Kaufmann Park Ii, LLC v. KCC Props., LLC

KAUFMANN PARK II, LLC v. KCC PROPERTIES, LLC

No. 1747

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2016

May 23, 2018

In the Circuit Court for Anne Arundel County

Case No. 02-C-13-184294

UNREPORTED

Wright, Kehoe, Rodowsky, Lawrence F. (Senior Judge, Specially Assigned), JJ.

Opinion by Wright, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

In 2013, Kaufmann Park II, LLC ("KPII"), appellant, filed, in the Circuit Court for Anne Arundel County, a Complaint seeking declaratory judgment and injunctive relief, arising from KCC Properties, LLC's ("KCC"), appellee's, alleged breach of an Easement Agreement. The circuit court, submitting one issue to a jury and conducted a two-day hearing, entered a Preliminary Injunction in favor of KCC. KPII timely appealed and presents several questions for our review which we have paraphrased and condensed:¹

1. Whether the circuit court erred by reading the 2003 Easement Agreement and the 2002 Agreement of Sale together?

2. Whether the circuit court erred in issuing a "preliminary injunction" rendering KCC's use of the parking lots exclusive?

3. Whether the circuit court erred in failing to enforce a release from the Easement Agreement?

For reasons to follow, we answer KPII's questions in the negative, and affirm in part and vacate in part the judgment of the circuit court.

BACKGROUND

At issue in this case is a property dispute concerning an easement. In December 2002, Kauffman Enterprises, a Maryland general partnership, was the owner of Kaufmann's Restaurant located at 329 Gambrills Road (the "Restaurant Parcel"), and also owned two parcels abutting the restaurant on either side, located at 331 Gambrills Road ("Lot 1") and 325 Gambrills Road ("Parcel 2").

On December 21, 2002, Kaufmann Enterprises entered into an Agreement of Sale with Gregory Casten for the sale and purchase of the Restaurant Parcel. The Agreement of Sale included express warranties to induce Casten into entering the sale. At an unknown time, Casten assigned the Agreement of Sale to KCC. The Agreement of Sale provided the following:

14. Title Provisions: Encroachments

It is understood and agreed by the parties that the premises shall not be in conformity with this agreement unless:

a. All buildings, structures and improvements, including, but not limited to, any driveways, garages, cesspools and leaching fields, and all means of access to the premises, shall be located completely within the boundary lines of the said premises and shall not encroach upon or under the property of any other person or entity except 1 that portion of the parking area, water wells and drain fields servicing the current facility are located on the adjacent property (the Kaufmann/Edwards Property, Lot 2, Parcel 75, T.M. 30); and

b. No building, structure or improvement of any kind belonging to any other person or entity, shall encroach upon or under the said premises.c. The deed to this property upon settlement and conveyance by SELLER to BUYER is together with an easement for the existing parking area located on the "Kaufmann/Edwards property" presently used by the restaurant, subject to the right of the SELLER to reconfigure that parking as required for development of the adjacent property (the Kaufmann/Edwards Property, Lot 2, Parcel 75, T.M. 30). Seller may reconfigure the existing parking used for the restaurant so as to facilitate the development of this parcel. SELLER warrants that the same number of parking spaces will be provided after any such reconfiguration as exist at the time of execution of the Agreement and that access to the parking lot from the street will not be detrimentally affected by the reconfiguration. The parties will execute a shared parking agreement prepared by SELLER in the form attached hereto as Exhibit B.

d. The deed shall also be together with an easement for use and maintenance of the septic system and water wells located on adjacent property at no charge. The water system for the restaurant and the office complex on the adjacent parcel to the north are interconnected. The owners of the restaurant parcel and the adjacent parcels on the north and south and the Buyer will have easements for the access and maintenance of these facilities. Seller will cooperate in any upgrade of the septic or water systems, at no cost to Seller, for as long as Sellers own the adjacent property.

On February 28, 2003, KCC and Kaufmann Enterprises conveyed an easement unto the Restaurant Parcel and recorded the Easement Agreement. The Easement Agreement provided, in relevant part:

1. Kaufmann hereby grants to KCC, its successors and assigns, and for use by its customers, employees, and invitees, a permanent easement for access and parking over that area identified as a "Parking Easement" on Exhibits A and B attached hereto. KCC acknowledges that portions of the "Parking Easement" area described on Exhibit A have been improved by Kaufmann for use as an "overflow" parking area, and that the parking surface improvements were constructed as temporary and have not been designed or approved in accordance with County Regulations or by County administrative agencies.

* * *

2. The grant of such easements by Kaufmann referred to in Paragraphs 1 and 2 above, is subject however to the reservation of the right by Kaufmann in the course of the development of Lot 1; provided however, that the use of the parking area and the septic dry well structures by KCC for the benefit of the Restaurant Parcel shall not be interrupted or impaired unless and until comparable facilities are constructed and in service in an alternate location on Lot 1[.][sic]

The Easement Agreement also provided that KCC granted Kaufmann a permanent easement for access and parking on portions of the Restaurant Parcel that were improved or available for access and parking by KCC. The parties contracted that the Easement Agreement would run and bind with the land, and that the agreement was completely integrated.

On March 3, 2003, Kaufmann Enterprises conveyed the Restaurant Parcel to KCC by deed which was recorded. Following the sale, Kaufmann Enterprises retained ownership of Lot 1 and Parcel 2. On February 22, 2004, David Kaufmann formed KPII. A week later, on February 27, 2004, Kaufmann Enterprises, David Kaufmann, and William Kaufmann² transferred ownership of Lot 1 and Parcel 2 to KPII, in a non-arms-length-transaction, to convert ownership of those assets from a Maryland general partnership to a Maryland limited liability company.

After this transfer of ownership, KPII began developing a commercial office development on Lot 1.³ The record indicates that in March 2007, K C, Inc. ("KCI"), a subsidiary of KCC, and Kaufmann Enterprises entered into a Confidential SettlementAgreement and Mutual General Release. The Settlement Agreement contained a stipulation that KCC would "release and forever discharge KPII . . . from any and all claims, actions, causes of action" and any other claims KCC had or would have with KPII.

According to KCC's complaint, dated December 19, 2013, KPII entered into this development knowingly violating the terms of both the Easement Agreement and the Agreement of Sale. This development work included construction curbs, gutters, and landscaping areas. KCC alleged, below, that KPII "failed to construct and place in service comparable alternate parking facilities for use by KCC." KCC alleged that because of KPII's breach, it lost more than seventy-one (71) parking spaces for patrons and customers of its restaurant property. KCC also noted that, in addition to this breach, KPII was responsible for the towing of restaurant patrons cars from the newly constructed parking area on Lot 1.

In its December 2013 complaint, KCC claimed that KPII violated the Easement Agreement, and it sought a permanent injunction declaring that any improvements in the lot should be removed, that the lot be restored to its condition prior to the breach, and sought a permanent injunction declaring that all of the parking areas located on the newly configured Lot 1 should be available for use by KCC's patrons and customers.

KPII responded in September 2014 denying the allegations in the complaint in full and raising several affirmative defenses.⁴ In August 2014, KPII filed a motion to dismiss, or in the alternative, for summary judgment which was denied.

In October 2014, KPII filed a counterclaim and demanded a jury trial. According to the counterclaim, when KCC purchased the Restaurant Parcel from KCI it purchased the restaurant on the Restaurant Parcel from Kaufmann's Tavern, Inc. KPII alleged that KCC did not do its due diligence in researching the purchase of the Restaurant Parcel, including the limitations of the Easement Agreement. KPII also alleged that KCC began violating the Easement Agreement by erecting unpermitted structures that removed improved parking facilities on the Restaurant Parcel and by creating unpermitted structural extensions of the restaurant that attracted more patrons and added surcharges to the dry wells serving the restaurant.⁵ KCI was involved in litigation with the Kaufmann's.⁶ KPII argued that following the Easement Agreement, it allocatedapproximately 2,840 square feet located outside the initial "overflow" parking area on Lot 1 as "comparable facilities" to offset the 2,823 square feet of the initial "overflow" parking area designated by the Easement Agreement. Despite this, KPII alleged that KCC acted in wanton disregard of the Easement Agreement by authorizing restaurant patrons to park in areas that were not marked for their use, by allowing vendors to park and unload on Lot 1, by removing fixtures placed on Lot 1, by erecting unlawful facilities on Lot 1, and by inviting to the Restaurant Parcel more patrons than could reasonably be accommodated,...