Brzowski v. Maryland Home Improvement Commission

HARRELL, Judge. Kenneth J. Brzowski, t/a Building By Design, Ltd., appeals from a decision of the Circuit Court for Montgomery County affirming a Final Order of the Maryland Home Improvement Commission (the Commission) which authorized payment from the Home Improvement Guaranty Fund (the Fund) on a claim filed by a homeowner, Raymond E. Odemns, who had contracted with appellant for home repair work. The homeowner claimed the work performed by appellant was of poor quality, and the dispute was submitted to arbitration. The arbitrator awarded Mr. Odemns $7,028.00.

The award was submitted then to the Commission. Appellant objected to the Commis ⁶²¹ sion authorizing payment from the Fund, because the arbitrator’s award did not comply with the conditions set forth in the Home Improvement Act (the Act), Md.Code Ann., Bus. Reg. § 8-401 et seq., which must be satisfied before payment from the Fund could be authorized. Nonetheless, the Commission approved the award for payment.

After concluding that the Act was remedial in nature, the circuit court affirmed the Order of the Commission. For the reasons stated below, we shall affirm. ISSUES Appellant presents the following issues, reordered and rephrased below: 1. Whether the form of an arbitration award must strictly comply with the provisions of Md.Code Ann., Bus.

Reg. § 8-409(a)(2) before the Maryland Home Improvement Commission may pay a claim from the Home Improvement Fund. 2. Whether an arbitrator has the power to modify or correct an award if neither party to the award has petitioned the arbitrator for a modification or correction within twenty days after delivery of the award as prescribed by Md.Code Ann., Cts. & Jud. Proc. § 8-222. FACTS Mr. Brzowski is the owner and operator of a business known as Building by Design, Ltd. and is a licensed contractor under the Maryland Home Improvement Act, Md.Code Ann., Bus.

Reg. § 8-101 et seq. Sometime before September 1992, the Department of Housing and Community Development of Prince George’s County (the Department) solicited bids for specified work to be performed at the home of Raymond Odemns, located in District Heights, Maryland. Building by Design won the contract with a bid of $9,235.00. Mr. Odemns and Building by Design entered into a contract on 8 September 1992.

Under the terms of the contract, Mr. Odemns and Mr. Brzowski agreed, inter alia, to submit all disputed claims to arbitration in accordance with the Construction Industry ⁶²² Arbitration Rules of the American Arbitration Association (AAA). • Work commenced on the project and Mr. Odemns authorized the Department to make most of the progress payments to Building by Design. At some point, however, Mr. Odemns became dissatisfied with the quality of appellant’s workmanship. Consequently, he complained to the Department and refused to approve the final payment of $900.00 due under the contract. In response to Mr. Odemns’ complaint, the Department dispatched a representative to inspect appellant’s work.

The Department official recommended that the matter be resolved by Mr. Odemns retaining the $900.00 to cure the alleged defects. Mr. Brzowski agreed to this proposal. In addition to retaining the $900.00, however, Mr. Odemns filed a written demand for arbitration with AAA dated 20 May 1994. A hearing was conducted by Arbitrator John D. Bond, Esquire, on 9 December 1994. 1 On 12 December, the arbitrator awarded Mr. Odemns $7,028.00.

Based upon this award, Mr. Odemns submitted a claim to the Commission for compensation from the Fund. On 20 March 1995, the Commission notified appellant that it intended to authorize payment to Mr. Odemns from the Fund based on the award, subject to appellant’s right to appeal the award. Appellant timely objected to the Commission’s proposal to authorize payment from the Fund, contending that the award did not comply with the provisions of Md.Code Ann., Bus. Reg. § 8-409(a)(2)(i).

Those provisions require that an arbitration award contain a statement by the arbitrator that he “expressly found on the merits that the claimant is entitled to recover under § 8-405(a) of this subtitle.” 2 ⁶²³ On 21 April 1995, the Executive Director of the Commission wrote a letter to Mr. Odemns, with copies to appellant and his attorney, in which she suggested that he obtain a statement from the arbitrator explaining the basis of his award. By letter to the Commission dated 27 April, appellant objected to this procedure. In response to Mr. Odemns’s request for an explanatory statement concerning the Award, the arbitrator sent a letter to AAA on 10 May that stated in part: “My award in favor of Mr. Odemns was based upon my determination that the work performed for him by Building by Design (Kenneth J. Brzowski) was performed in a grossly defective manner. The amount of the award reflects my determination of the amount required to properly correct the deficiencies in the work and make Mr. Odemns whole.” Based on the arbitrator’s letter of 10 May, the Commission issued its Final Order dated 22 June 1995 awarding Mr. Odemns $7,028.00, to be paid from the Fund.

In January 1996, appellant filed a Petition for Judicial Review with the Circuit Court for Montgomery County. On 4 March 1995, the court, after conducting a hearing, denied appellant’s petition. The court concluded that the Home Improvement Act was remedial in nature and, therefore, should be broadly construed. Hence, although the award did not satisfy the precise requirements of section 8-409(a)(2)(i), the court affirmed the Commission’s Final Order.

This appeal ensued. ANALYSIS I. Judicial review of a final decision of the Maryland Home Improvement Commission may be obtained by appeal to the circuit court. Md.Code Ann., Bus. Reg. § 8-314; State Gov’t §§ 10-222, 10-223; see generally Mayor and Aldermen of Annapolis v. Annapolis Waterfront Co., 284 Md. 383 , 393- ⁶²⁴ 99, 396 A.2d 1080 (1979).

The extent of judicial review of an administrative agency 3 decision is set forth in the Maryland Administrative Procedure Act. Md.Code Ann., State Gov’t. § 10-101 et seq. Although judicial review of an administrative decision is ordinarily limited in scope, Esslinger v. Baltimore City, 95 Md.App. 607, 623 , 622 A.2d 774, 782 , cert. denied, 331 Md. 479 , 628 A.2d 1066 (1993); Secretary of Health & Mental Hygiene v. Crowder, 43 Md.App. 276, 280 , 405 A.2d 279, 281 (1979), a court can and should review whether an agency has acted within its statutory powers or has otherwise made an error of law. Md.Code Ann., State Gov’t § 10-222(h)(8)(ii), (iv); Board of Educ. v. Paynter, 303 Md. 22, 35 , 491 A.2d 1186, 1192-93 (1985).

See Montgomery County v. Buckman, 333 Md. 516 , 519 n. 1, 636 A.2d 448 , 450 n. 1 (1994); Erb v. Maryland Dept. of the Env’t, 110 Md.App. 246, 255-56 , 676 A.2d 1017, 1022 (1996); General Motors Corp. v. Bark, 79 Md.App. 68, 71-72 , 555 A.2d 542, 543-4 (1989). In the case sub judice, after conducting a hearing encompassing a scant twelve pages of transcript, the circuit court summarily concluded that “it is clear from the face of the award ... that [it] satisfies the statute [Md.Code Ann., Bus. Reg. § 8-409].” We presume that the circuit court was referring to the arbitrator’s award, as it was originally presented to the Commission, which merely stated: BUILDING BY DESIGN, KENNETH J. BRZOWSKI (Respondent) shall pay to RAYMOND E. & LINDA F. ODEMNS (claimant) the amount of SEVEN THOUSAND AND TWENTY-EIGHT DOLLARS ($7,028.00) within thirty (30) days of the date of this Award. ⁶²⁵ The first point appellant seeks to establish is that the award as originally presented to the Commission could not support payment from the Fund because the award did not conform to the specific requirements of Md.Code Ann., Bus. Reg. §§ 8-409(a) and 8-405(a).

According to appellant’s construction of the statute, the Commission may not authorize payment from the Fund until it has received a certified award from an arbitrator expressly stating that, based upon a determination rendered on the merits, the claimant is entitled to recover under the provisions of section 8-405(a). Section 8-405(a) provides that a claimant may only recover for an “actual loss,” which is defined in section 8-401. Appellant, therefore, concludes that by ordering payment from the Fund in contravention of the requirements of section 8-409(a), the Commission exceeded the scope of its statutory authority. 4 The Commission, on the other hand, asks this Court to apply a liberal construction to the Act in light of its remedial purpose. Further, the Commission suggests that the Act, when viewed in its entirety, evidences the legislature’s ⁶²⁶ intent to ensure that homeowners who have prevailed against a contractor in arbitration proceedings are afforded access to the additional remedy provided by the Fund.

The Commission further contends that deference should be accorded to its previous liberal constructions of the statute in which it has sought to achieve the remedial purposes sought by the legislature’s enactment of the Statute. The Commission, however, fails to enumerate any particular instances when the Commission actually applied a liberal construction to its statute. Finally, the Commission argues that appellant’s construction of the statute flies in the face of the legislature’s intent, because Md.Code Ann., Bus. Reg. § 8-408(b)(3)(i) mandates that the Commission shall approve a final judgment or arbitration award decided in favor of a claimant.

All questions relating to the statutory power or authority of an agency to make an order or decision that it undertook to make are subject to judicial review. See generally N.L.R.B v. Jones & Laughlin Steel Corp., 301 U.S. 1 , 57 S.Ct. 615 , 81 L.Ed. 893 (1937); Interstate Commerce Commission v. Illinois C.R. Co., 215 U.S. 452 , 30 S.Ct. 155 , 54 L.Ed. 280 (1910). Administrative agencies derive all their authority and power from the enabling statutes that govern them. Annapolis Waterfront Co., supra; Dal Maso v. Board of County Comm’rs, 182 Md. 200, 205 , 34 A.2d 464, 466 (1943); Department of Economic and Employment Dev. v. Lilley, 106 Md.App. 744, 758 , 666 A.2d 921, 928 (1995).

Stated differently, agencies have no powers beyond those that have been conferred upon them by statute. A determination of the limits of an agency’s authority, therefore, requires a construction of an agency’s enabling statute. Such construction is a question of law, and therefore, for a court to decide. Falcone v. Palmer Ford, Inc., 242 Md. 487, 493-94 , 219 A.2d 808, 810 (1966); Mayor and City Council of Ocean City v. Purnell-Jarvis, Ltd., 86 Md.App. 390, 413 , 586 A.2d 816, 827 (1991).

Our prime directive when construing a statute is to ascertain and effectuate the intention or purpose of the legislature as expressed in the statute. Bowen v. Smith, 342 Md. 449, 454 , 677 A.2d 81, 83 (1996). See State v. Bricker, 321 Md. ⁶²⁷ 86, 92, 581 A.2d 9, 12 (1990). Said intention must be ascertained primarily from the language used in the statute.

Klingenberg v. Klingenberg, 342 Md. 315, 327 , 675 A.2d 551, 557 (1996). When the language of a statute is plain and unambiguous, there is usually no need for a court to inquire further. Board of Trustees of Md. State Retirement & Pension Sys. v. Hughes, 340 Md. 1, 7-8 , 664 A.2d 1250, 1253 (1995). If the language of a statute is clear and expresses the intention of the legislature, it must be construed to give effect to that intention regardless of the consequences, even though such effect may cause a hardship.

Schmeizl v. Schmeizl, 186 Md. 371, 375 , 46 A.2d 619, 621 (1946). Simply put, a court construing an unambiguous statute must view the law as it is, and not as it might wish it to be. Department of Economic & Employment Dev. v. Taylor, 108 Md.App. 250, 277 , 671 A.2d 523, 537 , cert. granted, 343 Md. 332 , 681 A.2d 68 (1996). See In re Adoption/Guardianship No. A91-71A, 334 Md. 538, 557 , 640 A.2d 1085, 1095 (1994).

To ascertain the legislature’s intent, a statute must also be construed as a whole with all parts considered together. Jones v. State, 311 Md. 398, 404 , 535 A.2d 471, 474 (1988). In expounding on part of a statute, resort should be had to every other part. Scott v. State, 297 Md. 235, 245 , 465 A.2d 1126, 1132 (1983).

Thus, a court should examine the context of the statutory scheme in which the particular provision appears. Revis v. Maryland Auto. Ins. Fund, 322 Md. 683, 686 , 589 A.2d 483, 484 (1991).

Finally, in construing a statute to ascertain the legislative intent, we should consider the object to be accomplished, Montgomery Citizens League v. Greenhalgh, 253 Md. 151, 158 , 252 A.2d 242, 245 (1969); Gunpowder Horse Stables v. State Farm Auto. Ins. Co., 108 Md.App. 612, 617 , 673 A.2d 721, 724 (1996), the evils or mischief sought to be remedied, Sinai Hosp. of Balto., Inc. v. Department of Employment & Training, 309 Md. 28, 40 , 522 A.2d 382, 388 (1987); Maryland-Nat’l Capital Park & Planning Comm’n v. State Dep't of Assessments and Taxation, 110 Md.App. 677, 689 , 678 A.2d 602, 607 , cert. granted, 344 Md. 52 , 684 A.2d 1327 (1996), the purpose to be sustained, and should ⁶²⁸ construe it so as to carry out and effectuate its purpose. Mustafa v. State, 323 Md. 65, 72 , 591 A.2d 481, 484 (1991).

The Maryland Home Improvement Law is a regulatory statute enacted for the protection of the public. Harry Beren-ter, Inc. v. Berman, 258 Md. 290, 294 , 265 A.2d 759, 761 (1970). The Act established the Maryland Home Improvement Commission within the Department of Labor, Licensing, and Regulation. Md.Code.

Ann., Bus. Reg. §§ 8-201; l-101(f). The Commission’s primary functions are to investigate complaints about home improvement contractors, id., § 8-206(b), (d), and administer the licensing of those contractors in this state. Id., § 8-301, et seq.

The Act also established the Home Improvement Guaranty Fund. Id., § 8-401 et seq. The Fund was created to provide an additional remedy for homeowners who suffered actual loss due to unsatisfactory work performed by a home improvement contractor. Md Ann.Code art. 56, § 257A(a) (Supp.1985) (re-codified at Md.Code Ann., Bus.

Reg., §§ 8-403(a), -405(a)); 5 Senate Economic and Environmental Affairs Committee, Bill Analysis for Senate Bill 507 at 2 (1985). The statutory provisions governing the administration of the Fund, however, limit payments from the Fund to only those claims that establish that a homeowner has suffered “actual loss” due to the act or omission of a licensed contractor. Md.Code Ann., Bus. Reg. § 8-405(a).

We shall explain further. A claim for reimbursement from the Fund requires the submission of a claim to the Commission, with “the amount claimed based on the actual loss.” Id., § 8-406(1) (emphasis ⁶²⁹ added). Upon receipt of a claim, the Commission must transmit a copy of the claim to the contractor “alleged to be responsible for the actual loss.” Id., § 8-4Q7(b)(l) (emphasis added). Actual loss “means the costs of restoration, repair, replacement, or completion that arise from an unworkmanlike, inadequate, or incomplete home improvement.” Id., § 8-401 (emphasis added).

By employing the word “means,” as opposed to “includes,” the legislature intended to limit the scope of “actual loss” to the items listed in section 8-401. See Colautti v. Franklin, 439 U.S. 379 , 392 n. 10, 99 S.Ct. 675 , 684 n. 10, 58 L.Ed.2d 596 (1979) (definition that declares “means” excludes any meaning not stated); National Wildlife Fed’n v. Gorsuch, 693 F.2d 156 , 172 (D.C.Cir.1982) (same); Federal Power Comm’n v. Corp. Comm’n of Okla., 362 F.Supp. 522, 544 (W.D.Okla.1973) (“means” is verb of limitation, while “includes” is verb of enlargement), aff'd, 415 U.S. 961 , 94 S.Ct. 1548 , 39 L.Ed.2d 863 (1974); see also Harris v. State, 179 Miss. 38 , 175 So. 342, 343 (1937) (holding that word “means” in subsection defining certain terms was not being used synonymously with word “includes”). Cf. Group Health Ass’n, v. Blumenthal, 295 Md. 104, 111 , 453 A.2d 1198, 1203 (1983) (“ ‘Including’ means comprising by illustration and not by way of limitation”); Exxon Corp. v. Lujan, 730 F.Supp. 1535, 1545 (D.Wyo.1990) (use of word “includes” rather than the word “means” in a regulatory definition indicates that what follows is a nonexclusive list which may be enlarged upon), aff'd, 970 F.2d 757 (10th Cir.1992).

When the Commission orders payment from the Fund, serious repercussions can be visited upon the contractor responsible for the actual loss that the Fund payment sought to compensate. For instance, if the Commission pays any amount from the Fund on account of a contractor’s conduct, the Commission may suspend the contractor’s license if he fails to reimburse the Fund in full. Md.Code Ann., Bus. Reg. § 8-411.

Naturally, loss of license can have dire consequences for a contractor. A person may not act as contractor in this state without a contractor’s license. Id., § 8-6Ql(a). Indeed, “a licensed person will not be given the assistance of ⁶³⁰ the courts in enforcing contracts within the provisions of the regulatory statute because such enforcement is against public policy.” Harry Berenter, 258 Md. at 293 , 265 A.2d at 761 .

See Donmar Md. Corp. v. Hawkesworth, 46 Md.App. 575, 576 , 420 A.2d 295 (1980). Furthermore, if the Commission pays a claim against the Fund, the rights of the claimant against the contractor are subrogated to the Commission to the extent of the amount paid to the claimant from the Fund. Md.Code Ann., Bus. Reg. § 8-410(a)(l).

The Commission, therefore, may sue any contractor on whose account a claim was paid, if the contractor does not reimburse the Fund in full, including interest. Id., § 8-410(b). Section 8-409 of the Act serves as a check on the Commission’s ability to use the Fund as a club to punish contractors who are on the losing end of arbitration awards or judicial decisions. To this end, the section specifies the requirements that must be met before the Commission may order payment of a claim against the Fund: § 8-409.

Payments from Fund. (a) In general. — The Commission may order payment of a claim against the Fund only if: (1) the decision or order of the Commission is final in accordance with Title 10, Subtitle 2 of the State Government Article 6 and all rights of appeal are exhausted; or (2) the claimant provides the Commission with a certified copy of a final judgment of a court of competent jurisdiction or a final award in arbitration, with all rights of appeal exhausted, in which the court or arbitrator: (i) expressly has found on the merits that the claimant is entitled to recover under § 8-405(a) of this subtitle; and (ii) has found the value of the actual loss ... (1992). A claimant has essentially three avenues from which he can obtain relief from the Fund.

He can file a claim ⁶³¹ directly with the Commission or proceed initially in court or in an arbitration proceeding. When the Commission conducts its own hearing on whether a claimant should be compensated from the Fund, it is presumed that the Commission is aware of the Fund’s limited purpose, to compensate for actual loss as defined by section 8-401. Thus, any award the Commission makes from the Fund must be for actual loss, because the Commission is presumed to know the scope of its authority, and act within those bounds. See Johnstown Coal & Coke Co. v. Dishong, 198 Md. 467, 474 , 84 A.2d 847, 849 (1951) (holding that it may be presumed that an agency has performed its duties in accordance with and under the law), overruled on other grounds, Criminal Injuries Compensation Bd. v. Gould, 273 Md. 486 , 331 A.2d 55 (1975).

No such presumption arises under the statutory scheme, however, for either an arbitration award or a judgment rendered by a court. A multitude of remedies might be granted by either forum, only some of which may fall within the finite scope of actual loss as defined by section 8-401. See Baltimore County v. Mayor & City Council of Baltimore, 329 Md. 692, 708 , 621 A.2d 864, 871 (1993) (arbitrators have broad discretion in fashioning remedy); Baltimore Teachers Union, Am. Fed’n of Teachers, Local 340 v. Mayor and City Council of Balto., 108 Md.App. 167, 192 , 671 A.2d 80, 92 , cert. denied, 342 Md. 472 , 677 A.2d 565 (1996) (same).

Thus, an award arising out of either judicial or arbitration proceedings may compensate the claimant for items of damage which do not fall within the statutory definition of “actual loss.” Mindful of this potential scenario, the legislature in drafting the statute, required that Fund claimants who choose to proceed initially in court or through arbitration supply the Commission with a final judgment or award which states the amount of actual loss, the amount which can be paid legally from the Fund. 7 In ⁶³² particular, the court’s or arbitrator’s award must contain an express finding of fault on the part of the contractor and a determination of the dollar value of actual loss before the Commission can authorize payment from the Fund. 8 Our construction of the statute also derives support from an examination of the legislative history behind the provisions governing the Fund. We first turn to the language of section 8-409 as it appeared when first enacted in 1985, prior to the recodification of the Act. § 257E. Payments from Fund... (a) Payments. ... [T]he Commission may direct payment from the Fund only if: (1) The Commission’s decision or order has become final in accordance with the Administrative Procedure Act with all rights of appeal exhausted; or (2) The claimant provides the Commission with a certified copy of a final judgment of a court of competent jurisdiction, or a final award in arbitration with all rights of appeal exhausted, in which the