Smalls v. Maryland State Department of Education

CHARLES E. MOYLAN, JR., J. (Retired, Specially Assigned). The subject is res judicata. The aberrational nuance is that we are dealing with two adjudications by an administrative agency.

The appellant, Jonathan Smalls, received on April 19, 2007, a family child care certificate of registration (“Certificate”) from the Office of Child Care (“OCC”) of the Maryland State Department of Education (“Department”). The Department, that initially issued but then twice revoked that certificate, is the appellee. Before even getting to res judicata, the inevitable first question has to be, “What is ‘a family child care certificate of registration?’ ” The Significance of Registration The case is controlled by Maryland Code, Family Law Article, Subtitle 5, “Child Care, Foster Care.” Section 5-501(e) defines a “Family child care home” as “a residence in which family child care is provided for up to 8 children.” Subsection (c) defines a “child care provider” as an “adult who has primary responsibility for the operation of a family child care home[.]” Section 5-552(a) goes on to provide that “a family child care home ... may not operate unless it is registered.” Section 5-505(a) further provides that “a person shall be licensed by the Administration as a child care home before the person may exercise care, custody, or control of a minor child.” Section 5-550.1 focuses specifically on the “Registration system.” Subsection (b)(1), in pertinent part, sets out the “purpose” of the registration requirements: “b) Purpose — The purpose of registration of family care homes ... is to: (1) protect the health, safety, and welfare of children while they are in family child care[.]” ²²⁸ Subsection (c) confirms the legislatively declared linkage between proper registration and the health and safety of the children: “Legislative intent. — The system of registration is intended to promote a high degree of flexibility in the regulation of family child care homes and large family child care homes while assuring the health and safety of children who are cared for in family child care homes.” (Emphasis supplied). Section 5-515 deals with the suspension or revocation of a certificate of registration earlier granted.

It provides: “Subject to the hearing provisions of § 5-516 of this subtitle, if a licensee violates any provision of this subtitle or of a rule or regulation adopted under this subtitle, the Administration may: (1) suspend the license for a period not exceeding 1 year; or (2) revoke the license.” (Emphasis supplied). The reference to “a rule or regulation adopted under this subtitle” is a reference to COMAR regulations. It is COMAR 13A.15.13.07 that deals with the revocation of a certificate of registration. That section lists 14 separate regulations of which a certificate holder could be in violation.

The first two are here pertinent: “A. The office may revoke a certificate of registration if the: (1) Provider or home is in violation of one or more of the regulations under this subtitle and the health, safety, or welfare of a child in the home is threatened; (2) Provider misrepresented or offered false information on the application or on any form or report required by the officelT (Emphasis supplied). A Preliminary Glimpse at the Issue Before Us On February 4, 2010, the OCC notified the appellant that it intended to revoke his family day care certificate of regis ²²⁹ tration. He appealed the revocation to the Office of Administrative Hearings (“OAH”). Following a full hearing, an Administrative Law Judge (“ALJ”) upheld the revocation.

The appellant sought further review in the Circuit Court for Baltimore City. In a Written Opinion and Order filed on January 24, 2011, Judge Sylvester Cox reversed the finding of the ALJ and reinstated the appellant’s certificate of registration. The Department did not appeal that decision of the circuit court. That decision represented a final judgment on the merits.

It was also the predicate for all that followed. On August 22, 2013, the OCC initiated a second attempt to revoke the appellant’s certificate of registration. The appellant again appealed to the OAH. Following another full hearing on March 18, 2014, an ALJ rendered a decision on April 16, 2014 upholding the revocation of the appellant’s certificate of registration.

The appellant again appealed to the circuit court. On December 8, 2014, Judge Kendra Y. Ausby affirmed the decision of the ALJ. On this appeal, the appellant contends: 1. “The ALJ erred by denying appellant’s motion for summary decision when appellant was entitled to judgment, as a matter of law, under the doctrines of collateral estoppel and/or res judicata and 2. “The ALJ’s decision is not supported by substantial evidence and is erroneous as a matter of law.” (Emphasis supplied). Res Judicata Res judicata is a common law defense.

Maryland’s recognition of the defense, by express name, goes at least as far back as 1885 with State v. Brown, 64 Md. 199 , 1 A. 54 (1885). The Court of Appeals there quoted with approval from the Supreme Court’s decision in Beloit v. Morgan, 74 U.S. 619 , 19 L.Ed. 205 , 7 Wall. 619, 622 (1868), which, in turn, had quoted with approval from the English decision of Henderson v. Henderson, 3 Hare 100, 67 ER 313 (1843). In State v. Brown, 64 Md. at 203 , 1 A. 54 the Court of Appeals held: ²³⁰ “According to well-settled principles, our decision in the first case finally determined, as between the parties to the suit, all matters then adjudicated. As between these parties, no matter then decided can ever again become the subject of controversy.” (Emphasis supplied).

See also Archer v. State, 74 Md. 410 , 22 A. 737 (1891). Section 1 of the Restatement of Judgments (1942) described the aim or purpose of res judicata: “Where a reasonable opportunity has been afforded to the parties to litigate a claim before a court which has jurisdiction over the parties and the cause of action, and the court has finally decided the controversy, the interests of the State and of the parties require that the validity of the claim and any issue actually litigated in the action shall not be litigated again by them.” (Emphasis supplied). Professor Kenneth Culp Davis in his monumental Administrative Law and Government (1960), Ch. 18 “Res Judicata,” p. 343, emphasized society’s interest in repose: “The main idea is that a party should have his ‘day in court’ — his chance to win his case — and that once the tribunal has made a final decision and the time for rehearing or appeal or further appeal has expired, the result of the case becomes binding and cannot be reopened; the decision becomes res judicata. The reason for the doctrine of res judicata is that we don’t want the court to have to consider the same claim over and over, and we don’t want the defendant to have to defend over and over.

At some point in the presentation and determination of controversies, we want repose. The objective of the doctrine of res judicata is repose.” (Emphasis added). Administrative Decisions and Res Judicata Both of the two sequential efforts by the OCC to revoke the appellant’s certificate of registration led to respective hearings ²³¹ before the Office of Administrative Hearings, an administrative agency engaged in a quasi-judicial function. In this case, to be sure, both decisions by ALJ’s were ultimately appealed to the Circuit Court and were ruled upon at that level.

Lest there should be any doubt, however, as to whether the principles of res judicata apply with full vigor to decisions that were initially the quasi-judicial decisions of administrative agencies, a brief look at the undisputed case law may be appropriate. Although earlier Maryland decisions had, to be sure, strongly suggested that res judicata did not apply to decisions, even quasi-judicial decisions, of administrative agencies, the thorough-going analysis by the Court of Appeals in Woodlaum Area Citizens Assn. v. Board of County Commissioners for Prince George’s County, 241 Md. 187, 194-96 , 216 A.2d 149 (1966), worked a dramatic correction of course and brought Maryland into line with the more enlightened and majority view through the nation. 1 In Neifert v. Department of Environment, 395 Md. 486, 507 , 910 A.2d 1100 (2006), the Court of Appeals well articulated the current law: “An administrative agency’s decision is given preclusive effect based on three factors: (1) whether the agency was acting in a quasi-judicial capacity, (2) whether the issue presented to the circuit court was actually litigated before the agency, and (3) whether resolution of the issue was necessary to the agency’s decision.” (Emphasis supplied). See also, Stavely v. State Farm Mut. Auto.

Ins. Co., 376 Md. 108, 116-17 , 829 A.2d 265 (2003); Batson v. Shiflett, 325 Md. 684, 703-708 , 602 A.2d 1191 (1992); Sugarloaf Citizens Ass’n v. Northeast Maryland Waste Disposal Authority, 323 Md. 641 , 658 n. 13, 594 A.2d 1115 (1991); Murray International Freight Corp. v. Graham, 315 Md. 543, 547-49 , 555 A.2d 502 (1989); White v. Prince George’s County, 282 Md. 641, 658 , 387 A.2d 260 (1978). ²³² In Seminary Galleria, LLC v. Dulaney Valley Improvement Ass’n, 192 Md.App. 719, 735 , 995 A.2d 1068 (2010), this Court, quoting Restatement (Second) of Judgments (1982), § 83(1), stated: “[A] valid and final adjudicative determination by an administrative tribunal has the same effects under the rules of res judicata, subject to the same exceptions and qualifications, as a judgment of a court.” (Emphasis supplied). Claim Preclusion, Not Issue Preclusion As a cautionary guidepost along the way, we note that there is a pervasive tendency for advocates litigating a res judicata question reflexively to throw in collateral estoppel almost as a doctrinal bonus, and for other advocates, raising a collateral estoppel issue, to exhibit the same conditioned reflex with respect to res judicata. The two are not, it should be carefully noted, Tweedledum and Tweedledee.

Murray International Freight Corp. v. Graham, 315 Md. 543, 546-52 , 555 A.2d 502 (1989). Unlike Castor and Pollux or Damon and Pythias, res judicata and collateral estoppel may be separated. Indeed, they are far less confusing when they are kept carefully apart. Just to clear away any possible clutter, therefore, let us point out that we are dealing on this appeal with res judicata and not with collateral estoppel.

We are not here concerned with any factual decision on the ultimate merits so as to trigger issue preclusion under principles of collateral estoppel. Janes v. State, 350 Md. 284, 295-307 , 711 A.2d 1319 (1998). Our concern is only with claim preclusion, which does not depend on any factual decision on the merits and is as concerned with what might have been litigated as surely as it is with what actually was litigated. MPC, Inc. v. Kenny, 279 Md. 29, 32-35 , 367 A.2d 486 (1977).

Res judicata, moreover, is direct and not collateral. See Klein v. Whitehead, 40 Md.App. 1, 13 , 389 A.2d 374 (1978) (“Res judicata is a direct estoppel, and collateral estoppel is ²³³ what its name says it is.”). In John Crane, Inc. v. Puller, 169 Md.App. 1, 27 , 899 A.2d 879 (2006), this Court starkly distinguished the respective concerns of the two doctrines: “[T]he core concern of res judicata law is with the legal consequences of a final judgment in terms of precluding the subsequent relitigation of the same case---- “By contrast, the concern of collateral estoppel law is with the preclusion of duplicative fact-finding.” (Emphasis supplied). In Burkett v. State, 98 Md.App. 459, 464 , 633 A.2d 902 (1993), this Court stressed the essential difference between these two very different preclusive defenses: “Collateral estoppel is concerned with the factual implications of an earlier litigation of a different case, whereas res judicata is concerned with the legal consequences of a judgment entered earlier in the same case....

Res judica-ta, by contrast, is concerned with the legal consequences of a judgment regardless of whether the judgment was based on the ultimate factual merits or on the basis of a legal ruling having nothing to do with the ultimate factual merits.” (Emphasis supplied). At a very high (almost ethereal) level of abstraction, there is a rough similarity between the two preclusive defenses. Indeed, they each preclude something. Each defense effectively asserts, “Having done something once, you are precluded from doing it a second time!” The two doctrines, however, then diverge sharply in identifying what that “something” is that was done the first time around and also in defining what “having done” something actually consists of.

The failure to deal carefully with these critical distinctions can result in an utter breakdown in communication, as it threatened to do in this case. The Department, as an example of what we are warning against, spends three pages of its appellate brief ostensibly refuting the appellant’s defense of res judicata. The language of that refutation and the legal criteria invoked, however, are ²³⁴ exclusively from the world of collateral estoppel, a subject which is not before us in this case. The Department argues that “the issues in the 2013 proceeding were not identical to those in the 2010 proceeding.” (Emphasis supplied).

Of course, they were not and they do not have to be for purposes of res judicata. It further argues, “Res judicata, also called issue preclusion, bars relitigation of an issue.” Res judicata, of course, is not issue preclusion. It is claim preclusion and it is not concerned with factual issues as factual issues. The Department’s brief goes on, “Issue preclusion does not require that the cause of action be the same, but it applies only with respect to issues of fact actually determined in the earlier proceeding.” On the other hand, res judicata, which is before us in this case, does most definitely require that the causes of action be the same.

Res judicata is not in the least concerned, moreover, with whether “issues of fact [were] actually determined in the earlier proceeding.” The Department concludes, “[Appellant] argues that the issues in both proceedings are identical. They are not.” The Department makes a strong case that its second revocation attempt was not precluded by collateral estoppel. The appellant, for his part, has been just as undisciplined in framing his contention. As to both, the battle over collateral estoppel has been a tempest in a teapot.

Both parties have been fighting a phantom that has nothing to do with this case. Through the Looking Glass Just as a dispositive difference between res judicata and collateral estoppel is the distinction between a factual issue and a legal claim or cause of action, a potentially even more gaping difference may be in the subsequent dispositions of those respective predicates. In collateral estoppel law, the factual issue must actually be resolved on its merits by the factfinder before it acquires any preclusive effect. In res judicata law, by contrast, it is a legal decision rather than a factual determination that concerns us.

Unlike a factual determination, the legal decision, to enjoy preclusive effect, ²³⁵ need not actually be made. It is enough that it could have been made. Therein lies a world of difference. Grammatically speaking, the language we use in discussing and analyzing collateral estoppel law should be in the indicative mood.

We are interested in what is. We are concerned with the here and now. In discussing and analyzing res judicata, by contrast, we are not so earthbound. We may, of course, employ the indicative mood and all that it portends, but we may also, alternatively, switch into the subjunctive mood.

We may inquire about what legal decision was actually made, but we may also speculate about legal decisions that were never made, but might have been. We are invited to step through Alice’s looking glass into an alternative reality. This is a world that collateral estoppel cannot imagine. As Judge Levine explained for the Court of Appeals in MPC v. Kenny, 279 Md. at 33 , 367 A.2d 486 : “If ... the two causes of action are the same, and res judicata is therefore applicable, the first judgment would bar appellants, as urged by appellee, from raising any matters which could have been decided in that case.” (Emphasis supplied).

Alvey v. Alvey, 225 Md. 386, 390 , 171 A.2d 92 (1961), speaks of the duty to raise in the first cause of action all matters that could there have been raised. “ ‘It will not do to say that the facts relied upon in the second bill were not alleged in the first bill, and could not, therefore, have been proved in the first case, for the answer is, it was the appellant’s duty to have either alleged them in the first case, or to have shown in this case some good reason’for failing to do so. ‘We conclude that all questions of fact arising in connection with the present transaction between the appellant and the appellees have been litigated and determined in the first suit, not only as to the matters and claims which were ²³⁶ presented, in that suit, but also as to all matters that could have been presented but were not.” (Emphasis supplied). In Powell v. Breslin, 430 Md. 52, 64 , 59 A.3d 531 (2013), the Court of Appeals reaffirmed: “Judge Allison’s grant of summary judgment in Powell I was a final judgment on the merits at the time it was entered and, therefore, was conclusive as to the matters decided in that case, as well as to ‘all matters which with propriety could have been litigated in the first suit.’” (Footnote omitted; emphasis supplied). This Court articulated the same principle in Seminary Galleria, LLC v. Dulaney Valley, 192 Md.App. at 735 , 995 A.2d 1068 , quoting Whittle v. Board of Zoning Appeals, 211 Md. 36, 49 , 125 A.2d 41 (1956): “ ‘If the second suit is between the same parties and is upon the same cause of action, a judgment in the earlier case on the merits is an absolute bar, not only as to all matters which were litigated in the earlier case, but as to all matters which could have been litigated.’ ” (Emphasis supplied). See also Richman v. FWB Bank, 122 Md.App. 110, 152 , 712 A.2d 41 (1998).

Res judicata is concerned not only with what was, but with what could have been. Identifying a Claim or Cause of Action As we prepare to focus in more tightly on whether the Department’s first revocation attempt of 2010 precluded, as res judicata, its subsequent revocation attempt of 2013, two of res judicata’s three elements pose no problem. In both of the legal proceedings under examination, the parties were the same — the appellant and the Department. In the first proceeding, moreover, there was a final judgment.

When the Circuit Court for Baltimore City on January 24, 2011, reversed the decision of the administrative law judge and ruled that the evidence presented by the Department was not legally sufficient to justify its revocation of the appellant’s ²³⁷ certification, the revocation action was dismissed. That was a final judgment. What remains to be analyzed is whether the claim or cause of action that was brought by the Department in 2013 was the “same” as the claim or cause of action that had earlier been brought by the Department in 2010. Identifying a claim and then properly labeling it, neither too narrowly nor too broadly, is an exercise in conceptualization.

It is hard to describe this process in laymen’s terms, but if we can do so, it should be a major step in truly understanding the process. In attempting to organize an assortment of issues, large and small, into a logical outline, we must identify which issues are deserving of Capital Letters in the outline and then determine which broader issues are actually worthy of Roman Numerals. A tricky question may be whether a particular Capital Letter is simply a subdivision under a Roman Numeral or is an integral part of the Roman Numeral itself. That is a question, moreover, that is not always free of ambiguity.

In sorting litigable issues into categories and in designating the categories, there inevitably is involved a certain degree of arbitrariness. Maryland’s first serious effort to articulate a workable test for determining whether two causes of action were the same for res judicata purposes was MPC, Inc. v. Kenny, 279 Md. 29 , 367 A.2d 486 (1977). Judge Levine’s opinion, 279 Md. at 33 , 367 A.2d 486 , described the “same evidence” test: “Courts elsewhere have applied a variety of tests in determining whether two causes of action are the same for purposes of invoking res judicata. The measure which seems to find favor with most courts, and one which we have applied, is whether the same evidentiary facts would sustain both actions.... “Analysis of the issues framed by these two cases in light of the ‘same evidence’ test demonstrates that a different cause of action is presented here.” (Emphasis supplied).

Significantly, that opinion noted that “[c]ourts elsewhere have applied a variety of tests” in resolving this question of sameness. ²³⁸ The seminal Maryland examination of what is the “same claim” for the purpose of res judicata was that made 10 years later by Judge Rodowsky in Kent County Board of Education v. Bilbrough, 309 Md. 487 , 525 A.2d 232 (1987). At the very outset, the leitmotif was sounded: “The question presented turns on the application to the facts of this case of the elusive concept, ‘claim,’ as used in the law of claim preclusion.” 309 Md. at 489 , 525 A.2d 232 . In the Bilbrough case, this Court had relied on MFC v. Kenny and the “same evidence” test in holding that a plaintiffs second suit against the defendants was not barred by res judicata. The Court of Appeals did not reverse that holding per se, but it opined that undue reliance on the “same evidence” test might “improperly narrow the scope of a ‘claim’ in the preclusion context”: “Although we agree with the result reached by the Court of Special Appeals, we are concerned that sole reliance on the same evidence or required evidence analysis to determine if the same claim is involved in two actions may improperly narrow the scope of a ‘claim’ in the preclusion context.” 309 Md. at 494 , 525 A.2d 232 .

(Emphasis supplied). In then making a case for a broader scope to be afforded the term “claim,” the opinion, 309 Md. at 494-96 , 525 A.2d 232 , explored the “considerable evolution” that claim preclusion had undergone in the course of the Nineteenth and early Twentieth Centuries, relying heavily on Restatement (Second) of Judgments, § 24, comment a, at 197. The earlier rigidity had been caused in large measure by the law’s equating of the terms “claim” and “cause of action,” on the one hand, with the legendary rigidities once inherent in the forms of action. 2 Judge Rodowsky, 309 Md. at 495 , 525 A.2d 232 , explained that ²³⁹ Maryland had moved away from that earlier dependence on the forms of the action. “The Maryland law of claim preclusion has moved far enough from the influence of the common law forms of action that it seems to be settled here that a mere change in the legal theory, applied to the same set of facts previously litigated, will not in and of itself avoid claim preclusion.” (Emphasis supplied). The more flexible approach recommended by the American Law Institute in its Restatement (Second) of Judgments is to equate the term “claim” or “cause of action” for res judicata purposes with the notion of a “transaction.” Determining what is and what is not a “transaction” defies the application of any strict definition and requires a flexible or “pragmatic” approach.

Section 24(2) of the Restatement emphasizes this essential flexibility: “What factual grouping constitutes a ‘transaction’, and what groupings constitute a ‘series,’ are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage.” 309 Md. at 498 , 525 A.2d 232 . (Emphasis supplied). 3 In approving this flexible or “transactional” approach to identifying a claim or cause of action, the Court of Appeals ²⁴⁰ made it clear that the transactional test “defies any attempt of abstract definitions which could be applied to all cases.” “We therefore generally approve of the approach to resolving the question of identity of claims found in § 24 of the Restatement. We also agree with the observation by Schopflocher, supra, 21 Or. L.Rev. at 324 that the ‘pragmatic’ test ‘defies any attempt of abstract definition which could be applied to all cases. ’ And Moore’s Federal Practice at 361 doubts that the Restatement’s substituting ‘transaction’ for ‘claim’ or ‘cause of action’ to describe the unit of litigation to which preclusive effect is given, ‘[b]eyond thus fortifying the already developed principle that a plaintiff may not relitigate a claim for relief by switching legal theories ... would make any very material change in the practice in the federal courts.’ ” 309 Md. at 499-500 , 525 A.2d 232 .

(Emphasis supplied). In DeLeon v. Slear, 328 Md. 569, 589 , 616 A.2d 380 (1992), the Court of Appeals reaffirmed Kent County v. Bilbrough and its use of the “transaction” test to identify the critical claims or causes of action: “In determining whether claims are the same for purposes of res judicata, we have in the past sometimes utilized a ‘same evidence’ test. See MPC, Inc. v. Kenny, supra, 279 Md. at 33 , 367 A.2d at 489 . We have indicated, however, that the concept of a ‘claim’ is broad.

See, e.g., Edmonds [Edmunds] v. Lupton, 253 Md. 93 , 252 A.2d 71 (1969) (defining a ‘claim’ as ‘a group or aggregate of operative facts giving ground or occasion for judicial action, as distinguished from the narrow concept of a