State Ctr., LLC v. Lexington Charles Ltd. P'ship

• Decision Date: 27 March 2014
• Docket Number: No. 12,12
• Parties: STATE CENTER, LLC, ET AL. v. LEXINGTON CHARLES LIMITED PARTNERSHIP, ET AL.
• Court: Court of Special Appeals of Maryland

STATE CENTER, LLC, ET AL. v. LEXINGTON CHARLES LIMITED PARTNERSHIP, ET AL.

No. 12

COURT OF APPEALS OF MARYLAND

Argued: October 3, 2013

September Term, 2013

Filed: March 27, 2014

State Center, LLC, et al. v. Lexington Charles Limited Partnership, et al., No. 12, September Term, 2013

JUDICIAL REVIEW—MARYLAND RULE 8-602—MOTION TO DISMISS APPEAL—LACK OF PRESERVATION AND IMPROPRIETY OF PRESENTATION TO THIS COURT: This Court's discretion to dismiss an appeal is limited to certain statutory grounds by Maryland Rule 8-602(a). Neither lack of preservation nor impropriety of presentation to this Court are a permissible ground upon which this Court may grant a dismissal of an appeal. Thus, Appellees' Motion to Dismiss the appeal was denied.

ADMINISTRATIVE AGENCY—EXHAUSTION OF ADMINISTRATIVE REMEDIES: A claimant is not required to exhaust administrative remedies that the claimant is not eligible to pursue.

REAL PROPERTY—GOVERNMENT REDEVELOPMENT PROJECT—PROPERTY OWNER STANDING—AGGRIEVED CLASS: When determining whether a protestant is a "person aggrieved" for purposes of having standing to challenge a government redevelopment project, the most important factor to consider is proximity, as measured by the physical location of the protestant's property to the subject site.

REAL PROPERTY—GOVERNMENT REDEVELOPMENT PROJECT—PROPERTY OWNER STANDING—SPECIAL AGGRIEVEMENT—ECONOMIC EFFECTS—TRANSIT ORIENTED DEVELOPMENT SCOPE: When determining whether a person is "specially aggrieved," for purposes of having standing to challenge a government redevelopment project, the economic effects which may result from the redevelopment project are irrelevant. Similarly, the scope of the transit-oriented development of the project is not relevant to this determination.

REAL PROPERTY—GOVERNMENT REDEVELOPMENT PROJECT—STANDING—SPECIAL AGGRIEVEMENT—PROTESTANT LACKS PROXIMITY: When a protestant lacks proximity to the government redevelopment project's site, claims of harm, including a change in the character of the neighborhood, increase in traffic, and limited visibility, are not sufficient to show special aggrievement.

JUDICIAL REVIEW—TAXPAYER STANDING—LACK OF PRIVATE RIGHT OF ACTION: Under the common law doctrine of taxpayer standing, a complainant has standing if he/she/it meets the requirements for the doctrine; no private right of action is required additionally.

JUDICIAL REVIEW—TAXPAYER STANDING: To establish taxpayer standing in Maryland, a taxpayer need only allege: (1) that he is a taxpayer; (2) an action by a municipal corporation or public official that is illegal or ultra vires; and (3) that suchaction may result reasonably in a pecuniary loss to the taxpayer or an increase in taxes. Appellees met these requirements in their Complaint challenging the State's actions of entering into the formative contracts for the subject Project as illegal under the Procurement Code, but failed in their challenge to the TOD designation.

EQUITY—AFFIRMATIVE DEFENSE—DOCTRINE OF LACHES: The equitable doctrine of laches bars stale claims when there is an unreasonable delay in the assertion of one's rights and that delay results in prejudice to the opposing party. Here, the delay in bringing the lawsuit was unreasonable and caused great prejudice to the State Agencies and Developers. Thus, the doctrine of laches barred Appellees' remaining claims.

Circuit Court for Baltimore City

Case No. C10009242V10

Barbera, C.J.,

Harrell,

Battaglia,

Greene,

Adkins,

^*Eldridge, John C. (Retired,

Specially Assigned),

Rodowsky, Lawrence F. (Retired,

Specially Assigned),

JJ.

Opinion by Harrell, J.

Battaglia, J., joins in judgment only

^*Eldridge, J., participated in the hearing and

conference of this case after being recalled

pursuant to the Constitution, Article IV,

Section 3A, but did not participate in the

decision or adoption of this opinion.

Table of Contents^*

I. Background Facts.................

II. The Procedural Path of the Present Case.................13

III. Appellees' Motion to Dismiss the Appeal.................24

IV. Applicable Standards of Appellate Review.................27

V. Analysis.................29

A. JUSTICIABILITY.................29

1. Procurement Claims Brought By Appellees As Plaintiffs.................35

2. Are The Statutory Administrative Remedies Really "Available" Here?.................40

3. Private Right of Action.................50

4. Property Owner & Taxpayer Standing Doctrines.................52

a. Property owner standing........54

i. Whether property owner standing doctrine applies here?.................57

ii. Whether Appellees alleged sufficient facts for "special aggrievement" to confer property owner standing?.................62

(1) Prima facie aggrieved property owners?.................65

(2) Almost prima facie aggrieved property owners?........70

(3) Nebulous third category of property owner standing?.................73

b. Taxpayer standing........75

i. Taxpayer standing & procurement claims: is a private right of action required for taxpayer suits?........79

ii. The necessary party plaintiffs for taxpayer standing doctrine.................85

iii. A governmental action that is illegal or ultra vires.................95

iv. Specific injury sufficient.................96

(1) What types of "harm" amount to a pecuniary loss?.................100

(2) Nexus........114

(3) Amount of pecuniary harm.................123

B. THE FATAL FLAW—THE DOCTRINE OF LACHES.................126

1. Propriety of Addressing Laches.................127

2. Standard of Review.................128

3. The Fatal Flaw........129

a. Whether laches applies to taxpayer suits?........130

b. Delay in filing........133

i. The starter's gun sounds...........134ii. Whether the delay was unreasonable.........149

c. Prejudice from the delay........155

^* Every novella-length appellate opinion warrants one.

The State Center Project (the "Project") is a $1.5 billion, multi-phase redevelopment project intended to replace aged and obsolete State office buildings with new facilities for State use and to revitalize an approximately 25-acre property owned by the State of Maryland in midtown Baltimore ("City"), without burdening unduly the State's capital budget. To these ends, in 2005, the State issued a public Request for Qualifications ("RFQ") to solicit a "Master Developer" who would be granted the exclusive right to negotiate with the State to execute the entire project, which included the reconstruction of older deteriorating buildings currently on the site of the project, as well as the receipt of a 75-90 year leasehold interest. The State Center, LLC, was chosen as the Master Developer. The Maryland Department of General Services ("DGS"), the Maryland Department of Transportation ("MDOT") and the State Center, LLC, negotiated for the Project, entering into a series of agreements between 2007 and 2010 for the purpose of completing the Project in a timely manner. These agreements, thus far, are: (1) the Master Development Agreement ("MDA"); (2) the First Amendment to the MDA ("First Amendment"); (3) two Phase I ground leases; and, (4) four approved Phase I occupancy leases.

In 2010, fifteen plaintiffs, property owners in downtown Baltimore (many with available office space for rent) and taxpayers of the State, filed suit in the Circuit Court for Baltimore City against the DGS, MDOT, and the State Center, LLC, and its subsidiaries, seeking a declaratory judgment that the formative contracts for the Project were void and an injunction to halt the Project. The result of the suit in the trial court was the voiding of the formative contracts of the Project on the grounds that they violated theState Procurement Law. On appeal, we are asked to address the Circuit Court's denials of Defendants' Motions to Dismiss and the trial court's partial grant and partial denial of their Motion for Summary Judgment. Embedded in these questions are justiciability issues of taxpayer and property owner standing; the requirements for the exhaustion of administrative remedies and, if necessary to be reached, whether a private right of action existed; and, lastly, the equitable doctrine of laches. If the resolution of any of these threshold issues is not dispositive, there waits potentially at the end of the day questions regarding the interpretation of the State Procurement Law.

I. BACKGROUND FACTS

The State Center complex, as it currently blights the skyline of midtown Baltimore, consists of five Soviet-block style buildings and approximately 1,300 parking spaces. It was built in the 1950s and 60s to house a number of State agencies. Today, it is agreed widely that these buildings are long past their useful lives. Although the State Center may be deemed fairly a "concrete wasteland,"¹ the property has substantial redevelopment potential. The State Center sits next to a passenger rail station that connects the area to the rest of the city. It serves as a major employment node for the State Center offices and the Maryland General Hospital. Moreover, the Center borders many of the City's major cultural and educational institutions, and enjoys relative proximity to downtown Baltimore and the waterfront. Despite this potential, the current State Centercomplex, it is said, "does not form a true crossroads [between the neighborhoods] and more often forms a barrier separating neighborhoods."

In anticipation of the need for more modern structures and the currently unrealized potential of the property, the State Center Project was conceived in 2004 during the administration of Governor Robert L. Ehrlich. In September 2005, the DGS and MDOT (hereinafter, collectively, "State Agencies") issued a public RFQ to solicit and select a "Master Developer" for the purpose of redeveloping comprehensively the State Center complex. The RFQ envisioned, as its overarching goal, "through new TOD [Transit-Oriented Development]² at State Center and nearby properties[,] the existing cultural and educational institutions of the Cultural Center can be enhanced and the area diversified so that it becomes...