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Butz v. Pulte Home Corporation

United States District Court, D. Maryland

February 21, 2017

THEODORE H. BUTZ, et al., Plaintiffs,


          Paula Xinis United States District Judge

         Pending in this declaratory relief action is a motion to dismiss filed by Defendant, Pulte Home Corporation (“Pulte” or “Defendant”). ECF No. 20. The issues are fully briefed, and the Court now rules pursuant to Local Rule 105.6 because no hearing is necessary. For the following reasons, Defendant Pulte's motion to dismiss is denied.

         I. BACKGROUND[1]

         Plaintiffs Theodore Butz, Thompson Butz, Jr., Robert Butz, and Jeremy Butz are brothers (collectively, “Plaintiffs”) who together owned a 54.45-acre property located at 21901 Ridge Road, Germantown, Montgomery County, Maryland (“the Property”). ECF No. 2 at 2. Because the Property was used for agricultural purposes, Plaintiffs enjoyed favorable tax treatment under Md. Code Ann., Tax-Prop. § 8-209. See generally ECF No. 2 at 4. Defendant Pulte, a Michigan corporation, is a national homebuilder with numerous projects in the state of Maryland. ECF No. 2 at 2.

         On August 14, 2013, the parties executed a Letter of Intent for Pulte to purchase the Property for development of 140 single-family residential homes. ECF No. 2 at 2; ECF No. 2-2. On November 27, 2013, Pulte and the Plaintiffs executed an agreement (“the Agreement”), ECF No. 2-3, for the purchase of the Property. ECF No. 2 at 3. The recordation of deed to the Property triggered three tax assessments: (1) an agricultural land transfer tax (“the Agricultural Land Transfer Tax”) pursuant to Md. Code Ann., Tax-Prop. § 13-301, et seq.; (2) a Prince George's County transfer tax, pursuant to Prince George's County Code § 10-188; (3) and a general state transfer tax applicable to all real estate transactions, Md. Code Ann., Tax-Prop. §§ 13-202 to 13-203. ECF No. 2 at 5. Because Pulte purchased the Property for the purpose of building homes, ECF No. 2 at 2, the Property's favorable tax treatment under Md. Code Ann., Tax-Prop. § 8-209 ended. ECF No. 2 at 4; ECF No. 2-5. This transformation from agricultural to non-agricultural use resulted in an Agricultural Land Transfer Tax in the amount of $959, 857. ECF No. 2 at 4; ECF No. 2-5.

         The Agricultural Land Transfer Tax assessment precipitated a dispute between the parties as to which party should bear the cost under the Agreement. ECF No. 2 at 6. Plaintiffs contend that Pulte is in material breach of Section 15.4 of the Agreement by not sharing equally in the payment of the Agricultural Land Transfer Tax. Section 15.4 of the Agreement provides:

Shared Settlement Costs. Seller [Plaintiffs] and Purchaser [Pulte] shall share equally the Settlement Agent Fees and all state, county and other transfer taxes, recordation fees and other fees in connection with the Settlement [to complete the purchase and sale].

ECF No. 2-3 at 12.

         On April 18, 2016, Plaintiffs filed a complaint in the Circuit Court for Montgomery County Maryland seeking a declaratory judgment that Pulte pay its $479, 928 share of the Agricultural Land Transfer Tax. ECF No. 2 at 6. Following timely removal of the case to this Court, Pulte filed its motion to dismiss. ECF No. 20.


         When ruling on a motion under Rule 12(b)(6), the court must “accept the well-pled allegations of the complaint as true” and “construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff.” Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). In addition to the complaint, the court “may consider documents attached to the complaint . . . so long as they are integral to the complaint and authentic.” Sec'y of State for Def., v. Trimble Navigation Ltd., 484 F.3d 700, 705 (4th Cir. 2007) (citing Fed.R.Civ.P. 10(c)). The Court also “may properly take judicial notice of matters of public record.” Philips v. Pitt County Mem's Hosp., 572 F.3d 176, 180 (4th Cir. 2009). Here, the August 14, 2013 letter of intent to purchase the Property, the executed Agreement, subsequent amendments to the Agreement, the Agricultural Land Transfer Tax statement, and deed of conveyance are integral exhibits attached to the Complaint, whose authenticity is not disputed. See ECF Nos. 2-2, 2-3, 2-4, 2-5, 2-6, 2-7.

         “Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints.” Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). “The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6).” Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). To survive a motion to dismiss, the factual allegations of a complaint “must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal citations omitted). “To satisfy this standard, a plaintiff need not ‘forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements.” Walters, 684 F.3d at 439 (citation omitted). “Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is ‘probable, ' the complaint must advance the plaintiff's claim ‘across the line from conceivable to plausible.'” Id. (quoting Twombly, 550 U.S. at 570).

         III. ANALYSIS

         Pulte contends the current action should be dismissed on three grounds: (1) Plaintiffs impermissibly seek declaratory relief; (2) Plaintiffs failed to allege compliance with statutory and contractual notice obligations regarding the Agricultural Land Transfer Tax; and (3) Plaintiffs are obligated to pay the Agricultural Land Transfer Tax pursuant to the terms of the parties' Agreement. ECF No. 20-1 at 2. The Court will address each argument in turn.

         A. Declaratory Judgment

         The Plaintiffs' sole cause of action is for declaratory relief pursuant to §§ 3-401 through 3-415 of the Courts & Judicial Proceedings Article of the Maryland Code. ECF No. 2 at 6. Pulte argues the Plaintiffs impermissibly seek declaratory judgment instead of ...

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