HOLLANDER, J.
Nicholas Sharp, appellant, and Barry and Rhonda Downey, appellees, own adjacent tracts of land in Howard County. For almost eight years, the parties, as well as their predecessors in title and some of their neighbors, have been engaged in litigation as to various matters regarding the adjoining parcels. In 2007 and 2008, the Circuit Court for Howard County ordered the parties to submit their disputes to binding arbitration. Of relevance here, in an Arbitration Award (the "Award") dated
Dissatisfied with the Award, appellant unsuccessfully asked the Circuit Court for Howard County to vacate it. This appeal followed, in which appellant presents one issue: "Whether the circuit court erred in refusing to vacate the arbitrator's decision and award[.]" For the reasons that follow, we shall reverse and remand.
The properties at issue are two adjacent, irregularly shaped lots in Woodbine, along the South Branch of the Patapsco River at the northern border of Howard County. Appellant's property is located at 400 Morgan Station Road. We shall refer to it as "Lot 2" or the "Sharp Lot." Appellees' property is located at 410 Morgan Station Road. We shall refer to it as "Lot 1" or the "Downey Lot."
Originally, the two lots were a single tract of land owned by Jack Ryan, Inc., the corporate alter ego of John E. Ryan (collectively, "Ryan"). On February 20, 1996, Ryan divided the tract by deed, creating Lot 1 and Lot 2. By a separate deed of even date, Ryan conveyed Lot 1 (i.e., the Downey Lot) to Pamela Jekel, Inc.,
On the same date as the conveyance of Lot 1, Ryan and Jekel executed two instruments relating to two separate easements concerning Lot 1 and Lot 2. One instrument, entitled "Declaration for Ingress and Egress Easement (Driveway) and Maintenance Agreement," established an easement "over the existing jeep trail located on Lot 1" (i.e., the Downey Lot). We shall refer to this agreement as the "Original Jeep Trail Agreement." The other easement instrument, entitled "Declaration for Easement and Maintenance Agreement," is referred to by the parties as the "Riverfront Easement." All four instruments were recorded in the land records of Howard County on February 27, 1996.
According to the Original Jeep Trail Agreement, "[t]he Easement shall be for the sole purpose of ingress and egress for foot and vehicular traffic and for no other purpose." It noted that the jeep trail "is
The Riverfront Easement granted to Jekel (and her successors in title) an easement over a narrow strip of riverfront property that was part of Lot 2, and which separated Lot 1 from the Patapsco River. In relevant part, it stated that "Ryan will not in anyway interfere with Jekel's use of the easement such as moving animals to the river or any other purpose." The primary significance of the Riverfront Easement to the issues on appeal is that, as we shall explain, the arbitrator ultimately found that the jeep trail referenced in the Original Jeep Trail Agreement cut into, and then out of, the Riverfront Easement area as the jeep trail made its way between Lot 2 and Morgan Station Road.
A little over a year after the conveyance of Lot 1, Ryan and Jekel executed and recorded another easement agreement (the "Second Jeep Trail Agreement"), which, like the Original Jeep Trail Agreement, was titled "Declaration for Ingress and Egress Easement (Driveway) and Maintenance Agreement." It provided: "An easement is established over the existing jeep trails located on Lot 1." Moreover, the Second Jeep Trail Agreement expressly stated that it "replaces absolutely and in its entirety" the Original Jeep Trail Agreement. Nevertheless, it largely tracked the language of the Original Jeep Trail Agreement, including the statements that the easement was "perpetual" and was for the purpose of "ingress and egress," and the requirement that any disputes be resolved by arbitration. However, unlike the Original Jeep Trail Agreement, it did not explicitly describe the jeep trails as connecting to Morgan Station Road or to the Sharp Lot. The Second Jeep Trail Agreement again identified the jeep trails by reference to the Health Department Plan, but also by reference to a "new road approved by the State of Maryland Department of the Environment Water Management Administration, April 25, 1996, permit 94-NT-1072-1994468197" (the "MDE Permit").
On December 13, 2002, in the Circuit Court for Howard County, appellees filed a three-count "Complaint for Declaratory Judgment," naming as defendants Jack Ryan, Inc., as well as John E. Ryan and Pamela Jekel Ryan individually, and seeking resolution of several disputes regarding the adjoining properties. Pertinent to this appeal,
In the course of the litigation, appellees filed five amended complaints. On September 4, 2003, during the litigation, appellant purchased Lot 2 (the Sharp Lot) from Ryan. As a result, appellees added Sharp as a defendant to their suit. Appellant filed a counter complaint, as did other defendants (including Ryan, as well as the Breslins, a couple who owned another neighboring parcel and had been named as defendants by the Downeys with respect to claims not at issue here).
Before Sharp purchased Lot 2 and entered the lawsuit, Ryan filed a "Motion to Dismiss Count II and to Compel Arbitration." Ryan cited the language of the Second Jeep Trail Agreement calling for resolution by arbitration of disagreements relative to "any . . . issue" concerning the easement, and asked the court to dismiss the second count and to "order [appellees] to initiate the arbitration process." Noting that appellees "indicated that they do not oppose the Motion," the court granted Ryan's motion on May 15, 2003.
In the summer of 2003, Ryan and the Downeys began a binding arbitration proceeding to resolve the claims at issue in the Downeys' original "Count II." After Sharp purchased Lot 2 from Ryan, he joined in that arbitration proceeding.
Subsequently, in July 2007, Ryan and Jekel and their associated entities were dismissed from the lawsuit by a joint stipulation that resolved all claims by and against them. By "Order" entered on September 11, 2007, the circuit court required Sharp and the Downeys to arbitrate in the pending arbitration proceeding their disputes relative to the "Second Jeep Trail Agreement." On January 16, 2008, pursuant to an agreement by Sharp and the Downeys, the court entered an Order dismissing the remaining claims between them, and ordering Sharp and the Downeys to submit those claims (which are wholly separate from the issues on appeal)
The arbitration proceeding at issue here began in January 2008.
On January 6, 2009, the arbitrator issued his Award, in which he recounted the history of the land transactions relative to the two lots. The arbitrator also explained that before Ryan divided his property into the Sharp Lot and the Downey Lot, he had begun "to improve the jeep trail without the necessary government permits regulating flood plain tidal and non-tidal waterways." The arbitrator continued:
The arbitrator also observed that the Health Department Plan, referenced in both the Original and the Second Jeep Trail Agreement, indicated the "Ex[isting] Jeep Trail" with a "darker broken black line." In his decision regarding the issues pertinent to this appeal, the arbitrator placed great reliance on the Health Department Plan's depiction of the jeep trail. The arbitrator said:
The pertinent language of the [Original Jeep Trail Agreement] reads:
The arbitrator also rejected a claim by Sharp that, if he did not have an express
With respect to the instant dispute, the arbitrator made the following "Decision and Findings":
By letter dated January 13, 2009, the arbitrator advised the parties that the final sentence of the Award's discussion of easement by necessity "should read, `Ryan, now Sharp, does not have an implied easement by necessity, he does not need one.'" (Emphasis added to show addition.)
On January 20, 2009, Sharp filed with the arbitrator a "Motion to Reconsider, Modify or Correct Arbitration Award," in which he asked the arbitrator to reconsider his three "Findings," numbered 5, 6, and 7, relating to the Second Jeep Trail Agreement. Sharp did not challenge five other findings of the arbitrator, which related to issues that are not the subject of this appeal.
In the meantime, on January 15, 2009, appellees reopened the circuit court case by filing a "Petition to Confirm Arbitration Award." Appellant responded with an answer to appellees' petition, as well as a "Petition to Vacate Arbitration Award." In these papers, appellant advised the court that he had filed his Motion to Reconsider with the arbitrator on January 20, 2009. According to appellant, appellees' petition to confirm the Award was "premature,"
Although the court did not issue a formal stay, it took no immediate action on the two petitions. On March 30, 2009, the arbitrator denied appellant's Motion to Reconsider. In his "Ruling & Order on Motion of Respondent," the arbitrator stated:
On April 7, 2009, appellees filed a "Memorandum in Further Support of Petition to Confirm Arbitration Award" in the circuit court. On April 28, 2009, appellant filed a "Further Petition and Memorandum to Vacate Arbitration Award."
In brief, appellant contended that the Arbitration Award was "irrational" and displayed a "manifest disregard of the law." In Sharp's view, the arbitrator illogically "failed to actually locate the `new road' referred to in the Jeep Trails Easement when the location was shown on exhibits referred to in the Award." Further, appellant argued that, "if the easement was not locatable by the Declaration of Easement, it must be presumed to be in the location the parties constructed their driveway." Additionally, Sharp maintained that the Downeys "took title to Lot 1 subject to the known and clearly visible easement for the existing driveway clearly visible to them on the ground." Finally, Sharp disputed the arbitrator's statement
On September 28, 2009, the court entered a Memorandum Opinion and Order, confirming the Award. It recognized that "Maryland law favors the resolution of legal disputes through binding arbitration as evidenced by the codification of the Maryland Uniform Arbitration Act. . . ." The court also explained that "the Act severely limits the Court's authority to vacate an arbitration award," and that, "[t]o prevent a reviewing court from substituting its judgment for the decision of the arbitrator, a court `shall not vacate the award or refuse to confirm the award on the ground that a court of law or equity could not or would not grant the same relief.'" (Quoting statute; circuit court's emphasis). Nevertheless, the circuit court recognized case law for the proposition that "arbitrators `exceed[] their powers' when they reach a completely irrational result," O-S Corp. v. Samuel A. Kroll, Inc., 29 Md.App. 406, 409, 348 A.2d 870 (1975), cert. denied, 277 Md. 740 (1976), and that an arbitrator's award may be vacated where it displays "`manifest disregard of the law,'" which is "`something beyond and different from a mere error in the law or failure on the part of the arbitrator[] to understand or apply the law.'" Board of Educ. of Prince George's County v. Prince George's County Educators' Ass'n, Inc., 309 Md. 85, 102, 522 A.2d 931 (1987) (citation omitted).
The circuit court concluded that the arbitrator "completely, and rationally, adjudicated all issues presented in the arbitration proceedings." The court explained:
The court also rejected appellant's assertion that the easement should be "presumed" to be located where Ryan had physically placed his driveway, stating:
In denying Sharp's claim that the Downeys should be burdened by the easement because it was readily apparent "on the ground," the court observed that "whether an unrecorded easement is apparent to a purchaser is a fact determination." In the court's view, the arbitrator's conclusion that no easement supported the existing
Finally, the court rejected Sharp's claim "that an implied easement is necessary to keep his land from being landlocked and that such a finding is supported by Maryland law." The court stated: "An owner may freely cut off access to his land." For that proposition, it cited Shpak v. Oletsky, 280 Md. 355, 371, 373 A.2d 1234 (1977). The court explained that, in the arbitrator's view, "[t]he parties' predecessors-in-interest created an easement involving the Jeep Trails, but . . . did not extend it into [appellant's] property (Lot 2), the Riverfront Easement, or Morgan Station Road, leaving [appellant] landlocked." Finding no error in the arbitrator's determination, the circuit court reasoned:
Accordingly, the court entered its "Order" granting the Downeys' Petition to Confirm Arbitration Award and denying Sharp's competing Petition to Vacate Arbitration Award. This appeal followed.
As the circuit court correctly recognized, this case is governed by the Maryland Uniform Arbitration Act (the "Act"), codified in Md.Code (2006 Repl. Vol., 2010 Supp.), §§ 3-201 et seq. of the Courts & Judicial Proceedings Article ("C.J."). The Act is an expression of Maryland's "`strong legislative policy favoring enforcement of arbitration agreements.'" Louis Fireison & Assocs., P.A. v. Alkire, 195 Md.App. 461, 471, 6 A.3d 945 (2010) (quoting All State Home Mortg., Inc. v. Daniel, 187 Md.App. 166, 178, 977 A.2d 438, cert. denied, 410 Md. 560, 979 A.2d 707 (2009)). See also Questar Homes of Avalon, LLC v. Pillar Constr., Inc., 388 Md. 675, 684, 882 A.2d 288 (2005).
Where the parties have agreed to submit a dispute to binding arbitration, the Act gives "the courts jurisdiction to enforce arbitration agreements and enter judgments on arbitration awards." Questar Homes, 388 Md. at 684, 882 A.2d 288. The courts are also empowered to determine whether the parties have a valid agreement to arbitrate. C.J. § 3-207. "If a party to an arbitration agreement" that is covered by the Act "refuses to arbitrate, the other party may file a petition with a court to order arbitration." Id.
Once an arbitrator has rendered an award, C.J. § 3-227 authorizes either party to file a petition in court to confirm the award. The Act also permits the filing of a petition to vacate an arbitration award "within 30 days after delivery of a copy of the award to the petitioner," or within 30 days after "corruption, fraud, or other undue means" in procuring the award "become
Notably, the Act contemplates an extremely limited role for the courts in reviewing or countermanding an arbitrator's decision. As we observed in Mandl, 159 Md.App. at 85, 858 A.2d 508, "the General Assembly has severely restricted the role the courts play in the arbitration process." Further, we explained: "To prevent the possibility that a reviewing court will substitute its judgment for the decision of the arbitrator, thereby frustrating the purpose of arbitration, the General Assembly has narrowly confined . . . the circumstances in which the court has the power to vacate an arbitral award." Id.
Under the Act, a court may not vacate an award or refuse to confirm an award "on the ground that a court of law or equity could not or would not grant the same relief." C.J. § 32-24(c). Rather, C.J. § 3-224(b) enumerates limited circumstances in which a court "shall vacate an award":
When a party to an arbitration proceeding seeks to vacate the arbitrator's award, no matter how "the mistake is characterized, the burden of showing that an award is invalid rests with the party attacking the award." Baltimore Teachers Union, Am. Fed. of Teachers, Local 340 v. Mayor of Baltimore, 108 Md.App. 167, 181-82, 671 A.2d 80 (citation omitted), cert. denied, 342 Md. 472, 677 A.2d 565 (1996). Moreover, "this burden is a heavy one." Id. "Courts generally refuse to review arbitration awards on the merits, reasoning that the parties are required `to submit to the judgment of the tribunal of their own selection and abide by the award.'" Int'l Ass'n of Firefighters, Local 1619 v. Prince George's County, 74 Md.App. 438, 444, 538 A.2d 329 (1988) (quoting Roberts Bros. v.
In the touchstone case of O-S Corp. v. Samuel A. Kroll, Inc., supra, 29 Md.App. at 407-08, 348 A.2d 870, this Court recognized that the Act "restrictively defin[es] the grounds upon which a court might vacate an [arbitration] award, and expressly proscribe[s] any possibility of substitution of a reviewing court's judgment for that of the arbitrators." Nevertheless, the Court recognized that the text of the Act supported a "very limited extension of the reviewing court's scope of review to include authority to vacate an award that is `completely irrational.'" Id. at 409, 348 A.2d 870. Although the "completely irrational" standard derives originally from common law standards of review of arbitration awards that predate the Act, we gleaned "[s]tatutory support" for its application "in the fact that arbitrators `exceeded their powers' when they reach a completely irrational result, [and] in the connotation of the words `undue means' . . . ." Id. (quoting C.J. § 3-224(b)(1) & (3)).
Thus, the Kroll Court held that, "when reviewing the fruits of an arbitrator's award, a judge may withhold only such as were tainted by improbity or based on a completely irrational interpretation of the contract."
Notably, the Court made clear that this restrictive standard of review is distinct from, and sets a bar far higher than, the standards of review applicable to the decisions of trial courts or administrative agencies. It stated: "We must judicially accept an arbitrary interpretation of a contract by an arbitrator. We shall vacate a completely irrational one." Id. at 410, 348 A.2d 870. Further, the Court said: "[O]ur review. . . need not seek a preponderance of the evidence to support the award, nor even substantial evidence. There need only be some evidence to meet the test of rationality, i.e., it may be so little as to make the result `arbitrary', so long as it is not completely irrational." Id. at 411, 348 A.2d 870 (emphasis in original).
"Manifest disregard of the law" involves "`something beyond and different from a mere error in the law or failure on the part of the arbitrators to understand or apply the law.'" Bd. of Educ. of Prince George's County v. Prince George's County Educators' Ass'n, 309 Md. 85, 102, 522 A.2d 931 (1987) (citation omitted); see Southern Md. Hosp. Ctr., 48 Md.App. at 407, 427 A.2d 1051. The concept of "manifest disregard of the law" connotes "a `palpable mistake of law or fact . . . apparent on the face of the award' or a `mistake so gross as to work manifest injustice'. . . ." Baltimore Teachers Union, 108 Md.App. at 181, 671 A.2d 80 (alteration in original; citation omitted). Put another way, it occurs "`when arbitrators understand and correctly state the law, but proceed to disregard the same.'" MCR, 148 Md.App. at 120, 811 A.2d 331 (citation omitted).
As with the "completely irrational" standard, review for "manifest disregard of the law" is strictly circumscribed. "Judicial deference is appropriate unless the arbitrator's award actually violated the law or any explicit, well-defined and dominant public policy." Birkey Design Group, 113 Md.App. at 267, 687 A.2d 256. See MCR, 148 Md.App. at 120, 811 A.2d 331; Graceman, 93 Md. App. at 676, 613 A.2d 1049. To constitute "manifest disregard of the law," an arbitrator's decision must violate a public policy ascertainable "`by reference to the laws and legal precedents and not from general considerations of supposed public interests.'" Amalgamated Transit Union, Div. 1300 v. Mass Transit Admin., 305 Md. 380, 389, 504 A.2d 1132 (1986) (citations omitted). See also Baltimore County v. Mayor of Baltimore, 329 Md. 692, 702, 621 A.2d 864 (1993); Int'l Ass'n of Firefighters, Local 1619, 74 Md.App. at 449-50, 538 A.2d 329.
The Court of Appeals has not expressly adopted review for "manifest disregard of the law" in cases arising under the Act. But, in Prince George's County Educators' Ass'n, 309 Md. at 98, 522 A.2d 931, the Court reviewed an arbitrator's award in a case for which the Act did not apply, and utilized the "manifest disregard of the law" standard as a matter of common law. The Court said: "Since . . . the Maryland Uniform Arbitration Act is not applicable to the instant arbitration award, we need not and do not decide whether an arbitration award subject to the Uniform Act may be vacated . . . for `manifest disregard' of the law." Id. at 105, 522 A.2d 931. Nevertheless, the Court stated that "an arbitration award which is contrary to a clear public policy will not be enforced." Id. at 100, 522 A.2d 931. It also cited cases from other states applying the "manifest disregard"
The "manifest disregard" standard derives from Wilko v. Swan, 346 U.S. 427, 436-37, 74 S.Ct. 182, 98 L.Ed. 168 (1953), a case arising under the FAA. There, the Supreme Court said that "the interpretations of the law by the arbitrators[,] in contrast to manifest disregard [of the law,] are not subject, in the federal courts, to judicial review for error in interpretation."
Hall Street, 552 U.S. at 579, 128 S.Ct. 1396, began as a lease dispute between Hall Street, the landlord, and Mattel, the tenant. The parties agreed to arbitrate their dispute, and drafted an arbitration agreement that provided, in part, that a court "`shall vacate, modify or correct any award . . . where the arbitrator's conclusions of law are erroneous.'" Id. (quoting agreement). An arbitration award was made in favor of Mattel, but Hall Street successfully urged the federal district court to vacate the award for "legal error." Id. at 580, 128 S.Ct. 1396. After the Ninth Circuit reversed, the Supreme Court granted certiorari to determine whether the FAA's statutory grounds for vacatur "may be supplemented by contract." Id. at 578, 128 S.Ct. 1396. It recognized a split in the appellate courts "over the exclusiveness of [the FAA's] statutory grounds . . . with some saying the recitations are exclusive, and others regarding them as mere threshold provisions open to expansion by agreement." Id. at 583, 128 S.Ct. 1396. The Supreme Court expressly held "that the statutory grounds are exclusive." Id. at 578, 128 S.Ct. 1396.
In particular, the landlord unsuccessfully argued "that the grounds set out for vacating or modifying an award are not exclusive, taking the position . . . that expandable judicial review authority has been accepted as the law since Wilko . . . ." Id. at 584, 128 S.Ct. 1396. As the Supreme Court explained, "Hall Street reads [Wilko] as recognizing `manifest disregard of the law' as a further ground for vacatur on top of those listed in § 10 [of the FAA], and some Circuits have read it the same way. Hall Street sees this supposed addition to § 10 as the camel's nose: if judges can add grounds to vacate (or modify), so can contracting parties." Id. at 584-85, 128 S.Ct. 1396 (citations omitted). The Supreme Court rejected this view, however. "Quite apart from its leap from a supposed judicial expansion by interpretation to a private expansion by contract," said the Court, "Hall Street overlooks the fact that the statement [from Wilko] it relies on expressly rejects just what Hall Street asks for here, general review for an arbitrator's legal errors." Id. at 585, 128 S.Ct. 1396.
The Supreme Court opined that, even if the parties agree otherwise, "the text [of the FAA] compels a reading of the [statutory] categories as exclusive." Id. at 586, 128 S.Ct. 1396. In its view, the FAA
In the wake of Hall Street, a lively debate has ensued in the federal circuit courts of appeal over the continued vitality of the "manifest disregard of the law" standard. Some circuits have taken the view that because Hall Street holds that the FAA's statutory grounds are "exclusive," it follows that "manifest disregard" is no longer viable. See Citigroup Global Markets Inc. v. Bacon, 562 F.3d 349, 350 & 355-58 (5th Cir.2009) ("[M]anifest disregard of the law is no longer an independent ground for vacating arbitration awards under the FAA."); Medicine Shoppe Int'l, Inc. v. Turner Investments, Inc., 614 F.3d 485, 489 (8th Cir.2010) (citing Hall Street for the proposition that a "claim that the arbitrator disregarded the law" is "not cognizable"); Frazier v. Citi-Financial Corp., LLC, 604 F.3d 1313, 1322-24 (11th Cir.2010) (stating that prior circuit precedent had recognized "manifest disregard" as a "non-statutory ground[] for vacatur," but holding that "our judicially-created bases for vacatur are no longer valid in light of Hall Street"); Ramos-Santiago v. United Parcel Serv., 524 F.3d 120, 124 n. 3 (1st Cir.2008) (opining, in a non-FAA case, that Hall Street's "holding" is that "manifest disregard of the law is not a valid ground for vacating or modifying an arbitral award in cases brought under the . . . FAA"). But see Kashner Davidson Sec. Corp. v. Mscisz, 601 F.3d 19, 22-23 (1st Cir.2010) (declining to recall mandate in case holding arbitrator manifestly disregarded the law, describing Ramos-Santiago's discussion as "dicta," and stating that First Circuit has "not squarely determined whether our manifest disregard case law can be reconciled with Hall Street").
Yet, other circuits have looked to Hall Street's description of "manifest disregard" as referring to the FAA statutory grounds "collectively," or as "shorthand" for particular statutory grounds, expressing the opinion that review for "manifest disregard" remains sound. See Stolt-Nielsen SA v. AnimalFeeds Int'l Corp., 548 F.3d 85, 93-95 (2d Cir.2008), rev'd on other grounds, 559 U.S. ___, 130 S.Ct. 1758, 176 L.Ed.2d 605 (2010); Comedy Club, Inc. v. Improv West Assocs., 553 F.3d 1277, 1281 & 1289-90 (9th Cir.), cert. denied, 558 U.S. ___, 130 S.Ct. 145, 175 L.Ed.2d 36 (2009).
Of import here, the Supreme Court recently reviewed the Second Circuit's decision in Stolt-Nielsen, supra, 548 F.3d 85. The Supreme Court assumed that the "manifest disregard" standard applied and declined to resolve the controversy. It said: "We do not decide whether `manifest disregard' survives our decision in Hall Street . . . as an independent ground for review or as a judicial gloss on the enumerated grounds for vacatur set forth at 9 U.S.C. § 10. . . . Assuming, arguendo, that such a standard applies, we find it satisfied. . . ." Stolt-Nielsen SA v. Animal-Feeds Int'l Corp., 559 U.S. ___, ___ n. 3, 130 S.Ct. 1758, 1768 n. 3, 176 L.Ed.2d 605 (2010). In its view, the arbitration panel improperly "imposed its own policy choice and thus exceeded its powers." Id. at ___, 130 S.Ct. at 1770.
We recognize that the issue remains unsettled. But, for several reasons, we decline to reconsider whether "manifest disregard of the law" remains a viable basis to vacate an arbitral award under the Maryland Act. First, neither Hall Street nor Stolt-Nielsen squarely states that "manifest disregard" is no longer viable. Moreover, the case sub judice arises under the Maryland Act, not the FAA; regardless of Hall Street's import for review of arbitral awards under the FAA, it has only persuasive value in interpreting Maryland's Act. In addition, this Court's case law on "manifest disregard" has never been overruled by the Court of Appeals. Therefore, the well settled principles of stare decisis apply here.
It is also salient that our earlier decisions align with those of several federal courts, see Stolt-Nielsen, supra, 548 F.3d 85; Comedy Club, supra, 553 F.3d 1277, which, after Hall Street, viewed "manifest
The Act's grounds to vacate arbitral awards are all directed at preserving the integrity of the arbitration process. Arbitration is fundamentally a creature of contract, Gold Coast Mall, 298 Md. at 103, 468 A.2d 91, by which the parties relinquish their right to a judicial dispute resolution forum (containing a variety of procedural benefits, including comprehensive appellate review), in favor of "an expeditious and more affordable resolution of the controversy," including a choice of decision maker. Schuele v. Case Handyman & Remodeling Servs., LLC, 412 Md. 555, 575, 989 A.2d 210 (2010). However, while parties to arbitration agree to accept the arbitrator's interpretation of the law, Soc'y of Am. Foresters, supra, 114 Md.App. at 235-36, 689 A.2d 662, this does not mean that they agree to permit the arbitrator to fabricate the law from whole cloth. If agreeing to arbitrate meant relinquishing any expectation that the arbitrator will apply fundamental substantive legal principles, no rational party would ever agree to submit a dispute to arbitration. Thus, limited judicial review for manifest disregard of the law reinforces the process of arbitration by protecting the parties' ex ante expectation of an alternative but principled dispute resolution mechanism.
Finally, the parties have not asked us to reconsider the standard. To the contrary, they agree that an arbitrator's award may be vacated for manifest disregard of the law. Therefore, while recognizing that the statutory grounds are the sole grounds for vacatur of arbitral awards, we see no inconsistency in applying the "manifest disregard" standard.
Although the parties agree as to the standards of review that we have elucidated, they disagree as to the result we should reach in applying these standards. Because the parties' contentions implicate the law of easements, we pause to review applicable easement law.
The basic legal principles governing easements are well established. "`An easement is broadly defined as a nonpossessory interest in the real property of another. . . .'" Rogers v. P-M Hunter's Ridge, LLC, 407 Md. 712, 729, 967 A.2d 807 (2009) (quoting Boucher v. Boyer, 301 Md. 679, 688, 484 A.2d 630 (1984)). An easement involves "`the privilege of doing
As the Court of Appeals has explained, "`[i]n every instance of a private easement—that is, an easement not enjoyed by the public—there exists the characteristic feature of two distinct tenements—one dominant and the other servient.'" Bd. of County Comm'rs of Garrett County v. Bell Atlantic-Md., Inc., 346 Md. 160, 175, 695 A.2d 171 (1997) (citation omitted). An easement can be described as a right of the owner of the dominant estate—often, a right of way—over the real property that comprises the servient estate. In other words: "A dominant tenant is the owner of `[a]n estate that benefits from an easement'; a servient tenant is the owner of `[a]n estate burdened by an easement.'" Rogers, 407 Md. at 715 n. 1, 967 A.2d 807 (quoting BLACKS LAW DICTIONARY 589 (8th ed.2004); alterations in Rogers).
Of import here, there are several ways to create an easement. "An easement may be created by express grant, by reservation in a conveyance of land, or by implication." Kobrine, L.L.C. v. Metzger, 380 Md. 620, 635, 846 A.2d 403 (2004). An express easement, whether by grant or reservation, must be created by a written memorandum that satisfies the Statute of Frauds; and "a right[] of way created by deed" must satisfy "`the mode and manner prescribed by the recording statutes.'" Id. at 636, 846 A.2d 403 (citations omitted). In Rogers, 407 Md. at 729-30, 967 A.2d 807, the Court explained: "An express easement by reservation often arises when a property owner conveys a portion of his property to another, which would otherwise render the retained part inaccessible, so the reservation permits a right-of-way." In contrast, an easement by implication "`may be created in a variety of ways, such as by prescription, necessity, the filing of plats, estoppel and implied grant or reservation where a quasi-easement has existed while the two tracts are one.'" Id. at 730, 967 A.2d 807 (quoting Boucher, 301 Md. at 688, 484 A.2d 630).
This case involves principles regarding both express easements and a particular category of implied easement: an implied easement by necessity. As we have seen, Ryan and Jekel executed two documents—the Original and the Second Jeep Trail Agreement—which purportedly burdened Lot 1 (the servient estate, then owned by Jekel) with an express easement benefitting Lot 2 (the dominant estate, then owned by Ryan). However, in the absence of an express easement, which is what the arbitrator found (i.e., that the express easement did not exist, or was not so extensive as to give Lot 2 access to Morgan Station Road), Sharp argues that he is entitled to an implied easement by necessity, discussed infra.
Appellant alleges four errors in the decision of the arbitrator, which he contends amount to a decision "in manifest disregard of the law." As we shall explain, appellant's first three arguments, which challenge the arbitrator's decision making regarding the alleged express easement, cannot overcome the deferential standard of our review. But, we find merit in appellant's final argument, that the arbitrator manifestly disregarded the law when he ruled that appellant was not entitled to an implied easement by necessity.
First, appellant contends: "It is clear from the language of the [Second Jeep
Second, appellant argues: "The uncontradicted evidence was that there was an existing paved driveway which still remains on Lot 1 and Lot 2. . . . [I]f the easement cannot be located by the [Second Jeep Trail Agreement], it must be presumed to be in the location the parties constructed their driveway." He relies on Sibbel v. Fitch, 182 Md. 323, 34 A.2d 773 (1943), and Michael v. Needham, 39 Md.App. 271, 384 A.2d 473, cert. denied, 283 Md. 736 (1978), which he describes as standing for the proposition that,
Third, appellant posits that, "if the circumstances show that a purchaser had notice of prior equities or unrecorded easements which ought to have put a person of ordinary prudence on inquiry," Maryland law is "well established" that "the purchaser. . . takes his title subject to all equities of which he had knowledge and which an investigation would disclose." "Furthermore," he argues, "a purchaser of property cannot fail to investigate matters plain and open to him when purchasing property." In Sharp's view, because the existing driveway over Lot 1 was readily apparent when the Downeys purchased the lot, "[i]t was irrational and a manifest disregard of the law for the Award to ignore the existing driveway as an open and apparent encumbrance on the Downey's [sic] property."
We need not iterate more extensively appellant's first three claims, nor appellees' responses to them, because the claims simply cannot surmount the applicable standard of review.
The arbitrator gave particular weight to the lines depicting the jeep trail on the Health Department Plan. He concluded that the easement described in the Second Jeep Trail Agreement, as delineated by
In particular, we reject appellant's first claim, that the arbitrator manifestly disregarded the law by failing to specifically locate the "new road" approved by the MDE Permit. We agree with the circuit court that the arbitrator "was not obligated to issue a decision as to each proffered statement of fact" at issue. The arbitrator considered the evidence submitted regarding the MDE Permit, but did not find that the MDE Permit extended the "easement created by the [Second Jeep Trail Agreement]. . . to Morgan Stat[ion] Road," in part because the driveway that Ryan constructed was not actually built at the location shown on Ryan's Joint Permit Application for the MDE Permit.
Likewise, we discern no merit in appellant's second argument. Sibbel involved a deed to a parcel that expressly "`reserv[ed]. . . a right of way to and from'" an adjacent landlocked tract, but did not define the location of the way. Sibbel, 182 Md. at 325, 34 A.2d 773 (quoting deed). Although the right of way was not expressly defined in the deed, there was an "old road," in use for "more than half a century," that ran across the deeded parcel to the landlocked tract. Id. at 326, 34 A.2d 773. In that context, the Court quoted favorably the discussion of easements in Corpus Juris Secundum ("CJS"): "`Where a way is granted without fixing its location, but there is a way already located at the time of the grant, such way will be held to be the location of the way granted unless a contrary intention appears.'" Id. at 326-27, 34 A.2d 773; see also Michael, 39 Md.App. at 280, 384 A.2d 473 (quoting the same passage from CJS, in a case where there was a right of way in long use, despite no express easement). However, the rule of law quoted in Sibbel and Michael is not apposite to the location of the express easement allegedly established by the Second Jeep Trail Agreement. The Second Jeep Trail Agreement, by incorporation of the Health Department Plan, specifically defined the location of a right of way, but the arbitrator found that the easement, as located, simply did not provide access to Lot 2 and Morgan Station Road. In other words, the Second Jeep Trail Agreement did not grant a way "`without fixing its location.'" Sibbel, 182 Md. at 326-27, 34 A.2d 773 (quoting CJS).
Appellant's third argument, which relies on Kimm v. Andrews, 270 Md. 601, 313 A.2d 466 (1974), Fertitta v. Bay Shore Development Corp., 266 Md. 59, 291 A.2d 662 (1972), and Kramer v. Emche, 64 Md.App. 27, 494 A.2d 225, cert. denied, 304 Md. 297, 498 A.2d 1184 (1985), is similarly misplaced. These three cases stand for the proposition that if a purchaser has actual knowledge of "prior equities or unrecorded interests" on a property, or has "knowledge of circumstances which ought to have put a person of ordinary prudence on inquiry," the purchaser is not entitled to bona fide purchaser status, and takes the property subject to the unrecorded prior equities "which such an investigation would in all probability have disclosed if it had been properly pursued." Fertitta, 266 Md. at 72-73, 291 A.2d 662; accord Kimm, 270 Md. at 621, 313 A.2d 466 (quoting Fertitta); Kramer, 64 Md.App. at 43-44,
In appellant's fourth and final argument, Sharp contests the arbitrator's determination that he did not have an implied easement by necessity.
Sharp contends that there "was no factual dispute" that "there is no practical access from Lot 2 to Morgan Station Road over the entirety of Lot 2, and the only practical access is over Lot 1." He continues: "There was also no dispute that the necessity for an easement for the Driveway existed both at the time Lot 1 and Lot 2 were severed by Ryan, and has continued since." Further, appellant maintains that "[t]he intent of Jekel and Ryan to create an easement over Lot 1 is clearly shown" by the Original and the Second Jeep Trail Agreement, and that "[i]t was not the intention of Jekel and Ryan when they expressly created the two easement documents for ingress and egress to landlock Lot 1."
According to Sharp, "[i]f there is no express easement . . . there nonetheless must be an implied easement under the facts and the law," and the "undisputed facts satisfy all the conditions necessary under Maryland law to create an easement by necessity." Therefore, he insists that the arbitrator's finding of no implied easement by necessity, which "leaves Lot 2 landlocked," was "clearly an arbitrary, irrational decision in manifest disregard of the law."
In response, appellees observe that a critical element of an implied easement by necessity is that the necessity for the easement must exist "both at the time of the severance of title and the time of the exercise of the easement." They contend that "any claim that Sharp is entitled to an easement by necessity must be rejected because the express easement which defined the `Jeep Trails' . . . was drafted by Ryan . . . and post dates the division of the single parcel into two separate parcels." In their view, this compels the conclusion that "the necessity did not exist at the time of severance of title, preventing a finding of an implied easement by necessity."
Moreover, appellees maintain that Maryland law permits a landowner "to land lock a parcel." Therefore, they argue that "the only permissible conclusion is that the [Second] Jeep Trail[] Agreement means precisely what it says"—which, as the arbitrator found, was that there was no easement connecting Lot 2 to Morgan Station Road.
We conclude that the arbitrator erred in rejecting an easement by necessity, and that his error rises to the level of manifest disregard of the law. We elaborate.
Implied easements by necessity "arise from a presumption that the parties intended that the party needing the easement
The doctrine of easement by necessity "`is based upon public policy, which is favorable to full utilization of land and the presumption that parties do not intend to render land unfit for occupancy.'" Stansbury v. MDR Dev., L.L.C., 390 Md. 476, 488, 889 A.2d 403 (2006) (quoting Condry v. Laurie, 184 Md. 317, 321, 41 A.2d 66 (1945)); see also Hancock v. Henderson, 236 Md. 98, 104, 202 A.2d 599 (1964). The public policy exists in recognition that to allow a landlocked parcel inadvertently to be created affects not only the initial owner of that parcel, but every subsequent owner as well. By cutting off the land from all access to public ways, landlocking a parcel renders the land unuseable for virtually any future purpose.
Here, there is no controversy as to the first two elements; it is undisputed that Ryan initially owned both Lot 1 and Lot 2 as a single, undivided parcel, and then severed his unity of title by partitioning the lots and conveying Lot 1 to Jekel. Rather, the parties' dispute centers around the element of necessity.
As the nomenclature suggests, necessity is a critical component of the doctrine. An easement by necessity will only arise where "the easement is reasonably necessary for the fair enjoyment of the property." Greenwalt v. McCardell, 178 Md. 132, 138, 12 A.2d 522 (1940). Indeed, "`[m]ere inconvenience will not be sufficient to justify the finding of a way of necessity. It is only in [the] case of strictest necessity, where it would not be reasonable to suppose that the parties intended the contrary, that the principle of implied easement can be invoked.'" Stansbury, 390 Md. at 488, 889 A.2d 403 (citation omitted; alteration in Stansbury). The necessity required has also been described as "`imperative and absolute.'" Shpak v. Oletsky, 280 Md. 355, 361, 373 A.2d 1234 (1977) (citations omitted).
To be sure, "`[g]rants of easements by implication are looked upon with jealousy and are construed with strictness by the courts.'" Id. (quoting Condry, 184 Md. at 321, 41 A.2d 66). And, "`[t]he rule with respect to implied reservations is much more strict than that with respect to implied grants.'" Shpak, 280 Md. at 361, 373 A.2d 1234 (quoting Slear v. Jankiewicz, 189 Md. 18, 22, 54 A.2d 137 (1947), cert. denied, 333 U.S. 827, 68 S.Ct. 453, 92 L.Ed. 1112 (1948)).
"`[A] right of way of necessity can only be raised out of the land granted or reserved by the grantor, and never out of the land of a stranger.'" Shpak, 280 Md. at 361, 373 A.2d 1234 (citation omitted; alteration in Shpak). In other words, "[t]he dominant and servient estates must at some point have belonged to the same person." Rau, 167 Md.App. at 186, 891 A.2d 1175. Moreover, the "necessity" must arise "at the time of the initial grant of the property," and "`cannot be established by a subsequent necessity.'" Stansbury, 390 Md. at 488, 889 A.2d 403 (citation omitted). And, "a way of necessity exists only so long as the necessity itself
On occasion, the Court has stated that "[n]ecessity of itself does not create a right of way; it is merely a fact offered in evidence to show an intention to establish a right of way by raising the presumption of a grant." Greenwalt, 178 Md. at 139, 12 A.2d 522. See also Shpak, 280 Md. at 361, 373 A.2d 1234 (quoting L. Jones, Easements § 304 (1898)) ("`It is not the necessity which creates the right of way, but the fair construction of the acts of the parties. The necessity merely furnishes evidence as to the real intention of the parties.'"). However, in Hancock v. Henderson, supra, 236 Md. at 104 n. 2, 202 A.2d 599, the Court observed that "[t]he concept that a way of necessity arises from the presumed intention of the parties has been criticized," and characterized the majority in Condry, supra, 184 Md. 317, 41 A.2d 66, as adopting the proposition that "the basis for implying the grant was the necessity of ingress and egress over the grantor's land, imposed by law regardless of a contrary expression of intent by the parties." Hancock, 236 Md. at 104 n. 2, 202 A.2d 599.
Nevertheless, the Hancock Court recognized that "[t]he cases seem to be searching for the intent of the parties. . . ." Id. at 104, 202 A.2d 599. This is because "the basis of an implied easement is the implied intention of the parties that an easement be created[.]" Mitchell v. Houstle, 217 Md. 259, 265, 142 A.2d 556 (1958). But, as the Court explained in Stansbury, in the case of an implied easement by necessity, "`[t]he intent to create the easement is . . . deemed to be shown by the type of transaction involved and no other evidence is necessary to establish the intent of the parties to create a way of necessity.'" Stansbury, 390 Md. at 489, 889 A.2d 403 (quoting 3 HERBERT T. TIFFANY, THE LAW OF REAL PROPERTY, § 793 (3d ed.1939, 2004 Supp.)).
The Stansbury Court made another important observation, id. at 485 n. 5, 889 A.2d 403:
As we have seen, the doctrine of implied easement by necessity is founded in a strong public policy that favors "full utilization of land and the presumption that parties do not intend to render land unfit for occupancy." Condry v. Laurie, supra, 184 Md. at 321, 41 A.2d 66. Moreover, as indicated, the elements of implied easement by necessity are well established.
Here, it was plain that Lot 1 and Lot 2 satisfied the first two elements to show an implied easement by necessity: "(1) initial unity of title of the parcels of real property in question; [and] (2) severance of the unity of title by conveyance of one of the parcels." Stansbury, supra, 390 Md. at 489, 889 A.2d 403. In that context, the arbitrator's statements that "Sharp has no access to Morgan Station Road" and that "Lot 2 is landlocked" are fundamentally
As noted, appellees argue that, at the time the Sharp Lot was created, no necessity existed. To be sure, the arbitrator's decision was ultimately based on interpretation of the Second Jeep Trail Agreement, which Sharp and Jekel executed a year after the subdivision of Lots 1 and 2 and the conveyance of Lot 1 to Jekel. The arbitrator recognized explicitly that the Second Jeep Trail Agreement was the "sole controlling extant easement" and "entirely replaced" the Original Jeep Trail Agreement. But, in reaching his decision regarding the scope of the Second Jeep Trail Agreement, the arbitrator first construed the Original Jeep Trail Agreement. Explaining his decision, the arbitrator observed that the "first recorded evidence of the Jeep Trail easement occurred on February 20, 1996 when Ryan created Lot 1 and Lot 2, conveyed Lot 1 to Jeckel [sic], created with Jeckel [sic] the Riverfront Easement . . . and created with Jekel `the existing Jeep Trail' Easement." (Citations omitted.) In the Award, the arbitrator continued to refer to the Original Jeep Trail Agreement with the phrase "`existing Jeep Trail' Easement," and by reference to its exhibit number in the arbitration proceeding, which was Claimant's Exhibit 6.
Moreover, even if the arbitrator had not explicitly construed the scope of the Original Jeep Trail Agreement, his construction of the Second Jeep Trail Agreement relied on his interpretation of the Health Department Plan, which defined the location of the right of way in both the Original and the Second Jeep Trail Agreement. Indeed, in the Original Jeep Trail Agreement, the Health Department Plan was the only document incorporated to locate the easement. If the Health Department Plan does not describe a right of way that connected the Sharp Lot to Morgan Station Road when incorporated in the Second Jeep Trail Agreement, it follows logically that the same document cannot describe a right of way connecting the lot to the road when incorporated into the Original Jeep Trail Agreement.
The inescapable conclusion is that the arbitrator determined that there was never an express easement over Lot 1 that provided Lot 2 with access to Morgan Station Road. Therefore, under the arbitrator's construction of the easement instruments (which was neither illogical nor manifestly in disregard of the law), Lot 2 was landlocked from its inception. Thus, contrary to appellees' contention, the necessity required for an implied easement by necessity existed from the time that unity of title was severed until the present.
For the proposition that the law permits a landowner to landlock himself, the Shpak Court relied on a law review article by Professor J. Simonton, Ways by Necessity, 33 W. VA. L.Q. 64, 78-79 (1923), from which the Court quoted at length, 280 Md. at 365, 373 A.2d 1234 (italics in Shpak; boldface added):
The passage quoted in Shpak is in accord with the authorities we have cited, recognizing that "the basis of an implied easement [by necessity] is the implied intent of the parties that an easement be created," as demonstrated by the necessity for a right of way to reach a public road. Mitchell, supra, 217 Md. at 265, 142 A.2d 556. Thus, Shpak supports the proposition that, when the parties' actual intent is clear, there is no basis to infer a contrary intent.
In this case, it is quite clear that Ryan never intended to landlock Lot 2. To the contrary, both Ryan and Jekel unequivocally intended to create an easement for the express purpose of ingress and egress to Lot 2. Indeed, both the Original and the Second Jeep Trail Agreement used the phrase "ingress and egress" in their titles, and explicitly stated that the purpose of each agreement was to provide for ingress and egress. In a decision that we have found was not "completely irrational," the arbitrator determined that the easement over the "jeep trails" described in those agreements was, in the words of appellees' counsel at oral argument, "defective," because the Health Department Plan on which the easement was based did not show the trails extending to Morgan Station Road or to Lot 2. But, this does not negate Ryan and Jekel's clearly-expressed intent to create an easement over Lot 1 for ingress and egress to Lot 2. Nor, critically, does it negate the necessity for such an easement; without the easement, Lot 2 is rendered inaccessible.
The Court rejected Condry's argument that, by granting an explicit license to the Hittles, Rephorn had negated an implied easement by necessity. The Condry Court explained that a critical difference between a license and an easement is that a license "`ceases with the death of either party, and cannot be transferred or alienated by the licensee, because it is a personal matter,'" id. at 320, 41 A.2d 66 (citation omitted), while an easement runs with the land and is binding on successors in title. The Court said, id. at 323, 41 A.2d 66:
Millson v. Laughlin, supra, 217 Md. 576, 142 A.2d 810, is also instructive. There, the predecessors in title of adjoining landowners had executed an express easement for the dominant owner to travel across the servient owner's land. Id. at 580-82, 142 A.2d 810. The question before the Court was whether the existence of the express easement for ingress and egress compelled the conclusion that the dominant owner was not entitled to an implied easement by necessity for an electric pole and wires that ran across the servient property to provide electrical service to her house. Id. at 580, 142 A.2d 810. Relying on Condry, the Court determined that the servient owner was entitled to the implied easement. Id. at 584, 142 A.2d 810. It explained, id. at 583-84, 142 A.2d 810:
Similarly, in this case, the parties' execution of an express easement for ingress and egress that later turned out to be "defective," so as not to actually provide ingress and egress, cannot supply a supposed intent of the parties to landlock Lot 2, so as to defeat the presumption of an easement. Although it was defective for its intended purpose, the express easement demonstrated the clear intent of the parties' predecessors not to landlock Lot 2.
As we have seen, the arbitrator's conclusion that there is no express easement providing Lot 2 with access to Morgan Station Road cannot be disturbed, while the conclusion that appellant is entitled to an implied easement by necessity over Lot 1 to travel between Lot 2 and Morgan Station Road is compelled as a matter of law. On remand, there must be a determination (whether by the court or an arbitrator)
See also Stair v. Miller, 52 Md.App. 108, 111, 447 A.2d 109 (1982) ("It is well established that a way of necessity should be located so as to be the least onerous to the owner of the servient estate while, at the same time, being of reasonable convenience to the owner of the dominant estate."); Johnson v. Robinson, 26 Md.App. 568, 582, 338 A.2d 88 ("Upon remand, the chancellor is directed to decree a way of necessity, the reasonable location of which he shall establish as to inconvenience appellee only so much as is necessary to provide appellant ingress and egress to her land."), cert. denied, 276 Md. 748 (1975).
The Act counsels that we look to the law of other jurisdictions as well as our own, by providing that it "shall be so interpreted and construed as to effectuate its general purposes to make uniform the law of the states which enact it." C.J. § 3-232. Thus, Maryland courts ordinarily "`rely on decisions interpreting the [FAA]'" when interpreting corresponding provisions of the Act, id. at 424, 872 A.2d 735 (citation omitted), and have also found guidance in the case law of our sister jurisdictions interpreting their own versions of the UAA. See, e.g., Blitz v. Beth Isaac Adas Israel Congregation, 352 Md. 31, 40-41 & n. 9, 720 A.2d 912 (1998); Stephen L. Messersmith, Inc. v. Barclay Townhouse Assocs., 313 Md. 652, 656, 547 A.2d 1048 n. 1 (1988); Litton Bionetics, Inc. v. Glen Constr. Co., 292 Md. 34, 47-52, 437 A.2d 208 (1981).
Since Messersmith, the Court has not addressed Kroll's authority more definitively, and we have continued to apply our precedent, as stated in Kroll. In MCR of America, Inc. v. Greene, 148 Md.App. 91, 105-06 & n. 8, 811 A.2d 331 (2002), we observed: "[T]he `completely irrational' standard . . . has not, to date, been adopted by the Court of Appeals. . . . On the other hand, the Court has never rejected that standard. Until it does, we shall assume its continued vitality in Maryland." See also Snyder v. Berliner Constr. Co., 79 Md.App. 29, 37-39 & n. 2, 555 A.2d 523 (noting that the Messersmith Court's statements regarding Kroll were "dicta" and reviewing arbitrator's construction of substantive contractual provisions under the "completely irrational" standard), cert. denied, 316 Md. 550, 560 A.2d 1118 (1989).