Maryland-National Capital Park and Planning Commission v. Washington Nat. Arena

• Decision Date: 23 May 1978
• Docket Number: MARYLAND-NATIONAL,No. 115,115
• Citation: 282 Md. 588,386 A.2d 1216
• Parties: CAPITAL PARK AND PLANNING COMMISSION et al. v. WASHINGTON NATIONAL ARENA.
• Court: Maryland Court of Appeals

Page 588

282 Md. 588

386 A.2d 1216

MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMMISSION et al. v. WASHINGTON NATIONAL ARENA.

No. 115.

Court of Appeals of Maryland.

May 23, 1978.

Sanford E. Wool, Silver Spring (D. S. Sastri, Silver Spring, on brief), for Maryland-Nat. Capital Park and Planning Com'n.

James C. Chapin, County Atty. and John R. Gober, Associate County Atty., Upper Marlboro (Michael O. Connaughton, Deputy County Atty., Upper Marlboro, on brief), for Prince George's County.

Francis B. Burch, Atty. Gen. and Robert J. Aumiller, Asst. Atty. Gen., Baltimore, on brief, for amicus curiae Supervisor of Assessments for Prince George's County.

Peter F. O'Malley, Upper Marlboro (Glenn T. Harrell, Jr. and O'Malley, Miles, Farrington & McCarthy, Upper Marlboro, on brief), for appellee.

LEVINE, Judge.

The central issue in this appeal is whether a lessee may, consistent with the public policy of this state, voluntarily agree to relinquish in advance his statutory right to challenge a determination by the Supervisor of Assessments that the demised premises is subject to real property taxation. The Circuit Court for Prince George's County struck down such a noncontestability covenant in a lease between appellant, Maryland-National Capital Park and Planning Commission (the Commission), and appellee, Washington National Arena Limited Partnership (the Arena). On appeal the Court of Special Appeals declined to reach the merits, holding instead that the chancellor should have refused to assume jurisdiction to award declaratory relief under the Uniform Declaratory Judgments Act. Md.-Nat'l C.P. & P. Com. v. Wash. Nat'l Arena, 37 Md.App. 346, 360-61, 377 A.2d 545 (1977). We granted certiorari to review the decisions of both courts, and for reasons that follow we now reverse.

On August 11, 1971, an agreement was executed pursuant to which the Commission leased to Potomac Sports, Ltd., the Arena's predecessor in interest, a tract of land comprised of some 50 acres located at Largo in Prince George's County. The lease provided further for the construction of a major public athletic and recreational complex having a seating capacity of approximately 18,000 persons.

Under paragraphs 6(a) and 6(b) of the agreement, the lessee covenanted to pay as "additional rent" to state and local tax collecting authorities all property taxes on real estate improvements. Clause one of paragraph 6(c) conferred upon the lessee the "unrestricted right" to contest through administrative and judicial channels the amount of any assessment or valuation and to pay under protest any billing of such real property taxes or assessments. The right of the lessee, however, to challenge a determination of the taxability of the improvements was abrogated by the second clause of paragraph 6(c) around which the present dispute is centered and which in its entirety, provided:

"Lessee further agrees that it will not contest or challenge any determination by the State assessor (sic) that the real estate improvements are subject to real estate taxes; however, in the event that said real estate improvements are determined by the State assessor (sic) not to be subject to real estate taxes, the Lessee agrees to pay to the Lessor an additional annual rental over and above that provided in Paragraph 5 of this Lease Agreement in the sum of $325,000.00." (emphasis added).

As consideration for the assignment by Potomac Sports of all its "right, title, interest and estate" in and to the Lease Agreement, the Arena, with the Commission's approval, agreed on August 1, 1972, to assume "each and all obligations of Potomac as Lessee under the Lease," including the restrictions imposed by the noncontestability clause just quoted. Three weeks later the Commission and the Arena executed an addendum to the original contract providing for the lease of an additional 10-acre parcel for use as a parking facility. Construction of the complex commenced on August 24, 1972, and within the short span of 16 months the "Capital Centre," as the facility has since come to be called, opened to the public for the first time.

Early in January 1974 the Commission received notification from the Supervisor of Assessments for Prince George's County that the 60-acre tract on which the Capital Centre had been erected was to be assessed for purposes of property taxation at a value of $1,980,000. Soon thereafter a similar notice followed, informing the parties that a decision had been made to assess the structural improvements at $11,650,000. Contending that both the land and improvements were tax-exempt under Maryland Code (1957, 1970 Repl. Vol., 1977 Cum.Supp.) Art. 66D, § 5-109(a) and Code (1957, 1975 Repl. Vol., 1977 Cum.Supp.) Art. 81, § 8(7)(e), ¹ the Arena filed formal protests with the Supervisor. These efforts proved fruitless, however, and in November 1974 the assessments became final.

Disregarding the explicit prohibition of paragraph 6(c), the Arena appealed the Supervisor's decision respecting the taxability of the improvements to the Property Tax Assessment Appeal Board for Prince George's County. ² Within days of the scheduled hearing before the Appeal Board, the Commission instituted this action for declaratory and injunctive relief in the Circuit Court for Prince George's County, seeking to block the Arena from pursuing its administrative appeal in violation of the noncontestability clause of the 1971 lease. An attempt was made by appellant Prince George's County and the State of Maryland to intervene in the Commission's suit; however, only the County was given permission to do so.

The Arena interposed several defenses to the bill of complaint, arguing (1) that the noncontestability term was both void as against public policy and contrary to the due process clauses of the Federal and State Constitutions; (2) that specific performance of paragraph 6(c) was improper due to ambiguities in the contract language; and (3) that injunctive relief was inappropriate because the Commission had not sustained irreparable harm as a consequence of the breach.

After hearing oral argument and reviewing legal memoranda, the chancellor issued a decree on May 8, 1975, declaring the contractual waiver of appellee's right to protest the taxability of the leasehold improvements null and void as repugnant to public policy. No ruling was made on the Arena's remaining defenses. ³ Holding that the circuit court had erred in denying the State's earlier motion to intervene, the Court of Special Appeals in Md.-Nat'l Cap. P. & P. v Wash. Nat'l Arena, 30 Md.App. 712, 354 A.2d 459 (1976), reversed the order of the chancellor and remanded for a new hearing on the Commission's complaint. With the State participating, a second hearing was held and in a memorandum opinion dated November 10, 1976, the chancellor reaffirmed his prior order invalidating the noncontestability clause.

Subsequently, the Commission, joined by the two governmental intervenors, noted an appeal to the Court of Special Appeals, which, for reasons to be discussed below, vacated the chancellor's order and dismissed the bill of complaint. 37 Md.App. at 362, 354 A.2d 459. Only the Commission and Prince George's County sought further review in this Court.

I

Raising the issue on its own initiative, and thus without the benefit of any presentation by the parties, the Court of Special Appeals concluded that the chancellor abused his discretion in accepting and retaining jurisdiction over the Commission's action for declaratory and injunctive relief. In the court's view, the availability of an administrative remedy in the Maryland Tax Court and the Property Tax Assessment Appeal Board precluded the circuit court from issuing a declaratory decree under the Uniform Declaratory Judgments Act, Code (1974), §§ 3-401 et seq. of the Courts and Judicial Proceedings Article. We disagree.

At the outset we observe that the "jurisdictional" objection posed by the Court of Special Appeals actually envelopes two closely-akin but nevertheless distinct questions. The first of these relates to the power of the chancellor under the Uniform Declaratory Judgments Act to award declaratory relief where an alternative administrative remedy exists. If, as we shall hold, the circuit court did have authority to issue its declaratory decree, the issue then presented is whether, as a matter of judicial policy, not power, the chancellor should have refrained from exercising jurisdiction to construe the disputed noncontestability provision and awaited the outcome of the administrative appeal. See Gannon v. Perk, 46 Ohio St.2d 301, 348 N.E.2d 342, 348 (1976).

Notwithstanding the strong legislative policy favoring the liberal use and interpretation of the Declaratory Judgments Act to effectuate its broad remedial objectives, as expressed in § 3-402 of the Courts and Judicial Proceedings Article, see Millett v. Hoisting Engineers' Licensing Div., R.I., 377 A.2d 229, 233 (1977), declaratory relief is barred wherever the parties have resort to a special statutory procedure to resolve their differences:

"If a statute provides a special form of remedy for a specific type of case, that statutory remedy shall be followed in lieu of a proceeding under this subtitle." § 3-409(b) of the Courts and Judicial Proceedings Article. ⁴

Thus, with certain notable exceptions not relevant here, we have repeatedly held that where a specific statutory remedy is available, it is mandatory for the court to dismiss the suit for declaratory judgment and remit the plaintiff to the alternative forum. Tanner v. McKeldin, 202 Md. 569, 577, 97 A.2d 449 (1953); accord, Soley v. St. Comm'n on Human Rel., 277 Md. 521, 526, 356 A.2d 254 (1976); Lawrence N. Brandt, Inc. v. Mont. County, 39 Md.App. 147, 155, 383 A.2d 688 (1978).

As our case law amply demonstrates, however, the prohibition against awarding declaratory relief to parties who have alternative statutory or administrative remedies is...