Knoche v. State

KENNEY, J. William Knoche appeals the Circuit Court for Baltimore County’s grant of a declaratory judgment upholding the constitutionality of Maryland Code (1981, 2005 RepLVoL), § 1-213 of the Health Occupation Article (“Health Occ.”). 1 Knoche ²¹² poses two questions for our review, 2 which we have reworded and recast as follows: I. Was Knoche denied procedural due process under Health Occ. § 1-213 because he was not provided notice and hearing prior to the non-renewal of his State issued dental license?

II

Was Knoche denied substantive due process under Health Occ. § 1-213 because the statute does not rationally relate to the State’s interest in assuring quality dental care of its citizens?

III

Does the retroactive application of Health Occ. § 1-213, which requires, among other things, that an undisputed income tax obligation be paid before a dental license will be renewed, constitute an ex post facto law in violation of the Constitution of the United States and Article 17 of the Maryland Declaration of Rights? For the following reasons, we answer each of those questions in the negative, and shall affirm the judgment of the circuit court. FACTUAL AND PROCEDURAL HISTORY The facts are undisputed. Dr. William Knoche, a practicing dentist, has not filed a Maryland income tax return since 1980.

On September 4, 1990, the Comptroller of the Treasury, Income Tax Division, assessed Knoche’s tax liability, including ²¹³ interest and penalties, for calendar years 1980, 1981, and 1982 at $14,313.68, $19,403.08, and $21,937.44, respectively. On February 14, 1991, the Income Tax Division issued Knoehe assessments for calendar years 1983-1989. The assessments, including interest and penalties, ranged from $17,359.43 for the 1983 calendar year to $14,482.56 for the 1989 calendar year. The assessment notices indicated that the assessments would become final within thirty days unless Knoehe filed either a proper tax return or an appeal to the Maryland Tax Court.

Knoehe neither filed returns for the years 1980-1989 nor appealed the assessments to the Maryland Tax Court. By operation of Maryland Code (1988), § 13-805 of the Tax General Article (“Tax-Gen.”), Knoche’s unpaid tax assessment constituted a lien in favor of the State. Pursuant to Tax-Gen. § 13-807, the Income Tax Division filed the lien with the Circuit Court for Baltimore County, which entered the lien in the amount of $166,591.91 in the judgment docket of the court on April 20,1992. In 2003, the General Assembly enacted H.B. 935, the Budget Reconciliation and Financing Act of 2003.

Its purpose, among others, was to ensure tax compliance by not renewing certain State licenses if the license holders had not paid their taxes. See 2003 Laws of Maryland ch. 203 § 24. This requirement applied to licenses issued under Maryland Code § 1-204 of the Business Occupations and Professions Article, § 1-210 of the Business Regulation Article, § 1-203 of the Environment Article, § 1-213 of the Health Occupations Article, § 1-402 of the Natural Resources Article, § 1-205 of the Tax-General Article, and § 1-103 of the Transportation Article. The law went into effect July 1, 2003.

Licenses subject to Health Occ. § 1-213 include dental licences. Relevant to this appeal, Health Occ. § 1-213 provides: (a) In general.—A license or permit is considered renewed for purposes of this section if the license or permit issued by a unit of State government to a person for the period ²¹⁴ immediately following a period for which the person previously possessed the same or a substantially similar license, (b) Verification of payment of taxes or unemployment insurance contributions.—Before any license or permit may be renewed under this article, the issuing authority shall verify through the office of the Comptroller that the applicant has paid all undisputed taxes and unemployment insurance contributions payable to the Comptroller or the Secretary of Labor, Licensing, and Regulation or that the applicant has provided for payment in a manner satisfactory to the unit responsible for collection. In July 2004, Knoche received a letter from the Maryland State Board of Dental Examiners (“the Board”), indicating that his dental license would not be renewed because of his outstanding tax liability. In August 2004, Knoche received a cease and desist order from the Board, precluding him from practicing dentistry in Maryland until the Comptroller certified that he had paid all outstanding taxes or had otherwise provided for payment in a satisfactory manner.

On August 4, 2004, Knoche requested a hearing from the Comptroller. The Comptroller responded on August 11, 2004, that no hearing process was available. On November 19, 2004, Knoche filed a complaint for declaratory judgment in the Circuit Court for Baltimore County, asserting that H.B. 935, codified at Health Occ. § 1-213, 3 was unconstitutional on its face and as applied to him because he was denied “the right to work in his chosen profession” without being afforded a hearing. The State filed a motion to dismiss, or in the alternative, a motion for summary judgment on January 3, 2005.

Among other things, the State maintained that Health Occ. § 1-234 constituted a permissible exercise of the State’s right to protect and preserve the public health. It stated that the statute did not violate due process because anyone whose license was subject to non-renewal, ²¹⁵ including Knoche, was afforded the opportunity to dispute his or her tax obligations in the Maryland Tax Court. Attached as exhibits to the State’s motion were the affidavits of Patricia Baker, assistant manager of the Annapolis Collection Office of the Compliance Division of the Comptroller, and John Hearn, Deputy Clerk of the Maryland Tax Court. In her affidavit, Baker explained that Knoche had not filed a tax return since at least 1980, and that, despite being assessed penalties and interest for tax years 1980-1989, he had not made any payments on his assessed tax liability.

In his affidavit, Hearn stated that he had reviewed the docket index and determined that Knoche had not appealed his tax assessments to the Tax Court. Therefore, the State maintained that appellant had effectively waived any right he had to an administrative hearing. On January 28, 2005, Knoche filed an opposition to the State’s motion. In addition, Knoche filed a cross-motion for summary judgment.

Following argument on the cross-motions, the circuit court granted summary judgment in favor of the State. On April 11, 2005, the court issued a declaratory judgment, upholding the constitutionality of Health Occ. § 1-213, “on its face and as applied.” This timely appeal followed. STANDARD OF REVIEW Under Maryland Rule 2-501®, a court “shall enter judgment in favor of or against the moving party if the motion and response show that there is no genuine dispute as to any material fact and that the party in whose favor judgment is entered is entitled to judgment as a matter of law.” “The trial court will not determine any disputed facts, but rather makes a ruling as a matter of law. The standard of appellate review, therefore, is whether the trial court was legally correct.” Williams v. Mayor & City Council of Baltimore, 359 Md. 101, 114 , 753 A.2d 41 (2000).

We review “a trial court’s grant of a motion for summary judgment de novo.” Remsburg v. Montgomery, 376 Md. 568, 579 , 831 A.2d 18 (2003). See also Todd ²¹⁶ v. Mass Trans. Admin., 373 Md. 149, 154 , 816 A.2d 930 (2003); Beyer v. Morgan State Univ., 369 Md. 335, 359 , 800 A.2d 707 (2002); Schmerling v. Injured Workers’ Ins. Fund, 368 Md. 434, 443 , 795 A.2d 715 (2002).

In our review, we determine first whether a genuine dispute of material fact exists, “and only where such dispute is absent will we proceed to review determinations of law.” Remsburg, 376 Md. at 579 , 831 A.2d 18 . “The facts properly before the court, and any reasonable inferences that may be drawn from them,” are construed “in the light most favorable to the non-moving party.” Id. at 579-80 , 831 A.2d 18 . “We generally ‘uphold the grant of a summary judgment only on the grounds relied on by the trial court.’” Nationwide Mut. Ins. Co. v. Wilson, 167 Md.App. 527, 535 , 893 A.2d 1177 , cert. granted, 393 Md. 242 , 900 A.2d 749 (2006) quoting Mitchell v. Baltimore Sun Co., 164 Md.App. 497, 508 , 883 A.2d 1008 (2005) (quoting Ashton v. Brown, 339 Md. 70, 80 , 660 A.2d 447 (1995)). DISCUSSION I. Procedural Due Process Knoche contends that the circuit court erred in concluding that Health Occ. § 1-213 does not violate constitutionally protected rights to procedural due process, both facially and as applied, because it does not provide for a hearing before an individual may be deprived of his or her professional license.

The Fourteenth Amendment provides, in pertinent part, “nor shall any State deprive any person of life, liberty, or property, without due process of law.” U.S. Const, amend. XIV § 1. Likewise, Article 24 of the Maryland Declaration of Rights provides that “no man ought to be taken or imprisoned or disseized of his freehold, liberties or privileges, or outlawed, or exiled, or, in any manner, destroyed, or deprived of his life, liberty or property, but by the judgment of his peers, or by the Law of the land.” See also Pitsenberger v. Pitsenberger, 287 Md. 20, 27 , 410 A.2d 1052 (1980) (“[I]t should be pointed ²¹⁷ out that Article 24 of the Maryland Declaration of Rights and the Fourteenth Amendment of the United States Constitution have the same meaning, and that Supreme Court interpretations of the Fourteenth Amendment function as authority for interpretation of Article 24.”). It is well settled that, in order to satisfy the requirements of procedural due process, the State must provide notice and a hearing prior to depriving a person of life, liberty, or property.

Dusenbery v. United States, 534 U.S. 161, 167 , 122 S.Ct. 694 , 151 L.Ed.2d 597 (2002) (“[W]e have determined that individuals whose property interests are at stake are entitled to ‘notice and an opportunity to be heard.’ ”) (quoting United States v. James Daniel Good Real Prop., 510 U.S. 43, 48 , 114 S.Ct. 492 , 126 L.Ed.2d 490 (1993)). The State does not dispute that Health Occ. § 1-213 does not provide for a hearing; that Knoche would otherwise be entitled to a hearing before the Board prior to his license being revoked; or that a license to practice dentistry, like a license to practice medicine, is a property interest protected by the due process clause of the Fourteenth Amendment and Article 24. Rather, the State claims that Knoche was provided with notice and an opportunity to be heard in the Maryland Tax Court in regard to his tax liability. Because Health Occ. § 1-213 only applies where the tax and the unemployment insurance contribution liabilities are “undisputed,” and Knoche did not dispute his tax obligation in the Tax Court, the State contends that Knoche was not deprived of his rights to procedural due process.

We agree. Maryland Code (1988, 2004 Repl.Vol.), § 13-508 of the Tax General Article provides that, when a person or governmental agency disputes a tax assessment, they may file,