Lawrence N. Brandt, Inc. v. Montgomery County Commission on Landlord-Tenant Affairs

Moore, J., delivered the opinion of the Court. This appeal is another episode in the life — now legislatively extinguished — of the Montgomery County rent control law. * 1 Here, a landlord was rejected in its bid for an “Extraordinary Rent Increase.” A subsequent statutory appeal to the circuit court was unavailing, as were a request for a hearing en banc and a motion to revise judgment. The landlord then sought a rehearing before the administrative agency which the latter denied. Unbowed, the landlord then pursued an action in the circuit court for a declaratory judgment, and was again rebuffed.

From the lower court’s adverse declaration, this appeal has been taken; but a like fate awaits this persistent litigant’s latest encounter. ¹⁴⁹ I On July 29,1974, appellant, Lawrence N. Brandt, Inc., filed an application for an extraordinary rent increase (ERI) with the office of Landlord-Tenant Affairs for Montgomery County (OLTA) in conformance with § 29-51 (b) of the Montgomery County Code (1972, 1974 Cum. Supp.). The ERI was sought under the county’s rent control law as a result of alleged increased operating expenses at Colesville Towers, an apartment-hotel complex in Silver Spring; the expenses were claimed to be of such magnitude as to create a “hardship” if the landlord was limited to a “basic rent increase” (BRI), up to a maximum of four per cent of the base rent for each apartment, permitted to be charged to holdover tenants under new leases. 2 The executive director of OLTA was empowered to rule, in the first instance, upon ERI applications and, after a hearing in which appellant and certain tenants participated, he issued a decision on January 6, 1975 granting appellant’s request. Appeals were taken by both tenants and landlord 3 to the Commission on Landlord-Tenant Affairs, pursuant to § 29-51 (b) (10), and a hearing was held on March 17, 1975.

The executive director’s determination of the landlord’s ¹⁵⁰ entitlement to the ERI was reversed by the Commission. In a written “Decision and Order,” dated May 20, 1975, the Commission’s Chairman, John L. Catalan, stated, in pertinent part: “In deciding this appeal the Commission finds that it must agree with the tenants’ contention that the record established during these proceedings fails to disclose any creditable evidence to support the landlord’s allegation of hardship. “Section 29-51b permits the granting of an Extraordinary Rent Increase only upon a showing that the basic rent increase would result in a ‘hardship.’ Section 29-51b (5) requires the Executive Director to make a specific finding as to hardship. The landlord has the burden of proving the existence of hardship by a preponderance of the evidence. “The record doesn’t contain any evidence to support the conclusion that the landlord has even sustained any loss in his business during the period under review, much less hardship.” 4 The Commission’s order constituted final administrative action under § 29-51 (b) (12), and the sole remaining remedy for an “aggrieved party” under the provisions of the Code then existing was an appeal to the Circuit Court for Montgomery County, under Subtitle B of the Maryland Rules of Procedure, entitled “Administrative Agencies — Appeal From.” 5 Appellant did not petition the Commission for a rehearing 6 but filed in the circuit court, on June 10, 1975, a Petition in Support of Appeal. Appellant’s allegations were two-fold: paragraph seven, which contained eight sub-parts, challenged the constitutionality of the rent control article of the ¹⁵¹ Montgomery County Code as violating due process and equal protection, impairing freedom of contract, and improperly extending the police power; the succeeding paragraph, in six sub-parts, claimed arbitrary and capricious action on the part of the Commission in substituting its judgment for that of the executive director.

The relief requested was that the court declare the act unconstitutional and that it reinstate the ERI granted by the director, effective September 1, 1974, rather than October 1, 1974. (No claim of error was made in the failure of the Commission to grant a basic rent increase, as distinguished from an extraordinary rent increase.) A hearing was held in the circuit court before Judge Richard B. Latham and, on July 15,1976, the court rendered an oral opinion. After reviewing the history of the case and the evidence presented, Judge Latham stated: “Considering the various data as presented by the tenants at the hearing before the full Commission plus the record of the hearing before the Executive Director, the Court can only conclude that there was in fact a factual basis for the Commission finding that the record established during their hearing, and also referring to the proceedings before the Executive Director, that the landlord had in fact failed to disclose any credible evidence to support the allegation of hardship.” (Emphasis added.) The court further held that “the findings of the full Commission [were] fairly debatable,” and refused to “substitute its own judgment for that of the Commission....” The challenges to the constitutionality of the act were not addressed in the court’s opinion. 7 A motion to revise the judgment, pursuant to Maryland Rule 625, was then filed by appellant in the circuit court. At ¹⁵² a hearing before Judge Latham, appellant’s counsel argued (a) that some members of the Commission had arrived at their decision without reviewing the entire record of the proceedings before the executive director, (b) that certain new evidence of increased expenses forwarded by appellant to the Commission after the hearing had not been considered, and (c) that the Commission had applied an incorrect evaluative standard in determining whether appellant had suffered financial hardship.

On February 22, 1977, Judge Latham denied appellant’s motion for revision, after hearing extensive oral argument from counsel for the parties. Thereupon, on March 7, 1977, almost two years after the final order of the Commission from which the appeal had been taken, appellant engaged new counsel and filed a Petition for Rehearing before the Commission alleging “fraud, mistake, or inadvertence” in the Commission’s original decision of May 20,1975. Four grounds were asserted, the first three of which had been presented to the circuit court in the appeal proceedings: that the Commission applied an incorrect evaluative standard in denying the ERI; that the appellant was prejudiced by virtue of its being denied the opportunity to present evidence at the Commission hearing, and that the panel of Commissioners failed to discharge its duty to review the entire proceedings, where one or more, members failed to read the record in its entirety. The fourth ground was that the Commission failed to consider appellant’s entitlement to a “Basic Rent Increase” (BRI), when it ruled unfavorably with respect to the ERI.

On March 22,1977, the Commission, agreeing “that it may have the authority under certain circumstances to rehear such a case,” declined to do so by a 4 to 3 vote. At that juncture, appellant instituted a declaratory judgment action in the Circuit Court for Montgomery County which has given rise to this appeal. The bill of complaint also included a prayer for injunctive relief. Appellee demurred to appellant’s complaint, alleging that the action was barred by collateral estoppel or res judicata as a consequence of the prior appeal to the circuit court.

At a hearing before Judge David L. Cahoon, on May 19,1977, oral motions for summary ¹⁵³ judgment were made by appellees. 8 Judge Cahoon, holding that the court could properly enter summary declaratory judgment, delivered an oral opinion from the bench in which he carefully considered the grounds upon which appellant contended that error had been committed by the Commission. In sustaining appellees’ demurrers without leave to amend and issuing a declaratory judgment, he stated in part: “In summary, I find in the first instance that taken in their best light, the grounds for rehearing presented to the Commission were insufficient in not meeting the test of a decision that had been caused by fraud, mistake or irregularity. More significantly, each and every one of the matters, insofar as the proceedings before this Court are concerned would be barred by res judicata, or collateral estoppel---- “For those reasons, the Court will sustain the demurrers that have been filed and will sustain them without leave to amend and issue a declaratory judgment that the Commission’s action of March 22, 1977 was not an abuse of administrative discretion in that the Commission’s hearing and action on the ERI request of Lawrence N. Brandt, Inc. was not shown to have been attended by mistake, fraud, or inadvertence____” The court also denied the injunctive relief prayed by appellant to enjoin OLTA, the Commission, other county officials and certain tenant intervenors from interfering with appellant's right to collect the ERI rent, pending appeal procedures, under the provision of § 29-51 (b) (13) of the rent control law. See Riger v. L & B Limited Partnership, supra, note 2.

Appellant thereafter filed a petition for reconsideration of Judge Cahoon’s final order. That petition was also denied. ¹⁵⁴ On this appeal, it is contended that the lower court erred in disposing of the suit under a summary judgment procedure; 9 that the declaratory judgment issued by the court was incorrectly based upon res judicata or collateral estoppel; and that injunctive relief was improperly withheld. For reasons hereafter set forth, we do not reach the first and third issues, and we approach the res judicata question in a different context. We find in appellant’s brief a succinct statement of the purposes for which the declaratory judgment action was brought: “The declaratory judgment action sought judicial review of two administrative actions of the local regulatory agency.

The first administrative action of which complaint was made was a decision of the local agency which dealt with a request by the Appellant to raise rents at a rental facility in Montgomery County. The second administrative action of which complaint was made was a decision of the local agency which dealt with a petition filed with it by the Appellant to rehear the request to raise rents at the rental facility. The agency had denied the request to raise rents, and denied a petition to rehear the request.” In our judgment, appellant was not entitled to further judicial réview of agency action in either of the above instances. We therefore hold that the instant appeal must be dismissed and the case remanded to the circuit court with instructions that the action also be dismissed at that level.

II Our review of the authorities yields two grounds which require disposition of the case in this manner. First, dismissal is mandated by the clear language of the Uniform ¹⁵⁵ Declaratory Judgments Act, Md. Cts. & Jud. Proc. Code Ann. §§ 3-401 etseq.

(1974), which provides, in § 3-409 (b) that “[i]f a statute provides a special form of remedy for a specific type of case, that statutory remedy shall be followed in lieu of a proceeding under this subtitle.” Second, we are persuaded that the doctrine of res judicata bars the declaratory judgment action with respect to the agency’s denial of appellant’s request to raise rents, and that the agency’s refusal to reconsider such determination was justified not only by res judicata considerations but also because appellant's claim to agency reconsideration came too late. We will separately discuss the application of the declaratory judgment statute and of the doctrine of res judicata to each administrative action of which “judicial review” was sought. A. DENIAL OF REQUEST TO RAISE RENTS 1. Declaratory Judgments Act We regard the right of appeal to the circuit court permitted an aggrieved party under § 29-51 (b) (12) of the Montgomery County Code as the precise “special form of remedy for a specific type of case” contemplated as being exclusive by the drafters of the Uniform Declaratory Judgments Act.

Once the statutory mode of appeal has been exhausted, no further right remains in a party to secure review of a final decision of an agency. See Prince George’s County v. Fahey, 28 Md. App. 312 , 345 A. 2d 102 (1975). There is nothing to distinguish the instant case from the legion of cases decided by the Court of Appeals where a declaratory remedy was held not to exist in the face of a statutorily-provided right of appeal. Hartman v. Prince George’s County, 264 Md. 320 , 286 A. 2d 88 (1972) [citing Reiling v. Comptroller, 201 Md. 384 , 94 A. 2d 261 (1953); Tanner v. McKeldin, 202 Md. 569 , 97 A. 2d 449 (1953); Albert v. Public Service Commission, 209 Md. 27 , 120 A. 2d 346 (1956); Quinan v. Schneider, 247 Md. 310 , 231 A. 2d 37 (1967) ; Lee v. Secretary of State, 251 Md. 134 , 246 A. 2d 562 (1968)]; Friendship Heights v. Funger, 265 Md. 339 , 289 A. 2d 329 (1972); Soley v. State Commission on Human Relations, 277 Md. 521 , 356 A. 2d 254 (1976); C. & P. Telephone Co. v. Pincoffs, 23 Md. App. 474 , 328 A. 2d 78 (1974). ¹⁵⁶ In a leading case involving the right to declaratory relief in such a situation, Mayor of Baltimore v. Seabolt, 210 Md. 199 , 123 A. 2d 207 (1956), the city of Baltimore and intervening property owners appealed from a declaratory decree of the lower court that a zoning ordinance was invalid with respect to certain property.

The Court of Appeals held that an existing statutory method of appeal from zoning board determinations created an exclusive remedy, and should have been followed by the appellants: “If resort to declaratory judgment procedures can be had in every case where an applicant is dissatisfied with the ruling of the Board and the application of the general Zoning Ordinance to specific properties all over the City can be challenged, a condition of chaos can easily result____ “... The use of the Declaratory Judgments Act to accomplish such a result as that just stated would, we think, frustrate the purposes of the zoning laws and would go beyond the proper limits of declaratory relief.” 210 Md. at 209-10 , 123 A. 2d at 212 . See also Commissioners of Cambridge v. Eastern Shore Public Service Co., 192 Md. 333 , 64 A. 2d 151 (1949). Even where questions of constitutional law are involved, if they cán be raised in the statutorily-provided appellate setting, no exception to the strict rule of the Declaratory Judgments Act will apply.

As the Court of Appeals stated in Poe v. Mayor of Baltimore, 241 Md. 303, 307 , 216 A. 2d 707, 709 (1966), another zoning case: “The appellants contend that they had no effective remedy before the Board, because the Board is an administrative agency, not a court, and only a court can decide a question of constitutional law. This argument overlooks the fact that Section 40 of the Zoning Ordinance provides for an appeal from the Board’s action in denying an application for a special exception to the Baltimore City Court, and, from the decision of that court, to this tribunal.” Cf. Commissioners of Cambridge v. Eastern Shore ¹⁵⁷ Public Service Co., supra, 192 Md. at 337 , 64 A. 2d at 152-53 . In the instant case, appellant contends that errors of law were committed by the agency in denying the request for an ERI.

We believe that such issues could have been, and, indeed, were presented in the circuit court in the statutory appeal from the agency’s determination. The court considered such arguments in ruling on the motion to revise the judgment and we cannot find that appellant was entitled to resort to a declaratory remedy to obtain further review of the same questions. Appellant’s remedies were at an end after the ruling of the circuit court; the existence of the special statutory remedy precluded the action now before us. 2. Res Judicata “ ‘The doctrine of res judicata is that a judgment between the same parties and their privies is a final bar to any other suit upon the same cause of action, and is conclusive, not only as to all matters that could have been decided in the original suit, but as to all matters which with propriety could have been litigated in the first suit, where the court had jurisdiction, proceedings were regular, and [the] omission was due to [a party’s] own negligence.’ ” Lease-A-Car, Inc. v. Thomassen Lincoln Mercury, Inc., 36 Md. App. 437, 442 , 373 A. 2d 1268, 1272 (1977) [quoting Frontier Van Lines v. Maryland Bank & Trust Co., 274 Md. 621, 623 , 336 A. 2d 778, 780 (1975); Alvey v. Alvey, 225 Md. 386, 390, 171 A. 2d 92, 94 (1961)].

We have before us a case where res judicata applies not to the determinations of an administrative agency — a somewhat controversial area, see Board of County Commissioners v. Racine, 24 Md. App. 435 , 332 A. 2d 306 (1975) — but, rather, to the decision of the circuit court in a statutorily-provided appeal under the Maryland Rules of