Garrity v. Md. State Bd. of Plumbing , 221 Md. App. 678 ( 2015 )

REPORTED
IN THE COURT OF SPECIAL APPEALS
OF MARYLAND
No. 2171
September Term, 2013
WAYNE GARRITY, SR.
v.
MARYLAND STATE BOARD OF
PLUMBING
Zarnoch,
Reed,
Kenney, James A., III
(Retired, Specially Assigned),
JJ.
Opinion by Zarnoch, J.
Filed: February 26, 2015
In this case of successive administrative enforcement actions brought by State
agencies over a plumber’s use of unlicensed employees, the appellant, Wayne Garrity, Sr.
asks this Court to apply double jeopardy principles to bar imposition of a second civil
penalty, but to reject agency resort to the short-cut of collateral estoppel to prevent a second
administrative trial. In short, he simultaneously asserts claims of piling on and not piling
on enough. Finding no foul, we affirm the Circuit Court for Baltimore City and uphold the
enforcement action of the Maryland State Plumbing Board.
FACTS AND PROCEEDINGS
Garrity worked as a plumber in Maryland for thirty-five years. For much of that
time, he was a licensed master plumber and the sole manager of All State Plumbing, Inc.
and in effective control, through his wife, of All State Plumbing, Heating & Cooling (“All
State”). He was licensed by the Maryland State Plumbing Board (“the Plumbing Board”),
created pursuant to Md. Code (1989, 2010 Repl. Vol.), Business Occupations and
Professions Article (BO&P), §§ 12-301 et seq. (the Maryland Plumbing Act or MPA).
On February 23, 2012, the Consumer Protection Division of the Attorney General’s
Office (CPD) filed a Statement of Charges alleging that All State and Garrity had violated
1
the Consumer Protection Act (CPA). Specifically, they were accused of unfair and
deceptive trade practices in violation of CL §§ 13-301 through 13-305. During a contested
two-day hearing, an Administrative Law Judge considered eighty-four exhibits and heard
from over twenty witnesses. Garrity did not testify. On November 7, 2012, the ALJ issued
1
Md. Code (1975, 2013 Repl. Vol.), Commercial Law Article (CL), §§ 13-101 et seq.
a Proposed Decision finding that Garrity and All State had violated the CPA. No
exceptions were taken. As a result, on January 3, 2013, the CPD’s designee issued
Findings of Fact and Conclusions of Law, noting that between 2005 and 2010, All State
had employed two plumbers whose licenses had been revoked by the Board, and that while
employed by All State, these plumbers had performed over 6,000 plumbing jobs while not
being licensed. In addition, the CPD found that All State charged consumers between $100
and $175 for permits for certain plumbing services, but routinely failed to obtain required
permits or schedule the required inspections of water heaters installed in at least 697 homes
in Maryland.
The CPD also issued a Final Order concluding that All State and Garrity had
committed at least 7,079 violations of the CPA by engaging in unfair or deceptive practices
related to providing plumbing services. The CPD imposed a $707,900 civil penalty and
assessed $35,000 for costs incurred in investigating and prosecuting the matter. The CPD
also ordered Garrity to cease and desist from acts and omissions that violate the CPA and
to pay into a restitution fund to be distributed by the CPD to qualified consumers. No
judicial review of this decision was sought.
After reviewing the CPD’s Final Order, the Plumbing Board opened a complaint
against Garrity. After unsuccessful requests for documentation from Garrity, the Board
issued a Charge Letter alleging that Garrity had violated BO&P § 12 3-12(a)(1)(iii) by the
provision of incompetent and or negligent plumbing services; § 12 3-12(a)(1)(iv) by his
failures to obtain permits required by local jurisdictions; § 12 3-12(a)(1)(vi) by having been
found guilty of unfair trade practices; § 12 3-12(a)(1)(xi) by knowingly permitting
2
employees to work outside the scope of their licenses; and § 12 3-12(a)(1)(xii) by
employing unlicensed persons to provide or assist in providing plumbing services in
violation of § 12-602(a)(1).
On May 16, 2013, the Plumbing Board held an evidentiary hearing on these charges.
Garrity was represented by counsel and refused to testify, called no witnesses, and offered
no evidentiary exhibits. Instead, his attorney objected to the Board’s consideration of the
CPD’s Findings of Fact and Final Order, insisting that the Board should be required to
independently prove the facts alleged in the Charge Letter. The Board’s counsel argued
that Garrity was collaterally estopped from re-litigating the same facts that had already
been determined by the CPD in its Final Order. The Board accepted this order into
evidence, but did not rule on whether collateral estoppel applied, and Garrity did not seek
postponement of the hearing pending the Board’s ruling.
The Board issued a Final Decision and Order on July 9, 2013. Based on the factual
findings in the CPD’s Final Order and applying collateral estoppel, the Board concluded
that Garrity had violated the provisions of the MPA as alleged in the Charge Letter. The
Board revoked his master plumbing license and imposed a $75,000 civil monetary penalty.
Garrity filed a Petition for Judicial Review in the Circuit Court for Baltimore City.2 The
circuit court upheld the action of the Plumbing Board and this appeal followed.
QUESTIONS PRESENTED
Garrity asks:
2
All State did not join in the petition and is not a party here.
3
1. Did the Final Order of the CPD meet the legal requirement of a “final judgment,”
as established in Culver v. Md. Ins. Comm’r, 175 Md. App. 645 (2007), so that the
Plumbing Board could properly use it, in lieu of actual evidence to meet its own
burden of proof in its later case against Garrity?
2. Did the State of Maryland violate Garrity’s double jeopardy protections under the
5th Amendment to the U.S. Constitution, when, for the same alleged conduct, its
Plumbing Board punished him a 2nd time with a $75,000 civil penalty right after its
CPD had already punished him a first time with a $707,900 civil penalty?
DISCUSSION
I. Standard of Review
In Maryland Aviation Administration v. Noland, 386 Md. 556 (2005), the Court of
Appeals explained:
A court’s role in reviewing an administrative agency adjudicatory decision
is narrow; it is limited to determining if there is substantial evidence in the
record as a whole to support the agency’s findings and conclusions, and to
determine if the administrative decision is premised upon an erroneous
conclusion of law.
Id. at 571–72 (Citations and quotations omitted). Garrity does not contest the sufficiency
of evidence. Instead, he argues that the Board erred in its legal determination that Garrity
was collaterally estopped from calling for the Board to investigate the facts established in
the CPD’s Final Order.
We typically give “considerable weight” to an agency’s interpretation of the statutes
it administers. Id. at 572. The application of collateral estoppel, however, is a separate
legal question, subject to de novo review. Shader v. Hampton Imp. Ass’n, Inc., 217 Md.
App. 581, 605 (2014); see Spencer v. Maryland State Bd. of Pharmacy, 380 Md. 515, 528-
29 (2004). The same is true of whether multiple civil penalties violate the Fifth
Amendment to the U.S. Constitution. Thus, we must determine whether the Board’s
4
conclusions are legally correct, without deference to its actions. Gebhardt & Smith LLP v.
Maryland Port Admin., 188 Md. App. 532, 564 (2009).
II. Offensive Nonmutual Collateral Estoppel
Garrity characterizes the Plumbing Board’s reliance upon the CPD decision as use
of “offensive non-mutual collateral estoppel.” This is a version of the doctrine of collateral
estoppel that arises when the plaintiff in the second case seeks to foreclose the defendant
from re-litigating an issue the defendant has previously litigated unsuccessfully against
other plaintiffs.3 Rourke v. Amchem, 384 Md. 329, 341 (2001). He claims that there is
not “one single reported case in Maryland where offensive non-mutual collateral estoppel
had actually been upheld, wherein the predicate, fact-finding forum was . . . an
administrative agency.” In other words, he asserts that an agency may not rely on the facts
found by a different agency, even when both adjudications involve the same defendant and
the same issue. Garrity argues that the CPD is not “a real court,” and therefore cannot
issue a “final judgment.” The Board dismisses this as a “largely unsupported and purely
semantic argument . . . ignoring clear judicial precedent.”
Collateral estoppel may be used offensively or defensively. The Court of Appeals
has followed a four-part test that must be satisfied for the doctrine of collateral estoppel to
apply:
1. Was the issue decided in the prior adjudication identical with the one
presented in the action in question?
3
Even though both adjudications involved “state” agencies, no party has advanced the
argument that the collateral estoppel is “mutual.”
5
2. Was there a final judgment on the merits?
3. Was the party against whom the plea is asserted a party or in privity with
a party to the prior adjudication?
4. Was the party against whom the plea is asserted given a fair opportunity
to be heard on the issue?
Burruss v. Bd. of Cnty. Commissioners of Frederick Cnty., 427 Md. 231, 249-50 (2012)
(Citation omitted). Garrity does not contest prongs 1 or 4. Garrity’s misrepresentations
about the qualifications of his plumbers and procurement of permits constituted violations
of both the CPA and the MPA; thus, “identical” issues were before the CPD and the
Plumbing Board. Further, Garrity was the party charged in both actions, and he was given
a fair opportunity to be heard before the CPD and the Board, yet refused to testify or present
evidence. Moreover, he had an opportunity to seek judicial review of the CPD’s Final
Order, but did not.
Garrity’s remaining arguments are unpersuasive. First, collateral estoppel gives
preclusive effect to the findings of an adjudicator, even between different parties, in a
subsequent proceeding on the same issue. Second, administrative agencies, acting in a
quasi-judicial capacity, are treated as “courts” that can issue orders and rulings for the
purposes of collateral estoppel. For the reasons set forth below, we believe that because
the CPD thoroughly examined Garrity’s violations of the CPA and the MPA, the Plumbing
Board did not err in relying on those findings in reaching its own conclusions.
a. When is Offensive Nonmutual Collateral Estoppel Appropriate?
Under the doctrine of collateral estoppel, “ ‘[w]hen an issue of fact or law is actually
litigated and determined by a valid and final judgment, and the determination is essential
6
to the judgment, the determination is conclusive in a subsequent action between the parties,
whether on the same or a different claim.’” Murray Int’l Freight Corp. v. Graham, 315
Md. 543, 547 (1989) (quoting Restatement (Second) of Judgments § 27 (1982)) (hereinafter
Restatement).4 That is, if Plaintiff A proves a Defendant’s violation before a court, Plaintiff
B may rely on those findings in a separate adjudication against the same Defendant in a
different court. See Restatement § 29 (“A party precluded from relitigating an issue with
an opposing party . . . is also precluded from doing so with another person unless the fact
that he lacked full and fair opportunity to litigate the issue in the first action or other
circumstances justify affording him an opportunity to relitigate the issue” 5) (Emphasis
added).
Like res judicata, collateral estoppel is based on “the sound and obvious principle
of judicial policy that a losing litigant deserves no rematch after a defeat fairly suffered, in
adversarial proceedings, on an issue identical in substance to the one he subsequently seeks
to raise.” Dep’t of Human Res. v. Thompson, 103 Md. App. 175, 194 (1995) (quoting
Astoria Federal S & L v. Solimino, 501 U.S. 104, 107 (1991)). The purpose of this rule is
to avoid “the expense and vexation of multiple lawsuits, conserve judicial resources, and
4
“[W]e observe that the Court of Appeals gives considerable, and at times, persuasive
weight to the position taken by the American Law Institute in Restatement (Second) of
Judgments.” Bryan v. State Farm Mut. Auto. Ins. Co., 205 Md. App. 587, 602 (2012);
see, e.g., Leeds Fed. Sav. & Loan Ass’n v. Metcalf, 332 Md. 107, 120 (1993) (§§ 27–29).
5
Garrity does not argue that he was unable to fairly litigate the issue in the CPD hearing.
7
foster reliance on judicial action by minimizing the possibilities of inconsistent decisions.”
Bryan v. State Farm Mut. Auto. Ins. Co., 205 Md. App. 587, 592 (2012).
Garrity argues that the Board may not rely on findings of fact from the CPD hearing,
noting that there was not “complete mutuality between the parties” because the
adjudications involved two different state agencies. Garrity misstates the law here.
Although traditionally the Court held that all four requirements must be met, i.e., that there
was “mutuality of parties,” see Pat Perusse Realty Co. v. Lingo, 249 Md. 33, 45 (1968),
the Supreme Court has said that “offensive nonmutual collateral estoppel” may apply to
subsequent proceedings between two distinct parties. See Parklane Hosiery, 439 U.S. at
329-30 (1979); Rourke, 384 Md. at 350.
In the context of civil actions between private, non-governmental parties, courts
have noted two general concerns that could limit the application of this doctrine. The Court
of Appeals followed Parklane in Rourke, 384 Md. at 350 and reiterated the Supreme
Court’s two major policy concerns with the application of the doctrine: judicial economy
and fairness.
The Rourke Court summarized Parklane, 439 U.S. at 330-31, and explained this
first concern:
First, offensive use of collateral estoppel does not promote judicial economy
in the same manner as defensive use does. The Court explained that, whereas
defensive collateral estoppel gives a plaintiff a strong incentive to join all
potential defendants in the first action, if possible, offensive collateral
estoppel creates a contrary incentive: [s]ince a plaintiff will be able to rely
on a previous judgment against a defendant but will not be bound by that
judgment if the defendant wins, the plaintiff has every incentive to adopt a
‘wait and see’ attitude, in the hope that the first action by another plaintiff
will result in a favorable judgment.
8
Rourke, 384 Md. at 350 (Quotation omitted).
Second, the Court of Appeals was concerned with the fairness of offensive
nonmutual collateral estoppel, including:
(1) that [i]f a defendant in the first action is sued for small or nominal
damages, he may have little incentive to defend vigorously, particularly if
future suits are not foreseeable, (2) offensive use may be unfair as well “if
the judgment relied upon as a basis for the estoppel is itself inconsistent with
one or more previous judgments in favor of the defendant, and (3) such use
may be unfair where the second action affords the defendant procedural
opportunities unavailable in the first action that could readily cause a
different result.”
Rourke, 384 Md. at 350 (Quotation omitted).
In light of these twin concerns of judicial economy and fairness, we recognize that
the Court of Appeals has never rejected offensive nonmutual collateral estoppel as a
doctrine, but merely found it inappropriate to the specific facts of the cases before it. In
Rourke, the Court held the doctrine must be applied consistent with the conflict of laws
principles. In that case, which arose from “consolidated settlement of several hundred
asbestos-related personal injury and wrongful death actions,” the Court considered whether
to give “common law collateral estoppel effect to a judgment of the Supreme Court of
Virginia involving none of the plaintiffs and only three of the thirteen defendants in this
case.” Id. at 332-33. Because “under the Maryland law of conflict of laws, the res judicata
effect to be given to the judgment of another State is that which the judgment would have
in the State where it was rendered,” and Virginia did not recognize “offensive non-mutual
collateral estoppel,” the Court rejected its use. Id. at 342.
9
The Court has found it unfair to apply this doctrine where the predicate court’s
judgment was reached through a lower standard of proof, or if the court is acting in a non-
judicial role. This is common in the context of attorney discipline cases, and as such, courts
rarely apply this version of collateral estoppel in that context. See Attorney Grievance
Comm’n of Maryland v. Bear, 362 Md. 123 (2000) (“Jurisdictions that have dealt with the
precise issue presented by this case almost uniformly refuse to give preclusive effect to
issues decided in a civil case under a preponderance of the evidence standard in a
subsequent attorney discipline proceeding.”) In Bear, the Court refused to adopt the
findings of a District of Columbia court because the “original findings of fact to which
preclusive effect is sought to be given were made under a less stringent standard of proof
than is required in an attorney disciplinary action.” Id. at 125. And in Attorney Grievance
Comm’n v. Miller, 310 Md. 163 (1987), the doctrine was found inappropriate where a
federal appellate court was not sitting as a judicial tribunal in a disciplinary proceeding but
was conducting a judicial review of an agency decision. Id. at 171-72. The issue for the
Court was whether Miller was guilty of misconduct and should be disciplined; however,
the D.C. Circuit was only reviewing a federal agency’s decision under an arbitrary and
capricious standard. Id. at 172.
Where the burdens of proof and the alleged conduct at issue are the same, however,
other States have upheld the use of offensive nonmutual collateral estoppel in a subsequent
attorney disciplinary action. See, e.g., Office of Disciplinary Counsel v. Kiesewetter, 585
Pa. 477, 481 (2005) (Disbarment as a result of a 1994 federal civil jury verdict entered
against respondent for fraud). And in In re Caranchini, 956 S.W.2d 910, 913 (Mo. 1997),
10
the Missouri Supreme Court relied on a federal court’s finding that an attorney had made
unsupported and frivolous arguments in its disciplinary proceeding.
A different fairness concern arose in Burruss, where the Court also found it unfair
to apply offensive nonmutual collateral estoppel because the predicate ruling was legally
incorrect. 427 Md. at 252. In that case, plaintiffs in Anne Arundel and Frederick County
filed separate actions to challenge the legal standard to assess the authenticity of petition
signatures. After the trial judge in the Anne Arundel County case adopted a “sufficient
cumulative information” standard, the Frederick County plaintiffs sought to apply that
ruling in their case. The Court of Appeals observed that the defendants to the action were
different, so the doctrine could not apply.
Although initially stating that the Court had “not, since we issued our opinion in
Rourke, adopted or applied the doctrine of offensive nonmutual collateral estoppel,”
it noted that “we deem the Supreme Court’s analysis in Parklane persuasive.” 427 Md. at
252. Echoing Rourke, the Court in Burruss examined the judicial economy and fairness
concerns, and found that the Anne Arundel court was legally incorrect, id., as the Court of
Appeals had determined that same year in Maryland State Bd. of Elections v. Libertarian
Party of Maryland, 426 Md. 488, 514-15 (2012). The Court concluded that
[i]t would be unfair to bind Respondents to an incorrect interpretation of the
law, as determined by another trial court, that could have been, and should
have been, interpreted correctly by that trial court. Furthermore, this Court’s
recent holding in Libertarian Party reaffirmed that the petition signature
requirements in § 6–203(a) [of the Election Law Article] are mandatory, and
it would be unfair to bind Respondents to an interpretation of the law
inconsistent with our holding in that case. Therefore, we decline to adopt the
doctrine of offensive non-mutual collateral estoppel in the case sub judice.
11
Id. at 252. We agree with the reasoning of the Court in Burruss, but do not see how it
precludes application of offensive nonmutual collateral estoppel here.
This Court has upheld use of this doctrine in a case somewhat similar to this one.6 In
Culver, we concluded that the Maryland Insurance Agency (MIA) could rely on the
Attorney Grievance Commission’s findings when it revoked Culver’s insurance license.
Culver, 175 Md. App. 645. We noted that there was no concern that the MIA
would adopt a “wait and see” attitude toward the first action. . . because the
MIA is not a plaintiff seeking a windfall without any work. Rather, as a
regulatory body, the MIA is charged with protecting consumers from
untrustworthy insurance producers by revoking or denying their licenses.
When the MIA discovered that the highest court of this state had found that
Culver acted dishonestly, it refused to allow appellant to relitigate the
underlying facts found by that Court. The MIA’s actions did not constitute
the kind of “wait and see” attitude that troubled the Parklane Hosiery court.
Id. at 656.
Here, two separate state agencies sought to prosecute a licensee for the same illegal
course of conduct. Unlike private parties, the CPD and the MSPB could not join their
proceedings together, because administrative agencies can only adjudicate violations of
their own statutes. For this reason, offensive nonmutual collateral estoppel is appropriate
when the plaintiffs are two government agencies unable to jointly bring their case in a
single proceeding.
We also found in Culver that the doctrine would not be unfair:
The Court’s second concern—fairness to the defendant—contemplates three
scenarios in which the use of offensive nonmutual collateral estoppel would
be unfair to the defendant. None of the scenarios are here present. Appellant
6
In Culver, the predicate judgment was that of a court, not an administrative agency. See
discussion on pp. 14-18.
12
had every “incentive to defend vigorously” in the action that resulted in his
disbarment. Similarly, the present case is not one where “the judgment relied
upon as a basis for the estoppel is itself inconsistent with one or more
previous judgments in favor of the defendant.” Nor is this a case in which
procedural protections afforded in the later case may lead to a result
inconsistent with the prior action. In sum, application of collateral estoppel
principles to the case sub judice would satisfy all of the concerns identified
in Parklane Hosiery and reiterated in Rourke.
Id. at, 656-57. In this case, Garrity was not being sued for “small or nominal damages,”
but the CPD adjudication resulted in more than $700,000 in civil penalties. This fine, for
a small business owner, was hardly nominal, and Garrity had every incentive to defend his
case.
The additional fairness concerns raised in Rourke and Parklane are not present here.
There is no risk that “the judgment relied upon as a basis for the estoppel is itself
inconsistent with one or more previous judgments in favor of the defendant.” Parklane,
439 U.S. at 330. That was clearly not an issue, because there were no prior judgments
favoring Garrity. Further, the CPD’s determination was not incorrect as a matter of law,
see, e.g., Burruss, 427 Md. at 252.
Nor do we find that there are different “procedural opportunities.” Rourke v.
Amchem Products, Inc., 384 Md. at 350; see also Bear, 262 Md. at 125. Again, in this
case, where the two “plaintiffs” were two state agencies, and both held administrative
hearings, there were not distinct “procedural opportunities.” Garrity argues that hearsay
would have been admitted in an administrative hearing, but fails to state how he was
13
prejudiced in this regard.7 The mere fact that hearsay might have been allowed in both the
CPD and the MSPB hearings is irrelevant, as he had the same procedural opportunities in
both forums.
Our decision in Culver is consistent with the discussion of fairness in Parklane,
Rourke, and subsequent cases. As we recently observed, in declining to permit collateral
estoppel, “a plaintiff who invokes nonmutual collateral estoppel against a defendant does
so offensively, and may proceed so long as raising the prior case against the defendant(s)
in the action does not offend the Parklane factors.” Shader v. Hampton Imp. Ass’n, 217
Md. App. 581, 607-08 cert. granted, 440 Md. 225 (2014). We also note that this case and
Culver both involved Maryland administrative agencies applying statutes designed to
protect consumers in highly-regulated industries. We see no unfairness here in preventing
Garrity from relitigating the question of his deceptive plumbing practices.
b. Finality of the CPD Order
We also reject Garrity’s second argument that the CPD is not a “court” and that
therefore collateral estoppel cannot apply. He argues that Culver established the outer
7
Also, Garrity has not identified any hearsay evidence introduced in either agency
proceeding. See Commonwealth v. Two Parcels of Land, 724 N.E.2d 739, 744-45 (Mass.
App. 2000) (rejecting a similar hearsay contention).
14
limits for offensive mutual collateral estoppel8: an administrative adjudication can adopt
a prior judicial determination, but not another administrative one.
Both federal and Maryland courts have long held that a factual finding of an
administrative agency adjudication is “final” and thus preclusive, “if it determines or
concludes the rights of the parties, or if it denies the parties means of further prosecuting
or defending their rights and interests in the subject matter proceedings before the agency,
thus leaving nothing further for the agency to do.” Maryland Comm’n on Human Relations
v. Baltimore Gas & Elec. Co., 296 Md. 46, 56 (1983) (citing federal and state authorities).
The Court of Appeals will give preclusive effect to “some administrative agencies
performing quasi-judicial functions.” Batson v. Shiflett, 325 Md. 684, 703 n. 7 (1992); see
Maryland Aggregates v. State, 337 Md. 658, 678 (1995) (“[A]n agency in the executive
branch may ordinarily perform adjudicatory functions in harmony with the principle of
separation of powers provided that there is an opportunity for judicial review of the
agency’s final determination.”) Similar principles apply to collateral estoppel. See Batson,
325 Md. at 704 (“Thus, current Maryland law on the preclusive effect of administrative
agency decisions, under principles of res judicata or collateral estoppel, incorporates
parallel considerations.”); Restatement § 83(1) (“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”). The
8
See n. 6 supra.
15
Restatement suggests that the formality and purpose of the hearing will determine whether
it can be used in subsequent proceedings:
Where an administrative forum has the essential procedural characteristics of
a court, therefore, its determinations should be accorded the same finality
that is accorded the judgment of a court.
...
For example, within the context of a licensing hearing it may be disputed
whether or not the licensee engaged in a specified course of conduct on a
particular occasion, where engaging in the conduct is relevant to the
licensure question; determination of that issue can be accorded preclusive
effect in later litigation even though the grant or denial of the license as such
is not a matter of legal right. If an issue has thus been formulated, and if the
procedure for resolving it is substantially similar to that used in judicial
adjudication, the agency’s determination of the issue should be given
preclusive effect in accordance with the rules of res judicata.
Restatement § 83 cmt. b (Emphasis added).
In Batson, the Court of Appeals said that whether “an administrative agency’s
declaration should be given preclusive effect hinges on three factors: (1) whether the
[agency] was acting in a judicial capacity; (2) whether the issue presented to the district
court was actually litigated before the [agency]; and (3) whether its resolution was
necessary to the [agency’s] decision.” 325 Md. at 701 (Quotation omitted) (alteration in
original).9
Applying the same requirements of Batson here, we find that the CPD’s findings
had preclusive effect in the Board’s adjudication. First, the agency was acting in its judicial
9
This test was first articulated by the Ninth Circuit in Exxon Corp. v. Fischer, 807 F.2d
842, 845-46 (9th Cir. 1987), and is in this context often referred to as the “Exxon test.”
16
capacity. Batson, 325 Md. 684 at 705. (“By conducting a hearing, allowing the parties to
present evidence and ruling on a dispute of law, the [agency] acted in a judicial capacity.”)
(Quotation and citations omitted). The CPA clearly grants the CPD adjudicative powers
to the CPD. See CPA § 13-206. During these proceedings, Garrity had the opportunity to
testify, but refused. He had the right to call witnesses in his defense, but chose not to. The
CPD offered twenty-four witnesses and eighty-four exhibits to establish Garrity’s
violations. No judicial review was sought. See Bellermann v. Fitchburg Gas & Elec. Light
Co., 18 N.E.3d 1050, 1069 (Mass. 2014) (“Nor does FG & E’s decision not to appeal from
the DPU’s adjudications render the application of issue preclusion improper.”)
Second, the “issue” was actually litigated before the agency, in this case, the CPD.
In Batson, the Court of Appeals explained: “[i]t must appear that the precise issue was
raised and resolved in the former proceeding.” Id. at 706. Here, the issue presented to the
Board was the same issue presented to the CPD—whether Garrity deceived his customers
through the use of unlicensed plumbers or overcharged customers for unpermitted services.
Had the Board not accepted the CPD’s findings, the Board would have needed to begin the
entire fact-finding process anew, interviewing the same customers and the same employees
to determine whether Garrity provided unlicensed plumbers or billed consumers for
permits he had never obtained. Under these circumstances, a second round of
investigations would have served only to inconvenience witnesses and waste agency
resources.
Third, it is quite apparent that it was “necessary” for the CPD to establish findings
of Garrity’s violations in order to issue its order. See id. at 707-08 (1992) (citing 18 Cow.
17
Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 4421, at 192 (1981) (“A
factual issue is necessary to the determination only if its resolution is required to support
the judgment entered in the prior proceeding.”)) In sum, the Board was correct in rejecting
Garrity’s insistence that the agency was required to re-litigate his numerous violations of
the law before revoking his license and imposing a monetary penalty.
It is settled, then, that for purposes of finality, both the CPD and the Board are
adjudicators whose decisions are subject to the rule of collateral estoppel. Garrity, argues
that no court in any other jurisdiction has blessed the use of nonmutual collateral estoppel
when used by one government agency to accord collateral estoppel effect to the decision
of another. This is not entirely true. For example, in High Country Res. v. F.E.R.C., 255
F.3d 741, 742 (9th Cir. 2001), the U.S. Court of Appeals for the Ninth Circuit rejected a
challenge to FERC’s reliance on a determination by the United States Forest Service to
support the denial of license applications for hydroelectric projects on tributaries of a river.
However, the applicant’s unsuccessful challenge was premised on the limited ground that
FERC was bound by an earlier Forest Service determination and thus, could not rely on the
later administrative determination. Id. at 747-48.10
10
It would also appear that the Restatement contemplates the possibility of successive
administrative adjudications over the same claim. See § 83(3) (“An adjudicative
determination of a claim by an administrative tribunal does not preclude relitigation in
another tribunal of the same or a related claim based on the same transaction if the scheme
of remedies permits assertion of the second claim notwithstanding the adjudication of the
first claim.”)
18
Nevertheless, we see no reason why this doctrine should not apply in this setting.
In the scope of this proceeding, the CPD and the Board served similar roles: to protect the
public from the unfair and deceptive provision of plumbing services. In the course of the
investigation, the CPD called numerous witnesses and performed a detailed review of
business records and found, among other things, that Garrity had charged consumers for
permits he did not obtain and sent unlicensed employees to perform plumbing services into
people’s homes. Garrity presented no evidence to contradict the CPD’s claims during this
proceeding. Given these extensive findings and Garrity’s decision not to defend against
the charges in the first proceeding, it was not unfair for the Board to decline to set forth
additional evidence to establish the exact same set of facts. To do so would have wasted
judicial resources and delayed the Board from taking corrective action to protect the public
and to deter other licensees from engaging in similar conduct. Accordingly, the Plumbing
Board did not err in applying the CPD findings of fact in its license revocation hearing.
III. Double Jeopardy
a. Introduction
Garrity challenges the multiple civil penalties imposed upon him as a violation of
the Double Jeopardy Clause of the Fifth Amendment of the U.S. Constitution.11 We
disagree. Agency penalties are generally upheld, because “an administrative agency with
disciplinary and licensing authority has broad latitude in fashioning sanctions within
[those] legislatively designated limits.” Cornfield v. Board of Physicians, 174 Md. App.
11
He has not challenged his license revocation.
19
456, 486 (2007) (Quotation omitted).
The State Government Article (SG), Md. Code (1984, Repl. Vol. 2009) § 10-222,
governs the scope of judicial review of final administrative agency decisions where the
agency is acting in a “quasi-judicial” capacity. Spencer, 380 Md. at 527. A punishment
will not be disturbed on appeal unless it is “so extreme and egregious that the reviewing
court can properly deem the decision to be arbitrary or capricious.” Id. at 531. The MPA
grants the Board authority to discipline licensees by revoking licenses or imposing a civil
monetary penalty of up to $5,000 per violation. See MPA § 12-312.
Garrity contends that the civil monetary penalty violates the Fifth Amendment’s
double jeopardy prohibition because he had already been fined $707,900 for his violation
of the CPA. The Board contends that the fine is necessary to put the public on notice of
Garrity’s violations and as a “catharsis for the profession and protection for the public.”
b. Impact of Hudson v. U.S., 522 U.S. 93 (1997)
The Double Jeopardy Clause provides that no “person [shall] be subject for the same
offence [sic] to be twice put in jeopardy of life or limb.” “The Clause protects only against
the imposition of multiple criminal punishments for the same offense, and then only when
such occurs in successive proceedings.” Id. at 99 (Quotations and citations omitted); see
also United States ex rel. Marcus v. Hess, 317 U.S. 537, 548-49 (1943) (“Only” “criminal
punishment” “subject[s] the defendant to ‘jeopardy’ within the constitutional meaning”);
20
Breed v. Jones, 421 U.S. 519, 528 (1975) (“In the constitutional sense, jeopardy describes
the risk that is traditionally associated with a criminal prosecution”).
At the outset, we note that Garrity has not been twice charged with the same offense;
the CPD sanctioned him for violation of the CPA, and the Board sanctioned him under the
MPA. However, Garrity views the two agency’s punishments as aimed at the same
offenses.
“Whether a particular punishment is criminal or civil is, at least initially, a matter of
statutory construction.” Id. at 99 (Citation omitted). Determining the civil or criminal
nature of a penalty involves two steps. First, we must “ask whether the legislature, in
establishing the penalizing mechanism, indicated either expressly or impliedly a preference
for one label or the other.” Id. at 99. (Quotation omitted). Second, even if the legislature
intends for the penalty to be civil, “we have inquired further whether the statutory scheme
was so punitive either in purpose or effect, as to transfor[m] what was clearly intended as
a civil remedy into a criminal penalty.” Hudson, 522 U.S. at 99 (Quotations and citations
omitted).
On this first question, the MPA is clear that the revocation of a license is a civil
penalty. MPA § 12-607, “Fines and Penalties,” provides that a person who violates §§ 12-
501, 601-606 is “guilty of a misdemeanor” and provides for punishments of fines or
imprisonment. MPA §§ 12-607 (a) - (c). Subsection (d), however, omits any reference to
criminal culpability, and instead sets forth multiple factors that the Board may consider in
setting a $5,000 penalty, including, among other things, “(i) the gravity of the violation;
(ii) the good faith of the violator; (iii) the quantity and gravity of previous violations by the
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same violator.” MPA § 12-607(d)(2). This language is consistent with SG § 10-1001, which
sets forth general guidelines on when an agency may assess a civil penalty. That Section
provides that to “impose a civil penalty,” the agency “shall consider the following in setting
the amount of the penalty: (1) the severity of the violation for which the penalty is to be
assessed; (2) the good faith of the violator; and (3) any history of prior violations.” SG §
10-1001(b). We note the similarity of these standards and conclude that the “penalty”
under MPA § 12-607(d) is a “civil penalty” as described under SG § 10-1001.
Read together, these two Sections clearly distinguish criminal penalties for
“misdemeanor[s]” and the penalties imposed through license revocation. Neither the CPD
nor the Board found Garrity had committed one of the offenses enumerated in §12-607.
Rather, he was punished under §12-312 for his fraudulent action and violation of other
requirements, such as obtaining permits for work.
For the second consideration, “only the clearest proof could suffice to establish the
unconstitutionality” of governmental action on the basis of a violation of double jeopardy.”
United States v. Ward, 448 U.S. 242, 248-49 (1980) (Quotation and citations omitted). “In
making this latter determination,” the Supreme Court identified the following “useful
guideposts,” such as:
(1) [w]hether the sanction involves an affirmative disability or restraint;
(2) whether it has historically been regarded as a punishment;
(3) whether it comes into play only on a finding of scienter;
(4) whether its operation will promote the traditional aims of punishment-
retribution and deterrence;
(5) whether the behavior to which it applies is already a crime;
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(6) whether an alternative purpose to which it may rationally be connected is
assignable for it; and
(7) whether it appears excessive in relation to the alternative purpose
assigned.
Hudson, 522 U.S. at 99-100 (quoting Kennedy v. Mendoza–Martinez, 372 U.S. 144, 168–
169 (1963)). Critically, “no one factor should be considered controlling as they “may often
point in differing directions.” Hudson, 372 U.S. at 100 (quoting Kennedy, 372 U.S. at 169).
Furthermore, “these factors must be considered in relation to the statute on its face, and
only the clearest proof will suffice to override legislative intent and transform what has
been denominated a civil remedy into a criminal penalty.” Id. at 100 (Quotations omitted).
Garrity does not argue specifically which, if either, of the respective CPA or MPA
penalties is criminal. He relies instead on United States v. Halper, which held that the
Double Jeopardy Clause applied to the imposition of any kind of “punishment.” 490 U.S.
435, 448 (1989). In defining punishment, the Court there focused on the traditional “goals
of punishment,” namely, “retribution and deterrence.” Id. The Hudson Court, however,
noted that in this respect, Halper’s “deviation from longstanding double jeopardy
principles was ill considered” and that “Halper’s test for determining whether a particular
sanction is punitive,’ and thus subject to the strictures of the Double Jeopardy Clause, has
proved unworkable.” Hudson, 522 U.S. at 101-02. The Court reasoned that “[i]f a sanction
must be “solely” remedial (i.e., entirely nondeterrent) to avoid implicating the Double
Jeopardy Clause, then no civil penalties are beyond the scope of the Clause.” Id. at 102.
In sum, civil penalties may be non-punitive for the purposes of evading double jeopardy
concerns, even if their purpose is to deter future violations of the statute.
23
In Ward v. Dep’t of Pub. Saf. Corr. Servs., 339 Md. 343 (1993), the Court of
Appeals explained that the reviewing court should focus on whether the penalty is
retributive or deterrent in nature; the former is punitive, the latter is not. Id. For this reason,
the revocation of a license is not “punishment” where the revocation is done to protect the
public. See State v. Jones, 340 Md. 235, 251 (1995) (holding that revoking a driver’s
license for refusing to take a breath alcohol test was non-punitive because the purpose of
the provision was to protect the public from dangerous drivers). Simply because a
defendant considers a revocation to be punishment does not make it so. Id. at 249.
Moreover, the Supreme Court has clearly stated that “neither money penalties nor
debarment has historically been viewed as punishment.” Hudson, 522 U.S. at 104. As the
Court has “long recognized . . . revocation of a privilege voluntarily granted, such as a
debarment, is characteristically free of the punitive criminal element.” Similarly, “the
payment of fixed or variable sums of money [is a] sanction which ha[s] been recognized
as enforceable by civil proceedings since the original revenue law of 1789.” Id.
(Quotations omitted).
It is readily apparent under the Hudson factors that the Board did not issue a
“punishment.” The purpose of both statutes is to “protect the public” and provide for high-
quality professionals. See Hudson, 522 U.S. at 99. To do this, monetary penalties are
necessary not only to remedy the harm done to the public, but also to deter future violations.
Additionally, a monetary punishment itself is not “an affirmative disability or restraint.”
See id. Nor has it “historically been regarded as a punishment,” nor do the texts of the
statutes require a “finding of scienter.” See id. Although monetary penalties may further
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“traditional aims of punishment-retribution and deterrence,” Hudson explicitly chastised
the Halper Court for elevating this factor above others. Id. at 100, 101 (noting in Halper
“the Court elevated a single Kennedy factor—whether the sanction appeared excessive in
relation to its nonpunitive purposes—to dispositive status.” Moreover, making false
statements or employing unlicensed plumbers is not “already a crime.” See id. Nor is there
an “alternative purpose to which it may rationally be connected . . . assignable for it”; in
other words, the reason for this fine is clear. Finally, each violation of the CPA and MPA
may be as much as $5,000; Garrity was found to have engaged in over 7,000 separate
violations. Ultimately, he was only fined $707,900 and $75,000. These amounts, in light
of what he could have potentially been fined, do not appear excessive. Garrity may perceive
these fines, though considerable, as a form of punishment. Yet whether a penalty seems
like a punishment to the violator is immaterial; the Supreme Court has “long recognized
that the Double Jeopardy Clause does not prohibit the imposition of all additional sanctions
that could, ‘in common parlance,’ be described as punishment.” Hudson, 522 U.S. at 98-
99 (Quotations and citations omitted).
Accordingly, because Garrity has not been charged with any crime, the multiple
civil monetary penalties are not “punishments” and do not violate the Double Jeopardy
Clause of the Fifth Amendment.
JUDGMENT OF THE CIRCUIT
COURT FOR BALTIMORE CITY
AFFIRMED; COSTS TO BE PAID BY
APPELLANT.
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