Shallow Run Ltd. Partnership v. State Highway Administration

¹⁶⁰ CATHELL, Judge. Shallow Run Limited Partnership, appellant, appeals from a judgment rendered by the Circuit Court for Howard County (Sweeney, J., presiding) directing the specific performance of a land acquisition contract in favor of the State Highway Administration, appellee (sometimes hereinafter referred to as the State or SHA). Appellant presents two questions, one with multiple parts: 1. Did the Circuit Court err by ordering specific performance of a contract in which a material term was vague and uncertain? 2.

Did the Circuit Court err by granting specific performance of a contract for the purchase of property which the Appellee/contract purchaser had previously condemned: A. Was the contract enforceable after the parties failed to settle within the three month deadline contained in the contract? B. Did SHA’s conduct constitute a waiver of its right to enforce the contract? C. Was specific performance barred under the doctrine of judicial estoppel? D. Would specific performance of the contract violate the statutory prohibition against abandonment of a condemnation after property is taken by SHA?

The Facts Appellee entered into negotiations with appellant for the purpose of acquiring 18.591 acres of a larger tract containing approximately 29.691 acres. The acquisition by the State of the 18.591-acre parcel apparently left the remaining parcel “land-locked,” i.e., without access to road frontage, at least for a temporary period. To address the status of the landlocked parcel, certain easement provisions were included in the sub ¹⁶¹ sequent documentation, i.e., the option or contract. 1 The option or contract contained provisions requiring appellant to settle within ten days 2 and to provide clear title to the State at that time. The contract also provided that the State could take immediate possession of the property.

Other provisions required that the deal be consummated within ninety days. The property was encumbered by mortgages exceeding the anticipated purchase price of the property, and, therefore, appellant was required to obtain a release of liens for the subject property. It was unable to do so within the ten-day period, and the parties continued to attempt to effectuate settlement. During this period, the subject of condemnation came up.

The State alleges that it was in the context of a “friendly condemnation.” 3 Appellant claims otherwise. After the “quick take” condemnation 4 was instituted, the State deposited into court the amount of its appraisal of the subject property, which was $13,000 less than the amount ¹⁶² it had agreed to pay under the option contract. This appraisal was procedurally required. The condemnation action then continued.

The sums deposited were withdrawn by appellant and subsequently used, at least in part, to facilitate a release of the interests "of the various lienholders. After appellant was able to provide clear title, the State requested that appellant fully perform pursuant to the terms of the contract option. Appellant refused and insisted that the contract had been terminated when the State filed the condemnation action and asserted further that the State was required to proceed and conclude its condemnation action. The State then instituted the instant case for specific performance of the option contract.

We shall further discuss the relevant facts as we address the respective questions. 1. The Easement Provision Appellant asserts that the provisions in the option contract in respect to its retention of an ingress/egress easement to the “landlocked” property are so vague and uncertain as to make the entire agreement unenforceable. In its answer to the complaint below, appellant denied generally the allegations of the complaint but made no special answer claiming that the easement provision was vague and uncertain and that the contract was unenforceable for that reason. Appellant did assert the following special defenses: 11.

Plaintiffs action is barred by laches. 12. Plaintiff has failed to state a claim upon which relief may be granted. '13. Plaintiff is precluded from this action by waiver. 14. Those who signed the Option Contract on behalf of Defendant, lacked the capacity and were without authority to bind Defendant. 15.

Plaintiff is precluded from pursuing this claim because of a pending condemnation action which by law may not be dismissed. ¹⁶³ On May 10, 1994, appellant filed a motion for summary judgment that, as relevant to this question, asserted: “The option contract ... should be disregarded as a matter of law for failure of express conditions precedent.” In the affidavit in support of this motion, appellant asserted that the provision of an easement by the State was one of the conditions precedent 5 (as was the ten-day settlement period and the three-month delivery of deed and title period). The State opposed the granting of the motion for myriad reasons, including: “[PJaragraphs (D)(1) [the easement provision], (D)(2) [the ten-day settlement provision], and (E) [the three-month period for delivery of marketable title] are not conditions precedent....” The trial court denied appellant’s summary judgment motion by written Memorandum and Order dated June 29,1994. The court made no separate finding on the easement issue. Ultimately, the trial court, in its final judgment, addressed the matter of the easement, as well as the other matters appellant claimed were conditions precedent. 6 It stated: Shallow Run also argues that the contract contains conditions precedent which were not fulfilled and that, as a result, the contract is not enforceable.

Shallow Run argues that those conditions required that (1) S.H.A. provide easement access to Shallow Run for ingress and egress to the rear parcel and front parcel; (2) that the State settle within ten (10) days of its acceptance of the Option, on the condition that Shallow Run provided good and marketable fee simple title to the front parcel; and (3) that Shallow Run deliver good and marketable fee simple title to S.H.A. within three months of acceptance of the Option. As to the providing of an easement for egress and ingress, this was not a condition precedent. This obligation was an ongoing one to be effectuated by the State. There is ¹⁶⁴ no indication that the State will not provide the easement needed in a timely fashion.

The ten-day provision is not a condition precedent, but was inserted at the request of Shallow Run’s agents for Shallow Run’s benefit. The ten-day provision was never viewed by Shallow Run prior to the filing of the instant litigation as a condition precedent. Indeed, Shallow Run’s representatives were acting throughout the course of the pre-litigation history in full understanding that an enforceable contract existed. Shallow Run did have an obligation to deliver good and marketable fee simple title to S.H.A. within three months of acceptance of the Option.

This was not a condition precedent to the contract’s enforceability but an obligation that Shallow Run could not or would not comply with. It is just such an obligation that a specific performance action can seek to enforce. It should also be noted that the time provisions in the contract were in many respects put into the contract more as goals than mandates. The actions of the parties to the contract prior to the initiation of the condemnation litigation demonstrate an intent to continue to work to fulfill the terms of the contract, regardless of the specific wording as to time limit.

S.H.A. has consistently wanted to do this deal, and it appears that Shallow Run’s representatives also did, at least from May to September, 1992. Even if the time provisions at issue were viewed differently, the actions of the parties clearly waived any time mandate that Shallow Run now relies on. Laches in bringing this matter has been raised by Shallow Run. The Court rejects this.

While S.H.A.’s approach to enforcing its rights under the contract was at times confused and haphazard, the Court does not believe that there has been any inequitable delay or substantial prejudice to Shallow Run from S.H.A.’s somewhat plodding efforts to enforce its rather clear contract rights. The trial court found that the easement provision, as stated in the contract, was not intended to be a condition precedent to settlement but rather a continuing obligation of the State. ¹⁶⁵ We agree. Moreover, there was evidence that the parties knew of the initial proposed location of the easement and that the State had the right to change that location. Mr. Gorsuch, an employee of the State Highway Administration and “team leader” for the Western Region (team leaders were previously called Assistant Chiefs of Right of Way), 7 testified that he initially had a conversation with a contract purchaser of the Shallow Run property, Mr. Bean. 8 In his initial discussion with Mr. Bean, the subject of easement access to the “landlocked” parcel came up.

Mr. Gorsuch told him [Mr. Bean, that] I thought there wouldn’t be a problem getting an easement, I would have to get a plat prepared to show where we would probably allow an easement to be.... ... I told him that I thought we could get an ingress and egress easement over that property.... Q. What does ingress and egress mean to you? A. They could put a driveway, whatever they needed, for access to the rear property....

I specifically put in for an eighty foot wide easement.... Mr. Gorsuch then discussed the initial conversation he had with Mr. Stultz, president and general partner of appellant, prior to setting up the meeting between appellant and himself: “He questioned me about the easement.... I told him there would be an easement and that I would have a plat attached to the option contract showing the easement area.” Later, Mr. Gorsuch was asked: ¹⁶⁶ Q. .. .Were you ever asked by ... [appellant] to provide an easement that was developed, that was graded, that was paved, that was improved in any way? A. I was not asked to provide that ... and I emphatically stated we would not provide or construct a bridge or a road for that.

He then testified that he obtained the option document and then attached to it “the plat delineating the eighty foot easement.” He testified that that plat was attached to the contract when it was executed by appellant and that Mr. Knott, another of appellant’s principals, initialed the plat in the lower right-hand corner. There are initials on the lower right-hand comer that appear to be those of Mr. Knott. That plat clearly shows an 80-foot-wide, 1,579.11-foot-long easement along the western and southern boundaries of the subject property. Mr. Gorsuch testified that he showed Mr. Stultz and Mr. Knott the plat: “I gave them [Mr. Stultz and Mr. Knott] the contract — each one [had] a copy of it to read, and we discussed the easement.

I showed them the easement area on the plat.” On cross-examination, he testified further about the easement and the State?s modification rights: A. I believe it said in the contract that this could be moved ... or subject to relocation.... Q. In other words, ... [the plat] you were showing to Mr. Stultz and Mr. Knott was one person’s idea of where ... but somebody else in your department could decide that it wouldn’t go there ... ? A. I believe that’s correct. Mr. Bean testified that he discussed with appellant the discussions he had with the State regarding the easement issue.

He stated: “I probably told them that I had asked and tried to get the State to build ... a structure across the stream and was unsuccessful and basically telling them, I guess, they still had the right to try and get that but I was not successful____” Mr. Knott, a limited partner of appellant, testified that appellant had told appellee during negotiations ¹⁶⁷ that “we still needed access to the back piece of property---[W]e [he and Mr. Gorsuch] discussed the access and various items in the access.” Mr. Knott was asked: Q. ... [D]id you discuss with him specifically where the access would be ... ? A. He [Gorsuch] showed us ... a drawing showing where ... the possible access could have been---- [H]e said, “Well, your right-of-way could go here, but we could move it according to what your needs were.” [9] Later, Mr. Knott described further his understanding “that road was a temporary road, because once the people developed the piece of property in the back, we had to bring another road in____ We couldn’t spend a lot of money on putting a temporary road of two years ... that was a key in that negotiation.” (Emphasis added.) The easement language in the option agreement provides that the State would provide an ingress/egress easement to the landlocked parcel and that the easement [would] be extinguished at the end of two (2) years or at such time as physical and legal access becomes available through Parcel 285 ... whichever shall occur last. The said easement delineated on a property plan attached hereto is subject to modification based upon the State Highway Administration’s final wetlands mitigation design. This language, in the first instance, is not vague and uncertain.

It is clear the State is required to grant the 80-foot-wide by 1579.11-foot-long easement delineated on the plan attached to the contract. The State is permitted to change the location of that easement depending upon its final plans for the property. It is apparent from the evidence that all parties knew that to be the case. Appellant may not like it, and may not have liked it even when it agreed to it, but it did agree.

The contract is clear — what may be uncertain is the ¹⁶⁸ end result, i.e., the precise location of the easement. But it is certain that appellant will get an easement. In that regard, we note what the Court of Appeals stated in Sibbel v. Fitch, 182 Md. 323, 327 , 34 A.2d 773 (1943) (quoting 28 C.J.S., Easements § 82): “Where an easement in land, such as a way, is granted in general terms, without giving definite location and description of it, the location may be subsequently fixed by an express agreement of the parties, or by an implied agreement arising out of the use of a particular way by the grantee and acquiescence on the part of the grantor, provided the way is located within the boundaries of the land over which the right is granted. As otherwise expressed, it is a familiar rule, that, when a right of way is granted without defined limits, the practical location and use of such way by the grantee under his deed acquiesced in for a long time by the grantor will operate to fix the location.

The location thus determined will have the same legal effect as though it had been fully described by the terms of the grant.” ... [T]he same principles with reference to the location of a way of necessity and the location of a way reserved in general terms are applicable. In the case sub judice, the State reserved the right to relocate the easement. The Court, in Sibbel , noted “the location of an easement when once established cannot be changed by either party without the other’s consent except under the authority of a grant or reservation to this effect.” Id. at 328 , 34 A.2d 773 (emphasis added). In the case at bar, the easement was definitely fixed at the time of the signing of the contract — and there was ample evidence that appellant knew that its location was fixed.

Moreover, the contract, in clear and certain terms, reserved to the State the power to modify that easement. Modifications, if any, must be reasonable. We stated in Drolsum v. Luzuriaga, 93 Md.App. 1, 17 , 611 A.2d 116 , cert. denied, 328 Md. 237 , 614 A.2d 83 (1992) (quoting Bishields v. Campbell, 200 Md. 622, 624-25 , 91 A.2d 922 (1952)): ¹⁶⁹ [A] right of way is merely a right of passage and the owner of land is entitled to use it for any purpose that does not unreasonably interfere with the use of the easement. Hence, it is held in this State that, in the absence of an agreement or surrounding circumstances to the contrary, the owner of the servient estate has the right to maintain gates on a right of way at the points where the way begins and terminates.

Of course, if a grant, construed in connection with the surrounding circumstances, shows an intention that no gate shall be erected, such a showing of intention is controlling. It is equally true that the fact that a gate was standing at the time of a grant is a circumstance that strengthens the presumption that the parties contemplated that a gate might thereafter be maintained. We noted in Drolsum that a servient owner’s (the State here) modification of an easement must be reasonable. We also noted the law regarding the construction of improvements in the easement area and repairs to those improvements: In the absence of an agreement, the owner of the servient tenement is under no duty to maintain or repair it, but rather it is the duty of the owner of the easement to keep it in repair. 25 Am.Jur.2d § 85.

The few Maryland cases on this subject hold that an easement owner has a right to repair, maintain, and improve the easement. We believe that no Maryland case has actually considered the duty of an owner to keep an easement in repair. See Wagner v. Doehring, 315 Md. 97, 104 [ 553 A.2d 684 ] (1989) (grant of right of way entitles holder to “maintain, improve, or repair the way to serve its purpose”); Tong v. Feldman, 152 Md. 398, 402 [ 136 A. 822 ] (1927) (dominant tenement owner may enter, at reasonable times, to make proper repairs); Fedder v. Component Structures Corp., 23 Md.App. 375, 381 [ 329 A.2d 56 ] (1974) (owner of right of way may prepare, maintain, improve, or repair way). Id. at 20, 611 A.2d 116 .

In a negligence case, Wagner v. Doehring, 315 Md. 97, 104-05 , 553 A.2d 684 (1989), the Court of Appeals held that a ¹⁷⁰ holder of an easement has the limited liability against a trespasser that the owner of the fee might have so long as the easement holder has asserted control over the easement. The Court commented, “[t]he grant of a right-of-way ... entitle[s] the holder to ... improve, or repair the way to serve its purpose.” Id. at 104 , 553 A.2d 684 . The Court ultimately held: We ... hold that the holder of an easement for ingress and egress is afforded the same protection to which a landowner is entitled with respect to a trespasser, when the easement holder exercises a degree of control over the land which permits the holder to exclude trespassers from the easement. This is consistent with the rationale that a possessor of land should be free to use his land without the burden of watching for and protecting it against trespassers.

See W. Prosser, [The Law of Torts] § 58; see also 5 F. Harper, F. James & O. Gray, The Law of Torts § 27.2, at 136 (2d ed.1986) (if the source of a landowner’s immunity is that he is not charged with knowledge of a trespasser’s presence, then the same immunity should be applied to the holder of an easement). Id. at 107, 553 A.2d 684 . Although Wagner was a negligence case, it reaffirms the principle that holders of easements, such as appellant would be here, have the power to construct improvements to the easement reasonably necessary for all permitted uses of the landlocked parcel. 10 What the law contemplates when the grantor of a defined easement reserves the power to modify it are those constraints that exist in the case of easements by necessity. “The test in such cases is the question of a reasonable access to the property of the party claiming to be entitled to a way of necessity.” Beck v. Mangels, 100 Md.App. 144, 168 , 640 A.2d ¹⁷¹ 236 (1994) (quoting Zimmerman v. Cockey, 118 Md. 491, 496 , 84 A. 743 (1912)), cert. dismissed, 337 Md. 580 , 655 A.2d 370 (1995). Thus, we conclude that the easement provision in the contract is not vague and uncertain.

It established the then present location of the easement and reserved to the State the right to reasonable modification, i.e., relocation. Moreover, we also hold that the mere grant of a simple easement permits the dominant holder (appellant) to improve, maintain, and repair the easement area consistent with its needs, and permits it to use that area, wherever located, without unreasonable interference from the servient owner (here the State) and does not require the servient owner to construct or maintain improvements in the easement area unless the grant itself requires it. Finally, we hold, with our above resolution, that it is unnecessary for us to determine whether the easement provision was a condition precedent. If it was a condition precedent, that condition was met when the State executed the contract with the plat attached.

That is all, at that stage, that the State could do because appellant thereafter was initially unable and then refused to settle and thus declined to execute a deed reserving to itself the easement in question or requiring, at settlement, that the State grant it an easement under separate document. Appellant contends that the language of the easement leaves the Appellant completely uncertain whether its property can be developed, and if so, to what extent it can be developed, when it can be developed, what the uses of the property can be, what the cost of development will be and whether there are environmental or other regulatory obstacles to building an entrance roadway. Since the Bradshaw parcel is an industrial zoned property, the value of the property is directly proportional to its development potential. [Footnote omitted.] All of these potential problems are, if they occur, the result of the clear and certain terms of the contract. These ¹⁷² problems were, or should have been, clearly discernable when the easement provision was negotiated and the contract executed.

In summation, appellant chose to enter into a contract that clearly created potential problems in respect to their use of the remainder of the property. If the contract was bad for appellant and if appellant’s use of the remainder of their property is limited as a result of the contract — so what? People are permitted to enter into contracts to their disadvantage. If appellant had contracted to landlock the remainder of its property completely, it could have done so.

We noted in Beck, 100 Md.App. at 158 , 640 A.2d 236 (quoting Dalton v. Real Estate & Improvement Co., 201 Md. 34, 46-47 , 92 A.2d 585 (1952)): A distinction has been maintained in the law between implied grants [where a grantee is granted landlocked property] and implied reservations [where a grantor retains landlocked property]---- [I]f a grantor intends to reserve any rights ... he must reserve them expressly, and the only exception is of easements ... of ... strict necessity.... We later noted in Beck a statement from Hancock v. Henderson, 236 Md. 98, 102 , 202 A.2d 599 (1964), “The rule with respect to implied reservations is much more strict than that with respect to implied grants.” 100 Md.App. at 159 , 640 A.2d 236 . Thus, if appellant wished to reserve any additional easement rights over the property for the benefit of the property retained, it should have retained an express reservation of such additional rights. Appellant’s briefed argument on question one is based entirely on the easement provision.

Accordingly, we do not address whether any other terms were vague and uncertain. The circuit court did not err in its treatment of this question. 2. Granting of Specific Performance Appellant argues that the trial court erred in granting specific performance. Appellant presents multiple questions with respect to this argument.

We address appellant’s first two questions together. ¹⁷³ A. Was the contract enforceable after the parties failed to settle within the three month deadline contained in the contract? B. Did SHA’s conduct constitute a waiver of its right to enforce the contract? In reviewing the trial court’s factual findings relating to the questions at issue, we are concerned with whether the trial court was clearly erroneous. We noted in the criminal case of Nixon v. State, 96 Md.App. 485, 491-92 , 625 A.2d 404 , cert. denied, 332 Md. 454 , 632 A.2d 151 (1993): The standard of review for court trials is well-established.

Maryland Rule 8-131(c) provides that in an action tried without a jury, an appellate court “will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of the witnesses.” See also Reisterstown Plaza Assocs. v. General Nutrition Ctr., Inc., 89 Md.App. 232, 240 [ 597 A.2d 1049 ] (1991). “Unless the factual findings of the trial court are clearly erroneous, an appellate court may not arrive at different factual conclusions. If there is any competent material evidence to support the factual findings of the trial court, those findings cannot be held to be clearly erroneous.” In Emory v. State, 101 Md.App. 585, 622 , 647 A.2d 1243 (1994), cert. denied, 337 Md. 90 , 651 A.2d 855 (1995), we said: Because the weighing of evidence is the exclusive prerogative of the fact finder and does not impact on the purely legal question of whether some competent evidence is present to support a finding, evidence that is legally sufficient to satisfy one burden of persuasion is legally sufficient to satisfy any burden of persuasion. This is the “clearly erroneous” standard of appellate review. It was explicitly spelled out by State v. Faulkner, 314 Md. [630, 635, 552 A.2d 896 (1989)]....

We also restated the “clearly erroneous” standard in our recent civil case of Mayor of Rockville v. Walker, 100 Md.App. 240, 256 , 640 A.2d 751 , cert. granted, 336 Md. 354 , 648 A.2d 464 (1994): ¹⁷⁴ It is hornbook law, memorialized in Md. Rule 8 — 131(c), that “[w]hen an action has been tried without a jury, the appellate court ... will not set aside the judgment of the trial court on the evidence unless clearly erroneous, and will give due regard to the opportunity of the trial court to judge the credibility of witnesses.” This means that if, considering “the evidence produced at trial in a light most favorable to the prevailing party ...,” there is evidence to support the trial court’s determination, it will not be disturbed on appeal. Maryland Metals, Inc. v. Metzner, 282 Md. 31, 41 , 382 A.2d 564 (1978). Moreover, “if there is any competent, material evidence to support the factual findings below, we cannot hold those findings to be clearly erroneous.” Staley v. Staley, 25 Md.App. 99, 110 , 335 A.2d 114 , cert. denied, 275 Md. 755 (1975). Mr. Gorsuch testified that in his initial contact with appellant, which was prior to presenting appellant with a contract, Mr. Stultz also asked me how fast we could settle, and I said that would be entirely up to him.

He requested that we settle within ten days. Q. And did he tell you why? A. At that time I believe that’s when he told me that they were very close to being foreclosed on ... and that they wanted to get this completed as soon as possible. Later, he testified that “Mr. Stultz in particular [told him] that there would be no problem, they could clear the property within this ten-day period____ [T]hey ... asked for the check to be delivered within ten days.” Later, he explained the delays in the settlement process were at the request of appellant.

He noted that Mr. Stultz asked him to withhold notifying tenants. Mr. Gorsuch explained that Stultz: At that time ... was having problems getting a clear title to the property, and he asked for more time.... I believe during one of our conversations when he indicated he was having problems getting the clear title, he asked if there was any way that we could assist in that. And at that time ¹⁷⁵ I think I indicated, “Well, we have done friendly impositions in the past----” A. Excuse me ... [.] Friendly condemnations in the past where it was difficult to get all property owners or lien holders to agree and that we could file what we refer to as “a friendly condemnation.” THE COURT: It gives you leverage over the lien holders, right?

A. Yes, right---- Q. .. .What was the purpose of offering a friendly condemnation ... to Mr. Stultz when he asked if there was anything else that we could do? A. I was attempting to assist them in any way I could to help them clear the property---- ... Clear it of ... anybody who has interest in the property. Lien holders....

Q. Now, when you mentioned this friendly condemnation possibility to Mr. Stultz, what was his response? A. He questioned me as to what that meant---- ... I don’t recall what his response was----” On cross-examination, he reiterated that Mr. Stultz wanted the ten-day settlement provision and, in response to a question, testified additionally to Mr. Stultz’s knowledge of “friendly condemnation”: I said I recall telephone conversations with Mr. Stultz---At the time he was telling me he was having problems getting the title cleared as fast as he thought he could and conversation such as he was very — what’s the word I’m ¹⁷⁶ looking for — he was very anxious. He even told me that his house was up for mortgage on this property, he could lose everything ... [.] He wanted to know if there was any way that we could assist in getting this cleared up.

And I think that’s when I suggested that it was possible that we might be able to go with a friendly condemnation at which time he asked me what that meant. Mr. Gorsuch concluded by noting that Mr. Stultz’s “big concerns were the easement and the ten[-]day turn around.” Ms. Kimmel, a Contractual Right-of-Way Supervisor for the State, was assigned by Mr. Ditto, the Deputy Director of the Office of Real Estate, to do the settlement. During her direct examination, the following colloquy took place: Q. ... From the State’s point of view, was the State ready, willing and able to proceed to settlement within the ten days except for being provided with the releases of liens by Mr. Stultz.

A. ... [W]e found out ... that ... the general partner ... [was] not in good standing____ Q. Did he correct that? A. Yes.... Q. ... [W]as the State ready, willing and able to proceed