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Real estate contract unambiguous and did not limit the campus design as long as the campus was use consistent with contract terms.

Newell, et al. v. Johns Hopkins University
A.3- (2013)

by Gregory S. Emrick, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In 1987, Ms. Banks was the managing co-owner and caretaker of a 138-acre farming property in Montgomery County (“the Property”) that had been held by her family for over 100 years. Despite being approached on numerous occasions, Ms. Banks refused to sell the property to residential or commercial developers. In 1987, Montgomery County levied taxes to pay for road expansion and the property was assessed $1.5 million in property taxes. In order to resolve the tax burden, Ms. Banks negotiated a deal with John Hopkins University (“JHU”) wherein the Property would be conveyed to JHU, subdivided into two (2) parcels of land, but with provisions that required JHU to construct a house on the property for Ms. Banks to reside in, and timed the use of the other parcel only after her grandchildren died (“the Contract”). The Contract contained the following restrictions:

13. Use Restrictions. For a period of no less than the shorter of (a) fifty (50) years from the date the [Farm] is transferred to the Buyer, or (b) 21 years from the death of the last to survive of the now living grandchildren of each of Roland L. Banks, Jr. and Beulah F. Newell, the Buyer shall not dispose of its fee interest in [Parcel B] . . . , and Buyer shall further limit its use of such portion of the Land, if any use thereof is made, for agricultural, academic, research and development, delivery of health and medical care and services, or related purposes only, which uses may specifically include but not be limited to development of a research campus in affiliation with one or more divisions of the Buyer. Moreover, during said period of time, the Buyer shall maintain such portion of the Land in a well kept and attractive fashion and shall preserve on such portion of the Land an appropriate wooded and fenced buffer area between [certain designated] portions of the Land. . . . Such portion of the land shall be known as the “Belward Campus of the Johns Hopkins University.” The restrictions on Buyer’s use of the [Farm] set forth in this paragraph shall be enforced by a covenant to be contained in the deed conveying the [Farm] to Buyer for the benefit of Sellers and their descendants.

As to the portion of the Land consisting of 30 acres more or less, [i.e., Parcel A], there shall be no limitations on the Buyer’s use or disposition thereof.

(emphasis added) (hereinafter “Restriction”). Over the course of the next few years, JHU worked with Ms. Banks and the County to rezone the Property, and in 1990, developed a plan for the property for a mixed research campus. Construction did not occur, however, and in 2010, in line with a new County development plan, JHU prepared a revised plan for the Property, which was “more dense, less pastoral, and less Hopkins-centric” than the campus that Ms. Banks and her family had envisioned.

Ms. Banks’ family brought a declaratory judgment action against JHU seeking a declaration that the planned development violated the terms of the Contract. JHU filed a Motion for Summary Judgment alleging that the terms of the Contract were unambiguous and did not place a restriction on the building density or height, or preclude JHU from leasing space to others. The Family argued that the terms of the Contract were unambiguous, but required that JHU construct a traditional “campus” style development, and operate the campus itself. The family alternatively argued that critical terms of the Restriction, including “campus” and “use,” were not adequately defined and ambiguous, thus requiring examination of extrinsic evidence of Ms. Banks’ purpose in the conveyance. After a period of discovery, JHU renewed its Motion for Summary Judgment, which the trial court granted. The family appealed.

The Court of Special Appeals reviewed the lengthy history behind the Contract, and observed that the real estate contract and Restriction were interpreted using standard contract law. In applying the rules of construction and the Court held that the language of the Restriction was unambiguous. Moreover, the Restriction only limited the use of the property, and was silent as to the building density and height, or JHU’s right to lease space on the property. The Court further noted there was no ambiguity created by applying the terms of any other section of the Contract to the Restriction. Despite the lack of ambiguity, the Court also took the opportunity to note that the extrinsic evidence presented by the family would affect the Court’s determination, as the evidence only showed that Ms. Banks later came to disapprove the JHU’s evolving plans. The Court noted that “a bad deal does not mean a void deal” and JHU could not be held to unexpressed limitations that Ms. Banks had not placed in the Contract. The Court affirmed the trial court’s grant of summary judgment to JHU.


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