Maryland's highest court paved the way Tuesday for development work to resume on Baltimore's "superblock" by dismissing a challenge from a local group that wanted the court to force the city to seek new proposals.

Maryland's Court of Appeals upheld a lower court ruling that the Baltimore Development Corp., the city's quasi-public development agency, acted properly in selecting Lexington Square Partnership to build a mixed-use project within an area bounded roughly by Lexington, Howard and Fayette streets and Park Avenue, an area assembled by the city.

A group called 120 West Fayette Street LLP, an entity associated with Orioles owner and attorney Peter G. Angelos, had sued the city, contending that Lexington Square was not adhering to a 2001 agreement between the city and the state that guides development on the west side of downtown and calls for preservation of certain historic buildings.

Angelos' group also questioned the way the BDC selects developers and whether it has legal authority to represent the city. The superblock's developers had stopped working on their design for the project until the court issued its ruling.

The ruling means that Lexington Square can resume work without the uncertainty of a pending lawsuit, but it still must adhere to the 2001 preservation agreement.

M.J. "Jay" Brodie, president of the Baltimore Development Corp., said he was gratified by the decision. "It's an endorsement of the way the city has carried out its development proceedings," Brodie said. A ruling in favor of Angelos' group "would have had severe repercussions on the way the city has done business for decades."

The lawsuit had the potential to change the way the city sells land for development, said City Solicitor George Nilson. But the court ruling "validates the way in which the city and the BDC have done these projects for a long time," Nilson said.

Calling for new stores, housing and parking, Lexington Square's project is one of the largest developments ever planned for Baltimore's west side and is seen as a potential catalyst to the continued revitalization of downtown.

Brodie said he hopes to meet with Lexington Square's principals soon to examine where the project stands and what's necessary to move it forward. He said he is optimistic that the developers will devise a plan that's acceptable to the state's preservation agency, the Maryland Historic Trust, and others.

The construction timetable for another mixed-use project on the west side, by the Cordish Cos. and the Harry and Jeanette Weinberg Foundation, is tied to Lexington Square's timetable.

M. Albert Figinski, an attorney representing 120 West Fayette Street, said his client will continue to monitor the Lexington Square development and would sue the city again if it believes the 2001 agreement is being violated. "No plan has yet met the criteria of the" agreement, he said.

"If BDC, in league with its developers, persists with any plan that destroys the historic fabric of the superblock," he said, his client "will be forced … to re-litigate for the preservation of meaningful properties."

Baltimore Sun reporter Robbie Whelan contributed to this article.