Evans Realty Co. v. Town of Lonaconing

1

EVANS REALTY COMPANY, INC v. THE TOWN OF LONACONING

No. 986-2023

Court of Special Appeals of Maryland

August 29, 2024

IN THE APPELLATE COURT OF MARYLAND UNREPORTED ^[*]

Circuit Court for Allegany County Case No. C-01-CV-20-000324

Reed Beachley, Kenney, James A., III (Senior Judge, Specially Assigned), JJ.

OPINION

KENNEY, J.

This case stems from a dispute between Evans Realty Company, Inc. ("Evans Realty") and the Town of Lonaconing (the "Town") over the terms of a contract regarding the Town's use of a reservoir on real property owned by Evans Realty. Evans Realty filed, in the Circuit Court for Allegany County, a complaint for declaratory relief that alleged that the contract was not supported by consideration and the Town's use and occupation of the reservoir was an unconstitutional "taking." Following a hearing, the trial court entered an order declaring that the contract was supported by consideration and enforceable, that the Town had the legal right to continue using the reservoir, and that there had not been a taking. Evans Realty noted a timely appeal and raises two questions:

1. Did the trial court err in finding that the contract was supported by consideration and therefore enforceable?

2. Did the trial court err in finding that there had not been a taking by the Town?

Finding no error, we affirm.

BACKGROUND

In 1983, four brothers - Benjamin Evans, Jr., Aleck Evans, David Evans, Sr., and John "Jack" Evans (collectively the "Evans Family") - owned two businesses related to this appeal. At the time, John Evans was also the Town's mayor.

The first business, the Lonaconing Water Company ("LWC"), owned large tracts of land in Allegany County on which several water reservoirs were located in addition to the equipment designed and used to provide water from the reservoir to the Town (collectively the "Water System"). All four Evans brothers were involved in LWC's operation:

Benjamin Evans served as president; Aleck Evans was vice president; David Evans was secretary; and John Evans was the general manager. The second business, Evans Realty, owned the land on which was located one of the reservoirs (the "Charlestown Reservoir")^[1]used by LWC to supply water to the Town. LWC owned and operated all of the equipment related to the reservoir's use. Evans Realty had two officers. John Evans was its president and David Evans was its secretary.

On February 7, 1983,^[2] LWC and the Town executed an Agreement of Sale in which LWC agreed to sell the entire Water System to the Town for $663,000.00. The Agreement was signed on behalf of LWC by Benjamin Evans, as president, and David Evans, as secretary. Regarding the Charlestown Reservoir, the Agreement included the following language:

2. Leasehold Interest. It is understood and agreed that in addition to the conveyance of the above referenced property, the [Town] shall secure a leasehold interest in a certain portion of an area commonly known and designated as the [Charlestown Reservoir] for a term of ninety-nine (99) years at a cost of One Dollar ($1.00) per year, with the [Town] having the option of renewing said lease for an additional ninety-nine y(99) [sic] years at a cost of One Dollar ($1.00) per year. The terms and conditions of said leasehold shall be the subject of a separate leasehold agreement by and between the [Town] and Evans Realty Company, Inc., the titled owners of said property.

On April 19, 1983, LWC executed an Incumbency Certificate, which was signed by Benjamin Evans, David Evans, and John Evans. In that document, the signatories attested that they were "authorized to take all actions and to do all things as such officers required under and pursuant to a certain Agreement of Sale dated February 7, 1983." That same day, David Evans and Benjamin Evans, acting on behalf of LWC, executed a Bill of Sale, in which LWC recognized that, in exchange for the consideration set forth in the Agreement of Sale, LWC was transferring all of its interests in the Water System to the Town. Attached to the Bill of Sale was an exhibit outlining the various properties and equipment that were part of the Water System. The Charlestown Reservoir was included in that exhibit.

Also on April 19, 1983, the Town and Evans Realty executed a Memorandum of Lease (the "Memorandum"), which was signed by David Evans and John Evans as secretary and president, respectively, of Evans Realty.^[3] The Memorandum stated that Evans Realty would lease the Charlestown Reservoir to the Town "for ninety-nine (99) years" and that the Town would have the option to renew the lease "for one additional period of ninety-nine (99) years." It further stated that it was "subject to the terms, conditions, and restrictions contained in that certain unrecorded agreement between [Evans Realty] and [the Town] dated the 19th day of April, 1983."^[4] In the Memorandum, Evans Realty "reserve[d] the right to use any and all roadways crossing the leased premises for the purpose of ingress and egress from adjoining property owned by [Evans Realty] and not subject to this lease." It did not include any other terms.

That same day, LWC and the Town executed Articles of Sale and Transfer, which were signed by David Evans and Benjamin Evans as secretary and president, respectively, of LWC. In that document, which listed the property that was being sold by LWC to the Town, LWC stated that it was granting all of its "right, title and interest in and to a lease for a term of years dated April 19th, 1983, by and between [Evans Realty] and [the Town] concerning [the Charlestown Reservoir] and more particularly described in [the Memorandum.]"

Following the execution of those documents, the Town began operating the Water System. In 2012 or 2013, the Town erected a fence around the Charlestown Reservoir for safety reasons.

In 2020, Evans Realty filed its Complaint for Declaratory Relief, which is the subject of the instant appeal. In the complaint, Evans Realty alleged that the Town had used the Charlestown Reservoir without compensating Evans Realty since April 19, 1983, and that the lease was not supported by consideration. Evans Realty asked the court to determine the Town's rights and obligations regarding its use of the Charlestown Reservoir and to determine whether that use constituted a "taking" under the United States and Maryland constitutions.

Hearing

In January 2023, the trial court held a hearing on Evans Realty's complaint. At that hearing, the court received into evidence various documents, including the Agreement of Sale, Bill of Sale, Articles of Sale and Transfer, Incumbency Certificate, and Lease. In addition, it heard testimony from several witnesses. Tyler Rayner, the Town's Administrator, testified that, according to the Town's records, no payment had ever been made by the Town to Evans Realty for the use of the Charlestown Reservoir. Mr. Rayner testified further that, to his knowledge, the Town had not permitted Evans Realty to use the Charlestown Reservoir property since the 1983 sale. He added that, in his four years as the Town's Administrator, he was never made aware of any prior contact or litigation by Evans Realty regarding payment for the Town's use of the Charlestown Reservoir.

Benjamin Evans, III, the current president of Evans Realty and the son of LWC's former president, Benjamin Evans, Jr., testified that, despite maintaining an ownership interest in the Charlestown Reservoir, Evans Realty had not been permitted to use the property and had not received any payment for the Town's use of the property since 1983. He also testified that, prior to 1983, when the Water System was being operated by LWC, Evans Realty did not receive compensation from LWC for its use of the Charlestown Reservoir.

John Coburn, the Town's Mayor since 1997, testified that he was not aware of any obligation of the Town to Evans Realty. According to Mr. Coburn, Evans Realty had not objected to the construction of the fence around the Charlestown Reservoir, and until recent communications related to the instant litigation, Evans Realty had never contacted him about the fence.

Court's Ruling

Following the hearing, the trial court issued a written opinion with findings of fact and determinations pertaining to Evans Realty's complaint for declaratory relief. Specifically, the court found that, although Evans Realty claimed that the Memorandum was the only document evincing any agreement between Evans Realty and the Town, it "was not the complete expression of the party's transaction[,]" the main purpose of which was for the Town to acquire the Water System. Consequently, the Memorandum "was not the final expression of the party's intention to bargain." The court found that the documents executed in 1983 - the Agreement of Sale, Articles of Sale and Transfer, Bill of Sale, Incumbency Certificate, and Memorandum - served to govern the overall transaction. And even though the Agreement of Sale was between LWC and the Town, the court found that Evans Realty, based on it "shar[ing] similar corporate officers" with LWC, was aware of the overall agreement and consented to be bound to its terms.

The court concluded that the Memorandum was supported by the consideration provided in the Agreement of Sale and its terms "enforceable." Therefore, the Town had "the legal right to continue the occupy the [Charlestown Reservoir property]" for a payment of $1.00 per year as set out in the Agreement of Sale and there was no "taking." In addition, it found that the Town owed Evans Realty arrearages under the Memorandum of $39.00.^[5] This timely appeal followed. Additional facts will be supplied as needed below.

STANDARD OF REVIEW

When reviewing a declaratory judgment following a bench trial, we '"review ...