Relating to Real Estate

In 1990, Maryland Reclamation Associates, Inc. (MRA) purchased a 62-acre parcel in Harford County, Maryland (the Property) for $732,500 to be used as a rubble landfill. Prior to closing on the purchase of the Property, the Property was included in the County Solid Waste Management Plan as a rubble landfill at the request of MRA, and MRA obtained a Phase I rubble landfill permit approval from the Maryland Department of the Environment. Beginning just days after MRA closed on the Property, the Harford County Council introduced legislation amending the zoning requirements for rubble landfills that would effectively make it impossible for the Property to be sited as a rubble landfill without a variance. A long and complicated history of more than 30 years of litigation about this legislation ensued before the current case, which is called Maryland Reclamation Assocs., Inc. v. Harford Cty, 468 Md. 339, 227 A.3d 230 (2020), reconsideration denied May 4, 2020, cert. denied No. 20-335, 2020 WL 6037255 (U.S. Oct. 13, 2020). This history included three prior trips to the Court of Appeals, which declined on two separate occasions to consider the merits of MRA’s laundry list of challenges to the County Council legislation (which related to federal and state constitutional claims as well as non-constitutional claims) because MRA failed to exhaust all of its administrative remedies.

Particularly relevant to the current decision are the following holdings and facts in rounds three and four of the legal battle between MRA and Harford County:

1. In Maryland Reclamation Associates, Inc. v. Harford Cty, 382 Md. 348 (2004) (MRA III), the Court of Appeals ruled that MRA had not exhausted its administrative remedies, because MRA failed to apply for a zoning variance from the new zoning requirements for rubble landfills created by the offending legislation.
    
2. Maryland Reclamation Associates, Inc. v. Harford Cty, 414 Md. 1 (2010) (MRA IV) was the result of the following procedural history: After MRA III, MRA applied for, and was denied, a zoning variance from the Harford County Hearing Examiner. MRA appealed to the Harford County Board of Appeals and then to the circuit court. MRA’s appeal, at this stage, included the denial of the variance and constitutional challenges to the offending legislation that it had previously raised to the Board of Appeals (and previously appealed to the circuit court), but which were stayed while MRA applied for a zoning variance. When the circuit court did not rule in its favor, MRA appealed to the Court of Special Appeals (CSA). The Court of Appeals granted certiorari on its own initiative and ruled in favor of Harford County on the merits of all of MRA’s claims in MRA IV. This included upholding the denial of the variance.

Following the decision in MRA IV, MRA again filed suit against Harford County in the circuit court. This time, it alleged that the County’s actions in prohibiting MRA from developing the Property as a rubble landfill constituted an “inverse condemnation” of the Property. The jury found in favor of MRA and awarded MRA damages of $45,420,076 as just compensation for the “taking.” The jury award was based on the projected revenues and profits that MRA alleged would have been generated by a rubble landfill at the Property. Harford County appealed to the Court of Special Appeals.

The CSA held on August 1, 2019, that MRA’s inverse condemnation claim was barred by the statute of limitations. According to the Court of Special Appeals, that claim accrued when the Harford County Board of Appeals upheld the Hearing Examiner’s denial of MRA’s variance requests. That denial was rendered six years before MRA filed its complaint against Harford County in the circuit court, well after the expiration of the three-year limitations period. Harford Cty v. Maryland Reclamation Assocs., Inc., 242 Md. App. 123 (2019). Notably, the CSA held that MRA had exhausted its administrative remedies in regard to the inverse condemnation claim because (1) such claim only became justiciable after MRA’s variance application was denied by the Board of Appeals; and (2) MRA was not required to first bring a takings claim for just compensation in an administrative proceeding. The CSA, accordingly, reversed the judgment of the circuit court.

In the 2020 case, the Court of Appeals affirmed the holding of the CSA, but on different grounds. The Court of Appeals held that MRA had not exhausted its administrative remedies because MRA failed to raise its inverse condemnation claim before the Board of Appeals. The Court of Appeals rejected MRA’s argument that a landowner is not required to bring a takings claim in an administrative proceeding as opposed to after an administrative proceeding. Regulatory takings claims in the context of a zoning regulation require the landowner to show that the application of the regulation to the landowner’s property deprives the property of “all beneficial use and that the [p]roperty cannot be used for any other purpose under the existing zoning[.]” (emphasis added). The factual determination of whether a property is denied of any beneficial use must first be made by the zoning administrative agency, which has in its toolbox the right to grant a zoning variance “to alleviate a constitutional violation arising out of the application of an otherwise valid zoning regulation.”

Therefore, despite the fact that a zoning agency does not have the power to award just compensation if a landowner successfully establishes a taking and the zoning agency does not grant a variance, a landowner nevertheless must first raise a takings claim before the Board of Appeals. The Court further explained that MRA’s constitutional right to a jury trial is limited to the right “to a determination of just compensation by a jury … only after MRA raised all its constitutional challenges … within the Board of Appeals proceeding[.]” (emphasis in original).

According to the Court of Appeals, MRA in 1991 should have appealed the application of the regulations to the Property to the Board of Appeals and requested a variance, simultaneously. Such an appeal should have included each and every constitutional claim MRA intended to assert. MRA should have presented evidence addressing both the variance standards under the local zoning code and the inverse condemnation standard. This would have resulted in an initial factual determination by the Board of Appeals of whether the Property would be deprived of all beneficial use, the absence of which the Court of Appeals viewed as MRA’s fatal flaw.

Interestingly, the Court of Appeals did not reach the issue addressed by the CSA in August 2019: whether MRA’s inverse condemnation claim was barred by the statute of limitations, and, consequently, whether MRA may attempt, once more, to pursue its inverse condemnation claim against Harford County in accordance with the Court of Appeals’ guidance.

Perhaps the saga of MRA’s thwarted landfill will continue even though the Supreme Court denied certiorari.

For questions, please contact Edward J. Levin.

Edward J. Levin
410-576-1900 • elevin@gfrlaw.com