The opinion of the court was delivered by: Deborah K. Chasanow United States District Judge
Presently pending and ready for review in this tax dispute are two motions: (1) the motion to dismiss filed by Defendants the Federal National Mortgage Association ("Fannie Mae"), the Federal Home Loan Mortgage Corporation ("Freddie Mac"), and the Federal Housing Finance Agency ("the Agency") (ECF No. 14); and (2) the motion for partial summary judgment as to liability filed by Plaintiff Montgomery County, Maryland (ECF No. 24). The issues have been fully briefed, and the court now rules, no hearing being deemed necessary. Local Rule 105.6. Because Fannie Mae's and Freddie Mac's charters exempt them from the state and local taxes at issue in this case, Montgomery County's statutory claim seeking payment of such taxes will be dismissed, and a declaratory judgment will be entered in favor of Defendants.
The state of Maryland imposes recordation and transfer taxes when parties transfer title to real property. See Md. Code. Ann., Tax-Prop. §§ 12-101 & 13-201 et seq. The state of Maryland also permits its counties to impose their own transfer taxes, subject to certain conditions. See id. § 13-401 et seq. Pursuant to this authority, Montgomery County imposes transfer taxes. See Montgomery County Code § 52-19 et seq. Together, the transfer and recordation taxes imposed by the state of Maryland and the transfer taxes imposed by Maryland counties (including Montgomery County) pursuant to Section 13-402.1 will be referred to herein as "the Transfer Taxes."
Fannie Mae is a private corporation chartered by Congress to "establish secondary market facilities for residential mortgages," to "provide stability in the secondary market for residential mortgages," and to "promote access to mortgage credit throughout the Nation." 12 U.S.C. § 1716. Freddie Mac is also a congressionally chartered private corporation with a similar mission: to "provide ongoing assistance to the secondary market for residential mortgages," to strengthen and support "mortgages on housing for low- and moderate-income families" by "increasing the liquidity" of the market, and to "promote access to mortgage credit throughout the Nation." Id. § 1451 note. Congress created the Agency to oversee Fannie Mae and Freddie Mac and, in 2008, appointed the Agency to serve as their conservator. See id. § 4617.
Fannie Mae and Freddie Mac (together, "the Entities") are generally exempt from taxation by states and localities. The federal statute chartering Fannie Mae provides as follows:
The corporation, including its franchise, capital, reserves, surplus, mortgages or other security holdings, and income, shall be exempt from all taxation now or hereafter imposed by any State, territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent as other real property is taxed.
12 U.S.C. § 1723a(c)(2). Freddie Mac's charter is much to the same effect:
The Corporation, including its franchise, activities, capital, reserves, surplus, and income, shall be exempt from all taxation now or hereafter imposed by any territory, dependency, or possession of the United States or by any State, county, municipality, or local taxing authority, except that any real property of the Corporation shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
Id. § 1452(e). These exemption clauses will be referred to collectively herein as "the Charter Exemptions."*fn1
On January 7, 2013, Montgomery County filed a class action complaint in this court, alleging that the Entities have participated in thousands of real estate transactions in Montgomery County and elsewhere in Maryland involving the transfer of title to real property, but have refused to pay both the Transfer Taxes and the agricultural land transfer taxes imposed by Washington County pursuant to Section 13-502 of the Maryland Code on Tax-Property ("the Washington County Agricultural Taxes"). (ECF No. 1 ¶¶ 24-26).*fn2 The complaint alleges that the Entities have negligently, intentionally, or fraudulently claimed exemptions to these taxes under both state and federal law. Specifically, Montgomery County argues that the statutory language of the Charter Exemptions does not relieve the Entities from their obligation to pay the Transfer Taxes and that, in any event, the Charter Exemptions are unconstitutional as applied. In addition to the Entities, Montgomery County names the Agency as a Defendant, alleging that, as the Entities' conservator, the Agency stands in the shoes of Fannie Mae and Freddie Mac. (Id. ¶ 32). Montgomery County purports to bring this action on behalf of itself and a putative class of 18 Maryland counties that impose their own transfer taxes. (Id. ¶¶ 11-23).
In its first count, Montgomery County seeks a judgment pursuant to 28 U.S.C. § 2201 declaring that the Entities are not exempt from payment of the Transfer Taxes or the Washington County Agricultural Taxes under state or federal law. Pursuant to 28 U.S.C. § 2202, Montgomery County seeks additional relief in the form of payment (in an unspecified amount) of previously unpaid Transfer Taxes and Washington County Agricultural Taxes, plus applicable statutory penalties and interest. Plaintiff also asserts a second count directly under the statutes creating the Transfer Taxes and the Washington County Agricultural Taxes, alleging that Montgomery County and the other putative class members have been damaged by the Entities' refusal to pay and seeking payment (again in an unspecified amount), plus interest and penalties.
On February 4, 2013, Defendants filed a motion to dismiss the complaint pursuant to Fed.R.Civ.P. 12(b)(6). (ECF No. 14). On March 1, Montgomery County moved for partial summary judgment on liability pursuant to Fed.R.Civ.P. 56(a) (ECF No. 24) and also filed an opposition to Defendants' motion (ECF No. 26). On March 26, Defendants filed a consolidated brief in opposition to Montgomery County's partial motion for summary judgment and in reply to its motion to dismiss. (ECF No. 29). Defendants then filed a "Notice of New Authority" submitting several recently decided federal district court decisions involving similar disputes (ECF No. 30), and Montgomery County filed a reply in support of its partial summary judgment motion (ECF No. 31).
As noted, Defendants seek dismissal of Montgomery County's complaint for failure to state a claim pursuant to Rule 12(b)(6). In addition to opposing this motion, Montgomery County also seeks partial summary judgment as to liability on its claims pursuant to Rule 56. Although these competing motions seemingly implicate two different standards of review, they raise identical issues and turn on purely legal questions that can be resolved without resort to matters outside of the pleadings.*fn3 Accordingly, it is appropriate to resolve Montgomery County's statutory claim for payment of the Transfer Taxes pursuant to the well-established standards for a Rule 12(b)(6) motion to dismiss. In other words, Montgomery County's statutory claim will be dismissed if it fails, as a matter of law, to state a claim upon which relief can be granted. See, e.g., Sager v. Housing Com'n of Anne Arundel Cnty., 855 F.Supp.2d 524, 544 (D.Md. 2012) ("A Rule 12(b)(6) motion constitutes an assertion by the defendant that, even if the facts that the plaintiff alleges are true, the complaint fails, as a matter of law, to state a claim upon which relief can be granted." (internal quotation marks omitted)).
By contrast, resolution of Montgomery County's claim for declaratory relief pursuant to 28 U.S.C. § 2201 is not properly decided under Rule 12(b)(6). As is evident from the complaint and the parties' briefs, there is an actual, ongoing controversy between them as to whether the Entities are exempt from the Transfer Taxes. The parties disagree only as to how this controversy should be resolved. In such circumstances, a motion to dismiss for failure to state a claim is not the appropriate means of resolving a declaratory judgment claim:
"Where a bill of complaint shows a subject matter that is within the contemplation of the relief afforded by the declaratory decree statute, and it states sufficient facts to show the existence of the subject matter and the dispute with reference thereto, upon which the court may exercise its declaratory power, it is immaterial that the ultimate ruling may be unfavorable to the plaintiff. The test of the sufficiency of the bill is not whether it shows that the plaintiff is entitled to the declaration of rights or interest in accordance with his theory, but whether he is entitled to a declaration at all; so, even though the plaintiff may be on the losing side of the dispute, if he states the existence of a controversy which should be settled, he states a cause of suit for a declaratory decree."
Charter Oak Fire Ins. Co. v. Am. Capital, Ltd., No. DKC 09--0100, 2011 WL 856374, at *18 (D.Md. Mar. 9, 2011) (quoting 120 W. Fayette Street, LLLP v. Mayor & City Council of Baltimore City, 413 Md. 309, 355-56 (2010)); see also, e.g., 22A Am.Jur.2d Declaratory Judgments § 232 (2013 supp.) ("A motion to dismiss is seldom an appropriate pleading in actions for declaratory judgments, and such motions will not be allowed simply because the plaintiff may not be able to prevail.").
Accordingly, with respect to Montgomery County's claim for declaratory relief, the parties' motions will be construed as competing cross-motions for a declaration in their favor as to Entities' obligation to pay the Transfer Taxes. See McKinsey & Co., Inc. v. Olympia & York 245 Park Ave. Co., 433 N.Y.S.2d 802, 802 (N.Y.App.Div. 1980) ("In the absence of a holding that a dispute is not ripe for adjudication, a court should not dismiss the complaint in a declaratory judgment action, but should declare the parties' rights."); Diamond v. Chase Bank, No. 11-0907-DKC, 2011 WL 3667282, at *5 (D.Md. ...