4th Circuit Court of Appeals Holds Landowner Failed to State Viable Constitutional Claims Against Local Entities Based on Zoning Actions

This post was authored by Matthew Loeser, Esq.

 

Pulte Home Corporation and Shiloh Farm Investments LLC, a real estate developer, purchased or contracted to purchase 540 acres of real property in Clarksburg, Maryland. Development of the land was governed by the 1994 Clarksburg Master Plan & Hyattstown Special Study Area at the time Pulte purchased the land. Pulte’s land was designated as a receiving property for Transferable Development Rights (“TDR”). The land was zoned to allow for one dwelling unit per acre; however, Pulte could increase the allowable density to two units per acre by purchasing TDRs from agricultural properties in a different area of Montgomery County. The purchase of the TDRs would place a covenant on the agricultural property that would restrict its ability to be developed in the future. Pulte invested more than twelve million dollars to purchase several hundred TDRs, which it recorded, to build between 954 and 1,007 detached homes and townhomes on its land.

 

In 2009, Pulte submitted its Water and Sewer Category Change Request application for review by the County and the Maryland-National Capital Park and Planning Commission, but no action was taken. In 2013, the Commission’s Montgomery County Planning Board submitted a draft amendment to the 1994 Master Plan to the County, which the County extensively revised and approved. The Amendment implemented a variety of regulatory changes that severely reduced the number of dwellings Pulte could build on its land and placed additional costly burdens on Pulte, such as a requirement to dedicate parkland. The County then enacted the Clarksburg West Environmental Overlay Zone in the Zoning Ordinance, which imposed the same low impervious cap and high open space requirement on Pulte’s development of its land along with additional environmental requirements, while implementing a higher fifteen percent impervious cap on other properties in the Ten Mile Creek watershed. The district court granted summary judgement to the County and Commission on Pulte’s various claims arising from this enactment, and Pulte appealed.

 

As to Pulte’s claims under the Due Process Clause of the Fourteenth Amendment, the court found Pulte failed to show that the County or Commission deprived it of any constitutionally protected property interest. The record reflected that a plain reading of the 1994 Master Plan apprised all who read it that it was intended to be revised about every ten years, and that even after prerequisites had been satisfied the County could delay action on water and sewer change applications, conduct further studies, or take whatever land use actions it deemed necessary. As the 1994 Master Plan gave the appellees broad discretion to adopt the Amendment and to take the other actions they took with respect to Pulte’s land, Pulte’s procedural and substantive due process claims were found not viable.

 

The court next reviewed Pulte’s equal protection claim. Pulte did not allege it was deprived of a fundamental right or subjected to discrimination based on a suspect classification, but instead that it was treated differently from the other parcels of land in the Ten Mile Creek watershed, which it claimed were similarly situated. Contrary to this contention, the record reflected that in the Council and Commission’s estimation, Pulte’s land differed from these other parcels in several significant ways, including: size, location, and the fact that several particularly sensitive tributaries of Ten Mile Creek originate on and flow through Pulte’s land. The court found that these above distinctions were rational, even if they were not the actual reasons for treating Pulte’s land differently.

 

As to Pulte’s regulatory taking claim, the court found Pulte did not plead the exact diminution in value it alleged its property suffered as a result of the Amendment and the local authorities’ other actions. However, even assuming arguendo that Pulte suffered an eighty-three percent diminution in the value of its property, that would not enough on its own to establish a taking. Furthermore, Pulte purchased undeveloped land that did not have water and sewer access at the time of the purchase, and the 1994 Master Plan informed Pulte that there was no guarantee that the land would maintain its existing zoning classification or that a water and sewer change application would be granted. Thus, the court held Pulte’s takings claim failed.

Pulte Home Corp. v Montgomery County, 2018 WL 6204906 (4th Cir. CA 11/29/2018)