Maryland-National Capital Park & Planning Commission v. Washington National Arena
Levine, J., delivered the opinion of the Court. The central issue in this appeal is whether a lessee may, consistent with the public policy of this state, voluntarily agree to relinquish in advance his statutory right to challenge a determination by the Supervisor of Assessments that the demised premises is subject to real property taxation. The Circuit Court for Prince George’s County struck down such a noncontestability covenant in a lease between appellant, Maryland-National Capital Park and Planning Commission (the Commission), and appellee, Washington National Arena Limited Partnership (the Arena). On appeal the Court of Special Appeals declined to reach the merits, holding instead that the chancellor should have refused to assume jurisdiction to award declaratory relief under the Uniform Declaratory Judgments Act.
Md-Nat'l C.P. & P. Com. v. Wash. Nat’l Arena, 37 Md. App. 346, 360-61 , 377 A. 2d 545 (1977). We granted certiorari to review the decisions of both courts, and for reasons that follow we now reverse. On August 11,1971, an agreement was executed pursuant to which the Commission leased to Potomac Sports, Ltd., the Arena’s predecessor in interest, a tract of land comprised of some 50 acres located at Largo in Prince George’s County.
The lease provided further for the construction of a major public athletic and recreational complex having a seating capacity of approximately 18,000 persons. Under paragraphs 6(a) and 6(b) of the agreement, the lessee covenanted to pay as “additional rent” to state and local tax collecting authorities all property taxes on real estate improvements. Clause one of paragraph 6(c) conferred upon the lessee the “unrestricted right” to contest through administrative and judicial channels the amount of any assessment or valuation and to pay under protest any billing of such real property taxes or assessments. The right of the lessee, however, to challenge a determination of the taxability of the improvements was abrogated by the second clause of paragraph 6(c) around which the present dispute is centered and which, in its entirety, provided: “Lessee further agrees that it will not contest or challenge any determination by the State assessor 592 [sic] that the real estate improvements are subject to real estate taxes; however, in the event that said real estate improvements are determined by the State assessor [sic] not to be subject to real estate taxes, the Lessee agrees to pay to the Lessor an additional annual rental over and above that provided in Paragraph 5 of this Lease Agreement in the sum of $325,000.00.” (emphasis added).
As consideration for the assignment by Potomac Sports of all its “right, title, interest and estate” in and to the Lease Agreement, the Arena, with the Commission’s approval, agreed on August 1,1972, to assume “each and all obligations of Potomac as Lessee under the Lease,” including the restrictions, imposed by the noncontestability clause just quoted. Three weeks later the Commission and the Arena executed an addendum to the original contract providing for the lease of an additional 10-acre parcel for use as a parking facility. Construction of the complex commenced on August 24,1972, and within the short span of 16 months the “Capital Centre,” as the facility has since come to be called, opened to the public for the first time. Early in January 1974 the Commission received notification from the Supervisor of Assessments for Prince George’s County that the 60-acre tract on which the Capital Centre had been erected was to be assessed for purposes of property taxation at a value of $1,980,000.
Soon thereafter a similar notice followed, informing the parties that a decision had been made to assess the structural improvements at $11,650,000. Contending that both the land and improvements were tax-exempt under Maryland Code (1957, 1970 Repl. Yol., 1977 Cum. Supp.) Art. 66D, § 5-109 (a) and Code (1957, 1975 Repl.
Vol., 1977 Cum. Supp.) Art. 81, § 8 (7) (e), 1 the Arena filed formal protests with the Supervisor. These efforts proved 593 fruitless, however, and in November 1974 the assessments became final. Disregarding the explicit prohibition of paragraph 6(c), the Arena appealed the Supervisor’s decision respecting the taxability of the improvements to the Property Tax Assessment Appeal Board for Prince George’s County. 2 Within days of the scheduled hearing before the Appeal Board, the Commission instituted this action for declaratory and injunctive relief in the Circuit Court for Prince George’s County, seeking to block the Arena from pursuing its administrative appeal in violation of the noncontestability clause of the 1971 lease.
An attempt was made by appellant Prince George’s County and the State of Maryland to intervene in the Commission’s suit; however, only the County was given permission to do so. The Arena interposed several defenses to the bill of complaint, arguing (1) that the noncontestability term was both void as against public policy and contrary to the due process clauses of the Federal and State Constitutions; (2) that specific performance of paragraph 6(c) was improper due to ambiguities in the contract language; and (3) that injunctive relief was inappropriate because the Commission had not sustained irreparable harm as a consequence of the breach. After hearing oral argument and reviewing legal memoranda, the chancellor issued a decree on May 8, 1975, declaring the contractual waiver of appellee’s right to protest the taxability of the leasehold improvements null and void as repugnant to public policy. No ruling was made on the Arena’s remaining defenses. 3 Holding that the circuit court had erred in denying the State’s earlier motion to intervene, the Court of Special Appeals in Md.-Nat’l Cap.
P. & P. v. 594 Wash. Nat’l Arena, 30 Md. App. 712 , 354 A. 2d 459 (1976), reversed the order of the chancellor and remanded for a new hearing on the Commission’s complaint. With the State participating, a second hearing was held and in a memorandum opinion dated November 10, 1976, the chancellor reaffirmed his prior order invalidating the noncontestability clause. Subsequently, the Commission, joined by the two governmental intervenors, noted an appeal to the Court of Special Appeals, which, for reasons to be discussed below, vacated the chancellor’s order and dismissed the bill of complaint. 37 Md. App. at 362 .
Only the Commission and Prince George’s County sought further review in this Court. I Raising the issue on its own initiative, and thus without the benefit of any presentation by the parties, the Court of Special Appeals concluded that the chancellor abused his discretion in accepting and retaining jurisdiction over the Commission’s action for declaratory and injunctive relief. In the court’s view, the availability of an administrative remedy in the Maryland Tax Court and the Property Tax Assessment Appeal Board precluded the circuit court from issuing a declaratory decree under the Uniform Declaratory Judgments Act, Code (1974), §§ 3-401 et seq. of the Courts and Judicial Proceedings Article. We disagree.
At the outset we observe that the “jurisdictional” objection posed by the Court of Special Appeals actually envelops two closely-akin but nevertheless distinct questions. The first of these relates to the power of the chancellor under the Uniform Declaratory Judgments Act to award declaratory relief where an alternative administrative remedy exists. If, as as we shall hold, the circuit court did have authority to issue its declaratory decree, the issue then presented is whether, as a matter of judicial policy, not power, the chancellor should have refrained from exercising jurisdiction to construe the disputed noncontestability provision and awaited the outcome of the administrative appeal. See Gannon v. Perk, 46 Ohio St.2d 301 , 348 N.E.2d 342, 348 (1976). 595 Notwithstanding the strong legislative policy favoring the liberal use and interpretation of the Declaratory Judgments Act to effectuate its broad remedial objectives, as expressed in § 3-402 of the Courts and Judicial Proceedings Article, see Millett v. Hoisting Engineers’ Licensing Div., R. I., 377 A. 2d 229 , 233 (1977), declaratory relief is barred wherever the parties have resort to a special statutory procedure to resolve their differences: “If a statute provides a special form of remedy for a specific type of case, that statutory remedy shall be followed in lieu of a proceeding under this subtitle.” § 3-409 (b) of the Courts and Judicial Proceedings Article. 4 Thus, with certain notable exceptions not relevant here, we have repeatedly held that where a specific statutory remedy is available, it is mandatory for the court to dismiss the suit for declaratory judgment and remit the plaintiff to the alternative forum.
Tanner v. McKeldin, 202 Md. 569, 577 , 97 A. 2d 449 (1953); accord, Soley v. St. Comm’n on Human Rel., 277 Md. 521, 526 , 356 A. 2d 254 (1976); Lawrence N. Brandt, Inc. v. Mont. County, 39 Md. App. 147, 155 , 383 A. 2d 688 (1978). As our case law amply demonstrates, however, the prohibition against awarding declaratory relief to parties who have alternative statutory or administrative remedies is applicable only where the alternative means of redress was intended to be exclusive. DuBois v. City of College Park, 280 Md. 525, 533 , 375 A. 2d 1098 (1977); see E. Borchard, Declaratory Judgments 342 (2d ed. 1941).
This interpretation of § 3409 (b) is borne out by the language of § 3-409 (c) of 596 the Courts and Judicial Proceedings Article, which specifically provides that: “A party may obtain a declaratory judgment or decree notwithstanding a concurrent common-law, equitable, or extraordinary legal remedy, whether or not recognized by statute." (emphasis added). In light of the broad remedial objectives of the Declaratory Judgments Act, § 3-409 (b) will be invoked to deprive a trial court of power to render a declaratory decree only in those cases where the Legislature intended to prohibit the exercise of concurrent jurisdiction by the courts. The immediate question before us, then, is whether the Legislature would have intended .to endow the tax appeal tribunals with authority, to the exclusion of courts of ordinary jurisdiction, to determine the validity of the noncontestability clause of paragraph 6(c) of the 1971 Lease Agreement. Considering the narrowly defined statutory function of the Maryland Tax Court and local property tax appeal boards, we cannot say that the Legislature would have intended to oust the chancellor of his jurisdiction to hear the Commission’s claim for declaratory relief.
Each property tax assessment appeal board has authority to hear all appeals in a given county concerning property tax assessments. Code (1957, 1975 Repl. Vol., 1977 Cum. Supp.) Art. 81, § 250.
The subject matter jurisdiction of the local property tax assessment appeal boards is set out in Art. 81, § 255 (b) (1), which provides that a taxpayer may demand a hearing before the property tax assessment appeal board as to the “assessment of any property ... or as to the increase, reduction or abatement of, or refusal to increase, reduce or abate, any such assessment, or as to the classification thereof, made by the initial assessing authority,” which in this case was the Supervisor of Assessments for Prince George’s County. The authority of the Maryland Tax Court is delineated in Art. 81, § 256 (a). Enumerated persons aggrieved by a decision of a property tax assessment appeal board or other final assessing authority may petition the Tax Court for 597 further review regarding any “assessment or classification” or “any increase, reduction, abatement, modification, change or alteration” of any assessment or classification or the failure to do any of the foregoing acts. Although not in and of itself a grant of subject matter jurisdiction, see Mont Co. Council v. Supervisor, 275 Md. 339, 347-48 , 340 A. 2d 302 (1975), Art. 41, § 318 (1) states that the Tax Court shall have jurisdiction to hear appeals “with respect to the valuation, assessment, or classification of property, or the levy of a tax, or with respect to the application for an abatement or reduction of any assessment, or tax, or exemption therefrom.” Article 81, § 229 (f) provides that the Tax Court “shall have full power to hear, try and determine or remand any matter before it.” The court is empowered to dispose of matters, over which it has jurisdiction by reassessing, reclassifying or modifying any valuation, assessment, classification, tax or final order from which an appeal has been taken.
Art. 81, § 229 (h). Finally, parties to proceedings before the Tax Court are permitted to submit requests for rulings on points of law “similar to prayers in nonjury cases in courts of law.” So far as any such request is material to its decision, the court must then grant, reject or modify it. Art. 81, § 229 (k). When read together, the foregoing statutory provisions manifest a clear legislative intent to limit the jurisdiction of the tax agencies primarily to the review of decisions concerning the assessment, valuation and classification of real and personal property for tax purposes.
Presumably, in enacting such an intricate and comprehensive mechanism for the review of property tax determinations, the General Assembly sought to afford the taxpaying public a systematic and efficient method of fact-finding and policy-formation in an area where many of the day-to-day problems of administration either lie beyond the conventional competence of the courts because of the technical complexity of the subject matter or, because of their routine nature, are not properly suited for resolution in formal adjudicatory proceedings. See Sawejka v. Morgan, 56 Wis. 2d 70 , 201 N.W.2d 528, 533 (1972). 598 Thus, with rare exception, we have insisted that taxpayers pursue their statutory remedies under Article 81 whenever they attempt to challenge a decision as to the amount of an assessment, the valuation of property, or the applicability of the tax statutes to a particular parcel of land or to improvements thereon. See State Dep’t of A. & Tax. v. Clark, 281 Md. 385, 404 , 380 A. 2d 28 (1977). The overriding public interest in the speedy and orderly collection of revenues demands that there be finality upon failure of an aggrieved party to exercise the statutory right of appeal from allegedly illegal or erroneous tax assessments and that collateral attack by way of a declaratory judgment suit be prohibited.
Reiling v. Comptroller, 201 Md. 384, 388-89 , 94 A. 2d 261 (1953); Tawes, Comptroller v. Williams, 179 Md. 224, 228-29 , 17 A. 2d 137 , 132 A.L.R. 1105 (1941); see Palmer v. Perkins, 119 Colo. 533 , 205 P. 2d 785, 787 (1949). Properly speaking, the matter of the enforceability of the waiver provision of paragraph 6(c) was not a problem arising under the tax statutes. It was, rather, purely and simply a question of contract construction. In resolving this dispute a court would not need to make any factual determinations as to the value of the real estate, nor would an inquiry into the proper application or interpretation of the revenue laws be necessary.
See Verkouteren v. Sup'r of Assess., 38 Md. App. 216, 222 , 380 A. 2d 642 (1977). The claim presented by the Commission’s bill of complaint was only tangentially related to the substantive tax law question of taxability, and thus did not fall squarely within the exclusive jurisdiction of the tax agencies. On the other hand, the validity of the noncontestability provision was relevant to the question of the Arena’s standing to institute an administrative appeal in the first instance. To this extent, then, the tax tribunals would have had incidental or implied power to determine the validity of the clause insofar as it pertained to the right of a party before them to maintain the protest.
See R. Parker, Administrative Law 127 (1952); and see Cammarata v. Essex County Park Comm’n, 26 N. J. 404, 140 A. 2d 397, 401 (1958). But the fact that an agency may be empowered to decide a legal question that is 599 encompassed by its incidental jurisdiction does not, absent a contrary indication from the Legislature, necessarily deprive the courts of all authority to adjudicate a point of law they could otherwise decide. And certainly no one would doubt the power of the courts of general jurisdiction in this state to construe, interpret and enforce provisions of contracts, leases, and other written instruments. Support for the views expressed here may be found in Cambridge v. Eastern Shore Pub.
Serv. Co., 192 Md. 333 , 64 A. 2d 151 (1949). There a conflict arose between the City of Cambridge and a local utility company as to whether a statute empowering the municipality to construct and operate its own electrical generating system superseded the utility’s preexisting exclusive franchise to sell and distribute electrical power in Cambridge. The city commenced a declaratory judgment action contesting the validity of the utility franchise.
The trial court sustained demurrers to the bill of complaint without leave to amend. On appeal the utility urged affirmance on the ground that the Legislature had specifically designated the Public Service Commission as the proper forum for settling disputes over utility franchises and had thereby preempted the power of the circuit courts to award relief under the Declaratory Judgments Act. Concluding that the trial court did have jurisdiction to issue a declaration as to the validity and scope of the competing franchises, this Court acknowledged that the Public Service Commission, by reason of its statutory authority to issue certificates permitting utility operation in various localities throughout the state, possessed the incidental or implied power to determine the nature and validity of existing franchises. Nevertheless, we noted that the question of franchise validity was one of law and therefore subject in any event to full review by the courts.
In view of the Public Service Commission’s inability to render a binding judgment with regard to the franchise issue, we held that: “[T]he existence of a right to complain to the Commission is not such a statutory remedy as to preclude the determination of the legal question in 600 a proceeding for declaratory relief. The enforcement of such a right seems to fall in the category of ‘an equitable remedy, or an extraordinary legal remedy ... recognized or regulated by statute,’ rather than ‘a special form of remedy for a specific type of case,’ within the meaning of [§ 3-409 (b) of the Courts Article].” 192 Md. at 340-41 . The incidental power of the Public Service Commission to decide the validity of utility franchises was therefore not so exclusive as to prevent adjudication of this same question in a suit for declaratory judgment. In the present case the question of the validity of the noncontestability clause, like the franchise issue in Cambridge , is essentially a judicial and not an administrative matter, and therefore fully reviewable by courts of law.
Furthermore, deciding the legal question of contract construction in advance of the administrative question of taxability may well have disposed of the whole issue, and thus, by barring the Arena from mounting its appeal, may have prevented the delay and expense incident to a determination by the administrative tribunals. Cf. Pressman v. State Tax Commission, 204 Md. 78, 83 , 102 A. 2d 821 (1954) (administrative remedies may be by-passed where there is clear necessity for a prior judicial decision). In sum, then, our own examination of the property tax appeal procedures of Article 81 and the limited subject matter jurisdiction of the appeal tribunals convinces us that the Legislature did not intend to confer upon these agencies exclusive power to construe contractual provisions such as the noncontestability clause of paragraph 6(c).
Whatever authority the Tax Court and property tax assessment appeal boards possessed in regard to this purely legal question was merely incidental to their power to review the assessment, classification and valuation of real estate for tax purposes. As such, it was shared concurrently with the courts of ordinary jurisdiction. Since the alternative statutory remedy available to the Commission was nonexclusive, we hold that the chancellor had power under the Declaratory Judgments 601 Act to issue a declaratory decree determining the validity of paragraph 6(c). It remains to be decided whether considerations of judicial policy required the chancellor to refrain from exercising his power to grant declaratory relief in deference to the administrative tax appeal agencies which had incidental jurisdiction over the matter of the enforceability of paragraph 6(c).
In our opinion the present issue is governed by the doctrine of primary jurisdiction, which is a judicially created rule designed to coordinate the allocation of functions between courts and administrative bodies. Nader v. Allegheny Airlines, Inc., 426 U. S. 290, 303 , 96 S. Ct. 1978 , 48 L.Ed.2d 643 (1976); United States v. Western Pac. R. Co., 352 U. S. 59, 63 , 77 S. Ct. 161 , 1 L.Ed.2d 126 (1956); see generally Botein, Primary Jurisdiction: The Need for Better Court/Agency Interaction, 29 Rutg. L. Rev. 867 (1976). 5 The doctrine is not concerned with subject matter jurisdiction or the competence of a court to adjudicate, but rather is predicated upon policies of judicial restraint: “which portion of the dispute-settling apparatus—the courts or the agencies—should, in the interests of judicial administration, first take the jurisdiction that both the agency and the court have.” Browne v. Milwaukee Bd. of Sch.
Directors, 69 Wis. 2d 169 , 230 N.W.2d 704, 707 (1975); 2 F. Cooper, State Administrative Law 564-65 (1965); 3 K. Davis, Administrative Law Treatise § 19.01, at 3 (1958). It comes into play when a court and agency have concurrent jurisdiction over the same matter, Mordhorst v. Egert, 88 S. D. 527, 223 N.W.2d 501, 504 (1974), and there is no statutory provision to coordinate the work of the court with that of the agency. Mercury Motor Express, Inc. v. Brinke, 475 F. 2d 1086, 1091-92 (5th Cir. 1973); accord, Home Federal S. & L. Ass’n v. Insurance Dept. of Iowa, 428 F. Supp. 992, 996 (N.D. Iowa 1977). 602 Primary jurisdiction is thus not a principle that governs judicial review of administrative action and in this regard is distinguishable from the doctrine requiring the exhaustion of administrative remedies. 6 The latter doctrine demands that a party fully pursue administrative procedures before obtaining limited judicial review and contemplates a situation in which the claim asserted is enforceable initially by administrative action exclusively. Mazzola v. Southern New England Telephone Co., 169 Conn. 344 , 363 A. 2d 170, 174 (1975).
See also Eastern Shore Nat. Gas Co. v. Stauffer Chemical Co., 298 A. 2d 322, 325 (Del. 1972). As we stated in Berwyn Heights v. Rogers, 228 Md. 271, 275 , 179 A. 2d 712 (1962): “Where administrative remedies are not exclusive but merely cumulative to or concurrent with a judicial remedy, the rule that administrative remedies must be exhausted before resort is had to the courts does not come into play.” In contrast, primary jurisdiction is relevant only if the claim is enforceable by original judicial action, that is, where the claim is initially cognizable in the courts but raises issues or relates to subject matter falling within the special expertise of an administrative agency. United States v. Western Pac.
R. Co., supra, 352 U. S. at 63-64 ; Writers Guild of America, West., Inc. v. F.C.C., 423 F. Supp. 1064, 1089-90 (C.D. Cal. 1976); Jaffe, Primary Jurisdiction Reconsidered: The Antitrust Laws, 102 U. Pa. L. Rev. 577 , 579 (1954). In the present case, as we have previously concluded, jurisdiction to evaluate the validity of the noncontestability clause in paragraph 6(c) was shared between the chancellor and the tax appeal tribunals. As the claim was therefore cognizable in the trial court as an original matter, the principles of primary jurisdiction, not exhaustion, determine whether the chancellor abused his discretion in awarding declaratory relief, notwithstanding his power to do so.
Applying these principles to the case at hand, we conclude 603 that the chancellor acted properly in retaining jurisdiction to adjudicate the Commission’s claim for declaratory and injunctive relief. In the first place, the interpretation and construction of a lease or other written instrument is a preeminently judicial function, one that is well within the conventional experience of the judiciary. See Far East Conf. v. United States, 342 U. S. 570, 574 , 72 S. Ct. 492 , 96 L. Ed. 576 (1952); Gt. No. Ry. v. Merchants Elev.
Co., 259 U. S. 285, 291-92 , 42 S. Ct. 477 , 66 L. Ed. 943 (1922). Secondly, application of principles of public policy and doctrines of constitutional law to measure the validity of a contractual provision like the one before us does not require the kind of special expertise and technical knowledge normally employed in administrative fact-finding and rule-making. See Nader v. Allegheny Airlines, Inc., supra, 426 U. S. at 304 ; MCI Communications Corp. v. American Telephone & Tel. Co., 496 F. 2d 214, 222 (3d Cir. 1974).
For this reason it seems quite unlikely that a prior determination by the Tax Court would have provided any material assistance to the court in passing on a purely legal question. See Ricci v. Chicago Mercantile Exchange, 409 U. S. 289, 302 , 93 S. Ct. 573 , 34 L.Ed.2d 525 (1973); Fraternal Order of Po., Strawberry L. #40 v. Entrekin, 294 Ala. 201 , 314 So. 2d 663, 671 (1975). On the contrary, this was a case where a prior judicial decision would have been preferable. To be sure, whether or not the Arena’s leasehold improvements are exempt from property taxation does involve questions of tax policy.
But this was not the issue before the chancellor, nor is it the question before us here. The question before us deals strictly with the standing of the Arena to mount an administrative appeal and the effect of its voluntary agreement to waive the right to seek further review. Whatever connection this problem may have with the revenue laws, it is at best remote. Thirdly, inasmuch as the Tax Court and property tax assessment appeal boards perform a primarily adjudicatory and hence non-regulatory function, the usual concern of courts for protecting the uniformity and integrity of the regulatory scheme is not pertinent here.
See Texas & Pac. Ry. 604 v. Abilene Cotton Oil Co., 204 U. S. 426, 440 , 27 S. Ct. 350 , 51 L. Ed. 553 (1907). Even so, uniformity in interpreting and applying the tax statutes is an admirable goal. As pointed out above, however, the resolution of the merits of this appeal involves no interpretation of the revenue laws.
Hence the uniformity rationale for deferring to the initial decision of the agency must be rejected as well. Because neither the property tax appeal board nor the Tax Court manifestly could have rendered a binding judgment in respect of the contract construction claim, it would have been pointless for the Commission to have sought intervention in the Arena’s administrative appeal. Similarly it would have served no useful purpose for the chancellor to have postponed consideration of the Commission’s claim in deference to the ongoing administrative proceeding. Here, in theory at least, the benefits of a fair and expeditious resolution of the dispute over the validity of paragraph 6(c) by a court competent to render a final and binding judgment clearly outweighed the rather miniscule advantages of seeking preliminary administrative “assistance.” See Miss.
Power & Light Co. v. United Gas Pipe Line, 532 F. 2d 412, 419 (5th Cir. 1976), cert. denied, 429 U. S. 1094 (1977). Accordingly, we do not agree with the Court of Special Appeals that the circuit court abused its discretion in reaching the merits of the Commission’s complaint. Indeed, the retention of jurisdiction to award declaratory relief was the only sensible course for the chancellor to follow. Consequently, we hold that the circuit court acted properly in assuming and retaining jurisdiction to award declaratory relief.
II In striking down the noncontestability clause of paragraph 6(c), the chancellor expressed the view that a voluntary agreement under which a taxpayer attempts to relinquish his statutory right to appeal from an adverse ruling of the Supervisor of Assessments is “inimical to our system of justice,” and hence, unenforceable as a matter of public policy. For reasons which we shall shortly enumerate, we 605 think that the chancellor’s reliance upon public policy principles to invalidate the disputed waiver provision was mistaken. From the dawn of the common law
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