United States District Court, D. Maryland
MEMORANDUM OPINION
Richard D. Bennett, United States District Judge
Plaintiffs
Tanya and Timothy Emkey (“the Emkeys” or
“Plaintiffs”), residents of Florida, allege that
the Defendants, W.S.C., Inc. (“WSC”), a
Pennsylvania Corporation, and its wholly owned Maryland
subsidiary, Indian Acres Club of Chesapeake Bay, Inc. (the
“Indian Acres Club” or “the Club”)
(collectively, “Defendants”), have breached their
obligation to transfer ownership and operation rights of
common amenities in a planned campground, Indian Acres of
Chesapeake Bay (“Indian Acres”), to themselves
and other similarly situated owners of campground lots, or
“Funsteads.” (Compl. ¶ 13.) The Emkeys'
Complaint (ECF No. 1) asserts five counts, all sounding in
Maryland state law: breach of contract (Counts One and Four);
violations of the Maryland Real Property Article, Md. Code,
Real Prop., § 11B-106.1, et seq. (Counts Two
and Three); unjust enrichment (Count Five); unfair and
deceptive trade practices (Count Six); and seeks a
declaratory judgment (Count Seven). (Id.) Plaintiffs
filed their Complaint in this Court pursuant to the
jurisdiction conferred under the Class Action Fairness Act of
2005 (“CAFA”), 28 U.S.C. §
1332(d).[1]
Pending
before this Court is Defendants' Motion for Summary
Judgment (ECF No. 33). The parties' submissions have been
reviewed, and no hearing is necessary. See Local
Rule 105.6 (D. Md. 2018). For the reasons stated below,
Defendants' Motion for Summary Judgment (ECF No. 33) is
GRANTED, and Judgment is ENTERED in favor of Defendants,
W.S.C. and Indian Acres Club.
BACKGROUND
I.
Factual Background.
This
dispute arises out of the Emkeys' claim that the
Defendants have failed to uphold their contractual obligation
to transfer ownership and operation rights of common
amenities in a planned campground, known as Indian Acres.
(Id. at ¶¶ 45.) Indian Acres is a 300-acre
property in Cecil County, Maryland which has been subdivided
into nine Glens containing individually-owned campground
lots, or “Funsteads.” (Compl. ¶ 19; Ans.
¶ 19.) Defendant WSC, a Pennsylvania corporation which
operates in Cecil County, was created to develop Indian Acres
and continues to engage in the sale of Funsteads. (Compl.
¶ 18; Ans. ¶ 18; Defs.'s Ex. I, Restated
Declaration at 330, ECF No. 33-2.)[2] Defendant Indian Acres Club
is a Maryland corporation which manages and operates the
campground. (Compl. ¶ 19; Ans. ¶ 19.) The Emkeys
allege that they jointly own three Funsteads. (Compl. ¶
14, 16, 17.)
A.
The Restated Declaration.
The
Emkeys' claims arise from the Defendants' alleged
breach of the terms of a Restated Declaration recorded in the
Land Records for Cecil County, Maryland (Compl. ¶ 29;
Ans. ¶ 20.) On July 6, 1978, WSC executed a Restated
Declaration to “establish[] and create[] certain
restrictions in furtherance of the plan for the subdivision,
improvement and sale of the subdivided numbered lots
(hereinafter referred to as “Funsteads”) set
forth and described in the recorded plats [for Indian
Acres].” (Restated Declaration at 330.) The Restated
Declaration sets forth that its restrictions “run with
the land and shall be binding on all parties having acquired
any right, title or interest in and to the real property or
any part or parts thereof, or right to use any part or parts
thereof subject to such Restrictions.” (Id. at
331.) The covenant prohibits the use of Funsteads
“except for camping purposes” and specifically
declares that “No Funstead shall be used as a
residence[.]” (Id. at §§ 4(A),
7(A)(1)).
The
document also establishes the authority of the Indian Acres
Club as follows:
The purchaser of a Funstead acknowledges that the
Declarant[3] has granted to Indian Acres Club of
Chesapeake Bay, Inc. a non-stock Maryland Corporation,
(hereinafter referred to as the ‘Club') the
exclusive right to operate and maintain all community areas
and recreational facilities and understands that the Club is
engaged in the sale of membership to the general public[.]
(Id. at § 11 (A)).
The Club shall have all the powers that are set out in its
Articles of Incorporation and all other powers that belong to
it by operation of law, including, but not limited to, the
power to levy against every member of the Club a uniform
annual charge per Funstead or membership in the amount of
such charge to be determined by the club after consideration
of current maintenance needs, leasing fees and future needs
of the Club, for the purposes set forth in its Articles of
Incorporation.
(Id. at §11(E)).
The
Emkeys claim that the Defendants have failed to abide by
§ 11(K) of the Restated Declaration by failing to
transfer the “common elements” of Indian Acres to
the Funstead owners. (Compl. at ¶¶ 3, 22.) This
provision specifies that WSC must “transfer to the Club
all of the Declarant's rights and obligations with
respect to the operation of [Indian Acres] (excepting rights
with respect to the then unsold Funsteads) . . . when eighty
(80%) of the total number of Funsteads held for sale or other
disposition by Declarant and its predecessors have been sold,
leased, conveyed or otherwise disposed.” (Id.
at § 11(K)). The provision further specifies how the
number of Funsteads are to be tallied and how the transfer is
to effectuated. The total number of Funsteads must be
“determined with reference to the latest recorded plat
or plats covering all nine (9) Glens[].” (Id.)
When 80% of the total number of Funsteads have been conveyed,
“[t]he Club will be obligated to purchase from the
Declarant all of the common areas and recreational
facilities[.]” (Id.) The purchase price is
also stated with specificity: it is to be “equal to the
figure obtained by multiplying the number of Funsteads sold,
under contract of sale, or otherwise disposed of, along with
a contract reference to this obligation, by $495.00, such
price to be paid in case by the Club to the Declarant.”
Finally, when WSC receives the Club's payment,
“[WSC] will execute and deliver to the Club a deed
conveying title to such common areas and recreational
facilities, and all of the Declarant's rights and
obligations with respect to the property (excepting rights
with respect to the then unsold Funsteads).”
(Id. at § 11(K)(2).)
B.
Indian Acres Club By-Laws
The
Emkeys also claim that the Indian Acres Club has violated its
own By-Laws by improperly assessing fees and engaging in
“mismanagement, and acts of self-dealing.”
(Id. at ¶ 67.) The By-Laws of Indian Acres Club
(“By-Laws”) provides that the purpose of the
corporation is to “operate, manage and maintain, the
development known as Indian Acres of Chesapeake Bay, Cecil
County, Maryland.” (Defs.'s Ex. J, By-Laws Art. 1
§ 3, ECF No. 33-1.) The By-Laws complement WSC's
obligations to transfer ownership of the campground's
common amenities. They specify that the Club must purchase
all of the community areas and recreational facilities in
Indian Acres from WSC when eighty percent (80%) of the total
number of Funsteads at Indian Acres are sold or under
contract. (Id. at Art. 8 § 5.) The method of
determining the total number of Funsteads is the same in the
By-Laws as in the Restated Declaration: they are to be
“determined with reference to the latest recorded plat
or plats covering all nine Glens.” (Id. at
Art. 8 § 5.) As stated in the Restated Declaration, the
purchase price for the amenities will be $495 per each sold
Funstead.
C.
The Total Number of Funsteads and the 80% Threshold.
Plaintiffs
allege that Indian Acres consists of 2, 154 lots and that
WSC's own internal audit of May 2017 found that WSC had
sold eighty-one percent (81%) of the original lots. (Compl.
at ¶ 25.) Despite this, Plaintiffs allege, the
Defendants have not transferred ownership of Indian
Acres' common amenities as they are contractually
obligated. To support these allegations, Plaintiffs attached
the “internal audit” to their Complaint-an
unsigned, two-page document labeled “Land Inventory as
of ...