Opinion ID: 2181555
Heading Depth: 2
Heading Rank: 1

Heading: TheFrankel case

Text: As mentioned previously, appellants rely heavily on our recent case of Frankel, supra. Appellants claim that the language in Frankel should be applied to the case sub judice, as it waives sovereign immunity in that case for four independent reasons: (1) the general waiver of governmental immunity in contract actions, Md.Code Ann., St. Gov't § 12-201; (2) the right to a refund against the State by a claimant who pays a greater amount of a fee or charge than is properly and legally payable, Md.Code Ann., Tax-Gen. § 13-901(a); (3) the policy passed by the Board entitling a student to a refund upon re-classification from out-of-state to in-state status, which gives rise to a common law contract action; or (4) the `sue and be sued' provision in Section 12-104(b)(3) of the Education Article, which waives immunity in actions within the scope of the Board of Regents' duties and obligations, including tuition and contract matters. We do not agree. In Frankel, we held that a University of Maryland, College Park student was entitled to have a determination of his residency status for tuition purposes based on his domicile and not the policies regarding primary sources of income. In Frankel, the Board of Regents argued that the student's retrospective claims were barred by sovereign immunity. In response to the Board's argument, we discussed several ways in which sovereign immunity may have been waived in that case. First, we stated: [T]here is no merit in the suggestion that Jeremy's claim is barred by governmental immunity. Even if the only basis for the claim were the general waiver of governmental immunity in contract actions set forth in Code (1984, 1999 Repl.Vol.), §§ 12-201 through 12-204 of the State Government Article, Jeremy's claim would not be barred by the one year period of limitations in § 12-202. Jeremy filed this action within a year from the final administrative decision denying his request for in-state status and his claim for a refund. As previously discussed, he did not abandon his claim for a refund. Frankel, 361 Md. at 308, 761 A.2d at 329. Neither in this, nor any other section of Frankel, did we address the merits of the question of whether Md.Code §§ 12-201 through 12-204 of the State Government Article waived the Board's immunity in that case, i.e., we never addressed whether there was a written contract executed by a State official acting within his or her scope of authority between Mr. Frankel and the Board of Regents. The case provides no discussion in that regard. We merely stated that § 12-202's statute of limitations [10] would not defeat the student's claim and we went on to address the merits of three other ways in which the Board had, in that case, waived its immunity. Frankel, therefore, is not dispositive on this issue. The next alternative waiver of immunity discussed in Frankel involved a theory that the Tax General Article authorized a refund for tuition overcharges. We stated: There are, moreover, grounds for Jeremy's claim other than §§ 12-201 through 12-204 of the State Government Article. It may be that Code (1988, 1997 Repl.Vol., 1999 Supp.), § 13-901(a) of the Tax General Article, is 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 Jeremy clearly filed his claim and brought this action within that time. Frankel, 361 Md. at 308, 761 A.2d at 329 (emphasis added). The language [i]t may be that Code (1988, 1997 Repl.Vol., 1999 Supp.), § 13-901(a) of the Tax General Article, is applicable makes clear that we did not specifically hold that Md.Code (1988, 1997 Repl.Vol., 1999 Supp.), § 13-901(a) of the Tax General Article applied in Frankel. That language was dicta. [11] Next, the Frankel case sets out what is perhaps the crux of its holding-its discussion of the Board's specific adopted policy and regulations entitling students to a refund of tuition where a student is reclassified from an out-of-state to in-state status. In that regard, we said: If the statutory refund remedy in §§ 13-901(a)(1) and 13-1104(a) of the Tax General Article is inapplicable to this case, the result would be no different. 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.' Apostol v. Anne Arundel County, 288 Md. 667, 672, 421 A.2d 582, 585 (1980); See, e.g., White v. Prince George's Co., 282 Md. 641, 653-654 n. 7, 387 A.2d 260, 267 n. 7 (1978) (where the law `provided that the [claimant] was entitled to a refund but did not contain a special statutory remedy, ... an action in assumpsit could be maintained'); Baltimore v. Household Finance Corp., 168 Md. 13, 14, 176 A. 480, 481 (1935) (a law, providing that one who paid `more money for taxes or other charges than was properly and legally chargeable' was entitled to a refund, `changed the common law rule that taxes [or other charges] paid under a mistake of law could not be recovered,' and therefore the plaintiff could bring an action in assumpsit, subject to the statute which `provides that suits in assumpsit shall be commenced within three years after the cause of action accrued'); Baltimore v. Home Credit Co., 165 Md. 57, 65, 166 A. 604, 607-608 (1933) (same); George's Creek Coal & Iron Co. v. County Com'rs of Allegany County, 59 Md. 255, 260-261 (1883) (same). Frankel, 361 Md. at 308-09, 761 A.2d at 329-30 (emphasis added). The operative facts in Frankel, which distinguish it from the case sub judice, included a specific authorization by the Legislature to the Board of Regents, allowing the Board to set forth a policy to provide a refund to students who received a residency reclassification for tuition purposes and the Board of Regents had established a refund policy. We noted in Frankel that by enacting § 12-109(e)(7) of the Education Article, the General Assembly authorized the presidents of the various institutions, subject to the Board of Regents' policies, to set tuition and fees. In that case, the President of the University of Maryland, College Park adopted a policy, pursuant to the Board of Regents' policy, that provided for the aforementioned refund. In Frankel, we merely held that a common law action to recover a tuition refund for reclassifications of residency status existed. Once the Board of Regents and President of the University adopted a refund policy in respect to residency reclassifications pursuant to a delegation of authority from the Legislature, it necessarily waived its sovereign immunity in suits to recover under that policy. Our holding on that issue in Frankel relied upon the well-settled law as stated in Apostol v. Anne Arundel County, 288 Md. 667, 672, 421 A.2d 582, 585 (1980), where we stated: It is firmly established in this State that once a taxpayer voluntarily pays a tax or other governmental charge, under a mistake of law or under what he regards as an illegal imposition, no common law action lies for the recovery of the tax absent a special statutory provision sanctioning a refund. This is true even if payment is made under protest. Moreover, in these circumstances, no common law or declaratory judgment action lies to challenge the validity of a tax so paid. Where there is a special statutory provision sanctioning a refund, although no particular statutory remedy is provided, an action in assumpsit is available. However, where there is statutory authorization for a refund and a special statutory remedy set forth, that remedy is exclusive. These principles have recently been reviewed at length in Baltimore County v. Xerox Corp., 286 Md. 220, 406 A.2d 917 (1979); White v. Prince George's Co., 282 Md. 641, 650-654, 387 A.2d 260 (1978); and Rapley v. Montgomery County, 261 Md. 98, 274 A.2d 124 (1971). Furthermore, the rule that no action lies to challenge the validity of a tax paid under a mistake of law, except for any refund sanction specifically provided by the Legislature, has been applied consistently by this Court, regardless of the nature of the legal attack mounted or the type of mistake of law claimed. [Emphasis added.] The Board has adopted no policy in reference to refunds caused by general tuition increases; rather it adopted the tuition increase at issue in the case at barnot a refund policy. The emphasized language in the quote from Apostol clearly illustrates that the common law right to sue for a refund only exists where a refund is authorized, although no statutory procedure for the remedy is provided. Apostol does not even mention sovereign immunity or how its holding relates to that doctrine. The more logical interpretation of Apostol is that, where the General Assembly authorizes a refund (in Frankel that refund was authorized pursuant to a legislative delegation of authority), sovereign immunity may be waived and a right to sue the State in an attempt to avail oneself of the refund may exist. The cases do not support extending this holding to waive immunity where no refund policy is authorized or exists. In the case sub judice, unlike Frankel, no tuition refund policy exists for mid-semester increases of tuition. Appellants do not fall into a class, such as Frankel's residency reclassification class, subject to a refund policy provided for by a legislative delegation of power to the Board and/or Presidents of the System institutions. As no refund policy was provided for situations like the case sub judice, no waiver of sovereign immunity pursuant to a legislative delegation of authority, such as the ones in Frankel and Apostol, existed. Finally, appellants' contend that our discussion in Frankel regarding the sue or be sued provision in Md.Code (1978, 2001 Repl.Vol.), § 12-104(b)(3) of the Education Article (§ 12-104(b)(3)), indicates that the Board's sovereign immunity has been waived. We stated in Frankel: Apart from the general waiver of governmental immunity for contract actions in §§ 12-201 through 12-204 of the State Government Article, and the law concerning refunds of overpayments to governmental agencies, the General Assembly has authorized the Board to `[s]ue and be sued....' Code (1978, 1999 Repl.Vol.), § 12-104(b)(3) of the Education Article. Although a `sue and be sued' provision ordinarily does ` not alone constitute a general waiver of [governmental] immunity,` it does waive immunity in actions concerning matters within the scope of the governmental agency's ` duties and obligations. ` Jackson v. Housing Opportunities Comm'n, 289 Md. 118, 124, 422 A.2d 376, 379 (1980), quoting Board of Trustees of Howard Community College v. John K. Ruff, Inc., 278 Md. 580, 590, 366 A.2d 360, 366 (1976), and Katz v. Washington Suburban Sanitary Comm'n, 284 Md. 503, 512, 397 A.2d 1027, 1033 (1979). See O & B, Inc. v. Maryland-Nat'l Capital Park & Planning Com'n, 279 Md. 459, 466-468, 369 A.2d 553, 557-558 (1977); Weddle v. School Commissioners, 94 Md. 334, 51 A. 289 (1902). The Board has a duty to `prescribe policies and procedures' for the University System, and, in order to carry out that power and `accomplish the purposes of the University,' the Board was granted the authority to `[e]nter into contracts of any kind.' § 12-104(b)(5) and (j) of the Education Article. As earlier mentioned, the Board is expressly granted the authority to set `tuition and fees.' § 12-109(e)(7) of the Education Article. Although the Board's waiver of governmental immunity for actions filed in tort may be limited `to the extent of any applicable liability insurance,' the waiver of immunity for other actions is not so limited. See § 12-104(b) and (i) of the Education Article. Under all of the circumstances, the statutory authorization to `be sued' waives any governmental immunity in declaratory judgment and contract actions to recover tuition overcharges which the Board might otherwise have enjoyed. Frankel, 361 Md. at 309-10, 761 A.2d at 330 (emphasis added). Appellants appear to interpret § 12-104(b)(3) as granting an absolute waiver of sovereign immunity in actions concerning matters within the scope of the governmental agency's `duties and obligations.' Id. at 310, 761 A.2d at 330 (internal citations omitted). The plain reading of that language in Frankel limited its application in that case to contract actions to recover tuition overcharges, because, as we had noted earlier, there was legislation enabling the Board to adopt a policy regarding residency reclassifications and an express policy adopted by the Board pursuant to that authority relating to residency reclassifications and refunds of tuition sums in those instances beyond those sums that were legally payable had the residency classifications been initially correct. This statement in Frankel is also restricted by the last element in the Maas and Ruff test of the waiver of sovereign immunity, which was not overruled by Frankel. As previously mentioned, Mass, supra, and later Ruff, supra, set out the elements to be considered by a court in addressing the issue of whether sovereign immunity has been waived. The Maas test was succinctly set forth in Ruff, a case where the issue of sovereign immunity was not briefed by the parties, but where this Court stated: Legislative authority for a governmental agency to be sued is not free from restrictions, even though limitations are not expressly made by the Legislature. Such authority does not impose unqualified liability even as to matters within the scope of the agency's duties and obligations. This Court has consistently held that suits may not be maintained unless money has been appropriated for the payment of such damages as may be awarded, or the agency itself is authorized to raise money for that purpose. We said in University of Maryland v. Maas, supra, 173 Md. at 558-559, 197 A. at 125: The decisions in this state go further than holding that without legislative sanction an arm of the state government... may not be sued, and are to the effect that, even though there is a legislative authorization to sue, such suits may not be maintained unless funds are available or may be made available by the agency itself for the purpose of paying the claim for damages that may be established by the suit.... `So it is established that neither in contract nor tort can a suit be maintained against a government agency, first, where specific legislative authority has not been given, second, even though such authority is given, if there are no funds available for the satisfaction of the judgment, or no power reposed in the agency for the raising of funds necessary to satisfy a recovery against it.' See Bolick v. Bd. of Education of Charles Co., supra, 256 Md. at 183, 260 A.2d at 32, and Thomas L. Higdon, Inc. v. Board, supra, applying it; Weisner v. Bd. of Education, supra; Williams v. Fitzhugh, supra ; Fisher & Carozza Co. v. Mackall, 138 Md. 586, 114 A. 580 (1921); Weddle v. School Commissioners, supra . It follows, and we so hold, that sovereign immunity is a valid defense against a suit brought for a money judgment in assumpsit under the contract here against the Board unless funds have been appropriated for the payment of such damages as may be awarded, or the Board is authorized to raise funds for that purpose. Ruff, 278 Md. at 590-91, 366 A.2d at 366. The Ruff Court went on to hold that the Board of Trustees of Howard County Community College did not have the power to provide funds by taxation, but remanded the case to hear arguments on whether funds had been appropriated for the purpose of satisfying a monetary judgment arising out of the underlying construction contract in that case. In the case sub judice, appellants also argue that § 12-104(b)(3), which authorizes the Board of Regents to [s]ue and be sued, and the language in Frankel stating that § 12-104(b)(3) waives any governmental immunity in declaratory judgment and contract actions to recover tuition overcharges, waives the Board's sovereign immunity in all contract cases falling within the scope of the Board's duties and obligations. Appellants cite the Education Article of the Maryland Code to assert that the Board of Regents has extensive powers, including the right to [e]xercise all the corporate powers granted Maryland corporations under the Maryland General Corporation Law, pursuant to § 12-104(b)(1) (alteration added), and the rights to [e]nter into contracts of any kind, pursuant to § 12-104(b)(5) (alteration added). Appellants cite § 10-208(5) of the Education Article for the Board of Regents' power to set guidelines for tuition and mandatory fees. Appellants argue that these provisions of the Education Article illustrate that mid-year tuition increases fall within the scope of the Board's official duties and, because Frankel, 361 Md. at 309-10, 761 A.2d at 330 (internal citations omitted), states that sue and be sued language does waive immunity in actions concerning matters within the scope of the governmental agency's `duties and obligations,' that the sue and be sued provision of § 12-104(b)(3) waives the Board's sovereign immunity. While we agree that § 12-104(b) is a specific legislative act that discusses the scope of the duties of the Board of Regents, including the setting of tuition, and may satisfy the first prong of the Maas and Ruff test, we nevertheless hold that even if the general sue or be sued language asserted by appellants was, by itself, a waiver of sovereign immunity, which we do not hold, appellants nonetheless did not satisfy their burden under the second prong of the Maas and Ruff test. Appellants argue that the General Assembly specifically authorized some suits by enacting § 12-104(b)(3), with its sue and be sued language. Coupling this legislative consent to sue and be sued with the Board's authority to set tuition and to enter into contracts, the first prong of the Maas and Ruff test might be satisfied. See Frankel, 361 Md. at 309-10, 761 A.2d at 330; see also Jackson v. Housing Opportunities Comm'n of Montgomery County, 289 Md. 118, 124, 422 A.2d 376, 379 (1980) (holding that the first prong of the waiver test was satisfied under the circumstances of that case as the Legislature enacted a law allowing the housing authority to sue and be sued); Katz, supra, 284 Md. at 512-15, 397 A.2d at 1032-34 (holding that the Washington Suburban Sanitary District Code's language to sue and be sued, under the circumstances there present, satisfied the first prong of the waiver test); O & B, Inc. v. Maryland-Nat'l Capital Park & Planning Comm'n, 279 Md. 459, 466-468, 369 A.2d 553, 557-558 (1977) (limiting the waiver of immunity of a sue and be sued provision to actions as would be necessary to carry out the agency's purposes); Ruff, 278 Md. at 590, 366 A.2d at 366 (holding that sue and be sued language may satisfy the first prong of the waiver test, but that even where such language may satisfy the first prong, immunity is waived only where funds have been appropriated for the purpose of satisfying the judgment, or the ability to raise those funds is given by the Legislature); Lohr v. Upper Potomac River Comm'n, 180 Md. 584, 588-89, 26 A.2d 547, 549-50 (1942) (holding that the sue and be sued language was a limited waiver of immunity in that the actions must be necessary to carry out the agency's purpose); Weddle v. Board of County School Commissioners of Frederick County, 94 Md. 334, 344, 51 A. 289, 291 (1902) (holding that sue and be sued language waives immunity in respect to all matters within the scope of [the State actor's] duties and obligations, but that immunity cannot be waived where there is no power to raise funds to pay damages) (alteration added). While the language in Frankel regarding the sue and be sued provision of § 12-104(b)(3) may, under some circumstances, waive the Board's sovereign immunity for actions within the scope of its authority, thus satisfying the first prong of the Maas and Ruff test, it does not eliminate the need for analysis under the second prong of that test. In Frankel, we did not formally discuss the second prong of the Maas and Ruff test, as we held that immunity was waived by the Legislature's granting of authority to the Board to create a refund policy and the Board's creation of its own refund policy. The discussion of the sue and be sued provision followed Frankel's discussion of the Board's tuition refund policy for reclassifications of residency for tuition purposes, a policy which we acknowledged under the specific circumstances of that case waived governmental immunity in and of itself. There was thus no need for this Court to determine whether funds had been appropriated for Mr. Frankel's refund, or whether the Board was authorized to raise funds to pay for the refund because of the existence of the Board's own refund policy. [12] We reiterate that the factual circumstances in Frankel were very different than those in the case sub judice. In Frankel, if the student's proper classification was as a Maryland resident, he had overpaid his tuition, i.e., paid more than was legally due, and there was an express statutory source and an express policy requiring a refund. In the case at bar, the issue is whether the new tuition sums are legally payable in the first instance, not whether there has been overpayment based on an improper residency classification. In the case sub judice, there is no refund policy that covers appellants' situation, therefore in attempting to determine the extent to which the holdings in Frankel apply in this case we must also examine and contrast the policy issues present in this case with the policy in Frankel, and even if we presume the policy issues are similar, we must investigate whether the Board is able to levy a tax to raise funds for the repayment of a mid-year tuition increase of the scope here present or whether money has been appropriated and is available for the purpose of claims regarding the cumulative substantial tuition increases. The policy issue in Frankel was a legislatively authorized Board of Regents policy where the appropriation of funds was presumed by the parties and the Court to exist. The policy issue in the current case is whether the Board can legally impose a tuition increase, and whether the process of registration constitutes an express written contract signed by an authorized person, which might constitute a waiver of immunity, which, in turn, would make the increased tuition not legally payable. The issue is thus different than the issue resolved in Frankel. It is clear that no statutory authority exists to authorize the Board of Regents to levy a tax for the purpose of repaying illegal mid-year tuition increases, so, under the Frankel scenario, even if it were applicable, the determinative issue then would be whether money has been appropriated for the payment of damages arising from claims such as appellants' claims in the case sub judice. The General Assembly is cognizant of how to specifically authorize the power to raise funds in satisfaction of the second prong of the Mass 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. Section 12-203 states that to fund damages arising out of actions based on § 12-201 of the State Government Article, discussed infra, the Governor shall include in the budget bill money that is adequate to satisfy a final judgment that ... is rendered against the State or any of its officers or units. No such language appears in Title 12 of the Education Article and the parties have not directed us to any other such legislative authority applicable in the circumstances of this case. In Maas, after holding that the University of Maryland was a State entity and that the Laws of 1812 (chapter 159), declaring that the University be able in law to sue and to be sued, might waive the University's sovereign immunity, this Court, nevertheless, held that the suit claims against the University could not proceed. We stated: In the case of Williams v. Fitzhugh, 147 Md. 384, 128 A. 137, suit was brought against the Board of Trustees of the State Normal School by one of the teachers for damages for an alleged breach of contract of employment. The right to maintain this suit was denied on the ground that the Board of Trustees had no means of `procuring funds beyond the amount it receives from the state treasury under budget appropriations by the General Assembly for specific uses.' To the same effect is the case of Fisher & Carozza Bros. Co. v. Mackall, 138 Md. 586, 114 A. 580 and Stanley v. Mellor, 168 Md. 465, 178 A. 106. The decisions in this state go further than holding that without legislative sanction an arm of the state government, such as the University of Maryland, may not be sued, and are to the effect that, even though there is a legislative authorization to sue, such suits may not be maintained unless funds are available or may be made available by the agency itself for the purpose of paying the claim for damages that may be established by the suit. And this is supported by the case of Fisher & Carozza Bros. Co. v. Mackall, supra . This court there said, quoting from Weddle v. School Commissioners, 94 Md. 334, 51 A. 289, and approving this doctrine as laid down in State v. Rich, supra, that, `notwithstanding the statute authorized a suit by or against a board of county school commissioners, the court held that the board was not liable in an action of tort because it had no power to raise money for the purpose of paying damages. `This doctrine, as applied to actions in tort, is extended to actions in contract in the case of Williams v. Fitzhugh, supra . So it is established that neither in contract nor tort can a suit be maintained against a governmental agency, first, where specific legislative authority has not been given, second, even though such authority is given, if there are no funds available for the satisfaction of the judgment, or no power reposed in the agency for the raising of funds necessary to satisfy a recovery against it.