Board of Public Works v. K. Hovnanian's Four Seasons at Kent Island, LLC

Board of Public Works, et al. v. K. Hovnanian’s Four Seasons at Kent Island, LLC, No. 57,
September Term 2014, Opinion by Greene, J.
ADMINISTRATIVE LAW – EXHAUSTION OF ADMINISTRATIVE REMEDIES
AND FINAL JUDGMENT
Absent a specific legislative grant of review authority or immediate and irreparable harmful
legal consequences, a party must exhaust all exclusive administrative remedies and await a
final administrative decision before filing suit in the circuit court to challenge an action by
an administrative agency. In this case, Hovnanian’s allegation that the Board applied an
“unauthorized procedure” does not fall under the recognized exceptions to the finality
doctrine.
ADMINISTRATIVE LAW – JUDICIAL REVIEW – MANDAMUS
In order for mandamus to lie for the courts to review a discretionary action of an
administrative agency, there must be both no adequate administrative remedy and an alleged
illegal, arbitrary, or capricious action. In this case, mandamus is improper where Hovnanian
challenges an action that is within the discretion of the Board and an adequate remedy exists
to challenge the Board’s actions on judicial review following a final administrative decision.
Circuit Court for Queen Anne’s County
Case No. 17-C-14-018727
Argued: April 1, 2015
IN THE COURT OF APPEALS
OF MARYLAND
No. 57
September Term, 2014
_____________________________________
BOARD OF PUBLIC WORKS, et al.,
v.
K. HOVNANIAN’S FOUR SEASONS AT
KENT ISLAND, LLC
_____________________________________
Barbera, C.J.
Harrell
Battaglia
Greene
Adkins
Watts
Rodowsky, Lawrence F. (Retired,
Specially Assigned),
JJ.
___________________________________
Opinion by Greene, J.
___________________________________
Filed: June 3, 2015
This is the fourth time this Court has dealt with proceedings surrounding the
development project spearheaded by K. Hovnanian’s Four Seasons at Kent Island, LLC
(“Appellee” or “Hovnanian”).1 At issue in the underlying administrative proceedings is a
State wetlands license. Although we previously addressed the merits of the Board of Public
Works’s (“Appellant” or “the Board”) review of Hovnanian’s application for a State
wetlands license, see Maryland Board of Public Works v. K. Hovnanian’s Four Seasons at
Kent Island, LLC, 425 Md. 482, 42 A.3d 40 (2012) (“Hovnanian I”), the issue presently
before us is procedural. Hovnanian initiated this latest litigation by filing a complaint for
declaratory and injunctive relief and for a writ of mandamus against the Board, seeking an
order compelling the Board to vote promptly on Hovnanian’s long-outstanding application
for a State wetlands permit following delays resulting from a perceived conflict of interest
involving a Board employee. On Hovnanian’s motion for summary judgment, the Circuit
Court for Queen Anne’s County granted the relief requested by Hovnanian and ordered the
Board to hold a final vote on the application, notwithstanding any perceived appearance of
impropriety. The Board noted an appeal to the Court of Special Appeals. Prior to any
proceedings in that court, we granted the Board’s petition for certiorari to consider the
following questions:
I. Was Hovnanian required to await a final administrative decision and
exhaust statutory administrative remedies before bringing an action for
1
The previous cases are: Maryland Bd. of Public Works v. K. Hovnanian’s Four
Seasons at Kent Island, 425 Md. 482, 42 A.3d 40 (2012); Foley v. K. Hovnanian at Kent
Island, LLC, 410 Md. 128, 978 A.2d 222 (2009); and Queen Anne’s Conservation, Inc. v.
County Comm’rs, 382 Md. 306, 855 A.2d 325 (2004).
mandamus, injunction, and declaratory judgment to challenge the
administrative procedure adopted to evaluate Hovnanian’s application for a
State wetlands license?
II. Did the trial court err in substituting its judgment for that of the Board with
respect to remediating the Wetlands Administrator’s conflict of interest, which
involved a previously undisclosed relationship with one of Hovnanian’s
attorneys and his law firm?
III. Did the trial court err in entering a writ of mandamus directing the Board
to issue a decision on Hovnanian’s application for a State wetlands license by
October 6, 2014, confining the facts that the Board may consider to those
contained in that portion of the administrative record that existed on July 24,
2013, and limiting what the Board may consider in any future action on the
project?
We shall vacate the judgment of the Circuit Court for Queen Anne’s County and hold that
the Circuit Court’s order was improper (1) for want of a prior final administrative decision;
and (2) because mandamus is unavailable under these circumstances. Accordingly, we need
not and do not address the remaining questions which relate to the appearance of a conflict
of interest and limitations on the Board’s consideration of the administrative record.
FACTUAL AND PROCEDURAL HISTORY
The development project underlying these proceedings has been in the works for
nearly two decades. The project involves the construction of a mixed-use adult community
on Kent Island in Queen Anne’s County known as Four Seasons at Kent Island (“the
project”). As described in our 2012 decision, “the project envisions 1,350 single and
multifamily dwelling units, an assisted living facility, and related community and recreational
facilities, to be erected on two tracts comprising 562 acres that lie on the north side of U.S.
2
Route 50 between the towns of Chester and Stevensville.” Hovnanian I, 425 Md. at 495, 42
A.3d at 47. As a result of the location’s proximity to several bodies of tidal water as well as
the Chesapeake Bay Critical Area,2 Hovnanian was required to obtain numerous permits and
approvals from state and local agencies. Despite significant opposition, administrative
appeals, and several lawsuits over the years since the inception of this project, Hovnanian has
obtained all of the necessary permits and approvals, except one. Hovnanian I, 425 Md. at
495, 42 A.3d at 47.
The final outstanding permit application, at issue in these proceedings, is Hovnanian’s
application for a State wetlands license pursuant to Maryland Code (1982, 2014 Repl. Vol.),
§ 16-202 of the Environment Article (“Env.”). Under the statute, the authority to grant
licenses for the “dredging” or “filling” of State-owned wetlands rests with the Board, which
is comprised of three members: the Governor, the State Comptroller, and the State Treasurer.
In relevant part, Env. § 16-202(g)(1) provides that “the Board shall decide if issuance of the
license is in the best interest of the State, taking into account the varying ecological,
economic, developmental, recreational, and aesthetic values each application presents.” As
we stated previously, “under Env. § 16-202, the Board possesses a great deal of largely
unguided discretion in determining whether to issue a license and on what terms and
conditions[.]” Hovnanian I, 425 Md. at 515, 42 A.3d at 59.
2
For definitions and the laws governing the Chesapeake Bay Critical Area, see
Maryland Code (1973, 2012 Repl. Vol.), title 8, subtitle 18 of the Natural Resources Article.
3
Briefly, the State wetlands license application process typically begins with a review
by the Maryland Department of the Environment (“the Department” or “DOE”), and
terminates with the Board’s decision following receipt of a report and recommendation from
the Department.3 The Board also employs a Wetlands Administrator, who evaluates the
Department’s report and makes an independent recommendation to the Board. See COMAR
23.02.04.08. In deciding whether to grant a license, the Board has broad discretion to
consider the reports and recommendations of both the Department and the Wetlands
3
In our 2012 opinion, we explained the application process and the Department of the
Environment’s (“DOE”) role in that process as follows:
With exceptions not relevant here, only a person with a riparian interest in
upland adjacent to the State wetlands or that person’s agent may apply for a
license. COMAR 26.24.02.02A. The application is made to DOE, which
evaluates it in light of 19 criteria set forth in COMAR 26.24.02.03. Those
criteria include, among other things (i) ecological, developmental, recreational,
and aesthetic values of tidal wetlands in order to preserve them and prevent
their despoliation and loss, (ii) the proprietary interests of the Board over State
wetlands, and (iii) the degree to which dredging and filling activities can be
avoided or minimized, will alter or destroy tidal wetlands, are consistent with
Federal, State, and local land use plans, and will provide facilities for the
handling of storm water runoff and sanitary wastes.
. . . [W]ith respect to its review of an application for a license to dredge or fill
State wetlands[,] . . . Env. § 16–202(f) . . . provides that (1) the Secretary shall
assist the Board in determining whether to issue a license to dredge or fill State
wetlands, and (2) after consultation with interested Federal, State, and local
units, the Department shall issue a public notice, hold any requested hearing,
take any evidence the Secretary deems advisable, and submit a report
indicating whether the license should be granted and, if so what if any terms,
conditions, and consideration should be required.
Hovnanian I, 425 Md. at 491-92, 42 A.3d at 45.
4
Administrator, as well as public testimony at any hearing and any other information available
in the public record.
Hovnanian’s wetlands license application originally included four infrastructure
development elements: (1) a bridge over Cox Creek; (2) a stormwater management system;
(3) utility lines drilled underneath Cox Creek; and (4) a community pier. After conducting
an extensive review of the project, both the Department and then-Wetlands Administrator
Doldon Moore recommended granting the license. At the Board’s May 23, 2007, meeting,
however, the Board denied the application, on a two to one vote, based on the majority’s
view that the environmental impact of the project as a whole was too great and not in the best
interest of the State.
Thereafter, Hovnanian filed in the Circuit Court for Queen Anne’s County a petition
for judicial review of the Board’s denial of the application. The Circuit Court reversed the
Board’s decision, “conclud[ing] that the Board did err, by basing its decision on
considerations outside the lawful scope of its discretion,” to wit, the entirety of the proposed
project, rather than just the four infrastructure elements forming the application. Hovnanian
I, 425 Md. at 485, 42 A.3d at 41. The Board appealed and we granted certiorari prior to any
significant proceedings in the Court of Special Appeals. Id. We agreed with the Circuit
Court and held that the Board applied an incorrect legal standard by considering the broader
environmental impact of the project as a whole, where the statutes and regulations governing
wetlands permits confine the Board’s review to the impacts on State wetlands. Hovnanian
5
I, 425 Md. at 517-19, 42 A.3d at 60-61. In other words, the Board’s focus was too broad.
We explained:
[I]n deciding whether to issue a wetlands license, the Board does not act—is
not authorized to act—as a super land use authority. Its own regulation,
COMAR 23.02.04.10, limits its focus to considering the recommendations of
DOE and the Wetlands Administrator and taking into account the ecological,
economic, developmental, recreational, and aesthetic values ‘to preserve the
wetlands and prevent their despoliation and destruction,’ not to determine
whether the project as a whole is environmentally sound at its particular
location. That authority lies elsewhere.
The decision to allow a development to proceed within the Chesapeake Bay
or Atlantic Coastal Bays Critical Area is specifically committed by law to the
jurisdiction of the affected counties and the Critical Area Commission for the
Chesapeake and Atlantic Coastal Bays, created by Md. Code, § 8-1803 of the
Natural Resources Article . . . .
****
The language of Env. § 16-202(c)(1) [now § 16-202(g)(1)] cannot reasonably
be read to broaden the jurisdiction of the Board in such a manner as to trump
the clear commitment of land use policy to the local governments and, in part,
to the Critical Area Commission and other State agencies. The requirement
that the Board consider the ecological, economic, developmental, recreational,
and aesthetic values presented in the application in determining whether
issuance of the license is in the State’s interest has reference to the impact of
the proposed dredging or filling on the affected wetlands. Section 16-102(b),
which declares the public policy behind the Wetlands Law, makes abundantly
clear that those considerations are tied to the desire ‘to preserve the wetlands
and prevent their despoliation and destruction,’ not to control all development
near the Chesapeake Bay, and the Board’s own regulation confirms that
narrower focus.
Hovnanian I, 425 Md. at 517-19, 42 A.3d at 60-61. What the Board should have considered,
and indeed was required to consider, we stated, “was whether the impact on the affected
wetlands of the four elements that comprised the application was sufficiently adverse as to
6
make it in the State’s interest to deny the application.” Hovnanian I, 425 Md. at 521, 42
A.3d at 63.
Accordingly, this Court remanded the case to the Circuit Court for Queen Anne’s
County with directions to remand the case to the Board for further proceedings. We
explained that “[i]n this case, that would be for the Board to consider whether, applying the
considerations set forth in Env. § 16-202(g)(1) and its own regulations, as construed in [the]
Opinion, issuance of the license is in the State’s interest.” Hovnanian I, 425 Md. at 522, 42
A.3d at 63. The Circuit Court for Queen Anne’s County remanded the case to the Board on
June 15, 2012.
Following the remand, Hovnanian advised the Board that it intended to submit a
revised application and asked the Board to delay review until those changes were made.
According to its brief, Hovnanian reviewed each of the elements included in the original
application for impacts on tidal wetlands and concluded that only the bridge over Cox Creek
and the stormwater discharge outfall impacted the wetlands. Cognizant of the substantial
opposition posed by the Board, Hovnanian then decided to remove and/or redesign the
problematic elements before submitting its amended application.
Hovnanian submitted a revised application in May 2013, approximately one year after
the date of this Court’s opinion in Hovnanian I. The May 2013 application listed only two
of the original elements: the drilled sewer line and the community pier. Effectively,
Hovnanian withdrew the bridge, drilled water line, and stormwater management system
7
elements from the original permit application. The scope and extent of the two remaining
elements (the sewer line and pier) did not differ from the original application. In addition,
Hovnanian represented to the Board that it would eliminate a portion of the proposed
residential project (“Phase V”), and convey the parcel of land where Phase V would have
been located (the “Tanner Parcel”) to Queen Anne’s County for use as an ecopark. The
removal of Phase V explained the removal of the bridge from the license application because
the bridge would have been necessary to reach the Tanner Parcel.
Upon receipt of the revised application, the Board adopted an expedited review
process under which Mr. Moore would submit a supplement to his 2007 report.4 The
Department would then review Mr. Moore’s report and issue comments. The Board
scheduled a hearing on Hovnanian’s application for its July 24, 2013, meeting. In the
meantime, on May 23, 2013, members of the Department, Mr. Moore, and Hovnanian’s
stormwater management engineer conducted a site visit to review the re-engineered
4
In its brief, the Board states, “there was no clear precedent for how the Board should
proceed in the unfamiliar territory of processing a wetlands license application that had been
remanded to the Board from the Court of Appeals and after which the applicant had made
substantial changes to the project.” The Board also stated that “[s]ome members of the
public believed that the best approach would be to send the application back to the very
beginning of the regulatory process and request a full report and recommendation from the
Department of the Environment or, at least, delay review until the Queen Anne’s County
government had issued further building permits.” In response to concerns of this nature at
the Board meeting, Adam Snyder, Assistant Attorney General of Maryland, noted that “it’s
not something that would be compelled by regulation . . . to start [at] square one to give
everyone an opportunity to provide input on a changed project because the project ha[d]
really been shrunk . . . rather than changed.”
8
stormwater facilities. During the visit, Department members suggested additional changes
to the system, which Hovnanian agreed to make.5 Prior to the hearing, Mr. Moore issued his
supplemental report and the Department filed comments on that report to the Board. Both
Mr. Moore and the Department recommended approval of the license as presented in the
revised application.
The Board held a hearing on Hovnanian’s revised wetlands license application on July
24, 2013. At the hearing, the Board members discussed at length this Court’s 2012 opinion,
and heard explanations of the legal standard to be applied by the Board, as interpreted by this
Court,6 from attorneys from the Office of the Attorney General. Accordingly, then-Governor
Martin O’Malley encouraged everyone at the hearing to address their remarks to the impacts
on State wetlands.
Mr. Moore, as Wetlands Administrator, and Dr. Robert Summers, as Deputy Secretary
of the Department of the Environment, testified regarding the proposed development’s
impacts on State wetlands. Mr. Moore commented on the reduced scope of the project, and
stated his conclusion that the remaining two elements included in the application would
5
In its brief, Hovnanian points out that the Department noted, in its comments based
on Mr. Moore’s supplemental report, that “the revised project . . . eliminates several
stormwater management outfalls and moves the remaining stormwater management outfalls
away from tidal wetlands.”
6
We note for purposes of clarity that, as we reiterated supra in this Opinion, the “legal
standard” to be applied by the Board “was whether the impact on the affected wetlands of
the four elements that comprised the application was sufficiently adverse as to make it in the
State’s interest to deny the application.” Hovnanian I, 425 Md. at 521, 42 A.3d at 63.
9
“have no impact whatsoever to wetlands.” Similarly, Dr. Summers testified that following
the full review in 2007 the Department had determined that the project met all regulatory
requirements, and that by the time of the 2013 hearing, Hovnanian had “come back with a
project that actually eliminated the wetlands impacts.” Dr. Summers stated in conclusion that
the Department “recommend[ed] that [the project] can proceed, that it actually reduces the
damages or the impacts that we had said previously had been properly mitigated and could
be controlled.”
The major topic of discussion at the hearing was the change in scope of the
application and the project—namely, the removal of elements from the application, as well
as the elimination of Phase V and the proposed transfer of the Tanner Parcel to Queen
Anne’s County. Charles Schaller, one of Hovnanian’s attorneys, advocated on behalf of
Hovnanian at the meeting and described the proposed changes to the project as a “win-win
situation for everybody.” Mr. Schaller explained that Hovnanian had reduced the density of
the project, had removed some of the concerning stormwater drainage features, and was
“committed to achieving environmental site design to the maximum extent practicable.” In
addition, Mr. Schaller explained that Hovnanian was in negotiations with Queen Anne’s
County for implementation of the transfer of the Tanner Parcel to the County for recreational
uses. The Board took issue with the fact that the property transfer was not yet complete, and
questioned Mr. Schaller about what “guarantees” the Board had that the property would not
be developed later, thereby requiring a bridge over Cox Creek, etc., at some point in the
10
future.
Ultimately, the Board deferred a vote on Hovnanian’s application to provide “ample
time” to “figure out better assurances” that the Tanner Parcel would be conveyed to the
County for an ecopark or other non-private development use. The Queen Anne’s County
Commissioners did not vote on the necessary agreement for the property transfer until
October 8, 2013. Hovnanian and the County thereafter entered into a contract for the
conveyance of the property, which included terms that incorporated the “assurances” required
by the Board. Although the next scheduled Board meeting occurred on October 16, 2013,
the Board did not include Hovnanian’s wetlands license application on the meeting agenda.
Around October 23, 2013, the Board learned that Mr. Moore had a previously
undisclosed relationship with Mr. Schaller and Mr. Schaller’s law firm, which the Board
viewed as a potential conflict of interest or, at least, an appearance of a conflict of interest.
Mr. Moore first contacted the Board’s General Counsel on October 22, 2013, to discuss an
ethical concern based upon his appointment and service since August 23, 2010, with Mr.
Schaller as co-trustee of Mr. Moore’s brother-in-law’s testamentary trust.7 In addition, Mr.
Schaller’s law firm had previously served as Mr. Moore’s family lawyers. Board Counsel
referred Mr. Moore to the State Ethics Commission. After a meeting with the Ethics
Commission, Mr. Moore informed Sheila McDonald, the Board Secretary, that he must
7
Hovnanian points out that, notably, the trusteeship appointment came some three
years after the initial review of Hovnanian’s application had been completed in May 2007.
11
recuse himself from any duties as Wetlands Administrator involving Mr. Schaller and his law
firm, including the Hovnanian application. Around October 23, 2013, Ms. McDonald
informed the Board members about Mr. Moore’s actions vis à vis his potential conflict of
interest. Concluding that this prior relationship between Mr. Moore and Mr. Schaller
created, at least, an appearance of impropriety, the Board placed Hovnanian’s application on
hold while it determined how best to protect the integrity of the administrative record. On
November 8, 2013, Ms. McDonald informed Hovnanian that the application would not be
placed on the Board’s agenda until the Board “evaluated the record before the Board in light
of that relationship and had undertaken appropriate measures, if any, resulting from that
evaluation.” Mr. Moore retired ultimately from his position as Wetlands Administrator.
The Board adopted an “expedited approach” in order to, in its words, “cur[e] any
possible appearance of impropriety and ensur[e] that the Board could vote on a clean record,
free from any ethical taint.” The Board anticipated that this process would take 60 to 90
days. On December 13, 2013, the Board informed Hovnanian by letter of its plan to review
and ensure the integrity of the record following the apparent conflict of interest. In
particular, the Board proposed that it would (1) strike from consideration Mr. Moore’s 2013
supplemental report; (2) require the Department to initiate a new review of the application
and render an additional report; and (3) retain two independent environmental
experts/professors from the University of Maryland to “stand in the shoes” of the Wetlands
Administrator and conduct a review of the application and prepare a report of their findings.
12
In addition to the two elements listed in the application, the Board requested the Department
and the independent environmental experts to consider whether Hovnanian’s proposed
revised stormwater management system required a wetlands license. The Board also
determined to strike the Department’s comments to Mr. Moore’s 2013 supplemental report.
Meanwhile, the Board had not yet hired a new Wetlands Administrator.8
On December 20, 2013, Hovnanian objected to the Board’s proposal and requested
the Board to schedule a vote on the application based on the existing administrative record.
On January 3, 2014, Ms. McDonald advised Hovnanian that the Board had not offered “any
feedback that would cause [her] to change the course set forth in [the] December 13, 2013
letter.”
On January 13, 2014, Hovnanian filed its current Complaint for Declaratory and
Injunctive Relief and for a Writ of Mandamus in the Circuit Court for Queen Anne’s County.
Through its Complaint, Hovnanian sought an order to compel the Board to review
Hovnanian’s revised application and to vote on the application based on the existing
administrative record without further delay. Hovnanian also sought a preliminary injunction
to halt the application review process ordered by the Board and the Board’s proposed plan
to certify the integrity of the administrative record. The Board voluntarily agreed to do so,
and Hovnanian withdrew its motion for preliminary injunction. As a result, all proceedings
8
The Board apparently hired a new Wetlands Administrator in July 2014, after this
action had commenced. No further review of Hovnanian’s application has taken place,
however, pending a final resolution of this litigation, as agreed to by the parties.
13
before the Board regarding Hovnanian’s application, including the conflict of interest
“remediation plan,” were suspended pending the conclusion of the action in the Circuit
Court.
In its Complaint, Hovnanian asserted that the Circuit Court had jurisdiction over the
matter, and that Hovnanian was not required to exhaust administrative remedies because the
Board required Hovnanian to follow an “unauthorized procedural framework significantly
at variance with applicable statutory and regulatory standards.” The Board moved to dismiss
the Complaint on several grounds, including failure to exhaust administrative remedies,
arguing that Hovnanian could challenge the Board’s allegedly illegal procedures via judicial
review following a final administrative decision. The Circuit Court dismissed Hovnanian’s
claim for declaratory relief, but denied the Board’s motion as to Hovnanian’s other claims.
Following discovery, both Hovnanian and the Board filed motions for summary judgment.
Following a hearing on July 7, 2014, the Circuit Court for Queen Anne’s County
granted summary judgment in favor of Hovnanian. The Circuit Court concluded that the
Board had acted beyond its authority by deferring its vote on Hovnanian’s application, and
that any further attempt by Hovnanian to advance its application would be “an exercise in
futility.” The Circuit Court further concluded that, “[e]ven through the lens of extreme
deference . . . upon applying the reasonable person standard, no appearance of impropriety
existed[,]” based on the facts that: (1) Mr. Moore made the disclosure; (2) Mr. Moore’s
relationship to Mr. Schaller had no connection to the application process; (3) the 2013 report
14
is the same as the 2007 report; (4) MDE members accompanied Mr. Moore during his 2013
site visit; and (5) there existed no evidence of improper actions. Finally, the Circuit Court
decided that the only thing left for the Board to do was to take a vote—a “mere[] execution
of a task” (i.e., a ministerial function)—and, therefore, a writ of mandamus was properly
within the court’s authority to issue. Thus, the Circuit Court ordered the Board to vote on
Hovnanian’s application on or before Monday, October 6, 2014, and ordered the Board to
limit its consideration to the impact to State tidal wetlands from the proposed sewer line
under Cox Creek and the ten slip community marina, noting that “the issue of stormwater
outflows, similar to the fate of the Tanner Parcel, is beyond the present authority of the
[Board].” 9
On August 4, 2014, the Board noted a timely appeal to the Court of Special Appeals.
Prior to any meaningful proceedings in that court, the Board filed a petition for certiorari to
this Court, as well as a motion to stay the judgment of the Circuit Court. We granted both
requests. Bd. of Pub. Works v. K. Hovnanian’s Four Seasons at Kent Island, 439 Md. 694,
98 A.3d 233 (2014).
DISCUSSION
This Court reviews a circuit court’s grant of summary judgment for legal correctness
under a non-deferential standard of review. State Ctr. LLC v. Lexington Charles Ltd. P’ship,
9
As noted previously, we do not address the merits in this proceeding because the
Circuit Court’s conclusions on the merits were premature in the absence of a final
administrative decision.
15
438 Md. 451, 497, 92 A.3d 400, 427 (2014). In its Order in the instant case, the Circuit
Court for Queen Anne’s County characterized this action as a challenge to the Board’s
“failure to act” and concluded that, therefore, Hovnanian’s action for mandamus was
properly before the court despite the lack of a final administrative decision. Before
beginning our analysis, we note that although the Circuit Court characterized this as a
“failure to act” case, the parties agree that Hovnanian’s claims have centered on a challenge
to the legality of the Board’s actions—namely, the process for remediating a perceived
conflict of interest, which Hovnanian refers to as an “unauthorized procedural framework.”
Moreover, both parties agree that there has been no final administrative decision and that,
once such a decision is made, the decision would be subject to judicial review pursuant to
Env. § 16-204.
Hovnanian argues that the Circuit Court properly ruled in this case because there
exists an “unauthorized procedures” exception to the exhaustion rule, which applies when
a complainant challenges an agency’s use of unauthorized or illegal procedures. In addition,
Hovnanian contends that the court has authority to hear this case under the “mandate rule,”
i.e., the inherent authority of the court to enforce its orders. The Board asserts that this action
is premature and improper for two reasons: first, Hovnanian failed to await a final
administrative decision, and, second, mandamus does not lie under these circumstances.
Finality and Exhaustion
It is a basic tenet of administrative law that “[w]here an administrative agency has
16
primary or exclusive jurisdiction over a controversy, the parties to the controversy must
ordinarily await a final administrative decision before resorting to the courts for resolution
of the controversy.” State v. Maryland State Bd. of Contract Appeals, 364 Md. 446, 457, 773
A.2d 504, 510 (2001). “To be ‘final,’ the order or decision must dispose of the case by
deciding all question of law and fact and leave nothing further for the administrative body
to decide.” Willis v. Montgomery Cnty., 415 Md. 523, 535, 3 A.3d 448, 455-56 (2010). In
addition, a claimant must exhaust all administrative remedies prior to bringing a challenge
in court to an agency action. See Dorsey v. Bethel A.M.E. Church, 375 Md. 59, 76, 825 A.2d
388, 397 (2003) (“Another principle of administrative law, which is related to and somewhat
overlaps the finality principle, is the requirement that administrative remedies must be
exhausted before bringing an action in court.”). The doctrines of exhaustion and finality are
“overlapping” principles in that, “[i]f there is no final administrative decision in a case before
an administrative agency, there is ordinarily no exhaustion of the administrative remedy.”
Renaissance Centro Columbia, LLC v. Broida, 421 Md. 474, 485, 27 A.3d 143, 149 (2011).
The doctrines of exhaustion and finality “share the common goal of preventing
potentially unnecessary and premature disruption by the courts of the activities of
administrative agencies.” Maryland Comm’n on Human Relations v. Downey Commc’ns,
Inc., 110 Md. App. 493, 528, 678 A.2d 55, 72 (1996). We have explained:
The rule requiring exhaustion of administrative or statutory remedies is
supported by sound reasoning. The decisions of an administrative agency are
often of a discretionary nature, and frequently require an expertise which the
agency can bring to bear in sifting the information presented to it. The agency
17
should be afforded the initial opportunity to exercise that discretion and to
apply that expertise. Furthermore, to permit interruption for purposes of
judicial intervention at various stages of the administrative process might well
undermine the very efficiency which the Legislature intended to achieve in the
first instance. Lastly, the courts might be called upon to decide issues which
perhaps would never arise if the prescribed administrative remedies were
followed.
Soley v. State Comm’n on Human Relations, 277 Md. 521, 526, 356 A.2d 254, 257 (1976).
“We have recognized a few limited exceptions to the exhaustion requirement, the
principal one being an action challenging the validity of a legislative enactment on its face.”
Maryland Comm’n on Human Relations v. Mass Transit Admin., 294 Md. 225, 232, 449
A.2d 385, 388 (1982). Hovnanian asserts that one such exception is the “unauthorized
procedures” exception, which, Hovnanian contends, this Court announced in Prince
George’s County v. Blumberg, 288 Md. 275, 418 A.2d 1155 (1980). In that case, the
plaintiff builders obtained building and water-sewer permits from Prince George’s County
and the Washington Suburban Sanitary Commission (WSSC) to build two high rise
residential buildings. Blumberg, 288 Md. at 278, 418 A.2d at 1157. Shortly before
construction commenced, however, the builders learned that the County was considering a
revocation of the permit, based on a newly enacted county law, requiring that a building
permit issue only to a licensed building contractor. Blumberg, 288 Md. at 279, 418 A.2d at
1158. The builders’ permit application was filed before the effective date of the new
ordinance and did not list a licensed building contractor. Id. The permit was issued after the
new law came into effect, however. Id. Construction commenced, but shortly thereafter the
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County issued a stop work order because the previously issued building permit was invalid
for failing to list a licensed contractor. Blumberg, 288 Md. at 280, 418 A.2d at 1158. The
WSSC subsequently revoked its permits as well. Id. The builders filed suit against the
County and the WSSC in the Circuit Court for Prince George’s County. Blumberg, 288 Md.
at 281, 418 A.2d at 1159. The trial court found for the builders, and ordered the County and
the WSSC to reissue the permits and to pay compensatory damages. Blumberg, 288 Md. at
282, 418 A.2d at 1159-60. The Court of Special Appeals affirmed. Id.Before this Court, the County argued that the court lacked jurisdiction to hear the case
because the builders had failed to exhaust all administrative remedies. Blumberg, 288 Md.
at 283, 418 A.2d at 1160. In addressing that issue, we recognized that:
[T]here are exceptions to the administrative agency exhaustion rule . . . .
Among them are:
1. When the legislative body has indicated an intention that exhaustion of
administrative remedies was not a precondition to the institution of normal
judicial action. White v. Prince George’s Co., 282 Md. 641, 649, 387 A.2d
260, 265 (1978).
2. When there is a direct attack, constitutional or otherwise, upon the power or
authority (including whether it was validly enacted) of the legislative body to
pass the legislation from which relief is sought, as contrasted with a
constitutional or other type issue that goes to the application of a general
statute to a particular situation. Harbor Island Marina v. Calvert Co., 286 Md.
303, 308, 407 A.2d 738, 741 (1979).
3. When an agency requires a party to follow, in a manner and to a degree
that is significant, an unauthorized procedure. Stark v. Board of
Registration, 179 Md. 276, 284-85, 19 A.2d 716, 720 (1941).
4. Where the administrative agency cannot provide to any substantial degree
19
a remedy. Poe v. Baltimore City, 241 Md. 303, 308-09, 216 A.2d 707, 709
(1966).
5. When the object of, as well as the issues presented by, a judicial proceeding
only tangentially or incidentally concern matters which the administrative
agency was legislatively created to solve, and do not, in any meaningful way,
call for or involve applications of its expertise. Md.-Nat’l Cap. P. & P. v.
Wash. Nat’l Area, 282 Md. 588, 594-604, 386 A.2d 1216, 1222-27 (1978).
Blumberg, 288 Md. at 284-85, 418 A.2d at 1161 (emphasis added). At issue in that case was
the fourth exception, “no substantial remedy available.” This Court held that there was an
available remedy: the builders could have sought an appeal to the Board of Appeals, and
thereafter could have sought judicial review of the Board’s decision. Blumberg, 288 Md. at
290-91, 418 A.2d at 1164. Therefore, the trial court should have dismissed the lawsuit
because the builders failed to exhaust their administrative remedies. Blumberg, 288 Md. at
293, 418 A.2d at 1165.
Hovnanian relies on the third exception listed in Blumberg, supra, to argue that the
exhaustion rule does not apply when the plaintiff is challenging the agency’s use of
unauthorized or illegal procedures. That exception was not at issue or discussed in
Blumberg, however, and Hovnanian points to no case where this Court has in fact applied
any such exception. Indeed, three years after Blumberg, we noted that the “unauthorized
procedure” exception is dicta in Blumberg and had previously been disavowed. We
explained that in Soley v. State of Maryland Comm’n on Human Relations, decided prior to
Blumberg, we had disavowed the dicta in Stark, cited in Blumberg for the “unauthorized
procedure” exception, “stating that [the exception] had been ‘deprived of any vitality it may
20
have possessed by the subsequent adoption of the Administrative Procedure Act,’ that
provides for judicial review of final agency decisions that are alleged to be the result of . .
. an ‘unlawful procedure.’” Maryland Comm’n on Human Relations v. Bethlehem Steel
Corp., 295 Md. 586, 594 n.10, 457 A.2d 1146, 1150 n.10 (1983) (quoting Soley v. State of
Maryland Comm’n on Human Relations, 277 Md. 521, 528, 356 A.2d 254, 258 (1976)).
Hovnanian points out that the instant proceedings before the Board do not constitute a
“contested case hearing” and, therefore, are not governed by the Administrative Procedure
Act (APA). As such, Hovnanian argues, the “unauthorized procedure” exception remains
viable in agency proceedings not governed by the APA. The Board, to the contrary, argues
that the “unauthorized procedure” exception is not viable after the passage of the APA
anyway because it has now been “encompasse[d] . . . within the scope of judicial review.”
Soley, 277 Md. at 528, 356 A.2d at 258. We agree with the Board that, in this context,
whether a matter is a “contested case” and subject to the APA for purposes of judicial review
is a distinction without a difference. We explained as much in Harvey v. Marshall:
Although we are cognizant that the particular situation presented in this case
. . . was not a “contested case” at the time it was considered by the agency and
therefore the APA does not apply, Maryland cases suggest that “an
administrative proceeding, even if not subject to judicial review under the
APA, would be subject to judicial review, of essentially the same scope, in an
action for mandamus, certiorari, injunction or declaratory judgment . . . .”
Med. Waste Assocs. v. Maryland Waste Coalition, 327 Md. 596, 610, 612 A.2d
241, 248 (1992)[.]
389 Md. 243, 296, 884 A.2d 1171, 1203 (2005). Accordingly, we decline to draw a
distinction between APA vs. non-APA judicial review cases for the purposes of exceptions
21
to the principles of exhaustion and finality.
We addressed exceptions to the finality requirement more recently in Renaissance
Centro Columbia, LLC v. Broida, 421 Md. 474, 27 A.3d 143 (2011). In that case, a
developer sought approval of a mixed-use site development plan from the Howard County
Planning Board. Renaissance Centro, 421 Md. at 477, 27 A.3d at 144-45. Despite public
opposition to the development, the Planning Board approved the site development plan. Id.The opponents appealed the decision of the Planning Board pursuant to the Howard County
Code. Renaissance Centro, 421 Md. at 477, 27 A.3d at 145. Their appeal was heard, first,
by an administrative hearing examiner, and, subsequently, by the Howard County Board of
Appeals. Renaissance Centro, 421 Md. at 477-78, 27 A.3d at 145. During the administrative
appeal, the developer argued that the opponents lacked standing to challenge the decision of
the Planning Board. Id. Following a hearing, the Howard County Board of Appeals held a
vote, which resulted in a two to two tie. Renaissance Centro, 421 Md. at 478-79, 27 A.3d
at 145. Shortly thereafter, two new members were confirmed to be appointed to the Board
of Appeals, and the Board of Appeals informed the parties that it would reconvene and hold
a new vote on the matter with the new Board of Appeals. Renaissance Centro, 421 Md. at
479, 27 A.3d at 146. Both parties objected to the new procedure, and the developer filed suit
in the Circuit Court for Howard County, challenging as illegal the Howard County Board of
Appeals’s decision to hold a re-vote. Renaissance Centro, 421 Md. at 479-80, 27 A.3d at
146.
22
On review by this Court, we held that the Board of Appeals’s decision to hold a re-
vote was not a final administrative decision. Renaissance Centro, 421 Md. at 490-91, 27
A.3d at 152-53. Therefore, the declaratory judgment action should have been dismissed
because the developer failed to exhaust administrative remedies and await a final
administrative decision. Renaissance Centro, 421 Md. at 491, 27 A.3d at 153. We
explained:
[T]his Court has consistently held that, in the absence of a statutory provision
expressly authorizing judicial review of interlocutory administrative decisions,
and in the absence of an interlocutory administrative decision with immediate
legal consequences causing irreparable harm, ‘the parties to the controversy
must ordinarily await a final administrative decision before resorting to the
courts.’ State v. State Board of Contract Appeals, 364 Md. 446, 457, 773 A.2d
504, 510 (2001) (emphasis added).
Renaissance Centro, 421 Md. at 485, 27 A.3d at 149 (quoting Dorsey v. Bethel A.M.E.
Church, 375 Md. 59, 74-75, 825 A.2d 388, 397 (2003)). Therefore, we stated, “apart from
the two exceptions delineated in the above quotation, a final administrative decision is a
prerequisite for ‘resorting to the courts,’ i.e., for a court to consider and decide the merits or
other issues in a case like the present one.” Renaissance Centro, id. In addition, we
specifically rejected the developer’s argument that the fact “that the Board of Appeals’
planned action would be unauthorized and improper [would] excuse or cure the lack of a
final administrative decision and the failure to exhaust the administrative remedy.”
Renaissance Centro, 421 Md. at 490, 27 A.3d at 152. Rather, we continued, “[t]he
appropriate time to argue that the decision of an administrative agency was not in accordance
23
with law is in a judicial review action, after the rendering of a final administrative decision.”
Id. (emphasis in original).
Accordingly, our decision in Renaissance Centro assumes the invalidity of any
“unauthorized procedure” exception and is consistent with the rationale underlying the rules
of finality and exhaustion. It is well established that “[t]he salutary purpose of the finality
requirement is to avoid piecemeal actions in the circuit court seeking fragmented advisory
opinions with respect to partial or intermediate agency decisions.” Driggs Corp. v. Md.
Aviation Admin., 348 Md. 389, 407, 704 A.2d 433, 443 (1998). Therefore, absent a specific
legislative grant of review authority or immediate and irreparable harmful legal
consequences, our administrative law jurisprudence requires a party to exhaust all exclusive
administrative remedies and await a final administrative decision before filing suit in the
circuit court. Hovnanian has neither argued nor demonstrated that it is entitled to review
based on a statute or that it has suffered immediate irreparable harm. Thus, Hovnanian is
required to await a final administrative decision by the Board before filing suit to challenge
the review procedure applied in this case.10
10
As an alternative theory, Hovnanian contends that the court has the authority to hear
this case under the “mandate rule.” The “mandate rule” is a “subset of the [law of the case]
doctrine.” Stokes v. Am. Airlines, Inc., 142 Md. App. 440, 446, 790 A.2d 699, 702 (2002)
(citing Tu v. State, 336 Md. 406, 416, 648 A.2d 993, 998 (1994)). We have explained that
“a decision of [this Court] . . . is binding and conclusive upon the parties . . . . [a]nd it is
obvious that if the order departs from the mandate either by allowing more or less than
contained in its terms, it is illegal and subject to review by this Court.” Chayt v. Bd. of
Zoning Appeals of Baltimore City, 178 Md. 400, 403, 13 A.2d 614, 615 (1940) (citation
(continued...)
24
Mandamus 11
The Board further asserts that this case should be dismissed because mandamus does
not lie under these circumstances.
It is well established that common law mandamus is ‘an extraordinary remedy’
that ‘is generally used to compel inferior tribunals, public officials or
administrative agencies to perform their function, or perform some particular
duty imposed upon them which in its nature is imperative and to the
performance of which the party applying for the writ has a clear legal right.
The writ ordinarily does not lie where the action to be reviewed is
discretionary or depends on personal judgment.’
Falls Rd. Cmty. Ass’n, Inc. v. Baltimore Cnty., 437 Md. 115, 139, 85 A.3d 185, 199 (2014)
(quoting Goodwich v. Nolan, 343 Md. 130, 145, 680 A.2d 1040, 1047 (1996)). In the rare
case where mandamus is appropriate to review a discretionary agency action, we have made
(...continued)
omitted). Where relevant, this principle applies equally to administrative agencies as a result
of a remand following judicial review. See Atlantic City Elec. Co. v. Fed. Energy Regulatory
Comm’n, 329 F.3d 856, 858 (D.C. Cir. 2003) (“[The] [c]ourt has the power to enforce its
mandates, including the power to ‘correct any misconception of its mandate by a[n] . . .
administrative agency subject to its authority.’”); City of Cleveland v. Federal Power
Comm’n, 561 F.2d 344, 346 (D.C. Cir. 1977) (“[The Commission] is without power to do
anything which is contrary to either the letter or spirit of the mandate construed in the light
of the opinion of [the] court . . . , and [the court] is amply armed to rectify any deviation
through the process of mandamus.”). Essentially, Hovnanian asserts that the Board has failed
to comply with this Court’s 2012 mandate, which constitutes part of the “law of the case.”
Under the circumstances, however, we do not address that issue until a final decision is made
by the Board, or until Hovnanian can establish one of the exceptions to the finality
requirement described in Renaissance Centro, supra.
11
For clarity, we note that this case involves common law mandamus. “Common law
mandamus is to be distinguished from administrative mandamus, a remedy that allows for
judicial review of certain quasi-judicial administrative decisions when judicial review is not
otherwise expressly provided by law.” Falls Rd. Cmty. Ass’n, Inc. v. Baltimore Cnty., 437
Md. 115, 139 n.26, 85 A.3d 185, 199 n.26 (2014).
25
clear that “there must be both a lack of an available procedure for obtaining review and an
allegation that the action complained of is illegal, arbitrary, capricious or unreasonable.”
Goodwich, 343 Md. at 146, 680 A.2d at 1048. See also Brack v. Wells, 184 Md. 86, 90, 40
A.2d 319, 321 (1944) (“Unless [the agency’s] discretion is grossly abused or such duty
compelled by statute or there is a clear showing that such duty exists, mandamus will not
lie.”).
Hovnanian argues that the Board imposed unauthorized procedures on Hovnanian that
are illegal, arbitrary, and unreasonable. In particular, Hovnanian contends that the Board’s
actions are inconsistent with Title 16 and the applicable regulations governing wetlands
license applications. To the contrary, the Board contends that the “conflict remediation”
procedures adopted by the Board do not conflict with any statute or regulation, and do not
constitute an unreasonable exercise of its discretion. In any event, the Board continues,
Hovnanian has an adequate avenue for obtaining review by means of an action for judicial
review following a final administrative decision on the application.
We agree with the Board. As stated above, the wetlands license application process
is a matter over which the Board exercises broad discretion. See Hovnanian I, 425 Md. at
515, 42 A.3d at 59 (stating that “the Board possesses a great deal of largely unguided
discretion in determining whether to issue a [State wetlands] license and on what terms and
conditions”). Therefore, in order for mandamus to lie, there must be both no adequate
remedy and an alleged illegal, arbitrary, or capricious action. Here, Hovnanian has an
26
available remedy: await a final decision by the Board and then seek judicial review in the
circuit court. Therefore, mandamus is improper under the circumstances of this case.
Moreover, we note, without deciding, that an agency like the Board, under similar
circumstances, must retain some discretion to cure an appearance of impropriety.12 In
addition, based on our review of the record, we agree with the Board’s assertion that “there
was no significant period of unexplained delay, and there is no evidence that the Board was
‘deliberately dragging its feet’” which might require judicial intervention. See Harvey, 389
Md. at 276, 884 A.2d at 1191 (noting that “a court’s inherent power of judicial review, under
appropriate circumstances, may reach an administrative agency’s inaction as well as its
action”); A. H. Smith Sand & Gravel Co. v. Dep’t of Water Res., 270 Md. 652, 661, 313 A.2d
820, 826 (1974) (implying that mandamus may be available when an agency “unduly delays
processing an application”).13
Conclusion
In conclusion, we vacate the order of the Circuit Court for Queen Anne’s County for
two reasons. First, Hovnanian’s lawsuit was premature due to the failure to exhaust
administrative remedies and await a final administrative decision. Second, mandamus was
12
Where there is no clear statute or regulation governing a conflict of interest-type
situation, we could not say that an administrative agency would be acting unlawfully or
arbitrarily to address an alleged conflict of interest.
13
Indeed, much of the alleged delay in getting to a final vote on the revised application
is self-inflicted by Hovnanian in pursuing this premature litigation. As noted at oral
argument in this case, a final vote may have been achieved (with attendant objections on the
administrative record for subsequent judicial scrutiny) long before it will now occur.
27
improper, where the issue at hand was a matter of discretion left to the Board, because an
adequate remedy existed to challenge the Board’s actions on judicial review following a final
administrative decision. Accordingly, the Circuit Court should have dismissed the action.
JUDGMENT OF THE CIRCUIT COURT
F O R Q U E E N A N N E ’S C O U N T Y
VACATED. CASE REMANDED TO
THAT COURT WITH DIRECTIONS TO
REMAND THE CASE TO THE BOARD
OF PUBLIC WORKS FOR FURTHER
PROCEEDINGS. COSTS TO BE PAID
BY APPELLEE.
28