Court Opinion

ID: 1023536
Source: CourtListenerOpinion
Date Created: 2013-07-04 23:39:19.967749+00
Date Added: 2024-06-11T15:26:03.818979
License: Public Domain

UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                              No. 06-1615

ROSCOE G. BARTLETT, JR.; ELLEN BARTLETT;
AMERICAN HERITAGE COMMUNITIES, INCORPORATED,

                                             Plaintiffs - Appellants,

           versus

FREDERICK COUNTY, MARYLAND,

                                                Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.   William M. Nickerson, Senior District
Judge. (1:05-cv-03135-WMN)

Argued:   May 24, 2007                      Decided:   August 21, 2007

Before WILLIAMS, Chief Judge, SHEDD, Circuit Judge, and WIDENER,
Senior Circuit Judge.

Reversed by unpublished per curiam opinion.     Chief Judge Williams
wrote a dissenting opinion.

ARGUED: Pamela Anne Bresnahan, VORYS, SATER, SEYMOUR & PEASE,
Washington, D.C., for Appellants. Laura Nachowitz Steel, WILSON,
ELSER, MOSKOWITZ, EDLEMAN & DICKER, L.L.P., Washington, D.C., for
Appellee.   ON BRIEF: Elizabeth Treubert Simon, VORYS, SATER,
SEYMOUR & PEASE, Washington, D.C., for Appellants.     Yoora Pak,
WILSON, ELSER, MOSKOWITZ, EDLEMAN & DICKER, L.L.P., Washington,
D.C., for Appellee.
Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

      Mr. and Mrs. Roscoe Bartlett (“the Bartletts”) and American

Heritage Communities, Inc. (“American”) (collectively “Appellants”)

appeal the district court’s dismissal of their suit for breach of

contract and related claims against Frederick County, Maryland

(“the County”).       For the reasons that follow, we reverse.

                                        I

      In December of 1998, the Bartletts entered into a contract

(“the Easement”) with the County in which they granted the County

an   easement    to   install   water   and/or   sewer   lines   under   their

property.       The Easement contained, inter alia, the following

provisions:

      A.    Grantor [the Bartletts] will be permitted, but not
            required, to connect existing structures to the
            sewer line, in accordance with the Water and Sewage
            Plan and Department of Public Works Rules and
            Regulations.   All costs associated with any such
            connection will be paid by Grantor, including
            capacity or “tap” fees.
      B.    Grantee [the County] represents unto Grantor that
            the proposed sewer line is designed to include
            capacity sufficient to serve the Grantor’s property
            when   developed,  if   developed   to  a   density
            contemplated by the current Comprehensive Plan
            designation for the property Office/Research.
            Additional capacity may be provided if required for
            future development and if available.

J.A. 26.

      The Bartletts later entered into a contract with American for

the sale of the property subject to the Easement.           American sought

                                        3
to acquire the property as part of its plan to build a 100-bed

nursing home along with an independent retirement community. After

the County denied Appellants the right to access the sewer lines,

Appellants filed suit alleging a breach of the Easement and related

causes of action.     The district court granted the County’s motion

to dismiss the complaint, concluding that, as a matter of law, the

Easement does not grant Appellants the right to access the sewer

lines under their property for future development.

                                    II

      We review de novo the dismissal of a complaint for failure to

state a claim under Rule 12(b)(6).       Hinkleman v. Shell Oil Co., 962

F.2d 372, 378 (4th Cir. 1992).          In so doing, we must accept the

factual allegations of the complaint as true, and we must affirm

the dismissal only if the plaintiffs can prove no set of facts upon

which relief can be granted.      Id.

      Under Maryland law, a contract must be construed as a whole.

Gresham v. Lumbermen’s Mut. Cas. Co., 404 F.3d 253, 260 (4th Cir.

2005).   Where the contract, read as a whole, “is subject to more

than one interpretation . . . by a reasonably prudent person[,]”

the   contract   is   ambiguous   and    the   court   “must   consider   any

extrinsic evidence which sheds light on the intentions of the

parties at the time of the execution of the contract.”           Sy-Lene of

Washington, Inc. v. Starwood Urban Retail II, LLC, 829 A.2d 540,

                                    4
547 (Md. 2003).         We find that the Easement is ambiguous in that it

is susceptible to different interpretations.             Paragraph B of the

Easement provides that “the proposed sewer line is designed to

include capacity sufficient to serve the Grantor’s property when

developed.”        J.A. 26.      The County contends that this language

should be read to mean that the County simply agrees that the sewer

line will be of a certain capacity.          However, it also could be read

to mean that a sufficient amount of capacity will be made available

to Appellants for future development.            That the latter meaning is

a reasonable one is indicated by language in the next sentence of

Paragraph B which states that under certain conditions not relevant

here “additional” capacity may be provided.                  The provision of

“additional” capacity certainly reasonably suggests that the first

sentence of Paragraph B provides some initial capacity.

       With the language of the Easement capable of bearing a meaning

which      supports     the   allegations   of   Appellants’    complaint,    we

conclude that dismissal of the complaint was error.1                 We do not

pass       upon   the   County’s   remaining     arguments     in   support   of

       1
      The fact that Paragraph A of the Easement clearly grants
permission for connection of existing buildings to the sewer line
while Paragraph B does not give express permission to connect
cannot be read to resolve any ambiguity as a matter of law. This
language may reflect nothing more than a temporal distinction (that
is, current buildings can connect; future buildings, not yet in
existence, will be provided service). In any event, the terms of
Paragraph A certainly do not imply as a matter of law that
Paragraph B unambiguously denies service to future buildings.

                                        5
affirmance, but leave them for the district court to consider in

the first instance.

                               III

     The judgment of the district court is reversed, and the case

is remanded for further proceedings.2

                                                          REVERSED

     2
      The   district   court   dismissed   Appellants’    negligent
misrepresentation claim (Count V) on the independent bases that it
lacked the particularity required by Fed. R. Civ. P. 9(b) and that
it was barred by the Easement’s integration clause. Nonetheless,
we reverse the dismissal of Count V.       Appellants filed their
complaint in state court, after which the County removed the case
to federal court, triggering the heightened pleading standards of
Rule 9(b). In these circumstances, Appellants should be given the
opportunity to amend their complaint prior to dismissal. Further,
given that we conclude that the Easement is ambiguous, we find that
Appellants’ negligent misrepresentation survives, notwithstanding
the Easement’s integration clause.

                                6
WILLIAMS, Chief Judge, dissenting:

     Today, a majority of this panel holds that a contractual

provision guaranteeing a certain amount of “capacity” could be

defined as guaranteeing “access.”                I do not believe the words are

synonymous.     Because I believe the contract is clear on its face in

that it does not guarantee the Bartletts an unqualified right to

connect future development to the sewer line, I dissent.

                                            I.

     In    December   1998,    Mr.      and      Mrs.    Bartlett   entered    into   a

contract with Frederick County, Maryland.                  The Bartletts agreed to

convey an easement over their property to the County “for the

purpose    of   installation       of   a    water      and/or   sewer    line(s)   and

necessary appurtenances.”           (J.A. at 25.)           The contract provided

that the Bartletts would transfer the land to the County in

exchange for the sum of $6,475.00.

     The    second    page    of    the      two-page      contract      included   two

additional pertinent clauses.               First, Provision A provided:

     Grantor [Bartlett] will be permitted, but not required,
     to connect existing structures to the sewer line, in
     accordance with the Water and Sewerage Plan and
     Department of Public Works Rules and Regulations. All
     costs associated with any such connection will be paid by
     Grantor, including capacity or “tap” fees.

(J.A. at 26.)     Second, Provision B provided:

     Grantee [the County] represents unto Grantor that the
     proposed sewer line is designed to include capacity
     sufficient to serve the Grantor’s property when

                                             7
     developed, if developed to a density contemplated by the
     current Comprehensive Plan designation for the property
     OFFICE/RESEARCH. Additional capacity may be provided if
     required for future development and if available.

(J.A. at 26.)

     The contract concluded with an integration clause, which

explained that the contract contained all the terms of the contract

with respect to the obtaining of the easement, but contained “no

representations as to any other issues relating to the provision of

water or sewer service to the subject property.”   (J.A. at 26.)

     In May 2004, the Bartletts entered into a contract with co-

Appellant American Heritage Communities, Inc. for the sale of the

subject property.   American Heritage planned on acquiring the land

as part of its design to build a nursing home and retirement

community.   As discussed in the majority opinion, however, the

County denied any right to access the sewer lines.

     On October 17, 2005, Appellants filed suit in the Circuit

Court for Frederick County, seeking injunctive and declaratory

relief against the County, as well as stating various damages

claims.   Specifically, the complaint alleged seven claims, which

are summarized below:

     Count I – an injunction against the County from taking
     any further action that is inconsistent with Appellants’
     rights under the contract.

     Count II – a declaration that the       contract   grants
     Appellants access to the sewer line.

     Count III – money damages to Bartlett for a material
     breach of the contract.

                                 8
     Count IV – money damages to American Heritage as a third
     party beneficiary for the breach.

     Count V – money damages for the County’s negligent
     misrepresentation.

     Count VI – an unconstitutional taking claim.

     Count VII – an unconstitutional impairment of contract
     claim.

     The County timely removed the action to federal district court

for the District of Maryland, based on the complaint’s federal

claims.   The County then filed a motion to dismiss for failure to

state a claim upon which relief can be granted.

     On April 25, 2006, the district court granted the County’s

motion to dismiss.   First, the district court noted that all of

Appellants’ claims -- with the possible exception of Count V, the

negligent misrepresentation claim -- were contingent on a contract

that granted Appellants the sewer access rights they were seeking.

If the contract was unambiguously silent on that point, all those

claims, which required something akin to a breach of the contract,

would, in the district court’s opinion, necessarily fail.

     After reviewing the language of the contract, the district

court found there existed “no right to connect to the public sewer

line any structure except for those already on the property at the

time the contract was executed.”     (J.A. at 150.)   This led the

district court to conclude that there was “no breach of that

contract and there [were] no rights, constitutional or otherwise,

of which [Appellants] have been deprived.”   (J.A. at 150.)     With

                                 9
respect to the negligent misrepresentation claim, the district

court found that Appellants failed to plead the misrepresentation

claim with particularity.        Alternatively, the district court found

that the contract’s integration clause foreclosed Bartlett from

claiming that he relied on oral statements made by the County

during contract negotiations.

                                       II.

      We review de novo the district court’s dismissal of an action

under Federal Rule of Civil Procedure 12(b)(6).            See, e.g., Veney

v. Wyche, 293 F.3d 726, 730 (4th Cir. 2002).           "[A] Rule 12(b)(6)

motion should only be granted if, after accepting all well-pleaded

allegations in the plaintiff's complaint as true and drawing all

reasonable factual inferences from those facts in the plaintiff's

favor, it appears certain that the plaintiff cannot prove any set

of   facts   in   support   of   his   claim   entitling   him   to   relief."

Bominflot, Inc. v. M/V Henrich S, 465 F.3d 144, 145-46 (4th Cir.

2006) (internal quotation marks omitted).              In considering the

motion to dismiss, a court may only examine the complaint, exhibits

attached to the complaint, matters of public record, and judicially

noted facts.      See Fed. R. Civ. P. 10(c) & 12.      When there exists a

conflict between the complaint’s bare allegations and an exhibit

attached to the complaint, the exhibit prevails.                 Fayetteville

Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1465 (4th

                                       10
Cir. 1991).   Finally, although “we must take the facts in the light

most favorable to the plaintiff, we need not accept the legal

conclusions drawn from the facts.”         Eastern Shore Mkts., Inc. v.

J.D. Assocs. Ltd. P’ship., 213 F.3d 175, 180 (4th Cir. 2000).

     Appellants’ brief states six convoluted issues on appeal, most

of which account for minor arguments that make up part of a larger,

undefined central argument.      The County, responding to Appellants’

brief, also makes the case appear more confusing than it is.

Because   every   claim   in    the     complaint   (save   the   negligent

misrepresentation claim and takings claim) fails as a legal matter

unless the contract can be read to secure future sewer line access

rights to the Bartletts, the chief question (as recognized by the

majority) is whether the contract did in fact confer on the

Bartletts a right to connect any future built structures to the

sewer line.

                                   A.

     Because we are concerned with a contract formed in Maryland,

we apply Maryland law.    See Kramer v. Bally’s Park Place, Inc., 535

A.2d 466, 467 (Md. 1988).       Maryland follows the law of objective

contract interpretation.       See, e.g., Long v. State, 807 A.2d 1, 8

(Md. 2002).    Under this theory of interpretation, “the written

language embodying the terms of an agreement will govern the rights

and liabilities of the parties, irrespective of the intent of the

parties at the time they entered into the contract.” Id. (internal

                                      11
quotation marks and alternation omitted). Courts must “[d]etermine

from the language of the agreement itself what a reasonable person

in the position of the parties would have meant at the time it was

effectuated.”   Calomiris v. Woods, 727 A.2d 358, 363 (Md. 1999).

     If a contract’s language is unambiguous, Maryland courts will

not concern themselves with what the parties intended the contract

to mean at the time of execution.      Rather, when the language is

unambiguous, Maryland courts “will give effect to its plain,

ordinary, and usual meaning, taking into account the context in

which it is used.”   Sy-Lene of Wash., Inc. v. Starwood Urban Retail

II, 829 A.2d 540, 546 (Md. 2003).     “If the contract is ambiguous,

the court must consider any extrinsic evidence which sheds light on

the intentions of the parties at the time of the execution of the

contract.”   Id. at 547 (internal quotation marks omitted).

                                 1.

     Appellants argue that Provision B was meant to reserve “some

right of the Bartlett property owners to access the sewer line.”

(Appellants’ Br. at 15.) They further contend that their complaint

provided a reasonable interpretation of the contract, which shows

that the contract granted them the right to access the sewer line

to develop their property.   They attempt to buttress this claim by

stating that the County could have used more unambiguous language

if it had not intended to grant Bartlett access rights.         The

majority, however, implicitly rejects these arguments by relying on

                                 12
its own reasoning and reading to discover ambiguity.               In my view,

however, neither Appellants nor the majority are correct.

     The contract states that the Bartletts agreed to transfer the

easement in exchange for $6,475.00.            Provision A of the contract

then states that the Bartletts are permitted “to connect existing

structures    to   the   sewer   line,”   in   accordance   with    rules   and

regulations. (J.A. at 26 (emphasis added).) Provision B, which is

the clause the parties primarily contest, states in relevant part

that the County represents that the sewer line will be “designed to

include capacity sufficient to serve [the Bartletts’] property when

developed.”    (J.A. at 26 (emphasis added).)

     I cannot agree that this language is ambiguous.               Provision A

conferred upon Bartlett a right to connect existing structures.

But Provision B confers no rights.         Instead, it states merely that

the sewer line will be designed in a fashion that -- should the

Bartletts want to develop the land -- has the capacity to service

future structures.       But nothing in Provision B’s language can be

read as granting Bartlett a right to connect to the sewer line

simply because the line will have the capacity to handle the

connection.    Thus, while the contract conferred upon Bartlett a

right to connect existing structures to the land, it did not confer

upon him a right to connect future structures.

     Appellants claim that this interpretation (which is required

by the contract’s plain language) renders Provision B meaningless.

                                     13
That is not so.   It is easy to imagine the Bartletts explaining

that they want to be able to connect existing structures (Provision

A), but also want to ensure that if they further develop the

property, the sewer line will have sufficient capacity to service

the development as well. The County then could have explained that

while it was not willing to grant him an unqualified right to

connect any hypothetical future structure (which would likely be

ultra vires under Maryland law), it could guarantee that the line

would at least have the capacity to serve such future hypothetical

structures so long as they are “developed to a density contemplated

by the current Comprehensive Plan designation for the property.”

(J.A. at 26 [Provision B].)     Read plainly, then, it is not a

meaningless or ambiguous provision.   Although Bartlett would have

to follow the normal procedural channels to get connected to the

sewer line, he would nevertheless be sure that the line was

equipped with the capacity to serve the new structures, provided

they were reasonable for the property.

                                2.

     I disagree with the majority’s analysis that:

     [Provision B] could be read to mean that a sufficient
     amount of capacity will be made available to Appellants
     for future development. That the latter meaning is a
     reasonable one is indicated by language in the next
     sentence of Paragraph B[,] which states that under
     certain conditions not relevant here “additional”
     capacity may be provided.

(Ante at 4.)

                                14
      The   sentence    referenced   by    the    majority     states    in   its

entirety: “Additional capacity may be provided if required for

future development and if available.”             (J.A. at 26.)     Of course,

the majority’s reading begs the question of how a provision for

additional capacity can be read as creating a right to access that

capacity.     See    Catawba   Indian     Tribe    v.   City   of   Rock   Hill,

(circulated) (holding that a party could not show that a water

contract was impaired by later added impact fees for service

connection because the contract related “to solely infrastructure,

or capacity”).      I cannot fathom how a provision providing for the

possibility of additional capacity can be anything more than a

provision contemplating the possibility of an increase in the sewer

lines “ability for holding, storing, or accommodating.”                 Merriam-

Webster’s Collegiate Dictionary 182 (11th ed. 2004).

                                     3.

      Because, in my mind, the plain language of the contract cannot

be read to have granted the Bartletts an unconditional right to

connect future structures to the sewer line, the majority of

Appellants’ claims fail as a legal matter.              Count 1 fails because

Appellants cannot show that the County has taken actions that

interfere with their rights under the contract.                 Count 2 fails

because Appellants cannot show that the contract “permits American

Heritage and the Bartletts to use the existing water/sewer lines on

the   Bartlett      Property   for   the    development        of   a    nursing

                                     15
home/continuing care facility.”        (J.A. at 14.)      Counts 3 and 4 fail

because they cannot show a “material breach of the contract.”

(J.A. at 15.)    Count 7, the constitutional impairment of contract

claim, must also fail as a matter of law.            Accordingly, I would

affirm the district court’s dismissal with respect to Counts

1,2,3,4, and 7.

                                       B.

     Claims 5 and 6 of the complaint require further discussion

because   the   plain   meaning   of    the    contract   does   not   resolve

Appellants’ takings and negligent misrepresentation claims.                  As

explained below, I would reverse with respect to the takings claim,

but affirm with respect to the negligent misrepresentation claim.

                                       1.

     Although part of Appellants’ takings claim relies on an

alleged “property interest” created by the contract, Appellants

contend that their takings claim relies also on later actions that

occurred independent of the contract, and therefore should not have

been dismissed based simply on the plain meaning of the contract.

Appellants are correct.

     Appellants allege that sometime after the signing of the

contract, the County violated the takings clause by changing the

Comprehensive    Plan   designation     from    “Office/Research”      to   “No

Planned Development.”      The crux of this claim seems to be that

after granting a special exception to build the nursing home to

                                       16
American Heritage in November 2004, the County then “took” away

that property right by denying access to the sewer lines and

designating the property “No Planned Service.”           (J.A. at 18.)

     Regardless of this claim’s strength on the merits, it does not

rely on any interpretation of the contract.          Thus, it should not

have been dismissed on those grounds.          I would therefore reverse

with respect to Count 6.*

                                      2.

     I also disagree with the majority with respect to Appellants’

negligent misrepresentation claim.           That claim alleges that the

County   induced   the    Bartletts   into    entering   the   contract   by

“negligently assert[ing] a false statement . . . that the Bartlett

Contract   provided      that   the   water/sewer    lines     would   serve

[Appellants’] property, when it was developed.”           (J.A. at 17.)

     After Appellants’ claim was removed from state court, the

district court treated the claim as falling within the ambit of

Rule 9(b) of the Federal Rules of Civil Procedure, which provides:

     In all averments of fraud or mistake, the circumstances
     constituting fraud or mistake shall be stated with

     *
      The County argues that even if it was improper to dismiss the
takings claim based on a plain reading of the contract, it was ripe
for dismissal on alternative grounds. Namely, the County contends
that the “No Planned Service” designation occurred in 2001, and the
three year statute of limitations to challenge that change to the
Comprehensive Plan has since run.     While this may very well be
true, the record is unclear as to when Appellants’ takings claim
accrued.   Thus, the County would be free to raise the point on
summary judgment after further factfinding by the district court.

                                      17
     particularity.   Malice, intent, knowledge, and other
     condition of mind of a person may be averred generally.

Fed. R. Civ. P. 9(b).

     It is an open question in this Circuit whether a negligent

misrepresentation      claim   must   be   pleaded   with    particularity.

Nevertheless, Appellants do not argue the point, preferring to

assume that Rule 9(b) applies.             Instead, they argue that the

district court erred in dismissing the claim without granting them

leave to amend.      This claim has some intuitive force.

     The majority tells us in normative terms that the district

court   erred   in   dismissing   this     claim   because   under    removal

circumstances     like   these,   “Appellants      should    be    given   the

opportunity to amend their complaint prior to dismissal.” (Ante at

5 n.2.)   I disagree.    While I would agree strongly that a district

court would have abused its discretion if it had refused Appellants

leave to amend after Appellants requested leave, that simply is not

what happened here.

     Appellants never requested leave to amend, not even after the

County filed its memorandum in support of its motion to dismiss,

which contended that the claim should be dismissed for failure to

satisfy Rule 9(b).       Instead, Appellants argued at the district

court that they fully complied with Rule 9(b), even though their

complaint fell far short of the Rule’s requirements.              Furthermore,

they did not conditionally ask for leave in case the district court

found that they had not complied with the Rule.              And after the

                                      18
district court dismissed their action, they did not file a motion

to reconsider asking for leave.

     Although I would have no trouble concluding that the district

court abused its discretion if it denied leave to Appellants, it is

far more troubling to suggest that the district court had to sua

sponte grant leave when Appellants implicitly waived any desire to

amend their complaint.    At some point, a plaintiff has to look out

for her own interests, but see Shane v. Fauver, 213 F.3d 113, 116

(3d Cir. 2000) (requiring a district court to sua sponte grant

leave under the Federal Rules), and Appellants certainly cannot

complain of surprise here, considering the County’s motion to

dismiss put them on notice of the Rule 9(b) argument and they made

no effort to ask for leave.    In these circumstances, I feel that

appellate courts “should” treat district courts with more fairness.

I would therefore affirm with respect to Claim 5 because Appellants

never expressed an interest in amending their complaint; instead,

they chose to argue solely that it complied with Rule 9(b).

                                III.

     In sum, I, like the majority, would reverse with respect to

the takings claim.    On every other claim, however, I would affirm

the district court.   I therefore respectfully dissent.

                                  19