UNPUBLISHED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Reversed by unpublished per curiam opinion.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Unpublished opinions are not binding precedent in this circuit.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
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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.
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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
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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.
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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
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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
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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
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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.
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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
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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.
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