Garrity v. Maryland State Board of Plumbing

ZARNOCH, J. In this case of successive administrative enforcement actions brought by State agencies over a plumber’s use of unlicensed employees, the appellant, Wayne Garrity, Sr. asks this Court to apply double jeopardy principles to bar imposition of a second civil penalty, but to reject agency resort to the short-cut of collateral estoppel to prevent a second administrative trial. In short, he simultaneously asserts claims of piling on and not piling on enough. Finding no foul, we affirm the Circuit Court for Baltimore City and uphold the enforcement action of the Maryland State Plumbing Board. FACTS AND PROCEEDINGS Garrity worked as a plumber in Maryland for thirty-five years.

For much of that time, he was a licensed master plumber and the sole manager of All State Plumbing, Inc. and ⁶⁸² in effective control, through his wife, of All State Plumbing, Heating & Cooling (“All State”). He was licensed by the Maryland State Plumbing Board (“the Plumbing Board”), created pursuant to Md.Code (1989, 2010 Repl.Vol.), Business Occupations and Professions Article (BO & P), §§ 12-301 et seq. (the Maryland Plumbing Act or MPA). On February 23, 2012, the Consumer Protection Division of the Attorney General’s Office (CPD) filed a Statement of Charges alleging that All State and Garrity had violated the Consumer Protection Act (CPA). 1 Specifically, they were accused of unfair and deceptive trade practices in violation of CL §§ 13-301 through 13-305.

During a contested two-day hearing, an Administrative Law Judge considered eighty-four exhibits and heard from over twenty witnesses. Garrity did not testify. On November 7, 2012, the ALJ issued a Proposed Decision finding that Garrity and All State had violated the CPA. No exceptions were taken.

As a result, on January 3, 2013, the CPD’s designee issued Findings of Fact and Conclusions of Law, noting that between 2005 and 2010, All State had employed two plumbers whose licenses had been revoked by the Board, and that while employed by All State, these plumbers had performed over 6,000 plumbing jobs while not being licensed. In addition, the CPD found that All State charged consumers between $100 and $175 for permits for certain plumbing services, but routinely failed to obtain required permits or schedule the required inspections of water heaters installed in at least 697 homes in Maryland. The CPD also issued a Final Order concluding that All State and Garrity had committed at least 7,079 violations of the CPA by engaging in unfair or deceptive practices related to providing plumbing services. The CPD imposed a $707,900 civil penalty and assessed $35,000 for costs incurred in investigating and prosecuting the matter.

The CPD also ordered Garrity to cease and desist from acts and omissions that violate the CPA and to pay into a restitution fund to be ⁶⁸³ distributed by the CPD to qualified consumers. No judicial review of this decision was sought. After reviewing the CPD’s Final Order, the Plumbing Board opened a complaint against Garrity. After unsuccessful requests for documentation from Garrity, the Board issued a Charge Letter alleging that Garrity had violated BO & P § 12 3-12(a)(l)(iii) by the provision of incompetent and or negligent plumbing services; § 12 3-12(a)(l)(iv) by his failures to obtain permits required by local jurisdictions; § 12 3 — 12(a)(l)(vi) by having been found guilty of unfair trade practices; § 12 3-12(a)(l)(xi) by knowingly permitting employees to work outside the scope of their licenses; and § 12 3-12(a)(l)(xii) by employing unlicensed persons to provide or assist in providing plumbing services in violation of § 12-602(a)(l).

On May 16, 2013, the Plumbing Board held an evidentiary hearing on these charges. Garrity was represented by counsel and refused to testify, called no witnesses, and offered no evidentiary exhibits. Instead, his attorney objected to the Board’s consideration of the CPD’s Findings of Fact and Final Order, insisting that the Board should be required to independently prove the facts alleged in the Charge Letter. The Board’s counsel argued that Garrity was collaterally estopped from re-litigating the same facts that had already been determined by the CPD in its Final Order.

The Board accepted this order into evidence, but did not rule on whether collateral estoppel applied, and Garrity did not seek postponement of the hearing pending the Board’s ruling. The Board issued a Final Decision and Order on July 9, 2013. Based on the factual findings in the CPD’s Final Order and applying collateral estoppel, the Board concluded that Garrity had violated the provisions of the MPA as alleged in the Charge Letter. The Board revoked his master plumbing license and imposed a $75,000 civil monetary penalty.

Garrity filed a Petition for Judicial Review in the Circuit Court for Baltimore City. 2 The circuit court upheld the action of the Plumbing Board and this appeal followed. ⁶⁸⁴ QUESTIONS PRESENTED Garrity asks: 1. Did the Final Order of the CPD meet the legal requirement of a “final judgment,” as established in Culver v. Md. Ins. Comm’r, 175 Md.App. 645 [ 931 A.2d 537 ] (2007), so that the Plumbing Board could properly use it, in lieu of actual evidence to meet its own burden of proof in its later case against Garrity? 2. Did the State of Maryland violate Garrity’s double jeopardy protections under the 5th Amendment to the U.S. Constitution, when, for the same alleged conduct, its Plumbing Board punished him a 2nd time with a $75,000 civil penalty right after its CPD had already punished him a first time with a $707,900 civil penalty?

DISCUSSION I. Standard of Review In Maryland Aviation Administration v. Noland, 386 Md. 556 , 873 A.2d 1145 (2005), the Court of Appeals explained: A court’s role in reviewing an administrative agency adjudicatory decision is narrow; it is limited to determining if there is substantial evidence in the record as a whole to support the agency’s findings and conclusions, and to determine if the administrative decision is premised upon an erroneous conclusion of law. Id. at 571-72 , 873 A.2d 1145 (Citations and quotations omitted). Garrity does not contest the sufficiency of evidence. Instead, he argues that the Board erred in its legal determination that Garrity was collaterally estopped from calling for the Board to investigate the facts established in the CPD’s Final Order.

We typically give “considerable weight” to an agency’s interpretation of the statutes it administers. Id. at 572 , 873 A.2d 1145 . The application of collateral estoppel, however, is a separate legal question, subject to de novo review. Shader v. Hampton Imp.

Ass’n, Inc., 217 Md.App. 581, 605 , 94 ⁶⁸⁵ A.3d 224 (2014); see Spencer v. Maryland State Bd. of Pharmacy, 380 Md. 515, 528-29 , 846 A.2d 341 (2004). The same is true of whether multiple civil penalties violate the Fifth Amendment to the U.S. Constitution. Thus, we must determine whether the Board’s conclusions are legally correct, without deference to its actions. Gebhardt & Smith LLP v. Maryland Port Admin., 188 Md.App. 532, 564 , 982 A.2d 876 (2009).

II

Offensive Nonmutual Collateral Estoppel Garrity characterizes the Plumbing Board’s reliance upon the CPD decision as use of “offensive non-mutual collateral estoppel.” This is a version of the doctrine of collateral estoppel that arises when the plaintiff in the second case seeks to foreclose the defendant from re-litigating an issue the defendant has previously litigated unsuccessfully against other plaintiffs. 3 Rourke v. Amchem, 384 Md. 329, 341 , 863 A.2d 926 (2004). He claims that there is not “one single reported case in Maryland where offensive non-mutual collateral estoppel had actually been upheld, wherein the predicate, fact-finding forum was ... an administrative agency.” In other words, he asserts that an agency may not rely on the facts found by a different agency, even when both adjudications involve the same defendant and the same issue. Garrity argues that the CPD is not “a real court,” and therefore cannot issue a “final judgment.” The Board dismisses this as a “largely unsupported and purely semantic argument ... ignoring clear judicial precedent.” Collateral estoppel may be used offensively or defensively. The Court of Appeals has followed a four-part test that must be satisfied for the doctrine of collateral estoppel to apply: 1.

Was the issue decided in the prior adjudication identical with the one presented in the action in question? 2. Was there a final judgment on the merits? ⁶⁸⁶ 3. Was the party against whom the plea is asserted a party or in privity with a party to the prior adjudication? 4. Was the party against whom the plea is asserted given a fair opportunity to be heard on the issue?

Burruss v. Bd. of Cnty. Commissioners of Frederick Cnty., 427 Md. 231, 249-50 , 46 A.3d 1182 (2012) (Citation omitted). Garrity does not contest prongs 1 or 4. Garrity’s misrepresentations about the qualifications of his plumbers and procurement of permits constituted violations of both the CPA and the MPA; thus, “identical” issues were before the CPD and the Plumbing Board.

Further, Garrity was the party charged in both actions, and he was given a fair opportunity to be heard before the CPD and the Board, yet refused to testify or present evidence. Moreover, he had an opportunity to seek judicial review of the CPD’s Final Order, but did not. Garrity’s remaining arguments are unpersuasive. First, collateral estoppel gives preclusive effect to the findings of an adjudicator, even between different parties, in a subsequent proceeding on the same issue.

Second, administrative agencies, acting in a quasi-judicial capacity, are treated as “courts” that can issue orders and rulings for the purposes of collateral estoppel. For the reasons set forth below, we believe that because the CPD thoroughly examined Garrity’s violations of the CPA and the MPA, the Plumbing Board did not err in relying on those findings in reaching its own conclusions. a. When is Offensive Nonmutual Collateral Estoppel Appropriate? Under the doctrine of collateral estoppel, “ ‘[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.’ ” Murray Int’l Freight Corp. v. Graham, 315 Md. 543, 547 , 555 A.2d 502 (1989) (quoting Restatement (Second) of ⁶⁸⁷ Judgments § 27 (1982)) (hereinafter Restatement ). 4 That is, if Plaintiff A proves a Defendant’s violation before a court, Plaintiff B may rely on those findings in a separate adjudication against the same Defendant in a different court.

See Restatement § 29 (“A party precluded from relitigating an issue with an opposing party ... is also precluded from doing so with another person unless the fact that he lacked full and fair opportunity to litigate the issue in the first action or other circumstances justify affording him an opportunity to relitigate the issue” 5 ) (Emphasis added). Like res judicata, collateral estoppel is based on “the sound and obvious principle of judicial policy that a losing litigant deserves no rematch after a defeat fairly suffered, in adversarial proceedings, on an issue identical in substance to the one he subsequently seeks to raise.” Dep’t of Human Res. v. Thompson, 103 Md.App. 175, 194 , 652 A.2d 1183 (1995) (quoting Astoria Federal S & L v. Solimino, 501 U.S. 104, 107 , 111 S.Ct. 2166 , 115 L.Ed.2d 96 (1991)). The purpose of this rule is to avoid “the expense and vexation of multiple lawsuits, conserve judicial resources, and foster reliance on judicial action by minimizing the possibilities of inconsistent decisions.” Bryan v. State Farm Mut. Auto.

Ins. Co., 205 Md. App. 587, 592 , 45 A.3d 936 (2012). Garrity argues that the Board may not rely on findings of fact from the CPD hearing, noting that there was not “complete mutuality between the parties” because the adjudications involved two different state agencies. Garrity misstates the law here.

Although traditionally the Court held that all four requirements must be met, i.e., that there was ⁶⁸⁸ “mutuality of parties,” see Pat Perusse Realty Co. v. Lingo, 249 Md. 33, 45 , 238 A.2d 100 (1968), the Supreme Court has said that “offensive nonmutual collateral estoppel” may apply to subsequent proceedings between two distinct parties. See Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322, 329-30 , 99 S.Ct. 645 , 58 L.Ed.2d 552 (1979); Rourke, 384 Md. at 350 , 863 A.2d 926 . In the context of civil actions between private, non-governmental parties, courts have noted two general concerns that could limit the application of this doctrine. The Court of Appeals followed Parklane in Rourke, 384 Md. at 350 , 863 A.2d 926 and reiterated the Supreme Court’s two major policy concerns with the application of the doctrine: judicial economy and fairness.

The Rourke Court summarized Parklane, 439 U.S. at 330-31 , 99 S.Ct. 645 , and explained this first concern: First, offensive use of collateral estoppel does not promote judicial economy in the same manner as defensive use does. The Court explained that, whereas defensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action, if possible, offensive collateral estoppel creates a contrary incentive: [sjince a plaintiff will be able to rely on a previous judgment against a defendant but will not be bound by that judgment if the defendant wins, the plaintiff has every incentive to adopt a ‘wait and see’ attitude, in the hope that the first action by another plaintiff will result in a favorable judgment. Rourke, 384 Md. at 350 , 863 A.2d 926 (Quotation omitted). Second, the Court of Appeals was concerned with the fairness of offensive nonmutual collateral estoppel, including: (1) that [i]f a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously, particularly if future suits are not foreseeable, (2) offensive use may be unfair as well “if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant, and (3) such use may be unfair where the second ⁶⁸⁹ action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result.” Rourke, 384 Md. at 350 , 863 A.2d 926 (Quotation omitted).

In light of these twin concerns of judicial economy and fairness, we recognize that the Court of Appeals has never rejected offensive nonmutual collateral estoppel as a doctrine, but merely found it inappropriate to the specific facts of the cases before it. In Rourke , the Court held the doctrine must be applied consistent with the conflict of laws principles. In that case, which arose from “consolidated settlement of several hundred asbestos-related personal injury and wrongful death actions,” the Court considered whether to give “common law collateral estoppel effect to a judgment of the Supreme Court of Virginia involving none of the plaintiffs and only three of the thirteen defendants in this case.” Id. at 332-33 , 863 A.2d 926 . Because “under the Maryland law of conflict of laws, the res judicata effect to be given to the judgment of another State is that which the judgment would have in the State where it was rendered,” and Virginia did not recognize “offensive non-mutual collateral estoppel,” the Court rejected its use.

Id. at 342 , 863 A.2d 926 . The Court has found it unfair to apply this doctrine where the predicate court’s judgment was reached through a lower standard of proof, or if the court is acting in a non-judicial role. This is common in the context of attorney discipline cases, and as such, courts rarely apply this version of collateral estoppel in that context. See Attorney Grievance Comm’n of Maryland v. Bear, 362 Md. 123 , 763 A.2d 175 (2000) (“Jurisdictions that have dealt with the precise issue presented by this case almost uniformly refuse to give preclusive effect to issues decided in a civil case under a preponderance of the evidence standard in a subsequent attorney discipline proceeding.”) In Bear , the Court refused to adopt the findings of a District of Columbia court because the “original findings of fact to which preclusive effect is sought to be given were made under a less stringent standard of proof than is required in an attorney disciplinary action.” Id. at 125 , 763 A.2d 175 .

And ⁶⁹⁰ in Attorney Grievance Comm’n v. Miller, 310 Md. 163 , 528 A.2d 481 (1987), the doctrine was found inappropriate where a federal appellate court was not sitting as a judicial tribunal in a disciplinary proceeding but was conducting a judicial review of an agency decision. Id. at 171-72 , 528 A.2d 481 . The issue for the Court was whether Miller was guilty of misconduct and should be disciplined; however, the D.C. Circuit was only reviewing a federal agency’s decision under an arbitrary and capricious standard. Id. at 172 , 528 A.2d 481 .

Where the burdens of proof and the alleged conduct at issue are the same, however, other States have upheld the use of offensive nonmutual collateral estoppel in a subsequent attorney disciplinary action. See, e.g., Office of Disciplinary Counsel v. Kiesewetter, 585 Pa. 477, 481 , 889 A.2d 47 (2005) (Disbarment as a result of a 1994 federal civil jury verdict entered against respondent for fraud). And in In re Caranchini, 956 S.W.2d 910, 913 (Mo.1997), the Missouri Supreme Court relied on a federal court’s finding that an attorney had made unsupported and frivolous arguments in its disciplinary proceeding. A different fairness concern arose in Burrass, where the Court also found it unfair to apply offensive nonmutual collateral estoppel because the predicate ruling was legally incorrect. 427 Md. at 252 , 46 A.3d 1182 .

In that ease, plaintiffs in Anne Arundel and Frederick County filed separate actions to challenge the legal standard to assess the authenticity of petition signatures. After the trial judge in the Anne Arundel County case adopted a “sufficient cumulative information” standard, the Frederick County plaintiffs sought to apply that ruling in their case. The Court of Appeals observed that the defendants to the action were different, so the doctrine could not apply. Although initially stating that the Court had “not, since we issued our opinion in Rourke , adopted or applied the doctrine of offensive nonmutual collateral estoppel,” it noted that “we deem the Supreme Court’s analysis in Parklane persuasive.” 427 Md. at 252 , 46 A.3d 1182 .

Echoing Rourke , the Court in ⁶⁹¹ Burruss examined the judicial economy and fairness concerns, and found that the Anne Arundel court was legally incorrect, id., as the Court of Appeals had determined that same year in Maryland State Bd. of Elections v. Libertarian Party of Maryland, 426 Md. 488, 514-15 , 44 A.3d 1002 (2012). The Court concluded that [i]t would be unfair to bind Respondents to an incorrect interpretation of the law, as determined by another trial court, that could have been, and should have been, interpreted correctly by that trial court. Furthermore, this Court’s recent holding in Libertarian Party reaffirmed that the petition signature requirements in § 6-203(a) [of the Election Law Article] are mandatory, and it would be unfair to bind Respondents to an interpretation of the law inconsistent with our holding in that case. Therefore, we decline to adopt the doctrine of offensive non-mutual collateral estoppel in the case sub judice.

Id. at 252, 46 A.3d 1182 . We agree with the reasoning of the Court in Burruss , but do not see how it precludes application of offensive nonmutual collateral estoppel here. This Court has upheld use of this doctrine in a case somewhat similar to this one. 6 In Culver , we concluded that the Maryland Insurance Agency (MIA) could rely on the Attorney Grievance Commission’s findings when it revoked Culver’s insurance license. Culver, 175 Md.App. 645 , 931 A.2d 537 .

We noted that there was no concern that the MIA would adopt a “wait and see” attitude toward the first action ... because the MIA is not a plaintiff seeking a windfall without any work. Rather, as a regulatory body, the MIA is charged with protecting consumers from untrustworthy insurance producers by revoking or denying their licenses. When the MIA discovered that the highest court of this state had found that Culver acted dishonestly, it refused to allow appellant to relitigate the underlying facts found by that Court. The MIA’s actions did not constitute the kind ⁶⁹² of “wait and see” attitude that troubled the Parklane Hosiery court.

Id. at 656 , 931 A.2d 537 . Here, two separate state agencies sought to prosecute a licensee for the same illegal course of conduct. Unlike private parties, the CPD and the MSPB could not join their proceedings together, because administrative agencies can only adjudicate violations of their own statutes. For this reason, offensive nonmutual collateral estoppel is appropriate when the plaintiffs are two government agencies unable to jointly bring their case in a single proceeding.

We also found in Culver that the doctrine would not be unfair: The Court’s second concern — fairness to the defendant— contemplates three scenarios in which the use of offensive nonmutual collateral estoppel would be unfair to the defendant. None of the scenarios are here present. Appellant had every “incentive to defend vigorously” in the action that resulted in his disbarment. Similarly, the present case is not one where “the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant.” Nor is this a case in which procedural protections afforded in the later case may lead to a result inconsistent with the prior action.

In sum, application of collateral estoppel principles to the case sub judice would satisfy all of the concerns identified in Park-lane Hosiery and reiterated in Rourke . Id. at 656-57, 931 A.2d 537 . In this case, Garrity was not being sued for “small or nominal damages,” but the CPD adjudication resulted in more than $700,000 in civil penalties. This fine, for a small business owner, was hardly nominal, and Garrity had every incentive to defend his case.

The additional fairness concerns raised in Rourke and Park-lane are not present here. There is no risk that “the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant.” Parklane, 439 U.S. at 330 , 99 S.Ct. 645 . That ⁶⁹³ was clearly not an issue, because there were no prior judgments favoring