United States District Court, D. Maryland
BYRON W. MARTZ
DAY DEVELOPMENT COMPANY, L.C., et al.
Catherine C. Blake United States District Judge.
before the court is defendants Day Development Company, L.C.
("DDC") and Southlawn Lane Properties, L.L.C.'s
("Southlawn") (collectively, "the development
company")renewed motion for judgment as a matter of
law (ECF No. 85) and plaintiff Byron W. Martz's
cross-motion for judgment (ECF No. 86). Martz's Amended
Complaint contains four counts: (I) Breach of Contract
(Domiciliary Care Parcel); (II) Breach of Contract
(Commercial Parcel); (III) Declaratory Judgment; arid-(IV)
Unjust Enrichment. (Am. Compl. ¶¶ 82-121, ECF No.
27). The court previously granted summary judgment on
liability in Martz's favor as to Counts I and II. (ECF
Nos. 53, 54). A four-day bench trial has been held. For the
reasons outlined below, the court will deny the
"development company's, motion for judgment as a
matter of law and will enter judgment in Martz's favor as
to Count IV of the Amended Complaint.
OF FACT AND CONCLUSIONS OF
dispute arises out of a series of contractual agreements
between Martz and the development company regarding real
property located in Frederick County, Maryland. Based on
evidence adduced at the bench trial held on October 5, 2018,
January 3, 2019, and January 4, 2019,  the court makes
the following findings of fact and conclusions of law.
1996 Purchase Agreement
March 21, 1996, Bernard E. Burkett, III, Earl E. Burkett, and
Martz (collectively the "Sellers") entered into a
purchase agreement ("1996 Purchase Agreement") with
Horizon Development and Interest Company, L.L.C.
("Horizon") for the sale of real property located
in Frederick County, Maryland. (J.E. 3). In the 1996 Purchase
Agreement, Horizon agreed to pay the Sellers a minimum
purchase price of $ 2, 725, 000.00, , plus "fifty
percent (50%) of the finished lot value of. any portions of
the Property which are designated as Commercial, Office or
other development designation than Residential (the
"Commercial Property")." (Id ¶
2.1). In 1999, Horizon assigned its rights under
the 1996 Purchase Agreement to Valley Ranch Associates,
L.L.C. ("Valley Ranch"), (J.E. 9-A); in 2000,
Valley Ranch assigned these rights to DDC. (J.E. 9-B).
2003 Consulting Services Agreement
2003, DDC and Martz entered into a Consulting Services
Agreement (the "2003 CSA"). regarding a portion of
the property known as the Domiciliary Care Parcel. (J.E. 13).
DDC had previously..obtained, approval from the City of
Frederick to develop a 189-unit domiciliary, care facility on
-the Parcel but sought to amend: its approved development
plan. Under-the 2003.CS A, Martz agreed to "assume
primary responsibility" for applying to the City of
Frederick for an amendment "so that the permitted use
for the Domiciliary Care Parcel shall be a multistory
residential condominium project." (Id at 2(b)).
Martz and DDC agreed to "share equally all costs
incurred by Martz in having such application prepared,
submitted and pursued with the City of Frederick."
2003 CSA outlined two methods for calculating Martz's
compensation. If Martz obtained the amendment from the City
of Frederick, but DDC decided to sell the Domiciliary Care
Parcel "for use as a condominium project to a third
party, " DDC agreed to pay Martz 50 percent of its net
profit on the sale. (Id. at 4(a)). If Martz obtained
the amendment and DDC decided to build the condominium units,
DDC agreed to pay Martz 50 percent of the net' appraised
value of the Domiciliary Care Parcel. (Id. at
4(b)). The 2003 CSA also specified that Martz
would be paid upon the happening of one of three events,
whichever was earlier: (1) "A sale of the Domiciliary
Care Parcel, or a portion thereof; (2) "Obtaining by DDC
or other builder, in the event of assignment, a building
permit for the construction of any units on the Domiciliary
Care Parcel..."; or (3) "January 1, 2015."
(Id. at 4(c)(i)-(iii)). Pursuant to the 2003 CSA,
DDC's obligation to pay Martz "shall survive any
sale of the Domiciliary Care Parcel, and any termination of
this Agreement, and shall be binding upon any transferee,
assignee or successor in interest of DDC to the Domiciliary
Care Parcel." (Id. at 4(c))., C.
2005, DDC and Martz executed an amendment to the 2003 CSA
(the "2005 ACSA"), which expanded the scope of
Martz's consulting services. (J.E. 17). The 2005 ACSA
stated that Martz would provide consulting services regarding
development of the "Commercial Parcel, " another
portion of the land originally sold pursuant to the 1996
Purchase Agreement. Like the 2003 CSA, the 2005 ACSA set
forth two potential methods for determining Martz's
compensation. First, if DDC decided to sell the Commercial
Parcel, "DDC shall pay Martz fifty percent (50%) of the
finished lot value of the Commercial Parcel . . . [and] the
net proceeds of sale shall be divided equally between DDC and
Martz." (Id. at 6(b)). Second, if DDC
decided to build on the Commercial Parcel, Martz was entitled
to "to fifty percent (50%) of the Net Appraised Value of
the Commercial Parcel." (Id.) Once again, DDC
agreed to pay Martz upon the happening of one of three
events, whichever was earlier: (1) "A sale of the
Commercial Parcel, or portion thereof; (2) "Obtaining by
DDC or other builder, in the event of an assignment, a
building permit for the construction of any commercial units
on the commercial lots or parcels of the Commercial Parcel .
. ."; or (3) January 1, 2015. Id. at
6(c)(i)-(iii)). The 2005 ACSA provided that DDC's
obligation to pay Martz "shall survive any sale of the
Commercial Parcel, and any termination of this Agreement, and
shall be binding upon any transferee, assignee or successor
in interest of DDC to the Commercial Parcel."
Transfer of Domiciliary Care and Commercial Parcels to
November 30, 2005, DDC granted the Domiciliary Care Parcel
and the Commercial Parcel to Southlawn for "no monetary
consideration." (J.E. 33). DDC and Southlawn did not
formally record this transfer until 2012. (Id).
The Development Company Does Not Sell or Build on Parcels
Prior to January 1, 2015
parties do not dispute that as of January 1, 2015, neither
the Domiciliary Care Parcel nor the Commercial Parcel had
been sold to a third party, and the development company had
not begun construction on the Parcels. At trial, the
development company contended that they could not sell or
develop either Parcel because of poor market conditions.
Martz presented significant ' evidence, in the form of
witness testimony, that established by a preponderance of the
evidence that the Parcels could have been profitably sold or
developed. In any event, the contracts did not provide for a
later payment date than January 1, 2015, even if market
conditions were poor.
Testimony of Walter C. Martz
plaintiffs brother, Walter C. Martz ("Walter"),
testified at trial regarding his knowledge of development on
the land surrounding the Domiciliary Care and Commercial
Parcels. (Trial Tr. Oct. 5, 2018, at 47:2-18, 48:2-13).
Walter testified that the southern portion of the Burkett
farm, which was part of the property originally sold pursuant
to the 1996 Purchase Agreement, "has all been developed
... by Mr. Day and other builders." (Id.
at 47:2-8). Walter also testified about the development of
property adjacent or .near to the Parcels. (Id.
Testimony of Byron Winebrenner Martz
testified that he obtained the approvals as specified by the
2003 CS A and that it was his understanding that if the
development company did not build or sell the Domiciliary
Care Parcel by January 1, 2015, "[i]t would be appraised
as finished lots, permits pulled, and I would be paid."
(Id. at 66:21-67:1). Martz also testified that in
November 2014, he called Mr. Day to inquire about the status
of his compensation. (Id. at 70:7-12). According to
Martz, Mr. Day responded, "I'm not going to pay you,
and I'm just going to take the property from you."
Testimony of Terrence W. McPherson
Martz and the development company called McPherson, an expert
in the field of real estate appraisal, to testify at trial
McPherson testified that the development company hired
himto assess the value of the Domiciliary
Care and Commercial Parcels. (Trial Tr. Oct. 5, 2018, . at
117:22-118:3). The development company first approached
McPherson in 2012 to conduct an appraisal "for internal
decision-making regarding the development of the
property." (Id. at 118:1-7). McPherson
finalized his appraisal in 2013. (Id. at 120:15-18).
McPherson's appraisal of each Parcel was based on the
hypothetical conditions that the roads in each Parcel were
complete and the proposed uses for each Parcel were approved.
(Trial Tr, Oct. 5, 2018, at 132:22-133:4; Trial Tr. Jan. 4,
2019, at 60:5-22). McPherson determined that the highest and
best use of the Domiciliary Care Parcel was for development
as two-over-two residential condominiums and that there was
adequate demand for these condominiums. (Trial Tr. Oct. 5,
2018, at 130:10-21). McPherson also noted that at the time of
the 2013 appraisal, the development company was taking no
efforts to sell the Domiciliary Care Parcel. (Trial Tr. Jan.
4, 2019, at 112:1-4). McPherson concluded that the fair
market value of the Domiciliary Care Parcel was $4, 200,
000.00. (Id at 132:22-133:9,
133:14-134:12). McPherson also determined that there was some
demand for the Commercial Parcel, (id. at 130:3-5),
and valued it at $1, 100, 000, 000, subject to the completion
of the roads. (Id at 134:24-135:4).
Testimony of William J. Holtzinger
an expert in civil engineering and land development in
Frederick City, Maryland, testified that 132 two-over-two
condominium units could be constructed on the Domiciliary
Care Parcel (Trial Tr. Oct. 5, 2018, at 149:15-20,
159:11-14). Holtzinger testified that the Domiciliary Care
Parcel was approved for multifamily use, which can include
any housing type that falls within the category of
"multifamily" as defined by the City of Frederick.
(Id at 156:19-23). Holtzinger also testified ...