Relating to Real Estate

In Precision Small Engines, Inc. v. City of College Park, ____ Md. _____, No. 43 Sept. Term, 2017, 79 A. 3d 1019 (Md. Ct. App. February 21, 2018), the Court of Appeals held that a memorandum of understanding between Prince George’s County and the City of College Park governed College Park’s authority to enforce County zoning laws, but did not restrict College Park’s authority to enforce its own zoning laws.

In 2002, pursuant to Land Use Article §22-119(b), Prince George’s County and College Park entered into a Memorandum of Understanding (MOU) that delegated to College Park the authority to enforce County zoning laws within the boundaries of College Park. The MOU restricted the delegated authority in several ways: it excluded certain properties, prohibited College Park from using stricter standards in enforcing the County zoning laws than those followed by the County, and did not authorize College Park to issue County permits or perform inspections pursuant to County permit applications.  

Precision Small Engines, Inc. was a tenant at a commercial property located in College Park. College Park cited and fined Precision for failing to obtain required occupancy and use permits issued by College Park although Precision had already obtained the requisite County occupancy and use permits. Precision and the owners of the property first challenged the fines in the District Court of Maryland sitting in Prince George’s County. The parties then sought a declaratory judgment in the Circuit Court for Prince George’s County that the MOU prohibited College Park from requiring nonresidential occupancy or building permits from occupants who had already obtained occupancy or building permits from the County. 

The circuit court agreed with Precision. It issued a declaratory judgment that the MOU restricted College Park from requiring occupants or owners of nonresidential property to obtain occupancy, building, grading or other construction permits from College Park where the occupants or owners had already obtained the comparable permits from the County. The circuit court opinion rested on the court’s conclusion that, since the MOU prohibited College Park from issuing permits “now issued by the County Department of Environmental Resources,” and College Park and County permits “virtually serve[d] the same purpose,” the MOU curtailed College Park’s power to require and issue permits in this circumstance.

College Park appealed to the Court of Special Appeals, which reversed and held that the MOU plainly preserved College Park’s authority to enforce its own building code and to regulate use and occupancy of buildings within the limits of College Park. City of College Park v. Precision Small Engines, Inc., 233 Md. App. 74 (2017).

Precision subsequently petitioned to the Court of Appeals (Court), which affirmed the Court of Special Appeals’ ruling. The Court first noted that College Park is granted the authority to enact local zoning laws from §§5-211, 5-202, and 5-209 of the Local Governmental Article. Those sections expressly authorize College Park to enact a building code and regulations pertaining to the construction of buildings, occupancy and use, and the health and safety of the residents of College Park. 

The Court then turned to the MOU. Applying the objective theory of contract interpretation and examining the MOU in its entirety, the Court concluded that the terms of the MOU “plainly demonstrate[d]” that the parties only intended to govern and restrict College Park’s new authority to enforce County zoning laws. Sections 1(a) and 1(b) of the MOU granted College Park the power (formerly held by the County) to enforce County zoning laws while simultaneously reserving any powers endowed to College Park by other laws. Clearly, the parties did not intend to affect authority already possessed by College Park. When properly read in this context, the Court said that the provisions of the MOU prohibiting College Park from issuing County permits manifest the parties’ intent only to curb College Park’s power to enforce County zoning laws.

The circuit court had erred by failing to give effect to the plain language of the MOU, interpreting select provisions of the MOU in isolation and overlooking the authority granted to College Park under the Local Government Article. Instead, the circuit court engaged in a comparison of the types of permits issued by the County and College Park, which was a misapplication of the expressed intent of the parties to the MOU. Moreover, the circuit court failed to consider that College Park conducted more than 4,000 inspections annually without objection from the County — evidence that College Park had not exceeded the authority granted by the County under the MOU. 

Finally, the Court of Appeals noted that Precision was not the appropriate party to challenge the MOU in any event. Pursuant to section 10 of the MOU, College Park and the County were the only beneficiaries, and there were no third-party intended beneficiaries that had the right to bring an action to enforce the provisions of the MOU. 

For more information, contact Edward J. Levin.

Ed Levin
410-576-1900 • elevin@gfrlaw.com