A Guy Named Moe, LLC v. Chipotle Mexican Grill of Colorado, LLC

KRAUSER, C.J. The parties to this appeal are two “foreign limited liability companies”: 1 A Guy Named Moe, LLC (“Moe’s”), appellant, and Chipotle Mexican Grill of Colorado, LLC (“Chipotle”), appellee. 2 Both companies operate a chain of restaurants, which are respectively known as “Moe’s Southwest Grill” and “Chipotle Mexican Grill.” The dispute between the parties, which underlies this appeal, began in 2012, when Chipotle 3 applied for a “special exception” for 36 Market Space in ²⁴² Annapolis, Maryland, where it intended to open one of its restaurants. That location is just a little more than 400 feet from the Moe’s Southwest Grill at 122 Dock Street, a restaurant which affords a similar fare, at similar prices. The City of Annapolis’s Department of Planning and Zoning subsequently recommended that the Board of Appeals of the City of Annapolis approve Chipotle’s application. At the proceedings before the Board that ensued, Moe’s opposed that recommendation but to no avail.

The Board unanimously approved Chipotle’s request. When Moe’s thereafter filed a petition requesting that the Circuit Court for Anne Arundel County review the Board’s decision, that court responded by dismissing Moe’s petition, reasoning that, because Moe’s, as a lessee of the Dock Street property, did not pay any taxes on that property, it lacked standing to challenge the Board’s decision. From that ruling, Moe’s noted this appeal, contending that, while it was not a “taxpayer,” under Maryland Code (2012), § 4-401 (a) of the Land Use Article (“L.U.”), it still had standing to file such an action as “a person aggrieved” by the Board’s decision under the very same statutory provision. Because we hold that Moe’s did not have standing to file such a petition, though for an entirely different reason from the one relied upon by the court below in rendering its ruling, we shall affirm.

I. Moe’s, a Virginia LLC, leases 122 Dock Street in Annapolis and has operated a restaurant at that location since 2006. On August 27, 2012, Chipotle, a competitor of Moe’s, filed an application for a special exception with the City’s Department of Planning and Zoning, so that it could open a “standard restaurant” 4 at 36 Market Space in downtown Annapolis, a ²⁴³ location just four to five hundred feet 5 from one of Moe’s restaurants. Chipotle’s application sought permission to modify the use of the Market Space property, which had been previously occupied by a coffeehouse with a bookstore. Among other things, it requested the right to increase the interior seating for customers, to “remove the bookstore component from the current restaurant license,” and to maintain its daily hours of operation from 11 a.m. to midnight.

On September 25, 2012, the City’s zoning department issued a staff report recommending approval of Chipotle’s application. After that report was transmitted to the Board of Appeals of the City of Annapolis, a public hearing was subsequently held by the Board on Chipotle’s application. Following that hearing, the Board voted to approve Chipotle’s application for a special exception and later issued a written opinion confirming and explaining its decision. Contesting that decision, Moe’s filed a petition for judicial review in the Anne Arundel County circuit court.

Although the filing fell within the 30-day period for filing such a petition under Rule 7-203(a), 6 it notably occurred several years after ²⁴⁴ Moe’s right to do business in Maryland had been forfeited, a right that was not restored until September 24, 2013, over four months after the 30-day filing period for such petitions had lapsed. That is to say, Moe’s had lost its right to do business in Maryland when it filed its otherwise timely petition for judicial review. What is more, notwithstanding the forfeiture of its right to do business in this State, Moe’s continued to do business in Maryland without pause or interruption and, in fact, was conducting business in Maryland on the very day that it invoked the assistance of the Maryland judiciary by filing the petition at issue. Chipotle responded to that petition by filing a motion to dismiss in the circuit court, contending that, because Moe’s had been stripped of its right to do business in Maryland and nonetheless continued to do business in this State, it lacked standing to seek judicial review.

Nor could it file such a petition, Chipotle added, as either a “person[ 7 ] aggrieved by the decision or action” of the Board, under L.U. § 4—401(a)(1), or as a “taxpayer,” under L.U. § 4-401(a)(2), as it was neither. On December 4, 2013, the circuit court granted Chipotle’s motion to dismiss “with prejudice,” stating that Moe’s “does not have standing” because it “is not a taxpayer within the meaning of the statute and therefore on that basis alone the Court must grant the motion.” The court went on to state that, because it was granting Chipotle’s motion to dismiss on Moe’s lack of taxpayer status, it did not “have to get into” other issues, though it appeared to do precisely that when it ²⁴⁵ expressed the belief, in ruling on that motion, that Moe’s opposition to Chipotle’s request for a special exception was “a matter of competition,” which, if true, would have denied Moe’s “aggrieved” party status.

II

The parties agree, and correctly so, that Moe’s was not “a taxpayer” under L.U. § 4—401(a)(2). To achieve that status, a petitioner must be a “person” or “entity” that “pays real property taxes to the local jurisdiction whose zoning action is being challenged on appeal,” Superior Outdoor Signs, Inc. v. Eller Media Co., 150 Md.App. 479, 507 , 822 A.2d 478 (2003), 8 which Moe’s does not. Moe’s contends, however, that not only did the circuit court err in dismissing its petition on those grounds, but it also erred in failing to consider whether it, Moe’s, qualified to file the petition in question, on alternative statutory grounds, namely, as a “person aggrieved” by the Board’s decision under L.U. § 4-401(a). That provision provides that, in addition to a “taxpayer,” a “person,” under L.U. § l-101(k), “may file a request for judicial review of a decision of a board of appeals ... by the circuit court” when that “person” is “a person aggrieved by the decision or action.” 9 Moe’s therefore urges this Court to remand this case to the circuit court so that it may address that issue. ²⁴⁶ But, here, Moe’s is getting a little ahead of itself because the threshold issue of this appeal is not whether Moe’s was a “taxpayer” or “a person aggrieved,” or neither one at all, but whether the petition at issue was void ab initio, given that, at the time that it was filed, Moe’s had lost its right to do business in Maryland and was nonetheless continuing to do business in Maryland.

Although the circuit court chose not to address and resolve this pivotal issue, we may do so, as this Court may “affirm a circuit court’s judgment on any ground adequately shown by the record, even one upon which the circuit court has not relied or one that the parties have not raised.” Puppolo v. Adventist Healthcare, Inc., 215 Md.App. 517, 530 , 81 A.3d 620 (2013) (quoting Barnes v. Greater Baltimore Med. Ctr., Inc., 210 Md.App. 457, 471 , 63 A.3d 620 (2013)).

III

Although it acknowledged that it did file its petition for judicial review after its right to do business in Maryland had been forfeited and while it was nonetheless continuing to conduct business in this State, Moe’s asserts that it could nonetheless legally maintain a suit because it did file its petition for judicial review within the 30 days of the Board’s decision as required by Rule 7-203(a) and because that petition was revived when, several years later, its right to do business in Maryland was restored. It then asserts, “by the plain language of the statute [Md.Code (1975, 2014 Repl.Vol.), § 4A-1007(a) of the Corporations and Associations Article (“C.A.”) ], the failure of a foreign limited liability company to be licensed and registered to do business in Maryland will at most make the foreign company’s suit subject to dismissal” and that dismissal should only occur “if it fails, as specified by the statute, to cure the infirmity and pay any penalty.” While a foreign LLC may have standing as a “taxpayer” or a “person aggrieved” under L.U. § 4-401(a) to petition the circuit court for judicial review, it loses that standing if it continues to do business in Maryland after its right to do ²⁴⁷ business here has been forfeited. We reach that conclusion based upon the plain language of C.A. § 4A-1002(a), C.A. § 4A-1013, and C.A. § 4A-1007(a). C.A. § 4A-1002(a) states that “[bjefore doing any interstate, intrastate, or foreign business in this State, a foreign limited liability company shall register with the [State Department of Assessment and Taxation (“SDAT”) ].” C.A. § 4A-1013 then warns that the SDAT may “forfeit the right of any foreign limited liability company to do business in this State” if that company “fails to file any report” with the SDAT or “fails to pay any late fee” within the statutorily prescribed period for doing so.

And, then, of particular significance to the issue before us, C.A. § 4A-1007(a) provides that, “[i]f a foreign limited liability company is doing or has done any intrastate, interstate, or foreign business in this State without complying with the requirements of this subtitle, the foreign limited liability company ... may not maintain suit in any court of this State,” unless it “shows to the satisfaction of the court” that it has satisfied certain obligations or that it is no longer doing business in Maryland. (Emphasis added.) A petition for judicial review of an administrative decision filed in the circuit court is a “suit,” as it is an “original action.” Kim v. Comptroller of the Treasury, 350 Md. 527, 534 , 714 A.2d 176 (1998); see also Black’s Law Dictionary 1663 (10th ed. 2014) (defining “suit” as “[a]ny proceeding by a party or parties against another in a court of law”). Moe’s had its right to do business forfeited by the SDAT on November 16, 2006. 10 That forfeiture occurred, as Moe’s counsel explained to the circuit court, because Moe’s “hadn’t filed the proper registration and the fees and what have you,” in violation of C.A. § 4A-1002 and 4A-1013, 11 until that right was reinstated nearly seven years later, on September 24, ²⁴⁸ 2013. 12 Moe’s nonetheless continued to do business in Maryland—that is, to operate its restaurant—during the period of forfeiture. And, during that period, it not only opposed Chipotle’s special-exception application before the Board but then filed the petition at issue, in the circuit court, contesting the Board’s decision to grant Moe’s a special exception.

Specifically, C.A. § 4A-1007(a) provides that a foreign LLC, which is doing or has done business in Maryland in violation of the subtitle governing foreign LLCs, may not “maintain suit” in any Maryland court unless: (1) The foreign limited liability company or the person claiming under it has paid the penalty [for doing business in Maryland without registering]; and (2) (i) The foreign limited liability company or a successor to it has complied with the requirements of this subtitle; or (ii) The foreign limited liability company and any foreign limited liability company successor to it are no longer doing intrastate, interstate, or foreign business in this State. Moe’s is correct that the plain language of the statute allows a foreign LLC to “cure the infirmity” of forfeiture so that it may “maintain suit,” as the statute provides that a foreign LLC could pay the required penalty and either show the court that it has complied with the subtitle governing foreign LLCs or that it had stopped doing business in Maryland. But Moe’s is not correct that, once a foreign LLC has satisfied the court of its right to maintain suit, it may then rely on a petition it had filed with the court when it had no such right to do so, if that petition for judicial review was filed within the required ²⁴⁹ 30-day time limit. Indeed, Moe’s cites no authority for that proposition, and neither the plain language of C.A. § 4A-1007(a) nor its legislative history support such a conjecture.

Although there are no Maryland appellate decisions that address the issue of a foreign LLC’s standing to bring or maintain a legal action under the circumstances presented by this case, a relatively recent Maryland appellate decision, Price v. Upper Chesapeake Health Ventures, 192 Md.App. 695 , 995 A.2d 1054 (2010), has addressed this issue in the context of a domestic LLC. There, this Court held that a domestic LLC may not file or maintain a lawsuit after its right to do business has been forfeited. Id. at 708-09 , 995 A.2d 1054 . In Price , members of a domestic LLC filed a derivative suit against members of the LLC’s management committee, who had decided to sell substantially all of its assets, as well as against those members of the LLC who had ratified that sale.

But the suit was brought nearly a year after the domestic LLC’s right to do business had been forfeited. While noting that C.A. § 4A-920 does provide that “[t]he forfeiture of the right to do business in Maryland and the right to the use of the name of the limited liability company does not ... prevent the limited liability company from defending any action, suit, or proceeding in a court of this State,” (emphasis added), we stressed that “[t]he negative implication of such language, and the sweep of the ‘doing business’ and name ‘using’ prohibition is that the company may not file or maintain a lawsuit after its rights have been forfeited.” Id. at 708, 995 A.2d 1054 (footnote omitted) (emphasis in original). That reasoning and, more specifically, that “negative implication” is applicable to foreign LLCs, like Moe’s, as well. Like C.A. § 4A-920, the statute governing domestic LLCs, C.A. § 4A-1007(b), the statute governing foreign LLCs, provides: “The failure of a foreign limited liability company to register in this State does not impair the validity of a contract or act of the foreign limited liability company or prevent the foreign limited liability company from defending any action, ²⁵⁰ suit, or proceeding in a court of this State.” (Emphasis added.) Then, significantly, the foreign LLC subtitle goes one step further and includes a statutory provision, C.A. § 4A-1007(a), that expressly bars a foreign LLC from maintaining suit when it is doing business in Maryland without a right to do so.

Thus the reasoning in Price clearly applies to the instant case: If a domestic LLC cannot, by “negative implication,” file or maintain suit, then surely a foreign LLC containing an express bar to such legal action cannot file or maintain suit, or its legal equivalent, a petition for judicial review. Further support for this proposition is to be