Monarch Acad. Balt. Campus, Inc. v. Balt. City Bd. of Sch. Comm'rs

• Decision Date: 18 December 2017
• Docket Number: No. 7, Sept. Term, 2017,7, Sept. Term, 2017
• Citation: 175 A.3d 757,457 Md. 1
• Parties: MONARCH ACADEMY BALTIMORE CAMPUS, INC., et al. v. BALTIMORE CITY BOARD OF SCHOOL COMMISSIONERS
• Court: Court of Special Appeals of Maryland

457 Md. 1

175 A.3d 757

MONARCH ACADEMY BALTIMORE CAMPUS, INC., et al.

v.BALTIMORE CITY BOARD OF SCHOOL COMMISSIONERS

No. 7, Sept. Term, 2017

Court of Appeals of Maryland.

December 18, 2017

Argued by Francis William DuBois (Christopher S. Gunderson, Jessica M. Raba, Venable LLP of Baltimore, MD) on brief, for Petitioners.

Argued by Steven F. Barley (Hogan Lovells US LLP of Baltimore, MD; Maree Sneed, Michele E. Gutrick, Hogan Lovells US LLP of Washington, DC) on brief, for Respondent.

ARGUED BEFORE: Barbera, C.J.; Greene, Adkins, McDonald, Watts, Hotten, Getty, JJ.

Getty, J.

This Court has twice addressed appeals in which public charter schools alleged that a local school board failed to meet the requirement in Maryland Code, Education Article ("ED") § 9–109 to provide the charter schools with funding that is "commensurate with the amount disbursed to other public schools in the local jurisdiction." See Frederick Classical Charter Sch., Inc. v. Frederick Cty. Bd. of Educ. , 454 Md. 330, 164 A.3d 285 (2017), reconsideration denied (Aug. 24, 2017); Balt. City Bd. of Sch. Comm'rs v. City Neighbors Charter Sch. , 400 Md. 324, 929 A.2d 113 (2007). However, in both of those cases, charter schools initially challenged a local school board's proposed annual funding allocation in an administrative adjudicatory proceeding before the State Board of Education ("the State Board"), and the dispute came before the courts only when one of the parties subsequently filed a petition for judicial review of the State Board's decision.

In contrast, the Petitioners in the instant case, thirteen operators of charter schools in Baltimore City (the "Charter School Operators"),¹ sought to obtain relief in a similar commensurate funding dispute by filing breach of contract complaints against the Respondent, the Baltimore City Board of School Commissioners (the "City Board"), directly in the Circuit Court for Baltimore City without first seeking review before the State Board. The contracts at issue all contained a provision in which the City Board agreed to "allocate Commensurate Funding to the [Charter] School Operator," and to provide information as to its own finances and how it had reached a specific per-pupil commensurate funding figure for the charter school. The Charter School Operators contended that the City Board breached those contractual requirements by not providing information as to its finances and commensurate funding calculations and by failing to provide the correct amount of commensurate funding for the 2015–16 school year.

After the cases were consolidated before the circuit court, the City Board moved to dismiss the case or stay the proceedings on the grounds that the State Board had primary jurisdiction over commensurate funding determinations. After holding a hearing, Judge Julie Rubin concluded that the State Board had "provided sufficient guidance" regarding the meaning of commensurate funding so that the circuit court was "no longer obliged to punt the issue to the expertise of the administrative body." Therefore, she declined to invoke the primary jurisdiction doctrine and denied the motion to dismiss.

On the same day as it filed its motion to dismiss before the circuit court, the City Board filed a petition for declaratory relief before the State Board, requesting that the State Board declare that its funding formula complies with ED § 9–109 and has resulted in commensurate funding. After Judge Rubin's order, the State Board dismissed the petition, noting that the circuit court had "asserted its jurisdiction." Thereafter, the City Board filed a counterclaim against the Charter School Operators before the circuit court. The Charter School Operators moved to dismiss the counterclaim, and a hearing on their motion to dismiss was scheduled before the circuit court. At that hearing, Judge Alfred Nance questioned counsel as to the procedural background of the case, instructing them to "[t]ell me what happened that causes you to rightfully be in my courtroom." After a brief recess and off-the-record discussion in chambers, counsel for the City Board made an oral motion to dismiss the Charter School Operators' complaints. Judge Nance, after hearing arguments for and against the motion, determined that "in lieu of" granting the motion he would issue an order staying proceedings in the circuit court "pending administrative review of the parties' dispute by the State Board of Education."

After the Stay Order ruling, the parties moved to proceed on separate procedural tracks. The Charter School Operators appealed from the circuit court's Stay Order to the Court of Special Appeals, while the City Board once again filed a petition for declaratory relief before the State Board. The State Board once again dismissed the City Board's petition, stating that "the case remain[ed] within the jurisdictional purview of the courts." Subsequently, in a reported opinion, the Court of Special Appeals dismissed the Charter School Operators' appeal after concluding that the circuit court's Stay Order was not an appealable order. Monarch Acad. Balt. Campus, Inc. v. Balt. City Bd. of Sch. Commissioners , 231 Md. App. 594, 619, 153 A.3d 859 (2017). The Charter School Operators filed a petition for writ of certiorari from that dismissal, which we granted on April 4, 2017. Monarch Acad. Balt. Campus v. Balt. City Bd. of Sch. Comm'rs. , 452 Md. 523, 157 A.3d 809 (2017).

On appeal to this Court, the Charter School Operators contend that the circuit court's Stay Order was a final and appealable judgment, and therefore urge us to hold that the Court of Special Appeals erred in dismissing the appeal. The Charter School Operators further assert that the State Board does not have primary jurisdiction over their breach of contract claims, and therefore the circuit court erred in entering the Stay Order.

When a court determines that a party's claim is within the authority of an administrative agency under the doctrine of primary jurisdiction, it is ordinarily entirely appropriate under the primary jurisdiction doctrine to enter a stay to permit that party to bring his or her claim before the appropriate agency. Then, after the agency has had the opportunity to evaluate and rule on the claim, a party may ordinarily seek judicial review before the circuit court. In this appeal, however, we are confronted with a rare and unique set of circumstances in which there is a strong likelihood that the Charter School Operators would not be able to obtain an administrative ruling on their breach of contract claim.

Here, the State Board is the only agency to which the Charter School Operators can bring their claim at the juncture at which the Stay Order was entered, and they can only do so in the form of a petition for declaratory relief. However, the agency has twice denied petitions for declaratory relief in this case, citing in the first denial the lack of any factual record upon which it could review and issue a declaratory judgment. Despite the arguments raised by the City Board in this appeal, there is no guarantee that the State Board would grant a third petition for declaratory relief under the circumstances present here. The State Board's prior declaratory rulings and this Court's precedent set forth a detailed and highly fact specific inquiry for charter school funding disputes. Of great significance to our decision, the contract between parties requires certain financial information to be disclosed by the City Board to the Charter School Operators. However, the Charter School Operators allege that they did not receive that information. If true, the Charter School Operators simply may not have enough information to successfully frame a declaratory petition to the State Board, or to obtain a declaratory order from the State Board that fully resolves the charter school funding issues raised in their Complaint. And, although there is the potential for a limited discovery process before the State Board, it is discretionary and even if employed may not be sufficient to address this concern.

Finally, the Stay Order was entered in a rushed and improper manner, before there was any opportunity for discovery as to the information necessary for the resolution of the charter school funding claims, and without clear guidance to the State Board as to exactly what issues needed to be resolved before the matter could resume before the circuit court. Thus, the rushed and non-specific Stay Order at issue here further exacerbated the difficulties facing the Charter School Operators in pursuing an administrative remedy and eventually being able to return to court for a judicial resolution of their claim.

Therefore, under the above-described unique circumstances of this case, we shall hold that the Stay Order was a final and appealable judgment and therefore shall reverse the judgment of the Court of Special Appeals dismissing the appeal. We shall also hold that the circuit court abused its discretion in staying the proceeding in order for the parties to seek administrative review because the court did not first allow for discovery and did not provide guidance as to how and when the case would resume in circuit court. However, we shall also hold that the State Board retains primary jurisdiction as to the underlying commensurate funding issues in dispute and that, after discovery before the circuit court is concluded, it will be appropriate for the circuit court to enter a more definite order staying proceedings for review of those issues before the State Board.

BACKGROUND

A. Primary Jurisdiction

The doctrine of primary jurisdiction derives from "the relationship between legislatively created administrative remedies and alternative statutory, common law or equitable judicial remedies." Prince George's Cty. v. Ray's Used Cars , 398 Md. 632, 644, 922 A.2d 495 (2007). We have explained the relationship between those remedies as follows:

[W]henever the [General Assembly] provides an administrative

...