Board of Public Works v. K. Hovnanian's Four Seasons at Kent Island, LLC

GREENE, J. This is the fourth time this Court has dealt with proceedings surrounding the development project spearheaded by K. Hovnanian’s Four Seasons at Kent Island, LLC (“Appellee” or “Hovnanian”). 1 At issue in the underlying administrative proceedings is a State wetlands license. Although we previously addressed the merits of the Board of Public Works’s (“Appellant” or “the Board”) review of Hovnanian’s application for a State wetlands license, see Maryland Board of Public Works v. K. Hovnanian’s Four Seasons at Kent Island, LLC, ²⁰³ 425 Md. 482 , 42 A.3d 40 (2012) (“Hovnanian /”), the issue presently before us is procedural. Hovnanian initiated this latest litigation by filing a complaint for declaratory and injunctive relief and for a writ of mandamus against the Board, seeking an order compelling the Board to vote promptly on Hovnanian’s long-outstanding application for a State wetlands permit following delays resulting from a perceived conflict of interest involving a Board employee. On Hovnanian’s motion for summary judgment, the Circuit Court for Queen Anne’s County granted the relief requested by Hovnanian and ordered the Board to hold a final vote on the application, notwithstanding any perceived appearance of impropriety.

The Board noted an appeal to the Court of Special Appeals. Prior to any proceedings in that court, we granted the Board’s petition for certiorari to consider the following questions: I. Was Hovnanian required to await a final administrative decision and exhaust statutory administrative remedies before bringing an action for mandamus, injunction, and declaratory judgment to challenge the administrative procedure adopted to evaluate Hovnanian’s application for a State wetlands license?

II

Did the trial court err in substituting its judgment for that of the Board with respect to remediating the Wetlands Administrator’s conflict of interest, which involved a previously undisclosed relationship with one of Hovnanian’s attorneys and his law firm?

III

Did the trial court err in entering a writ of mandamus directing the Board to issue a decision on Hovnanian’s application for a State wetlands license by October 6, 2014, confining the facts that the Board may consider to those contained in that portion of the administrative record that existed on July 24, 2013, and limiting what the Board may consider in any future action on the project? We shall vacate the judgment of the Circuit Court for Queen Anne’s County and hold that the Circuit Court’s order was improper (1) for want of a prior final administrative decision; and (2) because mandamus is unavailable under these circum ²⁰⁴ stances. Accordingly, we need not and do not address the remaining questions which relate to the appearance of a conflict of interest and limitations on the Board’s consideration of the administrative record. FACTUAL AND PROCEDURAL HISTORY The development project underlying these proceedings has been in the works for nearly two decades.

The project involves the construction of a mixed-use adult community on Kent Island in Queen Anne’s County known as Four Seasons at Kent Island (“the project”). As described in our 2012 decision, “the project envisions 1,350 single and multifamily dwelling units, an assisted living facility, and related community and recreational facilities, to be erected on two tracts comprising 562 acres that lie on the north side of U.S. Route 50 between the towns of Chester and Stevensville.” Hovnanian I, 425 Md. at 495 , 42 A.3d at 47 . As a result of the location’s proximity to several bodies of tidal water as well as the Chesapeake Bay Critical Area, 2 Hovnanian was required to obtain numerous permits and approvals from state and local agencies. Despite significant opposition, administrative appeals, and several lawsuits over the years since the inception of this project, Hovnanian has obtained all of the necessary permits and approvals, except one.

Hovnanian I, 425 Md. at 495 , 42 A.3d at 47 . The final outstanding permit application, at issue in these proceedings, is Hovnanian’s application for a State wetlands license pursuant to Maryland Code (1982, 2014 Repl.Vol.), § 16-202 of the Environment Article (“Env.”). Under the statute, the authority to grant licenses for the “dredging” or “filling” of State-owned wetlands rests with the Board, which is comprised of three members: the Governor, the State Comptroller, and the State Treasurer. In relevant part, Env. § 16-202(g)(l) provides that “the Board shall decide if issu ²⁰⁵ anee of the license is in the best interest of the State, taking into account the varying ecological, economic, developmental, recreational, and aesthetic values each application presents.” As we stated previously, “under Env. § 16-202, the Board possesses a great deal of largely unguided discretion in determining whether to issue a license and on what terms and conditions!!.]” Hovnanian I, 425 Md. at 515 , 42 A.3d at 59 .

Briefly, the State wetlands license application process typically begins with a review by the Maryland Department of the Environment (“the Department” or “DOE”), and terminates with the Board’s decision following receipt of a report and recommendation from the Department. 3 The Board also employs a Wetlands Administrator, who evaluates the Department’s report and makes an independent recommendation to the Board. See COMAR 23.02.04.08. In deciding whether to grant a license, the Board has broad discretion to consider the reports and recommendations of both the Department and the ²⁰⁶ Wetlands Administrator, as well as public testimony at any hearing and any other information available in the public record. Hovnanian’s wetlands license application originally included four infrastructure development elements: (1) a bridge over Cox Creek; (2) a stormwater management system; (3) utility lines drilled underneath Cox Creek; and (4) a community pier.

After conducting an extensive review of the project, both the Department and then-Wetlands Administrator Doldon Moore recommended granting the license. At the Board’s May 23, 2007, meeting, however, the Board denied the application, on a two to one vote, based on the majority’s view that the environmental impact of the project as a whole was too great and not in the best interest of the State. Thereafter, Hovnanian filed in the Circuit Court for Queen Anne’s County a petition for judicial review of the Board’s denial of the application. The Circuit Court reversed the Board’s decision, “concluding] that the Board did err, by basing its decision on considerations outside the lawful scope of its discretion,” to wit, the entirety of the proposed project, rather than just the four infrastructure elements forming the application.

Hovnanian I, 425 Md. at 485 , 42 A.3d at 41 . The Board appealed and we granted certiorari prior to any significant proceedings in the Court of Special Appeals. Id. We agreed with the Circuit Court and held that the Board applied an incorrect legal standard by considering the broader environmental impact of the project as a whole, where the statutes and regulations governing wetlands permits confine the Board’s review to the impacts on State wetlands.

Hovnanian I, 425 Md. at 517-19 , 42 A.3d at 60-61 . In other words, the Board’s focus was too broad. We explained: [I]n deciding whether to issue a wetlands license, the Board does not act — is not authorized to act — as a super land use authority. Its own regulation, COMAR 23.02.04.10, limits its focus to considering the recommendations of DOE and the Wetlands Administrator and taking into account the ecological, economic, developmental, recreational, and aesthetic values ‘to preserve the wetlands and prevent their ²⁰⁷ despoliation and destruction/ not to determine whether the project as a whole is environmentally sound at its particular location.

That authority lies elsewhere. The decision to allow a development to proceed within the Chesapeake Bay or Atlantic Coastal Bays Critical Area is specifically committed by law to the jurisdiction of the affected counties and the Critical Area Commission for the Chesapeake and Atlantic Coastal Bays, created by Md.Code, § 8-1803 of the Natural Resources Article.... * * * The language of Env. § 16-202(c)(l) [now § 16 — 202(g)(1) ] cannot reasonably be read to broaden the jurisdiction of the Board in such a manner as to trump the clear commitment of land use policy to the local governments and, in part, to the Critical Area Commission and other State agencies. The requirement that the Board consider the ecological, economic, developmental, recreational, and aesthetic values presented in the application in determining whether issuance of the license is in the State’s interest has reference to the impact of the proposed dredging or filling on the affected wetlands. Section 16-102(b), which declares the public policy behind the Wetlands Law, makes abundantly clear that those considerations are tied to the desire ‘to preserve the wetlands and prevent their despoliation and destruction/ not to control all development near the Chesapeake Bay, and the Board’s own regulation confirms that narrower focus.

Hovnanian I, 425 Md. at 517-19 , 42 A.3d at 60-61 . What the Board should have considered, and indeed was required to consider, we stated, “was whether the impact on the affected wetlands of the four elements that comprised the application was sufficiently adverse as to make it in the State’s interest to deny the application.” Hovnanian I, 425 Md. at 521 , 42 A.3d at 63 . Accordingly, this Court remanded the case to the Circuit Court for Queen Anne’s County with directions to remand the case to the Board for further proceedings. We explained that ²⁰⁸ “[i]n this case, that would be for the Board to consider whether, applying the considerations set forth in Env. § 16-202(g)(1) and its own regulations, as construed in [the] Opinion, issuance of the license is in the State’s interest.” Hovnanian I, 425 Md. at 522 , 42 A.3d at 63 .

The Circuit Court for Queen Anne’s County remanded the case to the Board on June 15, 2012. Following the remand, Hovnanian advised the Board that it intended to submit a revised application and asked the Board to delay review until those changes were made. According to its brief, Hovnanian reviewed each of the elements included in the original application for impacts on tidal wetlands and concluded that only the bridge over Cox Creek and the stormwater discharge outfall impacted the wetlands. Cognizant of the substantial opposition posed by the Board, Hovnanian then decided to remove and/or redesign the problematic elements before submitting its amended application.

Hovnanian submitted a revised application in May 2013, approximately one year after the date of this Court’s opinion in Hovnanian I. The May 2013 application listed only two of the original elements: the drilled sewer line and the community pier. Effectively, Hovnanian withdrew the bridge, drilled water line, and stormwater management system elements from the original permit application. The scope and extent of the two remaining elements (the sewer line and pier) did not differ from the original application. In addition, Hovnanian represented to the Board that it would eliminate a portion of the proposed residential project (“Phase V”), and convey the parcel of land where Phase V would have been located (the “Tanner Parcel”) to Queen Anne’s County for use as an ecopark.

The removal of Phase V explained the removal of the bridge from the license application because the bridge would have been necessary to reach the Tanner Parcel. Upon receipt of the revised application, the Board adopted an expedited review process under which Mr. Moore would ²⁰⁹ submit a supplement to his 2007 report. 4 The Department would then review Mr. Moore’s report and issue comments. The Board scheduled a hearing on Hovnanian’s application for its July 24, 2013, meeting. In the meantime, on May 23, 2013, members of the Department, Mr. Moore, and Hovnanian’s stormwater management engineer conducted a site visit to review the re-engineered stormwater facilities.

During the visit, Department members suggested additional changes to the system, which Hovnanian agreed to make. 5 Prior to the hearing, Mr. Moore issued his supplemental report and the Department filed comments on that report to the Board. Both Mr. Moore and the Department recommended approval of the license as presented in the revised application. The Board held a hearing on Hovnanian’s revised wetlands license application on July 24, 2013. At the hearing, the Board members discussed at length this Court’s 2012 opinion, and heard explanations of the legal standard to be applied by the Board, as interpreted by this Court, 6 from attorneys from ²¹⁰ the Office of the Attorney General.

Accordingly, then-Governor Martin O’Malley encouraged everyone at the hearing to address their remarks to the impacts on State wetlands. Mr. Moore, as Wetlands Administrator, and Dr. Robert Summers, as Deputy Secretary of the Department of the Environment, testified regarding the proposed development’s impacts on State wetlands. Mr. Moore commented on the reduced scope of the project, and stated his conclusion that the remaining two elements included in the application would “have no impact whatsoever to wetlands.” Similarly, Dr. Summers testified that following the full review in 2007 the Department had determined that the project met all regulatory requirements, and that by the time of the 2013 hearing, Hovnanian had “come back with a project that actually eliminated the wetlands impacts.” Dr. Summers stated in conclusion that the Department “recommend[ed] that [the project] can proceed, that it actually reduces the damages or the impacts that we had said previously had been properly mitigated and could be controlled.” The major topic of discussion at the hearing was the change in scope of the application and the project — namely, the removal of elements from the application, as well as the elimination of Phase Y and the proposed transfer of the Tanner Parcel to Queen Anne’s County. Charles Schaller, one of Hovnanian’s attorneys, advocated on behalf of Hovnanian at the meeting and described the proposed changes to the project as a “win-win situation for everybody.” Mr. Schaller explained that Hovnanian had reduced the density of the project, had removed some of the concerning stormwater drainage features, and was “committed to achieving environmental site design to the maximum extent practicable.” In addition, Mr. Schaller explained that Hovnanian was in negotiations with Queen Anne’s County for implementation of the transfer of the Tanner Parcel to the County for recreational ²¹¹ uses.

The Board took issue with the fact that the property transfer was not yet complete, and questioned Mr. Schaller about what “guarantees” the Board had that the property would not be developed later, thereby requiring a bridge over Cox Creek, etc., at some point in the future. Ultimately, the Board deferred a vote on Hovnanian’s application to provide “ample time” to “figure out better assurances” that the Tanner Parcel would be conveyed to the County for an ecopark or other non-private development use. The Queen Anne’s County Commissioners did not vote on the necessary agreement for the property transfer until October 8, 2013. Hovnanian and the County thereafter entered into a contract for the conveyance of the property, which included terms that incorporated the “assurances” required by the Board.

Although the next scheduled Board meeting occurred on October 16, 2013, the Board did not include Hovnanian’s wetlands license application on the meeting agenda. Around October 23, 2013, the Board learned that Mr. Moore had a previously undisclosed relationship with Mr. Schaller and Mr. Schaller’s law firm, which the Board viewed as a potential conflict of interest or, at least, an appearance of a conflict of interest. Mr. Moore first contacted the Board’s General Counsel on October 22, 2013, to discuss an ethical concern based upon his appointment and service since August 23, 2010, with Mr. Schaller as co-trustee of Mr. Moore’s brother-in-law’s testamentary trust. 7 In addition, Mr. Schaller’s law firm had previously served as Mr. Moore’s family lawyers. Board Counsel referred Mr. Moore to the State Ethics Commission.

After a meeting with the Ethics Commission, Mr. Moore informed Sheila McDonald, the Board Secretary, that he must recuse himself from any duties as Wetlands Administrator involving Mr. Schaller and his law firm, including the Hovnanian application. Around October 23, 2013, Ms. McDonald informed the Board members about Mr. Moore’s ²¹² actions vis á vis his potential conflict of interest. Concluding that this prior relationship between Mr. Moore and Mr. Schaller created, at least, an appearance of impropriety, the Board placed Hovnanian’s application on hold while it determined how best to protect the integrity of the administrative record. On November 8, 2013, Ms. McDonald informed Hovnanian that the application would not be placed on the Board’s agenda until the Board “evaluated the record before the Board in light of that relationship and had undertaken appropriate measures, if any, resulting from that evaluation.” Mr. Moore retired ultimately from his position as Wetlands Administrator.

The Board adopted an “expedited approach” in order to, in its words, “cur[e] any possible appearance of impropriety and ensur[e] that the Board could vote on a clean record, free from any ethical taint.” The Board anticipated that this process would take 60 to 90 days. On December 13, 2013, the Board informed Hovnanian by letter of its plan to review and ensure the integrity of the record following the apparent conflict of interest. In particular, the Board proposed that it would (1) strike from consideration Mr. Moore’s 2013 supplemental report; (2) require the Department to initiate a new review of the application and render an additional report; and (3) retain two independent environmental experts/professors from the University of Maryland to “stand in the shoes” of the Wetlands Administrator and conduct a review of the application and prepare a report of their findings. In addition to the two elements listed in the application, the Board requested the Department and the independent environmental experts to consider whether Hovnanian’s proposed revised stormwater management system required a wetlands license.

The Board also determined to strike the Department’s comments to Mr. Moore’s 2013 supplemental report. Meanwhile, the Board had not yet hired a new Wetlands Administrator. 8 ²¹³ On December 20, 2013, Hovnanian objected to the Board’s proposal and requested the Board to schedule a vote on the application based on the existing administrative record. On January 3, 2014, Ms. McDonald advised Hovnanian that the Board had not offered “any feedback that would cause [her] to change the course set forth in [the] December 13, 2013 letter.” On January 13, 2014, Hovnanian filed its current Complaint for Declaratory and Injunctive Relief and for a Writ of Mandamus in the Circuit Court for Queen Anne’s County. Through its Complaint, Hovnanian sought an order to compel the Board to review Hovnanian’s revised application and to vote on the application based on the existing administrative record without further delay.

Hovnanian also sought a preliminary injunction to halt the application review process ordered by the Board and the Board’s proposed plan to certify the integrity of the administrative record. The Board voluntarily agreed to do so, and Hovnanian withdrew its motion for preliminary injunction. As a result, all proceedings before the Board regarding Hovnanian’s application, including the conflict of interest “remediation plan,” were suspended pending the conclusion of the action in the Circuit Court. In its Complaint, Hovnanian asserted that the Circuit Court had jurisdiction over the matter, and that Hovnanian was not required to exhaust administrative remedies because the Board required Hovnanian to follow an “unauthorized procedural framework significantly at variance with applicable statutory and regulatory standards.” The Board moved to dismiss the Complaint on several grounds, including failure to exhaust administrative remedies, arguing that Hovnanian could challenge the Board’s allegedly illegal procedures via judicial review following a final administrative decision.

The Circuit Court dismissed Hovnanian’s claim for declaratory relief, but denied the Board’s motion as to Hovnanian’s other claims. Following discovery, both Hovnanian and the Board filed motions for summary judgment. Following a hearing on July 7, 2014, the Circuit Court for Queen Anne’s County granted summary judgment in favor of ²¹⁴ Hovnanian. The Circuit Court concluded that the Board had acted beyond its authority by deferring its vote on Hovnanian’s application, and that any further attempt by Hovnanian to advance its application would be “an exercise in futility.” The Circuit Court further concluded that, “[e]ven through the lens of extreme deference ... upon applying the reasonable person standard, no appearance of impropriety existed[,]” based on the facts that: (1) Mr. Moore made the disclosure; (2) Mr. Moore’s relationship to Mr. Schaller had no connection to the application process; (3) the 2013 report is the same as the 2007 report; (4) MDE members accompanied Mr. Moore during his 2013 site visit; and (5) there existed no evidence of improper actions.

Finally, the Circuit Court decided that the only thing left for the Board to do was to take a vote — a “mere[ ] execution of a task” (i.e., a ministerial function) — and, therefore, a writ of mandamus was properly within the court’s authority to issue. Thus, the Circuit Court ordered the Board to vote on Hovnanian’s application on or before Monday, October 6, 2014, and ordered the Board to limit its consideration to the impact to State tidal wetlands from the proposed sewer line under Cox Creek and the ten slip community marina, noting that “the issue of stormwater outflows, similar to the fate of the Tanner Parcel, is beyond the present authority of the [Board].” 9 On August 4, 2014, the Board noted a timely appeal to the Court of Special Appeals. Prior to any meaningful proceedings in that court, the Board filed a petition for certiorari to this Court, as well as a motion to stay the judgment of the Circuit Court. We granted both requests.

Bd. of Pub. Works v. K. Hovnanian’s Four Seasons at Kent Island, 439 Md. 694 , 98 A.3d 233 (2014). DISCUSSION This Court reviews a circuit court’s grant of summary judgment for legal correctness under a non-deferential stan ²¹⁵ dard of review. State Ctr.

LLC v. Lexington Charles Ltd. P’ship, 438 Md. 451, 497 , 92 A.3d 400, 427 (2014). In its Order in the instant case, the Circuit Court for Queen Anne’s County-characterized this action as a challenge to the Board’s “failure to act” and concluded that, therefore, Hovnanian’s action for mandamus was properly before the court despite the lack of a final administrative decision. Before beginning our analysis, we note that although the Circuit Court characterized this as a “failure to act” case, the parties agree that Hovnanian’s claims have centered on a challenge to the legality of the Board’s actions — namely, the process for remediating a perceived conflict of interest, which Hovnanian refers to as an “unauthorized procedural framework.” Moreover, both parties agree that there has been no final administrative decision and that, once such a decision is made, the decision would be subject to judicial review pursuant to Env. § 16-204. Hovnanian argues that the Circuit Court properly ruled in this case because there exists an “unauthorized procedures” exception to the exhaustion rule, which applies when a complainant challenges an agency’s use of unauthorized or illegal procedures.

In addition, Hovnanian contends that the court has authority to hear this case under the “mandate rule,” i.e., the inherent authority of the court to enforce its orders. The Board asserts that this action is premature and improper for two reasons: first, Hovnanian failed to await a final administrative decision, and, second, mandamus does not lie under these circumstances. Finality and Exhaustion It is a basic tenet of administrative law that “[w]here an administrative agency has primary or exclusive jurisdiction over a controversy, the parties to the controversy must ordinarily await a final administrative decision before resorting to the courts for resolution of the controversy.” State v. Maryland State Bd. of Contract Appeals, 364 Md. 446, 457 , 773 A.2d 504, 510 (2001). “To be ‘final,’ the order or decision must dispose of the case by deciding all question of law and fact and leave nothing further for the administrative body to decide.” ²¹⁶ Willis v. Montgomery Cnty., 415 Md. 523, 535 , 3 A.3d 448, 455-56 (2010). In addition, a claimant must exhaust all administrative remedies prior to bringing a challenge in