Maryland Agricultural Land Preservation Foundation v. Claggett

ADKINS, J. In this appeal, we construe the terms of an agricultural easement conveyed by respondent Herschell Claggett, Sr. to petitioner Maryland Agricultural Land Preservation Foundation (“Foundation”) over his 208.39-acre Kent County proper ⁴⁹ ty (“Claggett Property”) for the sum of $262,190.50. 1 At issue is whether the Foundation must grant a release from that easement for a two-acre lot which allows Claggett to not only construct a dwelling house thereon, but also to sell that lot to a third-party free of the agricultural easement. We shall hold that the Deed of Easement and Preliminary Release only allow for the release of acreage to construct a dwelling house for the use of the landowner or landowner’s child and that they do not permit a transfer to a third-party free of that restriction. FACTS AND LEGAL PROCEEDINGS The Foundation, Its Governing Statute, And Provisions In Effect At Deed Execution As the Court of Special Appeals explained: The Foundation is empowered “[t]o acquire ... easements ... to restrict the use of agricultural land ... to maintain the character of the land as agricultural land.... ” Md.Code (2007 Repl.Vol., 2008 Supp.), § 2-504 of the Agriculture Article (“Agrie.”). [Footnote omitted.] See also Agrie. § 2-502 (establishing the Foundation). The terms of such easements are dictated by the Agriculture Article, and require the grantors to covenant, “for so long as profitable farming is feasible” on the burdened land, Agrie. § 2-514(a), that the land will not be used “for any commercial, industrial, or residential purpose.” Agrie. § 2-513(b).

Claggett v. Md. Agric. Land Pres. Found., 182 Md.App. 346, 352-53 , 957 A.2d 1083, 1086 (2008). The General Assembly created the Foundation to acquire easements by purchase and other means “to restrict the use of agricultural land and woodland as may be designated to maintain the character of the land as agricultural land or ⁵⁰ woodland[.]” Md.Code (1974, 1999 RepLVol.), § 2-504(3) of the Agriculture Article (AG-1999). 2 In preserving agricultural land and woodland, the legislature’s intent was to: provide sources of agricultural products within the State for the citizens of the State; control the urban expansion which is consuming the agricultural land and woodland of the State; curb the spread of urban blight and deterioration; and protect agricultural land and woodland as open-space land.

AG-1999 § 2-501. 3 The legislature also provided for provisions to be included in those easements, expressed in AG-1999 Section 2-513. Under AG-1999 Section 2-513(b)(l), a landowner “whose land is subject to an easement, may not use the land for any commercial, industrial, or residential purpose.” AG-1999 Section 2—513(b)(2) allows a landowner to obtain a release for the construction of a dwelling house: Except as provided in paragraph (5) of this subsection, on written application, the Foundation shall release free of easement restrictions only for the landowner who originally sold an easement, 1 acre or less for the purpose of constructing a dwelling house for the use only of that landowner or child of the landowner subject to the following conditions: (iii) The landowner shall pay the State for any acre or portion released at the price per acre that the State paid the owner for the easement. ⁵¹ (iv) Before any conveyance or release, the landowner and the child, if there is a conveyance to a child, shall agree not to subdivide further for residential purposes any acreage allowed to be released. The agreement shall be recorded among the land records where the land is located and shall bind all future owners. (v) After certifying that the landowner or child of the landowner has met the conditions provided in subparagraphs (i) through (iv) of this paragraph, the Foundation shall issue a preliminary release which shall: 1.

Become final when the Foundation receives and certifies a non-transferrable building permit in the name of the landowner or child of the landowner for construction of a dwelling house; or 2. Become void upon the death of the person for whose benefit the release was intended if the Foundation has not yet received a building permit as provided in this subparagraph. (vi) Any release or preliminary release issued under this paragraph shall include a statement of the conditions under which it was issued, a certification by the Foundation that all necessary conditions for release or preliminary release have been met, and copies of any pertinent documents. (vii) Any release, preliminary release, building permit, or other document issued or submitted in accordance with this paragraph shall be recorded among the land records where the land is located and shall bind all future owners.

(viii) The Foundation may not restrict the ability of a landowner who originally sold an easement to acquire a release under this paragraph beyond the requirements provided in this section. (Emphasis added.) Finally, under AG-1999 Section 2-513(b)(5)(i), the Foundation may grant a modified release of up to two acres for a dwelling house if regulations adopted by the Department of the Environment or the jurisdiction in which the land is situated require a minimum lot size of at least two acres. ⁵² The Deed Of Easement On February 1, 2000, Claggett conveyed an agricultural preservation easement to the Foundation “in consideration of the sum of ... $262,190.50[.]” The Easement contains the following general covenant, stating the intention of the parties: [T]he Grantor covenants for and on behalf of Grantor, the personal representatives, successors and assigns of the Grantor, with the Grantee, its successors and assigns, to do and refrain from doing upon the ... land all and any of the various acts set forth, it being the intention of the parties that the said land shall be preserved solely for agricultural use in accordance with the provisions of the Agricultural Article, Title 2, Subtitle 5, Annotated Code of Maryland, and that the covenants, conditions, limitations and restrictions hereinafter set forth, are intended to limit the use of the above described land and are to be deemed and construed as real covenants running with the land. The Easement then specifies particular “COVENANTS, CONDITIONS, LIMITATIONS AND RESTRICTIONS[J ” which reflect the provisions contained in AG-1999 Section 2-513(b): A. Subject to the reservations hereinafter contained, the Grantor for the Grantor, the heirs, personal representatives, successors and assigns of the Grantor, covenants and agrees as follows: (1) (a) Except as otherwise provided in this instrument, the [Claggett Property] may not be used for any commercial, industrial, or residential purpose. (b) As a personal covenant only and one that is not intended to run with the land, the Grantee, on written application from the Grantor, shall release free of easement restrictions only for the Grantor who originally sold this easement, 1 acre or less for the purpose of constructing a dwelling house for the use only of that Grantor or the Grantor’s child subject to the following conditions: (i) The total number of lots allowed to be released under this paragraph may not exceed 10 lots of 1 acre or less at ⁵³ a maximum of not more than 1 lot for each 20 acres or portion thereof; (iii) Before any conveyance or release, the Grantor and the child, if there is a conveyance to a child, shall agree not to subdivide further any acreage allowed to be released; the agreement shall be recorded among the land records where the land is located and shall bind all future owners[.] (Emphasis added).

Subsection (A)(1)(c) of the Easement provides what must be included in an “Application for Lot Exclusion” before a lot may be released “for the construction of a dwelling house[.]” Among other requirements, an application must contain “a declaration that the lot and dwelling house are only for the use of the landowner or the landowner’s child, whichever is the case[.]” Subsection (A)(1)(d) copies the AG-1999 Section 2-513(b)(2)(v) two-step procedure by which the Foundation shall issue a release: After certifying that the landowner or child of the landowner has met the conditions provided in subsections (a) and (b) of this section, the Foundation shall issue a Preliminary Release which shall: (i) Become final when the Foundation receives and certifies a non-transferrable building permit in the name of the landowner (or child of the landowner if the proposed lot is intended for the landowner’s child’s use) for the construction of a dwelling house; or (ii) Become void upon the death of the person for whose benefit the release was intended if the Foundation has not yet received a building permit as provided in this regulation. The Easement provides further that “[t]he right reserved to the Grantor under paragraph (l)(b) belongs only to the Grant- or who originally sold this easement and may be exercised only by the Grantor named in the instrument.” ⁵⁴ Section B in the Easement contains additional covenants. Among these is Subsection (7), which states: “If the Grantor has any doubts concerning the easement, covenants conditions, limitations or restrictions herein contained with respect to any particular use of the said land, the Grantor may submit a written request to the Grantee for consideration and approval of such use.” The Preliminary Release Claggett requested a release “to exclude a 2.00 acre owner’s lot from [his] 208.39 acre easement property for the construction of a dwelling intended for [his] use” (hereinafter “Owner’s Lot”), which the Foundation approved on June 28, 2001. The Foundation indicated in a letter that “[t]his lot exclusion was approved as presented in accordance with the provisions of [his] Deed of Easement and in accordance with [the] Agricultural Article ... which grants an allowance of a maximum lot size of up to 2.00 acres if required by regulations adopted by the Department of the Environment or the county.” The letter informed Claggett that any lot released would be done so pursuant to the “two-stage release process” articulated in AG-1999 Section 2-513 and that a Preliminary Release and Agreement would be recorded in the land records outlining conditions of the release.

The Foundation’s letter further stated that upon compliance with all of the terms and conditions of the Preliminary Release and Agreement, a “second (final) Release and Agreement [would] also be recorded upon request releasing the lot of all easement restrictions once a non-transferrable building permit [was] presented to the Foundation in [Claggett’s] name.” Finally, the letter indicated that “[b]efore a preliminary release [could] be prepared, [Claggett must provide] the following: 1. Reimbursement of the amount paid to [Claggett] by the Foundation for the requested lot. Our records show this total amount to be $2,470, @ $1,235 per acre. 2. A metes and bounds description of the lot[.]” Following receipt of the letter, Claggett remitted payment and a metes and bounds description of the Owner’s Lot.

The ⁵⁵ Foundation then sent Claggett a Preliminary Release and Agreement, which was filed on October 17, 2002, with the following pertinent provisions: WHEREAS, pursuant to Agriculture Article 2—513(b)(3) of the Annotated Code of Maryland and Section A(l) of the Covenants, Conditions, Limitations and Restrictions of the said Deed of Easement, as a personal covenant, the Releasees only may exclude from the easement restrictions up to two (2) acres ... upon written application to the Releasor for the owner’s use for the purpose of constructing a dwelling house for owner’s residence. NOW, THEREFORE, in consideration of the mutual promises, payment by the Releasees to the Releasor of the sum of $2,470.00 and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Releasor hereby conditionally releases [the Owner’s Lot] ... from restriction contained in the agricultural land preservation easement, subject, however, to the terms and conditions hereinafter set forth, including the condition that its use be for the purpose of constructing a dwelling house for the owner’s residence. [ (Emphasis added).] SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS 1. The Releasees, on behalf of themselves, their Personal Representatives and assigns, the survivor of them, his or her Personal Representatives and assigns, grant and relinquish the right to subdivide the above described 2.00 acres of land that is to be released from easement restrictions recorded among the land records of Kent County, Maryland in Liber 0190, Folio 558. This grant and relinquishment of right shall be deemed and construed as a real covenant, running with the land, and shall bind all current and future owners and any other person, firm or corporation having any interest in the subject property. 2.

This preliminary release shall: ⁵⁶ (a) Become final when the Foundation receives and certifies a nontransferable building permit in the name of the landowner for the construction of a dwelling house and issues a final release; or (b) Become null and void upon the death of the person whose benefit the release was intended if the Foundation has not received ■ a building permit as provided in the subparagraph. 3. Subject to the proceeding Paragraphs 1 and 2 it is the intent of this instrument to release the above described 2.00 acres parcel of land from agricultural easement restrictions set forth in the above mentioned Deed of Easement for the purpose of constructing a dwelling. The parties agree that this right may not be transferred to any person. However, all of the terms, covenants, conditions, limitations and restrictions set forth in the Deed of Easement shall remain in force, operation and effect on the remaining portions of the Releasees’ land not herein or heretofor expressly released. 4.

The Releasor does not warrant or represent to the Releasees, their assigns, the survivor of them, or the surviv- or’s Personal Representatives/Successors or assigns, that the release and conveyance of the above described one (2.00) acre or less will comply with county or local zoning laws or requirements or imply an approval which could negate any county or local zoning laws, requirements, or any specific use for which the Releasees may have intended. 5. Upon compliance with all of the terms and conditions hereinabove set forth, the Releasees shall have the right to request that the above described parcel of 2.00 acres be released from the operation and effect of the Deed of Easement subject only to the Terms and Conditions set forth in Paragraphs 1, 3 and 4 above. Amendments To Section 2-513 The 2003 Amendment Effective October 1, 2003, the General Assembly enacted 2003 Maryland Laws Chapter 258 (“Chapter 258”), which ⁵⁷ added a new Section 2-513(b)(3), allowing a landowner to reserve a single lot for exclusion from easement restrictions in lieu of the right to reserve an owner’s lot: A landowner may reserve the right to exclude 1 unrestricted lot from an easement in lieu of all owner’s and children’s lots to which the landowner would otherwise be entitled under [Section 2—513(b)(2) ]. (ii) An unrestricted lot may be subdivided by the landowner from the easement and sold to anyone to construct one residential dwelling^] The 200k Amendment This section was modified when the General Assembly enacted Maryland Laws, Chapter 498 (“Chapter 498”), which mandated that different terms be included in a release made pursuant to Section 2-513(b)(2)(vi) of the Agriculture Article, to be effective October 1, 2004 (hereinafter “AG-2004”): Any release or preliminary release issued under this paragraph shall include: 1.

A statement of the conditions under which it was issued, a certification by the Foundation that all necessary conditions for release or preliminary release have been met, and copies of any pertinent documents; and 2. A statement that the owner’s or child’s lot may not be transferred for 5 years from the date of the final release, except on: A. Approval by the Foundation; or B. Notwithstanding any conditions on transfers imposed under item 1 of this subparagraph, a lender providing notice to the Foundation of a transfer pursuant to a bona fide foreclosure of a mortgage or deed of trust or to a deed in lieu of foreclosure. (Emphasis added.) The Disputed Final Release Claggett submitted a building permit and request for final release in 2005. On June 7, 2005, the Foundation sent Clag ⁵⁸ gett a Final Release and Agreement (“Final Release”) with a letter requesting that he “return the signed document to the Foundation” so that it could be signed on behalf of the Foundation and then recorded in the Kent County land records.

The- Final Release included the following language reflecting the 2004 amendment to Section 2—513(b)(2)(vi)(2): [I]t is the intent of this instrument to release the [Owner’s Lot] for the personal residential use of the person named in the building permit[.] ... The parties agree that this right may not be transferred to any other person for five (5) years from the date of the final release, except on: (a) Approval by the Foundation; or (b) Notwithstanding any conditions on transfers imposed under item 1 of this subparagraph, a lender providing notice to the Foundation of a transfer pursuant to a bona fide foreclosure of a mortgage or deed of trust or to a deed in lieu of foreclosure. (emphasis added). Claggett refused to sign the Final Release.

In a letter to the Foundation, Claggett’s counsel questioned whether Claggett was subject to the Final Release requirement prohibiting a transfer of the Owner’s Lot “ ‘to any other person for five (5) years from the date of final release^]’ ” In a September 12, 2005 letter, the Foundation responded: By [“Chapter 498”] Mr. Claggett is subject to the requirements described in ... the final release, and by this law also, the Foundation does not have the authority to release his lot until this requirement is met. As the easement grantor, only Mr. Claggett has the one time right to an owner’s lot for the purpose of constructing a dwelling solely for his personal use. Before Chapter 498’s enactment the law did not allow a released lot for a dwelling to be conveyed to any other person but restricted its use to the landowner who sold the easement. This left the released owner’s lot in legal limbo with lenders and others ⁵⁹ that was corrected by the enactment of Chapter 498 (effective October 1, 2004) that now allows certain transfers.

Chapter 498 ... provides a benefit to landowners, such as Mr. Claggett, who make application for allowable lot releases after October 1, 2005; again, this benefit allows them to transfer owner’s lots to others, whereas before, the law did not provide this opportunity. Lastly, the Foundation does not have the authority to waive the language release requirements of Chapter 498; Mr. Claggett applied for a lot release after Chapter 498’s effective date and he is subject to its requirements. Circuit Court Proceedings Claggett filed a Complaint for a Writ of Mandamus and Declaratory Judgment in the Circuit Court for Kent County on November 9, 2006 and an amended complaint on January 8, 2007. In his complaint, Claggett requested a declaratory judgment that Chapter 498 “may not be applied retroactively to modify the terms and conditions of the Deed of Easement or the terms and conditions of the final release to which [Claggett] is entitled.” He also petitioned for a writ of mandamus ordering the Foundation to execute a final release that did not include the terms derived from Chapter 498.

Finally, Claggett sought damages in the amount of $100,000. The Foundation filed a Motion to Dismiss/Motion for Summary Judgment and the court granted summary judgment in favor of the Foundation on April 24, 2007. The court denied Claggett’s claim for damages under the doctrine of sovereign immunity and ruled that Claggett was subject to the terms of the Final Release and Chapter 498. The Court Of Special Appeals Decision Claggett appealed the Circuit Court’s judgment to the Court of Special Appeals (the CSA) and it reversed.

Claggett, 182 Md.App. at 393 , 957 A.2d at 1110 . After reviewing legislative history, the CSA concluded that “until Chapter 498 ⁶⁰ was enacted, [AG-1999 Section 2-513] permitted a landowner who obtained the release of an owner’s lot, and constructed a dwelling on the lot, to sell the lot and house free of easement restrictions.” Id. at 390 , 957 A.2d at 1108 . The CSA held, moreover, that “neither the Preliminary Release nor the Deed of Easement explicitly included any restriction on the alien-ability of the Owner’s Lot. Rather, the two documents are subject to the same ambiguities as [AG-1999 Section 2-513].” Id. at 391 , 957 A.2d at 1109 .

The CSA rejected the Foundation’s contention that Claggett’s release request was subject to 2004 amendment to Section 2-513: Chapter 498 prospectively altered the substantive terms of agricultural preservation easements. As noted, the Foundation makes no argument that the Legislature intended for a statute that substantively altered the vested rights of landowners to have retroactive effect; it merely argues that Chapter 498 did not alter vested rights. Because we conclude otherwise, we also conclude that Chapter 498 may not be applied retroactively to [Claggett] with respect to his Owner’s Lot. Id. at 393 , 957 A.2d at 1110 .

We granted a writ of certiorari to consider the Foundation’s following questions: I. Do the requirements of [AG-2004 Section 2-513(b) ], as amended by 2004 Laws of Maryland, Chapter 498, apply to a final release from land preservation easement for construction of a dwelling for the use of the landowner, which the landowner requested in 2005?

II

Prior to the October 1, 2004 effective date of [Chapter 498], did the landowner have a vested right to obtain final release of easement allowing him to construct a dwelling and to sell the dwelling and lot at any time to any unrelated third party, where such a right was not expressly provided by statute, regulation, or deed of easement, and where the landowner did not apply for the final release or satisfy the necessary conditions by submitting the required building ⁶¹ permit until sometime in 2005, more than six months after the effective date of the 2004 legislation? DISCUSSION Standard of Review “Our standard of review of the declaratory judgment entered as the result of the grant of a motion for summary judgment is whether that declaration was correct as a matter of law.” S. Easton Neighborhood Ass’n v. Town of Easton, 387 Md. 468, 487 , 876 A.2d 58, 70 (2005). “We review the record in the light most favorable to the non-moving party and construe any reasonable inferences that may be drawn from the facts against the moving party.” Educ. Testing Serv. v. Hildebrant, 399 Md. 128, 140 , 923 A.2d 34, 41 (2007). Where there is no genuine dispute of material fact, as is the case here, we proceed to review determinations of law.

Remsburg v. Montgomery, 376 Md. 568, 579 , 831 A.2d 18, 24 (2003). The Parlies’ Contentions The Foundation contends that Claggett’s final release request is subject to the five-year restriction on transfers found in Chapter 498—the 2004 amendment to Section 2-513(b). See AG-2004 § 2-513(b)(2)(vi). In other words, it asserts that Claggett’s requested final release must include the language provided in the amended version of the statute.

The Foundation offers several reasons why the 2004 amendment should govern, and Claggett responds to these with arguments of his own. We do not address these arguments about the