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Shader v. Hampton Improvement Ass'n, Inc.

Court of Special Appeals of Maryland

June 26, 2014


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Appeal from the Circuit Court for Baltimore County, Kathleen G. Cox, Judge.

Argued by: Jeffrey L. Forman (Bruce E. Kauffman, Kauffman and Forman, PA on the brief) all of Towson, MD. for Appellant.

Argued by: Michael W. Siri (Bowie & Jensen, LLC on the brief) of Towson, MD. for Appellee.

Panel: Hotten, Nazarian, Leahy, JJ.


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[217 Md.App. 589] Leahy, J.

Hampton is a residential community surrounding the grand Hampton Mansion and estate, a National Historic Site in Baltimore

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County. Since 1931, the Hampton community has been subject to restrictive covenants that operate mainly to limit residential density, preserve spacious lots, restrict development to single-family homes, and harmonize, to some extent, the appearance of homes and lots in the neighborhood. In 2004, Appellants Scott and Anna Shader (" the Shaders" ) reconfigured the lots underlying their property at 606 East Seminary Avenue in Hampton to create two separately addressed properties: 606 and 606A East Seminary Avenue. They ultimately filed a declaratory judgment action in the Circuit Court for Baltimore County against the Hampton Improvement Association (" HIA" ), seeking a declaration that [217 Md.App. 590] they were not prohibited from constructing a dwelling on 606A East Seminary Avenue because the HIA had waived by abandonment a restriction contained in Paragraph C of the covenants that precluded property owners from building more than one residential dwelling per lot, consistent with the original Plat filed in 1930. In the same action, the Shaders filed a motion for summary judgment raising offensive nonmutual collateral estoppel based on a prior judgment against the HIA in Cortezi v. Duval Four-A, LLC, No. C-07-02587 (Cir. Ct. Balt. Cnty. 2008) (" Duval " ). The court denied this motion and, after a bench trial, found that the HIA did not waive the covenants and could enforce the restriction against 606A East Seminary Avenue.

The Shaders present two questions on appeal:

I. Did the lower court err in denying the motion for summary judgment based upon the prior ruling in Duval Four-A in which it was held that the HIA had waived restriction of the one house per lot as lot was shown on the 1930 Plat by abandonment?
II. Did the lower court err when it failed to declare that the one house per lot as lot was shown on the 1930 Plat had been waived by abandonment?

With regard to question one, we hold that the circuit court properly declined to apply offensive nonmutual collateral estoppel because the issues in Duval and the instant case are not identical and because application of offensive nonmutual collateral estoppel would be unfair to the HIA according to the precepts established by the Supreme Court in Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). In response to question two, we hold that the circuit court was not clearly erroneous in finding that the HIA did not abandon Paragraph C of the covenants based on the evidence presented at trial, including testimony that the HIA has persistently enforced the restriction in dispute. We therefore affirm the judgment of the Circuit Court for Baltimore County.

[217 Md.App. 591]BACKGROUND

A. The Hampton Covenants

Before it was a National Historic Site, the Hampton Mansion and estate was privately owned by the Ridgely family since the mid-1700s.[1] In 1929, John Ridgely, Jr.

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established the Hampton Company and began developing a portion of the estate's land. The Hampton Company recorded Plat No. 1 of the Hampton community in 1930 (" 1930 Plat" ).[2] On April 6, 1931, the Company recorded a " Schedule of Restrictive Covenants and Easements" (" Covenants" ), which specifies that its provisions " are to be a part of each Deed of any part of the land shown on [Plat No. 1] from the Hampton Company to any and every purchaser." Paragraph C of the Covenants sets out the " Restrictions as to Use" :

The land included in said tract except as hereinafter provided shall be used for private residence purposes only and no building of any kind whatsoever shall be erected or maintained thereon except private dwelling houses each dwelling being designed for occupation by a single family and private garages for the sole use of the respective owners or occupants of the plots upon which such garages are erected there shall not be erected or maintained on said tract of land an apartment house or house designed or altered for occupation by more than one family and no more than one dwelling may be erected on a Lot.
[217 Md.App. 592] Buildings to be used for schools churches libraries art galleries museums clubs offices and studios or for recreative educational religious or philanthropic purposes may be erected or maintained in locations approved by the company.

The Covenants define " Lot" as " one unit of said tract as at present above by the recorded map of said tract" and " Building" as " one detached building." [3] A " Plot" may " consist of a single lot or more or less than a single lot."

Paragraph H concerns the duration of the Covenants and provides that the " restrictions[,] conditions[,] covenants[,] easements and agreements" shall run in perpetuity, provided, however:

[T]hat at any time after December 31, 1960 any of the provisions contained in Paragraphs C D and K hereof may be cancelled or abrogated in whole or in part by the recording in the proper public Land Records of an appropriate instrument or instruments in writing executed by the then owners (not including mortgagees) of a majority in area of the land included in said tract exclusive of streets and other land then devoted to public use . . . .

In 1939, the Hampton Company recorded a revised version of Plat No. 1 that reconfigured lots 40, 42, and 44-54 (" 1939 Plat" ). The Company also recorded another revised version of Plat No. 1 in 1949 (" 1949 Plat" ).

B. The Shader Property

In 2002, the Shaders purchased the real property located at 606 East Seminary Avenue in Hampton from William and Theresa Valente. The property comprised two parcels: Lot 59, a 2.246-acre parcel, and the eastern portion of Lot 75, a 1.457-acre parcel north of Lot 59. Back in the late 1940s, the Hampton Company divided Lot 75 by conveying the 1.457-acre [217 Md.App. 593] parcel to Raymond and Louise Moore who owned

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a contiguous property, Lot 59. A residential dwelling remains to this day on the balance of Lot 75. The deed conveying the 1.457-acre parcel from Lot 75 to the Moores (" 1948 Moore Deed" ) provided:

It is expressly covenanted and agreed as a part of the consideration for this deed by the said Raymond L. Moore and Louise B. Moore his wife for themselves their heirs and assigns with the said The Hampton Company for itself its successors and assigns that at no time shall any dwelling be erected on the lot hereby conveyed .

(emphasis added). The 1948 Moore Deed also expressly incorporated the agreements and restrictions contained in the Covenants and stated that the Covenants were " binding upon . . . [the Hampton] Company its successors and assigns." In 1986, following Raymond Moore's death, the Valentes acquired the property.

The Shaders later decided to reconfigure the lots they purchased from the Valentes to create two separately addressed properties. On September 10, 2004, they executed two deeds that created two vertical properties with the addresses of 606 East Seminary Avenue, upon which the Shaders' home is located, and 606A East Seminary Avenue. The Shaders recorded the deeds in the Baltimore County Land Records in 2004.

In 2009, the Shaders listed their home on 606 East Seminary Avenue for sale and, at the same time, listed the 606A East Seminary Avenue property for sale as a buildable lot. In a letter dated September 21, 2009, copy of which was sent to Mr. and Mrs. Scott Shader, HIA President Eric Krali reminded the Shaders' listing agents of the restrictive covenants, including the prohibition against " the erection of more than one house per deeded lot, as shown on the original Plat Map at the time the property was recorded."

More than one year later, on February 4, 2011, the Shaders initiated a quiet title action against the Hampton Company (a defunct company) and its original incorporators, seeking to [217 Md.App. 594] establish that the covenant in the chain of title for their portion of Lot 75--specifically, the covenant contained in the 1948 Moore Deed--was unenforceable.[4] When no answer was filed, the court entered an Order of Default and thereafter a Judgment of Default declaring that the covenant in the 1948 Moore Deed was void.

C. The Declaratory Judgment Action

On November 7, 2012, the Shaders filed a Complaint for Declaratory Judgment against the HIA in the Circuit Court for Baltimore County, seeking a declaration that the Covenants do not prohibit the building of a home on 606A East Seminary Avenue.

1. Plaintiffs Contend the HIA Is Collaterally Estopped from Enforcing the One-Dwelling-Per-Lot Restriction

The Shaders filed a motion for summary judgment on March 13, 2013, arguing that the circuit court should apply the doctrine of collateral estoppel based on the ruling in Duval .[5] The Shaders claimed that Duval precluded the HIA from re-litigating whether it waived Paragraph C of the Covenants by abandonment.

In Duval, the HIA and individual homeowners in Hampton filed an action for

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declaratory and injunctive relief against Duval Four-A, LLC (" Duval" ), a property owner in the Hampton community. The HIA sued to stop construction of a dwelling on Duval's reconfigured lot and invoked the original configuration of the lot as it was shown on the 1930 Plat. The circuit court observed that the revised 1949 Plat " reconfigured the lot lines for several lots, and in fact, created Lot 4A, the [217 Md.App. 595] lot owned by [Duval] and Lot 4B." In its Order, the court included the following findings:

3. There is no evidence that any of the lot owners in Hampton ever objected to the construction of more than one house per lot as the lots were depicted on the 1930 Plat in these three other cases (Lots 18, 24, and 25). There is no evidence that the Hampton Improvement Association, Inc. ever objected. Neither the Plaintiffs, nor any of the other property owners in the subdivision sued or otherwise sought to enforce this interpretation of the covenant in these three situations, each of which involved lots oriented just adjacent to Lot 4A.
4. In addition, the testimony was undisputed that in some 30 instances in the subdivision, the Plaintiffs and their predecessors have permitted lot owners in Hampton to erect and maintain buildings other than single family dwellings and garages on their lots in violation of the very same covenant which they seek to enforce in this action.

(footnote omitted). The court determined that because " the Plat presently in effect portrays this Defendant's property as a separate lot, designated Lot 4A, the construction of Defendant's dwelling, as planned, will not frustrate the original intent or purpose of the covenants," which was to limit the density of homes in Hampton. Based on these findings, the court held that " the Plaintiffs and their predecessors, with regard to the proposed dwelling construction planned by the Defendant, have waived the right to seek to enforce the provisions of Paragraph C of the Covenants by abandonment" and that " Paragraph C of the Covenants does not preclude or prohibit construction of the dwelling contemplated by the Defendant, and the Defendant may construct a house on Lot 4-A." In a footnote, the court included the following instruction:

The decision in this matter is limited to the facts of this case. This Court specifically does not conclude that the covenants are 'void.' This Court specifically does not conclude that the waiver defense would apply in any other action to enforce covenants in the future.

[217 Md.App. 596] On April 10, 2013, a motions judge denied the Shaders' motion, stating:

First, I do not feel that " collateral estoppel" is able to be applied here. . . . [This doctrine] require[s] the placing of one face plate over another to see if the issues are the same and if the parties are fundamentally the same so as to be bound by a prior decision. There is nothing in the Shader motion that would allow me to see the face plate of the actual controversy before [the Duval court] and the decision by [the Duval court] as to the structures or buildings to which it refers as a violation of what covenant or issue presented. Second, the Response . . . makes an important distinction between the erection of houses as opposed to other sheds or buildings, the fact that there is argued not to have been an abandonment of covenants for Plat # 1, differences that may exist between the covenants, and application of the covenants as to different plats. That all means that a significant amount of additional facts needs to be gone through by the court before summary

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judgment or any judgment would be able to be entered.

A nonjury trial commenced on May 15, 2013, at which time the Shaders renewed their motion for summary judgment.[6] During argument on the Shaders' motion, the HIA countered with a disparate case, arguing that the court must also consider the prior ruling in Cully v. Hampton Improvement Ass'n, Inc., No. 91CG-655 90/284 (Cir. Ct. Balt. Cnty. 1992). Five years after purchasing Lot 10, a three-acre parcel in the Hampton subdivision, David and Carol Cully subdivided their lot to create Lot 10, a two-acre parcel upon which their home was located, and Lot 10A, a vacant one-acre parcel. The Cullys then sought permission from the HIA to construct a house on Lot 10A. When the HIA denied their request, the Cullys filed a declaratory judgment action in the Circuit Court for Baltimore County seeking a declaration that Paragraph C of the Covenants was void or waived. The Cullys argued, [217 ...

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