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Judge throws out part of ground rent suit

1 A judge has thrown out part of a lawsuitfiled by ground rent owners challenginga 2007 state law intended to haltabuses in the system, but allowed their constitutionalchallenge to move forward.

Judge Paul F. Harris Jr. of Anne ArundelCounty Circuit Court also denied the state'smotion to transfer the case to Baltimore.In a 21-page ruling released last week, Harrisrejected the argument from ground rentowners Stanley Goldberg and PFGR LLC thata state law abolishing ejectment -- the seizureof a property for nonpayment of groundrent -- is a "physical taking."

Harris wrote that the plaintiffs needed toshow that the new law "has caused or willnecessarily cause each and every ground renttenant to violate his or her lease and permanentlyremain on Plaintiffs' property."

"But such is not the case because the Act allowsproperty owners to foreclose on nonpayingground rent tenants," he wrote.

Harris, however, denied the state's motionto dismiss the entire case, which alleges thatthe legislature violated parts of the state andfederal constitutions that bar "private propertyfrom being taken for public use, withoutjust compensation."

He ruled that the plaintiffs' argument thatstate law amounts to a "regulatory taking," byeliminating or reducing the value of theirground leases, should move forward.

The lawsuit alleges that the market valueof the plaintiffs' ground rents has "plummetedand the properties have become unmarketable"since the state law took effect.

"Drawing the inferences in favor of Plaintiffs,these factual allegations are sufficient to statea claim that the Act effected an uncompensatedregulatory taking," Harris wrote.

The General Assembly overhauled thestate's ground rent system in the wake of aninvestigative series published by The Sun inDecember 2006 that detailed abuses in thesystem.

The state had argued that the case shouldbe heard in Baltimore because more than 90percent of the plaintiffs' ground rent propertiesare in the city, and it would be more convenientfor tenants to testify there than in Annapolis.

The plaintiffs argued for Anne ArundelCounty, in part, because "sensationalizednews coverage has inflamed passions in Baltimore,making Anne Arundel County a moreneutral forum."

Raquel Guillory, a spokeswoman in the attorneygeneral's office, said the state was"pleased that half of the plaintiffs' case wasthrown out in its entirety."

Edward J. Meehan, a Washington attorneyrepresenting the ground rent owners, said hewill ask the court to certify a class action thatcould include thousands of ground rent ownerspotentially seeking "several hundred milliondollars" from the state.

"If we cannot otherwise resolve it, then wewould proceed to a trial by jury,'' Meehansaid.

Copyright © 2014, The Baltimore Sun
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