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REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 243 September Term, 1996 _______________________________

AURELIA LOVEMAN, GUARDIAN FOR THE ESTATE OF JOSEPH H. LOVEMAN

v.

CATONSVILLE NURSING HOME, INC., et al.

_______________________________ Wilner, C.J., Murphy, Bloom, Theodore G. (retired, specially assigned), JJ. _______________________________ Opinion by Wilner, C.J. _______________________________

Filed:

November 4, 1996

- 1 -

Appellant's

husband,

Joseph

Loveman,

is

the

owner

of

a

building leased to appellee for use as a nursing home.

Claiming

that a dispute had arisen as to which of the parties was "entitled" to the authorized bed capacity of the nursing home, appellant, as guardian for her husband, filed suit in the Circuit Court for Baltimore County for a declaratory judgment and injunctive relief. On appellee's motion, the court dismissed the complaint, without prejudice, apparently on the ground that there was an administrative remedy available from the Health Resources Planning Commission (HRPC) that appellant had failed to exhaust.1 complains that the court erred in that determination. Appellant

She asserts

that (1) the controversy concerns the interpretation of the lease between the parties, and the court had primary jurisdiction to enter a declaratory judgment with respect to that interpretation, (2) there was no available administrative remedy to resolve that controversy, and (3) the dispute was ripe for judicial resolution. BACKGROUND In 1960, Mr. Loveman opened a 98-bed comprehensive care facility at 333 Harlem Lane, in Baltimore County.
1

It appears --

Neither the order dismissing the complaint nor a subsequent order denying appellant's motion to alter or amend the order of dismissal assigned any reasons for the court's action. The motion to dismiss has not been included in the record extract; nor has the memorandum filed in support of the motion, the motion to alter or amend, or a transcript (if there is one) of any hearing on either motion. In their briefs, the parties assert that the dismissal was based on appellant's failure to exhaust available administrative remedies, so we shall assume that the dismissal was, indeed, for that reason. Given the lack of any explanation in the order, appellant should have included at least appellee's motion in the record extract so that we could tell from the record the basis of the court's decision.

although the record is not entirely clear on this point -- that the home was operated through a corporation known as Shangri-La Nursing Center, Inc., in which Loveman owned all the stock, but that he was the licensee and he ran the home as an owner-operated facility. In

1978, the Legislature enacted a comprehensive health planning law that, among other things, created a health planning and development agency and provided that a health care facility may not be

established, relocated, or undergo a change in bed capacity without a certificate of need (CON) issued by that agency. The law

exempted from that requirement -- i.e., grandfathered -- a health care facility, such as that operated by Mr. Loveman, that was in operation before June 1, 1978. instant dispute. Mr. Loveman operated the home through Shangri-La until 1981, when, as a consequence of his being convicted of medicaid fraud, he was required to surrender his nursing home administrator's license and refrain from participation in the management or operation of a nursing home in Maryland. by leasing the real Loveman complied with that restriction and having Shangri-La sell the That exemption underlies the

property

personalty used in the operation to one Dexter Case.

Case, in

turn, assigned his rights to Joseph Kaplan and Benjamin Ashman, who proceeded to operate the home under the name Inglenook Nursing and Convalescent Center. Both the lease and the assignment were

contingent on Kaplan and Ashman obtaining a license to operate the center. That license was issued in September, 1981.

In 1987, the Center was acquired by Evergreen Health Group, - 3 -

Inc.

In December, 1987, Loveman and Evergreen entered into a new

four-year lease for the facility, with a six-year renewal option and an option to purchase. HRPC (the successor agency to the

Health Planning and Development Agency) concluded that, as there would be no change in services or bed capacity, the acquisition was exempt from CON review. to renew. Evergreen eventually exercised the option

Although it is not clear from the record before us, we

assume that Evergreen obtained either a new license to operate the home or an approved assignment of the license that had been issued to Kaplan and Ashman.2 In November, 1990, Evergreen assigned its lease to appellee, Catonsville Nursing Home, Inc. (CNH). Included in the assignment

was Evergreen's nursing home license, although the assignment was made expressly contingent on (1) approval by the Department of Health and Mental Hygiene of the transfer of the license, and (2) a determination by HRPC that a CON was not required to complete the transaction. As in 1987, the Commission, assured that there would

be no change in services or bed capacity, determined that the acquisition was exempt from CON review. As noted, since 1978, a health care facility may not be built or relocated nor, except as otherwise provided in the statute, may the bed capacity or the type or scope of health care service of an

HRPC is not a licensing agency; the CON required under the health planning law is not a license to operate the facility. Nursing homes, as "related institutions," require a license from the Secretary of Health and Mental Hygiene. Md. Code HealthGeneral art.,

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