382 Md. 581 856 A.2d 660

856 A.2d 660

POTOMAC ELECTRIC POWER COMPANY, et al. v. CLASSIC COMMUNITY CORPORATION.

No. 101,

Sept. Term, 2003.

Court of Appeals of Maryland.

Aug. 23, 2004.

*583Heather Libman Blauer (Mark A. Gilday, Bregman, Berbert, Schwartz & Gilday, LLC, Bethesda, Jeffrey A. Friedman, Ned S. Kodeck, Chtd., Baltimore, on brief), for appellants.

John A. Rego (Anderson & Quinn, LLC, Rockville, on brief), for appellants.

Patrick C. McKeever (Michael G. Campbell, Miller, Miller & Canby, Rockville, on brief), for appellee.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, GREENE and JOHN C. ELDRIDGE (Retired, Specially Assigned), JJ.

WILNER, J.

For about 70 years, Potomac Electric Power Co. (PEPCO) has maintained utility poles along the side of Travilah Road in Montgomery County, on land now owned by Classic Community Corporation (Classic).1 The poles carry electric lines owned by PEPCO and, through agreements with PEPCO, telephone *584lines owned by Verizon Maryland, Inc. (Verizon) and cable lines owned by Comcast of Maryland, Inc. (Comcast).

Classic, a developer, purchased the property, consisting of about thirty acres, in January, 1998, after receiving preliminary approval from the Maryland-National Capital Park and Planning Commission for a proposed 91-unit residential development. In February, 1998, Classic recorded subdivision plats in which it dedicated to public use the portion of the property on which the poles were located. It so dedicated that part of the property because the Public Improvements Agreement that it signed with Montgomery County required that Classic widen Travilah Road and construct a shoulder to the road, an adjacent drainage ditch, and sidewalks. For that work to be done and for Classic’s residential development to proceed, the poles must be moved. In addition to that strip of land dedicated to public use for the road, drainage, and sidewalk improvements, the plat showed a public utility easement of between 10 and 16 feet through another part of the property. The plat stated that the easement was dedicated pursuant to a separately recorded Declaration of Public Utility Easements that is not in the record before us and that has remained unmentioned by the parties. The Declaration, of which we may take judicial notice, makes clear that the easement is for the benefit of PEPCO, to allow it to bury the electric lines, instead of having them continue to run overhead.

Both the Public Improvement Agreements with the county and the construction permit issued by the county required Classic to move the poles.2 Classic filed a road plan showing the removal of the poles — a document that also is not in the record before us — but then insisted that PEPCO do the *585removal and relocation at its expense. When PEPCO refused, Classic filed this action against PEPCO, Verizon, and Comcast in the Circuit Court for Montgomery County, seeking a declaratory judgment that PEPCO had no easement or other interest in the property, that it therefore had no right to maintain the poles in their current location or to give Verizon or Comcast permission to string their lines from those poles, that PEPCO must remove the poles and relocate them at its expense, and that Verizon and Comcast must remove their wires from the poles.

On December 19, 2002, the court entered a declaratory judgment that essentially adopted Classic’s arguments. The judgment declared that PEPCO did not possess any easement or other interest in the land that would permit it to maintain its poles there, that it had no right to grant permission to Verizon or Comcast to string their lines on those poles, that PEPCO must remove the poles from Classic’s property and relocate them at its expense, and that Verizon and Comcast must remove their lines from the poles pending any future agreement.3 The utilities filed timely appeals, and we granted certiorari prior to proceedings in the Court of Special Appeals. Although each of the Circuit Court’s findings is challenged, it seems clear that the lines and poles will have to be removed at some point, if they have not already been removed, and, as noted, the real issue is who ultimately will bear the cost of that operation. We shall conclude that the cost of removing the lines and the poles must fall on Classic and that the Circuit Court erred in determining otherwise.

*586 BACKGROUND

Pursuant to a number of franchises, PEPCO has been supplying electricity to customers in various parts of Maryland, through lines located on or adjacent to public roads, since approximately 1909. See Potomac Elec. Power Co. v. Birkett, 217 Md. 476, 478-79, 143 A.2d 485, 487 (1958). In March, 1931, PEPCO, in consideration of one dollar, acquired from John H. Hunter, the then-owner of the property at issue, a right-of-way card that granted to PEPCO, and its successors and assigns,

“the right to construct, operate and maintain lines for the transmission and distribution of electricity, including the necessary poles, cables, wires, and fixtures upon the property owned by me or in which I have any interest, situated in Montgomery County, State of Md., and more particularly described as Travilah Road, Travilah, Md. and upon and along such roads, streets or highways adjoining the said property; and to make such extensions therefrom as are necessary to distribute electric service; to permit the attachment of the wires of any other company or person; to trim any trees along said lines so as to prevent injury thereto and to keep a reasonable clearance around the wires, with the further right to remove all trees that interfere with, or which in falling might damage said lines; to erect and set the necessary guy and brace poles and anchors and to attach thereto and to trees the necessary guy wires.
# 612311 to 15 incktherein
This permission is granted on condition that the work be done with care, and that all damage to the premises caused thereby shall be repaired at the expense and under the supervision of the Potomac Electric Power Company.”

It would appear that the numbers noted in the right-of-way agreement — “612311 to 15” — referred to the pole numbers, thus indicating an acknowledgment that at least five poles (Nos. 612311 through 612315) would be erected. At some point, Carlton Mills acquired the Hunter property. The deed *587from Hunter to Mills is not in the record. In June 1942, PEPCO acquired a new permission from Mills. The agreement gave to PEPCO, its successors and assigns, general permission to install, replace, relocate, and maintain poles and overhead electric wires on the premises and to make such extensions therefrom as necessary to distribute electric service from time to time. The card noted, by interlineation, “install pole 628817, replace + relocate pole 612309 N.O.T.T.” 4

Shortly after erection of the poles, the Chesapeake & Potomac Telephone Company, a predecessor to Verizon, installed its telephone lines on the poles. Pursuant to joint use agreements signed from time to time between PEPCO and the telephone company, those lines have been continuously maintained on the poles since that time. Pursuant to an Overhead Attachment Agreement with PEPCO, Comcast strung and has maintained its cable television lines on the poles since 1987. It is conceded that neither the telephone company nor Com-cast ever sought or received express permission from the landowner to attach its wires to the poles; their authority came solely from PEPCO.

DISCUSSION

As we have observed, in light of the fact that, as part of the proposed residential development, Travilah Road will be widened and sidewalks and drainage improvements will be install*588ed, the poles will, at some point, have to be moved. The ultimate relevant issue between the parties, therefore, is not whether the poles can remain where they are but whether PEPCO or Classic ultimately will bear the cost of the removal.

Unfortunately, the parties address the financial responsibility issue in terms of whether PEPCO has a right to maintain the poles in their current location. PEPCO claims that it has an express easement, based on the agreements it obtained from Hunter and Mills, to maintain the poles where they are and that if Classic wants the poles moved for its own purposes, it will have to bear the cost of removal. Verizon and Comcast also claim an easement with respect to their wires, either expressly through the agreements obtained by PEPCO or, in the case of Verizon, by prescription. Even if, as urged by Classic, the agreements obtained from Hunter and Mills do not constitute easements but are mere licenses that ended with the death of the licensors and were in any event revoked by Classic, PEPCO claims (1) a right under its franchise to maintain the poles in what is now a public right-of-way, and (2) that, by virtue of the tariff approved by the Public Service Commission, Classic is required to pay for removal of the poles. Verizon and Comcast adopt those arguments as well.

The Circuit Court concluded that the agreements obtained from Messrs. Hunter and Mills did not constitute express easements but were merely licenses. Although that conclusion rested in part on the wording of the agreements— particularly the 1942 agreement — the court found telling PEP-CO’s perceived need to obtain a new permission from Mills. It observed:

“The fact that PEPCO had Mr. Mills sign a ‘right of way card’ when he purchased the property from Mr. Hunter in 1942 speaks volumes as to how PEPCO viewed the 1931 card. Had PEPCO believed that the 1931 card created an easement, there would have been no reason for PEPCO to establish a relationship with the new property owner. Seeking Mr. Mills’ signature for the 1942 ‘right of way card’ indicates that PEPCO was cognizant of the notion that they only had the privilege of placing utility poles on the proper*589ty and would need the approval of the new owner to continue this privilege.”

Having so found, the court concluded that, armed only with a license, PEPCO had no further right to maintain its poles on Classic’s land. Although it noted that, because the poles were now situated on land dedicated to public use, Classic was not seeking an ouster of the poles, the court held that PEPCO must bear the cost of relocation. Notwithstanding that in its post-trial memorandum PEPCO expressly argued that, by virtue of its legislatively-conferred franchise and the tariff approved by the Public Service Commission, the cost of any required location must be borne by Classic, the court declared that PEPCO chose to base its use of Classic’s land solely on the right-of-way cards and therefore never addressed PEP-CO’s franchise and tariff arguments. Based solely on its finding that there was no easement, the court found that PEPCO was responsible for the cost of relocation.

There are a number of problems with the court’s analysis and ruling. It is not at all clear to us that the 1931 agreement obtained from Mr. Hunter did not constitute an easement5 or that, even if PEPCO had only a license, it would *590be required to remove the poles upon expiration of the license.6 We need not address those questions, however. The *591overarching consideration is that, as part of and as a condition to its private development of the land, Classic agreed with the *592county to widen Travilah Road and to make certain ancillary improvements adjacent to the road. In order to achieve those ends, it dedicated the land upon which those improvements are to be made and upon which the poles are situate to public use, making it a public right-of-way. By its own act, undertaken solely for its own economic benefit, it caused the poles to be situate on land dedicated to public use and thereby made the removal of those poles from that land necessary. Quite apart from whether PEPCO had a license or an easement and quite apart even from Classic’s agreement with the county to remove the poles at Classic’s expense, PEPCO and Verizon have a right under their respective franchises not to be burdened with the cost of removing the wires and poles.

The parties trace PEPCO’s franchise right to distribute electric power along Travilah Road to a franchise granted by the General Assembly in 1894 to the Great Falls Power Company to “erect and maintain lines for the transmission of Electricity in Montgomery County and Prince George’s County, in the State of Maryland.” See 1894 Md. Laws, ch. 540. We shall assume that to be the case, although it would appear that PEPCO did not formally acquire that franchise until 1947, some 16 years after it obtained the right-of-way agreement from Mr. Hunter and first erected the poles.7 The franchise authorized the company “to lay, construct and build lines or conductors, under, along, upon or over” the streets and roads in the two counties and to connect them with buildings, other structures or objects and with the place of supply. Id. Verizon enjoys a similar franchise. See Bd. of County Commissioners of Garrett Cty. v. Bell Atlantic-Maryland, Inc., 346 Md. 160, 171-73, 695 A.2d 171, 177-79 (1997); *593Maryland Code, § 8-103 of the Public Utility Companies Article. Thus, both companies have a right under their legislatively-conferred franchises to maintain poles and wires along public rights of way, “subject only to the avoidance of public inconvenience.” County Commissioners, 346 Md. at 173, 695 A.2d at 178.

At common law, public utilities were required to bear the cost of relocating equipment in a public right of way when the relocation was required by public necessity. See generally Norfolk Redev. & Housing Auth. v. Chesapeake & Potomac Telephone, 464 U.S. 30, 35, 104 S.Ct. 304, 307, 78 L.Ed.2d 29, 34 (1983) (“Under the traditional common-law rule, utilities have been required to bear the entire cost of relocating from a public right-of-way whenever requested to do so by state or local authorities.”). We adopted that rule in Baltimore Gas & Elec. Co. v. State Roads Comm., 214 Md. 266, 270, 134 A.2d 312, 313 (1957) (“Unless the Legislature directs to the contrary, the rule is that a public utility must, at its own expense, remove and relocate its service facilities in, on or under a public road or other land owned by the State if this is made necessary by improvement or extension of the road system.”) and in Mayor and City Council of Baltimore v. Baltimore Gas & Elec. Co., 221 Md. 94, 156 A.2d 447 (1959), although in both cases we found a legislative direction that the utility be compensated. See also 12 McQuilijn Mun Corp § 34.74.10 (3rd ed.) (“The fundamental common-law right applicable to franchises in streets is that the utility company must relocate its facilities in public streets when changes are required by public necessity.”).

The cases in which the common law rule is invoked have usually involved situations in which the relocation is required because of changes in the right-of-way made necessary by public works projects of one kind or another and the utility seeks compensation from the public authority for the cost of relocation. As we pointed out in City of Baltimore v. Baltimore Gas & Elec. Co., 232 Md. 123, 128, 192 A.2d 87, 89 (1963), “[m]ost of the cases in which the rule has been applied *594have dealt with highway improvements or extensions, but there are many cases reaching the same result in which other public projects have required the utility to accommodate progress, or at least change, at its expense, in the general public interest.” (Emphasis added). That was the situation in both Norfolk Redev. & Housing Authority and Balto. Gas Co. v. State Roads Comm., supra. Some courts have recognized a different rule, however, when the relocation is made necessary by private development or even by a municipality when acting in a proprietary, rather than a governmental, capacity.

We applied that different rule in City of Baltimore v. Baltimore Gas & Elec. Co., supra, 232 Md. 123, 192 A.2d 87. In that case, Baltimore City directed the closing of certain streets in order to proceed with various projects, and that, in turn, required the Baltimore Gas & Electric Company to relocate gas lines. With respect to the projects that the Court regarded as governmental in nature, we applied the common law rule and denied the utility’s demand for compensation. Id. at 131, 192 A.2d at 91. As to the one project that the Court regarded as proprietary in nature, however, we reached a different result and required compensation. In that regard, we observed:

“The Courts have held generally that a proprietary exercise of power which requires the moving of utility facilities from public ways or lands puts the sovereign or its creature in competition with, or on an equal basis with, the utility; and, therefore, the State, or its agency, may not exercise its usual superior governmental right to regulate franchises without cost to itself.”

Id. at 136-37, 192 A.2d at 94-95.

In support of that view, we cited cases from the Supreme Court, Ohio, New York, Texas, and Oregon. Id. See also Bell Atlantic-Maryland v. Maryland Stadium Authority, 113 Md. App. 640, 648, 688 A.2d 545, 549 (1997); City of Pontiac v. Consumers Power Co., 101 Mich.App. 450, 300 N.W.2d 594, 596 (1980). Although we have since expressed some skepticism as to the practicality of the governmental/proprietary *595distinction and have declined to extend that distinction into new areas (see Baltimore County v. RTKL, 380 Md. 670, 688-89, 846 A.2d 433, 444 (2004)), we have not discarded the doctrine as it has previously been applied. The rule applied in City of Baltimore necessarily must apply with even greater force when the relocation is made necessary by the actions of a private developer for its own economic benefit.

That very issue was presented in Pacific Gas & Electric Co. v. Dame Construction Co., 191 Cal.App.3d 233, 236 Cal.Rptr. 351 (1987). There, as here, as a condition to approval of a proposed residential development, a private developer was required to widen an adjacent road, which necessitated the relocation of electric utility poles. The developer widened the road but refused to remove the poles, causing the county to order the utility to remove them. The utility did so and then sued the developer to recover the cost. Affirming a judgment for the utility, the court declined to apply the traditional common law rule, holding that it was limited to the situation where relocation was required by a valid governmental act— that the purpose of the common law rule was to insulate the government and the taxpayers from the cost. The court declined to treat the developer’s work, undertaken as a condition to its development of the land, as a governmental act. Instead, applying a benefit analysis, the court concluded that:

“[W]hile the general public would also benefit from the road widening, the primary beneficiary of the work was [the developer], which would not have been permitted to develop its land without agreeing to widen the adjacent boulevard. Since [the developer] presumably enjoys the economic opportunity that the development represents, it seems proper that it should also bear the attendant costs.”

Id. at 240, 236 Cal.Rptr. at 356. The court added that it was “economically and otherwise fair that [the developer] bear these costs because it had reason to anticipate it would have to do so.” Id. at 241, 236 Cal.Rptr. at 356.

The Missouri appellate court reached the same conclusion in Home Builders v. St. Louis Cty., Water Co., 784 S.W.2d 287 *596(Mo.App.1989) and for largely the same reason. There, too, relocation of roadway utility lines became necessary by reason of private development projects, and the developers insisted that the utility bear the cost of removal. Affirming a judgment for the utility, the court stressed that “the actions of private developers constructing their projects, not the actions of a governmental entity, have caused the need for right-of-way improvements and have, in turn, necessitated water facility relocations.... While the right-of-way improvements incidentally accomplish a public purpose, they primarily accomplish private sector purposes....” Id. at 291.

Whether we adopt a benefit analysis as the California court did or simply hold, in conformance with the implications from City of Baltimore v. Baltimore Gas & Elec. Co., supra, that, where the relocation is triggered and made necessary by a private development, the common law rule does not apply and the developer must pay the cost of the relocation, is not likely to make much difference. The end result under either approach will, in almost all instances, be the same. The automatic rule is the easier to apply and avoids the prospect of extensive litigation and endless discovery over who, among any number of possible parties, may be the principal beneficiary of particular road improvements occasioned by a private development. Largely for that reason, we shall adopt that approach, reserving, however, the option of revisiting that decision should a truly extraordinary case arise that may justify using a benefit approach instead. We find no legal basis, and certainly no equitable one, for requiring a utility’s rate-paying customers to bear a cost triggered and made necessary by a private developer’s project and thus, in effect, to subsidize the cost of the development.8

*597JUDGMENT REVERSED; CASE REMANDED TO CIRCUIT COURT FOR FURTHER PROCEEDINGS AND ENTRY OF DECLARATORY AND OTHER JUDGMENT IN CONFORMANCE WITH THIS OPINION; APPELLEE TO PAY THE COSTS.

Potomac Electric Power Co. v. Classic Community Corp.
382 Md. 581 856 A.2d 660

Case Details

Name
Potomac Electric Power Co. v. Classic Community Corp.
Decision Date
Aug 23, 2004
Citations

382 Md. 581

856 A.2d 660

Jurisdiction
Maryland

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