Sean J. O'Reilly v. County Board of Appeals for Montgomery County, Maryland , 900 F.2d 789 ( 1990 )

WILKINS, Circuit Judge:

Sean J. O’Reilly appeals from the decision of the district court dismissing his claim brought pursuant to 42 U.S.C.A. § 1983 (West 1981) against the County Board of Appeals for Montgomery County, Maryland (Board). The district court determined that O’Reilly’s action was precluded by collateral estoppel. We reverse and remand.

I.

The Montgomery County Department of Transportation (DOT) issues Passenger Vehicle Licenses which are required of all taxicab operators in Montgomery County. In September and November 1985 the DOT awarded 20 licenses including one awarded to O’Reilly, a resident of Virginia. Because the number of qualified applicants exceeded the number of licenses to be awarded, several applicants were denied a license. Some of the applicants who had been denied a license appealed the licensing decisions of the DOT to the Board which conducted a de novo review. At the conclusion of this proceeding, the Board made new determinations regarding which applicants should be awarded licenses. O’Reilly was among those who were ultimately denied a license. Five of the applicants who received licenses had less experience driving taxicabs than O’Reilly who had three and one-half years experience driving taxicabs in Montgomery County. All of the applicants who received licenses were residents of Maryland.

O’Reilly appealed the decision of the Board to the Circuit Court for Montgomery County, Maryland. In this administrative appeal, O’Reilly claimed that geographical familiarity with Montgomery County was the key factor in the Board’s decision and that familiarity was linked to residence. He requested that the court invalidate the Board’s decision using a strict standard of constitutional scrutiny. He also filed a civil rights action in state circuit court alleging that the denial of a license and the requirement that he provide a transcript of the hearings before the Board in order to file an administrative appeal violated his constitutional rights. The state circuit court dismissed the civil rights action on the ground that O’Reilly had not exhausted his administrative remedies. The Maryland Court of Special Appeals ultimately affirmed.

After dismissal of the civil rights action but before the decision by the Court of Special Appeals, the state circuit court decided the administrative appeal and affirmed the decision of the Board. It found that residence was “considered only insofar as it related to familiarity, with no preference, per se, given to Montgomery County residents over non-resident applicants.” It also found that “the decision of the Board is well supported by the evidence, and ... its action was not arbitrary, unreasonable or illegal.” O’Reilly did not appeal this decision but instead moved the state circuit court to schedule further proceedings in the civil rights action. However, the state circuit court granted the motion of the Board to strike O’Reilly’s motion on the ground that the civil rights action had been dismissed and the dismissal had now been affirmed on appeal.

O’Reilly then filed an action in federal court pursuant to 42 U.S.C.A. § 1983 claiming that in determining familiarity with the geographical area, the Board considered an applicant’s residency as the primary criterion. He contends that this violated the privileges and immunities clause, U.S. Const, art. IV, § 2, cl. 1, the commerce clause, U.S. Const, art. I, § 8, cl. 3, and the privileges and immunities, due process and equal protection clauses of the fourteenth amendment, U.S. Const, amend. XIV, § 1. O’Reilly also claimed that the requirement that he provide a transcript before filing an administrative appeal violated his due process rights. The district court found that the final judgment of the state circuit court precluded O’Reilly from asserting the factual argument that the Board impermissi-bly denied him a license because he is a nonresident of Montgomery County. It also found that the transcript requirement did not violate O’Reilly’s due process rights.¹

II.

As the district court correctly noted, state court judgments are given preclu-sive effect in subsequent section 1983 actions brought in federal court. See University of Tennessee v. Elliott, 478 U.S. 788, 796, 106 S.Ct. 3220, 3225, 92 L.Ed.2d 635 (1986); Migra v. Warren City School Dist. Bd. of Educ., 465 U.S. 75, 80-85, 104 S.Ct. 892, 895-98, 79 L.Ed.2d 56 (1984). A federal court must “give the same preclusive effect to state court judgments that those judgments would be given in the courts of the State from which the judgments emerged.” Migra, 465 U.S. at 81, 104 S.Ct. at 896 (quoting Kremer v. Chemical Constr. Corp., 456 U.S. 461, 466, 102 S.Ct. 1883, 1889, 72 L.Ed.2d 262 (1982)). Thus, Maryland law is controlling on the issue of whether O’Reilly is precluded from asserting his claim that the Board unconstitutionally relied on his nonresidence in denying him a license.

Under Maryland law, collateral es-toppel, or issue preclusion, applies only if it is established that (1) the issue decided in the prior adjudication is identical to the issue in the present action, (2) there was a prior final judgment on the merits, and (3) the party against whom the decision is being used was a party in the prior action. MPC, Inc. v. Kenny, 279 Md. 29, 35, 367 A.2d 486, 490-91 (1977). It is undisputed that O’Reilly was a party in the prior action in the state circuit court and a decision was rendered on the merits. Thus, the only question is whether the issue raised and decided in the state circuit court is identical to the issue in the present action.

The district court noted that to prevail on his section 1983 claim, O’Reilly must show that he was denied a license because he is a nonresident of Montgomery County. Finding that the state circuit court had held that there was no basis for O’Reilly’s claim that he was denied a license because of his residency, the district court held that the issue in O’Reilly’s section 1983 action was identical to the issue in the state court action and O’Reilly was collaterally es-topped from arguing that the Board denied him a license because of nonresidency.

III.

Although the district court is correct in its assertion that the state circuit court found residence was not determinative of whether an individual received a license, O’Reilly does not base his section 1983 claim on this ground. Had he done so he would be collaterally estopped from raising the issue because the state circuit court found that “no preference, per se, [was] given to Montgomery County residents over non-resident applicants.” Our interpretation of the state circuit court's opinion suggests that the Board did not automatically deny a license to O’Reilly because he was a nonresident. However, rather than contending that residency was the dispositive factor in determining whether an individual received a license, O’Reilly contends that residency was the key factor in determining familiarity with Montgomery County which was in turn a key factor in determining whether an individual received a license. Thus, O’Reilly contends that the consideration of residency in determining familiarity with Montgomery County violates the privileges and immunities and commerce clauses and that this issue has not been addressed.

It is true that O’Reilly attempted to raise this issue in his appeal to the state circuit court. However, the record does not support a finding that this issue was addressed. The state court made only one reference to the constitutional issue in its opinion:

Mr. O’Reilly claims that the key consideration in the Board’s decision was geographical familiarity with Montgomery County, and that the Board illegally linked this to residence in the county.

He argues that the decision of the Board was protectionist, and asks the Court to invalidate it, utilizing a strict standard of constitutional scrutiny.

According to the dissent this language indicates that the state circuit court actually considered O’Reilly’s constitutional claims and resolved them. While we would like to say that this issue was addressed and decided in the state forum where the action was initiated, we cannot bar the doors of the federal courthouse to those pressing a basic constitutional claim by seizing upon this language and speculating that the constitutional issue was actually addressed by the state circuit court. O’Reilly raised it, but the state court did not address it.²

What the court did find was that residence was “considered only insofar as it related to familiarity_” This is O’Reilly’s point. The state court found that residence was a factor considered in determining familiarity, but the court did not determine whether this consideration was constitutional. Although the Board indicated that residence was only one aspect of determining familiarity and the state circuit court found that the Board considered criteria other than familiarity, the state court did not indicate whether it found that residence was or was not the controlling factor in determining familiarity or whether the consideration of residence in determining familiarity was unconstitutional. Because the language of the state circuit court’s opinion is ambiguous, we cannot say with any degree of certainty that it decided the identical issue raised in O’Reilly’s section 1983 action. Absent a clear identity of issues, O’Reilly should not be collaterally estopped from asserting that residence was impermissibly considered in determining familiarity. Without indicating an opinion regarding the merits of O’Reilly’s claim, we reverse the decision of the district court that this action is precluded and remand with instructions to reinstate.

REVERSED AND REMANDED WITH INSTRUCTIONS.

1 . On appeal, O’Reilly does not challenge the decision of the district court regarding the transcript.

2 . The dissent cites MGA, Inc. v. General Motors Corp., 827 F.2d 729 (Fed.Cir.1987), cert. denied, 484 U.S. 1009, 108 S.Ct. 705, 98 L.Ed.2d 656 (1988), for support. However, as the dissent points out, MGA involved a collateral attack on a state court judgment where the appellant challenged the state court’s analysis and claimed that the decision was arbitrary and capricious. Id. at 733. The Federal Circuit noted that the state court had in fact resolved the dispute presented by the parties. Id. Thus, the issue in MGA, unlike the issue here, was not whether the state court had decided the identical issue as that raised in federal court, but whether the state court decision was correct and whether the district court correctly applied Michigan law on issue preclusion. MGA offers little support for the dissent’s position.