Opinion ID: 2074067
Heading Depth: 2
Heading Rank: 3

Heading: The City's Alleged Waiver of the Covenants

Text: MIE alternatively claims that it is not bound by the Covenants because the City waived its right to enforce the instrument. [25] This waiver argument is based on four grounds. First, MIE states that, prior to its acquisition of the Property, the City allowed several uses on the Property that were inconsistent with the Covenants' restrictions. In particular, MIE cites as examples the operation of a sculpting studio and a private residence known as the Melford House on the Property. Second, MIE points to the City's voluntary extinguishment of the Covenants as to two subdivided parcels of the Property on which buildings were constructed for the federal government's Institute of Defense Analysis and Census Bureau. Third, it is asserted that representatives of the City manifested orally to MIE that the Covenants would not be enforced in the event that MIE purchased and developed the Property. Finally, after MIE purchased the property, it is contended that the City permitted tenancies in the flex building space of a home improvement contractor, a tutoring business, a kidney dialysis center, a medical clinic, a church, a vending business, and a sleep clinic. MIE alleges that these tenancies are contrary to the City's interpretation of the Covenants. Maryland appellate courts have long recognized the equitable defense of waiver in restrictive covenant cases. Jaggers, 261 Md. at 318-20, 275 A.2d at 172-73; Harker, 212 Md. at 195, 129 A.2d at 388; Kirkley v. Seipelt, 212 Md. 127, 136, 128 A.2d 430, 435 (1957); King, 208 Md. at 313, 117 A.2d at 920-21; Schlicht v. Wengert; 178 Md. 629, 635, 636, 15 A.2d 911, 913, 914 (1940); Lindner v. Woytowitz, 37 Md.App. 652, 658-59, 378 A.2d 212, 216 (1977); Speer v. Turner, 33 Md.App. 716, 727-29, 366 A.2d 93, 100-01 (1976); Liu v. Dunnigan, 25 Md.App. 178, 190-92, 333 A.2d 338, 345-46 (1975); see also Bean v. Steuart Petroleum Co., 244 Md. 459, 468-69, 224 A.2d 295, 300 (1966) (discussing the general principles of estoppel in relation to the enforcement of a restrictive covenant); Borssuck v. Pantaleo, 183 Md. 148, 154, 36 A.2d 527, 530 (1944) (same). In this context, waiver deems unenforceable a covenant because some word or act of the covenantee communicated to the covenantor that the covenant would not be enforced. Speer, 33 Md.App. at 728, 366 A.2d at 101(citing Gould v. Transamerican Assocs., 224 Md. 285, 294, 167 A.2d 905, 909 (1961)). The defense is manifested in two forms: (1) waiver by acquiescence, which involves a covenantee abiding the violative actions of the covenantor defendant, [26] and (2) waiver by abandonment, which entails the covenantee abiding the violative actions of others besides the covenantor defendant which are taken as also waiving impliedly violative actions of the covenantor defendant. [27] Kirkley, 212 Md. at 136, 128 A.2d at 435. Our cases, slathered with a layer of common sense, [28] dictate that in order for waiver to occur, the covenantee must be aware of the covenantor's acts or uses and their possible violative nature. Jaggers, 261 Md. at 318-19, 275 A.2d at 172; Speer, 33 Md.App. at 727, 366 A.2d at 100; see also Bean, 244 Md. at 468-69, 224 A.2d at 300; Borssuck, 183 Md. at 153-54, 36 A.2d at 530. The question of whether waiver has occurred is a question of fact, Creveling v. Gov't Employees Ins. Co., 376 Md. 72, 96, 828 A.2d 229, 243 (2003); Bean, 244 Md. at 469, 224 A.2d at 301; Lindner, 37 Md.App. at 658, 378 A.2d at 216, which is reviewed for clear error. This case involves an allegation of waiver by acquiescence because, although MIE alleges that a variety of other entities that actually are carrying on assertedly violative uses on the Property, only MIE is a party to the Covenants; MIE was the entity to approve the tenancies of the businesses perpetrating the violative uses; and MIE, as landlord, is the appropriate party to be enjoined by the City. [29] We find no evidence of clear error in the Circuit Court's judgment that the City did not waive its right to enforce the Covenants. On the first ground asserted by MIE, there was simply not enough evidence adduced by MIE to compel acceptance of its claim that the presence of the Melford House and a sculpting studio on the Property was inconsistent with the Covenants. The party seeking to prove waiver bears the burden of proof of establishing that defense. Canaras v. Lift Truck Servs., Inc., 272 Md. 337, 361, 322 A.2d 866, 879 (1974); see also Creveling, 376 Md. at 102, 828 A.2d at 247 (discussing estoppel). MIE's only proof that the aforementioned uses violated the Covenants was a reference to testimony by Joseph Meinert, Planning Director for the City of Bowie, who reviewed uses on the Property for consistency with the Covenants. Meinert testified that he believed that the historic Melford House was a consistent use and did not violate the Covenants. He further testified that the City was unaware of the sculpting studio use until the sculptor approached the City regarding a law enforcement matter related to his studio. [30] An unknown amount of time passed between commencement of his use of the space and the vandalism report. Meinert warned the sculptor that his use may not be legal for his lack of a use and occupancy permit and other trappings of the formal plan approval process, but did not pursue the matter further. This is an inadequate basis upon which to hold that the Circuit Court was clearly erroneous in its judgment that no waiver occurred. MIE next points to the fact that the City extinguished the Covenants' applicability with regard to certain parcels of the Property acquired by the federal government for the construction of the Institute for Defense Analysis and Census Bureau buildings. [31] This was achieved by the City executing and recording in the land records of Prince George's County a Declaration of Covenant Extinguishment and Reinstatement, which provided that the parcel acquired by the federal government was released from the encumbrance of the Covenants until such time as any non-federal entity held an interest therein. [32] This limited extinguishment was accomplished by the means prescribed in the Agreement and the Covenants: in writing and [] signed by the party against whom the enforcement of such waiver, modification or amendment is sought, and then only to the extent set forth in such instrument. The waiver, signed by all concerned parties, was personal to the federal government and thus, may not be extended by MIE to embrace its activities on the Property. Furthermore, because MIE asserts waiver by acquiescence, the City's grant of a waiver to another is irrelevant. Kirkley, 212 Md. at 136, 128 A.2d at 435. MIE's third ground for establishing waiver is unavailing for a reason similar to that underlying our rejection of the second ground: a purported oral waiver of the Covenants is ineffective when the Covenants specify that their waiver must be accomplished in writing. MIE asserts, based on deposition testimony of Edward St. John, President of MIE, that he was told by MIE's Development Director, Ramon Benitez, who in turn was told by City of Bowie officials, that the Covenants were waived for the federal government and should not prevent MIE from developing the Property. [33] This was an oral communication and, under the circumstances, could not be an effective waiver. Moreover, the Circuit Court found no waiver on this ground based on its evaluation of the competent evidence. We find no clear error in the Circuit Court's judgment. On MIE's final waiver ground, we note that the record does not demonstrate that the City had the requisite knowledge of the allegedly violative uses of the Property in the flex building space occurring after MIE purchased the Property. There was no determination by the Circuit Court that the uses violated the Covenants. Upon our examination of the record, we observe nothing demonstrating clearly that this is the case. Even if the uses violated the Covenants, MIE did not prove satisfactorily that the City was aware of them such that it could acquiesce in their existence. In fact, evidence was adduced by the City that not all tenancies on the Property are or were brought to the City's attention, including many, if not all, of those to which MIE refers in its fourth and final ground for establishing waiver. MIE suggests that we should uphold the Court of Special Appeals's limited remand to allow the Circuit Court to consider additional evidence on the waiver argument. This is unwarranted. The intermediate appellate court permitted reconsideration of the waiver defense solely because it was remanding the case on the question of the Covenants' validity. Because we find no error in the Circuit Court's analysis of the latter point, no remand is necessary or warranted, obviating the exercise of discretion by the intermediate appellate court in allowing consideration of further waiver evidence.