Md.-Nat'l CP & P. Comm'n v. Wash. Nat'l Arena

37 Md. App. 346 (1977) 377 A.2d 545 MARYLAND-NATIONAL CAPITAL PARK AND PLANNING COMMISSION ET AL. v. WASHINGTON NATIONAL ARENA. No. 1278, September Term, 1976. Court of Special Appeals of Maryland. Decided September 14, 1977.

The cause was argued before MORTON, THOMPSON and LISS, JJ. Sanford E. Wool for appellant Maryland-National Capital Park and Planning Commission. Edward G. Neal, Associate County Attorney, with whom were James C. Chapin, County Attorney for Prince George's County, Michael O. Connaughton, Deputy County Attorney and David S. Bliden, Associate County Attorney on the brief, for appellant Prince George's County, Maryland. ³⁴⁷ Submitted on brief by Francis B. Burch, Attorney General, and Ward B. Coe, III, Assistant Attorney General for appellant State of Maryland. Peter F. O'Malley, with whom were Glenn T. Harrell, Jr. and O'Malley, Miles, Farrington & McCarthy on the brief, for appellee.

LISS, J., delivered the opinion of the Court. On August 11, 1971, the Maryland-National Capital Park and Planning Commission (hereafter, "Commission"), as lessor, entered into a lease agreement with Potomac Sports Limited, lessee, for a parcel of land of approximately fifty acres, known as a part of the "Kuenne tract," located near the interchange of Central Avenue (Maryland Route 214) and the Capital Beltway (Interstate Route 495). On August 1, 1972, Potomac Sports Limited assigned its interest in the lease to the Washington National Arena Limited Partnership (hereafter, "WNA"), the assignment having been approved by the Commission. On August 23, 1972, the Commission and WNA executed an agreement (hereafter, "Shared Park Agreement") for the joint use of an additional ten acres of the Kuenne tract.

Title to all the land remained in the name of the Commission. The stated purpose of the original lease agreement subsequently assigned to WNA was to provide for the construction of a sports arena to furnish major recreational attractions for the citizens of Maryland — in particular those residing in Prince George's and Montgomery Counties — consistent with the extensive park development program of the Commission. The subsequent Shared Park Agreement gave WNA the right to park automobiles on the ten acre parcel in return for which WNA was required to either pay a sum of money to the Commission for use in a recreational program in the area or, in the alternative, construct certain recreational equipment on the ten acre tract for use when no parking was in progress. WNA met its obligation under this agreement by payment of an agreed sum of money to the Commission. ³⁴⁸ Pursuant to the lease agreement, WNA erected an arena containing approximately 18,000 seats, which has been in operation since December of 1973 as the Capital Centre.

The lease contained a tax clause in Paragraph 6(c) which required the lessee to pay all taxes, including ad valorem real estate taxes, as additional rent. Paragraph 6(c) further provided: "Lessee shall have the unrestricted right in its name to pursue such administrative and judicial procedures as may be necessary to contest and appeal from the amount of any assessment or valuation, and pay under protest any billing of real estate taxes or assessments, all or part of which are to be borne by the lessee under the terms of this Lease. Lessee further agrees that it will not contest or challenge any determination by the State Assessor 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 not to be subject to real estate taxes, the lessee agrees to pay to lessor an additional annual rental over and above that provided in paragraph 5 of this Lease Agreement in the sum of $325,000.00." On January 9, 1974, the Supervisor of Assessments for Prince George's County sent to the Commission a notice of assessment of the value of the 50 acre tract ( land only ), the subject of the lease, and the 10 acre tract ( land only ), the subject of the Shared Park Agreement — both tracts being considered together in the notice. The notice of assessment was forwarded to WNA, and on January 28, 1974, a formal letter of protest of the assessment was sent to the Supervisor of Assessments (hereafter, "Supervisor") in which WNA contended that it did not believe that the land was taxable; that there had been improper notification and service of the notice; and further protested the assessed valuation of the land.

On February 22, 1974, another notice of assessment was mailed to the Commission, care of Abe ³⁴⁹ Pollin (general partner in WNA), assessing the improvements constructed by WNA on the 50 acre tract. A formal protest of this notice was sent by WNA to the Supervisor arguing that the notice was improper, that the improvements were not taxable, and that the assessed valuation placed upon the improvements was excessive. On November 21, 1974, final notices of assessment were sent by the Supervisor to the Commission, care of Abe Pollin. Pursuant to Maryland Code (1957, 1975 Repl.Vol.), Art. 81, § 255, WNA filed a timely appeal to the Property Tax Assessment Appeal Board for Prince George's County (hereafter, "the Board") in which WNA raised the issues of the taxability of the land and improvements and the accuracy of the valuation of the improvements as determined by the State Assessor.

That appeal had been before the Board for more than six months when the Commission filed its bill for declaratory judgment and injunction, which is the subject matter of this appeal. The bill in equity was filed nine days prior to a scheduled hearing before the Board on the issues raised by WNA. In its bill, the Commission contended that Paragraph 6(c) of the lease between the parties amounted to a waiver and/or estoppel by and against WNA which precluded it from prosecuting an appeal of the Supervisor's determination that the real property improvements known as the Capital Centre were taxable. The Commission did not contend that WNA was not entitled to contest the Supervisor's conclusion that the land was taxable.

By the time that the Commission's bill for declaratory relief and injunction came on for hearing in the Circuit Court for Prince George's County (Judge Samuel Meloy, presiding), the Board had already considered the appeal of WNA from the decision of the Supervisor and had reversed his decision, concluding that neither the land nor the improvements were taxable but rather that under the provisions of Art. 81, they were specifically exempt from taxation. The State of Maryland and Prince George's County entered an appeal from that decision which is now pending in the Maryland Tax Court. ³⁵⁰ Judge Meloy, after hearing argument and considering the memoranda filed by all the parties, reached the conclusion that Paragraph 6(c) of the lease was against public policy in that it would prevent access to the courts by the lessee and would thereby preclude judicial review of an arbitrary, capricious or illegal imposition of tax liability by the Supervisor of Assessments. It is from that conclusion that this appeal was taken. Antagonists in the appeal are the State of Maryland, [1] the Commission, and Prince George's County as appellants and WNA as appellee.

All of the parties have filed excellent briefs and presented cogent arguments concerning the legal effect of Paragraph 6(c) of the lease agreement, but none of them have raised the basic question which must be determined before the substantive issues in this matter may be reached, i.e., the question of the jurisdiction of the Circuit Court of Prince George's County. Rule 1085 provides, "Where jurisdiction cannot be conferred on the court by waiver or consent of the parties, a question as to the jurisdiction of the lower court may be raised and decided in this Court whether or not raised or decided in the lower court." Therefore, even though the issue of jurisdiction was not raised or decided below — nor briefed and argued before us — that issue may be raised sua sponte by this Court under Rule 1085. Wilson v. State, 21 Md. App. 557 , 321 A.2d 549 (1974); Moore v. State, 15 Md. App. 396 , 291 A.2d 73 (1972). We believe it is necessary for us to raise and determine the issue of jurisdiction in order for this case to be considered in an orderly fashion and to avoid unnecessary and duplicative litigation.

Pursuant to the recommendations of the Tax Revision Commission established under Ch. 687, Acts 1927, the Legislature, by Ch. 226, Acts 1929, made a general revision ³⁵¹ of the tax laws of Maryland. In so doing, it repealed former Art. 81 and enacted a new Art. 81 of the Maryland Code. The newly adopted article reenacted substantial portions of the existing laws on taxation and enacted additions and clarifications of that law. The principal purpose of the revision, however, was to "codify and clarify." Meade Heights, Inc. v. State Tax Commission of Maryland, 202 Md. 20 , 95 A.2d 280 (1953).

The Article as adopted provided for a series of elaborate hearing and appellate procedures which are available to anyone aggrieved by a tax assessment levied against real and personal property owned in the State of Maryland. Subsection (a) of Art. 81, § 255, Code (1957, 1975 Repl.Vol., 1976 Cum.Supp.) provides: "With respect to any property assessed locally, any taxpayer, county or city, or the Attorney General or the State Department of Assessments and Taxation may demand a hearing before the supervisor of assessments or their respectively designated representatives, as to the assessment of any property or any unit of tax value, or as to the increase, reduction, or abatement of any such assessment, or as to the classification, for the next year." Subsection (b) grants to any taxpayer, county or city, or the Attorney General, or the State Department of Assessments and Taxation on behalf of the State the right to demand a further hearing before the property tax assessment appeal board and a review of the initial determination by the assessing authority and the supervisor of assessments. Any party aggrieved by the determination of the appeal board is permitted by § 256 (a) to appeal to the Maryland Tax Court because of any assessment or classification, or because of any increase, reduction, abatement, modification, change or alteration or failure or refusal to increase, reduce, abate, modify or change any assessment, or because of any ³⁵² classification or change in classification, or refusal or failure to make a change. The Maryland Tax Court was created by the Legislature by Ch. 757 of the Acts of 1959.

That enactment provided that the Tax Court and State Department of Assessments were to be independent of each other but together would constitute a separate department of the State government. [2] The "quasi-judicial" functions of the then existing State Tax Commission were to be exercised by the Maryland Tax Court and its "administrative" functions were to be vested in the Department of Assessments and Taxation, the separation of the functions being the principal purpose of Ch. 757. Montgomery County Council v. Supervisor of Assessments, 275 Md. 339 , 240 A.2d 302 (1975). The duties of the Tax Court, as set out in Art. 41, § 318, are as follows: "On and after July 1, 1959, the Maryland Tax Court shall have jurisdiction to hear appeals from the decision, determination, or order of any final assessing or taxing authority of the State, or of any agency, department or political subdivision thereof, 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." Section 229 of Art. 81 adopted the procedure to be followed on appeals to and from the Tax Court and provided in subsection (c) that proceedings before the court shall be de novo and shall be conducted in a manner similar to proceedings in courts of equity in this State. Subsection (h), which deals with the disposition of the cause, empowers the court: "[T]o assess anew, classify anew, abate, modify, change or alter any valuation, assessment, ³⁵³ classification, tax or final order appealed from, provided that in the absence of any affirmative evidence to the contrary or of any error apparent on the face of the proceedings, the assessment, classification or order appealed from shall be affirmed." Subsection (k) provides that in any proceeding before the court, "any party to such proceedings may submit requests for rulings on points of law, similar to prayers in nonjury cases in courts of law, and the Court shall grant, reject or modify the same, so far as may be material to its decision." By subsection (m), an aggrieved party is granted an appeal from the final decision of the Maryland Tax Court to the circuit court of the county or Baltimore City in which the property or any part of it is situated.

The circuit court or the Baltimore City Court, by subsection (o), is required to determine the matter upon the record made in the Maryland Tax Court. The circuit court or Baltimore City Court is required to affirm the Tax Court order if it is not erroneous as a matter of law and is supported by substantial evidence appearing in the record. The reviewing court is empowered to affirm, reverse, remand, or modify the order appealed from. Under subsection (p), any party to the proceedings may appeal from the order of the circuit court or Baltimore City Court to the Court of Special Appeals.

A final right to appeal to the Court of Appeals may be granted upon application for a writ of certiorari. The Commission sought declaratory relief and an injunction in this case contending that the lessee had waived its right to contest the determination of the Supervisor as to the taxability of the improvements erected on the land. We have detailed the elaborate system of hearings and appeals provided by the Legislature for the disposition of controversies involving taxes due on property in Maryland because the right to declaratory relief must be determined in light of the existence of such a statutory scheme. ³⁵⁴ The original Maryland Uniform Declaratory Judgments Act, Acts of 1939, Ch. 294, Code (1939), Art. 31A, [3] made no reference to the requirement, later adopted by the Legislature, that where a special form of remedy is provided for a specific type of case, that remedy must be followed in lieu of a declaratory proceeding. However, the Court of Appeals of Maryland in Tawes v. Williams, 179 Md. 224 , 17 A.2d 137 (1941), did recognize this principle.

In that case, the taxpayer sought a declaration of her State income tax liability for funds received from a trust created by the will of her late husband and paid to her by a fiduciary in Pennsylvania. In reversing the lower court, which had assumed jurisdiction and issued declaratory decrees as to the issues raised by the widow's bill, the Court held that where a special statutory method was provided for the determination of a particular type of case, jurisdiction under the Declaratory Judgments Act did not exist. In giving its reasons for this conclusion, the Court said at page 228: "It thus appears that the Legislation has in detail specifically designated the manner in which the determination of the amount of income taxes due shall be made. It therefore