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State v. Goldberg

Court of Appeals of Maryland

September 9, 2013, Argued; February 26, 2014, Filed

No. 8, September Term, 2013

Opinion

 [**234]  [*195]   Opinion by Harrell, J.

In this case, a re-match of sorts1 between the General Assembly and certain Baltimore landlords, we revisit the  [*196]  nature of Maryland's "ground lease" system. A group of plaintiffs-lessors holding ground leases brought this action against the State challenging, on Maryland Constitutional grounds, Chapter 286 of the Laws of Maryland, which 2007 legislation replaced ejectment with a lien-and-foreclosure process for defaulting lessees of ground leases when more than six months of rent is overdue. The Circuit Court for Anne Arundel County determined that the Legislature exceeded its powers and held Ch. 286 of the 2007 Laws of Maryland invalid as an abrogation of vested rights. The State appealed this decision, arguing that the Legislature is allowed to alter remedies by statute and that no vested property rights are implicated. Before  [***2] the Court of Special Appeals could decide the appeal,2 we granted certiorari to determine if the General Assembly indeed has authority to invalidate the ejectment clauses3 present in extant ground leases.

I. Facts and Legal Background

The ground lease is a centuries-old home financing tool found almost exclusively in Maryland. See Banks v. Haskie, 45 Md. 207, 218 (1876). With roots in feudal England, the ground lease, although little known elsewhere in the United States, is common in Maryland. See Lewis Mayer, Ground Rents in Maryland 43 (Cushings & Bailey ed., 1883). Although ground leases have changed little over the centuries,  [***3] recent legislation attempted "reforms" of the ground lease system. In late 2006, The Baltimore Sun published a three-part investigation into the ground rent system. Fred Schulte & June Arney, Part 1 of 3: On Shaky Ground, The Baltimore Sun, Dec. 10, 2006, http://www.baltimoresun.com/business/bal-te.bz.groundrent10dec10,0,5955952.story  [*197]  (last retrieved Nov. 13, 2013). Focusing on some anecdotal reports of tenants being ousted from their homes due to missed payments totaling far less than the value of the home, these articles led to a legislative attempt during the 2007 session of the General Assembly to address perceived abuses of the ground lease system. Appellees, a class representing ground lease holders,4 claim that the Legislature abrogated  [**235]  impermissibly their vested rights. Appellant, the State, counters that the legislation at issue is simply a substitution of remedies aimed at curtailing reported abuses of tenants by ground lease holders.

As noted earlier, the legislation at issue here is Chapter 286 of the 2007 Session Laws of Maryland, which revised Section 8-402.2 of the Real Property Article ("RP"5). Md. Code  [***4] (1974, 2010 Repl. Vol.), § 8-402.2 of the Real Property Article. Appellees challenged three aspects of Chapter 286. The first challenge is to Chapter 286's revision of RP § 8-402.2(a)(2) to prohibit ejectment proceedings for residential ground leases with four or fewer units.6 Second, Appellees challenged Chapter 286's enactment of RP § 8-402.3, establishing a lien-and-foreclosure process available for ground lease holders whose tenants owe at least six months' rent.7 Finally, Appellees challenged Chapter 286's institution of  [*198]  RP §§ 8-402.3(j)(3)(ii)-(k)(1)(ii), limiting the amount of attorney's fees that would be available as part of a judgment.

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437 Md. 191 *; 85 A.3d 231 **; 2014 Md. LEXIS 134 ***; 2014 WL 726166

STATE OF MARYLAND v. STANLEY GOLDBERG, ET AL.

Subsequent History: As Corrected May 13, 2014.

Costs and fees proceeding at State v. Braverman, 2016 Md. App. LEXIS 58 (Md. Ct. Spec. App., June 1, 2016)

Prior History:  [***1] Appeal from the Circuit Court for Anne Arundel County pursuant to certiorari to the Court of Special Appeals. Case No. 02-C-07126810. Paul F. Harris, JUDGE.

Disposition: JUDGMENT OF THE CIRCUIT COURT FOR ANNE ARUNDEL COUNTY AFFIRMED; COSTS TO BE PAID BY THE STATE OF MARYLAND.

CORE TERMS

ground rent, ground lease, vested right, lease, ejectment, re-entry, rent, leaseholder, abrogate, rights, vested, reversionary interest, event of default, holder, tenant, reversion, right of re entry, re-enter, remedies, renew, retrospective, bundle, right of entry, foreclosure, extinguishment, nonpayment, grantor, lessor, real property, terminate

Civil Procedure, Appeals, Standards of Review, De Novo Review, Summary Judgment Review, Standards of Review, Judgments, Summary Judgment, Partial Summary Judgment, Questions of Fact & Law, Real Property Law, Estates, Present Estates, Leasehold & Real Estates, Governments, Legislation, Effect & Operation, Retrospective Operation, Constitutional Law, Bill of Rights, Fundamental Rights, Eminent Domain & Takings