Opinion ID: 2681015
Heading Depth: 1
Heading Rank: 2

Heading: the procedural path of the present case

Text: On 17 December 2010, fifteen Plaintiffs12 filed a Complaint for Declaratory and Injunctive Relief (“Original Complaint”) in the Circuit Court for Baltimore City against the two State Agencies and the Developers. In the Original Complaint, Plaintiffs alleged, among other things, that they were “excluded . . . from the bidding process” for the Project that, according to them, was contrary to the State Procurement Law. Specifically, they alleged that they were harmed by the unlawful awarding of the Project to the Developers despite that the Plaintiffs were “ready, willing, and able to submit proposals to lease comparable office, retail, and parking space . . . on terms that are more favorable” than those provided to and by the Developers. The State Agencies and the Developers each moved to dismiss the Original Complaint on numerous grounds. One ground, which both sets of defendants asserted in their respective motions, was that the Circuit Court lacked jurisdiction because the Plaintiffs were required to exhaust administrative remedies before a state procurement officer and the Maryland State Board of Contract Appeals (“Appeals Board”) prior to 12 In the Original Complaint, the fifteen Plaintiffs, each of which were either a limited liability corporation or a limited partnership, were the following: St. Paul Plaza Office Tower, LLC; Lexington Charles Limited Partnership; 301 Charles Street, LLC; Park Charles Apartments Associates, LLC; Park Charles Office Associates, LLC; 501 St. Paul Street, LLC; St. Paul and Franklin, LLC; Robopark, LLC; Charles Plaza, LLC; 39 W. Lexington, LLC; Baltimore Condo 2-8, LLC; Fayette Garage, LLC; Charles Tower, LLC; The Marlboro Classic, LP; and Redwood Square Apartments, LP. The parties listed as Plaintiffs changed on several occasions during the proceedings in the Circuit Court. The collective term “Plaintiffs,” as used in this opinion, refers to the moveable feast of Plaintiffs as they changed throughout the proceedings. 13 presenting their claims to the Circuit Court. On 28 January 2011, the Plaintiffs amended the complaint (“Amended Complaint”), and, among other changes, added a new Plaintiff, David And Dad’s Inc. 13 The Amended Complaint set forth eight counts. Counts I – VII of the Amended Complaint sought declaratory judgment for the following propositions: (I) Invalidity of First Amendment and Incorporated MDA; (II) Invalidity of the Occupancy Leases and the Commitment to Enter Occupancy Leases; (III) Invalidity of Alleged Occupancy Leases as “Agreements to Agree”; (IV) Agency Failure to Promulgate Mandatory Regulations; (V) State Lacks Authority to Enter the First Phase Occupancy leases for Parcel G and Parcel I-2, and Any Amendments Thereto; (VI) State Center is Not and Could Not Be A TOD and its Designation as such Long After Execution of the MDA and First Amendment Renders Those Agreements Null and Void; and, (VII) The Parking Garage “Procurement” Violates SFP Title 13. Count VIII of the Amended Complaint sought injunctive relief to enjoin the Defendants from proceeding under the formative contracts of the Project (including the First Amendment, the MDA, Phase I Ground Lease, Phase I Occupancy Leases, and “the architecture, engineering and construction services related to the parking garage”) absent full compliance with the competitive procurement provisions of Title 13 and Chapter 484, Laws of Maryland, as well as “until after DBM [Department of Budget and 13 Additionally, in a Second Amendment by Interlineation of the Amended Complaint, filed on 1 April 2011, the following parties were added as Plaintiffs: DaMimmo’s Italian Restaurant; Sabatino’s, Inc.; Chiapparelli’s, Inc.; Vaccaro’s Italian Pastry Shop, Inc.; Bonnie’s Peanut Shoppe, Inc.; Davis and Davis, Inc., d/b/a Flowers by Gina D.; and Caesar’s Den, Inc. 14 Management] and/or DGS promulgate the proper regulations mandated by SFP § 10305(h).” The State Agencies and the Developers moved to dismiss the Amended Complaint, as they had the Original Complaint. On 6 April 2011, a trial court judge held a hearing on the Defendants’ Motions to Dismiss. On 19 July 2011, the Circuit Court entered two orders denying both Motions. First, the Circuit Court rejected the Defendants’ challenge to the Plaintiffs’ taxpayer standing raised by both Motions to Dismiss: The Court of Appeals has recognized, however, that “the extent to which a taxpayer is capable of detailing the damage anticipated from an illegal and ultra vires act may be rather limited at the time the suit is initially filed.” [120 W. Fayette Street, LLLP v. Mayor of Baltimore, 407 Md. 253, 266, 964 A.2d 662, 669 (2009)]. Thus, the Court has held that “the taxpayer plaintiff is not required to allege facts which necessarily lead to the conclusion that the taxes will be increased; rather, the test is whether the taxpayer reasonably may sustain a pecuniary loss or a tax increase - - whether there has been a showing of potential pecuniary damage.” Id. Plaintiffs have pled that State agencies engaged in illegal and ultra vires acts that could potentially cause Plaintiffs pecuniary harm or an increase in taxes. This Court finds that the allegations contained in Plaintiffs’ Amended Complaint are sufficient to establish taxpayer standing. Second, in ruling on another common challenge in the Motions to Dismiss, the Circuit Court rejected the Defendants’ exhaustion of administrative remedies defense because the Plaintiffs’ claim “is not the type of ‘contract claim’ contemplated to be within the [Appeals Board’s] jurisdiction.” While it is arguable that Plaintiffs’ complaint may be in the nature of a ‘protest,’ given that Plaintiffs are not prospective bidders or offerors, or bidders or offerors, they would not be entitled to submit such a protest to 15 the Appeals Board. Further, the absence of a procurement contract arguably precludes the submission of a contract claim. Reasoning further, the Circuit Court distinguished State v. State Board of Contract Appeals & Law Offices of Peter G. Angelos, 364 Md. 446, 773 A.2d 504 (2001), on the bases that the “Plaintiffs are not a party to the contracts at issue in the case sub judice. Furthermore, Plaintiffs are neither assignees nor parties in line to benefit from the contracts at issue.” Third, in regards to both sets of Defendants’ laches argument, the Circuit Court rejected their argument that “Plaintiffs adopted a ‘wait and see attitude’ and should have brought their claims following the issuance of the [RFQ] in 2005.” The judge noted that “[w]hen considering a motion to dismiss, the court must assume the truth of Plaintiffs’ well-pleaded factual allegations in the complaint.” The trial judge stated that “Plaintiffs assert[ed] that the [MDA], executed and approved in June 2009, was the first binding agreement related to the State Center Project and that the operative documents giving rise to this suit were the September 1, 2010 First Amendment . . . and the Phase I Occupancy Leases, approved July 28, 2010 and amended on December 15, 2010.” The Circuit Court concluded that “[a]s Plaintiffs’ initial complaint was filed on December 17, 2010, this Court finds that Plaintiffs’ claims are not barred by latches [sic].” Then, the Circuit Court rejected the argument, advanced by the Developers’ Motion to Dismiss only, that Plaintiffs lack standing to seek a declaration that the State’s commitment to pursue future Occupancy Leases is unenforceable as “agreements to agree” because they are not parties to the contract. The judge reasoned that, because 16 “Plaintiffs challenge the agreements as being ultra vires acts, which are part of an ‘unlawful procurement conspiracy,’” they “are neither required to be a party to the contract nor in privity with a party to the contract in order to make such a challenge.” Lastly, the Circuit Court ruled on arguments raised only in the State Agencies’ Motion to Dismiss. The judge concluded that “the Plaintiffs’ claims, concerning the interpretation and implementation of State procurement laws, and seeking declaratory and injunctive relief, are within the province of judicial review” and, thus, rejected the DGS’s and DOT’s “purely political question” assertion. Then, the Circuit Court found “that Plaintiffs’ claims for declaratory and equitable relief are not barred by the doctrine of sovereign immunity” because “[s]overeign immunity is not a bar to Plaintiffs challenging ‘the legality of State laws and regulations, or the alleged unlawful implementation of such law and regulations by a State official.’” (Citations omitted.) Almost two years of discovery followed the trial court’s rejection of the Motions to Dismiss. Throughout this time, and even prior to the court’s order denying the Motions to Dismiss, the Defendants sought to expedite the litigation in the hope to proceed with the development in as timely a manner as possible. On 2 September 2011, the State Agencies filed a $100,000,000 Counterclaim against the Plaintiffs/Counter-Defendants for Tortious Interference with Economic Relationships. The State Agencies averred that the filing and prosecution of Plaintiffs’ suit was “wrongful, illegal, and in bad faith” because the suit’s purpose was to cause the State Agencies damage and loss, and “to restrain trade and competition and the public and private benefits thereof.” Moreover, “[Plaintiffs/Counter-Defendants] filed [the suit] 17 after unreasonable and unexcusable delay, having waited six years since the inception of the Project, until the Project reached a critical juncture in its development, all in order to maximize the resulting disruption to progress and funding of the Project.” The State Agencies averred that “DGS and [M]DOT have suffered, and will continue to suffer, actual and prospective damage and loss as a result of the tortious acts of Plaintiffs/Counter-Defendants in bringing and maintaining this suit.” 14 On 6 September 2011, the Plaintiffs/Counter-Defendants filed a Motion to Dismiss Counterclaim on the grounds that the Noerr-Pennington doctrine 15 barred the 14 Specifically, the State Agencies alleged that “Plaintiffs’/Counter-Defendants’ filing and prosecution of this lawsuit is responsible for causing damages and loss to DGS and [M]DOT in the form[s] of delayed and/or lost base ground rents[;] . . . delayed and/or lost additional ground rents[;] . . . increased construction and/or financing costs for the garage associated with the Project[;] . . . delayed and/or lost revenues from the garage associated with the Project[;] . . . increased State-funded Project predevelopment costs[;] . . . increased office space rental costs due to increased building construction costs and/or increased interest rates[;] . . . prolonged and increased costs of maintaining rather than replacing the obsolete State office buildings on the Project site[;] . . . delayed and/or lost State tax revenues.” 15 The Court of Special Appeals explained recently the basis of the NoerrPennington doctrine as follows: [The Noerr-Pennington doctrine] derives from Supreme Court decisions in E. Railroad Presidents Conference v. Noerr Motor Freight Inc., 365 U.S. 127, 81 S. Ct. 523, 5 L. Ed. 2d 464 (1961) and United Mine Workers of Am. v. Pennington, 381 U.S. 657, 85 S. Ct. 1585, 14 L. Ed. 2d 626 (1965), statutory construction cases, where the court considered the right to petition in interpreting federal anti-trust laws. The immunity conferred by Noerr– Pennington extends to those who “use ... courts to advocate their causes and points of view regarding resolution of their business and economic interests, vis-a-vis their competitors.” California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 511, 92 S. Ct. 609, 30 L. Ed. 2d 642 (Continued…) 18 State Defendants’ counterclaim and that the State Agencies cannot establish the elements of tortious interference with economic relations, as a matter of law. The Circuit Court agreed that the Noerr-Pennington doctrine barred the Counterclaim and entered an order granting the Plaintiffs’ Motion to Dismiss Counterclaim on 22 December 2011. On 7 November 2012, the State Agencies and Developers moved collectively for summary judgment on several grounds: (1) “Because The [MDA] And First Amendment Are Not Procurement Contracts, The Defendants Are Entitled To Summary Judgment On Counts I, II, and V Of The Amended Complaint;” (2) “Plaintiffs’ Claims About Future Occupancy Leases Are Not Ripe and Will Be Invalid If They Ever Ripen;” (3) “Contrary (…continued) (1972). However, such immunity does not apply if a lawsuit is a sham both objectively and subjectively. Prof. Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60–61, 113 S. Ct. 1920, 123 L. Ed. 2d 611 (1993). In BE & K Constr. Co. v. NLRB, 536 U.S. 516, 122 S. Ct. 2390, 153 L. Ed. 2d 499 (2002), the Supreme Court extended the Noerr– Pennington doctrine—at least as to direct petitions, i.e.[,] lawsuits—to cases under the National Labor Relations Act, 29 U.S.C. § § 151 et seq. Although the Supreme Court has not spoken on the issue, lower courts, including some state courts, have recognized [a] First Amendment right to petition defenses, similar to Noerr–Pennington, to state common law and statutory claims. See Annot.: Application of Noerr–Pennington Doctrine by State Courts, 94 A.L.R. 5th 455 (2001). Federal courts have wrestled with whether the reach of Noerr–Pennington doctrine in antitrust cases is the same in suits brought under the common law or other statutes. See, e.g., Venetian Casino Resort v. NLRB, 484 F.3d 601, 611–13 (D.C. Cir. 2007), and Cardtoons, L.C. v. Major League Baseball Players Assoc., 208 F.3d 885, 889–91 (10th Cir. 2000). Hamot v. Telos Corp., 185 Md. App. 352, 367 n.13, 970 A.2d 942, 951 n.13 (2009). 19 To Count IV, Regulations For The Disposition Of Land Were Properly Promulgated As A Matter Of Law”; (4) “The [TOD] Designation Is Within The Exclusive Discretion Of The Secretary Of Transportation: Count VI Is Without Basis In Law”; and (5) “The Construction of the State Center Parking Garage Is Not Subject To The Maryland Procurement Code: Count VII Is Invalid.” On 15 January 2013, the Circuit Court held a hearing on the Motion for Summary Judgment. Two days later, the judge entered an order granting the motion in part and denying it in part. She noted that there were no disputes of material fact. Therefore, she stated, “the parties’ contentions present only issues of law, and the question before the court is whether either party is entitled to judgment as a matter of law upon the undisputed facts.” The judge granted partial summary judgment in favor of the Plaintiffs on Counts I, II, III, and V. 16 The Circuit Court, relying upon Department of General Services v. Harmans Associates Ltd. Partnership, 98 Md. App. 535, 633 A.2d 939 (1993), found that, “[d]espite the purported structure of the transaction, the ‘essence of the transaction’ was not a simple disposition of land governed by [SFP § 10-305], but a complex creative way to develop State land.” Because the “essence of the transaction” was a “complex creative way to develop State land,” the judge concluded that the formative documents – the MDA, the First Amendment, and the Ground Leases – are governed by [SFP § 11101, et seq.]. The State Agencies and the Developers conceded, and the Circuit Court 16 Plaintiffs withdrew voluntarily Count IV. 20 found, that they “did not comply with the procedures required in the code” and, therefore, the four formative contracts – the MDA, the First Amendment, and the Ground Leases – are void pursuant to SFP § 11-204. Accordingly, the Circuit Court found that the Plaintiffs were “entitled to judgment and to a declaratory judgment in their favor based on these counts.” Then, the judge entered partial summary judgment in favor of the Defendants with respect to Counts VI, VII, and VIII. With regard to Count VI of the Plaintiffs’ Amended Complaint, claiming that the projects conceived in the MDA and the First Amendment cannot be designated as TOD, the Circuit Court stated that Md. Code (1977, 2008 Repl. Vol.), Transportation Art., § 7-101, et seq. “permit[s] the Maryland Secretary of Transportation and local governments or multicounty agencies discretion in applying TOD designation” and, thus, found no merit in the argument. As to Count VII, the Circuit Court found that the provisions of the MDA and the First Amendment “are principally funded by the Maryland Economic and Development Corporation, which carries out its corporate purposes without the consent of any State unit and without being subjected to General Procurement Law,” pursuant to Md. Code (2008), Economic Development Art., § 10-111. Lastly, as to Count VIII, the judge found that “the extraordinary remedy of injunctive relief is not necessary or appropriate because Defendants have voluntarily refrained from acting under the [MDA] and the First Amendment . . . , and the legal issue is resolved by the declaratory relief granted herein.” 21 The State Agencies and the Developers (now Appellants) appealed timely to the Court of Special Appeals, but also petitioned contemporaneously this Court for a writ of certiorari and sought expedited review of three questions: (1) Did the [C]ircuit [C]ourt err in concluding that the State Center Project violates State procurement law on the ground that the project is “a complex, creative way to develop” land owned by the State? (2) Does the Circuit Court for Baltimore City lack jurisdiction to address, in the first instance, the plaintiffs’ claim that the State Center Project violates State procurement law, because such claims fall within the primary or exclusive jurisdiction of the Maryland State Board of Contract Appeals? (3) Do the plaintiffs lack standing, under the taxpayer standing theory they invoked, to challenge the State Center Project, because they failed to allege facts to support either their claim of illegal, ultra vires action or their contention that they will suffer the requisite special damage if the State Center Project proceeds? Appellees filed an Answer to the Petition for Writ of Certiorari and a Conditional CrossPetition for Writ of Certiorari. Appellees did not object to Appellants’ request for a writ of certiorari on the first issue presented, but requested that the question be reframed, so as not to “distort[] and truncate[] the lower court’s decision,” as follows: Did the [C]ircuirt [C]ourt correctly hold that the essence and true nature of the State Center development agreements was not a simple disposition of land, but rather a complex financing plan for the State’s acquisition of construction, construction-related services, and leaseholds, and that the acquisitions were subject to the requirement of competitive sealed proposals. Appellees objected to the second and third questions presented by Appellants on the grounds that “[they] present ordinary issues that are not certworthy and arise from rulings on Petitioners’ Motions to Dismiss that were not raised in Petitioners’ Motions for 22 Summary Judgment or addressed by the [C]ircuit [C]ourt’s summary judgment.” As to Appellees’ Cross-Petition, they sought review of the following question: Did the [C]ircuit [C]ourt err in declining to review the belated and defective designation of the State Center Project as a Transit-Oriented Development that permitted the Project to be unlawfully prioritized, and improperly receive substantial site-selection and other benefits? We issued, prior to a decision in the Court of Special Appeals, a Writ of Certiorari regarding the three questions tendered in Appellants’ Petition for Writ of Certiorari and the additional question tendered in Appellees’ conditional Cross-Petition. 430 Md. 344, 61 A.3d 344 (2012). Thus, on appeal, we confront the following questions, if necessary to reach them all in order to decide this case: 1) Did the trial court err in concluding that the State Center Project violates [the] State Procurement Law on the grounds that the project is not a simple disposition of land but a complex, creative way to develop land owned by the State that should have been subject to the requirement of competitive sealed proposals? 2) Does the Circuit Court for Baltimore City lack jurisdiction to address Appellees’ claim that the project violates [the] State Procurement Law because such claims fall within the primary or exclusive jurisdiction of the Maryland State Board of Contract Appeals? 3) Do Appellees lack standing, under the taxpayer standing theory, to challenge the project because they failed to allege facts to support either their claim of illegal, ultra vires action or their contention that they will suffer special damage if the project proceeds? 4) Did the trial court err in declining to review the belated designation of the project as a Transit-Oriented Development, a designation which permitted the project to be prioritized and receive substantial site-selection and other benefits? 23 On 1 February 2013, the State Agencies and the Developer moved for an immediate stay of enforcement of the judgment of the Circuit Court for Baltimore City entered on 24 January 2013. We denied this Motion on 12 February 2013.