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OT, LLC v. Harford County

United States District Court, D. Maryland

September 23, 2019

OT, LLC, et al. Plaintiffs,
HARFORD COUNTY, MARYLAND, et al., Defendants.


          George L. Russell, III United States District Judge.

         THIS MATTER is before the Court on Plaintiffs OT, LLC (“OT”), Gemcraft Homes, Inc. (“Gemcraft”), Shades and Springs, Inc. (“S&S”), and Ajaz Khan’s Motion for Partial Summary Judgment and Request for Hearing (“Plaintiffs’ Motion”) (ECF No. 196) and Defendants Harford County, Maryland (the “County”), County Executive Barry Glassman, County Director of Administration Billy Boniface, County Attorney Melissa Lambert, and County Director of Public Works Joseph J. Siemek’s (collectively, the “County Defendants”) Motion for Summary Judgment and Opposition to Plaintiffs’ Motion for Partial Summary Judgment (“County Defendants’ Motion”) (ECF No. 200).[1] The Motions are ripe for disposition, and no hearing is necessary. See Local Rule 105.6 (D.Md. 2018). For the reasons outlined below, the Court will deny Plaintiffs’ Motion and grant in part and deny in part County Defendants’ Motion.

         I. BACKGROUND [2]

         At the center of this dispute is Old Trails Subdivision, a residential subdivision in Harford County, Maryland (“Old Trails” or the “Property”). Although this litigation primarily involves religious discrimination that allegedly took place after OT acquired Old Trails in 2016, the Court’s inquiry depends in part on certain facts arising prior to that time. As such, the Court provides a brief history of the Property below.

         A. Initial Development of the Property

         In 2005, Old Trails Partnership, LLC (“OTP”), the original owner of Old Trails, sought to develop Old Trails into townhomes with Tousa Homes, Inc. (“Tousa”) as its partner. To do so, OTP entered into a Storm Water Management Maintenance Agreement and a Subdivision Agreement with the County. (Stipulation of Facts [“Stip.”] at 1, ECF No. 133-1). The County approved the Storm Water Management (“SWM”) plan in September 2005, and renewed its approval in March of the following year. (Id.). In 2006, OTP, Tousa, and Harford County entered into a Public Works/Maintenance Agreement for Roads and a Public Works Agreement for Sidewalks (collectively, the “PWAs”) and a Public Works On-Site Utility Agreement and a Public Works Off-Site Utility and Recoupment Agreement (collectively, the “PWUAs”). (Id. at 1–2). In connection with the PWAs, PWUAs, and SWM plan, Tousa procured and posted bonds from Fidelity and Deposit Company of Maryland (“F&D”) to secure the required infrastructure improvements. (Id. at 1).

         Between 2007 and 2008, Tousa built four townhomes on the Property and sold them to individual homebuyers. (Id. at 1). Prior to those sales, OTP and Tousa installed the base course of asphalt on the road, storm drains, and water and sewer infrastructure, including water and sewer mains and a pumping station, and began grading and construction of the SWM facilities. (See Ensor Dep. Jan. 9, 2019 at 79:13–85:15, ECF No. 200-15). OTP and Tousa did not, however, install the sidewalks or road’s top coat, complete the SWM facilities, or reach final acceptance of the on-site water and sewer mains because that work would typically be completed only after the houses were built. (See id.).

         Before completing the remaining work on Old Trails, Tousa filed for bankruptcy in early 2008. (Stip. at 1). Later that year, Senior Assistant County Attorney Margaret Hartka emailed Rose Baker, a management assistant in the County’s Department of Public Works (“DPW”), and other County employees recounting a conversation Hartka had with OTP’s counsel about Old Trails. (Defs.’ Mot. Summ. J. & Opp’n Pls.’ Mot. Part. Summ. J. [“Defs.’ Mot.”] Ex. 3 [“Hartka Email”], ECF No. 200-5). Hartka explained that she told OTP “the County would allow the existing bonds, issued with Tousa as the principal, to remain in place and [would] process the new SWM permit.” (Id.). Hartka said she “warned” OTP, however, that “if the premiums are not paid on the existing bonds and the bonding company sends us a notice of default, we will claim as much as we need to in order to safeguard the situation of the four existing homes . . . but would let the remainder of the bonds go and simply obtain new PWAs and new bonds from any developer who took over the project.” (Id.).

         Between 2008 and 2016, OTP engaged in limited development-related activities relating to Old Trails, including submitting the SWM plan for reapproval and applying for new SWM permits in 2008, 2012, and 2015. (Defs.’ Mot. Ex. 15 [“SWM Plan”], ECF No. 200-17).

         B. OT’s Purchase of the Property

         In March 2016, William Luther, Gemcraft’s president, expressed interest in purchasing Old Trails from OTP. (Defs.’ Mot. Ex. 16 [“Mar. 14, 2016 Dale Hevesy Email”], ECF No. 196-18). The next month, one of Luther’s business associates informed Luther that the SWM plans may need to be redesigned and reapproved in the event construction was not complete by May 2017. (Defs.’ Mot. Ex. 18 [“April 5, 2016 Dennis Reimann Email”] at 1, ECF No. 200-20; see also Luther Dep. Jan. 11, 2019 at 27:14–35:15, ECF No. 200-19). On May 18, 2016, Luther executed a Letter of Intent on behalf of Gemcraft, indicating that the “Buyer will assume the Property ‘As-Is’ and will assume all current and remaining developer obligations.” (Defs.’ Mot. Ex. 20 [“Letter of Intent”] at 2, ECF No. 200-22).

         OTP entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Gemcraft on August 17, 2016. (Stip. at 3). The Purchase Agreement provided that OTP was not transferring “any development bonds . . . held by or posted with any Governmental Authority . . . or other third party with respect to any improvement, subdivision or development obligations concerning [Old Trails].” (Defs.’ Mot. Ex. 22 [“Purchase Agreement”] § 1(e), ECF No. 200-24). The Purchase Agreement also released OTP from all responsibility for complying with or satisfying any governmental conditions of approval or requirements that remain unsatisfied with respect to the Property. (Purchase Agreement § 23(D)). Further, the Purchase Agreement acknowledged “that if the development work approved under the current construction drawings for the Property has not been completed on or prior to May 4, 2017 then the remaining undeveloped portion of the Property will be subject to the requirements set forth in the current storm water management regulations.” (Purchase Agreement § 11.2).

         By October 2016, community members began expressing concerns about the sale and proposed development of the Property. On October 4, 2016, a community advisory board member notified former County Councilman Dion Guthrie about “news that Old Trails will be sold on October 18th [to] a Muslim Group[, ]” to which Guthrie replied, “Get the Councilman to put in [an] amendment to tighten it up.” (Pls.’ Mot. Part. Summ. J. & Req. Hear. [“Pls.’ Mot.”] Ex. 23 [“Guthrie Email”], ECF No. 196-25). On October 5, 2016, Steven Weaver, who lived near Old Trails, contacted the office of then-Councilman Mike Perrone, Jr. “to report a possible suspicious situation” about Old Trails after unsuccessfully attempting to report his concerns to the Department of Homeland Security. (Pls.’ Mot. Ex. 20 [“Oct 5, 2016 Sherriff’s Department Email”], ECF No. 196-22). Weaver also spoke directly with Glassman about the issue over the phone. (See Pls.’ Mot. Ex. 22 [“Killian-Glassman Email”], ECF No. 196-24).

         C. Permitting Process

         Beginning in October 2016, Gemcraft was in frequent contact with the County about acquiring permits for the Property. In mid-October 2016, DPW informed Gemcraft that “there are currently bonds for sediment control and stormwater which will need to be replaced” and, as a result, the County “would like to wait until the plans are approved because the bonding amounts will likely need to be adjusted.” (Defs.’ Mot. Ex. 34 [“Oct. 18, 2016 Email”], ECF No. 200-36). Nonetheless, the County Department of Planning and Zoning (“DPZ”) issued five building permits to Gemcraft on November 16, 2016. (Stip. at 3–4). Several months later, DPW requested that Gemcraft submit a “new set of plans” for six storm water permits and the grading permit, noting that the permits were set to expire on June 24, 2017 and July 16, 2017, respectively. (Defs.’ Mot. Ex. 35 [“Mar. 29, 2017 Email”], ECF No. 200-37).

         On April 5, 2017, OT entered into an Option Agreement with S&S, a non-profit organization associated with the Ahmadiyya Movement in Islam, Inc., USA (“AMCUSA”). (Stip. at 4). The Option Agreement permitted S&S to purchase as many as forty-five lots in the Old Trails Subdivision. (June 4, 2018 Hearing Transcript [“Tr. I”] at 65, ECF No. 128). The Option Agreement also obligated OT to seek approval for the construction of a community center on the Property that could be used by residents of Old Trails as a gathering place for prayer and other activities. (Id.). To celebrate the Option Agreement, S&S and Gemcraft held a groundbreaking ceremony at the Property on April 22, 2017. (Id. at 108–09). After the ceremony, AMCUSA posted to its website photographs depicting Ahmadi men dressed in culturally traditional attire praying over the site. (Id.; Pls.’ Mot. Ex. 18 [“Photos of Groundbreaking Ceremony”], ECF No. 196-20).

         DPW awarded Gemcraft a grading permit for the Property on May 9, 2017. (Defs.’ Mot. Ex. 39 [“Grading Permit”], ECF No. 200-41). DPZ then issued four building permits to Gemcraft on May 10, 2017, and an additional four permits on May 11, 2017. (Stip. at 4–5). On May 12, 2017, Baker, the DPW assistant, emailed Gemcraft to explain that, although the County had “recently issued a builder phase grading permit . . . [and] approved several building permits” for the Property, “the storm water permits [and] public works agreements (currently under Old Trail Partnership LLC [and] Tousa Homes Inc) will also need to be permitted [and] bonded under OT LLC.” (Defs.’ Mot. Ex. 40 [“May 12, 2017 Baker-Luther Email”] at 2, ECF No. 200-42). Further, Baker cautioned Gemcraft that “the County will no longer approve any future building permits until this is resolved.” (Id.). Despite this warning, DPZ issued one additional building permit to Gemcraft on May 24, 2017. (Stip. at 5).

         Between June and August 2017, County employees communicated internally and with OT and Gemcraft about permitting requirements for Old Trails. On July 10, 2017, Tina Rawl, the permits review supervisor in DPW’s Division of Water and Sewer, informed a colleague that she could not sign off on a water and sewer hook-up worksheet for the lots on the Property that the County had permitted on November 16, 2016 because DPW is “requiring the developer to enter into a new PWA and post new bonds . . . .” (Defs.’ Mot. Ex. 42 [“July 10, 2017 Rawl Email”], ECF No. 200-44). Rawl also expressed her belief that “we need to require a new PWUA and new bonds as well.” (Id.).

         On July 17, 2017, upon learning that Gemcraft had submitted five new building permits, Rawl instructed several employees who had been reviewing permit applications for the Property that “until the bonds are reposted and a new PWUA is executed[, ] we should not be approving building permits.” (Defs.’ Mot. Ex. 43 [“July 17, 2017 Rawl Email”], ECF No. 200-45). Later that day, Rawl notified Luther of the same: Gemcraft would need to submit a new PWUA and replacement bond for the water and sewer utilities in order for DPW to approve any future permits. (Pls.’ Mot. Ex. 27 [“July 17, 2017 Rawl-Luther Email”], ECF No. 196-29; Defs.’ Mot. Ex. 44, ECF No. 200-46). Then, on July 18, 2017, following up on her May 12, 2017 email, Baker informed Luther that OT needed to renew and bond the storm water permits under OT’s name, update the SWM plans, and reassign and bond the PWAs for roads and sidewalks to OT. (Pls.’ Mot. Ex. 28 [“July 18, 2017 Baker-Luther Email”], ECF No. 196-30; Defs.’ Mot. Ex. 45 [“July 18, 2017 Luther-Baker Email”], ECF No. 200-47). Luther replied to Rawl and Baker with similar messages, explaining that “Old Trails is a community of finished lots, completed and bonded by another developer” and that Luther’s engineer would be in contact “to get an understanding as to what you are requesting.” (Defs.’ Mot. Ex. 46 [“July 18, 2017 Luther-Rawl Email”], ECF No. 200-48; July 18, 2017 Luther-Baker Email at 1).

         On July 19, 2017, Rawl forwarded the email chain with Luther to Siemek, Hartka, and two senior employees of DPW’s Water and Sewer Division, writing that she “was following the procedure we/County has required on other developments [where] the original developer has abandoned the project” and listing two examples. (Defs.’ Mot. Ex. 47 [“July 19, 2017 Rawl Email”], ECF No. 200-49). In her email, Rawl also flagged the portion of the Purchase Agreement providing that OT “hereby assumes all of the obligations of [OTP] first accruing after the date of this Agreement” including “[a]ll rights and appurtenances[, ]” explaining that “[water and sewer] is often referred to in this manner.” (Id.). Rawl followed up with Luther on July 20, 2017, offering to discuss the issue at any time, to which Luther responded that “a meeting with Billy Boniface will be necessary.” (Defs.’ Mot. Ex. 48 [“July 20, 2017 Luther-Rawl Email”], ECF No. 200-50).

         While Plaintiffs attempted to obtain permits from the County, residents from neighboring communities continued to oppose the Old Trails project. From around June 20, 2017 to July 4, 2017, Weaver made several calls inviting Glassman, Boniface, and other County officials to attend a public meeting with Gemcraft set for July 10, 2017 to address the community’s concerns about the Property. (See Pls.’ Mot. Ex. 24 [“July 3, 2017 Killian-Boniface Email”] at 2, ECF No. 196-26; Pls.’ Mot. Ex. 25 [“July 20, 2017 Killian Email”] at 2, ECF No. 196-27). Around the same time, local real estate agent Gina Pimentel contacted County officials about her concerns and shared inflammatory information about the Property on her social media pages. (See June 5, 2018 Hearing Transcript [“Tr. II”] at 82–159, ECF No. 131). Additionally, in July 2017, after receiving several e-mails and phone calls about Old Trails from constituents, Defendant Delegate Patrick L. McDonough (“Del. McDonough”) had a private conversation with Glassman in which he told Glassman to “get your County Attorney [Lambert] to investigate this. . . and do not issue any permits.” (See Preliminary Injunction Hearing Ex. 163 [“Audio Recording”] at 48:52; Tr. II at 18– 20).

         Lambert, Boniface, Siemek, and Hartka met privately on August 2, 2017, to discuss the Property. (See Pls.’ Mot. Ex. 29 [“Aug. 2, 2017 Siemek-Lambert-Hartka Email”], ECF No. 196-29). On August 3, 2017, Siemek sent an email to Boniface, Lambert, and Hartka, stating, “[p]er our meeting, here are the general steps required in the various areas of DPW to be able to approve building permits in a development that is taken over by a new owner.” (Defs.’ Mot. Ex. 49 [“Aug. 3, 2017 Siemek Email”], ECF No. 200-51). Siemek’s email also referenced the requirement that “[i]f the SWM facilities on the site were not constructed and certified to be as-built by May 4, 2017, new SWM design, calculations and plans will need to be submitted in compliance with the current MDE criteria.” (Id. at 2).

         On August 14, 2017, at Plaintiffs’ request, Lambert, Boniface, and Siemek met with Luther and counsel for OT, Gemcraft, and S&S to discuss the County’s refusal to issue more building permits. (Stip. at 5; Tr. II at 56). Boniface stated during this meeting that “[w]e have to cross our t’s and dot our i’s here because of the mosque issue” and the “greater scrutiny over what we are doing with this project.” (June 7, 2017 Hearing Transcript [“Tr. IV”] at 99, ECF No. 130). Additionally, Lambert told Luther that Gemcraft would need to post new bonds for the project because Lambert could not find Tousa’s original bonds or, alternatively, the bonds were expired or canceled. (Tr. I at 123; Tr. II at 58; June 6, 2017 Transcript [“Tr. III”] at 206–07, ECF No. 129). In response, Luther explained that he had copies of the bonds and offered to send them to Lambert. (Tr. I at 124). Following the meeting, counsel for OT, Gemcraft, and S&S sent Lambert a disc containing copies of the bonds and followed up with a letter explaining that the bonds were still in place. (Pls.’ Mot. Ex. 36 [“Aug. 16, 2017 Jay Young Ltr.”], ECF No. 196-38; Pls.’ Mot. Ex. 37 [“Aug. 23, 2017 Jeffrey Scherr Ltr.”], ECF No. 196-39).

         After the August 14, 2017 meeting, County employees attempted to collect additional information and documentation relating to the existing bonds. Hartka emailed Baker asking for the bonds on August 15, 2017. (Tr. III at 123–24). The following day, an administrative assistant from F&D provided the County with a printout entitled “Agency Bill Premium Advice, ” purporting to show that the bonds had been canceled. (Pls.’ Mot. Ex. 40 [“Aug. 16, 2017 F&D Email”], ECF No. 196-42). When Lambert and Boniface met again with Luther and counsel for OT, Gemcraft, and S&S on August 28, 2017, Lambert presented the printout from F&D and stated that the previous bonds “aren’t any good.” (Tr. I at 126). Lambert later admitted that the printouts did not appear to be cancellation notices. (Tr. III at 213).

         Plaintiffs and County Defendants also continued to disagree about the County’s permitting requirements after the August 14, 2017 meeting. On August 15, 2017, Rawl emailed Luther a draft of the PWUA for the Property, asking him to review and approve the document. (Defs.’ Mot. Ex. 51 [“Aug. 15, 2017 Rawl-Luther Email”], ECF No. 200-53). On August 16, 2017, Siemek, who had been copied on Rawl’s email from the previous day, warned Rawl to “expect some pushback like you did before.” (Defs.’ Mot. Ex. 52 [“Aug. 15, 2017 Siemek-Rawl Email”], ECF No. 200-54). Later that day, Luther replied to Rawl, writing: “I had a meeting with Billy Boniface and Joe Siemek on Monday 8/14 to resolve these issues. You have a PWUA and a bond posted on this job with the developer. Was this email generated before the meeting or as a result of the meeting?” (Defs.’ Mot. Ex. 53 [“Aug. 16, 2017 Luther-Rawl Email”], ECF No. 200-55). Also on August 16, 2017, Baker forwarded Siemek the 2008 email from Hartka in which Hartka explained that the County would “obtain new PWAs and new bonds from any developer who took over the project.” (Defs.’ Mot. Ex. 54 [“Aug. 16, 2017 Baker-Siemek Email”] at 2, ECF No. 200-56). Baker explained to Siemek, “[i]t was my understanding that if a new Developer were to take over the project, they would need to update all of the plans, permits & bonds in the new Developer name.” (Id. at 1).

         On September 5, 2017, Lambert sent a letter to counsel for OT and Gemcraft setting forth “a list of the steps required for the Old Trails property to obtain building permits for additional lots.” (Defs.’ Mot. Ex. 55 [“Sept. 5, 2017 Lambert Ltr.”] at 1, ECF No. 200-57). The letter instructed OT that it needed to submit new PWAs and PWUAs, update the SWM plan to comply with current stormwater management regulations, and obtain new bonds for the PWAs, PWUAs, and SWM permits. (Id.). The letter stated that “[u]pon verification by the County of these finalized documents, building permits for additional lots may be obtained.” (Id.). To date, OT and Gemcraft have not submitted new PWAs, PWUAs, SWM plan, bonds, or any other documents the County requested in the September 5, 2017 letter.

         D. Approval of ...

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