Pulte Home Corporation and Shiloh Farm Investments LLC v. Montgomery County, Maryland et al
Filing
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MEMORANDUM OPINION. Signed by Judge George Jarrod Hazel on 7/17/2015. (kns, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
Southern Division
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PULTE HOME CORPORATION, ET AL.,
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Plaintiffs,
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v.
Case No.: GJH-14-3955
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MONTGOMERY COUNTY, MARYLAND,
ET AL.,
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Defendants.
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MEMORANDUM OPINION
This is a civil rights action brought by Pulte Home Corporation and Shiloh Farm
Investments, LLC (collectively, “Pulte”) against Montgomery County, Maryland (the “County”)
and the Maryland-National Capital Park and Planning Commission (the “Commission”)
(collectively, “Defendants”) for allegedly violating Pulte’s state and federal civil rights by
enacting land use legislation that adversely affected Pulte’s ownership interests in approximately
541 acres of land it owns in Clarksburg, Maryland. Presently before the Court are two fully
briefed motions: Pulte’s motion to remand to state court (see ECF No. 21) and the Commission’s
motion to dismiss. See ECF No. 19. A hearing is unnecessary. See Loc. R. 105.6 (Md.). For the
reasons stated below, Pulte’s motion to remand is DENIED and the Commission’s motion to
dismiss is DENIED.
I.
BACKGROUND
Pulte is in the business of residential real estate development. Between November 2004
and January 2006, Pulte purchased or entered into a contract to purchase approximately 541
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acres of property (the “Development Land”) in Clarksburg, Maryland. See ECF No. 2 at ¶ 5.
Until July 2014, the Development Land was governed by the 1994 Clarksburg Master Plan
(“1994 Master Plan”), which divided Clarksburg development into four stages. See id. at ¶¶ 7-8.
Under Stage Four of the 1994 Master Plan, the Development Land, as well as other parts of
Clarksburg, were to be developed into residential communities at “specific residential densities”
based upon the zoning affixed to the land by the County in 1994. See id. at ¶ 8. Specifically, the
Development Land was zoned for residential development under the RE-1/TDR-2 classification,
which allowed for the development of one dwelling unit per acre, but encouraged two units per
acre through the purchase of County Transferable Development Rights (“TDRs”). See id. at ¶ 9.
Pulte contends that, in reliance on this zoning designation and the County’s TDR policies, it
purchased 323 TDRs from County farmers for over $12 million. See id. at ¶¶ 9, 15. Under the
Master Plan and RE-1/TDR-2 zoning, Pulte estimated that it could build between 954 and 1,007
detached homes and townhomes on the Development Land. See id.
Before development could proceed into Stage 4, however, the 1994 Master Plan required
the completion of several triggers, including a baseline biological assessment of Little Seneca
Creek and Ten Mile Creek watersheds, the issuance of 2,000 building permits east of Interstate
270 as part of Stages 2 and 3, and a County report evaluating water quality best management
practices and other mitigation techniques. See id. at ¶ 10. Pulte maintains that these conditions
were satisfied by 2009, at which time the 1994 Master Plan directed the County to consider
Water and Sewer Plan amendments to permit extension of public facilities to the Ten Mile Creek
area. See id. at ¶ 11. Thus, on May 12, 2009, in reliance on the 1994 Master Plan directives, Pulte
submitted its Water and Sewer Category Change Request application to the Montgomery County
Department of Environmental Protection (“DEP”) for review by the County and the
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Commission. See id. at ¶¶ 11-12. Pulte contends that since 2009, however, the County has failed
to act on its completed application, preventing Pulte from proceeding with other aspects of
Defendants’ development approval process. See id. at ¶¶ 15-20, 29-30.
Around the same time that Pulte submitted its Water and Sewer Category Change
Request, Pulte also submitted a Pre-Application Concept Plan to the Commission pursuant to the
County subdivision ordinance. The Commission, however, refused to endorse the plan despite
the fact that, according to Pulte, the plan fully conformed with the zoning ordinance. See id. at ¶¶
21-28. Moreover, Pulte contends that the Commission refused to meet with it regarding its PreApplication Concept Plan and eventually ceased responding to its requests altogether. See id. at
¶¶ 23-27. Instead, Pulte alleges, rather than proceeding with the Stage 4 development as directed
by the 1994 Master Plan, the County and the Commission began a multi-year campaign aimed at
curtailing permissible development of the Development Land.
In particular, Pulte alleges that Defendants reopened the 1994 Clarksburg Master Plan
upon which Pulte relied when making its original investment of over $53 million into the
Development Land. According to Pulte, the County requested that the Commission re-open the
1994 Clarksburg Master Plan in order to study the Ten Mile Creek watershed, which Pulte
contends was an unnecessarily extreme land use approach since the Commission could have
studied the watershed without re-opening the Master Plan. See id. at ¶ 36. Based on this study,
the Commission prepared a draft amendment to the Master Plan and submitted it to the County
on October 25, 2013. See id. at ¶ 54. Pulte maintains that the amendment included unprecedented
regulatory restrictions and exactions aimed specifically at the Development Land based on
technical reports provided by consultants retained and controlled by the Commission. See id. The
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County then revised the Commission’s draft amendment and, according to Pulte, approved an
even more stringent version. See id. at ¶ 65.
In its consideration of the Commission’s Draft Master Plan Amendment, Pulte contends
that Defendants failed to adequately discuss, analyze, or refute any of Pulte’s expert reports
submitted into the public record addressing what it perceived as errors and misstatements in the
Commission’s draft and in the work of its consultants. See id. at ¶ 61. After the close of the
public record, Pulte alleges that the County solicited extensive new testimony from state and
federal government employees in an attempt to justify Defendants’ actions. See id. at ¶ 64. Not
long after, the Commission then adopted the County’s version of the Master Plan Amendment.
See id. at ¶¶ 68, 71.
Following Defendants’ approval and adoption of the 2014 Master Plan Amendment,
Pulte contends that Defendants drafted and implemented the Clarksburg West Environmental
Overlay Zone, which imposed a radically low impervious cap on Pulte’s use of the Development
Land. See id. at ¶¶ 69-70, 72. Then, two days later, the Commission amended its Montgomery
County development regulations, called Environmental Guidelines, which, according to Pulte,
imposed extraordinary restrictions on any future use and development of the Development Land.
See id. at ¶ 73. Additionally, the Commission prepared, and the County enacted, a downzoning
of the Development Land from a residential to an agricultural classification. See id. at ¶¶ 54, 80.
Believing that Defendants’ land use, planning, and zoning actions arbitrarily and
capriciously targeted the Development Land, Pulte filed suit against the County and the
Commission on November 14, 2014 in Montgomery County Circuit Court. In its complaint,
Pulte contends that Defendants’ actions violated its due process and equal protection rights and
amounted to a taking of private property requiring just compensation. The County removed the
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case to this Court on December 18, 2014. See ECF No. 1. Pulte has filed a motion to remand to
state court. See ECF No. 21. Additionally, the Commission has filed a motion to dismiss.1 See
ECF No. 19. For the reasons stated more fully below, the Court will DENY both motions.
II.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint if it
“fails to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). This rule’s
purpose “is to test the sufficiency of a complaint and not to resolve contests surrounding the
facts, the merits of a claim, or the applicability of defenses.” Presley v. City of Charlottesville,
464 F.3d 480, 483 (4th Cir. 2006). To that end, the Court bears in mind the requirements
of Fed.R.Civ.P. 8, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal,
556 U.S. 662 (2009), when considering a motion to dismiss pursuant to Rule 12(b)(6).
Specifically, a complaint must contain “a short and plain statement of the claim showing that the
pleader is entitled to relief,” Fed.R.Civ.P. 8(a)(2), and must state “a plausible claim for relief,” as
“[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Iqbal, 556 U.S. at 678-79. “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Id. at 663.
III.
DISCUSSION
A.
Motion to Remand
Prior to addressing the Commission’s motion to dismiss, the Court must briefly address
Pulte’s motion to remand to state court. See ECF No. 21. Pulte contends that the “Court should
abstain and issue a remand order based on the well-established Burford abstention doctrine.”
The County has not filed a motion to dismiss; instead, it answered Pulte’s complaint on January
14, 2015. See ECF No. 24.
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ECF No. 21-1 at 6 (citing Burford v. Sun Oil Co., 319 U.S. 315 (1943)). In the alternative, Pulte
asks the Court to “exercise its discretion to decline jurisdiction under the supplemental
jurisdiction doctrine . . . [of] 28 U.S.C. § 1367” and remand the entire case. ECF No. 21-1 at 6.
Regarding the latter request, the Court “is not permitted to remand a federal claim” even when
state law claims predominate the action or when the case involves novel and complex issues of
state law, as Pulte contends is the case here. 75-80 Properties, LLC v. Bd. of Cnty.
Commissioners of Frederick Cnty., Maryland, Case No. 09-2977, 2010 WL 917635, at *6 (D.
Md. Mar. 10, 2010); see also e.g., Baker v. Kingsley, 387 F.3d 649, 656-57 (7th Cir. 2004) (“It is
an abuse of discretion for a district court to remand a federal claim that is properly before
it.”); Green v. Ameritrade, Inc., 279 F.3d 590, 596 (8th Cir. 2002) (“[A] district court has no
discretion to remand a claim that states a federal question.”); Borough of West Mifflin v.
Lancaster, 45 F.3d 780, 787 (3rd Cir. 1995) (explaining that “nothing in § 1367(c) authorizes a
district court to decline to entertain a claim over which it has original jurisdiction and,
accordingly, that section clearly does not sanction the district court’s remand of this entire case,
including the federal civil rights claims, to the state court”). The Court therefore cannot decline
to exercise jurisdiction under § 1367.
As for Pulte’s request that the Court abstain from exercising jurisdiction over this case
under the Burford abstention doctrine, the Court will likewise decline that request. The Supreme
Court has repeatedly instructed that courts have “a virtually unflagging obligation to exercise
their jurisdiction . . . .” Deakins v. Monaghan, 484 U.S. 193, 203 (1988) (internal quotation
marks omitted). Thus, “[a]bstention from the exercise of federal jurisdiction is the exception, not
the rule.” Colorado River Water Conserv. Dist. v. United States, 424 U.S. 800, 813 (1976)
(quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188-189 (1959)).
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The Burford abstention doctrine “‘justif[ies] the dismissal of a federal action’ in a
‘narrow range of circumstances’ when federal adjudication would ‘unduly intrude’ upon
‘complex state administrative processes’ because there exist (1) ‘difficult questions of state law
. . . whose importance transcends the result in the case then at bar’ or (2) federal review would
disrupt ‘state efforts to establish a coherent policy with respect to a matter of substantial public
concern.’” Martin v. Stewart, 499 F.3d 360, 364 (4th Cir. 2007) (internal citations omitted). The
Supreme Court has admonished that a federal court may dismiss a case under Burford abstention
only when presented with one of these “extraordinary circumstances.” Quackenbush v. Allstate
Ins. Co., 517 U.S. 706, 726-27 (1996). This case presents neither situation.
The Commission contends that the Court should abstain from deciding the merits of this
case due to the “[l]and use and zoning issues[,]” which, according to Pulte, are “traditionally
regulated by the states.” ECF No. 21-1 at 8. “While the [C]ourt recognizes that resolving routine
land-use disputes ‘is simply not the business of the federal courts[,]’ Gardner v. Baltimore
Mayor & City Council, 969 F.2d 63, 67 (4th Cir. 1992), the [C]ourt is also cognizant that the
Constitution protects against arbitrary and unreasoned action in zoning practices.” Frall
Developers, Inc. v. Bd. of Cnty. Comm’rs for Frederick Cnty., Case No. 07-2731, 2009 WL
2487071, at *2 (D. Md. Aug. 12, 2009); see also Scott v. Greenville County, 716 F.2d 1409,
1419-21 (4th Cir. 1983). Throughout Pulte’s complaint, it repeatedly contends that Defendants
acted arbitrarily and capriciously by, among other things, drafting and adopting amendments to
the 1994 Master Plan and by downzoning the Development Land so as to deprive Pulte of its
constitutionally protected property interests. See ECF No. ¶¶ at 85-88, 90, 113-115, 122. Thus,
Pulte’s claims, while requiring reference to Maryland land use law, are, at their core,
constitutional claims for which this Court is well-equipped to handle. The Court will therefore
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decline Pulte’s invitation to abstain from exercising jurisdiction as this case does not involve
difficult questions of state law, nor does it require this Court to disrupt Maryland’s efforts to
establish coherent land-use policies. See Martin, 499 F.3d at 364. Accordingly, Pulte’s motion to
remand is denied.
B.
Motion to Dismiss
Having denied Pulte’s motion to remand, the Court must now turn to the Commission’s
motion to dismiss. In its motion, the Commission argues that Pulte’s complaint must be
dismissed because the Commission did not have the “legal authority to zone, rezone, upzone, or
‘downzone’ property in Montgomery County” and therefore could not have caused Pulte’s
injuries. See ECF No. 19-1 at 7. Thus, although not explicitly argued as such, the thrust of the
Commission’s motion to dismiss is that Pulte lacks standing to sue the Commission.
There are two types of standing: Article III standing, which ensures that a suit presents a
“case” or “controversy” as required by the Constitution, and “prudential standing,” which
encompasses “judicially self-imposed limits on the exercise of federal jurisdiction.” Allen v.
Wright, 468 U.S. 737, 751 (1984). The Commission has not challenged Pulte’s prudential
standing; accordingly, such a challenge has been waived. See, e.g., Bd. of Natural Res. of State of
Wash. v. Brown, 992 F.2d 937, 945-46 (9th Cir. 1993). Instead, the Commission challenges
Pulte’s standing on Article III grounds.
Article III of the Constitution restricts federal courts to the adjudication of cases and
controversies. This requirement of standing is “perhaps the most important” condition of
justiciability, Allen v. Wright, 468 U.S. 737, 750, (1984), as it ensures that a plaintiff has a
personal stake in the outcome of a dispute, and that judicial resolution of the dispute is
appropriate. See Emery v. Roanoke City Sch. Bd., 432 F.3d 294, 298 (4th Cir. 2005). To meet the
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constitutional requirement for Article III standing, a plaintiff must plausibly allege that: 1) he or
she suffered an “injury in fact” that is concrete and particularized, and is actual or imminent; 2)
the injury is fairly traceable to the challenged action of the defendant; and 3) the injury likely
will be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 56061 (1992). Here, the Commission argues that Pulte’s injuries are not fairly traceable to it because
the Commission did not have the authority to engage in the various acts that Pulte contends
caused its injuries. See ECF No. 19-1 at 4, 6-19.
The Commission is correct that in order to invoke federal jurisdiction, a plaintiff must
show that his or her injury is “fairly traceable to the challenged action of the defendant, and not
the result of the independent action of some third party not before the court.” Id. at 560. The
“fairly traceable” standard, however, is “not equivalent to a requirement of tort causation.”
Natural Res. Def. Council, Inc. v. Watkins, 954 F.2d 974, 980 n. 7 (4th Cir. 1992) (quoting Pub.
Interest Research Group, Inc. v. Powell Duffryn Terminals Inc., 913 F.2d 64, 72 (3d Cir. 1990)).
Nor does the fairly traceable standard “require the defendant to be the only party responsible for
the injury, or the party that contributes most significantly to the injury.” EarthReports, Inc. v.
U.S. Army Corps of Engineers, Case No. 10-01834, 2011 WL 4480105, at *6 (D. Md. Sept. 26,
2011). Rather, all that is required is that a plaintiff show that the defendant’s conduct either
“causes or contributes to the kinds of injuries alleged by the plaintiffs.” Watkins, 954 F.2d at 980
(emphasis added). Here, Pulte has adequately alleged that the Commission’s actions have
contributed to its purported injuries. To fully understand why, it is helpful for the Court to
explain the role of the Commission, in general.
“The Commission is a bi-county agency created by the [Maryland] General Assembly to
develop both general and functional plans of proposed land development for the Washington
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Metropolitan District, which consists of most of Montgomery and Prince George’s Counties.”
Maryland-Nat. Capital Park And Planning Com’n v. Anderson, 164 Md. App. 540 (2005). The
Maryland General Assembly “created the Commission as the state agency responsible for
coordinating planning, zoning and recreational activities within the Washington metropolitan
area which otherwise would be the sole responsibility of the counties.” O & B, Inc. v. Md.-Nat’l
Capital Park and Planning Comm’n, 279 Md. 459, 465 (1977). Contrary to the Commission’s
argument, its role is not simply “advisory or ministerial.” ECF No. 19-1 at 7. Rather, Maryland
law specifically authorizes the Commission to acquire and manage lands for public parks, draft
and adopt master plans, draft zoning and subdivision ordinances, adopt development regulations,
act on land development applications, and recommend other land use policies to Montgomery
County. See Md. Code Ann., Land Use § 15-113 (general powers); see also e.g., § 15-302
(power to acquire and develop land); § 17-101 (power to acquire, develop, and control property
for parks); § 17-104 (providing title and control of property to Commission); § 21-104 (requiring
a general plan to contain Commission’s recommendations); § 21-202 (Commission’s power to
initiate a plan); §21-203 (Commission’s power to adopt a plan); §23-104 (Commission may
adopt subdivision regulations and amendments).
Thus, while the Commission may not have the authority to formally approve or enact a
master plan or amendments thereto, the Commission’s role in land use regulation is nevertheless
essential to continued real estate development in Montgomery and Prince George’s Counties. To
insulate the Commission from judicial review based solely on the fact that it did not have the
formal power to enact or implement the Master Plan or its Amendment would amount to a severe
limitation to Article III standing jurisprudence, especially where, as here, the Commission had
other non-discretionary and non-delegable duties as it relates to drafting and adopting
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development plans and amendments. The law simply does not support such a result. In fact, the
Supreme Court’s decision in Bennett v. Spear, 520 U.S. 154 (1997) flatly rejects it.
In Bennett, the plaintiff sued one government agency, ‘Agency A,’
which had coerced a second agency, ‘Agency B,’ into enacting
certain regulations that injured the plaintiff. The Court held that the
plaintiff had standing to sue ‘Agency A,’ even though it did not
actually enact the regulations at issue. The rationale was that the
plaintiff’s injuries were directly traceable to the actions of
“Agency A,” because “Agency B” would not have enacted the
challenged regulation “but for” the actions of ‘Agency A.’
The Pitt News v. Fisher, 215 F.3d 354, 361 (3d Cir. 2000). The same logic of Bennett applies
here.
Specifically, Pulte contends that, pursuant to its statutory mandate, the Commission
drafted and later adopted the Master Plan Amendment which severely restricted Pulte’s use of
the Development Land by, among other things, downzoning the property. According to Pulte, it
was the Commission who retained and oversaw the work of the consultants whose allegedly
flawed reports were used by it and the County to justify their planning, zoning, and regulatory
decisions impacting the Development Land. See ECF No. 2 at ¶¶ 37, 45. These reports,
according to Pulte, were conducted at a “‘planning level’ of detail (ignoring the actual ground),
used mistaken assumptions with respect to development properties in the area, and grossly
underestimated peak flows and volumes in the watershed.” ECF No. 30 at 11 (citing ECF No. at
2 at ¶¶ 43, 48-49, 53, 60). Pulte contends that the Commission made no attempt to calibrate or
verify the data from similar watersheds. See id. at ¶¶ 48, 53. Additionally, Pulte alleges that the
Commission’s consultants also failed to consider the appropriate water quality management
techniques into their modeling, in violation of state and county law and inconsistent with
industry standards. See id. at ¶¶ 41, 53, 57.
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Thus, it was based on these allegedly flawed opinions and reports created by the
Commission or its agents that Pulte contends the County justified the Master Plan Amendment
and its downzoning of the Development Land. Assuming the truth of these allegations, as the
Court must at this stage, Pulte has adequately alleged that the Commission’s actions contributed
to its alleged injuries. See Weigel v. Maryland, 950 F. Supp. 2d 811, 828 (D. Md. 2013) (finding
traceability to be “met because the Plaintiffs have sued all relevant State Defendants conceivably
involved in ‘passing’ and ‘enforcing’ Tracey, as well as the private party (Armistead) who has
allegedly ‘implemented’ the decision, to the Plaintiffs’ detriment”); see also N. Carolina
Fisheries Ass'n, Inc. v. Gutierrez, 518 F. Supp. 2d 62, 83 (D.D.C. 2007) (recognizing that the
“fairly traceable” inquiry “asks whether the agency’s actions materially increase the probability
of injury”). As such, the Court will deny the Commission’s motion to dismiss.
IV.
CONCLUSION
For the reasons stated above, Pulte’s motion to remand is DENIED and the
Commission’s motion to dismiss is DENIED.
Dated: July 17, 2015
/S/
George J. Hazel
United States District Judge
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