Fagan v. Howard County

RODOWSKY, Judge. In Reyes v. Prince George’s County, 281 Md. 279, 301 , 380 A.2d 12, 24 (1977), we “delineated the circumstances under which the adjudication of collusive suits arising [thereafter may be appropriate.... ” This case presents circumstances under which the termination of a collusive suit without adjudication is appropriate. The Columbia Park and Recreation Association, Inc. (CPRA) is a Maryland, nonprofit, membership corporation. CPRA operates community and recreational facilities, provides community programs and services, and maintains parkland and open space in Columbia, Howard County.

Columbia is a planned community which is not a municipal corporation. A major source of revenue for CPRA is a charge assessed annually (the Annual Charge) against all property which is subject to a certain Deed, Agreement, and Declaration of Covenants, Easements, Charges and Liens, dated December 13, 1966 (the Declaration). The Annual Charge under the Declaration may not exceed $.75 per $100 of “Assessed Valuation.” As defined in the Declaration, “Assessed Valuation” is related to the valuation of real estate in each year for purposes of Howard County and State of Maryland ordinary taxes. Chapter 175 of the Acts of 1978 and Ch. 314 of the Acts of 1979 made modifications for tax purposes in the ratio of real estate assessments to market value.

Both acts, however, contained sections (the Savings Provisions) on which CPRA relies for its legal position that the Annual Charge may continue to be calcu ²⁵³ lated on the same ratio of assessment to market value as prevailed for tax purposes prior to the 1978 and 1979 enactments. In order to obtain a judicial determination of the validity of the Savings Provisions, CPRA caused a test suit, prior to the suit sub judice, to be brought against it by the owners of a property subject to the Declaration. The Circuit Court for Howard County in that case adjudicated the Savings Provisions to be unconstitutional. This Court granted certiorari following CPRA’s appeal, and we held that the circuit court should have dismissed the action.

Under the rules relating to collusive actions as laid down in Reyes , CPRA’s suit did not have “ ‘as a proper party a governmental body, or an agency or official thereof.... ’ ” Columbia Park & Recreation Association, Inc. v. Olander, 287 Md. 1, 8 , 410 A.2d 592, 596 (1980) (emphasis in original). Thereafter the County Council of Howard County enacted Bill No. 75 authorizing the issuance of industrial development revenue bonds, the proceeds of which were to be used for certain CPRA projects. The revenue source for these bonds was, in essence, money derived from Annual Charges under the Declaration. CPRA then caused the instant test suit to be instituted in accordance with the procedures set forth in Reyes .

By letter to the administrative judge of the Circuit Court for Howard County, CPRA explained that it sought an adjudication of the Savings Provisions and that Martin H. and Barbara Fagan, owners of property subject to the Declaration, had agreed to serve as plaintiffs. The circuit court entered an order appointing as counsel for the position adverse to that of CPRA the same attorney who had represented that adverse position in the aborted Olander litigation. The court further ordered that counsel’s “fee for his services and the costs incurred in his representation of the [Fagans are] to be paid by [CPRA] as approved and directed by this Court.” In the suit filed by appointed counsel CPRA, Howard County, the Attorney General of ²⁵⁴ Maryland, and Gene Burner, the Director of the State Department of Assessments and Taxation, were joined as defendants. By June 22, 1982, all defendants had answered the suit.

There were no further proceedings of consequence until March 2, 1984, when Howard County moved to dismiss as to it. The motion recited that the county had been advised by its bond counsel that, due to amendments to the Internal Revenue Code, interest on the bonds authorized by Bill No. 75 would not be exempt from federal income taxation. The motion represented that the financing for the CPRA projects had changed and that revenue bonds would not be issued by Howard County. CPRA then moved to dismiss.

It argued that, absent Howard County as a party, the case was controlled by Olander . Appointed counsel argued that the