Opinion ID: 2551501
Heading Depth: 3
Heading Rank: 2

Heading: Funding the Judgment

Text: Before this Court, the parties contest the applicability of S.G. § 12-203 as a funding mechanism to satisfy BEKA's judgment, as well as the status of the supersedeas bond filed in the Circuit Court for Worcester County as a stay of execution pending this appeal. Because S.G. § 12-201(a) waives the County Board's sovereign immunity in an action based on a written contract for public school construction, we must ascertain whether the General Assembly intended for a judgment awarded thereunder to be satisfied by funding requested by the Governor as part of a budget bill pursuant to S.G. § 12-203. Thus, the issue before us is whether § 12-203 applies to all judgments, or only certain judgments, as it appears the intermediate appellate court concluded. In the later case, it would be necessary to have some intelligible way of discerning which judgments would be the responsibility of the State and which would not. The Court of Special Appeals held that, pursuant to this Court's decision in Stern, and notwithstanding the waiver of sovereign immunity, the burden of proving the availability of funds to satisfy the judgment is on the party seeking to show a waiver of the defense of sovereign immunity, in this case, BEKA[,] because SG § 12-203 does not provide a mechanism for appropriation of State funds to satisfy a judgment against a county board of education. BEKA, 190 Md.App. at 710, 712, 989 A.2d at 1205, 1207. The Court of Special Appeals reviewed the record to ascertain if facts were alleged to indicate that the County Board had the means to satisfy the judgment, through taxation or appropriation. See BEKA, 190 Md.App. at 712-13, 989 A.2d at 1207. Finding none and concluding that several allegations of sources of funding made by BEKA on appeal had not been made at trial, the intermediate appellate court determined that a new trial would require fact-finding on the issue of availability of funding. BEKA, 190 Md.App. at 715, 989 A.2d at 1208. In our view, additional fact-finding is unnecessary because funding is provided by statute. The Court of Special Appeals concluded that S.G. § 12-203 could not be used to satisfy a judgment, stating: To be sure, this provision generally would satisfy the funding requirement for State agencies. As indicated, however, school boards are unusual, hybrid agencies. See Dean [ v. Board of Education of Cecil County ], 71 Md.App. [92] at 98 [523 A.2d 1059 (1987)]. These boards, while State agencies for most purposes, are not normally regarded for structural or budgetary purposes, as units within the Executive Branch of the State government. Chesapeake Charter, 358 Md. at 137[, 747 A.2d. at 625]. BEKA, 190 Md.App. at 710-11, 989 A.2d at 1206. The Court of Special Appeals determined that S.G. § 12-203 did not apply to the present dispute relying largely upon Chesapeake Charter. In that case, we did not consider the sections of the State Government Article, at issue in the present case, because there the parties brought their procurement contract to the Maryland State Board of Contract Appeals (MSBCA) pursuant to § 15-205 of the State Finance and Procurement Article (S.F.P.). Consequently, sovereign immunity was not an issue in the case. In Chesapeake Charter, we held that a county board of education's school bus contracts were not subject to the General Procurement Law, because the board was not a unit of the Executive Branch of the State Government within the meaning of the pertinent statutory provision, S.F.P. § 11-101(x), and therefore the MSBCA had no jurisdiction over the dispute between the county board and a school bus contractor. Chesapeake Charter, 358 Md. at 145-46, 747 A.2d at 634. Determining that the language of the pertinent statute was ambiguous, we considered the legislative history and concluded that, other than school construction, the State Board of Public Works and the Department of General Services had never exercised any authority over the procurement of supplies and services by the county boards of education. Chesapeake Charter, 358 Md. at 140, 747 A.2d at 631 (footnote omitted, quoted supra ). Accordingly, our holding in Chesapeake Charter was a narrow one. We determined that most of [the county board of education's] operational funding comes from the county, not the State, government and that [t]hey are subject to the county, not the State budget process therefore the school bus contract was a local, and not a State concern. Chesapeake Charter, 358 Md. at 139, 747 A.2d at 631. The Court of Special Appeals relied on this reasoning to conclude that, [b]ecause county boards of education are subject to the county budget process, it does not appear that the State would be responsible for paying a judgment against a county board of education. . . . Accordingly, S.G. § 12-203 does not provide a mechanism for appropriation of State funds to satisfy a judgment against a county board of education. BEKA, 190 Md.App. at 712, 989 A.2d at 1207. While we do not disagree that the county board of education must submit a budget to the local government for approval, the funding that is appropriated to fulfill the budget emanates from local, State, and federal sources. This local budgetary character, therefore, appears insufficient to overcome the overwhelming support in our case law for the notion that county boards of education are legally State agencies. See Chesapeake Charter, 358 Md. at 137, 747 A.2d at 629. Here, the issue is one of statutory construction because we must determine whether S.G. § 12-203, by its terms, is applicable to the underlying action. We construe S.G. § 12-203 recogniz[ing] that `the cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature[,]' Stern, 380 Md. at 720, 846 A.2d at 1013, beginning with a plain meaning analysis in order to give effect to the statute as it is written[,] Pak v. Hoang, 378 Md. 315, 323, 835 A.2d 1185, 1189 (2003). [B]ut if the true legislative intent cannot readily be determined from the statutory language alone, we look to other indicia of that intent, including the title to the bill, the structure of the statute, the inter-relationship of its various provisions, its legislative history, its general purpose, and the relative rationality and legal effect of various competing constructions. Baltimore County v. RTKL Assoc., 380 Md. 670, 678, 846 A.2d 433, 437-38 (2004). We also avoid a construction of the statute that is unreasonable, illogical, or inconsistent with common sense. Zimmer-Rubert, 409 Md. at 215, 973 A.2d at 243 (quoting Walzer v. Osborne, 395 Md. 563, 573, 911 A.2d 427, 432 (2006)). We have also stated that this Court must read and `construe legislative dilution of governmental immunity narrowly in order to avoid weakening the doctrine of sovereign immunity by judicial fiat.' Magnetti, 402 Md. at 565, 937 A.2d at 229 (quoting Stern, 380 Md. at 720, 846 A.2d at 1012-13). Section 12-203 of the State Government Article requires that adequate funds to satisfy a final judgment rendered against the State or any of its officers or units be made available through a budget bill [15] after all appellate issues have been resolved. S.G. § 12-203. The provision is intended to carry out this subtitle, which, as stated, addresses Actions in Contract. S.G. 12-203. According to the plain language of the statute, and its surrounding provisions relating to governmental immunity in contract suits, there is no indication that § 12-203 differentiates between those judgments that the State must pay and those it must not as long as the legislative waiver of sovereign immunity enshrined in S.G. § 12-201(a) is applicable to the dispute. [16] See e.g., Coastal Holding & Leas. v. Maryland Environmental, 420 F.Supp.2d 441, 444-46 (2006) (holding that the Maryland Environmental Service was immune from suit in federal court based on the state treasury factor of the Fourth Circuit's sovereign immunity analysis because the agency successfully argued that S.G. § 12-203 means that the State of Maryland is ultimately liable for any judgments entered against it in a contract and likewise for a tort action). The amount of money that the Governor would be required to include in the budget bill to satisfy a final judgment is a factual inquiry and must be determined at trial by reference to the contract provisions and an accounting of payments and reimbursements between the parties. Thus, there is no other burden on BEKA in the instant case to prove the availability of funds, as there was in Ruff, and the Court of Special Appeals erred in concluding that BEKA bore that burden. Moreover, we have previously noted that S.G. § 12-203 was enacted by the General Assembly for the particular purpose of addressing the funding requirement that must precede a waiver of sovereign immunity under S.G. § 12-201(a). In Stern, we concluded that the General Assembly enacted S.G. § 12-203 upon an acknowledgment of our reasoning in Maas, 173 Md. at 558-60, 197 A. at 125-26 and Ruff, 278 Md. at 590-91, 366 A.2d at 366, that sovereign immunity is a valid defense unless funds have been appropriated to pay a judgment or funds may be raised for that purpose, stating: The General Assembly is cognizant of how to specifically authorize the power to raise funds in satisfaction of the second prong of the Maas and Ruff test, as it has enacted a power to appropriate funds for the purpose of paying judgments arising from an express legislative waiver of immunity in Md.Code (1984, 1999 Repl.Vol.), § 12-203 of the State Government Article. Stern, 380 Md. at 715, 846 A.2d at 1010. Therefore, in Stern, we considered S.G. § 12-203 to be an explicit funding mechanism for judgments based upon written contracts against the State, its officers, or units. Judge Wilner, dissenting in Stern with respect to the majority's analysis of S.G. § 12-201 and concluding that the Board of Regents had in fact breached written contracts with the students by executing a mid-year tuition increase, nevertheless echoed the majority's view of the function and purpose of S.G. § 12-203 stating: Section 12-203 of the State Government Article requires the Governor to place sufficient funds in the State budget to discharge the University's obligation. All of the necessary pieces, even under a [ Maas ] analysis, are thus in place. Stern, 380 Md. at 732, 846 A.2d at 1019 (Wilner, J., dissenting). Judge Wilner noted that § 12-203 requires the Governor to include in the budget bill money that is adequate to satisfy final judgments, citing § 52(4) and (12) of Article III of the Maryland Constitution. Stern, 380 Md. at 732, 846 A.2d at 1019, fn. 4. [17] Section 12-203 applies to the instant case because this Court has determined, supra, that its statutory companion, S.G. § 12-201(a), waives the County Board's governmental immunity and the language of S.G. § 12-203 requires that all judgments rendered against the State, its officers or units, upon breach of a written contract shall be requested by the Governor as part of a budget bill. Furthermore, the application of S.G. § 12-203 to written contract disputes between a State entity and a private party is consistent with the purpose of providing a waiver to immunity in contract actions involving written agreements. It gives effect to the moral obligation on the part of any contracting party, including the State or its political subdivisions, to fulfill the obligations of a contract. Magnetti, 402 Md. at 560, 937 A.2d at 227, fn. 6 (quoting 1976 Md. Laws, Ch. 450). [18]