Housing Authority v. Bennett

ELDRIDGE, Judge. The Local Government Tort Claims Act (LGTCA), Maryland Code (1974, 1998 Repl.Vol., 1999 Supp.), §§ 5-301 through 5-304 of the Courts and Judicial Proceedings Article, makes all entities defined therein as “local governments” responsible for the legal defense of their employees, and liable for judgments for compensatory damages rendered against their employees, in suits against the employees based on tortious acts committed in the scope of their governmental employment. In addition, the LGTCA prohibits local governments from asserting the defense of governmental immunity to avoid this responsibility and liability, and it establishes ³⁵⁸ monetary caps per individual claim and occurrence on the recoverable damages. This case concerns the scope of the LGTCA’s caps on damages.

In particular, the case at bar requires us to decide whether the damages cap provision applies to a judgment against a local government agency in a tort action which is authorized by another statute enacted by the General Assembly prior to the LGTCA and reenacted after the LGTCA. 1 I. To understand the underlying issue in this case, namely to what extent the LGTCA’s caps on damages affect local government tort liability under other law, and the tort liability of housing authorities in particular, it would be useful to summarize the status of local governmental immunity from suit up to and including the enactment of the LGTCA and its amendment pertaining to housing authorities. A. Unlike the sovereign immunity of the State and its agencies, which has been addressed by the General Assembly at various times in the history of Maryland, the matter of local government immunity prior to enactment of the LGTCA was shaped largely by judicial decisions and by statutes dealing with specific agencies or specific matters. See Austin v. City of Baltimore, 286 Md. 51, 69-72 , 405 A.2d 255, 264-266 (1979) (concurring and dissenting opinion). Until the twentieth century, local governments generally had no immunity under Maryland common law in either tort or contract actions.

Austin, 286 Md. at 71-78 , 405 A.2d at 265-269 . There is still no common law local governmental immunity in contract ac ³⁵⁹ tions. See Harford County v. Bel Air, 348 Md. 363, 372-373 , 704 A.2d 421, 425-426 (1998), and cases there cited. In the early twentieth century, however, this Court adopted a distinction that had been developed earlier in other jurisdictions, and held that local governments enjoyed immunity in certain types of tort actions based on activity categorized as “governmental” but had no immunity in tort actions based on activity categorized as “private” or “corporate” or “proprietary.” See Austin, 286 Md. at 71-78 , 405 A.2d at 265-269 (concurring and dissenting opinion), and cases there cited.

See also DiPino v. Davis, 354 Md. 18, 47 , 729 A.2d 354, 369-370 (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”); Harford County v. Bel Air, supra, 348 Md. at 373 , 704 A.2d at 426 ; Ashton v. Brown, 839 Md. 70 , 101, 660 A.2d 447, 462-463 (1995); Board v. Town of Riverdale, 320 Md. 384, 389-390 , 578 A.2d 207, 210 (1990), and cases there cited. Moreover, this governmental-proprietary distinction has no application to certain types of tort actions, and local governments have no immunity in those actions. Thus, local governments have no immunity from liability in nuisance actions. See Board v. Town of Riverdale, supra, 320 Md. at 388 , 578 A.2d at 209 , citing Tadjer v. Montgomery County, 300 Md. 539, 550 , 479 A.2d 1321, 1326 (1984) (“In Maryland, counties and municipalities have never been accorded immunity from nuisance suits”).

See also Harford County v. Bel Air, supra, 348 Md. at 373 , 704 A.2d at 425—426. In addition, local governments have no immunity in tort actions based on violations of the Maryland Constitution. See DiPino v. Davis, supra, 354 Md. at 50-51 , 729 A.2d at 371 ; Hatford County v. Bel Air, supra, 348 Md. at 373 , 704 A.2d at 426 ; Ashton v. Brown, supra, 339 Md. at 101-102, 106 , 660 A.2d at 462-463, 465 ; Board v. Town of Riverdale, supra, 320 Md. at 389 , 578 A.2d at 210 ; Clea v. City of Baltimore, 312 Md. 662 , 667-668 ³⁶⁰ n. 3, 541 A.2d 1303 , 1305 n. 3 (1988), and cases there cited. Local governments also lack immunity from tort liability for violations of federal constitutional or statutory rights.

Under 42 U.S.C. § 1983 , local governments, unlike state governments, may be sued when a local governmental statute, regulation, policy, or custom causes the alleged deprivation of federal rights. See DiPino, 354 Md. at 45-47 , 729 A.2d at 368-369 , and cases there cited; Ashton, 339 Md. at 110-113 , 660 A.2d at 467-468 , and cases there cited. Prior to enactment of the LGTCA, the common law governmental immunity of local governments, based on activity categorized as “governmental,” was waived under specific circumstances by various enactments of the General Assembly. One example of such a statute is Code (1957, 1998 RepLVol.), Article 44A, wherein the General Assembly authorized the creation of housing authorities, including the petitioner in the case at bar, the Housing Authority of Baltimore City.

In Jackson v. Housing Opp. Comm’n, 289 Md. 118 , 422 A.2d 376 (1980), this Court considered the viability of a personal injury action brought against the Housing Opportunities Commission of Montgomery County for negligence in failing to maintain safely the premises of a housing project. In determining whether the housing authority in that case was entitled to the defense of governmental immunity, we construed various sections of Art. 44A as effecting a limited waiver of any governmental immunity which the housing authority might otherwise enjoy. Separate provisions of Article 44A authorized housing authorities to sue and to be sued, mandated that no judgments against housing authorities could be executed against real property owned by the authorities, required the authorities to purchase liability insurance coverage for their operations against any risks or hazards, and directed the authorities to include the cost of such liability insurance in their operating costs to be covered by the rents they charged.

Considering these statutory provisions together, this Court held that, “by necessary and compelling implication,” Art. 44A effected a waiver of the defense of governmental immunity, but only to the extent of the “applicable limits” of a housing authority’s ³⁶¹ liability insurance policy. Jackson, 289 Md. at 130 , 422 A.2d at 382 . In other words, Art. 44A both waived any governmental immunity which a housing authority might otherwise enjoy and capped its liability at the extent of its liability insurance. Also prior to the enactment of the LGTCA, local governments occasionally waived any governmental immunity which they might otherwise enjoy under the common law.

For example, the Express Powers Act, Code (1957,1998 Repl.Vol.), Art. 25A, § 5(S), as construed in Bradshaw v. Prince George’s County, 284 Md. 294, 297-299 , 396 A.2d 255, 258-259 (1979), 2 authorizes charter counties to waive governmental immunity. The now repealed § 5(CC) of Art. 25A limited such waivers of governmental immunity to the greater of $250,000 or the amount of insurance coverage. 3 Prince George’s County, in § 1013 of its first charter, adopted in 1970, waived its governmental immunity pursuant to § 5(S) of the Express Powers Act. See Bradshaw v. Prince George’s County, supra. Therefore, prior to the enactment of the LGTCA, local governments enjoyed immunity from tort liability only with respect to nonconstitutional torts based on activity categorized as “governmental.” Moreover, such immunity could be waived by enactments of the General Assembly or by local enactments.

B. In 1987 the General Assembly enacted Ch. 594 of the Acts of 1987 which affected the tort liability of local governments in several ways. As previously noted, supra n. 3, § 1 of Ch. 594 repealed § 5(CC) of Art. 25A, which had placed monetary caps upon waivers of governmental immunity by charter counties. Section 1 of Ch. 594 also repealed Code (1974, 1984 Repl.Vol., ³⁶² 1986 Cum.Supp.), § 5-306 of the Courts and Judicial Proceedings Article, which had set forth notice requirements pertaining to any claim for unliquidated damages in an action for personal injury or property damage brought against a county or municipal corporation. In addition, § 1 of Ch. 594 enacted the LGTCA.

The first section of the LGTCA, inter alia, defines “local government” very broadly to include, not only counties and municipalities, but also such entities as the Maryland-National Capital Park and Planning Commission, the Washington Suburban Sanitary Commission, special taxing districts, public libraries, the Enoch Pratt Free Library, and community colleges and their boards of trustees. See Code (1974, 1998 RepLVol., 1999 Suppl.), § 5—301(d) of the Courts and Judicial Proceedings Article. The second section of the LGTCA requires all entities defined as “local governments” to provide a legal defense for employees in tort actions alleging tortious conduct committed in the scope of employment. § 5-302(a). This section further directs that no judgment can be executed against an employee in such a tort action unless the employee was found to have acted with actual malice, in which case the employee is fully liable for all damages awarded and the local government may seek indemnification for any damages it has paid. § 5-302(b).

The third section contains the monetary caps ($200,000 per individual claim and $500,000 per total claims arising from the same occurrence, § 5-303(a)(l)), mandates that a local government is liable to pay any judgment in a tort action brought against its employee for tortious conduct committed in the scope of employment (§ 5—303(b)(1)), deals with liability for punitive damages (§ 5—303(c)(1)), and provides that a local government may not raise the defense of its own governmental immunity to avoid the statutory duties to defend or indemnify its emplóyees (§ 5—303(b)(2)). The fourth section contains notice requirements for unliqui-dated damages actions against local governments or their employees (§ 5-304). These are essentially the same notice ³⁶³ requirements which had existed under the prior law which was repealed by Ch. 594. In addition to § 1, Ch. 594 included an uncodified § 2 which repealed all prior local government enactments inconsistent with Ch. 594.

Section 2 reads as follows: “SECTION 2. AND BE IT FURTHER ENACTED, That any provision or portion of a statute, law, ordinance, or charter provision enacted by a local government which is inconsistent with any provision of this Act is repealed.” The language of this repealer section is unusual in that it does not state that Ch. 594 repeals all prior inconsistent enactments; it repeals only those enacted by local governments. In 1988 the LGTCA was amended to include Art. 44A housing authorities within the statute’s definition of “local government.” See Ch. 323 of the Acts of 1988; Code (1974, 1998 Repl.Vol., 1999 Suppl.), § 5-301(d)(15) of the Courts and Judicial Proceedings Article. Art. 44A remained unchanged until 1990, when the General Assembly enacted Ch. 330 of the Acts of 1990.

See Code (1957, 1998 RepLVol.), Art. 44A. Chapter 330 repealed Articles 44A and 44B, the Housing Authorities and Housing Cooperation Laws respectively, and reenacted them, with modifications, into Article 44A, entitled Housing Authorities. The new Art. 44A reenacted, without any pertinent substantive modifications, the sections construed in Jackson v. Housing Opp. Comm’n, supra, as effecting a limited waiver of any governmental immunity which housing authorities might otherwise enjoy.

Chapter 330 did, however, contain a new section stating that all employees of housing authorities are local government employees for the purposes of the LGTCA and entitled to its protections. Art. 44A, § 1-211(a)(2). As earlier stated, the single issue presented by the case at bar is whether the LGTCA’s damages cap provision limits the liability of a local government in a tort action in which the local government itself is a defendant and is subject to a limited waiver of immunity effected by an enactment of the ³⁶⁴ General Assembly which .is separate and distinct from the LGTCA. 4 II. This case arose out of the lead poisoning of Crystal Bennett, a minor, who lived with her grandmother and legal guardian, Margaret Webb, at 751 Cator Avenue, Baltimore, Maryland, a residence owned and managed by the Housing Authority of Baltimore City.

Bennett was born on July 29, 1987, and lived at 751 Cator Avenue until July 1994. In July 1988, Bennett was tested for exposure to lead-based paint at the University of Maryland and was diagnosed with an elevated blood-lead level. Both before and after Bennett’s birth, Webb had complained to the Housing Authority about problems that needed repair, including chipping and flaking paint. In September 1994, Webb and Bennett filed in the Circuit Court for Baltimore City a complaint alleging, inter alia, that the Authority was negligent in allowing flaking lead-based paint to remain at 751 Cator Avenue and that this negligence resulted in permanent injuries to Bennett and medical expenses incurred by Webb. 5 The plaintiffs sought damages totaling several million dollars based on the negligence claims.

In March 1996, the Authority filed a motion requesting that the Circuit Court limit the Authority’s liability to the $200,000 ³⁶⁵ per individual claim established by § 5-303 of the LGTCA. The Circuit Court granted this motion in May 1996. The case proceeded to trial in November 1996. At the close of all the evidence, the Circuit Court held that Webb’s individual claims were barred by the three-year statute of limitations.

See Code (1974, 1998 Repl.Vol.), § 5-101 of the Courts and Judicial Proceedings Article. Only Bennett’s negligence claim was submitted to the jury. After deliberation, the jury returned a verdict of $630,000 in favor of Bennett. The Authority then moved to reduce the verdict to the LGTCA’s $200,000 cap in accordance with the May 1996 order.

The Circuit Court granted the motion over Bennett’s objection and entered judgment against the Authority for $200,000. In a motion to alter or amend the judgment, Bennett argued that the LGTCA does not apply to judgments against local governments, as opposed to judgments against employees for which local governments are held liable under the LGTCA. Bennett contended that the applicable law regarding the Authority’s liability is set forth in Jackson v. Housing Opp. Comm’n, supra, where this Court construed the Housing Authorities Law, Code (1957, 1998 RepLVol.), Article 44A, as waiving the governmental immunity which a housing authority might otherwise enjoy and capping its liability at the amount of available insurance. 6 Bennett asserted that she was enti- ³⁶⁶ tied to a verdict of $500,000 because the Housing Authority of Baltimore City had a general liability insurance policy which included coverage for lead paint exposure liability up to $500,-000.

In a March 13, 1997, order, the Circuit Court granted Bennett’s motion in part and entered judgment against the Authority for $350,000. In an opinion accompanying the order, the trial judge explained that the judgment was limited to the amount of insurance available to the extent that the amount fell within the statutory limit for noneconomic damages resulting from personal injuries. See Code (1974, 1998 RepLVol.), § ll-108(b) of the Courts and Judicial Proceedings Article. As Bennett was first diagnosed with an elevated blood-lead level in 1988, her claim arose in that year and her “noneconomic” damages were limited to the $350,000 cap established for that year. 7 The Authority then filed a motion to alter or amend the judgment, requesting that the amount of the judgment be reduced to reflect the funds remaining under its insurance policy and also requesting an evidentiary hearing to establish this amount.

The Authority contended that about $338,000 of the $500,000 limit was available to satisfy Bennett’s judgment because" the $500,000 limit was a per claim and aggregate limit subject to reduction by defense costs for all actions brought against the Authority during the policy period. On April 18, 1997, the trial judge issued an order denying the Authority’s motion. The Authority timely noted an appeal to the Court of Special Appeals, arguing, inter alia, that its liability was limited to the lesser of either the LGTCA’s cap of $200,000 or the extent of its available insurance. In this case, the Authori ³⁶⁷ ty concluded that the LGTCA’s cap would apply because there was “more than $200,000 of insurance money available to pay Bennett’s judgment.” The Court of Special Appeals, in an unreported opinion, upheld the Circuit Court’s holding as to the inapplicability of the LGTCA’s cap to Bennett’s action, but vacated the judgment and remanded the case to the Circuit Court for an evidentiary hearing to determine the amount of insurance money available to satisfy the judgment against the Authority.

The intermediate appellate court also held that, in arriving at the amount of insurance money available within the limitation established by the $350,000 statutory cap on noneconomic damages, the Authority’s defense costs must be deducted from its $500,000 coverage for lead paint exposure liability and not from the $350,000 cap. Thereafter the Authority filed in this Court a petition for a writ of certiorari, raising the single issue of “[wjhether the extent of HABC’s [the Authority’s] waiver of sovereign immunity and resulting liability is the available amount of any purchased insurance or the $200,000 Local Government Tort Claims Act cap?” (Petition for a writ of certiorari at 2). The Authority contended “that the liability of HABC is the lesser of either the LGTCA $200,000 cap or the extent of its available insurance.” (Id. at 9). The respondent did not file a cross-petition for a writ of certiorari.

We granted the Authority’s petition, Housing Authority v. Bennett, 351 Md. 161 , 717 A.2d 384 (1998), and we shall affirm the judgment of the Court of Special Appeals.

III

The Authority argues that both the language and the legislative history of the LGTCA reflect the General Assembly’s intent to cap the liability of local governments at the limits set forth in the LGTCA, regardless of whether the judgment is for compensatory damages rendered against an employee for a tort committed in the scope of employment or whether the judgment is against the local government itself pursuant to ³⁶⁸ state law separate and distinct from the LGTCA. According to the Authority, when the judgment is against a local government agency itself pursuant to a state law such as Art. 44A, the applicable cap on damages is the lesser of either the cap under the LGTCA "or the cap under the other state law. The respondent, on the other hand, argues that the LGTCA does not affect the governmental immunity of a local government itself and that, therefore, the caps on liability in the LGTCA have no application to suits against the local government or an agency thereof. According to the respondent Bennett, “the LGTCA applies to suits against employees of local governments only.

To now read more into the Act, is creating something that simply does not exist.” (Respondent’s brief at 5). Alternatively, the respondent argues that even if the LGTCA’s $200,000 cap on damages were to apply to actions against a government agency pursuant to a separate and distinct state law, the respondent’s exposure to flaking and chipping lead paint, and her resulting brain damage, occurred prior to the effective date of Ch. 323 of the Acts of 1988 which brought Art. 44A housing authorities within the LGTCA’s definition of “local government.” In light of our holding that the LGTCA’s damages cap provision does not apply to tort actions directly against an Art. 44A housing authority, we need not reach the respondent’s alternative contention. A. Sections 5-302 and 5-303 of the LGTCA provide in relevant part as follows: “ § 5-302 Nature and extent of legal representation. “(a) Government to provide legal defense to employees.— Each local government shall provide for its employees a legal defense in any action that alleges damages resulting from tortious acts or omissions committed by an employee within the scope of employment with the local government. ³⁶⁹ “(b) Immunity; exceptions.—(1) Except as provided in paragraph (2) of this subsection, a person may not execute against an employee on a judgment rendered for tortious acts or omissions committed by the employee within the scope of employment with a local government. “(2)(i) An employee shall be fully liable for all damages awarded in an action in which it is found that the employee acted with actual malice. ❖ V “ § 5-303 Liability of government; defenses. “(a) Limitation on liability.—(1) ... the liability of a local government may not exceed $200,000 per an individual claim, and $500,000 per total claims that arise from the same occurrence for damages resulting from tortious acts or omissions, including liability arising under subsection (b) of this section.... “(b) When government liable.—(1) Except as provided in subsection (c) of this section, a local government shall be liable for any judgment against its employee for damages resulting from tortious acts or omissions committed by the employee within the scope of employment with the local government. “(2) A local government may not assert governmental or sovereign immunity to avoid the duty to defend or indemnify an employee established in this subsection. “(c) Punitive damages; indemnification.-—(1) A local government may not be liable for punitive damages. “(2)(i) Subject to subsection (a) of this section and except as provided in subparagraph (ii) of this paragraph, a local government may indemnify an employee for a judgment for punitive damages entered against the employee. “(ii) A local government may not indemnify a law enforcement officer for a judgment for punitive damages if the law ³⁷⁰ enforcement officer has been found guilty under Article 27, § 731 of the Code as a result of the act or omission giving rise to the