Opinion ID: 2294280
Heading Depth: 1
Heading Rank: 8

Heading: The County's Remand Request

Text: The County contends that the courts below erred by declining to remand the case to County administrative officials for new decisions under AACC, Section 17-11-210 after ruling that the County PZO applied the wrong standard of law in granting extensions. The County asserts that the case must be remanded so that the PZO can grant extensions, validly and retroactively, by making the requisite findings that particular properties, for which fees were collected, would be benefitted directly by a planned project. The County argues that our decision in Frankel, 361 Md. at 307-11, 761 A.2d at 328-30 provides the analytical model for the Owners' claims in this case. According to the County, Frankel compels a remand to the County PZO and FO under the settled administrative law principles that the County articulates as follows: (1) even in the absence of a statutory provision authorizing an appeal, the Circuit Court has inherent authority to review a quasi-judicial decision of an administrative agency to determine if it was arbitrary, capricious or illegal ... and (2) once the Circuit Court determines that an agency has applied the wrong standard of law, the function of the Court is at an end and it may not substitute its judgment for that of the agency, but must remand the case for a new decision under the correct standard. In Frankel, we considered whether the University of Maryland, College Park (the University) violated a student's due process and equal protection rights by requiring him, a Maryland resident, to pay higher tuition fees than other Maryland residents for being `financially dependent' upon an out-of-state benefactor[.] Id. at 301, 761 A.2d at 325. We concluded that the University's policy violated the student's rights under Article 24 of the Maryland Declaration of Rights because it arbitrarily and irrationally discriminated against many bona fide Maryland residents. Id. at 318, 761 A.2d at 334. In the course of discussing an issue raised by the County relating to Frankel's abandonment of his right to a refund claim, we explained why a remand to the University's hearing board that made the decision to deny Frankel in-state status was appropriate: Under the Policy and the procedures therein set forth, a student is obligated to pay the higher out-of-state tuition during the pendency of a request for re-evaluation and all appeals. Until there is a proper re-evaluation, approval of the request, and a change in status, there would appear to be no entitlement to a credit or a refund. If, as we shall hold, the Policy provided for, and the administrative officials used, legally impermissible criteria in denying [Frankel's] request for in-state status and claim for a refund, those officials will be obligated to reconsider his request and claim using permissible criteria. A refund under the Policy cannot be made until the appropriate officials properly rule upon [Frankel's] request for in-state status, employing legally permissible criteria. Id. at 307, 761 A.2d at 329 (emphasis added). We added that nothing in the Policy provid[ed] that the entitlement to a refund cease[d] immediately upon the student's graduation. Id. The Policy provided, in reference to a student's request for a re-evaluation of his or her residency status, that `[i]f an approval is granted, then the Bursar's Office [would] credit the student's account for any excess tuition paid. Id. at 304, 761 A.2d at 327. The Policy then stated that [t]he student may also request a refund directly from the Bursar's Office. Id. These alternative Policy provisions for a credit or a refund suggested that a refund was the appropriate remedy when the student was no longer enrolled at the University and thus no longer had a University account that could be credited. Id. at 307-08, 761 A.2d at 329. We noted, furthermore, that the General Assembly has now provided broad ... refund remedies covering every type of tax, fee, or charge improperly collected by a Maryland governmental entity. Bowman v. Goad, 348 Md. 199, 204, 703 A.2d 144, 146 (1997). Although one must follow the appropriate administrative remedy to be entitled to a refund, Bowman v. Goad, supra, 348 Md. at 204, 703 A.2d at 146, [Frankel] [had] meticulously followed the applicable administrative procedures required by the University. Id. at 308, 726 A.2d at 329. We observed that Maryland Code (1988, 1997 Repl.Vol., 1999 Supp.), Section 13-901(a) of the Tax General Article may be applicable when a state college or university charges a student more for tuition than is legally payable: That section broadly authorizes a refund claim against the State by a claimant who (1) erroneously pays to the State a greater amount of ... fee, [or] charge... than is properly and legally payable. Under § 13-1104(a), a claimant has three years from the date of payment to file a claim for refund under this article ..., and [Frankel] clearly filed his claim and brought this action within that time. Id. Frankel could also maintain an action in assumpsit if the statutory refund remedy in §§ 13-901(a)(1) and 13-1104(a) of the Tax General Article [was] inapplicable to [the] case[.] Id. at 308-09, 761 A.2d at 329. We explained: The General Assembly delegated to the Board very broad authority over tuition and fees (§ 12-109(e)(7) of the Education Article), and the Board adopted a Policy and regulations entitling a student to a credit or refund of tuition upon re-classification from out-of-state status to in-state status. It has long been settled in Maryland that when one pays to a state government agency or a local government more in taxes, fees, or charges than the government is entitled to, and when the law specifically authorizes a refund, although no particular statutory remedy is provided, a common law contract action ... is available. Id. at 309, 761 A.2d at 329-30 (citation omitted, emphasis added). The County acknowledges the rule that where a refund of fees paid to the government is sanctioned by law, but no procedure is provided for obtaining a refund, an action in assumpsit lies against the government to obtain the refund. Yet it seizes on our analysis of the defenses asserted in Frankel for the proposition that an assumpsit claim is not ripe until there is a remand and administrative officials have rendered a decision according to the correct legal standard. This proposition, it argues, is consistent with settled principles of administrative law addressed in, inter alia, Department of Natural Resources v. Linchester Sand & Gravel Corp., 274 Md. 211, 334 A.2d 514 (1975) and Belvoir Farms Homeowners Ass'n, Inc. v. North, 355 Md. 259, 734 A.2d 227 (1999). In Linchester, we considered the constitutionality of a statute, under the separation of powers doctrine, that permitted a de novo jury trial on the reasonableness of administrative action in granting or denying a permit to build in wetlands. 274 Md. at 214-15, 217-18, 334 A.2d at 518-20. In considering this question, we contrasted the relative role of the administrative agency with that of the judiciary and indicated that agencies perform quasi-legislative and quasi-judicial duties. Id. at 221-22, 334 A.2d at 521-22. We distinguished the quasi-judicial authority of administrative agencies from the exercising of the `judicial powers' of this State, which by Section I, Article IV of the Maryland Constitution is reserved exclusively to designated courts and indicated that courts have an inherent power to review administrative agency decisions: While administrative agencies, in the proper performance of duties which the Legislature permissibly delegates to them, may use discretion to formulate policy, promulgate rules and adjudicate in order to determine specific questions of fact, they, nevertheless, in doing so are performing nonjudicial functions; on the other hand, the role of the courts in regard to these administrative agency functions is to see that these responsibilities were properly empowered to the agency and have been performed within the confines of the traditional standards of procedural and substantive fair play. In order to perform this essential duty, the courts may be provided with specific authorization to do so by the Legislature through statutory provision, but, even absent such authority, the judiciary has an undeniable constitutionally-inherent power to review, within limits, the decisions of these administrative agencies. Id. at 222-23, 334 A.2d at 522-23. This power of review, whether authorized by statute or assumed inherently, cannot be a substitution of the court's judgment for that of the agency and is limited to determining whether the contested quasi-judicial decision was rendered in an illegal, arbitrary, capricious, oppressive or fraudulent manner. Id. at 224, 334 A.2d at 523. In Belvoir Farms, we discussed the role of a reviewing court when confronted with an agency conclusion based upon an error of law. There, the Circuit Court properly concluded that the agency applied the wrong legal standard in granting a critical area zoning variance, but erred in reversing the decision without a remand to the agency. We explained: Generally, when an administrative agency utilizes an erroneous standard and some evidence exists, however minimal, that could be considered appropriately under the correct standard, the case should be remanded so the agency can reconsider the evidence using the correct standard. Belvoir Farms, 355 Md. at 270, 734 A.2d at 234. The reviewing court must remand the matter so that it will not usurp an administrative function: It is a fundamental principle of administrative law that a reviewing court should not substitute its judgment for the expertise of the administrative agency from which the appeal is taken. This principle underlies the rule that if an administrative function remains to be performed after a reviewing court has determined that an administrative agency has made an error of law, the court ordinarily may not modify the agency order. Under such circumstances, the court should remand the matter to the administrative agency without modification[.] ... Finally, if an administrative function remains to be performed, a reviewing court may not modify the administrative agency's action even when a statute provides that the court may `affirm, modify or set aside' because a court may not usurp administrative functions. Id. at 268, 734 A.2d at 232 (quoting O'Donnell v. Bassler, 289 Md. 501, 509-11, 425 A.2d 1003, 1008 (1981) (citations, footnote omitted)). The County's appeal to Frankel and general administrative law principles in arguing for a remand presumes, erroneously, that there is an administrative procedure and function that remains to be performed in this case. In Frankel, a remand to the University was the proper disposition because the University had an established administrative procedure for Frankel's tuition refund request: Under the Procedures Established by the University of Maryland at College Park, ... residency is first determined when a student applies for admission. If a student is dissatisfied with the initial residency classification, or if circumstances subsequently change, he or she may request a re-evaluation of his or her residency status. If the request for re-evaluation is denied, the student may appeal to the Director of the Residency Classification Office, and finally to the Residency Review Committee. While a request for re-evaluation and the appeals are pending, a student is still obligated to pay the out-of-state tuition. The Policy goes on to provide that [i]f an approval is granted, then the Bursar's Office will credit the student's account for any excess tuition paid. The student may also request a refund directly from the Bursar's Office. Frankel, 361 Md. at 304, 761 A.2d at 327. The Board of Regents for the University System was empowered by statute to prescribe the policies and procedures set forth above. Id. at 301, 761 A.2d at 326. The University president, in turn, had a statutory authority, subject to the regulations and policies set by the Board, to set tuition and fees. Id. at 302, 761 A.2d at 326. Our decision left the University with an unperformed administrative function because the University, in denying the Frankel's refund request on the ground that Frankel was a financially dependent non-resident, did not fully consider Frankel's claim that he was a resident based on eight domicile factors set forth in the Policy. Id. at 302-03, 305, 318, 761 A.2d at 326-27, 334-35. This case shares in common with Frankel the characteristic that there is an administrative agency or office empowered by statute to process refund claims. The County impact fee ordinance designates to the County FO and Controller the tasks of notifying owners of the availability of a refund and reviewing refund applications. AACC § 17-11-210(a), (b), and (c). The ordinance also designates to the County PZO the task of extending the time in which fees must be expended or encumbered. § 17-11-210(e). But unlike Frankel, the County is required to perform its administrative functions within a prescribed time period. In the absence of validly executed extensions under Section 17-11-210(e), the County FO was required to publish notice of the availability of fee refunds within sixty days from the end of the sixth fiscal year following collection. § 17-11-210(a), (b). The ordinance then required the eligible property owners to file an application for a refund within sixty days of the last publication of notice. § 17-11-210(c). The County contends that the Owners did not become vested with a right to a refund just because the PZO failed to execute a valid extension and cites a series of cases in support of its position that the Owners merely have a contingent right to a refund. It maintains that the Owners' refund rights do not vest or accrue until the County officials perform their Section 17-11-210 administrative functions on remand, such as (1) determining whether the period for expending or encumbering impact fees should be extended, (2) determining that there are fees available for a refund, and (3) publishing notice that there are fees available for refund in connection with specified districts and years. This case is not about vesting. It is about the PZO's lack of authority under the impact fee ordinance to go back and make administrative decisions that it failed to effectively execute when permitted. Indeed, the Owners may not be vested in their right to a refund. Whether they are entitled to a refund and in what amount will be determined by the Circuit Court on remand. The full refund amount determined by the Circuit Court may be reduced if the County is able to prove that it, in fact, encumbered the impact fee funds within six years. [7] Judge Rodowsky, writing for the COSA (specially designated) in Appeal III, explained: Here, the onus was on the County validly to extend the time before the right to refunds accrued, and the Code set a time limit for effecting that extension in the prescribed manner. This the County failed to do. There is nothing that the County can do now to correct what it failed to do by the end of the sixth year after collection of the impact fees. Once the window for effecting a valid extension closed, the right to a refund arose in all of the Owners in any district in which fees collected had not been timely expended or encumbered. See § 7-11-210. Under the refund format adopted by the County, all owners in districts where refunds are to be made for a given year share in the refund pro rata. There is no need for an administrator now to choose, from among properties for which impact fees had been paid, those properties which would benefit directly by a planned improvement and those that would not. Nevertheless, although the Circuit Court may modify, on remand, the amount determined to be owing as a refund, this is not an administrative process, and there remains no administrative process to be completed. [8] Instead, the County wants to go backwards in time, and make determinations and perhaps, expenditures, that are time barred. Section 17-11-210(d) states that the fees collected in a district during a fiscal year ... not expended or encumbered shall be made available for refund [.] (Emphasis added.) We see the County impact fee ordinance as a compromise, perhaps a politically sensitive one. The County Council could have passed an ordinance simply requiring that certain impact fees be paid when real property was developed, without any requirement for a refund. [9] This would impose the burden for the expense of county infrastructure on property developers and ultimately those who purchased from them. Instead, the law tempers the effect of a straight non-refundable impact fee by providing for the refund. In doing so, it places a time limit on the County's retention of the impact fee before expenditure or encumbrance for one of the stated uses to benefit properties within the applicable impact fee district. AACC § 17-11-209(d) and 210. The plain words of the ordinance make clear that the lawmakers did not intend that the County be able to utilize the impact fee revenue as a general unrestricted fund for county infrastructure for an unlimited time. The ordinance specifically authorized a refund, absent an effective extension, at the close of the sixth fiscal year following collection. Frankel makes clear that, with such a law, the Owners have a remedy in assumpsit. See 361 Md. at 309, 761 A.2d at 329-30 (citation omitted) (stating the long-settled rule that when one pays to a... local government more in ... fees ... than the government is entitled to, and when the law specifically authorizes `a refund, although no particular statutory remedy is provided,' a common law contract `action ... is available').