Baltimore County v. RTKL Associates Inc.

WILNER, J. Two issues are before us in this appeal: (1) what, if any, statute of limitations applies to an action filed by a county for breach of a written contract; and (2) whether a plaintiff who sues a corporate engineering or architectural firm for breach of contract or negligence is required to file a certificate of merit pursuant to Maryland Code, § 3-2C-02 of the Cts. & Jud. Proc. Article (CJP). We shall hold that the three-year statute of limitations set forth in CJP § 5-101, applicable generally to civil actions, applies to the county’s action, and that the certificate of merit requirement of CJP § 3-2C-02 is limited to actions against licensed individuals and is not applicable to suits against corporate firms.

The result of these holdings will be a reversal of the judgment entered by the Circuit Court for Baltimore County. BACKGROUND In April, 1996, Baltimore County and RTKL Associates, Inc. (RTKL) entered into a written contract under which RTKL agreed to provide design development, construction documents, and bid assistance for Phase I of the Dundee-Saltpeter Environmental Park, a proposed education center to be located in the northeastern part of the county. At some point, RTKL engaged Andrews, Miller & Associates (AMA) as a subcontractor to “perform engineering services associated ⁶⁷³ with the grading of the property.” Although the record is not entirely clear on this point, it appears that work under the contract was completed in 1998. In June, 1999, a county survey crew discovered that “benchmarks set by AMA were off by .092 feet” and that “all grading of dirt was done .092 feet too low.” As a result, more dirt had to be brought to the site to correct the grading and foundation walls already installed had to be changed.

That, in turn, required the “disas-sembly of wall panels, additional concrete and changes to the slab of the grade.” In August, 2001, the county sued both contractors, charging them with breach of contract and negligence. The defendants initially moved to dismiss the action on two grounds — that the dispute was subject to arbitration and that the action was not filed within the one-year time period allowed by Maryland Code, Art. 25A, § lA(c). The motion to dismiss in favor of arbitration was accompanied by a petition to compel arbitration. The court denied that petition and the motion to dismiss in favor of arbitration but did not expressly rule on the limitations issue.

RTKL and AMA filed an interlocutory appeal, asking the Court of Special Appeals to rule on both issues. The appellate court declined that invitation. Holding that an immediate appeal was permissible from an order denying a petition to compel arbitration, the court considered the defendants’ argument on that issue, but, finding no merit in it, affirmed the ruling of the Circuit Court. Concluding that no interlocutory appeal lay from any implied ruling on the limitations issue, however, the court refused to consider that matter.

RTKL v. Baltimore County, 147 Md.App. 647 , 810 A.2d 512 (2002). When the case returned to the Circuit Court, RTKL and AMA filed joint motions to dismiss on the grounds of the one-year statute of limitations in Art. 25A, § lA(c) and the county’s failure to file a certificate of merit in accordance with CJP § 3-2C-02. The county argued in response to the limitations argument that Art. 25A, § lA(c) applied only to persons suing ⁶⁷⁴ a county on a written contract, not to the situation where the county was the plaintiff, and that, indeed, the county was not subject to any statute of limitations when acting as a plaintiff in a breach of contract action. In May, 2003, the court denied the motion founded on the lack of a certificate of merit, holding that the requirement applied only to suits against licensed professionals — individuals—and not to suits against corporations.

It granted the motion based on limitations, however, concluding, largely on the ground of parity, that the one-year statute should apply to both parties to the contract, and not just one of them. Both sides appealed, and we granted certiorari on our own initiative, before proceedings in the Court of Special Appeals, to consider the two issues. DISCUSSION Statute of Limitations Art. 25A, § lA(c) CJP § 5-101 provides that “[a] civil action at law shall be filed within three years from the date it accrues unless another provision of the Code provides a different period of time within which an action shall be commenced.” Everyone agrees that the county’s action was filed within that three year period, but neither side believes that § 5-101 is the applicable provision. The defendants contend that the applicable statute of limitations is the one-year provision contained in Art. 25A, § lA(c).

The county, asserting the ancient common law doctrine of nullum tempus occurrit regi (time does not run against the King), argues that, when acting as a plaintiff, it is not subject to any statute of limitations. We shall begin with the statute. Art. 25A, § 1A was part of a law first enacted in 1976 (1976 Md. Laws, ch. 450) that, subject to certain conditions and limitations, waived the sovereign immunity of the State and purported to waive sovereign immunity of the counties and municipalities of the State in actions against them for breach of a written contract. Until the enactment of that law, the State and its agencies enjoyed a common law sovereign immu ⁶⁷⁵ nity from suits in both contract and tort: “neither a contract nor a tort action [could] be maintained against the State unless specific legislative consent has been given and funds (or the means to raise them) are available to satisfy the judgment.” Dep’t of Natural Resources v. Welsh, 308 Md. 54, 58-59 , 521 A.2d 313, 315 (1986).

Although the immunity enjoyed by the State, in both contract and tort actions, was a general one that had long been recognized, we noted in American Structures v. City of Balto., 278 Md. 356, 359 , 364 A.2d 55, 57 (1976), that “[a]s regards counties and municipalities, however, the rule is different.” Municipalities and counties enjoyed a limited immunity in tort actions. As we confirmed in DiPino v. Davis, 354 Md. 18, 47 , 729 A.2d 354, 369-70 (1999), “[a] local governmental entity is liable for its torts if the tortious conduct occurs while the entity is acting in a private or proprietary capacity, but, unless its immunity is legislatively waived, it is immune from liability for tortious conduct committed while the entity is acting in a governmental capacity.” We recounted in American Structures , however, that counties and municipalities “have been regularly subject to suit in contract actions, whether the contracts were made in performance of a governmental or proprietary function, as long as the execution of the contract was within the power of the governmental unit.” Id. at 359-60 , 364 A.2d at 57 , citing cases dating back to 1862 (Emphasis added). In Montgomery County v. Revere, 341 Md. 366 , 671 A.2d 1 (1996), we confirmed that “under Maryland law counties and municipalities are normally bound by their contracts to the same extent as private entities” and that “Maryland law has never recognized the defense of governmental immunity in contract actions against counties and municipalities.” Id. at 384 , 671 A.2d at 10 . See also Harford Co. v. Bel Air, 348 Md. 363, 372 , 704 A.2d 421, 425 (1998); Fraternal Order of Police v. Balto.

Co., 340 Md. 157, 173 , 665 A.2d 1029, 1037 (1995). That distinction — that the immunity from contract actions enjoyed by the State did not apply to the counties and municipalities — appears to have been missed by the General Assembly when it enacted eh. 450 in 1976, for, in one of the ⁶⁷⁶ “Whereas” clauses that introduced the bill, the Legislature stated that this Court had held that, “as a result of the common law doctrine of sovereign immunity, a suit cannot be maintained against the State or its political subdivisions, unless authorized by the Legislature, and funds are available to satisfy any judgment rendered.” (Emphasis added). Under that assumption, and desiring to modify the effect of this common law doctrine in the belief that “there exists a moral obligation on the part of any contracting party, including the State or its political subdivisions, to fulfill the obligations of a contract,” the Legislature proceeded, subject to certain conditions and limitations, to waive the immunity it knew was enjoyed by the State and the immunity it apparently thought was enjoyed by the counties and municipalities in actions for breach of a written contract. The Legislature achieved that result by enacting, in the one bill, five sets of nearly identical provisions: one, now found in §§ 12-201 through 12-204 of the State Government Article, applicable to actions against the State or units of the State government; a second, codified in Art. 23A, § 1A, applicable to actions against incorporated municipalities; a third, codified in Art. 25, § 1A, applicable to actions against non-chartered, non-code counties; a fourth, codified in Art. 25A, § 1A, applicable to actions against chartered counties, such as Baltimore County; and the fifth, codified in Art. 25B, § 13A, applicable to actions against code counties.

Each set contained four subsections. The most relevant set here — Art. 25A, § 1A — began in subsection (a) with the statement that, unless otherwise specifically provided by the Laws of Maryland, neither a chartered county nor its units or officials could raise the defense of sovereign immunity in the courts of this State in an action based on a written contract executed on behalf of the county or a unit of the county by an official or employee acting within the scope of his/her authority. Subsection (b) provided that, in any such action, neither the county nor its units or officials were liable for punitive damages. That, too, was unnecessary, as this Court had made clear well before 1976 and has consistently maintained since ⁶⁷⁷ then, that punitive damages are not recoverable by anyone in a breach of contract action.

See St. Paul at Chase v. Mfrs. Life Insur., 262 Md. 192, 236 , 278 A.2d 12, 33 , cert. denied, 404 U.S. 857 , 92 S.Ct. 104 , 30 L.Ed.2d 98 (1971); Siegman v. Equitable Trust Co., 267 Md. 309, 313 , 297 A.2d 758, 760 (1972) (“It is well settled in this State that there can be no award of punitive damages in a pure action for breach of contract.”); Bowden v. Caldor, 350 Md. 4, 22 , 710 A.2d 267, 276 (1998) (“Under Maryland law, punitive damages are allowable only in tort actions.”). Subsection (c), which is the one at issue here, provides that “[a] claim is barred unless the claimant files suit "within one year from the date on which the claim arose or within one year after completion of the contract giving rise to the claim, whichever is later.” Subsection (d), intending to address one of the practical supports for the sovereign immunity defense, requires the county, “[i]n order to provide for the implementation of this section,” to “make available adequate funds for the satisfaction of any final judgment ... which has been rendered against the county ... in an action in contract as provided in this section.” The remaining subsections, added after 1976, place certain conditions and limitations on mandated alternative dispute resolution provisions in construction contracts; they are not presently at issue in this case. The defendants contend, and the Circuit Court found, that the words “claim” and “claimant,” as used in subsection (c), include the county when it seeks recovery as a plaintiff, and that, as a result, the county in this case is subject to the one-year statute of limitations.

The county, of course, reads those words as applying only to those who sue the county. 1 ⁶⁷⁸ The issue is one of statutory construction, and, as we have often said, our predominant goal, when construing statutes, is to ascertain and implement the legislative intent. See MVA v. Lytle, 374 Md. 37, 57 , 821 A.2d 62, 74 (2003); Toler v. MVA, 373 Md. 214, 220 , 817 A.2d 229, 233 (2003). In doing so, we look first to the words of the statute, but if the true legislative intent cannot readily be determined from the statutory language alone, we look to other indicia of that intent, including the title to the bill, the structure of the statute, the inter-relationship of its various provisions, its legislative history, its general purpose, and the relative rationality and legal effect of various competing constructions. Id.

See also Witte v. Azarian, 369 Md. 518, 525 , 801 A.2d 160, 165 (2002). The language of subsection (c), if read in isolation and divorced from the rest of the section, is, indeed, ambiguous. As a stand-alone statute, it could be read, on its face, to apply to any claim, by any person, on any contract, including those between private persons, and thus to replace entirely, as to breach of contract actions, the three-year statute of limitations in. CJP § 5-101.

There is no suggestion anywhere that that could have been the legislative intent. The subsection can take its proper meaning only by reference to other relevant indicia of legislative intent, the clearest and most pertinent evidence of which lies in the other provisions of the statute and in the title to the Act, in which the subject of the Act is required to be described. See Maryland Constitution, Art. Ill, § 29. The title to ch. 450 states that it is for the purpose of providing that the State and its counties and municipalities “may not raise the defense of sovereign immunity in the courts of this State in an action in contract based upon certain written contracts” and “setting forth certain exclusions and limitations applicable to such actions ...” (Emphasis added).

The only situation in which sovereign immunity could be raised as a “defense” is when a claim is being made against the governmental entity; sovereign immunity as a defense has no meaning in the context of a claim by a governmental entity against someone else. Thus, the title alone, which necessarily ⁶⁷⁹ limits the scope of the statute, makes clear that the limitations applicable to “such actions” must mean actions against the governmental entity. That meaning flows indisputably from the other provisions of the statute itself. For the reasons noted, subsection (a), precluding the governmental entities from raising of the defense, can apply only to claims against the entity.

Subsection (b), stating that “[i]n any such action” the entity is not liable for punitive damages, also can apply only to claims against the entity; even if the law otherwise allowed punitive damages in a breach of contract action, the entity obviously could not be subject to liability for such damages when it is the claimant. Similarly, subsection (d), requiring the county, “[i]n order to provide for the implementation of this section,” to provide funds for the satisfaction of any final judgment “which has been rendered against the county” can have reference only to actions against the county. The requirement would be unnecessary when the county is acting as a claimant and thus would not be needed in that situation to provide for the implementation “of this section.” The whole structure of the statute — its text and its title— militates against the construction urged by the defendants and adopted by the Circuit Court. So, indeed, does its legislative history.

That history begins, for our purposes, with House Joint Resolution 65, adopted by the General Assembly in 1968. See 1968 Md. Laws, Joint Resolution No. 49. In that Joint Resolution, the Legislature expressed the view that “[t]he present judicial doctrine of sovereign immunity often operates capriciously and unjustly to preclude recovery on many meritorious claims against state and local governments” and noted the then-recent holding of this Court in Weisner v. Bd. of Education, 237 Md. 391 , 206 A.2d 560 (1965) that the doctrine was so firmly established in Maryland law that any change would have to come from the Legislature. The clear focus of the Joint Resolution was on immunity in tort actions, which was the subject of the Weisner case.

The ⁶⁸⁰ resolution called attention to the recent adoption of a Tort Claims Act in California and stated that “[t]he delineation of those areas where justice dictates that state and local governments be liable in tort and be responsible for providing compensation to injured persons can best be accomplished through detañed legislation in the nature of a State Tort Claims Act.” It continued that the liability of the State and its officers “in tort” required a comprehensive study, and, to that end, requested the Governor to appoint a Commission to make a comprehensive study on “the extent to which state and local governments and their officers should be liable in tort and on how best to insure that funds are avaüable to ... meet such claims.” Such a Commission was appointed, but due, apparently, to a lack of funding, it never conducted the study or issued a report. In 1969, the Legislative Council considered the matter, but took no action. See Minutes of Judiciary Committee of Legislative Councü, Meeting of May 6-7,1969, Item 64. A proposed Constitutional Amendment (Senate Bül 651), to provide that sovereign immunity could not be pleaded as a defense in a suit against the State or any unit of local government except to the extent prescribed by law, was introduced into the 1969 session of the General Assembly, but did not pass.

The Legislative Councü considered the issue again in 1972 in connection with its study of a State insurance program. See Maryland Legislative Councü Senate Finance Committee, House Committee on Appropriations, House Committee on Ways and Means, Joint Budget Subcommittees 1972 Report, Item 266 (Study of State Insurance Program and Self-Insurance Alternatives). The Councü noted that, although sovereign immunity was generally avaüable, legislative exceptions had been made to that doctrine and a number of State and local agencies had obtained comprehensive insurance or had established self-insurance programs. The Councü expressed the view that, the State, “having made the basic decision to waive sovereign immunity in some cases, should make the waiver uniform in aU cases by legislative act.” Id. at 101. ⁶⁸¹ In 1973, House Bill 1119 was introduced to make the State, the counties, and the municipalities liable “in any action of contract” and to preclude them from raising the sovereign immunity defense in those actions.

The bill passed the House of Delegates but died in the Senate. A similar bill (House Bill 5) did pass in the 1974 session but was vetoed by the Governor, who expressed a number of concerns, including the lack of any provision for making funds available to pay any judgments and whether, as worded, it might include actions sounding in negligence that arose from contracts or from governmental services that might be construed as contractual in nature. The Governor expressed the belief that further study was necessary and committed himself to reconstituting the Commission created in 1968. See Veto Message of Governor, May 31, 1974, 1974 Md. Laws at 3087-89.

Deciding not to await a report from that Commission, the Legislature enacted House Bill 1672 in 1975, which again would have made the State and its political subdivisions liable in an action of contract and preclude them from raising sovereign immunity in such actions. In an attempt to address one of the Governor’s concerns, the bill required the Governor to include in the State budget adequate funds for the satisfaction of any judgment rendered against the State and required the governing bodies of the political subdivisions to “make available” adequate funds for the payment of such judgments. That bill, too, was vetoed. The Governor noted that, although the bill required the Governor to include funds in the budget to satisfy judgments, it did not preclude the General Assembly from cutting or eliminating those funds and thus still left the matter uncertain.

He again expressed his desire that the Legislature await a report from the Commission. See Veto Message of Governor, May 15, 1975, 1975 Md. Laws at 4067-69. As part of its investigation into the waiver of immunity in contract claims, the Commission prepared a questionnaire, which it sent to bar associations