Verona Housing, Inc. v. St. Mary's County Metropolitan Commission

MacDaniel, J., delivered the opinion of the Court. Appellant Verona Housing, Incorporated, was sued by the St. Mary’s County Metropolitan Commission to recover certain monies allegedly due and owing to the Commission for water service furnished to appellant’s apartment complex over the past ten years. The Commission had filed a bill of complaint seeking certain declaratory and mandatory injunctive relief. The appellant demurred, challenging the court’s equitable jurisdiction • and, alternatively, its power to fashion the relief requested.

In February 1979 the demurrer was overruled; appellant then answered the bill of complaint and the Commission filed a motion for summary judgment. On March 6, 1979, the Circuit Court for St. Mary’s County, sitting in equity, granted the Commission’s motion, and awarded the declaratory and mandatory injunctive relief requested. Appellant then filed this appeal, challenging the trial court’s dismissal of its demurrer, its grant of summary judgment and its power to award the equitable relief requested. The story of this case is long, and its facts complex, so we had best begin at the beginning.

Appellant Verona Housing, Incorporated, (hereinafter Verona) is a New Jersey corporation authorized to carry on business in the State of Maryland. It is the successor in interest to the Patuxent Section I, Patuxent Section II and Patuxent Section IV Corporations. As such, it owns a ninety-nine year non-renewable, non-redeemable leasehold interest in certain land in Lexington Park, Maryland, the reversionary interest being owned by the United States of America. The land is improved by an eight to nine-hundred-unit apartment complex, known as the St. Mary’s Garden Apartments, which Verona manages.

It appears that, for all practical purposes, Verona has no attachable assets in Maryland. The monthly rental income from the complex has been assigned ⁴²³ to certain New Jersey banking interests: Verona merely collects the rents in order to transfer them to the assignee. Appellee St. Mary’s County Metropolitan Commission, (hereinafter the Commission) is a body corporate and politic of a political subdivision of the State of Maryland, created by the General Assembly to manage a public water and sewage system for St. Mary’s County. 1 It supplies such services to the St. Mary’s Garden Apartments. In 1971, the Commission assumed control of the privately owned and operated Patuxent Water Company, Inc., which, until that time, had provided water service to the apartment complex, then operated by Verona’s predecessors in interest.

The dispute began when the Commission raised the water service rates. A running battle then ensued, during the course of which Verona’s predecessors ceased paying their water bills, so that by September 1973, the arrearage had grown to $91,050.88. Efforts at an amicable settlement having failed, Verona’s predecessors brought suit in the United States District Court for the District of Maryland, seeking declaratory relief that certain sections of the Code of Public Laws of St. Mary’s County (pertaining to the Commission’s authority to set rates and charges) be declared unconstitutional, and injunctive relief preventing both the collection of the arrearage and the cessation of water service for nonpayment. 2 On June 25,1974, after a full hearing, the complaint was dismissed and the Commission awarded a judgment of $91,050.88. On March 26, 1975, the Fourth Circuit Court of Appeals affirmed the District Court’s decision.

The Commission then set out to satisfy its judgment. By May 31, 1975, the arrearage, including the uncollected judgment and other late fees, had grown to $151,172.15. In August, the parties resolved upon a payment plan to eliminate the indebtedness. The Commission recorded its Federal District Court judgment in the Circuit Court for St. ⁴²⁴ Mary’s County on September 22, 1975. 3 Meanwhile, problems developed with the repayment schedule, so that the August agreement was modified on October 22, 1975.

Despite these agreements, the dispute persisted during the next two years so that, by January 1978, Verona, as successor in interest, still owed the Commission $80,885.91. 4 At last, impatient to have its Federal Court judgment satisfied and its current charges paid when due, the Commission filed this suit, in equity, on January 26,1978. 5 In response to the Commission’s suit, Verona filed an action against the Commission pursuant to Md. Code, Art. 43, § 450, alleging that the rates, fees and charges established by the Commission were "unreasonably high, lack[ed] uniformity, and [were] arbitrary, capricious, discriminatory and confiscatory.” 6 Then, on June 16, 1978, Verona demurred to the Commission’s petition. On July 12, 1978, the Commission answered the demurrer. It also filed a Motion Raising Preliminary Objection to Verona’s Bill of Complaint on the grounds of lack of subject matter jurisdiction based on res judicata or collateral estoppel and lis pendens. Subsequently, upon motion by the Commission, the two actions were consolidated.

Additionally, the parties entered into a settlement agreement which was duly signed and filed with the court as a stipulation. Throughout 1978, Verona only paid for current service and front foot benefit charges sporadically; its unpaid balance increased, so that by January 1979, its arrearage had grown by an additional $34,333.27. In response, on January 24, 1979, the Commission filed a motion for a mandatory injunction pendente lite to compel Verona to pay its current charges. ⁴²⁵ Events now moved more swiftly. A hearing on the Commission’s motion raising preliminary objection to Verona’s suit had been held on January 9th.

By Order dated January 31st, the trial court granted the Commission’s motion and dismissed Verona’s suit, ruling that it was an attempt to relitigate the issues raised in Verona’s Federal Court action and therefore barred by the doctrine of res judicata. 7 On February 14, 1979, the Commission filed a motion for summary judgment in the amount of $108,758.04. 8 Verona answered the Commission’s motion for mandatory injunction pendente lite on February 15th, and on the sixteenth Verona’s demurrer was overruled, with leave granted to answer within fifteen days. On March 6, 1979, hearing was held on the Commission’s motion for summary judgment, and the motion was granted. By decree entered March 21st, and modified August 9,1979, the court affirmed the balance of the Federal Court judgment, plus interest, and awarded current service and front foot benefit charges as well. Additionally, by way of a mandatory injunction, the court ordered Verona to pay into the court all rent monies collected from tenants residing at the St. Mary’s Garden Apartments until such time as the court decreed that they be disbursed to the Commission in satisfaction of the court’s judgment.

Verona then filed a timely appeal to this Court. Verona first alleges error to the chancellor’s dismissal of its demurrer. In it, Verona alleged that the Commission had an adequate remedy at law, and that the Commission sought to invoke the court’s equity jurisdiction pursuant to § 8-211, Md. Real Prop. Code Ann. which, Verona asserted, was a remedial statute, available exclusively to tenants. 9 The issue for decision, therefore, is whether the Commission ⁴²⁶ alleged sufficient facts in its petition to invoke the equity jurisdiction of the court below.

In its January 26, 1978, petition the Commission first requested that the court issue a declaratory decree affirming the existence and amount of the unpaid balance of the Federal Court judgment, Verona’s delinquency and the Commission’s right, pursuant to statute, to cut off water service to the St. Mary’s Garden Apartments under those circumstances. 10 The Commission had also joined all the tenants of the apartment complex as a defendant class; it further requested a declaratory decree that its petition constituted sufficient notice to the tenants of the Commission’s right and intent to cut off water service, should all else fail. Clearly however, the Commission did not wish to exercise its right. It further petitioned the court that Verona be mandatorily enjoined to collect the tenants’ rents when due and owing; that they be paid directly to the court; that the court retain them until the accumulation equalled the indebtedness and that the court then pay them to the Commission in satisfaction of the debt. In support of its petition for a mandatory injunction the Commission alleged as follows: "16.

The termination of water service by plaintiff to St. Mary’s Garden Apartments would constitute a substantial threat to the life and health of the defendant tenants. 17. Said termination of service would be as a direct result of the landlord’s failure to pay the water bills past due and owing to plaintiff, said landlords being defendants Verona and St. Mary’s Garden Apartments. ⁴²⁷ 18. Pursuant to Real Property Article Section 8-211 of the Annotated Code of Maryland, defendants Richmond, Gibson, and Furlong, as representatives of the class of tenants, may pay their rent directly into Court where the landlord’s failure to pay its water bills causes a termination of water services. 19. ... defendants Richmond, Gibson, and Furlong, as representatives of the class of tenants, are not directly liable to plaintiff for monies past due and owing for water service or benefit charges and . .. plaintiff does not desire to penalize said defendants and other members of the class by terminating water service, . ...” Maryland Rule 370 a. 2. provides: "A bill or petition shall contain a concise statement of the facts upon which the plaintiff seeks relief, and such averments as may be necessary to entitle him to the relief sought, and, may also contain such facts as are intended to avoid an anticipated defense.” Subsection b. of that Rule states: "A formal combination clause, or allegation of want of remedy at law, or other similar formal averment, shall not be required.” And in Balto. Import Car v. Md. Port Auth., 258 Md. 335, 339-40 (1970), the Court of Appeals quoted from its opinion in Smith v. Shiebeck, 180 Md. 412, 420 (1942), to like effect: " * * The material facts essential to the complainant’s right to obtain relief should be alleged, but a general statement of the facts is sufficient.

It is not necessary to state minutely all the circumstances which may conduce to prove the general charge, as these circumstances are properly matters of evidence which need not be recited to enable them to be admitted as proof [citing cases]. ⁴²⁸ Even though every particular circumstance is not stated, the bill will be held sufficient if it states the complaint with reasonable certainty, clearness and accuracy so as to apprise the defendant of the nature of the claim brought against him.’ ” Verona’s demurrer challenged the jurisdiction of the court to grant the equitable relief requested. But it is well settled that "a demurrer to an entire bill of complaint must fail if, eliminating any portion of it that may be defective, enough remains to present a sufficient ground for equitable relief.” Causey v. Gray, 250 Md. 380, 391 (1968); Smith v. Smith, 216 Md. 141, 145 (1958); see also Jackson v. Cupples, 239 Md. 637, 641 (1965). In light of the Commission’s request for declaratory relief, the question before the chancellor in ruling on the demurrer was clear-cut. As the Court of Appeals explained in Hunt v. Montgomery County, 248 Md. 403 (1967), at 408-09: "Ordinarily the only place a demurrer has in the declaratory process is to challenge the legal availability/of the remedy sought to be used.

In Shapiro v. County Comm’rs, 219 Md. 298, 301-03 , Judge Prescott for the Court said: 'In actions for declaratory judgments or decrees, as in actions generally, a demurrer admits all of the alleged facts that are well pleaded. * * * 'It should be borne in mind that a demurrer is rarely appropriate in a declaratory judgment action. Where a bill of complaint shows a subject matter that is within the contemplation of the relief afforded by the declaratory decree statute, and it states sufficient facts to show the existence of the subject matter and the dispute with reference thereto, upon which the court may exercise its declaratory power, it is immaterial that the ultimate ruling may be ⁴²⁹ unfavorable to the plaintiff. The test of the sufficiency of the bill is not whether it shows that the plaintiff is entitled to the declaration of rights or