Maryland Court of Appeals Refuses to Hear Belward Farm Donor Intent Case

Maryland Court of Appeals Refuses to Hear Belward Farm Donor Intent Case

Article posted in State Courts on 8 July 2014| comments
audience: National Publication, Richard L. Fox, Esq. | last updated: 10 July 2014
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In a highly publicized and controversial donor intent case that has been going on for several years, the Maryland Court of Appeals, Maryland’s highest court, has issued an Order in which it has refused to hear an appeal brought by a deceased donor’s family against Johns Hopkins University and its plans to develop a “science city” on Belward Farm.  The appeal sought to set aside a decision by the trial court, which was upheld by the Maryland Court of Special Appeals, in favor of Johns Hopkins.  In not hearing the appeal, Maryland’s highest court has left in place the decision of the lower courts that Johns Hopkins did not violate the terms of an agreement under which the property was conveyed to the university.  In its Order, the Maryland Court of Appeals stated that there has been no showing that a review of the case “is desirable or in the public interest.”  (Whether or not an appeal (which is actually a petition for a writ of certiorari) to the Maryland Court of Appeals is heard by the court is entirely within the discretion of the court, similar to an appeal to the United States Supreme Court.)  Tim Newell, lead plaintiff in the suit and the donor’s nephew, said in a statement on March 25, 2014 that “We are very disappointed, to say the least.”  Mark Rotenberg, a Johns Hopkins University vice president and general counsel, said after the court’s ruling that the university believes this is the final end to the litigation that has been going on for several years. “Hopkins is grateful that three courts, including Maryland’s highest court, have agreed with [the university],” he said.

Facts of Belward Farm Case

Elizabeth Banks and her siblings, Rolland Banks, Jr. and Beulah Newell, owned a 138-acre parcel of property known as Belward Farm, located between Gaithersburg and Rockville, Maryland. Ms. Banks, the majority owner of the land who lived on the property until her death in 2005, fought a decades-long battle to preserve the property as farm land, which had been farmed by her family from 1873 to 1989, and to protect it against commercial development, a prospect she apparently loathed. Ms. Banks' antipathy towards developers in relation to Belward Farm was reported in a 1989 Montgomery Journal account of an interview of her at that time, where reporter Matt Hamblen quoted her as follows:

I never wanted it [Belward Farm] to be developed. I never wanted a developer to set foot on this property. They destroy all the trees, the birds, everything. This whole community around here has been destroyed by the developers. Sometimes when I'm out shopping total strangers ask me if I'm the one with the beautiful farm, and I tell them, “I'm trying to keep it that way.”

Ms. Banks had a great affinity towards Johns Hopkins and felt that a college campus on Belward Farm would be a good way to protect the property from being commercially developed. In 1989, she and her siblings sold the farm to Johns Hopkins University in Baltimore for $5 million pursuant to a contract of sale dated December 10, 1988, and a deed dated January 9, 1989, conveying the property to Johns Hopkins. In the contract of sale, the parties recognized that the $5 million purchase price recited in the contract did not represent the fair market value of the property and that Ms. Banks and her siblings intended to make a charitable contribution to Johns Hopkins to the extent of the excess of the actual fair market value of the property over the recited purchase price. Based upon an appraisal obtained, the property had a fair market value exceeding $50 million at the time of the transaction. 

The contract of sale and deed conveying the property to Johns Hopkins specifically limited the use of the 108-acre upper or western section of the 138-acre parcel, identified as “Parcel B” in the deed, “for agricultural, academic, research and development, delivery of health and medical care and services or related purposes only, which uses may specifically include but not be limited to the development of a research campus” and provided that the land shall be known as the “Belward Campus of The John Hopkins University.” The deed further stated that with respect to the 108-acre section of the land, the “restrictions herein contained…shall constitute a covenant running with the land,” although a violation of the covenant did not result in a forfeiture or reversion of the fee simple title to the land. The lower thirty-acre section of the 138-acre parcel, identified as “Parcel A” in the deed, could be commercially developed as the deed stated that “[t]here shall be no covenant or use restriction with respect to Parcel A.”  In July 1990, shortly after Johns Hopkins took ownership of Belward Farm, a zoning plan, known as the Shady Grove Study Area Master Plan, was approved by the Montgomery County Council, which designated Belward Farm “as a component of the R & D Village to be developed as a research campus containing R & D uses.” With this change, Johns Hopkins applied for and obtained a rezoning of Belward Farm to the R & D Zone. Under this zoning scheme, the permitted uses of Belward Farm were expanded to included research, development and related activities, as well as universities and colleges providing teaching and research facilities. Ms. Banks and her siblings cooperated in this effort in the expectation that it would facilitate the college campus development of Parcel B that the parties had agreed upon when the property was conveyed to Johns Hopkins. In fact, the contract of sale specifically states that the parties understood and agreed that the use of Belward Farm by Johns Hopkins would require a change in the current zoning classification and that Ms. Banks and her siblings would cooperate with and assist Johns Hopkins “in the prosecution of the application for the zoning change.” 

In March 1997, the Montgomery Country Planning Board approved the application for approval of a Preliminary Plan of Subdivision submitted by Johns Hopkins, the first step in the development of Belward Farm. The 1997 development plan submitted by Johns Hopkins conformed to the then existing R & D Zone and set forth proposed buildings, layouts, square footage, and number of stories. Parcel B included seventeen buildings, two to four stories each, and three parking structures. Development under this plan amounted to 1,367,000 total square feet on Parcel B. On Parcel A, six buildings of two to four stories were proposed, with a total square footage of 433,000. Thus, the maximum amount of developed square feet that could be developed under the 1997 development plan submitted by Johns Hopkins and approved by the Planning Board was 1,800,000. Johns Hopkins made Ms. Banks and her siblings aware of its 1997 plan before it submitted it to the Planning Board, who did not object, believing that the 1997 plan, if implemented as a Johns Hopkins-owned and operated college campus, was of “a magnitude and scale consistent with the deed restrictions and the agreed-upon rezoning, and would ensure the preservation of the farm buildings and home on Belward Farm in an appropriate historic context.” 

Although the development 1997 plan submitted by Johns Hopkins was approved by the Montgomery County Planning Board, the plan was never actually implemented. Then, in 2008, more than ten years after the 1997 plan was approved and three years after the death of Ms. Banks in 2005, Johns Hopkins became involved in a zoning amendment process involving a proposed amendment to the master plan approved by the Montgomery County Council in 1997, which Ms. Banks and her siblings had approved as being consistent with the restrictions placed on the use of Belward Farm. The amendments, which included Belward Farm, were known as the “Great Seneca Corridor Master Plan.” This master plan was approved by the Montgomery County Council in 2010, which allowed Johns Hopkins to more fully develop Belward Farm than allowed under the 1997 development plan.  Following the approval of the new master plan, on February 28, 2011, John Hopkins filed a request with the Montgomery County Planning Board to amend its 1997 development plan. The amended development plan submitted by Johns Hopkins in 2011 substantially expanded the development of Belward Farm from that envisioned under the 1997 plan. It included a conceptual layout of twenty-three buildings ranging in height from fifty to 150 feet, with a total of 4,737,777 square feet of development, and three parking structures that could accommodate over 12,000 vehicles. The 2011 development plan by Johns Hopkins also included a bisecting central roadway with a 150-foot right-of-way and Corridor Cities Transitway stop in the center of the developments, and the roads in the 2011 plan were designed to form a grid-like network of streets. The Montgomery County Planning Board approved the amendment to the Johns Hopkins 1997 plan in the fall of 2011. Under the 2011 development plan, Belward Farm was to be preserved on only approximately ten acres, surrounded on three sides by buildings. Unlike its 1997 development plan, of which Johns Hopkins made Ms. Banks and her siblings aware prior to it submission, Johns Hopkins did not involve the heirs of Ms. Banks or her siblings in their updated development plans.

The Lawsuit

Following the approval of the 2011 expanded development plan for Belward Farm by Johns Hopkins, the descendants of Ms. Banks and her siblings filed a lawsuit against Johns Hopkins on November 10, 2011, in the Circuit Court for Montgomery County, Maryland, Civil Action No. 355237-V, seeking to prevent the development. The complaint alleged that the amended development plan submitted by Johns Hopkins in 2011 did not conform either to the language of the contract of sale and deed conveying Belward Farm to Johns Hopkins or the intent of Ms. Banks and her siblings, characterizing Johns Hopkins 2011 development plan as a “substantial commercial, entrepreneurial real estate development,” which has been referred to as “Science City.” The complaint further alleged that the 1997 plan adopted by Johns Hopkins conformed to the use restrictions in the contract and deed and that it was a feasible plan, fully capable of being accomplished, and that the 2011 plan is in violation of the contract and deed conveying the property to Johns Hopkins. Paragraph 47 of the complaint specifically alleges as follows:

What is envisioned and planned by [Johns Hopkins University] is the substantial commercial, entrepreneurial real estate development of Belward Farm, exclusive of 10 acres for preservation of farmstead. What is not envisioned and planned is what [Ms. Banks and her siblings] and the descendants of Mrs. Banks and her siblings understood was envisioned and planned—a college campus consisting solely of buildings built for, and occupied by, JHU researchers, teachers, students and supporting personnel. The overall effect of the Plan Amendment, once all phases are fully implemented, is creation not of a small, low-rise college campus, but rather a dense, high-rise commercial development, once described by the Planning Board Staff in its Reports on the Plan Amendment (at p. 15) as an “urban scale network of blocks.”

Johns Hopkins responded to the complaint by filing a Motion to Dismiss, or in the alternative, a Motion for Summary Judgment. Johns Hopkins requested that the court dismiss the complaint, because it is premised on “conceptual plans” and therefore “does not allege facts ripe for adjudication and thus fails to establish a justiciable controversy.” Johns Hopkins also requested the court to grant summary judgment based upon the language of the contract and deed that no restriction exists as to the scale, height, or density of the use of Belward Farm. While acknowledging the expressed use restrictions in the contract and deed, Johns Hopkins contends that the “complaint objects to the scale and density of its planned development on Parcel B, and that such manner of development is not addressed in the four corners of the contract.” Johns Hopkins insists that the case turns on eighteen words as to the use of the property “...for agricultural, academic, research and development, delivery of health and medical care and services, or related purposes only…” And, Johns Hopkins asserts that its 2011 development plan meets this standard and, therefore, as a matter of law, it should prevail.  Tim Newell, the lead plaintiff on behalf of the heirs of the former Belward Farm owner and Ms. Bank's nephew, issued an official statement to the North Potomac-Darnestown Patch (Feb. 12, 2012) following the motions filed by Johns Hopkins, as follows:

Hopkins seeks to have the family's case dismissed at the outset on its claim that, on its face, the wording of the 1989 contract between the family and Hopkins unequivocally permits the development of a huge office park. Maryland law provides otherwise. The court should consider the character of the contract, its purpose, the donor intent and the facts and circumstances of the parties in 1989. With these considerations properly taken into account, what emerges is this: Not only were Hopkins' plans completely contrary to the family's $49 million donation of the family farm to Hopkins, but the top officials at Hopkins who were instrumental in securing this donation back in 1989 understood the donative intent as well. At the time, all involved understood that my Aunt Liz would never allow her beloved farm to be subjected to any commercial development, even if it was done by Johns Hopkins. I think anyone in Montgomery county who knew her or knew of her would agree that she would have not allowed this, she was famous for her anti-development stance and her protection of Belward Farm. We await the court's decision on the Hopkins' motion, optimistic that the court will apply the law correctly and provide us with the opportunity to present our evidence at trial.

In a March 9, 2012, twenty-four-page decision, the Montgomery County Circuit Court refused to dismiss the lawsuit. The court found that the progression in the scale of development from 1990 through 1997, and culminating in the 2011 plan, “presents a controversy ripe for adjudication. Without reaching the merits of the case, the Court finds that a conflict indicating imminent and inevitable litigation exists.” The court then denied the motion for summary judgment stating that the contract and deed, “when read in their entirety, contain ambiguities sufficient to defeat” the motion for summary judgment. The court stated that “in reading the two documents as a whole, the Court finds that a reasonable person standing in the parties' shoes at the time of the Contract's formation could find the agreement ambiguous.” Since the court determined that there was a genuine dispute as to the material facts of the case, the motion for summary judgment by Johns Hopkins was dismissed. Following the court dismissal of the motion to dismiss and its denial of summary judgment, Johns Hopkins said in a statement that the “ruling was on a preliminary motion and is not dispositive of the case at all. We are disappointed that the judge could not rule at this time that the contract and deed are unambiguous and do not restrict height, scale or density and do not prevent the university from leasing to outside tenants. We are confident, however, that the court will come to that conclusion as the case continues.” In early April 2012, Johns Hopkins filed a motion requesting that the court fast-track the case. In response, Judge John W. Debelius, III, issued a decision assigning the case to the Court's Business and Technology Case Management Program, Expedited Track 5, setting a scheduling hearing before Montgomery County Circuit Court Judge Ronald B. Rubin.

Montgomery County Circuit Court Rules in Favor of Johns Hopkins, Granting Johns Hopkins’ Motion for Summary Judgment on October 26, 2012

On October 26, 2012, Judge Rubin decided in favor of Johns Hopkins’ motion for summary judgment in a brief ruling from the bench at the close of a hearing on the parties’ cross-motions for summary judgment. On November 9, 2012, the final, written summary judgment and declaratory order in the case was entered. A trial was scheduled to begin on November 13th, which never took place given the court’s ruling in favor of the motion for summary judgment filed by Johns Hopkins.  In his ruling dated November 5, 2012 (entered on November 9, 2012), Judge Rubin ruled the contract and deed conveying Belward Farm “do not impose restrictions on Johns Hopkins University related to the scale or density of its development of Parcel B … and that the only development and use restrictions applicable to Johns Hopkins are those specifically set forth in the contract and deed,” i.e., “agricultural, academic, research and development, delivery of health and medical care and services or related purposes only, which uses may specifically include but not be limited to the development of a research campus in affiliation with one or more divisions of [Johns Hopkins].”   Judge Rubin also ruled that the restrictions imposed by the contract and deed did not apply to the leasing of Parcel B by Johns Hopkins, as the restrictions apply only to a transfer of a fee simple ownership interest in the property, not to a lease of the property.  Following the issuance of the ruling by Judge Rubin, Johns Hopkins released the following statement:

Johns Hopkins is, and always will be, grateful to Miss Banks and her relatives for the gift of their property. We have lived up to, and will always live up to, our agreement with them.  We will need time to fully assess the judge’s decision. But, obviously, we are greatly pleased with his ruling that the university’s agreement with the Banks family is clear and unambiguous. Our focus now will be on proceeding, over time, with development of the Belward Research Campus. We will proceed in a responsible manner, in consultation with the community and in support of Montgomery County’s vision for its economic development.

Notice of Appeal of Judge Rubins’ Ruling Filed by Plaintiffs

The plaintiffs in the lawsuit against Johns Hopkins filed a Notice of Appeal with the Montgomery County Circuit Court on November 14, 2012. Tim Newell, the lead plaintiff on behalf of the heirs of the former Belward Farm owner and Ms. Bank's nephew, stated that "the court accepted Hopkins’ characterization of  the transfer of the farm to Hopkins as an arms-length real estate transaction rather than a donation – despite the fact that Hopkins has long acknowledged that the family’s gift was one of the largest donations to the University in recent years, and the Contract states on the first page that the agreed intent of the parties in entering into the Contract was ‘to make a charitable contribution to [Johns Hopkins]. Mr. Newell further stated:

This has just strengthened my family's resolve to ensure that my Aunt Liz's donative intent is honored and that Belward Farm is used as a University Research campus, as Hopkins promised. Once the judges of the Special Court of Appeals look at the facts, I am confident they will see this as a case primarily about a donation, not a real estate sale. When that happens, Hopkins’ case completely falls apart.  Maryland law strongly supports the principle that the intent of a donor should take precedence in a gift situation.  "We look forward to the next phase of this important lawsuit.  If left to stand, the rejection of my Aunt Liz’ donative intent could erode public confidence in the nonprofit sector generally and undermine donor confidence that gifts of land under agreed terms will be honored and enforced.

November 21, 2013 Decision of Maryland Court of Special Appeals

On November 21, 2013, a three-judge panel of the Maryland Court of Special Appeals ruled that Johns Hopkins University’s proposed development of the Belward Farm was in compliance with the university’s agreement with its former owners and is not limited “in terms of scale or density or ownership structure.” In its unanimous opinion, the court affirmed the ruling by a Montgomery County Circuit Court judge. The appeals court stated that “the operative contract frames [Johns] Hopkins’ development rights solely and unambiguously in terms of permissible uses,” while adding that the contract “does not limit the scale or density of the development, nor preclude leasing.”  As indicated above, this decision remains in full force and effect, as the Maryland Court of Appeals has now refused to hear an appeal of the decision.

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