On 19 Nоvember 2002, Julia B. Passyn, Theodore B. Pas-syn, and their son, Theodore B. Passyn, III (“the Passyns”), acquired
As Bayly was not a registered home builder in Maryland, the contracts specified that Bayly would subcontract with T.B. Passyn & Sons, Inc., a registered home builder in Maryland, to build the homes. This understanding was еxpressed in the written, essentially form contracts as follows: Bayly, as “SELLER,” agreed to “sell and construct ... a house substantially similar to the seller’s model....” 1 Bayly agreed, in a later provision, to “complete ... a dwelling substantially similar to SELLER’S Model House....” Near the end of the contracts, buyers acknowledged, by signature, that “On _ (date), my home builder, T.B. Passyn & Sons, Inc., MHBR [Maryland Home Builder Registration] # 455 Provided me with a copy of [a] consumer information pamphlet.... ”
In an addendum entitled “Builder’s Notice of Standards and Buyer’s General Release to Landownеr 2 and Buyer’s Acknowledgment of Receipt of Consumer Pamphlet Information,” buyers were advised that “T.B. Passyn & Sons, Inc. MHBR 455 is the Builder for [their] house ... and hereby agrees to grant to the Buyers of said house a One-Year Limited Warranty in accord with the Standards set by the Residential Warranty Corporation----” “In exchange for [the] Limited Warranty,” the addendum continues:
[T]he Buyer’s [sic] hereby grant a general release to Bayly Crossing, LLC ([the Passyns]) Landowners and their heirs, successors and assigns and forever discharge the said Bayly Crossing, LLC ([the Passyns]) from any and all actions or causes of action relating to the construction of the house on Lot _ Phase _ located at Bayly Crossing which Buyers have or may have against the said Bayly Crossing, LLC ([the Passyns]) now or in the future and also release the Builder from any and all items not covered either by said Limited Warranty or the Punch List----
The contracts were executed by Julia B. Passyn, on behalf of Bayly, while the addendum was signed by a representative of T.B. Passyn & Sons, Inc. 3
Between 19 November 2002 and 22 October 2004, seven homes were constructed on Bayly’s lots. The purchase-price amounts in the contracts were paid to Bayly. On 22 October 2004, Bayly sold the remaining undeveloped twenty-three lots to an unrelated real estate development company.
On 12 July 2005, the Consumer Protection Division of the Attorney General’s Office (“the Division”) filed a Statement of
Charges against the Passyns and Bayly, alleging violations of Maryland’s Home
Under the HBRA and CPA, the Division is authorized to bring charges and conduct civil administrative proceedings on those charges, acting as both prosecutor and administrative adjudicator. Pursuant to this power, the Division delegated to the Maryland Office of Administrative Hearings (“OAH”), an independent state agency, the obligation to conduct evidentiary hearings regarding the charges against Bayly and the Passyns and make recommended written findings of fact and conclusions of law. On 28 September 2005, an Administrative Law Judge (“ALJ”) of the OAH, after holding hearings, issued a written Proposed Ruling, concluding that Bayly wаs exempt from the registration requirements of the HBRA. The ALJ reasoned that Bayly “f[ell] squarely within the [statutory] exception [for real estate developers who do not construct homes], and hence, outside of the registration requirement .... ”
The Division filed exceptions to the ALJ’s Proposed Ruling, effectively appealing administratively the ALJ’s Proposed Ruling to the Division’s adjudicative arm, which, for purposes of this opinion, we shall call “the Agency.” The Agency granted those exceptions, concluding that Bayly, in fact, “was required to have registered as a home builder at the time that it entered into the contracts in which it undertook to construct new homes for consumers.” The Agency then remanded the case to the OAH for “any further proceedings required to resolve factual or legal issues that have not been resolved by [this] ruling____”
Before the remand hearing was held, the Division filed an Amended Statement of Charges against Bayly and the Passyns, alleging a violation of CPA § 13-301(13). Specifically, it claimed that Bayly and the Passyns engaged in an unfair or deceptive trade practice by asking in the contracts for the buyers to grant a general release, in exchange for a one-year home warranty. After a remand hearing, the ALJ issued a second Proposed Ruling, concluding that, as obliged by the Agency’s earlier ruling, Bayly and the Passyns violated the “[HBRA] ... by failing to register as a home builder under the [HBRA]” and “[CPA] § 13-301(13) by using a contract related to the sale of single family residential realty that contained a clause limiting or precluding the buyer’s right to obtain consequential damages as a result of the seller’s breach or cancellation of the contract.” Bayly and the Passyns filed exceptions to the second Proposed Ruling. On 3 August 2007, the Agency issued a Final Order, upholding the ALJ’s Second Proposed Ruling and imposing penalties and costs, on the Passyns and Bayly, for the violations.
6
In pertinent part, the Agency concluded that Bayly was a “home builder,” within the meaning of the HBRA,
On 29 August 2007, Bayly and the Passyns filed, in the Circuit Court for Baltimore City, a petition for judicial review of thе Final Order. The Circuit Court affirmed the Agency action, prompting an appeal to the Court of Special Appeals by Bayly and the Passyns. The intermediate appellate court
affirmed the Agency action, in a reported opinion, while dismissing Bayly “as a party to this appeal for lack of standing.”
7
Bayly Crossing, LLC v. Consumer Prot. Div., Office of the Attorney Gen.,
(1) Whether the lower court erred in affirming the decision of the Respondent finding that Petitioners were required to be registered as “home builders” in order to sell houses constructed by a registered home builder where the Home Building Registration Act excludes “developers who do not construct homes” from the requirement of registration?
(2) Whether the lower court erred in affirming the decision of the Respondent finding that Petitioners violated Section 13 -301(13) of the Consumer Protection Act by using a provision in their contract where buyers were given a one-year warranty in exchange for a release of construction-related causes of action?
Before oral argument the Passyns filed a motion, on 12 July 2010, to add Bayly as a petitioner and to supplement their brief. The inspiration for this appears to be
Price v. Upper Chesapeake Health Ventures,
I.
Relevant Standards of Judicial Review
We “employ the same standards [of reviеw] as would the circuit court, [for] the inquiry is not whether the circuit [or intermediate appellate] court erred, but rather whether the administrative agency erred.”
Consumer Prot. Div. v. Morgan,
(1) remand the case for further proceedings;
(2) affirm the final decision; or
(3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision:
(i) is unconstitutional;
(ii) exceeds the statutory authority or jurisdiction of the final decision maker;
(iii) results from an unlawful procedure;
(iv) is affected by any other error of law;
(v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or
(vi) is arbitrary or capricious.
These provisions are instructive in understanding the applicable standards of review, as they lay out a basic analytical framework.
See Spencer v. Md. State Bd. of Pharm.,
We review challenges to an “agency’s conclusions of law ... [according to a genеrally non-deferential standard] for correctness.”
Schwartz v. Md. Dep’t of Natural Res.,
Defining the extent of that deference, however, remains an elusive snipe hunt. In
Baltimore Gas & Electric Co. v. Public Serv. Comm’n,
There is no dispute in the present case аs to the material facts. Where there is such a dispute, we apply the very deferential “substantial evidence” test.
Christopher v. Montgomery County Dep’t of Health and Human Servs.,
II.
A. Bayly’s Standing to File an Appeal
Before reaching the questions for which we issued the writ of certiorari, we consider briefly the “issue” of the standing of Bayly, as a defunct limited liability company (LLC), to participate as a petitioner in the Court of Special Appeals and here. The Court of Special Appeals noted that Bayly forfеited its charter before the appeal to that court was filed.
Bayly Crossing,
On 20 July 2010, after Price was filed, Petitioners filed a motion with this Court to add Bayly as a petitioner and to supplement their brief to “address the Court of Special Appeal’s analysis ... in the [Price ] case.” They made clear in the motion, however, that they were “not asking to add any other questions or issues for [our] consideration.” We granted that motion, but improvidently, so we now find that, whatever the merits of their arguments, Petitioners did not preserve properly the issue for our consideration. Md. Rule. 8-131(b)(l). They did not pose in their petition for certiorari a question regarding Bayly’s dismissal. Their subsequent motion did not seek to add a question in that regard. To permit Petitioners, by motion, to add a petitioner and argue the law regarding a question not raised in the petition for certiorari sanctions an end-around maneuver that we, albeit in hindsight, should not foster. We shall not consider further here the Court of Special Appeals’s views on Bayly’s (or any other defunct LLC’s) ability to participate in an appeal as an LLC after its charter is forfeit. Our consideration of the actual questions presented is not hampered thereby because the Passyns have standing to maintain the appeal in both appellate courts. See Garner v. Archers Glen, 405 Md. 43, 55, 949 A.2d 639, 646 (2008) (“[W]e ordinarily do not decide issues of standing where it is undisputed that one party on each side of the litigation has standing.”).
B. The HBRA’s Registration Requirements.
The parties, as well as the lower courts, frame the flagship issue as one of pure statutory interpretation, therefore, a pure question of law. The question, they assert, involves the interplay between the class of individuals and entities defined as “home builder[s],” by Section 4.5—101(f)(1) of the HBRA, and therefore required to register with the State, and those excluded expressly from the registration requirement by Section 4.5-101(g)(3)(iv) as “real estate developers” who do not construct homes. The Division argues that the term “home builder,” defined in the statute as one who “undertakes to erect оr otherwise construct a new home,” should include those who appear to contract to build new homes, but who, in fact, do not. Relying upon Section 4.5-101(g)(3)(iv), which exempts from registration “real estate developer[s] who do[ ] not construct homes,” the Passyns argue that the HBRA applies only
At first blush, this appears to generate a question of statutory interpretation. Upon closer reflection, however, we observe that the heart of this dispute rests not with the meaning of the terms “home builder” or even “real estate developer,” as used in the HBRA, but with the way the Division applied those terms to a less than inclusive consideration of all of the relevant and material undisputed facts of the case. As in Vann, not only are the material facts undisputed, the parties rely correctly on the basic governing statute, without real quarrel as to its meaning. They agree that the HBRA requires those who undertake to construct new homes to register as “homе builder[s].” The parties only reach an impasse regarding the exclusion of real estate developers because the Division presumes, as a matter of contract construction, that Bayly, in fact, “undertook” to construct new homes. A complete reading of the relevant portions of the contracts, as demanded by the principles of contract interpretation, undermines this presumption. Thus, it seems that a mixed question of law and fact looms, rather than a pure legal question.
In applying the HBRA (and the principles of contract intеrpretation) to the facts, the Division reads selectively the contracts, ignoring the direction that “‘in ascertaining [its] true meaning ... the contract must be construed in its entirety and, if reasonably possible, effect must be given to each clause so that ... an interpretation ... [does not] cast[ ] out or disregard[ ] a meaningful part of the language of the writing....’”
Cochran v. Norkunas,
Un-mistakenly, the buyers were on notice of the identity of their registered
C. The General Releases and the CPA
The final question we consider is whether Bayly and the Passyns, under the circumstances, violated the CPA by requiring buyers to grant a general release. Section 13-301(13) of the CPA provides that no “seller ... of consumer realty [may use] ... a clause limiting or precluding the buyer’s right to obtain consequential damages as a result of the seller’s breach or cancellation of the contract.” Com. Law § 13-301(13). The contracts in this case provided that, in exchange for a limited warranty, buyers were to grant
a general release to Bayly Crossing, LLC ([the Passyns]) Landowners and their heirs, successors and assigns and forever discharge the said Bayly Crossing, LLC ([the Passyns] ) from any and all actions or causes of action relating to the сonstruction of the house on Lot _ Phase _ located at Bayly Crossing which Buyers have or may have against the said Bayly Crossing, LLC ([the Passyns]) now or in the future and also release the Builder from any and all items not covered either by said Limited Warranty or the Punch List....
The Division argues that general releases, which preclude a buyer from obtaining any kind of resultant damages, necessarily preclude a buyer from obtaining consequential damages, in violation of the CPA. The Passyns retort that the general releases “sa[id] nothing about consequential dаmages,” meaning they did not preclude or limit, in any way, a buyer’s right to consequential damages. Although the phrase “any and all actions or causes of action” is broad in scope, they rely upon the qualifying phrase “relating to the construction of the house[s]” to suggest that buyers waived only causes of action arising after contract-performance. As the CPA concerns only those causes of action arising during contract-performance, or so Petitioners claim, the post-performance general releases did not violate it.
Unlike the HBRA issue, we perceive that the dispute here focuses on the meaning and coverage of the statute. Stated another way, the nature of our inquiry (and its ultimate resolution) are not fact-dependent, and, therefore, we are presented with a question of law.
See Vann,
On the basis of the plain meaning of the CPA, the Legislature intended to proscribe the use of general releases, by a
JUDGMENT OF THE COURT OF SPECIAL APPEALS IS REVERSED IN PART AND AFFIRMED IN PART; CASE REMANDED TO THE COURT OF SPECIAL APPEALS WITH DIRECTIONS TO REVERSE THE JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AND REMAND THE CASE TO THAT COURT FOR FURTHER REMAND TO RESPONDENT FOR FURTHER PROCEEDINGS NOT INCONSISTENT WITH THIS OPINION. COSTS TO BE SHARED EQUALLY BY PETITIONERS (50%) AND RESPONDENT (50%).
Notes
. Although the lots subject to the various contracts were undeveloped apparently, at least one buyer, a Mr. Ritz, did a walk-through of a home before entering his contract with Bayly. The record does not establish where this home was located, who built it, or whether it was a model.
. The contracts refer to Bayly as "seller” and "landowner” interchangeably.
. Although not all of the contracts were identical in their terms, the differenсes are of no consequence to our analysis or conclusions regarding the questions presented in this case.
. Maryland Code (2004 Repl.Vol. and 2007 Supp.), Business Regulation Article, § § 4.5-101 to 4.5-701. In 2008, the Legislature amended the HBRA, after the Division filed its Statement of Charges against Bayly and the Passyns. We shall not apply the substance of these post-filing amendments in deciding the questions presented here, as there is no indication that the Legislature intended them to have retrospective effect, and the Division does not argue that they do.
. Md.Code (2005 Repl.Vol. and 2009 Supp.), Com. Law §§ 13-101 to 13-501.
. The Agency imposed fines of $25,000 on the Passyns and $6,781.98 on Bayly.
. Prior to filing the appeal, Bayly’s corporate charter was forfeited in Maryland. The Court of Special Appeals reasoned that the forfeiture rendered Bayly ineffectual as a legal entity, and that, as a result, Bayly lacked standing to appeal. According to information supplied at oral argument, Bayly has not sought to revive its charter at any relevant time in these proceedings.
. Some of these considerations may be implicit in a record, while others require the agency to produce evidence expressly to support the invocation of deference, i.e., “well-reasoned process,” consistent application, and length of application.
. There maybe be instances, however, where a party challenges the agency's application of a statute, but the statute is so clear and dispositive of the issue at hand that the agency's discretion is little implicated.
See Schwartz,
. The ITBRA does not define the term "real estate developer.”
. For example, while cross-examining Julia B. Passyn before the ALJ, the Division emphasized one contractual provision regarding the "SELLER agrees to sell and construct.” Based of this language, the Division asserted that "Bayly Crossing ... agree[d] to construct the home.” In response, Ms. Passyn observed that the Division is "piecemealing the contract ... You’re asking me to act like that’s the only part of the contract that’s relevant.”
. To be sure, Bayly courted at least some of the Division’s views in this regard by using essentially form builder contracts for which little adjustment of inconsistent boilerplate was made to reflect the actual structure of the developer/builder dichotomy in these transactions.
. Although Bayly did not contract to build homes for purposes of the HBRA’s registration requirement, there might be claims under the contract relating to the construction process (and result) for which Bayly might be liable nonetheless.