Relating to Real Estate

The Court of Appeals decided that a foreign limited liability company may file an action in a Maryland court even if it was not then qualified to do business in this State, and it may pursue the case if it subsequently qualifies to do business in Maryland. However, the Court also decided that Moe’s Southwest Grill may not challenge a special zoning exception in favor of Chipotle in Annapolis because it lacks standing. A Guy Named Moe, LLC, t/a Moe’s Southwest Grill v. Chipotle Mexican Grill of Colorado, LLC et al., -- A.3d --, No. 56 Sept. Term 2015, 2016 WL 1637650 (Md. Apr. 26, 2016).

In 2012 Chipotle filed for a special exception to build a restaurant at 36 Market Space in Annapolis. Moe’s operates at 122 Dock Street, which is 425 feet away. In the Spring of 2013 the Board of Appeals approved Chipotle’s application following the recommendation of the Department of Planning and Zoning for the City of Annapolis. Moe’s filed a petition for review with the Circuit Court for Anne Arundel County. Chipotle moved to dismiss because Moe’s, a Virginia limited liability company, was not then qualified to do business in Maryland and because Moe’s lacked standing.

The circuit court held that foreign limited liability company could maintain an action as long as it later qualified to do business, but it dismissed Moe’s petition because it found that Moe’s lacked standing to petition for judicial review because it was not a “taxpayer” under §4 401(a) of the Land Use Article and the petition was brought “simply [as] a matter of competition.”

On appeal, the Court of Special Appeals decided that “the petition at issue was void ab initio, given that, at the time that it was filed, Moe’s had lost its right to do business in Maryland and was nonetheless continuing to do business in Maryland.” A Guy Named Moe, LLC v. Chipotle Mexican Grill of Colorado, LLC, 223 Md. App. 240, 246 (2015). See the July 2015 issue of Gordon Feinblatt’s Relating to Real Estate.

The Court of Appeals accepted certiorari, and it considered §4A-1009(a)(1) of the Corporations and Associations Article of the Maryland Code (“CA”), which provides that “doing business” does not include “maintaining suit,” and CA §4A-1007(a), which states “Unless the [foreign] limited liability company shows to the satisfaction of the court” that it has paid a penalty for noncompliance and complied with the registration requirements, it cannot “maintain” suit. The Court of Appeals then said, “The issue, thus, is queued up: If a foreign limited liability company had filed a judicial review action after it had forfeited its right to do business, could it then ‘maintain’ the suit, after it cured the infirmity?” In reliance in part on Kendrick & Roberts v. Warren Bros. Co., 110 Md. 47, 72 A. 461, 463 (1909), the Court of Appeals held, “once a foreign limited liability company comes into compliance with the statute, it may maintain its action even though not registered when initiating the suit.” This reversed the decision of the Court of Special Appeals on this point.

But after winning the battle, Moe’s lost the war. The Court of Appeals held that Moe’s was not a “person aggrieved” and thus did not have standing under §4-401 of the Land Use Article of the Maryland Code to file a request for judicial review of the decision of the Board of Appeals. One of the categories of persons who may file is a “person aggrieved,” and Moe’s claimed harm because of a change in the character of the neighborhood, an increase in traffic, and limited visibility. However, to be a person aggrieved, “[t]he decision must not only affect a matter in which the protestant has a specific interest or property right, but his interest therein must be such that he is personally and specially affected in a way different from that suffered by the public generally.” Bryniarski v. Montgomery County Board of Appeals, 247 Md. 137, 144, 230 A.2d 289, 294 (1967). The Court of Appeals noted that the circuit court had determined that Moe’s was not within direct view of Chipotle and that it lacked the sufficient proximity and “plus factors” identified in Ray v. Mayor & City Council of Baltimore, 430 Md. 74, 85 (2013), needed to demonstrate aggrievement. The Court of Appeals concluded, “It is clear . . . that, ‘a person is not “aggrieved” for standing purposes when his sole interest in challenging a zoning decision is to stave off competition with his established business.’” Therefore, it affirmed the dismissal of Moe’s judicial review action.

For questions, please contact Ed Levin (410) 576-1900.