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Court of Appeals backs Johns Hopkins in suit

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Published on: Wednesday, November 27, 2013

By Holden Wilen

GAITHERSBURG – The Maryland Court of Special Appeals has ruled in favor of Johns Hopkins University’s plan to develop the Belward Farm in Gaithersburg.

In 1989 Elizabeth Banks sold the 138-acre Belward Farm to Johns Hopkins for $5 million—far below market value—in order to prevent it from being developed by Montgomery County. At the time, Banks said the difference in value was a charitable gift to the university.

However, in 2010 JHU announced plans for a “science city” which includes 23 buildings and parking for more than 12,000 cars. Banks’ nephew, John Timothy Newell, and other family members eventually filed a lawsuit in November 2011.

In October 2012 Montgomery County Circuit Court Judge Ronald B. Rubin ruled Banks’ sale to JHU constituted an arms-length real estate deal. A three-judge panel of the Court of Special Appeals —consisting of Judges Kathryn Graeff, Douglas Nazarian and Arrie Davis—affirmed the Circuit Court’s decision “that the operative contract frames Hopkins’ development rights solely and unambiguously in terms of permissible uses.”

“Johns Hopkins is gratified by the ruling of the court,” said university spokesman Dennis O’Shea. “The university remains steadfast in its determination to develop the Belward Research Campus for the benefit of Montgomery County and in full compliance with its obligations under its agreement with Elizabeth Banks and her siblings. We are grateful to them, as we have always been.”

Newell said the Court of Special Appeals decision disappointed him because the case continues to get looked at as an arms-length real estate transaction.

“It is anything but a real estate contract,” Newell said in reaction to the court’s decision. “The Circuit Court seemed to hold on to this real estate transaction versus a donation thing even though in the first paragraph of the contract it says it is a charitable contribution… This case is not about a contract. This case is about the misuse of a generous, charitable gift made by my aunt, a woman of modest means, to one of the nation's wealthiest universities.”

According to the court’s decision, written by Judge Nazarian, the existence of charitable intent is not a factor in contract interpretations.

“The family no doubt believes it has been genuinely aggrieved by the way that Hopkins seeks to implement the contract, and we do not mean for an instant to diminish its anger or disappointment if Hopkins’s current vision for the Farm deviates from what Ms. Banks or other family members thought would happen,” Nazarian wrote in the decision. “But again, our task is to examine the agreement the parties did sign, not the agreement that one or the other now wishes they had negotiated instead. And although it may seem cold to hang our decision on rules of construction, certainty in contracts is important too, especially when the language of the contract is unambiguous.”

Newell said he plans to file a petition for writ of certiorari with the Court of Appeals, the highest court in Maryland, to review the decision.

“If we do not go any further than this it would be a devastating time for charitable giving in the state of Maryland,” Newell said. “The courts are supposed to give deference to charitable donations and Hopkins has spun this after saying for 20 years it was one of the largest donations ever given to them. Now they are saying it is simply a real estate transaction. It is very sad.”

Newell said if his aunt, who died in 2005, were still alive, she would have been appalled by the Court of Special Appeals decision because of her strong stance against development. However, Newell said his aunt would not be dissuaded and he will not let the decision dissuade him.

“We are right in this,” Newell said. “It is a David and Goliath story but I always remind myself that David won.”

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