Washington Suburban Sanitary Com'n v. C.I. Mitchell and Best Co.

• Decision Date: 01 September 1984
• Docket Number: No. 137,137
• Citation: 303 Md. 544,495 A.2d 30
• Parties: WASHINGTON SUBURBAN SANITARY COMMISSION v. C.I. MITCHELL AND BEST CO. et al. ,
• Court: Maryland Court of Appeals

Page 544

303 Md. 544

495 A.2d 30

WASHINGTON SUBURBAN SANITARY COMMISSION v. C.I. MITCHELL AND BEST CO. et al.

No. 137, Sept. Term, 1984.

Court of Appeals of Maryland.

July 17, 1985.

Per Curiam on Motion for Reconsideration filed Sept. 11, 1985.

Roger D. Redden, Baltimore (Paul A. Tiburzi, Baltimore and Nathan J. Greenbaum, Hyattsville, on brief), for appellant.

Charles G. Dalrymple, Silver Springs (Susan M. Reutershan and Linowes and Blocher, Silver Springs, on brief), for appellees.

Argued before MURPHY, C.J., SMITH, ELDRIDGE, COLE, RODOWSKY and McAULIFFE, JJ., and W. ALBERT MENCHINE, Associate Judge of the Court of Special Appeals (retired), Specially Assigned.

RODOWSKY, Judge.

This appeal is from a declaratory judgment invalidating a special connection charge imposed by the Washington Suburban Sanitary Commission (WSSC). We shall affirm that determination, but only after concluding that there is neither any special statutory remedy nor any administrative agency which should exercise primary jurisdiction. There may not be any recovery of the charges paid, however, because of Maryland's stringent voluntary payment rule.

WSSC is a creature of statute, originally Ch. 122 of the Acts of 1918. The present version of that statute is Md.Code (1957, 1983 Repl.Vol., 1984 Cum.Supp.), Art. 29. ¹ We have held that WSSC is a state agency for purposes of the Administrative Procedure Act. See Donocam Assocs. v. WSSC, 302 Md. 501, 510, 489 A.2d 26, 30 (1985); Prince George's Co. v. Blumberg, 288 Md. 275, 294-95, 418 A.2d 1155, 1166 (1980), cert. denied, 449 U.S. 1083, 101 S.Ct. 869, 66 L.Ed.2d 808 (1981). The agency enjoys sovereign immunity. See Katz v. WSSC, 284 Md. 503, 509-12, 397 A.2d 1027, 1031-32 (1979). We have also said that WSSC "had sufficient of '[t]he attributes of a municipal corporation' to bring it within the provision of a statute applicable in certain counties which, as a prerequisite to suit in certain instances, required written notice within 90 days after an injury or damage was sustained." WSSC v. Pride Homes, Inc., 291 Md. 537, 539, 435 A.2d 796, 797-98 (1981) (footnote omitted) (discussing Neuenschwander v. WSSC, 187 Md. 67, 48 A.2d 593 (1946)). The mission of the agency includes providing for the construction, operation, and maintenance of water supply, sewerage, and storm drainage facilities in the Washington Suburban Sanitary District (the District), an area encompassing over 950 square miles in Montgomery and Prince George's Counties and containing a population of more than one million. The capital and operating budgets of WSSC are, with limitations, subject to review and approval by the county executives and county councils of the two counties. See, e.g., § 1-204; Katz, supra, 284 Md. at 509, 397 A.2d at 1031. As part of the process WSSC is required annually to prepare and present to officials of the two counties a Capital Improvements Program (the CIP). See §§ 7-101 through -107. The CIP is "a 6 year projected program of capital improvements for water, sewer, and storm drainage facilities." § 7-101(c).

Historically, WSSC has funded capital expenditures required to support the extension of service lines and the construction of treatment plants, transmission, and storage facilities through long-term debt financing. This investment was recovered through various charges, including charges based upon the extent of use which a customer made of the system. Over the years growth in the District and inflation have greatly increased the amount of bonded indebtedness carried by WSSC, with consequent increases in user charges. Concerned over these increases the county councils of the two counties, while reviewing WSSC's proposed budget for the fiscal year beginning July 1, 1978, directed WSSC to develop and recommend in its next proposed budget alternative approaches for funding the capital costs of providing water and sewer service to new users in the District. In response WSSC adopted, effective July 1, 1979, a new charge, the System Expansion Offset Charge (SEOC). SEOC is a one-time, up front charge paid by a new WSSC customer. SEOC is paid in addition to sewer and water service charges, front foot benefit charges, the preexisting sewer and water connection charges, and subdistrict charges. ² In that first year the SEOC for a single family dwelling unit was $485 for water and $265 for sewer, or a total of $750. That amount was the same as a then existing Interim Sewer Service Charge (ISSC) which was repealed as part of the adoption of SEOC. During that first year of SEOC a committee largely composed of public officials and businessmen, including particularly home builders, studied SEOC. Although the committee split over whether SEOC should be retained, they agreed that if it were retained, its method of calculation should be modified. WSSC, by resolution effective July 11, 1980, substantially adopted the committee's recommendations. This modified calculation produced an SEOC for single family dwelling units totaling $1,560, apportioned $735 to water and $825 to sewer.

There are two aspects to the SEOC program. The first is the computation of the charge itself. Because we shall conclude that SEOC is facially invalid, this opinion will not deal with the details of that computation. ³ The second aspect of the program offsets debt service from the funds collected under SEOC. The trial judge's very full and helpful opinion describes this calculation.

All SEOC payments are deposited in a separate interest bearing account. An annual transfer is made from this account into the WSSC's operating budget. This transfer is intended to offset debt service in the WSSC's operating budget resulting from the issuance of long term bonds to fund new growth facilities. The amount of this transfer is determined by another multistep mathematical calculation, hereinafter referred to as the "transfer formula".... The coming year's CIP budgeted debt is divided into water and sewer projects; these projects are then divided into those for growth and those for reinforcement; and the amounts attributable to growth are then expressed as percentages of total cost for the year. Next the overall increase in debt service of the WSSC is obtained by subtracting the current year's debt service from the projected debt service for the coming year. The overall increase in debt service is then multiplied by the percentages attributable to growth. This figure is then multiplied by 57% which is the percentage of capital cost of serving a dwelling paid by the SEOC payor ($1,560 is 57% of $2,720, the other 43% is the offset allowance). Therefore, the transfer from the SEOC account to the operating budget is only intended to fund 57% of debt related to new growth.

The instant action was brought September 17, 1981, and was certified as a class action. Plaintiffs sought a declaratory judgment invalidating SEOC for want of legal power in WSSC to adopt it, or, if SEOC was authorized, declaring SEOC as adopted to be unreasonable and void. The complaint sought an injunction against future collection. Joining as plaintiffs were a mix of developers who had paid SEOC directly and of purchasers of new homes who had paid their developer's SEOC costs in the purchase prices of their homes. Plaintiffs sought refunds individually and on behalf of a class. In its final judgment the trial court invalidated SEOC for lack of authority in WSSC to adopt it at all and because SEOC, as adopted, was unreasonable in amount. The court enjoined future collections but then stayed the injunction pending this appeal. The circuit judge ordered WSSC to make restitution of SEOC paid after this suit was filed to direct payors of SEOC or, where direct payors had recovered their costs, to the payor's successor in title. The judgment did not order restitution of SEOC paid prior to suit.

WSSC appeals. It urges that an administrative remedy before the Public Service Commission of Maryland (PSC) has not been exhausted; that the action is barred by laches; that the trial court erred in both of its conclusions on the merits; that refunds cannot be ordered in any event; and that the class of plaintiffs was improperly enlarged after the trial had ended.

Plaintiffs cross appeal. They seek to enlarge the recovery of refunds to include SEOC paid prior to the institution of this action.

I

The threshold question is whether the trial court should have entertained this action as one invoking the ordinary general jurisdiction of the circuit court. "This Court has firmly adhered to the rule that statutorily prescribed administrative and judicial review remedies must ordinarily be pursued and exhausted." Maryland Comm'n on Human Relations v. MTA, 294 Md. 225, 230, 449 A.2d 385, 387 (1982). Here we deal with two possible special statutory remedies. WSSC urges that an administrative remedy lies before the PSC. If that remedy is available, it has not been exhausted. Our case law would then require us to vacate the trial court judgment. Such a PSC remedy would also be a "special form of remedy for a specific type of case" precluding a declaratory judgment. See Md.Code (1974, 1984 Repl.Vol.), § 3-409(b) of the Courts and Judicial Proceedings Article. Second, because this action seeks a refund of charges collected by a state agency, the action implicates Md.Code (1957, 1980 Repl.Vol.), Art. 81, § 215, the refund statute for public charges imposed by a state agency. A further threshold issue which we shall consider in this part I is whether the trial court should have deferred to the PSC under principles of primary jurisdiction as enunciated in Maryland-Nat'l Capital Park & Planning Comm'n v. Washington Nat'l Arena, 282 Md. 588, 386 A.2d 1216 (1978).

A

The statutes governing WSSC do not always flow in the mainstream of Maryland administrative law. This is initially demonstrated by the fact that WSSC does not even argue that the plaintiffs had an administrative remedy before that...