K. Hovnanian's Four Seasons at Kent Island v. Foley

K. HOVNANIAN'S FOUR SEASONS AT KENT ISLAND, LLC v. ROBERT FOLEY, et al.,

No. 1078-2020

Court of Special Appeals of Maryland

August 17, 2021

Circuit Court for Queen Anne's County Case No C-17-CV-20-000077

Berger, Friedman, Eyler, James R. (Senior Judge, Specially Assigned), JJ.

OPINION ^[*]

Eyler James, J.

K. Hovnanian's Four Seasons at Kent Island, LLC ("Hovnanian"), appellant, a developer of a mixed-use age-restricted community project appeals from a judgment entered by the Circuit Court for Queen Anne's County, which reversed a decision by the Queen Anne's County Board of Appeals ("the Board of Appeals"). The Board of Appeals had ruled that the 20-year term in the 2002 Development Rights and Responsibilities Agreement ("the DRRA") between Hovnanian and the Queen Anne's County Board of Commissioners ("Board of County Commissioners") was tolled for eight years due to litigation. The circuit court held that the term was not tolled. Hovnanian noted an appeal to this Court. Appellees, opponents of the project, are Robert and Brian Foley, James and Karen Wimsatt, Hal Fischer and Molly McGlashan-Fischer, Andrea Prieto, and Queen Anne's Conservation Association. We agree with the circuit court. Accordingly, we affirm the circuit court's judgment.

BACKGROUND

In 1995, the Maryland General Assembly enacted legislation creating a "Development Rights and Responsibilities Agreement" as a new land use tool for owners of real property and local political subdivisions. See Queen Anne's Conservation, Inc. v. County Com'rs of Queen Anne's County, 382 Md. 306, 308 (2004) ("Conservation"). See also Article 66B §13.01 (repealed and reenacted at Md. Code Ann., Land Use ("LU") Article, §§ 7-300 et. seq.). The resulting legislation was a balancing of the desire of developers/property owners for more certainty in the development process and the desire of local governments to receive greater public benefits on a more predictable schedule than that in the traditional development process. Conservation, 382 Md. at 308-09. The legislation defined a DRRA as "an agreement between a local governing body and a person having a legal or equitable interest in real property to establish conditions under which development may proceed for a specified time." LU § 7-301(b).

This is the fifth appeal involving Hovnanian's Kent Island development project, which has been in the works for over two decades.^[1] The project was first proposed in the late 1990's. As envisioned, it consisted of "1, 350 single and multifamily dwelling units, an assisted living facility, and related community and recreational facilities, to be erected on two tracts comprising 562 acres that lie on the north side of U.S. Route 50 between the towns of Chester and Stevensville." Board of Public Works v. Hovnanian, 443 Md. 199, 204 (2015) (quotation marks and citation omitted). The project, however, was mired in lawsuits before it began.^[2] While those lawsuits were pending, Hovnanian and the then three-person Board of County Commissioners negotiated the DRRA. It was executed on September 17, 2002.^[3]

The DRRA between Hovnanian and the Board of County Commissioners is a comprehensive agreement spanning 70 plus pages. It states that "a principal purpose of this Agreement is to bind the Developer to long term off-site public improvements which it can make in consideration of and upon reliance that the County will not change the rules and regulations pertaining to the development of the [property] from those in effect when this Agreement was executed." Important to the case before us, the DRRA provides that the Agreement "shall run with and bind the Subject Property so long as the Four Seasons development is under construction and development, but in any event this Agreement shall be void 20 years after the effective date of this Agreement." (emphasis added).

Less than two months after signing the DRRA, the citizens of Queen Anne's County voted and unseated all three of their commissioners, primarily because of public backlash against the proposed development.^[4] According to Hovnanian, between September 17, 2002, when the DRRA was signed, until October 2016, when the Board of Appeals^[5] approved Hovnanian's final site plan and subdivision application for a particular part of the project, they have been hampered in completing the project due to lawsuits by those opposing the project.

In February 2019, Hovnanian petitioned the Board of County Commissioners to toll the expiration date of the Agreement for eight years because of litigation delays.^[6] About two months later, the Board of County Commissioners confirmed that the DRRA had been tolled until October 2023 (see first tolling period in footnote 6) but the Board of County Commissioners took "no action" as to any further tolling. Hovnanian appealed the ruling to the Board of Appeals. On February 25, 2020, following arguments by counsel, the Board of Appeals issued an opinion and order in which it agreed with Hovnanian that the DRRA was tolled for the four time periods claimed, for a total of eight years. Accordingly, the DRRA was extended from a 20-year term to a 28-year term, terminating on September 17, 2030. Appellees petitioned for judicial review of the Board of Appeals' ruling in circuit court. Following oral argument, the circuit court entered an order on November 5, 2020, reversing the Board of Appeals' decision and remanding with directions to dismiss Hovnanian's petition for tolling. Hovnanian noted an appeal to this Court.

DISCUSSION

Hovnanian asks us to reverse the order of the circuit court and affirm the Board of Appeals' decision to toll the DRRA's 20-year term for eight years based on litigation covering four time periods. Hovnanian cites, inter alia National Waste Managers, Inc. v. Anne Arundel County, 135 Md.App. 585, 608 (2000) in support of its argument. The appellees ask us to affirm the order of the circuit court reversing the Board of Appeals' decision and cite, inter alia, Lillian C. Blentlinger, LLC v. Cleanwater Linganore, Inc., 456 Md. 272, 293 (2017) in support of their argument. While we are not unsympathetic to Hovnanian's position, the clear and unambiguous language of the DRRA statute and the terms of the DRRA itself compel us to hold that tolling is not available. We explain.

A. Standard of Review

When reviewing an agency proceeding, the issue before an appellate court "is not whether the circuit court erred, but rather whether the administrative agency erred." Bayly Crossing, LLC v. Consumer Protection Division, 417 Md. 128, 136 (2010) (quotation marks and citation omitted). See also Abbey v. University of Maryland, 126 Md.App. 46, 53 (1999). When reviewing the decision of an administrative agency, we make two determinations: "(1) the legality of the decision and (2) whether there was substantial evidence from the record as a whole to support the decision." Baltimore Lutheran High School Ass'n v. Employment Sec. Admin., 302 Md. 649, 662 (1985). We owe the agency's conclusions of law "no deference." Bennett v. Zelinsky, 163 Md.App. 292, 299 (2005). See also Stansbury v. Jones, 372 Md. 172, 184 (2002) ("a decision of an administrative agency, including a local zoning board, is owed no deference when its conclusions are based upon an error of law.") (quotation marks and citations omitted). Accordingly, we review an agency's legal conclusions de novo. Bayly Crossing, 417 Md. at 138-39. However, "a degree of deference should often be accorded the position of the administrative agency" on some legal issues. Blentlinger, 456 Md. at 293. Accordingly, "an administrative agency's interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts[, ]" but we will not "affirm an agency['s] decision premised solely upon an erroneous conclusion of law." Id.

B. DRRA Statute

In Blentlinger the Court of Appeals discussed in detail the use of DRRAs. The Court stated that their purpose is to "allow developers and local governing bodies, such as a county, to negotiate terms and conditions under which development may occur" and "to streamline the various approval processes that must occur for a complex development project." 456 Md. at 277. The Court added that to this end, one of the "key aspects" of a DRRA is a "freeze provision," "which permits parties to agree to freeze certain laws, rules, regulations, and policies as of the time of the execution of the DRRA." Id. (citing LU § 7-304(a)).

The statute lists the terms required in a DRRA and specifies the procedure for creating, amending, and terminating a DRRA. Specifically, the statute lists the following nine required conditions that "shall" be included in each DRRA:

(1) a legal description of the real property subject to the agreement;

(2) the names of the persons having a legal or equitable interest in the real property subject to the agreement;

(3) the duration of the agreement;

(4) the permissible uses of the real property;

(5) the density or intensity of use of the real property;

(6) the maximum height and size of structures to be located on the real property;

(7) a description of the permits required or already approved for the development of the real property;

(8) a statement that the proposed development is consistent with the comprehensive plan and development regulations of the local jurisdiction;

(9) a description of the conditions, terms, restrictions, or other requirements determined by the local governing body of the local jurisdiction to be necessary to ensure the public health, safety, or welfare; and

(10) to the extent applicable, provisions for the:

(i) dedication of a portion of the real property for public use;

(ii) protection of sensitive areas;

(iii)

...