Case Title: Ocean Petroleum v. Yanek

Citation: 416 Md. 74

Docket Number: 109/09

State: maryland

Court: Maryland Supreme Court

Date: 2010-10-04T00:00:00Z

Document:
Ocean Petroleum, Co., Inc. v. Estate of Dorothy Yanek, et al., No. 109, September Term,
2009 
 
CONTRACT LAW – INTERPRETATION OF A LEASE – “FAIR MARKET VALUE” –
When interpreting a landlord/tenant lease containing an option to purchase provision, courts
must consider the phrase within the context of the lease agreement and the circumstances
under which it was executed.  In this case, construction of the phrase “fair market value” in
an option to purchase agreement involves consideration of what a reasonable tenant and
landlord in the parties’ position, rather than an ordinary property owner and potential buyer,
would understand that phrase to mean.  Thus construed,  the phrase “fair market value of the
land,” as it appears in the option to purchase provision of the lease agreement, means the fair
market value of the land unencumbered by Appellant’s lease.  
Circuit Court for Worcester County
Case No. 23-C-08-001223
IN THE COURT OF APPEALS
OF MARYLAND
No. 109
September Term, 2009
OCEAN PETROLEUM, CO., INC.
v.
DOROTHY YANEK, et al.
Bell, C.J.,
Harrell
Battaglia
Greene
Murphy
Barbera
Eldridge, John C. (Retired, Specially Assigned),
JJ.
Opinion by Barbera, J.
Harrell and Battaglia, JJ., Dissent.
Filed:   October 4, 2010
This appeal arises out of a declaratory judgment action filed in Circuit Court for
Worcester County, in which Appellant, Ocean Petroleum Co., and Appellees, Dorothy Yanek
and the Estate of Victor Yanek, sought to establish the meaning of “fair market value” as that
term appears in an option to purchase provision of a lease agreement between these parties.
For the foregoing reasons, we affirm the judgment of the Circuit Court.
I.
Appellant owns and maintains a convenience store and other improvements, the “85th
Street Wine Rack,” on a piece of property located at 8501 Coastal Highway in Ocean City,
Maryland.  The property is owned by Appellees and leased from them by Appellant pursuant
to a lease agreement assigned to Appellant on July 1, 1980.  The term of the lease is ninety-
nine years, commencing on April 1, 1976, the date the original tenant entered into the lease
before assigning it to Appellant, and ending on March 31, 2075.  Pursuant to the lease,
Appellant is obligated to pay monthly rent as well as “additional rent,” which includes
“duties, taxes, assessments” and other charges attendant to the ownership and maintenance
of the property. 
The lease further provides that, “[a]t any time after the expiration of twenty (20) years
from the commencement date of th[e] Lease,” Appellant “shall have the right and option to
purchase the aforesaid demised premises” under certain terms and conditions:
1. The parties hereto shall attempt by negotiation to establish a price for
the land hereinbefore described.  In the event a purchase price cannot be
agreed upon by the Landlords and Tenant within thirty (30) days of
commencement of negotiations, then the purchase price shall be determined
as follows:
(a) The purchase price for the land shall be the fair market value
thereof at the time this option to purchase is exercised.  Fair market value of
1 Appellant and Appellees agree that “only” as it appears in the phrase “the fair market
value of the land only” indicates that the purchase price excludes the value of the tenant’s
improvements to the property. 
2
the land shall only be established by Landlords and Tenant each appointing a
real estate appraiser whose qualifications shall be at least a member of the
American Society of Appraisers.  In the event the two appraisers by Landlords
and Tenant cannot agree upon the fair market value of the land only, then such
two appraisers shall agree upon a third appraiser to determine the fair market
value of the land only and his decision shall be binding upon the parties hereto.
2.  This option shall be exercised by the giving of written notice to the
Landlords of the intention of Tenant to exercise this option either in person or
by registered mail and in no other way. . . . Settlement shall take place within
six months of the date of the exercise of this option by Tenant.
3.  Upon payment of the unpaid purchase money, a Deed for the
property containing covenants of special warranty and further assurances shall
be executed at Tenant’s expense, which deed shall convey the property by a
good and merchantable title to the Tenant free of liens and encumbrances.
In a letter to Mrs. Yanek dated November 5, 2007, Appellant exercised the option to
purchase the property.
The parties were unable to agree to a purchase price for the land and, moreover,
unable to agree on the meaning of the phrase “the fair market value of the land only” as it
appears in the lease.1  Consequently, Appellant filed in the Circuit Court for Worcester
County a complaint seeking a declaratory judgment construing that phrase.  Appellant argued
that “fair market value of the land” should be interpreted to mean “[t]he fair market value of
the land as encumbered by [Appellant’s] 99-year lease.”  Appellees countered that “the
purchase price is not limited to the value of the reversionary interest of the landlord in the
premises” and therefore “fair market value of the land” should be interpreted to mean the
value of the land as unencumbered “at the time [Appellant] exercised the option to purchase.”
2 In the context of property law, “merger” is defined as “[t]he absorption of a lesser
estate into a greater estate when both become the same person’s property.”  Black’s Law
Dictionary 1009 (8th ed. 2004).  
3
Both parties agreed that, “[u]ntil the issue is resolved with respect to that which is to be
appraised, it is impossible to implement the procedures in the Lease Agreement designed to
establish the purchase price.” 
During the hearing on the complaint the court observed that, if Appellant took title to
the property, Appellant’s leasehold interest would merge with the fee interest in the estate,
and Appellant would own the property no longer encumbered by the lease.2   Upon
concluding the hearing, the court further observed that, “where it is between the landlord and
the tenant, even though there is no specific language as to merger, the term fee simple, or fee
title . . . expresses an intent to form the merge[r].”  The court therefore decided that “fair
market value of the land” under the lease agreement should be determined as if the land were
unencumbered.
On February 18, 2009, the Circuit Court entered a written declaratory judgment
stating the following: 
[T]he meaning of ‘fair market value of the land only’ as used in the Lease
Agreement which grants [Appellant] a right to purchase the ‘demised
premises’ . . . is clear and unambiguous” and “that the purchase price for the
[Appellant’s] exercise of its right to purchase the demised premises is to be the
fair market value of the land as unencumbered by [Appellant’s] lease at the
time the option to purchase is exercised and not the value of [Appellees’]
reversionary interest therein. 
Appellant timely noted an appeal to the Court of Special Appeals.  Before
3 Appellant presents the following question for review:
Did the circuit court, in a case of first impression in Maryland, misapply the
doctrine of merger to the option-to-purchase provision in a long-term lease,
when it ruled that Appellant’s lease should not be considered in establishing
the fair market value of Appellees’ land where Appellant was the buyer, but
would be considered if the buyer was anyone else? 
Appellees cast the issues in terms of three questions:
1.  To ascertain the intention of the parties to the contract, was it proper for the
trial judge to take into consideration the fact that exercise of the purchase
option by the tenant would ultimately result in a merger of the leasehold and
the Landlord’s reversionary interest, thereby extinguishing the leasehold?
2.  Would it be reasonable to construe the reference in the Lease Agreement
to ‘fair market value of the land only’ to mean either ‘the fair market value of
the Landlord’s interest in the land’ or ‘the fair market value of the reversionary
interest in the land’?
3.  Would it be just to construe the purchase option in such manner as would
permit the tenant to secure the unencumbered fee simple estate in the land for
a price discounted as if the land was encumbered? 
4
consideration by that court, however, this Court on its own initiative issued a writ of
certiorari.  Ocean Petroleum Co. v. Yanek, 410 Md. 702, 980 A.2d 483 (2009).  Although the
parties frame differently the issues presented by this appeal,3 we may effectively resolve all
of these issues by addressing whether “fair market value of the land,” as that term appears
in the lease agreement between Appellant and Appellees, was intended to mean the fair
market value of the land subject to an encumbrance or, instead, the fair market value of the
land as an unencumbered fee simple estate.  For the following reasons, we hold that “fair
market value of the land,” as that phrase appears in the lease agreement between Appellant
5
and Appellees, refers to the fair market value of the land as an unencumbered fee simple
estate. 
II.
Before addressing the parties’ contentions and the merits thereof, we must dispose of
a procedural matter.  During oral argument the Court asked whether the parties present a
controversy ripe for adjudication, notwithstanding that they have not yet appointed appraisers
to determine the fair market value and have presented no evidence that appraisers have
disagreed about the fair market value of the property.  The parties argued at that time that
they must ascertain the meaning of the phrase “fair market value of the land” before they can
appoint appraisers to determine the fair market value of the property.  The parties further
asserted that, without a declaratory judgment establishing the meaning of that phrase, the
parties are unable to instruct the appraisers about the extent of the property interest for which
they should determine the fair market value.  Moreover, the parties argued that the meaning
of “fair market value of the land” is an issue of law that must be decided by the courts in
accordance with the intent of the contracting parties, not by appraisers who are strangers to
the contract and whose interpretation of the contract should not be binding.
Declaratory judgment actions are authorized under the Maryland Declaratory
Judgment Act.  Md. Code (2006 Repl. Vol.), §§ 3-401 to 3-415 of the Courts & Judicial
Proceedings Article (“C.J.”).  Pursuant to that authorization, courts may “declare rights,
status, and other legal relations whether or not further relief is or could be claimed.”  C.J. §
3-403(a).  Declaratory relief, however, is discretionary and may only be granted when “[a]n
6
actual controversy exists between contending parties.”  C.J. § 3-409(a)(1).  We have
explained that, when a party alleges something less than an “actual controversy,” that
controversy is not ripe and therefore is not justiciable.  120 West Fayette Street, LLLP v.
Baltimore City, 413 Md. 309, 356, 992 A.2d 459, 488 (2010).  We further explained:
A controversy is justiciable when there are interested parties asserting adverse
claims upon a state of facts which must have accrued wherein a legal decision
is sought or demanded.  To be justiciable the issue must present more than a
mere difference of opinion, and there must be more than a mere prayer for
declaratory relief.  Indeed, the addressing of non-justiciable issues would place
courts in the position of rendering purely advisory opinions, a long forbidden
practice in this State.  A declaratory relief action that requests adjudication
based on facts that have yet to occur or develop lacks ripeness and should be
dismissed for failure to allege a justiciable controversy.
Id. at 356-57, 992 A.2d at 488 (internal quotation marks and citations omitted). 
Appellant has exercised a contractual option to purchase property, and under that
contract, the lease agreement, the parties must negotiate a mutually agreeable purchase price,
or, if this is not possible, appoint appraisers to determine the “fair market value of the land.”
The appraisers’ determination of the property’s fair market value would then establish the
property’s purchase price.  Given that the record reflects—and we have not ascertained any
evidence to the contrary—that the parties attempted to negotiate a purchase price for the
property but could not agree, we are persuaded that the state of facts is such that the rights
of the parties should be determined now.  
The parties’ inability to agree stems from their contrasting interpretations of the
contractual phrase “fair market value of the land,” and this dispute would continue regardless
of the interpretation of that phrase by appraisers.  Thus, we need not be concerned that
7
subsequent factual developments would change the nature of the dispute or the respective
rights of the parties and, thereby, render our opinion advisory.  See Hickory Point P’ship v.
Anne Arundel County, 316 Md. 118, 130, 557 A.2d 626, 632 (1989) (observing that courts
are prohibited from “declar[ing] the rights of parties upon a state of facts which has not yet
arisen, [or] upon a matter which is future, contingent and uncertain” (internal quotation
marks and citations omitted)).  
Moreover, regardless of whether appraisers interpreted the lease agreement and
determined under that interpretation the property’s purported fair market value, the
interpretation of the phrase “fair market value of the land” would remain a question of law
ultimately to be decided by the courts.  See Clancy v. King, 405 Md. 541, 556-57, 954 A.2d
1092, 1101 (2008) (describing the interpretation of a contract as a question of law).  Were
we to decline to consider the issue at this juncture, and the parties appointed appraisers to
determine the lease agreement’s meaning themselves, undoubtedly one of the parties would
challenge that interpretation in the courts.   
For these reasons, we are assured that the legal issue to be decided in this case is
crystalized, and immediate resolution of this issue will terminate the parties’ dispute.  See
Hickory Point, 316 Md. at 131, 557 A.2d at 632 (“The disagreement over which declaratory
relief is sought must not be nebulous or contingent but must have taken on fixed and final
shape so that a court can see what legal issues it is deciding, what effect its decision will have
on the adversaries, and some useful purpose to be achieved in deciding them.” (internal
quotation marks and citation omitted)); see also Boyds Civic Ass’n v. Montgomery County
8
Council, 309 Md. 683, 691, 526 A.2d 598, 602 (1987) (observing that “the purpose of the
ripeness doctrine is to ensure that adjudication will dispose of an actual controversy in a
conclusive and binding manner”).  Accordingly, we conclude that the parties’ request for
relief arises out of an actual controversy and is therefore justiciable. 
III.
Appellant argues that the Circuit Court erred when it determined that “fair market
value of the land” was intended to mean the value of an unencumbered fee simple estate
because the court misapplied the doctrine of merger.  Specifically, Appellant contends that
the Circuit Court conflated the doctrine of legal merger with that of equitable merger.
Appellant submits that the doctrine of equitable merger permits, upon the exercise of a
tenant’s option to purchase a leased estate, the merger of the tenant’s lesser estate with the
landlord’s greater estate but only in the absence of express intent on the issue and if merger
at that time is in the interest of the person acquiring both estates.  Appellant argues, however,
that the lease agreement provisions requiring the landlord, upon the tenant’s exercise of the
option to purchase, to convey the property “by a good and merchantable title to the
[Appellant] free of liens and encumbrances” is not an expression of the parties’ intent that
equitable merger should take place before settlement.  Such a phrase, Appellant asserts, is
standard in “almost every contract for the purchase of real estate” and was intended to refer
to mortgages, judgment liens, and real estate taxes.  
Appellant also contends that this provision would be satisfied even if the two estates
did not merge before settlement because, under the doctrine of legal merger, Appellant’s
9
encumbrance on the land, the lease, would terminate at the time the deed is recorded.
Appellant contends, therefore, that the lease is silent on the issue of equitable merger and the
courts should consider whether equitable merger is in Appellant’s interest.  
Appellant further contends that, if merger does not serve that interest, then the estates
should not merge prior to recording the deed.  Appellant asserts that equitable merger is
against Appellant’s interest because merger would deprive Appellant of the value of the lease
and enable Appellees to convey their property at a value not attainable on the open market
in which the property could only be sold subject to that lease. 
Additionally, Appellant argues that, under the objective law of contract interpretation,
which is the approach in Maryland, courts must interpret the contract in question in
accordance with the plain meaning of the unambiguous terms without concern for the parties’
intent.  Appellant argues that applying these principles in this case compels the conclusion
that “fair market value of the land” is without ambiguity and construing that phrase to mean
“the fair market value of the land . . . as unencumbered by Tenant’s lease thereon” is an
impermissible addition of language to the contract.  Moreover, Appellant contends that “fair
market value” has a settled meaning in Maryland, which is the “‘price which an owner
willing but not [obliged] to sell would accept for the property and which a buyer willing but
not [obliged] to buy would pay therefor.’”  (Quoting Pumphery v. State Roads Comm’n, 175
Md. 498, 506, 2 A.2d 668, 671 (1938)).  Appellant further contends that the sale
hypothesized under this definition requires consideration of any encumbrances on the land,
such as Appellant’s lease. 
10
Appellees respond that we need not consider the doctrine of merger because the
parties’ intent can be ascertained from the text of the lease agreement.  Appellees argue that,
to ascertain that intent, the Circuit Court properly took into account the circumstances of the
option to purchase, meaning that the option would be exercised by a tenant who would
ultimately own the entire fee simple estate, and that these circumstances were apparent in the
lease.  Moreover, Appellees argue that the contract is a lease and therefore inherently reflects
the parties’ intent to facilitate a sale between a landlord and tenant, not a sale to a third party.
Appellees further argue that the meaning of “fair market value of the land” should be
interpreted in conformance with that intent, which would contemplate the value of the entire
estate rather than the landlord’s reversionary interest. 
As to the language of the contract, Appellees argue that, if the parties had intended
to grant Appellant the option to purchase solely the landlord’s reversionary interest in the
property, the contract would so provide.  Appellees further assert that, contrary to
Appellant’s argument, the provision requiring the landlord to convey the property “by a good
and merchantable title” and “free of liens and encumbrances” indicates that the parties
contemplated the extinguishment of the tenant’s leasehold estate upon exercise of the option.
Appellees argue that the contention that such provisions are standard and generally refer to
encumbrances other than leases is unavailing because a lease is an encumbrance and a vendor
could not comply with the contract while selling property subject to a lease.  Finally,
Appellees argue that the language of the lease should be interpreted in accordance with its
ordinary meaning, and the ordinary meaning of “fair market value of the land” is the fair
11
market value of the unencumbered estate, not the fair market value of the reversionary
interest in the land. 
IV.
“The interpretation of a contract, including the determination of whether a contract
is ambiguous, is a question of law,” which we review de novo.  Clancy, 405 Md. at 556-57,
954 A.2d at 1101 (internal quotation marks and citations omitted).  We employ in Maryland
an objective approach to contract interpretation, according to which, unless a contract’s
language is ambiguous, we give effect to that language as written without concern for the
subjective intent of the parties at the time of formation.  Cochran v. Norkunas, 398 Md. 1,
16, 919 A.2d 700, 709 (2007).  This undertaking requires us to restrict our inquiry to “the
four corners of the agreement,” id. at 17, 919 A.2d at 710, and ascribe to the contract’s
language its “customary, ordinary, and accepted meaning.” Fister v. Allstate Life Ins. Co.,
366 Md. 201, 210, 783 A.2d 194, 199 (2001) (internal quotation marks and citation omitted).
Rather than acquiescing to the parties’ subjective intent, we consider the contract from
the perspective of a reasonable person standing in the parties’ shoes at the time of the
contract’s formation.  Cochran, 398 Md. at 17, 919 A.2d at 710.  Thus, “‘the true test of what
is meant is not what the parties to the contract intended it to mean, but what a reasonable
person in the position of the parties would have thought it meant.’”  Id., 919 A.2d at 710
(quoting General Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261, 492 A.2d 1306,
1310 (1985)).  The language of a contract is only ambiguous if, when viewed from this
reasonable person perspective, that language is susceptible to more than one meaning.
12
United Servs. Auto. Assoc. v. Riley, 393 Md. 55, 80, 899 A.2d 819, 833 (2006).  
The Circuit Court determined that “the meaning of ‘fair market value of the land only’
as used in the Lease Agreement which grants [Appellant] a right to purchase the ‘demised
premises’ . . . is clear and unambiguous.”  We agree.  So too does Appellant.  He argues,
though, that “fair market value” is unambiguous because that phrase has an accepted
meaning in Maryland:  “‘the price which an owner willing but not obliged to sell would
accept for the property and which a buyer willing but not obliged to buy would pay
therefor.’”  Pumphery, 175 Md. at 506, 2 A.2d at 671.  Indeed, we have employed that
definition in cases in which the valuation of a certain piece of property was at issue.  See id.
at 512, 2 A.2d at 674; see also Realty Improvement Co. v. Consol. Gas & Elec. Light &
Power Co., 156 Md. 581, 587, 144 A. 710, 713 (1929) (addressing valuation of property in
condemnation proceedings).  
To employ that definition in this case, however, would be inconsistent with the
language of the contract, which provides that Appellant, after the expiration of twenty years,
“shall have the right and option to purchase” the property and, in the event that the parties
cannot agree on the purchase price, that price “shall be the fair market value thereof at the
time this option to purchase is exercised.”  The plain meaning of the word “shall” is that it
imposes an obligation on Appellees to permit Appellant to purchase the property and ensures
completion of the sale by providing that, if the parties cannot agree on the property’s
purchase price, that price will be fair market value.  See Eng’g Mgmt. Servs., Inc. v. State
Highway Admin., 375 Md. 211, 234, 825 A.2d 966, 979 (2003) (observing that “the term
13
‘shall’ is presumed mandatory on the parties, denoting an imperative obligation inconsistent
with the exercise of discretion” (internal quotation marks and citation omitted)). 
Even assuming arguendo that the definition of fair market value set forth in Pumphery
is consistent with the language of the lease agreement, merely inserting that definition into
the option to purchase provision does not dictate the proper interpretation of “fair market
value of the property.”  We employ an objective approach to contract construction with the
goal of interpreting the contract in a manner consistent with the parties’ intent.  See Pac.
Indem. Co. v. Interstate Fire & Cas. Co., 302 Md. 383, 388, 488 A.2d 486, 488 (1985).  We
achieve that objective by considering the plain language of the disputed provisions in
context, which includes not only the text of the entire contract but also the contract’s
character, purpose, and “the facts and circumstances of the parties at the time of execution.”
Id., 488 A.2d at 488.
Thus, even though “the fair market value of the land” may on its face be defined as
the price which an owner willing but not obligated to sell would accept for the property and
which a buyer willing but not obligated to buy would pay for it, that definition must be
considered within the context of the lease agreement and the circumstances under which it
was executed.  The option provision at issue states that, in the event the “Landlords and
Tenant” cannot agree to a purchase price, “[t]he purchase price for the land shall be the fair
market value thereof at the time this option to purchase is exercised.”  (Emphasis added).
The option provision further states that “[t]his option shall be exercised by the giving of
written notice to the Landlords of the intention of Tenant” and, “[u]pon payment of the
14
unpaid purchase money, a Deed for the property containing covenants of special warranty
and further assurances shall be executed at Tenant’s expense, which deed shall convey the
property by a good and merchantable title to the Tenant free of liens and encumbrances.”
(Emphases added).  These provisions indicate an intent to facilitate a sale between the tenant
and the landlords of the property subject to the lease, not between parties who are, but for
their dealing with the property in question, strangers to each other.  
Because the relevant provisions of the lease agreement contemplate a transaction
between a landlord and a tenant rather than an ordinary property owner and potential buyer,
these provisions indicate that the parties contemplated a transaction in which the property is
sold free of the tenant’s encumbrance thereon.  We need not resort to legal concepts, such
as equitable and legal merger, to reach this conclusion.  See Calomiris v. Woods, 353 Md.
425, 443, 727 A.2d 358, 366-67 (1999) (explaining that, when issues related to a contract’s
interpretation may be resolved by referring to the language of the contract, we need not look
to external legal principles).  Again, construing the lease agreement from an objective
perspective, a reasonable tenant, relying on common sense, would understand that the option
to purchase entitled him to purchase outright the entire property, free of encumbrances.
Likewise, a reasonable landlord, relying on common sense, would understand that his
obligation to sell would terminate completely his interest in the property. 
Furthermore, because the option to purchase would relieve the tenant of this financial
burden and terminate the landlord’s right to earn income on his property, the only reasonable
interpretation of “fair market value of the land only” as it appears in the option-to-purchase
15
provision of the lease agreement in question is one that charges the tenant for the rights
gained, and compensates the landlord for the rights lost, in the transaction.  Without resort
to legal principles, a reasonable tenant understands that purchasing the property he leases will
terminate his obligation to pay rent and entitle him to the full bundle of rights attendant to
property ownership.  Similarly, a reasonable landlord understands that granting a tenant an
option to purchase the property he leases will terminate his right to earn income on the
property but enable him to realize the property’s full value as unencumbered at that time,
rather than slowly earning income on the property over time.  Nothing in the contract
indicates that the parties contemplated a type of sale other than that which we have just
described.  
Further consideration of the contract supports our conclusion that the parties
contemplated a sale in which Appellant would compensate Appellees for the full value of the
property rather than merely for Appellees’ reversionary interest.   As Appellees point out, the
option to purchase expressly provides that Appellees shall convey to Appellant the land “free
of liens and encumbrances.”  Appellant urges us to disregard this provision as inapplicable
to leases on the property because such language is standard in these types of agreements.
Our rules of contract construction require us, however, to “avoid interpreting contracts so as
to nullify their express terms.”  Calomiris, 353 Md. at 441, 727 A.2d at 366; see also Clancy,
405 Md. at 557, 954 A.2d at 1101 (“[E]ffect must be given to each clause so that a court will
not find an interpretation which casts out or disregards a meaningful part of the language of
the writing unless no other course can be sensibly and reasonably followed.” (internal
16
quotation marks and citation omitted)).  Furthermore, when the language of a contract is
unambiguous, such as in this case, we must “presume that the parties meant what they
expressed.” See Calomiris, 353 Md. at 436, 727 A.2d at 363 (citation omitted).  We see no
reason to interpret this provision in a way inconsistent with its plain meaning when, under
the construction we have just outlined, its meaning may be interpreted in harmony with that
of “fair market value of the land.”  Therefore, we conclude that “fair market value of the
land,” as that phrase appears in the lease agreement between Appellant and Appellees, refers
to the fair market value of the property as unencumbered.
V.
For the foregoing reasons, we hold that the lease agreement between Appellant and
Appellees is unambiguous and, further, that the phrase “fair market value of the land,” as it
appears in the option to purchase provision of that lease agreement, means the fair market
value of the land unencumbered by Appellant’s lease.  Accordingly, we affirm the judgment
of the Circuit Court for Worcester County.
JUDGMENT OF THE CIRCUIT COURT
FOR WORCESTER COUNTY AFFIRMED.
COSTS TO BE PAID BY APPELLANT.  
IN THE COURT OF APPEALS
OF MARYLAND
No. 109
September Term, 2009
                                                                            
OCEAN PETROLEUM CO., INC.
v.
DOROTHY YANEK ET AL.
                                                                            
 
Bell, C.J.,
Harrell
Battaglia
Greene
Murphy
Barbera,
Eldridge, John C. (Retired,
Specially Assigned),
JJ.
                                                                            
Dissenting Opinion by Harrell, J.,
which Battaglia, J., joins.
                                                                            
Filed:   October 4, 2010
I dissent.  The propriety and ripeness for judicial resolution (through declaratory
judgment) of the disputed question that the parties wish us to resolve is not as apparent to me
as it is to the Majority.  The consideration of whether the fair market value of the land only
is affected by the existing lease between the parties was committed by the parties, through
their written agreement, to a non-judicial forum, a panel of  appraisers.  If the first two
appraisers, both Real Property members of the American Society of Appraisers (“ASA”), one
each appointed by the respective parties, disagree on the answer to the pertinent question, and
presumably on the ultimate value of the land (as undoubtedly they will if each party instructs
its or her appraiser consistent with their views expressed in this litigation), they must select
a third ASA appraiser who will break the deadlock and his/her decision will bind the parties.
That is the end of this “case” and the dispute between these parties.  This is what the parties
agreed as a private dispute resolution process.  The judicial system has no business in this
matter.
No effort was made by the parties to construct a record before the trial court as to what
any member of the ASA would be obliged to consider on the facts of this case in formulating
“fair market value,” the kind of decision that is the mother’s milk of most real property
valuation tasks.  Perhaps there would have been no disagreement between the two appraisers,
but, assuming there was, the third appraiser (who the parties did not select and whose
judgment they must accept) would have settled the hash.  I have a difficult time imagining
that whether an existing lease figures in the valuation of land, as between parties to an option
to purchase who might be similarly situated to those in the present case, has not been
confronted before now  by veteran appraisers.  The parties chose to leave it to the appraisers,
2
and so would I.  I would hold the parties to their bargain, vacate the judgment of the Circuit
Court, and direct that court to dismiss the suit.
Judge Battaglia authorizes me to state that she joins in the views expressed in this
opinion.