Case 1:15-cv-02825-RDB Document 1 Filed 09/20/15 Page 1 of...

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

(Northern Division)

AURORA HOLDINGS VII, LLC 8227 Cloverleaf Drive, Suite 309 Millersville, Maryland 21108

*

*Plaintiff

v. * Case No. 15-cv-02825

JAN H. GARDNER, COUNTY EXECUTIVE OF FREDERICK COUNTY, MARYLAND Winchester Hall, 12 East Church Street Frederick, Maryland 21701

*

*Serve On: Lori L. Depies, Director of Finance John S. Mathias, County Attorney Winchester Hall, 12 East Church Street Frederick, Maryland 21701

*

*COUNTY COUNCIL OF FREDERICK COUNTY, MARYLAND Winchester Hall, 12 East Church Street Frederick, Maryland 21701

*

Serve On: Lori L. Depies, Director of Finance John S. Mathias, County Attorney Winchester Hall, 12 East Church Street Frederick, Maryland 21701

*

*

FREDERICK COUNTY, MARYLAND Winchester Hall, 12 East Church Street Frederick, Maryland 21701

*

*

Serve On: Lori L. Depies, Director of Finance John S. Mathias, County Attorney Winchester Hall, 12 East Church Street Frederick, Maryland 21701

*

*

Defendants*

Case 1:15-cv-02825-RDB Document 1 Filed 09/20/15 of 26

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VERIFIED COMPLAINT FOR DECLARATORY AND INJUNCTIVE RELIEF

Plaintiff Aurora Holdings VII, LLC (“Aurora”) hereby sues Defendants Jan H. Gardner,

in her official capacity as County Executive of Frederick County; the County Council of

Frederick County; and Frederick County, Maryland, as successors to the former Board of County

Commissioners for Frederick County, Maryland (the “County”), and for grounds states as

follows:

INTRODUCTORY STATEMENT

1. This case involves the unlawful attempt by Frederick County to condemn a

privately owned assisted living and nursing home business, not for the traditional purposes of

building a roadway, a public park, or a government facility, but rather to convert and operate the

business for its own use, despite that only two years ago the County determined to privatize the

same business. At that time, the County Commissioners concluded that: (i) the County’s

ownership of the business was not in the public interest due to substantial funds expended to

subsidize the business; and (ii) selling the business to Aurora following a public bid process will

promote the health, welfare, and safety of the County residents.

2. The County’s decision to condemn Aurora’s property follows the election of a

new County Executive, and represents a complete reversal of its position prior to the election.

The County’s express intent in exercising its condemnation power to take over and operate a

private business is to avoid its contractual obligations to Aurora, an unlawful abuse of the

County’s power.

3. Aurora seeks declaratory and injunctive relief for the purpose of determining a

question of actual controversy between the parties and prohibiting the County from filing an


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action to condemn Aurora’s property interests in violation of the Contract Clause of the United

States Constitution (Article I, Section 10), as well as the Fifth and Fourteenth Amendments.

JURISDICTION AND VENUE

4. This Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331 and 28

U.S.C. §§ 1343(a)(3) and (a)(4). This Court also has jurisdiction over Aurora’s claims for

declaratory relief pursuant to 28 U.S.C. §§ 2201 and 2202. The Court is authorized to issue

temporary, preliminary, and permanent injunctive relief pursuant to Fed. R. Civ. P. 65.

5. Venue is proper in this District because the County’s unlawful actions occurred,

and continue to occur, in Frederick County, Maryland. See 28 U.S.C. § 1391.

THE PARTIES

6. Aurora is a Maryland limited liability company with its principal place of

business located at 8227 Cloverleaf Drive, Suite 309, Millersville, Maryland 21108.

7. Defendant Jan H. Gardner, the County Executive for Frederick County, is the

chief executive officer of the executive branch for Frederick County, a political subdivision of

the State of Maryland. The executive branch for Frederick County consists of the County

Executive and all officers, agents, and employees under the supervision and authority of the

County Executive. The County Executive’s principal office is located at Winchester Hall,

12 East Church Street, Frederick, Maryland 21701. County Executive Gardner is sued in her

official capacity.

8. Defendant County Council for Frederick County is the governing legislative body

for Frederick County, a political subdivision of the State of Maryland. The County Council’s

principal office is located at Winchester Hall, 12 East Church Street, Frederick, Maryland 21701.


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9. Defendant Frederick County, Maryland is a county incorporated under the laws of

the State of Maryland that operates pursuant to the Charter of Frederick County, Maryland.

Frederick County’s principal office is located at Winchester Hall, 12 East Church Street,

Frederick, Maryland 21701.

10. On December 1, 2014, Frederick County transitioned from the County

Commissioner form of government to the County Charter form of government, under which

there is an Executive Branch with a County Executive and a Legislative Branch with a County

Council. The County Executive, County Council, and Frederick County have succeeded all

rights, duties, and obligations of the former Board of County Commissioners for Frederick

County.

STATEMENT OF FACTS

I. Background

11. In 1828, the Justices of the Levy Court for Frederick County1 purchased

approximately 88 acres of land in Frederick County from an individual named Elias Brunner (the

“Property”). See Affidavit of Lori Depies, dated November 5, 2013, at ¶ 3. A copy of the

Affidavit of Lori Depies,2 former Frederick County Manager and current Director of Finance, is

attached hereto as Exhibit A.

12. In 1870, the County established Montevue Hospital on a portion of the Property.

1 The “Justices of the Levy Court of Frederick County” became the Board of County Commissioners for Frederick County.

2 The County submitted this affidavit in support of its Motion for Summary Judgment in the Trunk Litigation, referenced infra.


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13. In 1976, the County opened Citizens Nursing Home and Rehabilitation Center—

now known as Citizens Care and Rehabilitation Center of Frederick (“CCRC”)— on the

Property, adjacent to Montevue Hospital.

14. Between 1985 and 1987, the County constructed and opened Montevue Assisted

Living facility (“MAL”) on the Property.

15. After CCRC and MAL had been operating for a number of years, in 2002, the

County decided to construct a new nursing home and assisted living facility, which opened in

June 2012.

16. Today, MAL—known as Odyssey Assisted Living at Montevue—is a 75-unit

assisted living care facility licensed by the Maryland Department of Health and Mental Hygiene,

and CCRC is a 170-bed comprehensive care nursing facility (CCRC and MAL are together

referred to as the “Facilities”). MAL is now privately owned by Odyssey Assisted Living at

Montevue, LLC, and CCRC is now privately owned by Citizens Care and Rehabilitation Center

of Frederick, LLC.

II. The County’s Decision to Sell the Facilities

17. Between 2000 and 2013, the Facilities did not generate sufficient revenue to cover

expenditures. To cover the revenue shortfall, the County subsidized the Facilities. During this

timeframe, the County’s General Fund subsidies for the Facilities exceeded $53 million. See

Resolution No. 13-15, at 4. A copy of Resolution No. 13-15 is attached as Exhibit B.

18. Because the Facilities cost the County a significant amount of money each year, at

a public meeting on or about October 25, 2012, the County Commissioners directed the County

staff to explore its options for the use of the Facilities. Exh. B, at 3-4; Exh. A, at ¶ 6.


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19. As part of its exploration of options, the County considered eliminating its direct

General Fund subsidies to the Facilities. Exh. B, at 3. To this end, the County considered the

privatization and sale of the Facilities. Id. It further considered whether a sale of the Facilities

would be more effective and efficient for the County than operating the Facilities, and whether a

sale would allow the County to use money not spent on the Facilities to support other programs

for lower income residents. Exh. A, at ¶ 6.

20. In exploring the possibility of a sale, on January 24, 2013, the County issued a

request for proposals (“RFP”) to independent operators of nursing and assisted living homes to

purchase the Facilities. See Exh. B, at 3-4.

21. Aurora was one of six entities to submit a response to the County’s Request for

Proposals. Aurora proposed to purchase CCRC and MAL for $30,000,000. Id. at 4.

22. After a comprehensive review by the County, Aurora’s bid to purchase the

Facilities was recommended by the County staff. Id.

23. On June 25, 2013, following notice, a public hearing, and a comprehensive

evaluation of all factors, the County Commissioners adopted Resolution No. 13-15, by which the

Commissioners approved the sale of the Facility to Aurora. Id.

24. In Resolution No. 13-15, the County concluded that: (i) the Facilities are no

longer needed for any public use by the County; (ii) the continued operation of the Facilities by

the County is no longer in the public interest due to the significant funds expended to subsidize

the Facilities; (iii) acceptance of Aurora’s proposal will promote the health, welfare, and safety

of the residents of Frederick County; and (iv) adequate notice and a hearing on the sale of the

Facilities were provided. Id. at 6.


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25. On August 16, 2013, a group of citizens of Frederick County (the “Taxpayer

Plaintiffs”) filed a lawsuit against the County in the Circuit Court of Maryland for Frederick

County, challenging the County’s sale of CCRC and MAL to Aurora. This lawsuit is currently

pending, and it is captioned Charles F. Trunk, III, et al. v. Bd. of County Comm’rs for Frederick

County, Case No. 10-C-13-002727 (the “Trunk Litigation”).

26. Aurora has moved to intervene in the Trunk Litigation. Aurora’s initial

intervention motion was denied, and Aurora’s appeal of that decision is currently pending before

the Court of Special Appeals. Aurora Holdings VII, LLC v. Bd. of County Comm’rs for

Frederick County, Docket No. 02327 (September Term 2014). A second motion to intervene is

pending before the Circuit Court of Maryland for Frederick County.

III. The County’s Agreements to Sell the Facilities to Aurora

27. While the Trunk Litigation was pending, on May 1, 2014, the County entered into

a contract to sell CCRC and MAL to Aurora (the “APA”). A copy of the Asset Purchase

Agreement is attached as Exhibit C.

28. To allow time for the APA’s closing conditions to be satisfied and also permit

Aurora to begin immediately operating the Facilities, Aurora and the County entered into a

Facility Lease Agreement (the “Lease”). A copy of the Lease is attached as Exhibit D.

29. Aurora and the County also entered into a Continued Care Commitment

Agreement (“CCCA”) to ensure that the residents at MAL whose costs of care were subsidized

by the County would continue to receive care under Aurora’s ownership and management of

MAL for as long as those residents require assisted living care. A copy of the CCCA is attached

as Exhibit E.


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30. Pursuant to Paragraph III of the CCCA and Section 4.2(p) of the APA, in

consideration of Aurora continuing to care for certain MAL residents, the County agreed to pay

Aurora the aggregate amount of $10,700,000 in five (5) installments. See Exh. C at 28; Exh. E

at 2.

31. The CCCA and APA also obligate Aurora to accept new assisted living residents

requiring financial assistance at MAL if the County pays the full private pay amount. See Exh.

C, at 25. In other words, the County could require Aurora to fill each open bed at MAL with

subsidized (i.e., poor) residents. Thus, if the County exercised its contractual rights fully, over

time the County could require Aurora to care only for subsidized or poor residents at MAL.

32. The APA further requires Aurora to accept Medicaid and Medicaid pending

patients (i.e., poor patients) to CCRC. See Exh. C, at 25.

33. On May 15, 2014, the Taxpayer Plaintiffs in the Trunk Litigation amended their

complaint to challenge the validity of the APA and CCCA.

IV. Jan Gardner is elected as County Executive and the County reverses course

34. On November 4, 2014, Jan Gardner was elected as the first County Executive of

Frederick County, and she was inaugurated on December 2, 2014.

35. During her election campaign, County Executive Gardner publically opposed the

sale of CCRC and MAL to Aurora. Her election campaign website included the following

statements in opposition to the transaction between the County and Aurora: (i) “Jan [Gardner]

believes we should keep the promise to our seniors and [she] opposes the sale of Citizens Care

and Rehabilitation Center and the Montevue Home;” (ii) “Jan [Gardner] believes we should

honor the covenants in the deed on the Montevue Property;” and (iii) “Frederick County’s long-


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term legacy of taking care of the indigent elderly should continue.” See Jan Gardner Campaign

Website, attached hereto as Exhibit F.

36. County Executive Gardner’s election campaign website also contained the

following statements:

Instead of allowing [CCRC/MAL] to become self-sustaining, the County is planning to squander these assets by selling them at a significant financial loss to county taxpayers. County taxpayers will lose at least $20 million. The proposed sale gives away 7.5 acres of land for free, gives away almost $5 million in accounts receivable (cash), and sells state of the art new facilities for $8 million less than they cost to build. Citizens are fighting a legal battle to save [CCRC] and [MAL] and continue the care of our community’s indigent elderly. I am proud to stand with them.

See Exh. F.

37. Upon taking office, Jan Gardner immediately changed the County’s position –

consistent with her campaign platform – on the County’s sale of the Facilities to Aurora.

38. On February 27, 2015, the County sent to Aurora an Appraisal Report prepared

by Valbridge Property Advisors which purported to assess the value of Aurora’s interests in

CCRC and MAL.

39. The purpose of the appraisal was to set forth the County’s estimate of the value of

Aurora’s interests in the Facilities in the event the County seeks to exercise its power of eminent

domain to acquire Aurora’s interests.

40. Shortly thereafter, in March 2015, the County suggested that Aurora, the

Taxpayer Plaintiffs, and the County participate in three-party mediation to resolve the disputes

among the parties. One such dispute related to the County’s statement that it was exploring the

option of returning the Facilities to County ownership by invoking its eminent domain powers.

41. Aurora and the other parties agreed to participate in three-party mediation, which

commenced on June 10, 2015.


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42. On May 1, 2015, before the scheduled mediation, the County breached the APA

and CCCA by failing to make its required installment payment to Aurora in the amount of $3.25

million.

43. On May 5, 2015, after receiving Aurora’s Notice of Default, County Executive

Gardner convened a press conference in which she addressed the County’s failure to pay the

$3.25 million owed to Aurora. See May 5, 2015 Press Conference, available at:

http://frederick.granicus.com/MediaPlayer.php?view_id=5&clip_id=4850 (last visited

September 16, 2015). During this press conference, County Executive Gardner stated: “[T]he

deal put together by the prior administration is a bad deal for Frederick County, it’s a bad deal

for our taxpayers, and it’s a bad deal for the indigent elderly in Frederick County. I haven’t

changed my opinion on that. I said that when I was running for office, and I’m saying it again

today. It should come as no surprise to anyone.” See id. at 2:44–3:03.

44. County Executive Gardner also explained that during the first year of the CCCA,

“this arrangement has proved to be financially favorable to Aurora, as the number of individuals

living the assisted living care has declined, and has declined at a much more rapid pace than the

assumptions that were used.” Id. at 3:04-3:48. County Executive Gardner then stated, “I want to

protect the taxpayers. I want to make sure that we do not overpay.” Id. at 6:11-6:17. County

Executive Gardner further stated,

I certainly do not want to spend millions of dollars more than the full pay price to take care of the residents that are there. Certainly we need to treat taxpayers’ money responsibly, and that’s what I intend to do. That’s my job as the County Executive. So I’m living up to my campaign promises, I’m trying to make the best of what I consider to be a very bad deal for the taxpayers, and I’m trying to protect taxpayer dollars.

Id. at 8:20-8:50.


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45. The next day, during a radio interview, County Executive Gardner again stated

that “[t]he deal that the last Board of Commissions signed was an incredibly bad financial deal

for Frederick County residents.” See May 6, 2015 Radio Interview on WFMD, available at:

http://m.wfmd.com/media/podcast-morning-news-express-bobcast-bobcast/frederick-county-

executive-jan-gardner-26027967/ (last visited September 16, 2015). A transcript of the May 6,

2015 Radio Interview is attached hereto as Exhibit G. County Executive Gardner further stated

that “[w]e have taken care of indigent people on that property for 200 years. And I certainly

want to do that in a fiscally responsible manner. So part of that is making sure that we don’t give

away tax dollars.” Id. at 2.

46. On June 5, 2015, after the County admitted its default under the APA and CCCA

and failed to cure this default, Aurora sued the County in the Circuit Court of Maryland for

Frederick County, seeking full payment of the $3.25 million owed by the County. This lawsuit

is currently pending, and it is captioned Aurora Holdings VII, LLC v. Jan H. Gardner, et al.,

Case No. 10-C-15-001643, (the “Installment Payment Litigation”).

47. The parties were unable to resolve the pending disputes during the June 10, 2015

mediation session. They agreed to convene a second mediation session on September 16, 2015.

VI. The County’s imminent threat to exercise its condemnation powers

48. On August 18, 2015, the County filed a brief opposing Aurora’s appeal of the

denial of Aurora’s intervention motion in the Trunk Litigation. In that brief, the County stated

that it “has indicated to Aurora as part of the comprehensive mediation process that it would like

to reacquire the [Facilities] and has provided Aurora with an appraisal of the value of Aurora’s

real estate interests in the facilities . . . [T]he County has made no decision to institute eminent

domain to reacquire the facilities.”


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49. On August 27, 2015, during a status conference before the Honorable Theresa

Adams of the Circuit Court of Maryland for Frederick County in connection with the Installment

Payment Litigation, the County’s previously expressed equivocal position on the use of its

eminent domain powers became unequivocal. The County stated that it would file an action to

condemn Aurora’s interests in the Facilities if the parties could not reach a settlement during

mediation on September 16, 2015, and it advanced the position that the condemnation action

should have scheduling priority over the Installment Payment Litigation. Aurora and the County

agreed to stay the Installment Payment Litigation and any condemnation proceeding until the

conclusion of the September 16, 2015 mediation.

50. Prior to the September 16, 2015 mediation, the County informed Aurora that it

could immediately file a condemnation action without taking any additional procedural steps,

such as notice and a public hearing.

51. Also, prior to the September 16, 2015 mediation, the County proposed an

amendment to the Fiscal Year 2016 Budget to remove a $2.25 million appropriation that was to

be used to make a payment to Aurora under the APA and CCCA. See Proposed Budget

Amendments 16-01 and 16-02 (the “Proposed Budget Amendments”), attached to Aurora’s

Complaint as Exhibit H, at 2. The Proposed Budget Amendments are scheduled for Public

Hearing before the County Council on Tuesday, September 29, 2015.

52. The County proposes to use $800,000 of the $2.25 million already appropriated

for Aurora in Fiscal Year 2016 to acquire Aurora’s interests in the Facilities by eminent domain.

Exh. H, at 2-3. The Proposed Budget Amendments expressly state that “the County Executive

intends to exercise the power of eminent domain and acquire all of Aurora’s interests in the

[Facilities].” Id. at 2.


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53. The purpose of exercising the County’s eminent domain power is to impair

Aurora’s existing contracts with the County. Indeed, the Proposed Budget Amendments state

that “[t]he payments [to Aurora] under the CCCA and APA would then be unnecessary inasmuch

as Aurora would no longer have any interest in the Facilities and would be unable to perform

under the CCCA and APA.” Id. at 3.

54. The parties were unable to resolve their disputes during the September 16, 2015

mediation, but agreed to stay all litigation activity until Friday, September 18, 2015 at 5:00 p.m.

The parties were unable to resolve their disputes prior to this deadline.

VII. Aurora will suffer irreparable injury if the County’s seeks to exercise its eminent domain powers

55. If temporary and preliminary injunctive relief is denied in this case, Aurora will

suffer irreparable injury when the County files a condemnation action because potential residents

(i.e., customers), employees, and vendors will, at a minimum, perceive significant uncertainty about

the future viability of the Facilities. At best, people who understand the likely impact of the

County’s condemnation action will believe that Aurora likely will lose ownership and management

of the Facilities.

56. Under these circumstances, it will be exceedingly difficult for Aurora to retain and

attract residents and quality staff. Also, critical vendors, such as physicians, pharmacy providers,

therapy providers, and consultants, will not want to do business with Aurora.

57. Worse, people who do not understand that the County is simply acting improperly to

avoid its contract obligations, or who do not understand the nature of eminent domain proceedings,

may perceive that the County’s action to “condemn” was prompted by deficiencies in Aurora’s

management of the Facilities. Among these people, the damage to Aurora’s reputation as a quality


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provider of senior care services will be devastating. Moreover, the reputational damage will not be

limited to Aurora’s management of the Facilities, but will extend to other Aurora facilities.

58. The disputes between the County, Aurora, and the Taxpayer Plaintiffs concerning

the Facilities have already received significant media attention in local television, radio, and

newspaper coverage. The filing of a condemnation action would garner significant coverage to

the detriment of Aurora.

59. An additional element of irreparable injury involves the potential default of a $4.5

million loan granted by Congressional Bank to Citizens Care and Rehabilitation Center of

Frederick, LLC, an affiliate of Aurora and the operator of CCRC.3 A copy of the Revolving Credit

and Security Agreement (the “Loan Agreement”) is attached as Exhibit I. If the County initiates a

condemnation action against Aurora, the bank may declare a default pursuant to Section 10(i) of the

Loan Agreement as a “Material Adverse Change,” which is defined in Section 1.2 of the Loan

Agreement to include “any event, condition or circumstance or set of events, conditions, or

circumstances or any changes which . . . has been or would reasonably be expected to be adverse

to the business, operations, prospects, properties, assets, liabilities or financial condition of any

Credit Party, either individually or taken as a whole.” The condemnation of CCRC would

constitute a Material Adverse Change. Moreover, under Section 8.1(c) of the Loan Agreement, the

Borrower would be required to notify the bank of the condemnation action within five calendar

days.

3 The loan advance amount was later reduced to $2 million.


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COUNT I: DECLARATORY JUDGMENT (Takings Claim)

60. Paragraphs 1 through 59 of this Complaint are incorporated by reference as

though they were set forth fully herein.

61. The Takings Clause of the Fifth Amendment to the United States Constitution

prohibits the government from taking private property for public use without just compensation.

62. The Takings Clause of the Fifth Amendment is applicable to state and local

governments by incorporation in the Fourteenth Amendment.

63. Aurora possesses constitutionally protected property interests in the Facilities.

64. The County’s threatened taking of Aurora’s interests in the Facilities, made under

the color of state law, violates the Fifth Amendment to the United States Constitution.

65. The County’s threatened taking is arbitrary, is made in bad faith, is not for a

public purpose, and is not necessary for a public purpose.

66. Two years ago, after significant due diligence, analysis, solicitation and

consideration of six (6) proposals, notice, and a public hearing, the County adopted Resolution

13-15. See Exh. B. The County found that the Facilities were no longer needed for any public

use by the County, continued County-operation of the Facilities was not in the public interest due

to the significant funds expended to subsidize the Facilities, and the acceptance of Aurora’s

proposal will promote the health, welfare, and safety of the County residents. See id. at 6.

67. Without any new due diligence or analysis, the County now seeks to condemn the

same interests it recently sold to Aurora.

68. The County’s arbitrary decision to condemn Aurora’s interests in the Facilities is

not based on a desire to use the property for a public use. Rather, the County seeks to condemn

Aurora’s interests in the Facilities to avoid its contractual obligations to Aurora.


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69. That the County is truly motivated by a desire to avoid contractual obligations is

evidenced by County Executive Gardner’s public statements. Indeed, County Executive Gardner

repeatedly has publicly stated – consistent with her campaign platform – that the County’s

decision to sell the Facilities to Aurora is a bad financial deal for the County.

70. Avoiding contract obligations is not a valid public purpose under the Takings

Clause.

71. Even if the County’s purpose in condemning Aurora’s interests were to establish

or operate a nursing home and assisted living facility for the benefit of the poor and

disadvantaged persons, the Facilities are currently used and operated for this exact purpose, and

will be used for this exact purpose when Aurora owns the Facilities.

72. The County can also achieve this purpose through its existing contracts with

Aurora. Pursuant to the APA and CCCA, the County can require Aurora to accept poor residents

at MAL, and Aurora must accept poor residents at CCRC.

73. Under these circumstances, a County taking of Aurora’s interests in the Facilities

is unconstitutional.

74. An actual and justiciable controversy within the Court’s jurisdiction exists

between Aurora and the County concerning the County’s imminent use of its eminent domain

powers, which controversy may be determined by a judgment of this Court.

75. Aurora has no adequate remedy at law.

76. Pursuant to 28 U.S.C. §§ 2201 and 2202, this Court may declare the rights and

other legal relations of the parties under the Constitution, including whether the County may

legally condemn Aurora’s interests in the Facilities.


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77. All conditions precedent to the initiation or maintenance of this action have been

performed or have occurred.

WHEREFORE , Aurora requests that the Court: (i) find and declare that County’s

threatened condemnation of Aurora’s interests in the Facilities violates 42 § U.S.C. 1983 and the

Takings Clause of the Fifth Amendment, (ii) find and declare that the County may not legally

condemn Aurora’s property interests in the Facilities; (iii) award Aurora attorneys’ fees and costs

pursuant to 42 U.S.C. § 1988; and (iv) grant Aurora such further relief as the Court deems just

and appropriate.

COUNT II: INJUNCTIVE RELIEF (Takings Claim)



79. The Takings Clause of the Fifth Amendment to the United States Constitution

prohibits the government from taking private property for public use without just compensation.

80. The Takings Clause of the Fifth Amendment is applicable to state and local

governments by incorporation in the Fourteenth Amendment.


82. The County’s threatened taking of Aurora’s property interests in the Facilities,

made under the color of state law, violates the Fifth Amendment to the United States

Constitution.

83. The County’s threatened taking is arbitrary, is made in bad faith, is not for a

public purpose, and is not necessary for a public purpose. Under these circumstances, a County

taking of Aurora’s interests in the Facilities is unconstitutional.



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85. As set forth in paragraphs 55 – 59, supra, Aurora is likely to suffer immediate and

irreparable harm in the absence of temporary and preliminary injunctive relief.

WHEREFORE , Aurora requests that the Court: (i) grant temporary, preliminary, and

permanent injunctive relief enjoining any attempt by the County to initiate a court proceeding to

condemn Aurora’s interests in the Facilities; (ii) award Aurora attorneys’ fees and costs pursuant

to 42 U.S.C. § 1988; and (iii) grant Aurora such further relief as the Court deems just and

appropriate.

COUNT III: DECLARATORY JUDGMENT (Due Process Claim)



87. The Due Process Clause of Fourteenth Amendment to the United States

Constitution provides that state actors shall not deprive any person of life, liberty, or property,

without due process of law.



the color of state law, violates Aurora’s right to due process of law under the Fourteenth

Amendment.

90. The County’s threatened taking is arbitrary and does not advance a legitimate

governmental interest in the health, safety, and public welfare of Frederick County residents.

91. Two years ago, after significant due diligence, analysis, solicitation and

consideration of six (6) proposals, notice, and a public hearing, the County adopted Resolution

13-15. See Exh. B. The County found that the Facilities were no longer needed for any public

use by the County, continued County-operation of the Facilities was not in the public interest due


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to the significant funds expended to subsidize the Facilities, and the acceptance of Aurora’s

proposal will promote the health, welfare, and safety of the County residents. See id. at 6.

92. Without any new due diligence or analysis, the County now seeks to condemn the

same interests it recently sold to Aurora.

93. The County’s arbitrary decision to condemn Aurora’s interests in the Facilities is

not based on a desire to use the property for a public use. Rather, the County seeks to condemn

Aurora’s interests in the Facilities to avoid its contractual obligations to Aurora.

94. That the County is truly motivated by a desire to avoid contractual obligations is

evidenced by County Executive Gardner’s public statements. Indeed, County Executive Gardner

has publicly stated – consistent with her campaign platform – that the County’s decision to sell

the Facilities to Aurora is a bad financial deal for the County.

95. Avoiding contractual obligations is not a valid public purpose under the Due

Process Clause.

96. Even if the County’s purpose in condemning Aurora’s interests were to establish

or operate a nursing home and assisted living facility for the benefit of the poor and

disadvantaged persons, the Facilities are currently used and operated for this exact purpose, and

will be used for this exact purpose when Aurora owns the Facilities.

97. The County can also achieve this purpose through its existing contracts with

Aurora. Pursuant to the APA and CCCA, the County can require Aurora to accept poor residents

at MAL and Aurora must accept poor residents at CCRC.

98. Under these circumstances, the County’s threatened taking violates the Due

Process Clause. The County’s threatened action is arbitrary and does not advance a legitimate



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between Aurora and the County concerning the County’s imminent use of its eminent domain

powers, which controversy may be determined by a judgment of this Court.




legally condemn Aurora’s interests in the Facilities.




threatened condemnation of Aurora’s interests in the Facilities violates 42 § U.S.C. 1983 and the

Due Process Clause of the Fourteenth Amendment, (ii) find and declare that the County may not

legally condemn Aurora’s in the Facilities; (iii) award Aurora attorneys’ fees and costs pursuant

to 42 U.S.C. § 1988; and (iv) grant Aurora such further relief as the Court deems just and

appropriate.

COUNT IV: INJUNCTIVE RELIEF (Due Process Claim)



104. The Due Process Clause of Fourteenth Amendment to the United States

Constitution provides that state actors shall not deprive any person of life, liberty, or property,

without due process of law.



#536590v2 21 012831-0016


the color of state law, violates Aurora’s right to due process of law under the Fourteenth

Amendment.

107. The County’s threatened taking is arbitrary and does not advance a legitimate







condemn Aurora’s interests in the Facilities; (ii) award Aurora attorneys’ fees and costs pursuant

to 42 U.S.C. § 1988; and (iii) grant Aurora such further relief as the Court deems just and

appropriate.

COUNT V: DECLARATORY JUDGMENT (Contract Clause Claim)



111. The Contract Clause of the United States Constitution provides that “No State

shall . . . pass any . . . Law impairing the Obligation of Contracts . . . .” U.S. Const. art. I, § 10,

cl. 1.

112. Aurora has contracts with the County, including but not limited to the APA,

CCCA, and Facility Lease. See Exhs. C, D, E.

113. The County’s threatened taking of those contracts, made under the color of state

law, substantially impairs Aurora’s rights under those contracts. The County threatens to nullify


#536590v2 22 012831-0016

its contracts with Aurora, eliminating Aurora’s contractual right to purchase and lease the

Facilities. Indeed, the County has stated that “the County Executive intends to exercise the

power of eminent domain and acquire all of Aurora’s interests in the [Facilities]. The payments

under the CCCA and APA would then be unnecessary inasmuch as Aurora would no longer have

any interest in the Facilities and would be unable to perform under the CCCA and APA.” See

Exh. H.

114. The County’s substantial impairment of Aurora’s contractual rights is not

permissible as a legitimate exercise of the County’s police powers.

115. Aurora’s contracts with the County are public contracts.

116. The County does not need to impose the drastic impairment of its public contracts

with Aurora to achieve any legitimate policy objective. Indeed, the County’s express purpose in

condemning Aurora’s interests is to avoid the County’s contract obligations. This is not a

legitimate basis to impair the County’s contracts with Aurora.

117. Even if the County’s policy objective for condemning Aurora’s property interests

were to operate a nursing home and assisted living facility, the County’s condemnation of

Aurora’s interests is not necessary to achieve this purpose. In fact, Aurora currently uses the

Facilities for this purpose, and will continue to use the Facilities for this purpose when it owns

the Facilities.

118. In addition, the County, by deciding to condemn Aurora’s interests, imposes a

drastic impairment of its public contracts despite the evident and more moderate options that

would serve these policy objectives equally well. Instead of condemning Aurora’s interests, the

County could, among other things, require Aurora to fill MAL with subsidized residents. See

Exh. C, at § 4.1(g); see Exh. E, at Section IV.


#536590v2 23 012831-0016

119. With more moderate options available, the County’s threatened condemnation and

impairment of Aurora’s contractual rights violates the Contract Clause of the Constitution.

120. The County’s threatened taking and impairment of Aurora’s contractual rights is

also unreasonable, is not intended to serve a legitimate public purpose, and is not appropriate to

affect the proposed public purpose.

121. The County is motivated by a desire to avoid its contractual obligations. Such a

purpose is impermissible under the Contract Clause.


between Aurora and the County concerning the County’s imminent threat to substantially impair

its public contracts with Aurora, which controversy may be determined by a judgment of this

Court.




legally impose a substantial impairment on its contracts with Aurora.




threatened impairment of Aurora’s contracts with the County violates 42 § U.S.C. 1983 and the

Contract Clause of the Constitution, (ii) find and declare that the County may not legally

condemn or substantially impair Aurora’s contract rights; (iii) award Aurora attorneys’ fees and

costs pursuant to 42 U.S.C. § 1988; and (iv) grant Aurora such further relief as the Court deems

just and appropriate.


#536590v2 24 012831-0016

COUNT VI: INJUNCTIVE RELIEF (Contract Clause Claim)



127. The Contract Clause of the United States Constitution provides that “No State

shall . . . pass any . . . Law impairing the Obligation of Contracts . . . .” U.S. Const. art. I, § 10,

cl. 1.

128. Aurora has contracts with the County, including but not limited to the APA,

CCCA, and Facility Lease. See Exhs. C, D, E.

129. The County’s threatened taking of those contracts, made under the color of state

law, substantially impairs Aurora’s rights under those contracts, as the taking would completely

nullify the County’s contracts with Aurora.

130. The County’s substantial impairment of Aurora’s contractual rights is not

permissible as a legitimate exercise of the County’s police powers.

131. Aurora’s contracts with the County are public contracts.

132. The County does not need to impose the drastic impairment of its public contracts

with Aurora to achieve any legitimate policy objective.

133. The County’s threatened taking and impairment of Aurora’s contractual rights is

also unreasonable, is not intended to serve a legitimate public purpose, and is not appropriate to

affect the proposed public purpose.


between Aurora and the County concerning the County’s imminent threat to substantially impair

its public contracts with Aurora, which controversy may be determined by a judgment of this

Court.


#536590v2 25 012831-0016






condemn Aurora’s contracts and interests in the Facilities; (ii) award Aurora attorneys’ fees and

costs pursuant to 42 U.S.C. § 1988; and (iii) grant Aurora such further relief as the Court deems

just and appropriate.

Respectfully submitted,

/s/ Thomas C. Dame Thomas C. Dame, Fed. Bar No. 08352 Anatoly Smolkin, Fed. Bar No. 18618 Matthew A. Haven, Fed. Bar No. 18626 GALLAGHER EVELIUS & JONES LLP 218 North Charles Street, Suite 400 Baltimore, Maryland 21201 (410) 727-7702

Attorneys for Plaintiff Aurora Holdings VII, LLC

Date: September 20, 2015


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