State v. Merritt Pavilion, LLC

Decision Date29 November 2016
Docket NumberNo. 128, Sept. Term, 2016,128, Sept. Term, 2016
Citation230 Md.App. 597,149 A.3d 682
Parties State of Maryland v. Merritt Pavilion, LLC, et al.
CourtCourt of Special Appeals of Maryland

Julia D. Bernhardt (Steven M. Sullivan, Brian E. Frosh, Atty. Gen., on the brief), Baltimore, MD, for Appellant.

James D. Mathias (Michael N. Bakhama, David E. Dyson, DLA Piper, LLP, Baltimore, MD and Michael E. Field, County Atty., Bambi Glenn, Towson, MD) all on the brief, for Appellee.

Deborah S. Eyler, Arthur, J. Frederick Sharer (Senior Judge, Specially Assigned), JJ.

Arthur, J.

This case principally concerns the powers of the Maryland Board of Public Works, “the highest administrative body in the Maryland state government.” Alan M. Wilner, The Maryland Board of Public Works: A History (1984), at ix. Consisting of the Governor, the Comptroller of the Treasury, and the Treasurer, the Board of Public Works has the constitutional authority to “hear and determine such matters as affect the Public Works of the State, and as the General Assembly may confer upon them the power to decide.” Md. Const. Art. XII, § 1.

A regulation promulgated by the Board of Public Works requires counties to obtain the Board's approval before disposing of former public school property. Separately, Baltimore County had agreed, in a covenant in a 1981 deed, that it would not convey a specific school property without the Board's consent.

In 2014 Baltimore County reached an agreement with a private developer to sell portions of that former school property. Before the Board of Public Works made a final decision to approve or disapprove the sale, the developer sought a declaratory judgment that the 1981 covenant was invalid. The State intervened, arguing that the Board of Public Works' regulations governed the proposed disposition of the property. On cross-motions for summary judgment, the Circuit Court for Baltimore County declared that (1) the covenant was “invalid and of no legal force or effect” and (2) that the regulation was “inapplicable to and unenforceable against the contract of sale” between the County and the developer.

We reverse that judgment. The regulation governs the transaction, and it requires the County to obtain the Board of Public Works' approval before disposing of the property. As a result of that determination, it is unnecessary to declare the parties' rights under the covenant.

FACTUAL AND PROCEDURAL BACKGROUND
A. Transfer of Surplus School Property to Baltimore County

In the early 1950s, the Baltimore County Board of Education1 purchased approximately 28 acres of land at the corner of Merritt Boulevard and Wise Avenue in Dundalk. The property served as the site of North Point Junior High School until the school closed in 1981. The County Board of Education determined at that time that the property was no longer needed for school purposes.

As of 1981, Maryland law placed a number of restrictions on the disposition of a “surplus” school by a county board of education. Md. Code (1978), § 4–114(c) of the Education Article provided: “If, with approval of the State Superintendent [of Schools], a county board finds that any land, school site, or building no longer is needed for school purposes, it shall be transferred by the county board to the county commissioners or county council and may be used, sold, leased or otherwise disposed of, except by gift, by the county commissioners or county council.” The Board of Public Works, under its powers to regulate matters related to school construction, had delegated authority to the Interagency Committee on School Construction (IAC)2 to “review and approve ... all proposals for the ... disposition of school sites and buildings.” Rule 8(b) of the Rules, Regulations and Procedures for the Administration of the School Construction Program (approved Sept. 7, 1977). More broadly, the Board of Public Works retained statutory power to impose conditions on transfers of State property to a county government, regardless of whether the property had been used as a school. Md. Code (1957, 1980 Repl. Vol.), Art. 78A, § 15 ([a]ny real or personal property of the State of Maryland or of any board, commission, department or agency thereof ... may be sold, leased, transferred, exchanged, granted or otherwise disposed of ... to any county or municipality in the State subject to such conditions as the Board of Public Works may impose”).

According to an opinion of the Attorney General, this legal framework permitted a local board of education to transfer surplus school property to a local government only if: (1) the State Superintendent approved of the local board's finding that the school was surplus, and (2) both the IAC and the Board of Public Works approved of the disposition. See 64 Md. Op. Att'y Gen. 118, 122–23 (1979); 65 Md. Op. Att'y Gen. 209, 212–13 (1980). In the exercise of its approval power, the Board of Public Works could direct the terms and conditions of any subsequent use or disposition of the property. 64 Md. Op. Att'y Gen. at 123. “To safeguard the State's interests, the Board of Public Works may impose appropriate conditions on the local jurisdictions, require that the conditions of its approval and appropriate termination provisions or covenants be included in the instruments of transfer and lease, and require that those instruments be recorded.” 65 Md. Op. Att'y Gen. at 227.

Through a deed executed on October 22, 1981, the Baltimore County Board of Education disposed of the property that had been used as the site of North Point Junior High School. According to the deed, the County Board of Education had determined that the property was “no longer needed for school purposes [.] [I]n consideration of the sum of Five ($5.00) Dollars[ ] and other good and valuable considerations,” the County Board of Education agreed to convey the property to Baltimore County “in fee simple.” At the time of the conveyance, the State was still obligated in the amount of $89,808 on bond debt relating to the property.

The deed included the following covenant:

AND, [Baltimore County], acknowledging the financial interest of the State of Maryland in the property herein described, does hereby covenant that it will not convey, by deed, lease or other means, any portion of or interest in said property without first having received written consent thereto from the Board of Public Works of the State of Maryland. Such consent will not be unreasonably withheld.

The IAC reviewed the proposed transfer in accordance with the Board of Public Works' regulations. The IAC recommended that the Board approve the transfer subject to the understanding that Baltimore County would assume responsibility for $89,808 of the State's outstanding bond debt. The IAC also recommended that the following provision be incorporated into the transfer documents: [A]pproval of the Board of Public Works shall be obtained by Baltimore County prior to the transfer by it of any right, title, or interest in the school or site or any portion thereof, and the Board may attach such conditions to its approval, including the requirement that a pro-rata portion of the proceeds from the sale or lease of the school property be paid to the State, as it deems appropriate.” In June 1982, the Board approved the transfer subject to those conditions.3

B. Baltimore County's Use and Proposed Disposition of the Property

By the end of 1988, Baltimore County had paid off the outstanding bond debt on the property. Meanwhile, Baltimore County converted the former school building into the North Point Government Center, which was used primarily by county agencies such as the police department, recreation and parks department, and health department.

On the remaining portions of the property, the County maintained several athletic fields, including four baseball diamonds and three soccer fields. Those fields extend to the southern property line, which borders on additional athletic fields for an elementary school. This neighboring school, Grange Elementary School, has operated continuously since the 1960s.

By 2012, county officials no longer desired to continue to use the North Point property as a local government center. Consequently, the County solicited proposals from private developers for redevelopment of the property. The County accepted a proposal from Vanguard Commercial Development, Inc. (“Vanguard”).

By a contract executed in December 2013, the County agreed to sell approximately 15 acres of the 28–acre property to Vanguard for $2,105,355. The development plans called for the construction of a commercial complex that included offices, restaurants, and retail shops.4 Vanguard agreed to build a new recreation center and to upgrade athletic fields on the other portion of the property, which would continue to be owned by the County.

After further negotiations, the County entered into an “Amended and Restated Contract of Sale” in November 2014. The new contract substituted Merritt Pavilion, LLC (Merritt Pavilion), an affiliate of Vanguard, as the purchaser. Merritt Pavilion agreed to purchase the approximately 15–acre portion of the property for a revised price of $7,600,000. The County agreed to assume responsibility for constructing the recreation center and for upgrading the athletic fields.

The contracts listed several conditions precedent to closing, including final approval of a planned unit development (PUD) that would permit commercial use of the property.5 The transaction was not conditioned on obtaining approval from the Board of Public Works.

In 2015 Merritt Pavilion secured approval of the PUD from local administrative bodies. Nonetheless, some nearby residents, including Ms. Karen Cruz, were dissatisfied by the decision to permit commercial development on the property. Ms. Cruz and others petitioned for judicial review of the decisions authorizing the PUD. The Circuit Court for Baltimore County eventually heard the petition, but (as of the date of this opinion) the court has not yet issued a decision.

C....

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2 cases
  • Won Sun Lee v. Won Bok Lee, 1732, Sept. Term, 2017
    • United States
    • Court of Special Appeals of Maryland
    • January 30, 2019
    ...different" from when the case was last before this Court, we need not reach that question here.4 In State v. Merritt Pavilion, LLC , 230 Md. App. 597, 611 n.6, 149 A.3d 682 (2016), this Court concluded that a docket entry of "Granted" or "Denied" on a particular date within a docket entry f......
  • Cruz v. Balt. Cnty.
    • United States
    • Court of Special Appeals of Maryland
    • May 3, 2018
    ...the County from selling any portion of the property without the approval of the State Board of Public Works ("BPW"). State v. Merritt Pavilion, 230 Md. App. 597, 639 (2016). BPW has, thus far, declined to approve the sale. Pamela Wood,Dundalk Government Center Stalled Amid Legal, Political ......

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