United States District Court, D. Maryland
Catherine C. Blake United States District Judge.
American Southern Insurance Company (“American
Southern”) brought this action against Anne Arundel
County (the “County”) and Ridge Forest Glen
Homeowners Association, Inc. (“Homeowners
Association”), requesting a declaratory judgment that
American Southern has no obligations as surety to pay for
repairs on the alleged stormwater management violations at
Ridge Forest Glen Subdivision. Plaintiff also requests a
declaratory judgment that the Homeowners Association and the
County are responsible for the past ten years'
maintenance on the stormwater management system.
before the court are the defendants' motions to dismiss
for failure to state a claim upon which relief can be granted
under Federal Rule of Civil Procedure 12(b)(6). (Anne Arundel
Mot. Dismiss, ECF No. 5; Homeowners Ass'n Mot. Dismiss,
ECF No. 9). American Southern filed a response in opposition
(American Southern Opp'n Mot. Dismiss, ECF No. 14), to
which Anne Arundel County filed a reply that the Homeowners
Association joined and adopted. (Anne Arundel Reply Opp'n
Mot. Dismiss, ECF No. 15; Homeowners Ass'n Reply
Opp'n Mot. Dismiss, ECF No. 16). The motions are fully
briefed, and no oral argument is necessary. See
Local Rule 105.6 (D. Md. 2016). For the reasons stated below,
the defendants' motions to dismiss will be denied, but
the case will be stayed pending resolution of Case No.
C-02-CV-16-001039 in the Circuit Court for Anne Arundel
2002, Route 100 Ridge Road, LLC (“Developer”)
began development of the Ridge Forest Glen Subdivision in
Hanover, Maryland. (Compl. ¶ 7, ECF No. 1; Homeowners
Ass'n Mot. Dismiss 2). As part of the subdivision
development, the County issued grading permit G02009603 on
December 13, 2002, to the Developer for the proposed grading,
sediment control, and stormwater management of sixty-three
lots and common areas. (Compl., Ex. C, Grading Permit, ECF
No. 1-6; Homeowners Ass'n Mot. Dismiss 2). The County
required the Developer to post security for the good and
faithful performance of the work required in the grading
permit as a condition of granting the permit. (Compl. ¶
17). American Southern issued Grading and Sediment Control
Bond No. B98800010783 (the “Bond”) on July 8,
2004, in the amount of $126, 000, naming the County as
obligee. (Compl., Ex. D, Grading and Sediment Control Bond,
ECF No. 1-7).
August 11, 2014, the County inspected Ridge Forest Glen
subdivision and found numerous violations of Article 16 of
the Anne Arundel County Code, including failure to maintain a
stormwater management practice, failure to comply with the
permit, failure to submit as-builts and certifications, and
failure to complete an expired permit. (Compl., Ex. G,
Stormwater Management Violation Notice 1, ECF No. 1-10). The
County notified the Developer and American Southern of the
violations, included in its notification a list of corrective
measures, and mandated that curative work begin on September
12, 2014. (Id. 2). The County warned that
“failure to comply with the requirements of this notice
will be cause for the Department to proceed with bond
Southern believes the Homeowners Association is liable for
any stormwater management maintenance through its
relationship with the Developer under the Declaration of
Covenants (Compl. Ex. A, ECF No. 1-4), Inspection and
Maintenance Agreement (Compl. Ex. B, ECF No. 1-5), and Common
Areas Deed. (Compl. Ex. F, ECF No. 1-9; Compl. ¶¶
9-15, 24-27). The Homeowners Association denies any liability
for the repairs the County is demanding. (Compl. ¶ 35).
American Southern maintains that the Grading Permit expired
on January 1, 2007, and that the Developer no longer owns,
possesses, or controls any property within Ridge Forest Glen.
(Compl. ¶¶ 20, 28).
Developer failed to complete the curative work. (Homeowners
Ass'n Mot. Dismiss 2). The County informed American
Southern it would initiate litigation on or before June 1,
2016, if American Southern refused to honor its obligations
under the Bond. (Anne Arundel Mot. Dismiss 1; Compl. ¶
36). American Southern “exchanged correspondence
with” and “participated in meetings” with
the County, the Homeowners Association, and the Developer;
however, the parties were unable to resolve the dispute about
the requested repairs. (Compl. ¶ 33-34). American
Southern filed this declaratory judgment against the County
and the Homeowners Association on March 11, 2016.
Subsequently, on March 23, 2016, the County filed a breach of
contract suit against American Southern in the Circuit Court
for Anne Arundel County. (Anne Arundel Mot. Dismiss 2).
court has diversity jurisdiction over the case, 28 U.S.C.
§ 1332(a), because the parties are diverse and the
amount in controversy exceeds $75, 000. The suit is brought
pursuant to the Declaratory Judgment Act, 28 U.S.C. §
2201(a), as the sole relief sought in the complaint is the
declaration of the parties' rights under the Bond, the
Declaration of Covenants, the Common Areas Deed, and the
Inspection and Maintenance Agreement. The central question
presented by defendants in their motions is whether the court
should exercise its discretion to issue a declaratory
Declaratory Judgment Act is “an enabling Act, which
confers a discretion on the courts rather than an absolute
right upon the litigant.” Wilton v. Seven Falls
Co., 515 U.S. 277, 287 (1995) (quoting Public Serv.
Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 241
(1952)). Even where a declaratory judgment action
“otherwise satisfies subject matter jurisdictional
prerequisites, ” the district court “possess[es]
discretion” in determining whether to entertain the
suit. Id. at 282; see also Brillhart v. Excess
Ins. Co., 316 U.S. 491, 494 (1942). The Fourth Circuit
has long recognized “the discretion afforded to
district courts in determining whether to render declaratory
relief.” Aetna Cas. & Sur. Co. v. Ind-Com Elec.
Co., 139 F.3d 419, 421-22 (4th Cir. 1998). This
discretion is especially “crucial when . . . a parallel
or related proceeding is pending in state court.”
New Wellington Fin. Corp. v. Flagship Resort Dev.
Corp., 416 F.3d 290, 297 (4th Cir. 2005).
determining whether to exercise jurisdiction in a declaratory
judgment action, the district court must “weigh
considerations of federalism, efficiency, and comity.”
United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488,
493 (4th Cir. 1998) (quoting Nautilus Ins. Co. v.
Winchester Homes, Inc., 15 F.3d 371, 376 (4th Cir.
1994)); see also New Wellington Fin. Corp., 416 F.3d
at 297. The Fourth Circuit has articulated four factors for
district courts to consider when determining whether to
abstain from exercising jurisdiction over a declaratory
judgment action during the pendency of a parallel state
(1) [W]hether the state has a strong interest in having the
issues decided in its courts; (2) whether state courts could
resolve the issues more efficiently than the federal courts;
(3) whether the presence of “overlapping issues of fact
or law” might create unnecessary
“entanglement” between the state and federal
courts; and (4) whether the federal action is mere