Relating to Real Estate

In 2627 LLC v. Valley’s Planning Council, Inc., No. 1838, Sept. Term, 2017, 2020 WL 4673887 (Md. Ct. Spec. App. Aug. 12, 2020), the Court of Special Appeals (CSA) vacated the judgment of the Circuit Court for Baltimore County that found a proposed development plan was barred by collateral estoppel. The circuit court’s ruling was based on the plan’s similarities to a prior plan for the residential development in the Caves Valley area of Baltimore County that had been previously rejected.

In 2015, 2627 LLC (Developer) sought approval of a development plan that proposed the construction of four single-family homes on a 24.18-acre unimproved parcel of land (2015 Plan). The land was located on a ridge in the Caves Valley National Register Historic District in Baltimore County, a property adjacent to the Stemmer House, a Baltimore County landmark in a Baltimore County historic environmental site.

During a hearing before the Office of Administrative Hearings (OAH) for Baltimore County, several parties opposed the 2015 Plan because in 2004, a previous owner of the property was denied approval of a different development plan (2004 Plan) to construct homes in the same location. The 2004 Plan proposed 14 lots on 73 acres, which included a lot for the Stemmer House, and six stormwater management ponds. The two central reasons for the denial of the 2004 Plan were: (a) the potential environmental impact of the proposed stormwater management system and (b) the potential negative impact upon the Caves Valley National Register Historic District. Despite the denial of the 2004 Plan, the OAH for Baltimore County approved the 2015 Plan. The Administrative Law Judge (ALJ) who conducted the hearing made the following rulings: (1) res judicata was inapplicable because there had been a significant change in circumstances between the 2004 and 2015 Plans; (2) the proposed conceptual stormwater management plan was sufficient at this stage of the development process and satisfied the requirements of the Baltimore County Code (BCC); (3) the proposed lots were located outside of the Stemmer House historic environmental setting and amendments to the BCC no longer required the ALJ to preserve historic sites; and (4) the BCC does not require any agency to make findings or recommendations to the ALJ regarding panhandle lots.

After the ALJ’s approval of the 2015 Plan, one of the parties contesting the plan, the Valley’s Planning Council, Inc., appealed the decision to the Board of Appeals for Baltimore County, which affirmed the ALJ’s decision. On further appeal, the Circuit Court for Baltimore County ruled solely on the issue of whether the 2015 Plan was barred by res judicata or collateral estoppel because of the denial of the 2004 Plan. The circuit court decided that the issues and testimony presented to the ALJ with respect to the 2015 Plan were nearly identical to those presented in 2004, and thus, the 2015 Plan was barred by collateral estoppel. The circuit court determined that res judicata was not applicable. Subsequently, the Developer appealed to the CSA on several grounds.

The CSA vacated the circuit court’s judgment that the 2015 Plan was barred by collateral estoppel. The CSA agreed with the Developer’s argument that neither res judicata nor collateral estoppel was applicable because there had been substantial changes in circumstances between the 2004 and 2015 Plans. Specifically, the CSA noted major differences in the lots, acreage and scope of the 2015 Plan compared to the 2004 Plan, as well as differences in the stormwater management systems proposed by the two plans. Furthermore, none of the proposed homes in the 2015 Plan were to be built on slopes greater than 25%, which presented a significant difference in the environmental impact of the two plans.

With respect to preservation of historic sites, the CSA held that the ALJ committed an error of law by finding that he lacked the authority to consider the impact of the 2015 Plan on the Caves Valley National Register Historic District. Although a 2007 amendment to the BCC removed language expressly requiring historic sites to be considered in approving a development plan, the CSA concluded that it remained the explicitly stated policy and intent of the County to ensure that proposed development plans provide for the preservation of historic sites. Because the ALJ should have considered the impact of the 2015 Plan on the Caves Valley National Register Historic District, the CSA remanded the case to the OAH for further proceedings consistent with its opinion.

The CSA upheld the ALJ’s determination that the proposed “concept” stormwater management plan approved by the Baltimore County Department of Environmental Protection and Sustainability was sufficient at that stage of the development process and complied with applicable BCC requirements.

Finally, the CSA held that the ALJ improperly approved the proposed panhandle lots (a lot shaped and situated so that the only frontage or access to a public street is a narrow strip of land) in the 2015 Plan in the absence of evidence affirmatively demonstrating compliance with BCC requirements.

Based on People’s Counsel for Baltimore Cty. v. Elm St. Dev., Inc., 172 Md. App. 690 (2007), the Developer argued that reports from a county’s reviewing department can establish a prima facie case for approval of panhandle lots. If the opponents to the 2015 Plan failed to produce evidence that the panhandle lots were not code compliant, the Developer could opt not to present further evidence of compliance because the County Department of Planning had recommended and approved the 2015 Plan. The CSA disagreed; unlike in Elm Street, the opponents in this case did present evidence to the ALJ that the 2015 Plan did not in comply with BCC requirements for panhandle lots. As a result, the CSA held that although BCC § 32-4-409 does not expressly require a county department to submit findings to the ALJ regarding panhandle lots, once the ALJ heard expert testimony that the proposed panhandle lots were not code compliant, the ALJ erred by approving the 2015 Plan without evidence from the Developer or the Baltimore County Department of Planning affirmatively establishing compliance with BCC requirements.

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