SDC 214, LLC v. London Towne Property Owners Ass'n

ELDRIDGE, J. This case concerns the interpretation of a restrictive covenant which states that a six-acre parcel of land in Anne Arundel County “shall be undeveloped, except for educational facilities in conjunction with the Anne Arundel County Board of Education.” The disputed issue is whether the quoted ⁴²⁶ language means that the Board of Education was required to have been involved in the planning, design or construction of the educational facilities, or, on the other hand, whether the Board’s involvement in the use of the educational facilities is sufficient to permit such facilities under the covenant. I. The parcel of land which is the subject of this dispute is approximately six acres, located in the south east quadrant of the intersection of Maryland Route 2 and Maryland Route 214 in the Edgewater area of Anne Arundel County. The parcel had been part of a 1390-acre tract of land which a developer, Rose of Annapolis Limited Partnership, intended to develop “as a mixed-use community known as South River Colony.” In 1988, the developer Rose of Annapolis entered into a “Development Agreement and Declaration of Covenants, Conditions and Restrictions” with each of several community associations representing “citizens who reside in the general vicinity of the Property.” The respondent London Towne Property Owners Association, Inc., was one of these associations entering a Development Agreement and Declaration of Covenants, Conditions and Restrictions with the developer. Under a heading entitled “Dwelling Units and Land Use,” the Agreement provided, inter alia, as follows (emphasis added): “e.

The portion of the Property consisting of approximately six (6) acres and being located in the southeast quadrant of the Maryland Route 214/Maryland Route 2 intersection shall be undeveloped, except for educational facilities in conjunction with the Anne Arundel County Board of Education.” 1 ⁴²⁷ In June 2002, the subject six-acre parcel of land was sold to the petitioner SDC 214, LLC (hereafter referred to as SDC), for $306,000.00. Also in June 2002, SDC entered into a lease agreement with Sojourner-Douglas College, Inc., under which SDC was to construct and lease to the College an “Educational Center” on the six-acre parcel. The lease agreement provided that the land and building “shall be used for higher education and related activities” by the College, and that the College’s “use of the Premises is subject to the covenants and special exception conditions to educational uses in conjunction with Anne Arundel County Board of Education.” The term of the lease was fifteen years, commencing thirty days after the educational facility was constructed, with options to extend the term beyond the fifteen years. The lease agreement also gave the College options to purchase the property either upon completion of the building or during the first five years of the initial term of the lease. 2 The primary campus of Sojourner-Douglas College is in Baltimore City, although the College also has facilities in Anne Arundel, Prince George’s, Dorchester, and Wicomico Counties.

In addition, the College has a campus in the Bahamas. The College offers several four-year bachelor’s degree programs and a master’s degree program. The programs are primarily aimed at adult students who work during the day, and, therefore, most of the courses are given in the evening. The College’s Anne Arundel County facility, located in the City of Annapolis, had become overcrowded.

The purchase and lease of the subject six-acre parcel was specifically intended to alleviate this overcrowding problem. Shortly after SDC’s purchase of the six-acre parcel and the lease to the College, SDC by letter dated July 9, 2002, ⁴²⁸ informed the London Towne Association of the plan “to construct an educational facility for Sojourner-Douglas College on the [six-acre] site,” and that “[t]he proposed use is in conjunction with and has been approved by the Anne Arundel County Board of Education.” Although the President of the London Towne Association acknowledged in writing the receipt of the letter, the Association did not comment on the proposed facility. In November and December 2002, SDC applied to Anne Arundel County for a building permit and a “Zoning Certificate of Use” with regard to the six-acre parcel and the planned educational facility. Subsequently, both applications were granted.

On September 8, 2003, the College and the Anne Arundel County Public School System entered into a contract for the parties to “work collaboratively to enhance the educational experiences of students from both institutions” and to “cooperate” with regard to several matters. The contract was signed by an official of the College and by the Anne Arundel County Superintendent of Schools. 3 Under the contract, among other things, the College agreed, both at its Annapolis campus and at the planned facility to be constructed on the six-acre parcel, to provide tutoring and other assistance for suspended or expelled public school students, to make space available at both campuses for the Public School System’s “Alternate Education Programs” and “student academic intervention programs,” to “provide access to textbooks and other educational materials for students in teacher training programs,” and to make College facilities available to the Public School System. The Anne Arundel County Public School System, inter alia, agreed to “provide opportunities in its schools for [College] student teachers to get field experience,” and to “select and refer [public school] students for participation in [College] educational programs.” ⁴²⁹ During 2003, some opposition to the planned educational facility arose in some of the communities in the general vicinity of the proposed facility. On October 14, 2003, the London Towne Property Owners Association and John Yannone, a resident property owner in the South River Colony community, filed in the Circuit Court for Anne Arundel County a complaint for a declaratory judgment and an injunction.

SDC was named as the only defendant. The complaint asserted that the proposed building and use of the six-acre parcel was prohibited by the restrictive covenant stating that the parcel “shall be undeveloped, except for educational facilities in conjunction with the Anne Arundel County Board of Education.” The complaint alleged that, although the “Board of Education may utilize some of the facilities to be erected on the site,” the “primary use of the Property shall be college educational programs operated by a private entity independent of the Anne Arundel County Board of Education.” After the filing of an answer and some discovery, the case was tried before the Circuit Court on May 21, 2004. An officer of the London Towne Property Owners Association and the plaintiff John Yannone testified on behalf of the plaintiffs. Dr. Charlestein Fairley, an official of the College, and Earl P. Schubert, Jr., the owner of SDC, testified on behalf of the defendant, and numerous exhibits were introduced into evidence.

The only testimony directly relating to the relationship between the College and the Anne Arundel County Public School System was by Dr. Fairley, the Director of the College’s Anne Arundel County facilities. After pointing out that the College located in Anne Arundel County in 1993, and after describing the College’s general nature and programs, Dr. Fairley testified as follows: “Q. * * * What relationship or is there an existing relationship with the Anne Arundel County public school systems between the college — or a relationship between the college and the school system? ⁴³⁰ “A. Yes. There is both a formal and informal relationship. We, from the very beginning in 1993, established a relationship in conjunction with the Board of Education.

Our early childhood education majors do their practice teaching in the Anne Arundel County public schools. The Anne Arundel public schoolteachers serve as cooperating or mentoring teachers. We have a person on staff currently, Dr. Eleanor Harris, who is a retired Anne Arundel County administrator and principal, who supervises this process. “We also collaborate with the Board of Education on proposal development. We serve as a resource for them, and they for us.

We’ve opened our facility to the Board of Education to be used. They have come over and examined and looked at the kind of facilities that we have. Because we hold classes from 6:00 until 10:00 in the evening, our classroom space is open. So, we’ve made that available to them. “We also provide speakers for them, when requested.

We provide resources, and they to us. “Q. All right. “A. Some of it — well, many of the teachers teach in our general education program. And we’ve also provided help to some of their staff without college degrees obtain a college degree.” “Q. Dr. Fairley, with regard to student teaching, is that a formalized program? “A. Yes. Yes, it is a formalized program. It is — we have a manual.

We have job descriptions for the cooperating teachers. We have job descriptions for our supervising teacher. We have goals and objectives that students are to attain during this process. It’s all spelled out.

We pay a small fee to the cooperating teacher for having our students in the classroom.” ⁴³¹ “Q. * * * Now there are employees of the public school system who are seeking advanced degrees or seeking degrees through your program. Is that correct? “A. Yes. We’ve always had them, yes. “Q. And are there members of the public school staff who teach at Sojourner Douglas? “A. Yes. “Q. Now prior to entering into this lease, did you make an attempt to formalize a relationship with the county public school system? “A. Yes, we did. We worked out a memorandum of understanding, which took under consideration the activities that we were engaged in together.” Dr. Fairley went on to point out that the provision of services and facilities to the Anne Arundel County Public School System, at the six-acre Edgewater location, would commence “[w]hen the new building is constructed.” Thereafter, the Circuit Court filed an order denying the plaintiffs’ request for injunctive relief and filed a written declaratory judgment.

The Circuit Court held that there was no violation of the restrictive covenant, as the proposed building constituted an educational facility and that it was “in conjunction with the Anne Arundel County Board of Education.” The Circuit Court stated: “Based on Dr. Fairley’s testimony, it is undoubtedly clear that the College and the Board of Education have a longstanding relationship of working together to educate individuals in Anne Arundel County. In light of their relationship, this Court concludes that the College has been working ‘in conjunction with’ the Board of Education, as that phrase is used in Section l(A)(i)(C) of South River Colony’s Declaration of Covenants, in the establishment of its new educational facility upon the South River Colony Property. Therefore, this Court concludes that the Defendant’s proposed use of the South River Colony Property does conform with South River Colony’s Declaration of Covenants.” ⁴³² The plaintiffs noted an appeal to the Court of Special Appeals. They also requested the Circuit Court to issue a temporary injunction so that construction of the facility on the six-acre parcel would not commence pending appellate proceedings.

The Circuit Court denied the request for an injunction pending appeal. The plaintiffs neither challenged this denial in the Court of Special Appeals nor sought from the appellate court an injunction pending appeal. Consequently, construction of the facility began, and the parties have informed us that construction has been completed, that the facility is being used by the College, and that a public charter school, chartered and funded by the Anne Arundel County Board of Education, is located in the building. See Maryland Code (1978, 2006 Repl.Vol.), §§ 9-101 through 9-110 of the Education Article, relating to the “Maryland Public Charter School Program.” 4 The Court of Special Appeals, in an unreported opinion, reversed the judgment of the Circuit Court and remanded the case to the Circuit Court “for the entry of orders consistent with this [the Court of Special Appeals’] opinion.” 5 Although ⁴³³ acknowledging that both Dr. Fairley’s testimony and the September 2003 contract between the College and the Anne Arundel County Public School System “describe[ ] a general working relationship between the College and the Board [of Education],” the Court of Special Appeals determined that this relationship was not “sufficient to bring the proposed South River [Colony] development within the use permitted by the covenant.” The intermediate appellate court was of the view that, to satisfy the condition in the restrictive covenant, the Anne Arundel County Board of Education was required to have been involved in the planning, design or construction of the physical facilities.

The appellate court thus noted that the September 2003 contract between the College and the Board of Education “is clearly directed at the development and maintenance of worthwhile educational programs, not at the development of physical facilities.” In its conclusion, the Court of Special Appeals emphasized “that the Board [of Education] took no part in the site plan or layout of the property....” SDC filed a petition for a writ of certiorari which this Court granted. SDC v. London Towne, 390 Md. 90 , 887 A.2d 655 (2005). The respondents did not file a cross-petition for a writ of certiorari.

II

Several recent opinions of this Court have discussed the principles controlling the interpretation and application of restrictive covenants. See, e.g., Lowden v.