Jackson v. Housing Opportunities Commission

,Rodowsky, J., delivered the opinion of the Court. In this appeal we return to the field of sovereign immunity where the parties have found some ground which has not been plowed. At issue is whether the defense is available to the Housing Opportunities Commission of Montgomery County (the "HOC”), which is the housing authority of that county. Under the particular facts presented here, we hold that immunity which the HOC might otherwise enjoy has been partially waived to the extent of permitting recovery only out of any sum payable on behalf of the HOC by its insurer under applicable liability coverage.

The appellants, Julian Jackson, a minor, and E. Bert Jackson, his father, sued the HOC on August 10,1978 in the Circuit Court for Montgomery County. It was alleged that in August, 1976 the infant plaintiff had been an invitee on premises known as Pomander Courts on University Boulevard in Wheaton, Maryland, that the HOC was the owner, manager or "agent” of the property and that the infant plaintiff there sustained personal injuries in a fall resulting from a metal pipe railing giving way when the infant ¹²⁰ plaintiff put his weight on it. In its motion raising preliminary objection the HOC asserted sovereign immunity, alternatively as a state agency, or as a local agency exercising totally governmental functions. The appellants, in their reply to the supplemental memorandum of law of the HOC, took the position that the HOC maintained liability insurance and argued that this constituted a recognized exception to the doctrine of sovereign immunity.

In order factually to support this position, appellants’ counsel filed an affidavit to which were attached copies of correspondence relating to the appellants’ claim between counsel and both the Office of the County Attorney 1 and an identified insurance company. Existence of a liability policy insuring the HOC was not controverted. The Circuit Court granted the motion of the HOC and entered judgment for it. This judgment was affirmed by the Court of Special Appeals.

Jackson v. Housing Opportunities Commission of Montgomery County, 44 Md. App. 304 , 408 A.2d 1337 (1979). We issued certiorari. The Court of Special Appeals concluded that the HOC "is indeed a state agency . . ..” Id. at 307 , 408 A.2d at 1339 . Appellants do not directly challenge that conclusion here.

However, in the view which we take of this case, it is unnecessary for us to determine whether the HOC is an agency of the State of Maryland or of Montgomery County. In their petition for certiorari the sole question presented by the. appellants was whether there was a waiver of sovereign immunity, either expressed or implied. No contention is made that, if the HOC is an agency of Montgomery County, its functions are proprietary. Our conclusion that there has been a limited waiver of governmental immunity applies whether the HOC is a state agency or an agency of Montgomery County which exercises governmental functions. 2 ¹²¹ The genesis in this state of housing authorities is Maryland Laws (1937), Ch. 517 which added to the Code of Public General Laws Art. 44A entitled, "Housing Authorities." This legislation was enacted in anticipation of, and in order to take advantage of, the provisions of the United States Housing Act of 1937, ch. 896, 50 Stat. 888 , now 42 U.S.C. §§ 140.1-1440 (1976), under which the federal government established a program for slum clearance and low rent housing to be carried out in cooperation with local housing authorities.

See Matthaei v. Housing Authority of Baltimore City, 177 Md. 506 , 9 A.2d 835 (1939). By Art. 44A a housing authority was created in each city having a population of more than 1,000 (§ 4; § 3 (b)) and in each county of the state (§ 23). The state legislation made each housing authority "a public body corporate and politic” but it was necessary for the local authorities to breathe life into each otherwise dormant agency by declaring the need for a housing authority to function in their city or county. Housing Authority of College Park v. Macro Housing, Inc., 275 Md. 281 , 282 n.1, 340 A.2d 216 , 217 n.1 (1975).

Under Ch. 508 of the Acts of 1974 the Housing Authority of Montgomery County was redesignated as the Housing Opportunities Commission of Montgomery County (§ 8A (b)). Section 2 of the Housing Authorities Law expresses legislative findings that persons of low income are forced to reside in insanitary or unsafe accommodations, and that this condition constitutes a menace to health, safety, morals and welfare and necessitates excessive and disproportionate expenditures of public funds for, inter alia, accident ¹²² protection. An authority has "all the powers necessary or convenient to carry out and [effectuate] the purposes and provisions of’ Art. 44A, including, under § 8 (a), the power "[t]o sue and be sued ...” 3 and, under § 8 (d), the power "to insure or provide for the insurance of any real or personal property or operations of the authority against any risks or hazards . .. .” Section 9 provides that "an authority shall fix the rentals for dwellings in its projects at no higher rates than ... necessary in order to produce revenues which together with all other available moneys . . . will be sufficient ... (b) ... to provide for ... operating the projects (including the cost of any insurance). ...” 4 All real property of an authority is exempt from levy and sale under execution, pursuant to § 20 of the Act. 5 ¹²³ The principles governing whether immunity from suit has been waived were recently restated for this Court by Chief Judge Murphy in Katz v. Washington Suburban Sanitary Commission, 284 Md. 503 , 397 A.2d 1027 (1979).

A court should not hold that immunity has been waived except in cases of positive consent given, or by necessary and compelling implication. Any waiver of immunity must come from the Legislature whose intent we strive to effectuate. The test is two pronged. An asserted waiver of immunity is ineffective "unless specific legislative authority to sue the agency has been given, and unless there are funds available for the satisfaction of the judgment, or power reposed in the agency for the raising of funds necessary to satisfy a recovery against it.” Id. at 513 , 397 A.2d at 1033 .

In its application of these principles, the Court of Special Appeals compared the provisions of the Housing Authorities Law to the express waivers found in Md. Code (1957, 1978 Repl. Vol.), Art. 41, § 10A (state contracts), in Md. Code (1957, 1973 Repl. Vol., 1980 Cum. Supp.), Art. 25A, § 5 (CC) (express power to chartered counties to effect a limited waiver in tort actions) and § 4-105 of the Education Article (immunity of county boards of education waived to the extent of minimum required liability coverage).

It concluded that "while the Legislature may have intended to waive sovereign immunity when it granted the right to sue and be sued to the [HOC], .. . that grant was in and of itself insufficient... to effect such a waiver either expressly or by implication. Nor did the grant of authority to purchase insurance accomplish a waiver of sovereign immunity.” 44 Md. App. at 316 , 408 A.2d at 1343 . We disagree that the Housing Authorities Law merely authorizes the purchase of insurance. Our different analysis produces a different result. ¹²⁴ The first prong of an effective waiver of sovereign immunity is clearly satisfied in this case.

A housing authority has power "[t]o sue and be sued.” § 8 (a). The power is unqualified. The same power is conferred on trustees of community colleges by Md. Code (1978), § 16-203 (K) of the Education Article (formerly Art. 77A, § 1 (1-1)), which was considered in Board of Trustees of Howard Community College v. John K. Ruff, Inc., 278 Md. 580, 590 , 366 A.2d 360, 366 (1976) where we concluded that when the General Assembly expressly authorizes suits to be brought against one of the State’s agencies, it is the giving of a positive consent and has the effect of waiving sovereign immunity as to that agency within its scope of duties and obligations. It does not necessarily follow, however, that a money judgment may therefore be obtained The HOC, however, argues that defending suits for personal injuries or death arising out of an alleged negligent failure to keep premises in a safe condition is not within the scope of the duties and obligations of a housing authority.

For this proposition it relies primarily on Weddle v. School Commissioners, 94 Md. 334 , 51 A. 289 (1902), in which the statute involved provided that boards of county school commissioners "shall be capable to sue and be sued.” Weddle held that the statute restricted liability to suits against school boards "in respect to matters within the scope of their duties and to such things as the boards are empowered to do,” but that there was "no power given the Boards of School Commissioners to raise money for the purpose of paying damages, nor are they supplied with means to pay a judgment against them.” Id. at 344 , 51 A. at 291 . In Ruff, we reviewed Weddle and found implicit that "had the action concerned matters within the scope of the Board’s duties and involved such things as it was empowered to do, sovereign immunity would not have been a defense.” 278 Md. at 589 , 366 A.2d at 365 . Katz, supra, places the HOC’s contentions ¹²⁵ in perspective. The Washington Suburban Sanitary Commission legislation gives that corporation the right "to sue and be sued, and to do any and all other corporate acts for the purpose of carrying out the provisions” of the legislation.

As the HOC here argues, such language "does not alone constitute a general waiver of immunity.” Katz v. Washington Suburban Sanitary Commission, supra, 284 Md. at 513 , 397 A.2d at 1032 . Rather, we said, "it is limited to such matters, as those involved in the instant appeals, necessary to carry out the purpose for which the agency was created. O & B, Inc. [v. Maryland-Nat’l Capital Park and Planning Commission, 279 Md. 459 , 369 A.2d 553 (1977)]; Lohr v. River Commission, 180 Md. 584 , 26 A.2d 547 (1942); Weddle v. School Commissioners, 94 Md. 334 , 51 A. 289 (1902).” 284 Md. at 513 , 397 A.2d at 1033 (Emphasis supplied). All of the matters involved in the appeals in Katz were property damage tort claims, including a claim arising out of the bursting of a water main and a claim asserting that rocks and debris had been allowed to enter the sanitary commission’s fire hydrants with the result that fire department pumps became clogged when used to fight a fire.

In the instant matter an express purpose for the creation of housing authorities is to provide "safe and sanitary dwelling accommodations for persons of low income . . . .” Md. Code (1957, 1980 Repl. Vol.), Art. 44A, § 2. The theory of liability here asserted is that the HOC negligently failed to maintain the premises of a housing project. We see no difference between the alleged failure of the Washington Suburban Sanitary Commission to maintain its water mains and fire hydrants, and the theory of the instant case.

Each deals with a matter within the purposes of the agency and each presents a claim within the authorization of the agency to be sued. Further, the provisions of the Housing Authorities Law relating to insurance, discussed below as the source of payment, reinforce the conclusion that the consent to be sued includes negligence actions arising out of housing authority operations. Article 44A, § 8 (d) includes an authorization for a housing authority to purchase insurance. The HOC argues, ¹²⁶ and the Court of Special Appeals concluded, on the authority of Quecedo v. Montgomery County, 264 Md. 590 , 287 A.2d 257 (1972), that this authorization is insufficient to meet the second requirement, i.e., availability of funds for the satisfaction of a judgment.

We see the insurance provisions of Art. 44A not as a mere authorization, but as a mandate, so that the rule of Quecedo does not apply here. Quecedo was an action for damages based upon an alleged assault and battery by a Montgomery County police officer. Dismissal of the action on a motion raising preliminary objection based on sovereign immunity grounds was affirmed-. The declaration alleged that Montgomery County was insured under a liability policy carrying an endorsement under which the insurer agreed not to raise the immunity defense in any claim against the county.

Judge Barnes, writing for this Court, applied the general rule that the procurement of liability or indemnity insurance by a governmental unit has no effect upon its immunity for tort liability. He quoted from the opinion of Judge Chesnut in Jones v. Scofield Bros., 73 F. Supp. 395, 398 (D. Md. 1947) which stated that the " 'generally prevailing view seems to be that [the] mere existence [of indemnifying insurance] is not sufficient to create liability in tort unless the legislative enactments creating the agency or corporation considered as a whole, lead to the conclusion that it was the intention of the Legislature to impose such liability on the agency or corporation.’ ” Quecedo v. Montgomery Co., supra, 264 Md. at 595 , 287 A.2d at 259 . There was in Quecedo "no applicable statutory provision to the contrary” of the rule that merely carrying insurance did not waive immunity. Id. at 596 , 287 A.2d at 260 .

Jones rejected on immunity grounds a third party claim against the State Roads Commission of Maryland in a damage action for personal injuries suffered on a ferry boat operated by the Commission under the authority of Chapter 856 of the Acts of 1941, Md. Code (1939, 1947 Supp.), Art. 89B, §§ 140A to 140M. The third