Herron v. Mayor and City Council of Annapolis, Md.

• Decision Date: 21 September 2005
• Docket Number: No. CIV. WDQ-04-1977.,CIV. WDQ-04-1977.
• Citation: 388 F.Supp.2d 565
• Parties: Janet L. HERRON, et al., Plaintiffs, v. MAYOR AND CITY COUNCIL OF ANNAPOLIS, MARYLAND, Defendants.
• Court: U.S. District Court — District of Maryland

388 F.Supp.2d 565

Janet L. HERRON, et al., Plaintiffs, v. MAYOR AND CITY COUNCIL OF ANNAPOLIS, MARYLAND, Defendants.

No. CIV. WDQ-04-1977.

United States District Court, D. Maryland, Northern Division.

September 21, 2005.

COPYRIGHT MATERIAL OMITTED

Phillip F. Scheibe, Greiber and Scheibe, Millersville, MD, for Plaintiffs.

Michael John Winkelman, McCarthy and Winkelman LLP, Bowie, MD, for Defendants.

MEMORANDUM OPINION AND ORDER

QUARLES, District Judge.

Janet Herron sued the Mayor and City Council of Annapolis (the "Defendants") for, inter alia, deprivation of property in violation of the Fifth Amendment to the United States Constitution and Article 24 of the Maryland Declaration of Rights. For the following reasons the Defendant's motion to dismiss will be granted, and Herron's motions for class action certification, summary judgment and leave to file an amended complaint will be denied.

I. Background

On August 5, 1987, the Anne Arundel County Council passed an ordinance codified as Article 24, Title 7 of the Anne Arundel County Code which permits the County to fix, impose, and finance capital costs of improvements and facilities needed to accommodate new construction or development. Com pl. ¶¶ 6-7. The ordinance requires that all new developments pay "development impact fees," i.e., a proportionate share of the costs for land, capital facilities, and other expenses necessary to accommodate development impact on existing public school and transportation facilities within the affected district. Id. at ¶¶ 7, 10. Development impact fees must be paid to the County before the issuance of a building permit or zoning certificate. Id. at ¶ 8. Under § 7-110 of the ordinance, if fees collected have not been expended or encumbered within six years, the current property owner may be entitled to a refund.

In 1999, the Mayor and City Council of Annapolis passed Ordinance 0-36-98 which permits the City of Annapolis to collect school impact fees for all new residential construction within the city, provided such fees "are spent within the Annapolis High School Feeder System to reflect the needs of the City residents." Compl., Ex. 1 (Annapolis City Ordinance 0-36-98).

On November 15, 2000, the County and the City of Annapolis entered into an "Agreement to Collect Impact Fees," by which Annapolis acts as an agent for the County to collect development impact fees for school construction associated with new residential development in the city. Compl., Ex. 2 (Agreement to Collect Impact Fees). Annapolis began collecting impact fees in 2001. Defendants' Opposition to Class Cert. at 2.

Herron is a property owner in Annapolis. Herron Affidavit ¶ 3. The school impact fee for Herron's property was paid by M & K, LLC on May 29, 2003. Elliott Affidavit ¶ 6.

Herron argues that Annapolis collected impact fees without implementing capital improvements for the school system, and that excess school capacity made such improvements unnecessary. Accordingly, Herron alleges that the fees are: 1) an unlawful taking in violation of the Fifth Amendment to the United States Constitution; 2) an unlawful deprivation of property in violation of Article 24 of the Maryland Declaration of Rights; 3) a violation of Article 23A of the Annotated Code of Maryland; and 4) a violation of Article 24, § 7-109 of the Anne Arundel County Code. Herron seeks compensatory damages and a refund of the impact fees collected from the residents of Annapolis since 2001.

II. Analysis

A. Defendants' Motion to Dismiss

The Defendants have moved to dismiss arguing that, inter alia, Herron lacks standing to sue because she did not pay the impact fee on her property and therefore has not been injured. Herron argues that she has been injured and therefore has standing because, although a developer paid the impact fee on her property, the cost of the fee was included in the purchase price of her home.

1. Standard of Review

A Fed.R.Civ.P. 12(b) motion to dismiss should be granted "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002), (citing Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984)); Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir.1982). All allegations are treated as true, and the complaint is viewed in the light most favorable to the plaintiff. Mylan Laboratories, Inc. v. Raj Matkari, et. al., 7 F.3d 1130, 1134 (4th Cir.1993). If any possible basis for relief has been pled, the Court must deny the motion to dismiss. Thomas W. Garland, Inc. v. St. Louis, 596 F.2d 784 (8th Cir.1979), cert. denied, 444 U.S. 899, 100 S.Ct. 208, 62 L.Ed.2d 135 (1979); Swierkiewicz, 534 U.S. at 514, 122 S.Ct. 992.

In deciding a Rule 12(b) motion, the Court will consider the facts stated in the complaint and any attached documents. Biospherics, Inc., v. Forbes, Inc., 989 F.Supp. 748, 749 (D.Md.1997), aff'd, 151 F.3d 180 (4th Cir.1998)). The Court may also consider documents referred to in the complaint and relied upon by plaintiff in bringing the action. Id. In ruling on a Rule 12(b)(1) motion to dismiss for lack of subject matter jurisdiction, the Court may consider exhibits outside the pleadings without converting the motion to one for summary judgment. Williams v. United States, 50 F.3d 299, 304 (4th Cir.1995).

2. Standing Doctrine

Article III of the Constitution limits the jurisdiction of the federal courts to the adjudication of "cases" and "controversies." Lujan v. Defenders of Wildlife, 504 U.S. 555, 559-560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Valley Forge Christian College v. Americans United for Separation of Church and State, 454 U.S. 464, 471, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982); Friends for Ferrell Parkway v. Stasko, 282 F.3d 315 (4th Cir.2002). To present a justiciable "case" or "controversy" a litigant must have "`standing' to challenge the action sought to be adjudicated in the lawsuit." Valley Forge, 454 U.S. 464, 102 S.Ct. at 758; see also Lujan, 504 U.S. 555, 112 S.Ct. 2130. Standing, in turn, requires a showing that: 1) the plaintiff suffered an invasion of a legally protected interest (an injury in fact) which is (a) concrete and particularized and (b) actual or imminent rather than conjectural or hypothetical; 2) there is a causal connection between the injury and conduct complained of; and 3) it must be likely, not merely speculative, that the injury will be redressed by a favorable decision. Lujan, 504 U.S. 555 at 560, 112 S.Ct. 2130, 119 L.Ed.2d 351; Valley Forge Christian College, 454 U.S. 464, 102 S.Ct. 752, 70 L.Ed.2d 700.

The party invoking federal jurisdiction bears the burden of establishing these elements and each element must be supported "with the manner and degree of evidence required at the successive stages of the litigation." Id. at 561, 112 S.Ct. 2130.

3. Herron Has Not Demonstrated Standing

It is undisputed that M & K, LLC (the builder), not Herron, paid the impact fee on her home on May 23, 2003. Elliott Affidavit, Ex. 1. Herron contends that although M & K paid the impact fee, the cost of the fee was reflected in the purchase price of her property and therefore she, not M & K, should be considered the injured fee payer. On this basis, Herron argues, she has standing to challenge the ordinance's legality.

Discovery in this case has concluded; however, Herron has offered no evidence that the impact fee was included in the purchase price of her property. Nor has Herron offered any evidence that M & K, as a general practice, included the fee in the selling price of its homes. Instead, Herron asserts that the Court must assume that M & K passed the cost of the fee along to Heron to maximize its profits.

Although Herron plausibly argues that builders and developers would pass along the impact fee to buyers if possible, she has offered no evidence that they did. Under conditions of high demand and limited supply, developers may be able to recoup some or all of the cost increase through an increased price of the home. Under conditions of low demand and plentiful supply, developers may be forced to absorb some or all of increased costs and accept smaller profits. Absent collusion, it is implausible to assume that all developers and builders in the market uniformly raised their prices. The Court may as reasonably assume that market conditions in Annapolis forced developers to bear the entire cost themselves in the form of smaller profit margins.

Herron notes that § 7-110 of the impact fee ordinance provides for refunds to current property owners, not fee payers, if the collected funds have not been spent within six years. However, the refund provision is not evidence that builders incorporated the cost of the fees in their homes's sale prices and does not establish that Herron paid any part of the impact fee when she bought her home in 2003. Importantly, Herron is not suing the City of Annapolis for a violation of § 7-110 and has not yet sought a fee refund under its provisions. If there are excess-,i.e., unused fees-and Herron retains her home, she would be eligible to apply for a refund under the ordinance in 2009.

Herron also offers the 1987 report of the Impact Fee Study Committee (appointed by Anne Arundel County) which recommended that the County provide refunds to current property owners "on the assumption that the impact fee was incorporated into the value of the improved property." Boland Affidavit, Exhibit B, P. 8. This recommendation was incorporated in § 7-110 of the ordinance. However, the Report recommends that refunds be provided to property owners rather than fee payers, in part, because "tracking the fee payer would be too cumbersome for the county to administer." Id. Further, the Committee offered no evidence to support its assumption that the "impact fee was incorporated into the value of the improved property." Id.

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