Anne Arundel County v. Lichtenberg

Finan, J., delivered the opinion of the Court. This appeal is the second round in the controversy between Anne Arundel County and a real estate developer and his bonding companies over liability under a performance bond. The opinion in the first appeal is reported in Lichtenberg v. Anne Arundel County, 258 Md. 204 , 265 A. 2d 222 (1970). On October 22, 1968, Anne Arundel County (County) filed its original actions on two performance bonds of Mr. and Mrs. Jerome M. Lichtenberg (Lichtenberg), the developers of Michaelton Manor, for recovery of liquidated damages stipulated in subdivision agreements entered into between the County and Lichtenberg.

The fil ⁴⁰⁰ ing of the actions was accompanied with motions for summary judgment and supporting affidavits. Security Insurance Company of Hartford appears as the surety in one of the bonds while Fidelity and Deposit Company of Maryland is the surety in the other. These bonds were a prerequisite to the sale of subdivision lots under County law and called for specified payments of liquidated damages in the event that Lichtenberg failed to faithfully perform the obligations of . the subdivision agreements between him and the County. Such a bond was also required as a condition precedent to approval of building permits to be issued for construction on property shown on a proposed subdivision plat submitted to the County by Lichtenberg.

The County’s affidavits filed in support of its motions for summary judgment in each case averred that Lichtenberg had failed to complete by the dates specified in the agreements, or any other date, a substantial part of the improvements required to provide public access and storm drainage in the subdivision as approved, which improvements the health and welfare of county residents urgently required. Lichtenberg and Security responded with general issue pleas and affidavits (in opposition to the motions for summary judgment) which alleged justification for nonperformance. The issue thus joined, the matter was consolidated for trial and finally heard on the merits without a jury on July 15, 1969, at which time the court ruled from the bench in favor of the County, but allowed Lichtenberg’s counsel to submit memoranda on the question of whether he was entitled to compensation for work allegedly done in the subdivision. On August 13, 1969, after submission of the proposed memoranda, the court entered judgments in favor of the County for the full value of the liquidated damages stated in the bonds. 1 Subsequently, the cases were consolidated ⁴⁰¹ for the purpose of the appeal which was taken by Lichtenberg and his sureties.

On appeal, this Court (Lichtenberg v. Anne Arundel County, supra) neither affirmed nor reversed, but remanded with the following directive: “We shall remand the case * * * for further proceedings during the course of which the Lichtenbergs and their sureties will be accorded an opportunity to establish by competent testimony the manner in which the roads were conveyed to and accepted by the County. It will then be possible for the Court to determine what effect, if any, such an acceptance may have had on the County’s right to recover on the bonds.” 258 Md. at 210 . On remand the matter was set down for trial in the Circuit Court for Anne Arundel County, however, Lichtenberg filed a suggestion for removal and the case was transferred to the Circuit Court for Howard County for trial. On receipt of the notice of the suggestion and order, the County filed a motion to vacate the order of removal which motion was, in our opinion, erroneously denied.

The County properly noted an exception. While the matter stood pending trial in Howard County, the County filed on July 29, 1970, a motion for a bill of particulars requesting Lichtenberg to “state specifically what acts or instruments executed by the County constitute the basis of the ‘acceptance’ of the work called for in the subdivision agreements dated July 21, 1965, and July 31, 1967, between Jerome M. Lichtenberg, et ux, and Anne Arundel County as alleged in * * * argument to The Court of Appeals of Maryland.” No answer was filed to this motion until September 4, 1970, at which time Lichtenberg merely set forth grounds of exception to the motion for bill of particulars. Simultaneously, the County moved for judgment by default by reason of the failure of Lichtenberg to respond to the motion for the bill of particulars. No ruling was made ⁴⁰² on the motion until the trial of the case on the merits, at which time it was denied.

The matter was heard on the merits before the Circuit Court for Howard County, Mayfield, J. presiding, on September 25, 1970. The lower court construed the subdivision agreements in the following light: “The provisions of the agreements relating to default by the developer gave to the County (1) the right to refuse to take over and/or maintain the roads until completed, or (2) the right to enter into and upon said roads and construct said roads, the liability of the developer and the sureties to remain in effect. The agreements further provided that to enable the County to carry out those proceedings, should it so elect, the developer deliver to the County a fee simple deed for said roads which deed the County may accept at any time it may deem desirable. Obviously, the County elected to accept the deeds at the time they were recorded, namely, December 12, 1968.

It is the view of this Court that the recording of the deeds was unnecessary for the purpose of permitting the County ‘to enter into and upon said roads and to construct said roads’. While the testimony is somewhat in conflict as to the state of completion of the roads in July 1970, the testimony of Mr. Lichtenberg to the effect that the County had been using the roads stands undisputed and unrebutted, and while the testimony is undisputed that there had been no formal written acceptance of the roads by the County, this Court is led to the conclusion that such formality was waived by the recording of the deeds. * * * This Court finds, therefore, as a matter of fact, based upon the testimony and evidence before it, that the recording of the deeds by the ⁴⁰³ County, having been unnecessary to enable the County to exercise the option available to it, and not having been induced by any act of Lichtenberg, constituted a valid conveyance to and acceptance by the County of the lands described in said deeds and the roads theretofore constructed thereon.” The County, in argument on appeal has viewed the theory on which the lower court decided the case as one of estoppel against the County, however, we do not think that it goes that far. Before discussing the lower court’s opinion in further detail, more must be stated regarding the recording of the deeds to the roadways and easement areas in the subdivision in December of 1968. The fact of the acceptance and recording of the deeds had surfaced during argument before this Court in the first appeal and was not contained in the pleadings of record although the County and counsel for Lichtenberg both admitted this to be true.

On remand, evidence was adduced first by Lichtenberg and then by the County, on the issue of the defense of acceptance by deed. The deeds from Lichtenberg to the County were dated respectively July 21, 1965 and July 31, 1967, and were both recorded among the Land Records of Anne Arundel County on December 12, 1968, some six months prior to the trial on the original suits. The County vigorously contends that the recording of the deeds from the developer did not constitute an approval or acceptance of his road construction in the subdivision. It argues that it had the prerogative to file the deeds in order to facilitate road construction or drainage construction which it sought to pursue in that portion of the subdivision which had become inhabited, and that the recording of the deeds did not in any way constitute a waiver of the conventional inspection and acceptance procedure followed by it with regard to public improvements.

As the case again returns to this Court, the primary ⁴⁰⁴ issue for review is the ruling by the lower court that the recording of the deeds to the roadways and easements in December of 1968 constituted a waiver by the County of any formal acceptance and approval of the road improvements and that the County was by this action precluded from any further remedy against Lichtenberg and his sureties for nonperformance of the subdivision agreements. The lower court admitted that the testimony was in conflict as to the state of completion of the roads as late as July of 1970. Mr. Lohrman, County Public Works Supervisor, and Mr. Cook, County Inspector of Subdivisions, both testified that at the time of the recording of the deeds in December 1968 the road construction was only 50% completed. There was testimony offered by Lichtenberg which, while not directly contradicting the County’s testimony, was to the effect that the County inspectors were satisfied with the way work was progressing in March of 1970.

(Suits were originally filed by the County in October of 1968.) A Mr. Latham, a registered surveyor working in the County for some 16 years, testified that he knew of no requirement by the County that the acceptance of roads by the County had to be in writing. The County countered this testimony with that of Mr. Warner, the Chief of the County’s Inspection Division, who testified that the acceptance of roads had always been in writing. The final acceptance procedure as set forth in the specifications attached to the agreements entered into between the County and Lichtenberg incorporated the procedure