E-Alert Case Updates

Maryland Intermediate Appellate Court holds that Contractor developing Servient Estate had Standing to sue Owner of Dominant Estate to Easement, though the Easement was conveyed by the Local Municipality

Michael, LLC v. 8204 Assocs., LLC
No. 1601 (Md. App. Sept. 26, 2012)
by Wayne Heavener, Law Clerk
Semmes, Bowen & Semmes (www.semmes.com)

In Michael, LLC v. 8204 Assocs., LLC, the Maryland intermediate appellate court considered whether a dispute over an easement was justiciable. In particular, the Court found that Michael LLC (“Michael”) had standing to bring a declaratory judgment action against 8204 Associates LLC (“8204”). Montgomery County had contracted Michael to develop a parking lot, on which 8204 held an easement. The Court of Special Appeals concluded that Michael’s contractual rights as a developer made him a necessary party to an action involving the easement, providing Michael with the requisite standing to bring suit against the dominant estate. The Court also concluded that the controversy was ripe for a judicial decision, because the County had moved beyond the mere authorization phase of developing the servient lot. Therefore, the Court reversed the Circuit Court for Montgomery County’s dismissal of Michael’s declaratory judgment action, and remanded the case for further proceedings.

8204 owned land on Fenton Street in Silver Spring, Maryland, which adjoined property owned by the County. A two-story office building sat on 8204’s land, while the County’s land was a surface parking lot, known as Lot 3. On the second floor of the office building was access to a pedestrian bridge to Lot 3 over a drainage swale. The County had granted 8204 an easement and right-of-way for pedestrians on Lot 3, by way of the pedestrian bridge. This bridge was used to deliver goods to a publisher located in the office building, such that trucks would park in Lot 3, and move their supplies across the pedestrian bridge.

On December 2, 2005, the Montgomery County Department of Public Works and Transportation issued a request for proposals for mixed use development of Lot 3. Michael LLC responded to the Department’s request, and entered into an agreement with the County on October 6, 2008, which conveyed Lot 3 to Michael. Michael intended to conduct several phases of improvement upon the lot, the first of which would be an underground public parking garage. Upon its completion, Michael would convey the garage back to the County as a unit in a condominium. Completion of the garage would prevent the enjoyment of 8204’s easement as it was currently used. As part of the County Planning Board’s approval for Michael’s project, Michael entered into an agreement which required it to:

Install a commercial elevator inside the building convenient to the Fenton Street entrance. . . . if [Michael] and [8204] cannot agree to changes inside their building, [Michael] must provide one of two exterior options:

1. an exterior elevator, as illustrated in the Project Plan staff report as ‘Exterior Elevator Option; or

2. an exterior stair connecting the pedestrian bridge to the Fenton Street right-of-way, referred to in the Project Plan staff report as ‘Exterior Stair Option.”

Michael, LLC v. 8204 Assocs., LLC, No. 1601, slip op. at 3 (Md. App. Sept. 26, 2012). With 8204 and Michael unable to reach an agreeable option, the County Executive’s Office attempted to facilitate an agreement. In a letter to the County Assistant Chief Administrative Officer, 8204 stated that “[r]emoving . . . easy access and unilaterally installing a steep stairway so that a developer may maximize his profits is a legal issue that we are prepared to move forward on, but we’d rather not.” Id. at 3–4.

After the County abandoned its mediation efforts, Michael filed for declaratory judgment as to whether implementing the Exterior Stair Option as directed by the County Planning Board would comport with the terms of the easement. Michael asserted that 8204’s statement in its letter to the County’s Officer demonstrated that 8204 would initiate litigation if Michael proceeded with the Exterior Stair Option. 8204 moved to dismiss for want of a justiciable controversy, and the circuit court dismissed the case. In particular, 8204 argued that Michael lacked standing to bring the case, and that the case was not ripe for a decision.

The Court of Special Appeals reversed the circuit court’s dismissal, remanding the case for further proceedings. The Court stated that a case is justiciable where interested parties assert adverse claims, and a legal decision is demanded. In this case, 8204 had standing to bring its declaratory judgment suit, which the Court noted was common in disputes over easements. The Court found that Michael had contractual rights to improve Lot 3, both for the public and for itself. Furthermore, if 8204 had brought a declaratory judgment action against the County, as the servient owner of Lot 3, Michael would be a necessary party to the proceedings as a holder of development rights under its General Development Agreement with the County. Therefore, Michael was an interested party to the proceeding with standing. The Court likewise found the case ripe for judicial decision. The Court held that the construction process had moved beyond its mere authorization phase, and was in the course of being implemented when the County issued its first requests for development proposals. Hence, the Court found that the circuit court abused its discretion in finding the case nonjusticiable.