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Chipotle defeats Moe’s in restaurant dispute

Court uphols Annapolis zoning decision

A Maryland appeals court has held Moe’s Southwest Grill lacked standing to challenge an Annapolis zoning board’s approval of a Chipotle Mexican Grill restaurant less than 500 feet from Moe’s’ waterfront location.

In its 3-0 decision, the Court of Special Appeals said Moe’s filed its challenge when the Tex-Mex restaurant was serving food in Maryland though its right to operate in the state had been suspended by the State Department of Assessments and Taxation for failing to file and pay fees.

Under Maryland law, a company cannot file suit in any Maryland court, including legal challenges to zoning decisions, if it is conducting business while barred from doing so, the intermediate court said in its reported decision Friday.

Moe’s attorney, Bethesda solo practitioner Sean T. Morris, said he and his client are “still assessing our options” regarding an appeal to Maryland’s top court, the Court of Appeals.

Chipotle’s attorney, Alan J. Hyatt, welcomed the Court of Special Appeals’ decision.

“It’s been a slow process,” he said, noting Chipotle has not yet opened in Maryland’s capital city.

“Maybe we will see Chipotle opening up in Annapolis at the city dock sometime,” added Hyatt, of Hyatt & Weber P.A. in Annapolis.

Moe’s, a Virginia-based chain, had been operating a restaurant at 122 Dock St. in Annapolis for about six years when Chipotle applied to the city’s Department of Planning and Zoning in August 2012 for permission to open an eatery at 36 Market Space.

The department recommended in September 2012 that the Board of Appeals approve Chipotle’s application, which the panel did after holding a public hearing.

Moe’s appealed the approval in Anne Arundel County Circuit Court within 30 days, as required by Maryland’s procedural rules.

But Moe’s right to do business in the state, which SDAT had stripped in November 2006, was not restored until the proper filings were made and fees paid on Sept. 24, 2013 — more than four months after the 30-day deadline for filing an appeal.

Chipotle challenged Moe’s appeal, arguing the restaurant had no standing because it had operated while under SDAT suspension, was not an aggrieved party, and was a tenant of the Dock Street building and thus was not paying property taxes to Annapolis.

The circuit court agreed with Chipotle that Moe’s lacked standing because it was not a taxpayer and, in any event, could not sue because a competitor is not a “person aggrieved” by a zoning decision.

The Court of Special Appeals upheld the dismissal of Moe’s challenge but on the ground the circuit court did not address: Moe’s lack of standing based on its operation of a business and filing of the zoning challenge while under SDAT suspension.

Moe’s appeal “was a nullity from the moment it was filed” in circuit court, Court of Special Appeals Chief Judge Peter B. Krauser wrote for the court.

Krauser cited cases in which the Court of Special Appeals held that Maryland-based, or “domestic,” businesses lacked standing to sue while its right to do business had been suspended.

Moe’s, the court noted, is a “foreign” limited liability company in legal nomenclature because it is based out of state.

“Indeed, it would defy logic and its more pedestrian partner, common sense, to conclude that a foreign LLC, whose right to do business in Maryland was forfeited but nonetheless continued to do business in this state, for a number of years, in violation of Maryland law, can revive its suit when a domestic LLC or corporation, under Maryland decisions, cannot,” Krauser wrote.

Krauser was joined in the decision by Judges Robert A. Zarnoch and Arrie W. Davis, a retired jurist sitting by special assignment.

The case is A Guy Named Moe LLC T/A Moe’s Southwest Grill v. Chipotle Mexican Grill of Colorado LLC et al., No. 2270, Sept. Term 2013.