Inlet Associates v. Assateague House Condominium Ass'n

• Decision Date: 01 September 1987
• Docket Number: No. 35,35
• Citation: 313 Md. 413,545 A.2d 1296
• Parties: INLET ASSOCIATES v. ASSATEAGUE HOUSE CONDOMINIUM ASSOCIATION et al. ,
• Court: Maryland Court of Appeals

Page 413

313 Md. 413

545 A.2d 1296

INLET ASSOCIATES v. ASSATEAGUE HOUSE CONDOMINIUM ASSOCIATION et al.

No. 35, Sept. Term, 1987.

Court of Appeals of Maryland.

Aug. 26, 1988.

Gerard P. Martin and M. Albert Figinski (Julie C. Janofsky and Melnicove, Kaufman, Weiner, Smouse & Garbis, P.A., on the brief), Baltimore, for appellant.

K. King Burnett (Clifton B. Thaw, III, on the brief), Salisbury, for appellee Assateague House Condominium Ass'n et al.

Raymond D. Coates, Jr., Jeffrey B. Cropper (Coastes, Coates & Coates, P.A. for Mayor and City Council of Ocean City, on the brief), Snow Hill, for other appellees.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS and BLACKWELL, JJ.

MURPHY, Chief Judge.

This case involves a taxpayers' action to enjoin, and conversely a real estate developer's suit to compel, the conveyance of a municipality's public right-of-way in part of a dedicated street, together with riparian rights purported to accrue as a result of the municipality's interest in the dedicated street.

I

In December 1984, Inlet Associates (Inlet) obtained an option to purchase property known as "Holt's Landing," located at South Division Street between Philadelphia Avenue and the Sinepuxent Bay in downtown Ocean City, Maryland. South Division Street, a 75-foot wide dedicated street, extends from the boardwalk which abuts the Atlantic Ocean on the east to Sinepuxent Bay on the west; it intersects with Baltimore and Philadelphia Avenues. To the immediate north of Holt's Landing, fronting on the north side of South Division Street, is a Coast Guard Station owned by the United States.

Inlet planned to construct a hotel and marina complex on the Holt's Landing property. In furtherance of its plans, Inlet's managing partner, Leo D'Aleo, appeared before a public work session of the City Council of Ocean City on August 28, 1985. At that time, D'Aleo proposed alternate plans for the development of the property, one of which contemplated utilizing, as part of the hotel building site, 25 feet of the southerly side of South Division Street, the length of which extended some 275 feet from Philadelphia Avenue to the bay. By obtaining this additional land, Inlet would be able to construct a larger hotel complex than if it was required to build it entirely on the Holt's Landing property. In addition, Inlet's plan contemplated using the City's riparian rights in the western terminus of South Division Street to enable it to construct pavilion shops on a pier to be erected into the bay. Under this plan, and in exchange for these rights from the City, Inlet would provide a number of public amenities to enhance the revitalization of the project area, including a bay-front public boardwalk.

On September 2, 1985, at a regular session of the City Council, this plan was presented to the Council. After some discussion of the proposal, the Council scheduled a public hearing for October 21, 1985, to permit public expression on the proposed plan. As advertised, the public notice of the meeting stated that the Council would consider Inlet's request that the City

"abandon as a part of a public street and ... grant, convey and quitclaim unto Inlet Associates ... the southernmost twenty-five (25) foot strip of South Division Street from Philadelphia Avenue to the Bay for the full width of twenty-five (25) feet, all riparian rights and all interest in and to South Division Street for the full seventy-five (75) foot width of South Division Street westward from the terminus of South Division Street and the Bay."

At the October 21 public meeting, the Council President asked D'Aleo to explain the purpose of Inlet's request. D'Aleo stated that Inlet was "attempting to swap" 25 feet of the City's public right-of-way on South Division Street in return for Inlet's bulkheading the end of the street, providing a public boardwalk in front of the waterfront marina, installing street lighting and benches, and maintaining the entire area. D'Aleo also referred to six retail stores to be located in the marina complex. At this point, the Council President made clear that Inlet's building project had been submitted to the Ocean City Planning and Zoning Commission for approval and that all the Council was then considering was whether to grant Inlet's request to abandon and close the southerly 25 feet of South Division Street. One councilman stated that the City would be "swapping what they regard as possibly unused street square footage for this privately constructed public walkway." The Council President noted that Inlet's project had been discussed at the August 28 public work session of the Council; he said that the Council believed that the amenities to be provided by Inlet in return for the 25-foot strip of South Division Street "were in the public interest" and that the purpose of the public hearing was to determine "if the public really did agree that it was worth trading 25 feet of the street for the amenities we were receiving." A motion was then made that the City approve "the trading" of the 25-foot strip in return for the public amenities to be provided by Inlet, with the proviso that the hotel be limited to five stories in height, that the retail activity be limited to six shops, and that if Inlet's project failed for any reason the 25-foot wide section of South Division Street would revert back to the City. Before the vote on the motion, the City Solicitor reminded the Council that Inlet also wanted "the riparian rights of the western terminus of the entire [75-foot] street for the purposes of the pier." The Council then voted unanimously (7-0) to approve Inlet's request.

By letter dated December 19, 1985, the City Solicitor confirmed that the municipality "as a result of formal action taken [by the Council] after the public hearing ... held on October 21, 1985," had agreed, subject to the stated conditions, to "abandon and quitclaim" to Inlet the southerly 25 feet of South Division Street from Philadelphia Avenue west to the Bay"; and to "assign riparian rights adjacent to South Division Street from its western terminus to enable Inlet to construct a pier into the Bay." The letter further specified Inlet's agreement to limit retail activity on the pier to marina-related shops; to limit the height of its hotel to five stories; to construct a seawall and bulkhead at the southern boundary of its property; to construct a boardwalk at least 15 feet in width along the entire western edge of its property from South First Street to the northern side of South Division Street; to grant a public right-of-way over the boardwalk; and, if requested by the City, to construct a 10-foot boardwalk down the northern side of South Division Street from the bay to Philadelphia Avenue; and to maintain the improvements and install certain street lights in the area. The City Solicitor's letter stated that "formal documentation" would have to be prepared which would provide "for a reverter to the City in the event Inlet fails to comply with the terms and conditions [of the agreement]."

Following the favorable vote on the Council's resolution, Inlet exercised its option and purchased the Holt's Landing property. It expended substantial sums of money in preparing plans to develop the project, ranging between one and two million dollars. Inlet obtained site plan approval for the property, a permit to construct the marina, and a height variance to allow for a five-story hotel. Up to this time, there was no opposition to the Inlet plan.

The Corps of Engineers, in the summer of 1986, required Inlet to change the proposal for its contemplated pier into the waters of the bay at the end of South Division Street. As a consequence, Inlet returned to the City Council on September 15, 1986 and requested an amendment to the Council's resolution to permit it to construct a restaurant in place of the pavilion shops. Whether the restaurant would be built upon the pier, or would be located entirely landward of the bay across the full 75-foot width of South Division Street, is not clear from the record. In any event, on motion duly made the Council agreed to the amendment by a 3 to 2 vote, with the proviso that the restaurant not exceed one story. Because of some irregularity at this meeting, the Council reconsidered the proposal on October 6, 1986, again approving it, this time by a 4-2 vote. At the October 6 meeting, the question arose for the first time as to whether the disposition of the City's property interests required an ordinance rather than a resolution. The City Solicitor advised the Council that the City Charter permitted disposition of property by resolution after public notice and a public hearing.

In October 1986, the City Solicitor prepared an "Agreement and Declaration of Covenants, Conditions, and Restrictions" between Ocean City and Inlet; it was characterized as a "general plan of development." It recited Inlet's ownership of the Holt's Landing property; that South Division Street was a dedicated 75-foot public street; that the Planning Commission of Ocean City had approved Inlet's project to construct a hotel with marina facilities; that Ocean City wanted Inlet's property "developed as part of its comprehensive effort toward the redevelopment of 'downtown' Ocean City"; that as part of the redevelopment Ocean City wanted to obtain "public access and rights of way along the Sinepuxent Bay"; that Inlet was willing to grant to Ocean City, "for use and benefit of the public, a right of way along the bayside" of its property; and that Inlet wanted the use of the 25-foot southerly strip of South Division Street "and certain riparian rights of both South Division Street and South First Street." The agreement then set forth its terms and conditions which were consistent with the City Solicitor's earlier letter of December 19, 1985. The agreement, which was promptly signed by Inlet, was accompanied by a quitclaim deed and...