Kee v. State Highway Administration

ALPERT, Judge. No precept of the common law was more imperviously etched in stone than the notion “that the king himself can ⁴⁷⁵ do no wrong ...” 1 —the major premise of the doctrine of sovereign immunity. Although the doctrine is no longer sacrosanct, it continues to give rise to knotty legal problems, one with which we are confronted in the case at bar. Here, we must review the Maryland Tort Claims Act, which waives sovereign immunity in certain actions to the extent the State is covered by liability insurance, and determine whether the State waived its immunity when it failed to purchase sufficient insurance coverage as mandated by the legislature.

Before we discuss the doctrine and its place in Maryland law at the time of the occurrence which gave rise to the instant litigation, we pause to set forth the background of this case as gleaned from the agreed statement filed by the parties. See Maryland Rule 1029 b. Gary Schaffert and Evelyn Kee (appellants) filed a complaint in the Circuit Court for Frederick County on September 24, 1985, for damages arising out of an automobile accident which occurred on September 24, 1982, on a Maryland State highway. Appellant Schaffert alleged that he was injured as a result of the accident and that his brother, Mark Schaffert, died as a result of the accident.

The complaint alleged that the State Highway Administration of the State of Maryland (SHA or appellee) was negligent in failing to maintain properly a certain guardrail, that the SHA had actual notice of the defective, unsafe, and dangerous condition of the guardrail, the failure of which was the proximate cause of the accident. Appellant Evelyn Kee, Mark Schaffert’s mother and the Personal Representative of his estate, prayed for damages in the amount of $100,000 from the State of Maryland on behalf of the estate. Additionally, she prayed for damages in the amount of $100,000 from the State for Mark Schaffert’s wrongful death and for the loss of consortium of her son, Gary Schaffert. Appellant Gary Schaffert prayed for ⁴⁷⁶ damages in the amount of $100,000 for his injuries from the accident.

Following the denial of a motion to dismiss, the SHA moved for summary judgment, arguing that the State was immune because it did not have a program of insurance pursuant to Section 27 of Article 95 at the time of the accident. Appellants opposed the motion, asserting, inter alia, that the State’s self-insurance program under the Maryland Tort Claims Act waived immunity. Apparently finding that the State did not waive its (sovereign) immunity, the trial court granted appellee’s Motion for Summary Judgment. SOVEREIGN IMMUNITY—THEN AND NOW The history of sovereign immunity (or governmental immunity) was thoroughly explored by Judge Barnes in Godwin v. County Commissioners of St. Mary’s County, 256 Md. 326 , 260 A.2d 295 (1970).

The bases for the doctrine were explained by the court: It is well established ... that the doctrine was applied in the new States and was held to be applicable to the United States as one of the dual “sovereigns” in the federal system. The application of the doctrine in this country was most likely based more upon reasons of public policy than upon the concept of the new States or the United States being successors, as it were, of the former king. Indeed, it is clear in Maryland that public policy was a consideration for the application of this doctrine. In State v. B. & O.R.R. Co., 34 Md. 344, 374 (1871), Bartol, C.J. [,] stated for the Court: “This [sovereign] immunity belongs to the State by reason of her prerogative as a sovereign, and on grounds of public policy.

Parties having claims or demands against her, must present them through another department of the Government—the Legislature—and cannot assert them by suit in the courts.” (Emphasis supplied.) ⁴⁷⁷ When one considers the financial and other problems which might arise if the doctrine of sovereign immunity were not applicable, it was probably wise that our predecessors did apply it in Maryland____ 256 Md. at 333 , 260 A.2d 295 . Unfortunately, a necessary side-effect of the doctrine of sovereign immunity was the individual citizen who, though injured by the government’s wrongdoing, was barred from being compensated. The inequity of the doctrine was noted by Judge Cole in his dissenting opinion in Austin v. Mayor and City Council of Baltimore, 286 Md. 51, 83 , 405 A.2d 255 (1979): As the law now stands in Maryland, the injured citizen must bear all the harm thrust upon him by a negligent government. This is manifestly unjust and inequitable in light of contemporary concepts of cost spreading and the general rule that liability follows tortious conduct.

Any additional expense due to tort claims should be treated as any other cost of administration and spread among the public. The inequities of the doctrine notwithstanding, the Court of Appeals has steadfastly refused to abrogate sovereign immunity: Quite apart from our prior decisions, it is desirable and in the public interest that any change in the doctrine of sovereign immunity should come from the legislative branch of the state Government rather than from the judicial branch inasmuch as there are fiscal considerations, administrative difficulties and other problems in balancing the rights of the State and its agencies with new possible rights of the individual citizens, which can far better be considered and resolved by the legislative branch than by the judiciary of the State. Jekofsky v. State Roads Commission, 264 Md. 471 at 474 , 287 A.2d 40 . See also Board of Trustees of Howard Community College v. John K. Ruff, Inc., 278 Md. 580, 584 , 366 A.2d 360 (1976); Comment, The State as a Party ⁴⁷⁸ Defendant: Abrogation of Sovereign Immunity in Tort in Maryland, 36 Md.L.Rev. 653 (1977).

Subsequent to this statement in Jekofsky , the Court of Appeals in Board v. Ruff, supra, said 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.” 278 Md. at 590 , 366 A.2d 360 . A legislative waiver, however, could not be unqualified. Legislative authority for a governmental agency to be sued is not free from restrictions, even though limitations are not expressly made by the Legislature. Such authority does not impose unqualified liability even as to matters within the scope of the agency’s duties and obligations.

This Court has consistently held that suits may not be maintained unless money has been appropriated for the payment of such damages as may be awarded, or the agency itself is authorized to raise money for that purpose. We said in University of Maryland v. Maas, [ 173 Md. 554 ] at 558-559, 197 A. at 125 : “The decisions in this state go further than holding that without legislative sanction an arm of the state government ... may not be sued, and are to the effect that, even though there is a legislative authorization to sue, such suits may not be maintained unless funds are available or may be made available by the agency itself for the purpose of paying the claim for damages that may be established by the suit---- So it is established that neither in contract nor tort can a suit be maintained against a government agency, first, where specific legislative authority has not been given, second, even though such authority is given, if there are no funds available for the satisfaction of the judgment, or no power reposed in the agency for the raising of funds necessary to satisfy a recovery against it.” ⁴⁷⁹ Board v. Ruff, 278 Md. at 590-91 , 366 A.2d 360 . Although Ruff concerned sovereign immunity in contract actions, we believe the three-part test it enumerates is equally applicable to tort actions: [W]e must (1) decide if the [party defendant] is an agency of the State. If the [party defendant] is an agency of the State, the doctrine would be applicable (2) unless sovereign immunity had been waived by statute, expressly or by necessary inference therefrom.

Even if sovereign immunity had been so waived, the doctrine would nevertheless be applicable (3) if no funds were available to the [defendant] for satisfaction of a judgment against it on the [tort] and no power was reposed in the [defendant] to raise such funds by taxation. 278 Md. at 586 , 366 A.2d 360 . Contemporaneous with the court’s opinion in Ruff was the publication of the “Report of the Governor’s Commission to Study Sovereign Immunity” (November 1976). The report, which recognized the restrictions on waiver of sovereign immunity that were explicated in University of Maryland v. Maas, 173 Md. 554 , 197 A. 123 (1938) (quoted in Ruff, 278 Md. at 590-91 , 366 A.2d 360 ), focused in part on the fiscal consequences in the event sovereign immunity was waived in tort actions: Generally, the Commission’s survey of the State’s agencies reveals that with the exception of the Department of Transportation (DOT), the State of Maryland’s general tort claim experience has not been fiscally significant. Nine of the fourteen State agencies responding to the survey have not been the subject of a tort action.

The tort experience of the remaining agencies has been negligible, both in the number of claims raised and in the fiscal consequences of those claims. Administrative subdivisions of the Department of Transportation have been the targets of numerous tort suits. Insurance carriers for the MTA and MPA have absorbed over one million dollars in paid claims since 1972. The State Highway Administration has raised the ⁴⁸⁰ State’s sovereign immunity shield to bar recovery in 179 claims instigated since 1972, amounting to in excess of five million dollars in claimant demands.

Report at 127-28. 2 The Report also summarized the comments, suggestions and observations of the various state agencies on the issue of abrogation: Various alternatives to wholesale abandonment of sovereign immunity are discussed by the responding agencies. The Department of Economic and Community Development and the Department of Natural Resources suggest that the fiscal impact of a tort immunity waiver could be cushioned by limiting the waiver to insurable exposures. A few agencies agree with the State Highway Administration’s acknowledgement of a system of administrative agency claims boards, empowered to consider and resolve disputes, as a reasonable alternative to complete abrogation of the doctrine. The Department of Agriculture, the Department of Licensing and Regulation, and the Board of Trustees of the State Colleges explored the tort liability exposure of government agency employees.

In general, these agencies are concerned that the doctrine’s abrogation does not jeopardize the retention and performance of key government employees. It is recommended that certain government agency members be statutorily protected from tort liability in their individual capacities. Report at 130. Ultimately, the legislative branch responded to the call of its co-equal branches and enacted the Maryland Tort Claims Act.

Laws of 1981, ch. 298. The preamble to Senate Bill 585 stated: AN ACT concerning State Immunity in Tort ⁴⁸¹ FOR the purpose of waiving the immunity of the State and its officials in certain tort actions to the extent that the State is insured; granting certain State personnel immunity from liability as individuals for such torts absent certain circumstances; providing for the representation of the State and its personnel in such cases; requiring the filing of a claim with the State Treasurer as a prerequisite to the waiver of such immunity; authorizing the Treasurer to consider, ascertain, adjust, determine, compromise, and settle such claims and contract for services; limiting the fees which attorneys may charge in such matters; directing the Treasurer to secure insurance for such purposes to the extent that funds are available; and generally relating to the immunity of the State and its personnel in tort. Effective July 1, 1982, the Act, found in the Courts and Judicial Proceeding Article (1983 Cum.Supp.), provided in relevant part: § 5-403. Waiver of State’s immunity in tort.

(a) Actions in which State’s immunity is waived. —Except as provided in subsection (b) of this section, the immunity of the State from suit in the courts of this State and liability in tort is waived in the following actions to the extent and in the amount that the State is covered by a program of insurance established by the Treasurer pursuant to § 27 of Article 95. (5) An action to recover damages caused by a defective, unsafe, or dangerous condition of any street, alley, sidewalk, or highway owned and controlled by the State if constructive or actual notice of the condition existed; (b) Purposes for which immunity not waived.—The immunity of the State in tort is not waived for the following purposes: (1) Punitive damages; (2) Interest prior to judgment; ⁴⁸² (3) Individual claims in excess of $100,000; (4) An aggregate of claims arising from the same occurrence in excess of $500,000; (Emphasis added). Subsection 5-403(a) must be read together with Md.Ann.Code Art. 95 § 27 (1979 Repl.Vol.) as amended by the addition of subsections (d) and (e) (1983 Cum.Supp.), for those amendments and the Tort Claims Act were enacted in the same legislation, i.e., Laws of 1981, ch. 298. See Baltimore Gas & Elec.

Co. v. Dept. of Health and Mental Hygiene, 284 Md. 216, 221 , 395 A.2d 1174 (1979) (“all parts of a statute are to be read together to find the intention as to any one part”). The 1982 amendments to section 27 provide: (d) To the extent that funds are available in the budget, the Treasurer shall provide self-insurance or purchased insurance or a combination of self-insurance and purchased insurance sufficient to cover the liability of the State and its employees under Subtitle 4 of Title 5 of the Courts Article of this Code. (e) The limits of liability in subsection 5-403(b) of the Courts Article may not be construed to affect the authority of the Treasurer to provide insurance in any amount pursuant to the authority granted by this article. Before proceeding, we note the general principles of statutory construction, most recently enunciated by the Court of Appeals in Supervisor of Assessments v. Chase Associates, 306 Md. 568 , 510 A.2d 568 (1986): In interpreting a legislative enactment, our function is to ascertain the legislative purpose underlying the enactment and to interpret its language in the manner that will most effectively accomplish this purpose.

Id. at 576 , 510 A.2d 568 (citations omitted). The intention of the legislature was made abundantly clear: “It is the intent of the General Assembly that this subtitle be interpreted broadly to assure that injured parties have a remedy.” § 5-402(a), but to do so without adverse fiscal results. Thus, the Act can be interpreted as nothing ⁴⁸³ other than a clear manifestation of the legislature to waive the State’s sovereign immunity in certain tort actions— namely those then listed in § 5-403(a)(l)-(6). 3 Cognizant of the Court of Appeals’ statement in Ruff , the waiver is subject to restrictions which reflect the concern that liability to suit will deplete the State’s coffers. These restrictions are (1) those enumerated in § 5-403(b) and (2) that immunity “is waived ... to the extent and in the amount that the State is covered by a program of insurance established by the Treasurer____” § 5-403(a) (emphasis added).

In simple language, therefore, the legislature, through enacting the Tort Claims Act, sought to provide a remedy