Chelsea Woods Court Condo. v. Gates BF Inv'r, LLC

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CHELSEA WOODS COURT CONDOMINIUM v. GATES BF INVESTOR, LLC, ET AL.

No. 847-2021

Court of Special Appeals of Maryland

July 6, 2022

Circuit Court for Prince George's County Case No. CAL 1935904

Wells C.J., Berger, Leahy, JJ.

OPINION ^[*]

Leahy J.

In the final analysis, this case is about whether, and when, to cut the shared access to water and sewer between two properties owned by the dueling entities before us. Hanging in the balance are the people who live in the 175 condominium units whose access to water and sewer is in jeopardy.

In 1974, a large parcel in Greenbelt, Maryland, was subdivided into two lots with shared water and sewer infrastructure. The owner of the tract of land with the public water and sewer connection serviced by the Washington Suburban Sanitary Commission ("WSSC") entered into an agreement with the contract purchaser of the contiguous tract of land to the south, which remained serviced by the same water and sewer connection ("the Agreement"). The parties agreed that the owners of the northern tract would pay the WSSC bills for water and sewer charges generated by both properties and then seek reimbursement from the owners of the southern tract for its share of the water and sewer costs based upon data from a contemplated submeter that was to be installed between the parcels. The owners of the southern tract agreed to pay the bills promptly within 15 days of receipt and to obtain a $10,000 corporate surety bond, or, alternatively, hold $10,000 in an escrow account, to guarantee reimbursement to the owners of the northern tract. By its terms, the Agreement would terminate "at such time as individual sewer and water house connections have been provided for [the southern tract]." The Agreement was filed in the Land Records for Prince George's County, Liber 4520 at folio 665.

The parties to this appeal are successors in interest to the parties to that Agreement. The Council of Unit Owners of Chelsea Woods Courts Condominium ("Chelsea Woods"), appellant/cross-appellee, is the governing body for a 175-unit condominium developed on the southern tract ("Chelsea Property"). The appellees/cross-appellants are six Maryland limited liability companies - Gates BF Investor LLC, Cipriano West LLC, Gates K. Brothers LLC, Crown Royalty Gates LLC, BTR Gates LLC, and WMS Gates LLC (collectively "Gates LLCs") - who in 2016 purchased The Gates at Cipriano Apartments ("Gates at Cipriano"), a 592-unit apartment complex occupying the northern tract ("Gates Property").^[1] After disputes arose between Chelsea Woods and Gates concerning the enforceability of the Agreement and its scope, Gates notified Chelsea Woods that they were terminating the Agreement and would disconnect the water and sewer connections between the properties. Chelsea Woods disputed their right to do so, precipitating this lawsuit.

In the Circuit Court for Prince George's County, the Gates LLCs filed suit seeking declaratory relief and damages for breach of contract and unjust enrichment.^[2] Chelsea Woods counterclaimed, asserting the same three causes of action. The circuit court granted the Gates LLCs' motion for partial summary judgment on their declaratory judgment count, declaring that the Gates LLCs could terminate the Agreement upon a material breach by Chelsea Woods; that Chelsea Woods materially breached the Agreement; that the Gates LLCs had effectively terminated the Agreement; and that the Gates LLCs could disconnect the connection between the water and sewer lines on the Gates LLCs Property and the Chelsea Property six months later, on January 17, 2022.

The parties' remaining claims for breach of contract and unjust enrichment were tried to the court. The court found that Chelsea Woods was unjustly enriched by its receipt of a WSSC overbilling credit and awarded the Gates LLCs $6,758.03-an amount that reflects Chelsea Woods's pro-rata share of the cost incurred by the Gates LLCs to achieve that credit, plus prejudgment interest. It further found that Chelsea Woods was liable to the Gates LLCs for $166,523.29-the pro-rata share of the costs for improvements to the water pipes on the Gates Property-but did not award prejudgment interest.^[3] The court found for the Gates LLCs on Chelsea Woods's counterclaim. Chelsea Woods appealed and moved for a new trial. After its post-trial motion was denied, this appeal proceeded.

During the appellate proceedings, we ordered a limited remand to the circuit court for it to conduct an evidentiary hearing relative to a motion to stay the provision of the declaratory judgment permitting the Gates LLCs to disconnect Chelsea Woods's water and sewer lines. After a hearing, the circuit court amended the declaratory judgment to delay the date upon which the Gates LLCs could disconnect the water and sewer lines until August 1, 2022. The Gates LLCs noted a cross-appeal from the amended order, arguing that the circuit court erred and exceeded its authority by so ruling.

In its appeal, Chelsea Woods presents nine questions, which we have combined and reframed as six:

I. Did the Gates LLCs' conveyance of the Gates Property to their wholly owned subsidiaries during the litigation and before judgment render the judgment declaring the rights of the parties under the Agreement null and void?

II. Did the circuit court err by granting the Gates LLCs' motion for partial summary judgment because a) the Gates LLCs failed to establish damages, b) other remedies short of termination of the Agreement were appropriate, and c) the breaches were not material and/or that materiality was a disputed issue of fact?

III. Did the trial court err by finding Chelsea Woods liable for a share of the cost to reline pipes on the Gates Property because the Agreement did not expressly or implicitly require the sharing of maintenance expenses and because the elements of unjust enrichment were not met?

IV. Did the trial court abuse its discretion by denying Chelsea Woods's motion for a new trial premised upon new evidence bearing upon whether it received a benefit from the pipe relining project?

V. Did the trial court err by finding in the Gates LLCs' favor on Chelsea Woods's counterclaims?

VI. Did the trial court err in allowing and/or failing to quash writs of garnishment?

In their cross-appeal, the Gates LLCs present one question, which we have rephrased non-substantively as:

I. Was the circuit court's limited remand order improper or, in the alternative, should this court terminate the order upon resolution of this appeal?

We hold, first, that though the transferees of the Gates LLCs' interest in their property should have been joined, this may be accomplished on remand. Second, we affirm the grant of partial summary judgment in favor of the Gates LLCs, though we direct the circuit court to enter an amended declaratory judgment on remand. Next, we reverse the court's decision to grant the Gates LLCs reimbursement request for the costs to reline their pipes because they did not satisfy their burden to prove a breach of contract or unjust enrichment, thereby rendering moot the fourth issue regarding the propriety of the circuit court's denial of Chelsea Woods's motion for a new trial. Fifth, we affirm the denial of Chelsea Woods's counterclaim. Finally, we perceive no error in the circuit court's handling of the writs of garnishment, although under our holding above, the court's ruling in favor of Gates LLCs for $166,523.29 on their reimbursement claim for the pipe relining is reversed.

On the Gates LLCs' cross-appeal, we hold that the circuit court did not err or exceed its authority on limited remand.

On remand, we shall direct the circuit court to enter an order joining the appropriate parties for purposes of the declaratory judgment, to amend the declaratory judgment consistent with our construction of the Agreement, and to hold additional proceedings to determine the date when the Chelsea Property will be served by an independent WSSC connection.

BACKGROUND

The Agreement

The Gates Property and the Chelsea Property previously shared a common owner. In the 1960s, while under common ownership, a water and sewage system was constructed for the entire lot with the connection to the public water and sewer system located on Greenbelt Road at the northern border of what is now the Gates Property. In the early 1970s, the property was subdivided for development of a condominium on the southern portion. Prior to the sale of the Chelsea Property, the Agreement was executed.

We set out in more detail here the terms of the Agreement summarized above. The recitals explain that the Chelsea Property and the Gates Property^[4] were "serviced by one common sewer house connection and one common water house connection" and that water and sewer charges for both properties were "billed to and payable by" the owners of the Gates Property. Consequently, the Gates Property "must look to [the owners of the Chelsea Property] for reimbursement for the charges attributable to [their use]." The parties agreed to the following provisions "relating to [the] WSSC common charges":

1. That the owners of the Gates Property "shall continue to make timely payments of all common sewer and water charges billed by WSSC" for both properties.

2. That the owners of the Gates Property "shall arrange for the submeter measuring water and sewer charges to [the Chelsea Property] to be read every sixty (60) days, and shall remit to the [owners of the Chelsea Property] said submeter data, plus a bill for (i) the water and sewer charges shown thereon, and (ii) the meter reading charge shown thereon."

3.That the owners of the Chelsea Property "shall pay such bill, in accordance with the instructions thereon immediately, but in no event later than fifteen

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