Landsman v. HOME IMPROVEMENT

• Decision Date: 22 December 2003
• Docket Number: No. 436,436
• Citation: 839 A.2d 743,154 Md. App. 241
• Parties: Sheldon I. LANDSMAN v. MARYLAND HOME IMPROVEMENT COMMISSION.
• Court: Court of Special Appeals of Maryland

839 A.2d 743

154 Md. App. 241

Sheldon I. LANDSMAN v.MARYLAND HOME IMPROVEMENT COMMISSION.

No. 436, Sept. Term, 2002.

Court of Special Appeals of Maryland.

December 22, 2003.

Sheldon I. Landsman, Potomac, for appellant.

Joel Jacobson(J. Joseph Curran, Jr., Atty. Gen., on brief), for appellee.

Argued before DAVIS, KRAUSER, and BARBERA, JJ.

BARBERA, J.

We are asked to decide in this case whether the General Assembly's 2000amendment to the Home Improvement Guaranty Fund, increasing by a third the maximum amount a homeowner can recover for actual loss due to the unsatisfactory work of a contractor, applies retroactively to contracts entered into before the effective date of that amendment.For the reasons that follow, we hold that it does.

BACKGROUND

The underlying facts are not in dispute.Appellant, Sheldon I. Landsman, entered into a contract for a home improvement project with David Somerville, t/a Somerville Construction, on January 19, 1997.At that time, Somerville possessed a Maryland home improvement contractor's license.

Somerville completed some work on the project, but abandoned it on or about December 5, 1997, when he advised Landsman that he was moving to Arizona.Somerville refused to refund some of the monies that Landsman had paid him under the agreement, representing to Landsman that there was no money available.Somerville's contractor's license had expired on June 30, 1997.

Following enactment of Chapter 144 of the Maryland Session Laws of 2000, the maximum recovery under the Maryland Home Improvement Guaranty Fund ("Fund") was increased from $10,000.00 to $15,000.00.By express provision in the enacting legislation, the effective date was October 1, 2000.Nothing in the legislation indicated whether the statute should be applied retroactively.

On November 10, 2000, Landsman filed a claim against the Fund.The matter came on for a hearing in March 2001, before an administrative law judge ("ALJ").Landsman represented himself at the hearing.The Fund was represented by counsel.Somerville was not present, and no representative appeared on his behalf.¹

The ALJ thereafter issued his written proposed decision.The ALJ found as a fact that Landsman had incurred an "actual loss" of $42,395.41, and concluded that Landsman was entitled to recover the statutory maximum of $15,000.00 from the Fund.

In a proposed order, Panel B of the Maryland Home Improvement Commission, ("Commission"), appellee, approved the ALJ's proposed decision but reduced Landsman's award from $15,000.00 to $10,000.00.The panel concluded that "the $15,000.00 claim limit applies to contracts entered into on or after October 1, 2000 and that contracts entered into prior to October 1, 2000 are subject to the $10,000.00 claim limit."The panel's proposed order further stated that "the contractor's liability to the Guaranty Fund constitutes a penalty, and that an increase in such a penalty may not be applied retroactively to contracts entered into before the amendment to the law took effect."

Landsman filed exceptions to the proposed order.Following an exceptions hearing, the Commission entered a final order on July 24, 2001, affirming the proposed order.

Landsman thereafter filed a petition for judicial review in the Circuit Court for Montgomery County.After a hearing on the merits, the court affirmed the Commission's final order.

In an opinion and order entered on March 22, 2002, the court declared "that the Legislature's intent was clear not to make the amendment to Md. Ann.Code Art. Bus. Reg. § 8-405(e)(1) retroactive."Noting that the effective date "is expressly stated to be October 1, 2000" and that "[t]here is no express statement by the Legislature to the contrary,"the court concluded that " § 8-405(e)(1) fits neatly into the general category of statutes, which carry the strong presumption against retroactivity."The Court rejected Landsman's argument that the 2000amendment was remedial, stating that the increase in the maximum award "clearly creates new rights, new duties and new obligations thus effecting the substantive rights of the Petitioner and Somerville, a licensed contractor."The court reasoned that the 2000amendment"gives the claimant a new right to seek a higher monetary award from the Fund" and affects Somerville's substantive rights by increasing the "maximum penalty," thereby exposing Somerville to greater risk of license suspension for failure to reimburse the Fund the full amount of a claim.

Following entry of the court's order, Landsman filed this timely appeal raising five issues for our review, which we have consolidated into one:

Did the Commission err in concluding that, as a matter of law, the $15,000.00 claim limit applies only to contracts entered into on or after October 1, 2000, and that contracts entered into prior to October 1, 2000 are subject to the $10,000.00 claim limit?

DISCUSSION

In 1962, the General Assembly enacted the Maryland Home Improvement Law, now codified at Md.Code(1992, 1998 Repl.Vol., 2003 Supp.), § 8-101 et seq. of the Business Regulation Article.²This law, which had its genesis in a 1961 report of the Governor's Commission to Study the Home Improvement Industry in Maryland, is a regulatory scheme designed for the protection of the public.Shade v. State,306 Md. 372, 377, 509 A.2d 664(1986);Harry Berenter, Inc. v. Berman,258 Md. 290, 294, 265 A.2d 759(1970).

As the title of the original statute explained, the law was enacted, in part, "with the intention of `providing generally for the regulation of the home improvement business for all persons in the State,' and `establishing a system of licensing certain contractors and salesmen under a new administrative agency to be known as the Maryland Home Improvement Commission.'"Fosler v. Panoramic Design, Ltd.,376 Md. 118, 126, 829 A.2d 271(2003)."The Commission's primary functions are to investigate complaints about home improvement contractors, and to administer the licensing of those contractors in this state."Brzowski v. Maryland Home Improvement Comm'n,114 Md.App. 615, 628, 691 A.2d 699, cert. denied,346 Md. 238, 695 A.2d 1227(1997)(code citations omitted).

In 1981, the General Assembly enacted Subtitle 4 of the Home Improvement Law, establishing the Fund.The Fund was created to provide a remedy for homeowners who suffer an "actual loss that results from, [inter alia,] an act or omission by a licensed contractor."§ 8-405(a);Fosler,376 Md. at 131, 829 A.2d 271.³Subtitle 4 sets forth an administrative remedy before the Commission for claims against the Fund, and provides for a contested case hearing before the Commission and payments by the Commission to claimants.Fosler,376 Md. at 131,829 A.2d 271.As we have said, prior to 2000, the maximum amount that a homeowner could recover from the Fund for actual loss due to the unsatisfactory work of a home improvement contractor was $10,000.00.By Chapter 144 of the Acts of 2000, the General Assembly increased that amount to $15,000.00.⁴As amended, § 8-405(e)(1) reads: "The Commission may not award from the Fund [ ] more than $15,000 to 1 claimant for acts or omissions of 1 contractor."

At the heart of this appeal is whether Landsman, having established an actual loss resulting from Somerville's abandonment of the job in December 1997, is entitled to benefit from the increased maximum amount provided under the 2000amendment.The answer to this question is dictated by whether the amendment is to be applied retrospectively or prospectively.⁵

As we undertake to answer that question, we note preliminarily that "[i]t is well settled that a reviewing court may not substitute its judgment for that of the administrative agency or make its own findings of fact when reviewing the decision of an ALJ."Maryland State Bd. of Pharm. v. Spencer,150 Md.App. 138, 147-48, 819 A.2d 383, cert. granted,376 Md. 49, 827 A.2d 112(2003);accordMarzullo v. Kahl,366 Md. 158, 172, 783 A.2d 169(2001).Although "an administrative agency's interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts,"Marzullo,366 Md. at 172, 783 A.2d 169, an agency's decision "is owed no deference ... when it is based on erroneous legal conclusions,"Handley v. Ocean Downs, LLC,151 Md. App. 615, 642, 827 A.2d 961(2003).Therefore, "we`must substitute [our] judgment for that of the agency if our interpretation of the applicable legal principles is different.' "Spencer,150 Md.App. at 148, 819 A.2d 383(quotingPerini Servs., Inc. v. Maryland Health Res. Planning Comm'n,67 Md.App. 189, 201, 506 A.2d 1207, cert. denied,307 Md. 261, 513 A.2d 314(1986)).

The question we decide in this case is one of statutory construction, not involving any special expertise of the Commission.Consequently, we owe no deference to the Commission's decision respecting the applicability of the amendment.Angelini v. Harford County,144 Md.App. 369, 373, 798 A.2d 26, cert. denied,370 Md. 269, 805 A.2d 265(2002).Rather, we examine this purely legal question de novo."Whether a statute operates retrospectively or only prospectively is in the first instance a question of legislative intent."Tyrone W. v. Danielle R.,129 Md. App. 260, 277, 741 A.2d 553(1999),aff'd sub nom.Langston v. Riffe,359 Md. 396, 754 A.2d 389(2000)."`Because of the potential for interference with substantive rights, however, and because of the resulting prejudice against retroactive application,'a statute that affects substantive rights is presumed to operate prospectively."Id.(quotingState of Maryland Comm'n on Human Relations v. Amecom Div. of Litton Sys., Inc.,278 Md. 120, 123, 360 A.2d 1(1976)).

When, however, a statute affects only a procedure or remedy, and not a substantive right, the presumption in favor of prospective application does not apply.Rawlings v. Rawlings,362 Md. 535, 556, 766 A.2d 98(2001);La...