Magnetti v. University of Maryland

JAMES R. EYLER, Judge. Appellant, Charles Magnetti, filed a complaint, later amended, 1 in the Circuit Court for Prince Georges County, against the University of Maryland, College Park, the University’s ²⁸³ College of Arts and Humanities, and the Director of the University’s Professional Writing Program, Dr. Michael Marcuse, appellees, 2 alleging claims for breach of contract and breach of the implied covenant of good faith and fair dealing, and seeking specific performance, stemming from the termination of his employment in May or June of 2002. Appellees filed a motion to dismiss, asserting that governmental immunity prevented appellant from maintaining suit, as he had failed to file his claim within one year, as required by Maryland Code (2004 Repl.Vol.), § 12-202 of the State Government Article (“S.G.”). The Circuit Court for Prince George’s County agreed with appellees, applying S.G. § 12-201 (waiving the State’s governmental immunity for contract actions) and S.G. § 12-202 and dismissing the appellant’s complaint with prejudice on the ground of sovereign immunity.

On appeal, appellant alleges that the circuit court wrongly dismissed his claim, as Maryland Code (2006 RepLVol.), § 12-104 of the Education Article (“Ed.”), waived the University System’s governmental immunity through its “sue and be sued” provision. Appellant observes that the one year time limitation in S.G. § 12-202 for bringing suit against appellees under S.G. § 12-201, does not apply to the waiver of immunity under the Education Article. For the reasons set forth below, we shall affirm the decision of the circuit court. ²⁸⁴ Standard of Review We note at the outset that, as this case reached us upon the grant of a motion to dismiss, “we are referring not to evidence but only to allegations. There has yet been no evidentiary hearing____” Simms v. Constantine, 113 Md.App. 291, 294 , 688 A.2d 1 (1997).

We must presume all well pleaded facts in the complaint, and any inferences that can be drawn therefrom, to be true. Fioretti v. Maryland State Bd. of Dental Exam’rs, 351 Md. 66, 72 , 716 A.2d 258 (1998). “Dismissal is proper only if the facts and allegations, so viewed, would nevertheless fail to afford plaintiff relief if proven.” Simms, 113 Md.App. at 296 , 688 A.2d 1 . “The proper standard for reviewing the grant of a motion to dismiss is whether the ... court was legally correct.” Fioretti, 351 Md. at 71 , 716 A.2d 258 . Factual Background We summarize the facts, as alleged by appellant. Prior to 2002, appellant was employed for nineteen years as an instructor and lecturer with the Professional Writing Department of the University of Maryland, College Park.

Appellant received high marks in peer and student evaluations, and twice won the honor of teacher of the year. The Professional Writing Program does not use a tenure system with longtime professors, but instead uses a tiered personnel system. Appellant was informed that he was a member of the highest tier, known as “Core Faculty.” According to appellant, “Core Faculty members are in a bilateral contract with the Professional Writing Program ... whereby they are assured of continual teaching of at least three sections per semester, as long as they continue working with the professional writing program.” Without any good cause being stated, the appellant was informed in or around June of 2002 that his contract would not be reissued for the upcoming semester. Appellant’s subsequent attempts to reapply with the Professional Writing Program were similarly rebuffed without good cause.

Appellant alleged that a physical handicap affecting his ability to walk, ²⁸⁵ Peripheral Artery Disorder, and appellant’s outward appearance, such as wearing a beard and ponytail, played a determinative role in appellees’ decision not to continue his employment. At the motions hearing in circuit court, appellant’s counsel expressly stated that, for purposes of the motion, the contract was in writing. That statement is consistent with the allegations in the complaint, and thus, we will read the complaint as alleging a written contract. Procedural History After appellees failed to renew appellant’s contract and denied his subsequent applications for re-employment, on June 13, 2005, appellant brought contract claims in circuit court alleging, in count one, breach of contract, in count two, breach of the implied covenant of good faith and fair dealing, 3 and in count three, seeking specific performance to enforce the parties’ contract and allow appellant to continue as an instructor.

Thereafter, appellees filed a Md. Rule 2-322 motion to dismiss, alleging that appellant failed to state a claim upon which relief could be granted because the suit was barred by sovereign immunity, pursuant to S.G. § 12-201 and S.G. § 12-202. Those sections provide, in pertinent part: § 12-201: Except as otherwise expressly provided by a law of the State, the State, its officers, and its units may not raise the defense of sovereign immunity in a contract action, in a court of the State, based on a written contract that an ²⁸⁶ official or employee executed for the State or 1 of its units while the official or employee was acting within the scope of the authority of the official or employee. § 12-202: A claim under this subtitle is barred unless the claimant files suit within 1 year ... S.G. §§ 12-201-202. Appellees argued that appellant had failed to file suit 'within the applicable one year period and, thus, could not maintain his claims.

Appellant responded that immunity was waived pursuant to Ed. § 12-104(a) and (b). The relevant portions of Ed. § 12-104 state: (a) In addition to any other powers granted and duties imposed by this title, and subject to the provisions of Title 11 and any other restriction imposed by law by specific reference to the University System of Maryland ... the Board of Regents has the powers and duties set forth in this section. (b) In addition to the powers set forth elsewhere in this title, the University may: (3)Sue and be sued, complain, and defend in all courts. Ed. § 12~104(a) and (b).

Appellant argued that a recent amendment to Ed. § 12-104, adding the language “by specific reference,” made clear the Legislature’s intent that no restriction be placed upon the power granted to the Board of Regents, unless it specifically referenced the University System. According to the appellant, S.G. § 12-202 was inoperative as applied to the appellees because it restricted the ability of the Board of Regents to be sued under S.G. § 12-201, but did not specifically reference the University System. Appellant also alleged that Ed. § 12-104(b)(3)’s “sue or be sued” language waived governmental immunity, such that only the three year statute of limitations for ordinary contract claims was relevant. Because his contract claim was brought ²⁸⁷ within three years of the alleged breach of contract, appellant argued that the motion to dismiss should be denied.

At oral argument, the court did not find appellant’s Ed. § 12-104 argument persuasive, noting that this “legislation ... was enacted ... for the purpose of providing that the authority of the Board of Regents ... may not be superseded by any state agency or office in certain management affairs except by a provision of law that specifically references the University System of Maryland,” not for removing the application of S.G. § 12-202. Additionally, the court determined that, according to the ruling in Stern v. Bd. of Regents, 380 Md. 691 , 846 A.2d 996 (2004), Ed. § 12-104(b)(3)’s “sue or be sued” provision did not waive sovereign immunity in this case. Because sovereign immunity had not been waived under Ed. § 12-104(b)(3), and because suit had not been filed within one year, as required by S.G. § 12-202, the court ruled that the complaint was barred by sovereign immunity and, thus, granted appellees’ motion to dismiss. Contentions Appellant contends that the circuit court erred in ruling that, pursuant to S.G. § 12-201 and S.G. § 12-202, the appellees were immune from contract causes of action filed more than one year after the alleged breach of contract.

Appellant’s arguments center on whether the 2004 amendment to Ed. § 12-104(a) effectively removed the appellees from the scope of S.G. § 12-202’s one-year restriction on bringing suit, and whether sovereign immunity was waived through a provision of Ed. § 12-104(b)(3), which specifically states that the Board of Regents can “sue or be sued.” For the reasons set forth below, we affirm the decision of the court. Governmental Immunity If “a governmental agency or actor can, and does, avail itself of the doctrine of sovereign immunity, no contract or tort suit can be maintained thereafter against it unless the General Assembly has specifically waived the doctrine.” Stern, 380 Md. at 701 , 846 A.2d 996 . Sovereign immunity ²⁸⁸ protects the State government from excessive interference with governmental functions and preserves control over state funds. Id.

(citing Maryland, State Highway Admin, v. Kim, 353 Md. 313, 333 , 726 A.2d 238 (1999)). “There is no doubt ... that the Board is considered to be an arm of the State Government for the purposes of asserting the defense of sovereign immunity.” Id. at 702, 846 A.2d 996 . Thus, without a statutory waiver of sovereign immunity preventing the appellees from asserting the defense of sovereign immunity, appellant’s claim cannot be maintained. Appellant argues that either Ed. § 12-104(b) or S.G. § 12-201 constituted that waiver of immunity, without the limitation contained in S.G. section § 12-202. Ed. § 12-104(b), addressing the powers and duties of the Board of Regents, states that the Board of Regents may “sue or be sued.” Such “sue or be sued” language does not, however; allow a party to obtain a money judgment against a governmental actor.

Rather, obtaining a money judgment requires a two-part showing: first, that specific legislative authority for suits has been given, and second, that funds have been appropriated for the purpose of satisfying a money judgment or the agency has been empowered to provide such funds by taxation. Univ. of Maryland v. Maas, 173 Md. 554, 559 , 197 A. 123 (1938). As stated in Howard Cmty. Coll. v. John K. Ruff, Inc.: [W]hen 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, even with respect to matters within the scope of the duties of the agency ... [A]n action for a money judgment may not be maintained unless funds had been appropriated for that purpose or the agency can provide funds by taxation. 278 Md. 580, 590 , 366 A.2d 360 (1976)(emphasis added). Thus, “[i]t is clear that without a specific legislative waiver and ²⁸⁹ appropriation, or taxing power, sovereign immunity is applicable in respect to the state.” Stern, 380 Md. at 701 , 846 A.2d 996 (emphasis added). The Court of Appeals recently examined the application of the Maas and Ruff test to Ed. § 12-104(b)(3). Stem, 380 Md. at 691 , 846 A.2d 996 .

In that case, students of several member institutions of the University System of Maryland brought suit against the Board of Regents, alleging that a mid-year tuition increase constituted a breach of contract. When the Board of Regents defended on the ground of sovereign immunity, the students responded with several arguments, including an assertion that immunity had been waived through the “sue or be sued” provision of Ed. § 12-104(b)(3). The students alleged that pursuant to Frankel v. Bd. of Regents, Ed. § 12-104(b) waived governmental immunity in all “actions concerning matters within the scope of the governmental agency’s duties and obligations.” Stern, 380 Md. at 712 , 846 A.2d 996 (quoting Frankel v. Bd. of Regents, 361 Md. 298, 310 , 761 A.2d 324 (2000) (internal quotation marks and citations omitted)). The students argued that the Board of Regents “has extensive powers, including the right to [e]xercise all the corporate powers granted Maryland corporations ... and the right to enter into contracts of any kind,” and therefore was acting within the scope of its official duties in ordering the tuition increase.

Id. at 712, 846 A.2d 996 (<citing Ed. § 12—104(b)(1) and Ed. § 12-104(b)(5))(internal quotations omitted). Thus, according to the students, the Board had waived sovereign immunity pursuant to the sue or be sued provision. Id. The Court refused to read the Frankel holding so broadly.

The Court found that the waiver of immunity for actions done pursuant to the Board’s duties and obligations was still restricted by the second element of the Ruff' test, requiring that funds be specifically appropriated to satisfy a judgment or that the state agency have the taxing power to raise money to satisfy judgments. Id. at 714, 846 A.2d 996 . ²⁹⁰ Examining the second prong of the Maas and Ruff test in the context of Stem, the Court found it “clear that no statutory authority exists to authorize the Board of Regents to levy a tax for the purpose of repaying mid-year tuition increases.” Id. at 715, 846 A.2d 996 . The Court thus reviewed whether money had been appropriated to pay money damages arising from claims under Ed. § 12—104(b)(3). The Court stated that the General Assembly is cognizant of how to specifically authorize the power to raise funds in satisfaction of the second prong of the ...

Ruff test, as it has enacted a power to appropriate funds for the purpose of paying judgments arising from an express ... waiver of immunity in ... § 12-203 of the State Government Article. Id. S.G. § 12-203 states that “the Governor shall include in the budget bill money that is adequate to satisfy a final judgment” arising out of claims filed under the express waiver of immunity found within S.G. § 12-201. The Court found no such language in Title 12 of the Education Article for the appropriation of funds to satisfy claims brought under the alleged waiver provision of Ed. § 12—104(b)(3).

The Court then stated that the “appellants offer no evidence of whether, sufficient, or even any, funds were appropriated for the purpose of satisfying adverse judgments.” Id. at 718, 846 A.2d 996 . The students offered only a financial statement, which did not show “how the potential funds listed [were] to be appropriated or spent.” Id. Finding that the students had failed to demonstrate appropriations or taxing authority to satisfy money judgments, the Court ruled that the “sue or be sued” language of Ed. § 12—104(b)(3) did not waive governmental immunity for the students’ claims. The Court did not expressly decide whether Ed. § 12-104(b)(3)’s “sue or be sued” provision was a waiver of sovereign immunity, instead ruling only that the students had failed the second requirement in Ruff Id. at 712, 846 A.2d 996 . ²⁹¹ Appellant has also argued that S.G. § 12-201 acts to waive immunity in the present case.

While the potential waiver of immunity in Ed. § 12-104(b) will apply only in those instances when funding has been appropriated, S.G. §§ 12-201-203 are clearly applicable to the Board of Regents, as