Elsberry v. Stanley Martin Companies, LLC

482 Md. 159

286 A.3d 1

Ernest and Maryann ELSBERRY

v.STANLEY MARTIN COMPANIES, LLC

No. 6, Sept. Term, 2022

Court of Appeals of Maryland.

December 1, 2022

Argued by Cory L. Zajdel (Jeffrey C. Toppe and David M. Trojanowski, Z Law, LLC, Timonium, MD), on brief, for Petitioners.

Argued by Brian L. Moffet (Miles & Stockbridge, P.C., Baltimore, MD; Joshua R. Chazen, Miles & Stockbridge, P.C., Rockville, MD), on brief, for Respondent.

Amicus Curiae Maryland Building Industry Association: Steven M. Klepper, Esquire, Kramon & Graham, P.A., One South Street, Suite 2600, Baltimore, MD 21202, Chad M. Shue, Esquire, Law Office of Chad M. Shue, LLC, 10176 Baltimore National Pike, Suite 215, Ellicott City, MD 21042.

Argued before: Fader, C.J., Watts, Hotten, Booth, Biran, Eaves, Joseph M. Getty (Senior Judge, Specially Assigned), JJ.

Hotten, J. Md. Code Ann., Real Property ("Real Prop.") § 14-117(a)(3)(i) requires a seller of residential real property in Prince George's County to provide the purchaser with certain disclosures in the initial contract of sale, including the estimated cost of any deferred water and sewer charges for which the purchaser may become liable. Deferred water and sewer assessments are usually provided in the form of a declaration and recorded in the applicable county's land records. Real Prop. § 14-117(a)(3) ; Joseph N. Schaller & Shannon D. Sentman, Private Water & Sewer Assessment Companies , Md. Bar J. 36, 37 (2006). The declaration, in turn, reimburses the seller for the costs related to the construction and installation of the water and sewer systems. Real Prop. § 14-117(a)(3) ; Sullivan v. Caruso Builder Belle Oak, LLC , 251 Md. App. 304, 310, 253 A.3d 1142, 1145 (2021) ; Schaller & Sentman, supra , at 37. While Real Prop. § 14-117(a)(3)(ii) permits the seller to establish amortized water and sewer costs, the seller cannot impose upon the purchaser a repayment period for a duration longer than twenty years from the date of initial sale. Real Prop. § 14-117(a)(3)(ii). We are asked to determine whether the twenty-year deferred water and sewer assessment amortization limit, pursuant to Real Prop. § 14-117(a)(3)(ii), applies to the entire state or exclusively to properties located within Prince George's County.

The present dispute arose over the purchase of residential real property in Charles County, Maryland. According to the real estate purchase agreement, the purchased property was subject to a declaration, which prescribed, at the discretion of the seller, a thirty-year collection period for the property's water and sewer assessments. The purchasers filed suit, alleging that the seller violated Real Prop. § 14-117(a)(3)(ii) by imposing an amortized water and sewer charge longer than twenty years after the initial date of sale of the property. The seller moved to dismiss, asserting that Real Prop. § 14-117(a)(3)(ii) only applies to real property located in Prince George's County. Following a hearing, the Circuit Court for Charles County granted the seller's motion to dismiss.

The purchasers appealed to the Court of Special Appeals, which affirmed in an unpublished opinion. Elsberry v. Stanley Martin Cos., LLC , No. 172 Sept. Term, 2021, 2022 WL 94616 (Md. Ct. Spec. App. Jan. 10, 2022). The Court of Special Appeals declined to extend the geographic application of Real Prop. § 14-117(a)(3)(ii) beyond Prince George's County. Id. at *6. We granted certiorari on May 9, 2022, Elsberry v. Stanley Martin Cos. , LLC , 478 Md. 510, 275 A.3d 345 (2022), to address the following questions presented, which we have rephrased as follows:¹

1. Whether the Court of Special Appeals erred by determining that the "Prince George's County—Deferred Water and Sewer Charges Homeowner Disclosure Act of 2014 PG 413-14[,]" codified in part at Real Prop. § 14-117(a)(3)(ii), is limited to residential real property located in Prince George's County?

2. Whether the Court of Special Appeals erred by consulting the legislative history of Real Prop. § 14-117(a)(3)(ii) to help ascertain whether the intent of the General Assembly was to limit the effect of the statutory provision to residential real property located in Prince George's County?

3. Whether the Court of Special Appeals erred by considering whether its plain text interpretation of Real Prop. § 14-117(a)(3)(ii) would violate the "one subject rule" for bill titles pursuant to Art. III, § 29 of the Maryland Constitution ?

We answer these questions in the negative and shall affirm the judgment of the Court of Special Appeals.

FACTS AND PROCEDURAL BACKGROUND

Relevant Facts

On April 5, 2019, Petitioners, Ernest and Maryann Elsberry (the "Elsberrys") entered into a New Home Sales Contract (the "Purchase Agreement") with Respondent Stanley Martin Companies, LLC² ("Stanley Martin") for the purchase of residential real property and construction of a new home in Charles County (the "Property"). According to the Purchase Agreement, the Property was subject to a Declaration of Deferred Water and Sewer Charges (the "Declaration") which required the Elsberrys to pay Stanley Martin annual installments in the amount of $550 for thirty years, subject to a six percent interest rate, to reimburse Stanley Martin for the construction and installation of water and sewer systems. The Declaration was recorded in the Land Records of Charles County, and serves as a lien on the Property. Stanley Martin conveyed the Property to the Elsberrys on May 9, 2019, and the Elsberrys made a prorated initial payment pursuant to the Declaration.

On September 17, 2020, the Elsberrys filed suit in the Circuit Court for Charles County, alleging, inter alia ,³ that Stanley Martin's Declaration violated Real Prop. § 14-117(a)(3)(ii) by imposing a deferred water and sewer charge for a period of thirty years following the date of the initial sale of the Property.⁴ According to the Elsberrys, Real Prop. § 14-117(a)(3)(ii) applies to all counties in Maryland—not just Prince George's County—and prohibits the amortization of water and sewer charges for more than twenty years ; therefore, Stanley Martin's Declaration violates this provision.

On October 5, 2020, Stanley Martin filed a motion to dismiss, asserting that Real Prop. § 14-117(a)(3)(ii) only applies to property located in Prince George's County. Stanley Martin maintained that the Elsberrys’ claim is predicated on a misreading of Real Prop. § 14-117(a)(3)(ii), thereby "attempt[ing] to extend [its] reach [ ] beyond Prince George's County to manufacture a claim in Charles County that was never intended by the legislature ...." Accordingly, since the Property is in Charles County, Stanley Martin contended that the Elsberrys’ complaint failed to state a claim upon which relief may be granted.

Legal Proceedings

A. Circuit Court Proceedings

The Circuit Court for Charles County held a hearing on Stanley Martin's motion to dismiss on February 23, 2021. Following the hearing, the circuit court agreed with Stanley Martin and granted the motion. Upon review of Real Prop. § 14-117(a)(3), the court "noticed that the subsection little i, 14-117.A.3.i, directly states, in Prince George's County ... and then goes on to list items that have to be contained in the disclosure statement." (Emphasis added). The court also recognized that "[t]he placement of the small Paragraph [(ii)] under small Paragraph [(i)], leads to the conclusion that this was intended ... to be provided to residents of Prince George's County only ." (Emphasis added). "Furthermore, ... the title of the bills specifically state, in the first reading and the second reading, that the bills ... applied to Prince George's County only ." (Emphasis added). Upon review of "this bill, and looking that it applies to Prince George's County in the title and in the purpose of the bill, it is hard to see how any legislator reviewing this would automatically assume that it applies to all counties ." (Emphasis added).

Ultimately, the circuit court "believe[d] the legislative history supports the interpretation of the Court [ ], based upon its plain reading of the statute , that [ Real Prop. § 14-117(a)(3)(ii) ] is directly related to [ Real Prop. § 14-117(a)(3)(i) ], and relates to Prince George's County ." (Emphasis added). Therefore, on March 3, 2021, the court granted Stanley Martin's motion, dismissing the Elsberrys’ claim. On April 2, 2021, the Elsberrys timely appealed to the Court of Special Appeals.

B. Opinion of the Court of Special Appeals

On January 10, 2022, the Court of Special Appeals affirmed the circuit court in an unreported opinion. Elsberry , 2022 WL 94616. The intermediate court concluded that the General Assembly intended Real Prop. § 14-117(a)(3)(ii) to apply to properties only located within Prince George's County —not statewide. Id. at *7.

The Court of Special Appeals began by examining the plain language of Real Prop. § 14-117(a)(3). Id. at *3. The court observed that subparagraph (i) contains the introductory phrase, "In Prince George's County[,]" which plainly limits its application to Prince George's County. Id. The court recognized that "[s]ubparagraph (ii)’s geographical reach, however, is less obvious[ ]" because "[s]ubparagraph (ii), unlike subparagraph (i), does not mention Prince George's County." Id. "It is, however, placed within a paragraph that otherwise relates only to Prince George's County – a construction not otherwise used in [Real Prop.] § 14-117." Id. After noting the ambiguity surrounding the geographical scope of Real Prop. § 14-117(a)(3)(ii), the Court of Special Appeals turned to the legislative history to determine the intent of the General Assembly.⁵ Id.

The Court of Special Appeals determined that the legislative history of Real Prop. § 14-117(a)(3)(ii) also demonstrated its geographical limitation to Prince George's County. Id. at *4. The court examined several sources to ascertain legislative intent, including, but not limited to, "the context of the bill, including the title and...