Halle Development, Inc. v. Anne Arundel County

CATHELL, Judge. This case concerns waiver agreements entered into between Halle Development, Inc., Halle Enterprises, Inc., and Arundel Homes, Inc. (petitioners) 1 and Anne Arundel County (respondent) on four occasions between 1989 and 1999. Respondent entered into agreements with petitioners to waive the application of the school capacity requirements of respondent’s Adequacy of Public Facilities Ordinance in respect to petitioners’ proposed subdivisions in exchange for the payment of money to respondent and, in one instance, the conveyance of land to respondent by petitioners. On September 5, 2000, petitioners brought suit against respondent in the Circuit Court for Anne Arundel County for class action relief seeking a refund of the ³¹⁴ monies paid and a return of the land conveyed 2 based upon the allegedly unlawful procedure used by respondent of contracting with petitioners for waivers regarding the Adequacy of Public Facilities Ordinance.

On February 16, 2001, the Circuit Court issued a written decision and granted summary judgment for respondents. 3 On March 1, 2001, petitioners filed their Notice of Appeal to the Court of Special Appeals. On December 4, 2001, the intermediate appellate court affirmed, on other grounds, the decision of the trial court in a reported opinion Halle Development, Inc., et al. v. Anne Arundel County, Maryland, 141 Md.App. 542 , 786 A.2d 48 (2001). On December 18, 2001, petitioners filed a Petition for Writ of Certiorari to this Court. On January 18, 2002, respondent filed its Opposition to Petition for Writ of Certiorari and Conditional Cross-Petition for Writ of Certiorari.» On March 6, 2002, we granted both petitions.

Halle v. Anne Arundel County, 368 Md. 239 , 792 A.2d 1177 (2002). Petitioners have presented two questions for our review: 4 “1. When a chartered County government, without the consent of the legislature, admits to ‘... developing] a “School Fee Agreement” ’ as a predicate to granting a waiver of Adequacy of Facilities Ordinance, has that County rated or levied an aid, charge, tax, burthen or fee under ³¹⁵ ‘pretense of contract in violation of Article 14 of the Maryland Declaration of Rights?’ “2. Did the Court of Special Appeals engage in judicial legislation when it found that the County has the power under Article 26, § 2-411(b)(l)[Anne Arundel County Code] to grant a waiver for financial considerations, holding that this section’s prohibition in granting a waiver for financial considerations ‘... refers to the developers basis for claiming a waiver and does not refer to [the County’s] ability to negotiate a waiver in exchange for compensation?’ ” [Alteration added.] Respondent has presented two questions for our review in its Conditional Cross-Petition for Writ of Certiorari: 5 “1.

Did the Court of Special Appeals err when it declined to address the issues raised in AACO’s Cross-Appeal? A. Did Plaintiffs [petitioners] fail to comply with the notice requirements of the Local Government Tort Claims Act? B. Did Plaintiffs fail to exhaust their administrative remedies? C. Did Plaintiffs’ claim pursuant to 42 U.S.C. § 1983 fail to state a claim upon which relief can be granted?

D. Were Plaintiffs’ claims barred by laches? “2. Was it necessary for the Court of Special Appeals to reach the merits of Plaintiffs’ claims, which included constitutional claims, when it could have decided the case based upon the issues of limitations and res judicata? ” [Alteration added.] We shall not reach these issues or address any of the questions presented in the Certiorari Petitions or in the briefs. The trial court should have dismissed this case and not ³¹⁶ decided the merits of any of the claims presented by the parties because petitioners have failed to set out a proper cause of action. We hold that under the “voluntary payment rule” 6 petitioners cannot, at this point in time, dispute the school waiver agreements at issue in the case sub judice and seek relief in the Courts. 7 I. Facts a.

Anne Arundel County Code Provisions In 1967, the Anne Arundel County Council adopted the Anne Arundel County Adequacy of Public Facilities Ordinance, codified in the Anne Arundel County Code (AACC), Article 26, sections 2-409 through 2-420. 8 The purpose of the ordinance was to protect the citizens of the County and the environment from proposed residential subdivision developments that failed to demonstrate adequate fire suppression facilities, roads, schools, water supply systems, sewerage systems and storm drainage systems. Article 26 is entitled “SUBDIVISIONS”; Title 2 is entitled “Plat Submission and Approval Procedures”; Subtitle 4 is entitled “Final Plan Review”; and Part 2 is entitled “Adequacy of Facilities.” Article 26, section 2-413 states that a final subdivision plat cannot be approved until the ordinance’s requirements have been satisfied. Article 26, section 2 — 416(b) provides that, ‘Within two years following approval of a final subdivision plat, elementary and secondary schools in the service area of the proposed subdivi ³¹⁷ sion shall be adequate to accommodate the school population projected to be generated from the proposed subdivision.” Thus, if the existing schools will not be adequate within two years of the approval of the final subdivision plat, the process of subdivision may not move forward; however, Article 26, section 2-411 permits a waiver of any of the requirements of the Adequacy of Public Facilities Ordinance, including the adequacy of schools requirement. Specifically, Article 26, section 2-411(b) reads: “On request by a subdivider, the Planning and Zoning Officer may waive the application of one or more of the requirements of Part 2 of this subtitle to a proposed subdivision, if the Planning and Zoning Officer finds that: (1) the application of the requirement to the proposed subdivision would result in peculiar and exceptional practical difficulty to or exceptional and demonstrable undue hardship on the subdivider, other than financial considerations; (2) the physical features and other characteristics of the proposed subdivision are such that the waiver may be granted without impairing the intent and purpose of the requirement for which the waiver has been requested, the other provision of this article, the Zoning Article, and the General Development Plan; (3) the grant of the waiver will not endanger or present a threat to the public health, safety, or welfare; and (4) the waiver is the minimum relief available and necessary to relieve the difficulty or hardship to the subdivider.” With regard to such a request by a subdivider, Article 26, section 2-411(c) provides that “The Planning and Zoning Officer may impose such conditions on the grant of the waiver as are reasonably necessary to further the intent of the requirement for which the waiver was requested and to ensure the protection of the public health, safety, and welfare.” Apparently, respondent, based upon this last provision, concluded that it had the authority to require the payment of ³¹⁸ additional fees above and beyond State authorized development impact fees 9 as a “condition” for the granting of waivers.

While we note that impact fees are the method that the Legislature has devised that authorizes local governments to recoup the costs of developmental impact and that the Legislature has not expressly authorized the additional imposition of waiver fees, that also address developmental impacts under the guise of contractual agreements, we shall not directly address the challenged legality of this Anne Arundel County practice in this case, in that, because of the “voluntary payment rule,” petitioners cannot maintain this cause of action. b. The School Waiver Agreements In the case sub judice, respondent and petitioners entered into written agreements whereby respondent agreed to issue a waiver of the school capacity requirements of the Adequacy of Public Facilities Ordinance in return for petitioners agreeing to convey land or contribute funds to help alleviate the alleged school capacity problems caused by their residential developments. 10 The four “School Waiver Agreements” at issue and discussed hereafter were executed between 1989 and 1999. Without these agreements, petitioners would not have been able to move forward with the recordation of their subdivisions because respondent would not have waived the requirements of Article 26. 11 The first of the school waiver agreements was effectuated in 1989 in connection with petitioners’ proposed subdivision known as Seven Oaks. Respondent advised petitioners that existing school facilities were not adequate and that a school ³¹⁹ waiver fee agreement would be necessary in order to gain approval of petitioners’ proposed subdivision.

An agreement, entitled “Seven Oaks School Agreement,” dated March 22, 1989, was entered into between petitioners and respondent. Pursuant to the terms of this agreement, petitioners agreed to pay $4,700,000, in installments, to respondent. Then in February of 1995, petitioners and respondent entered into a second agreement called the “Old Mill High School Agreement.” Pursuant to the terms of this agreement, petitioners agreed to pay respondent $124,000 in exchange for a waiver of the Adequacy of Public Facilities Ordinance’s requirements with respect to adequate school facilities, which were, allegedly, lacking for the Cantor Farms Subdivision. Thereafter on March 30, 1995, in connection with a proposed development in the Crofton area, Crofton Farms Development Corp., Severn Valley Farms, Inc., Halle Enterprises, and the Richard’s Group of Washington entered into the “Crofton Farms School Agreement,” whereby Halle Enterprises agreed to convey a sizeable parcel of land to respondent in exchange for a waiver of the Adequacy of Public Facilities Ordinance’s school requirements.

The final school waiver agreement at issue in the case at bar was entered into on August 24, 1999, in respect to the proposed subdivision of Walnut View, whereby Arundel Homes and respondent entered into the “Cape St. Clair Elementary School Agreement.” Pursuant to this agreement, Arundel Homes paid $34,200 to respondent in exchange for a waiver of the Adequacy of Public Facilities Ordinance’s requirements. 12 Petitioners alleged that they had no knowledge that respondents did not have the ability to grant waivers to the ordinance regarding adequacy of school facilities in exchange for ³²⁰ financial considerations prior to February 11, 2000, when petitioners alleged that they read an article that appeared in The Baltimore Sun newspaper. This article discussed this practice and, according to petitioners, quoted a county legal representative as stating that the county ordinance [Adequacy of Public Facilities Ordinance] specifically forbids the granting of waivers for financial considerations. It was not until after they had read this article that petitioners, on September 5, 2000, filed suit against respondent in the Circuit Court for Anne Arundel County. 13 Petitioners alleged, inter alia, that respondent’s collection of school waiver fees, be it the money or the property, from developers as a condition to recording their subdivisions was tantamount to an illegal excise tax without enabling statutory authority from the Maryland Legislature. On February 16, 2001, the Circuit Court issued an opinion and order which granted respondent’s motion for summary judgment and denied petitioners’ motion ³²¹ for summary judgment.

The Circuit Court found that petitioners’ claims were barred by the statute of limitations and res judicata, that petitioners’ common law tort claims were barred by failure to give notice under the Local Government Tort Claims Act, and that respondent had the authority and power to collect the money and to accept the conveyances of land called for in the waiver agreements. Petitioners appealed to the Court of Special Appeals, which declined to address the trial court’s findings on the issues of limitations, laches, or res judicata and rejected the lower court’s findings regarding respondent’s authority to impose such a “tax” but, nevertheless, held that the waiver agreements were valid contracts. The Court of Special Appeals further held that waiver authority was found in the reading of both Article 24 14 and 26 of the AACC for respondent to raise revenue for capital improvements or receive compensation in the manner of the agreements at issue in the case sub judice and that the compensation received was not a tax. 15 Petitioners then noted an appeal to this Court and respondents noted a cross-appeal. ³²² II. Discussion a.

Voluntary Payment Rule As stated supra, the voluntary payment rule 16 is applicable to the facts of the case at bar. We shall not resolve the questions presented by either party for our review. We shall vacate the Court of Special Appeals’ judgment. In the cáse sub judice, petitioners were faced with the delay of their proposed subdivisions due to the requirements of the Adequacy of Public Facilities Ordinance and voluntarily entered into the school waiver agreements to avoid a delay in construction.

Both parties benefitted from these waiver agreements and petitioners have already received at least substantial benefits from the agreements, i.e., the ability to complete their subdivisions. Under the “voluntary payment rule,” petitioners cannot, now, question the legality of these agreements or respondent’s ability to enter into such waiver agreements in an attempt to regain the fees paid to respondent. The record of this case does not reveal that respondent has relied on the “voluntary payment doctrine” as a defense in this case. Although we found the doctrine inapplicable under the circumstances of that case, in Ash Duo, et al. v. Comcast Cable of Maryland, Inc., et al.; Douglas Harvey v. Kaiser Foundation Health Plan of the Mid-Atlantic States, Inc., 370 Md. 604 , 805 A.2d 1061 (2002), Judge Eldridge, writing for this Court, discussed the voluntary payment doctrine: “They rely on the general common law rule that, when one voluntarily pays money under a mistake of law, the payor may not ordinarily bring a common law action for the recovery of the money.

He may sue for a return on the money only if the right to recover it is provided for by statute. In Maryland, this common law principle, often referred to as the 'voluntary payment doctrine,’ has most ³²³ often been applied where there is a mistaken payment of taxes or other government fees. See, e.g. Bowman v. Goad, 348 Md. 199, 202-204 , 703 A.2d 144 (1997), and cases there collected. “... the general principle, that the common law does not recognize an action to recover money voluntarily paid under mistake of law, is obviously inapplicable under circumstances where the common law specifically recognizes an action to recover excess interest which had been voluntarily paid.” Id. at 646, 805 A.2d at 1085-086 . [Citations omitted.] Therefore, the principle issue is whether petitioners’ payments were voluntarily made within the meaning of the common law rule.

We hold that the payments at issue in the case sub judice were voluntary payments on the part of petitioners and the general principle that the common law does not recognize an action to recover money voluntarily paid under a mistake of law is applicable under the circumstances here present. To further elaborate on the voluntary payment doctrine, most recently discussed in Dua, we look to case law from our state and other jurisdictions. In Bowman v. Goad, 348 Md. 199 , 703 A.2d 144 (1997) we did not reach any of the issues presented because Bowman failed to set forth a cause of action in his complaint due to the fact that there was no statutory remedy permitting Bowman’s suit and that the refund of fees he and others in his class sought was prohibited by the voluntary payment rule. In Bowman , the issue was whether certain fees, collected by sheriffs in the State, for serving process in motor vehicle prosecutions were wrongfully required by the sheriffs, to be paid by Bowman and others.

We held that the trial court should not have decided the merits of the case and that this Court was not able to reach the issues presented due to the voluntary payment rule. We held that the fact that the General Assembly had provided broad administrative refund ³²⁴ remedies covering almost every type of tax, fee or charge improperly collected by a Maryland governmental entity meant that Bowman and those in his class would have been limited to their exclusive administrative remedy for a refund. In Bowman we stated: “The controlling principles were summarized by this Court in Apostol v. Anne Arundel County, 288 Md. 667, 672-678 , 421 A.2d 582, 585 (1980), as follows: ‘It is firmly established in this State that once a taxpayer voluntarily pays a tax or other governmental charge,[ 17 ] under a mistake of law or under what he regards as an illegal imposition, no common law action lies for the recovery of the tax absent a special statutory provision sanctioning a refund.... Where there is a special statutory provision sanctioning a refund, although no particular statutory remedy is provided, an action in assumpsit is available.... [WJhere there is statutory authorization for a refund and a special statutory remedy set forth, that remedy is exclusive. * $ $ $ $ ‘Furthermore, the rule that no action lies to challenge the validity of a tax paid under a mistake of law, except for any refund sanction specifically provided by the Legislature, has been applied consistently by this Court, regardless of the nature of the legal attack mounted or the type of mistake of law claimed.’ “Moreover, for reasons of public policy, this Court will sua sponte 18 raise and apply the above-summarized principles.

See, e.g., Nordheimer v. Montgomery County, 307 Md. 85 , ³²⁵ 96, 512 A.2d 379, 385-386 (1986); Potomac Elec. v. P.G. County, 298 Md. 185, 189 , 468 A.2d 325, 327 (1983). “The general doctrine that payments of taxes or other governmental fees or charges, voluntarily made under a mistake of law, are not recoverable in a common law action, and that any statutorily proscribed refund procedure is ordinarily the exclusive remedy, has been applied by this Court in a wide variety of situations. In addition to the cases previously cited, see, e.g., Wash. Sub. San.

Com’n v. C.I. Mitchell & Best, 303 Md. 544, 572-578 , 495 A.2d 30, 44-48 (1985) (allegedly unauthorized water and sewer connection charges, paid by developers could not be recovered in a declaratory judgment or common law action, because the charges were ‘voluntarily paid’ even