Bayly Crossing, LLC v. Consumer Protection Division

9 A.3d 4, 417 Md. 128, 2010 Md. LEXIS 700
CourtCourt of Appeals of Maryland
DecidedNovember 22, 2010
Docket8, September Term, 2010
StatusPublished
Cited by17 cases

This text of 9 A.3d 4 (Bayly Crossing, LLC v. Consumer Protection Division) is published on Counsel Stack Legal Research, covering Court of Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bayly Crossing, LLC v. Consumer Protection Division, 9 A.3d 4, 417 Md. 128, 2010 Md. LEXIS 700 (Md. 2010).

Opinion

HARRELL, J.

On 19 November 2002, Julia B. Passyn, Theodore B. Pas-syn, and their son, Theodore B. Passyn, III (“the Passyns”), acquired Bayly Crossing, LLC (“Bayly”), with each taking a one-third interest. Bayly’s main assets were thirty undeveloped, single-family residential lots in the eponymously-named Bayly Crossing subdivision in Dorchester County, Maryland. Bayly entered into contracts with various buyers to produce new homes on certain of these lots.

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 expressed 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 *132 [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 Landowner 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 *133 Charges against the Passyns and Bayly, alleging violations of Maryland’s Home Builder Registration (“HBRA”) 4 and Consumer Protection Acts (“CPA”). 5 These alleged violations were based on the contention that Bayly was operating as a home builder, without properly registering with the State Home Builders Registration Unit (“HBRU”).

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 was 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 *134 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, because it undertook to build new homes—that is, it “placed upon itself the obligation to ‘sell and construct’ ” new homes.

On 29 August 2007, Bayly and the Passyns filed, in the Circuit Court for Baltimore City, a petition for judicial review of the 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 *135 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., 188 Md.App. 299, 981 A.2d 777 (2009). A petition for certiorari to this Court ensued, which we granted, Bayly Crossing v. Consumer Protection Division, Office of the Attorney General, 412 Md.

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Bluebook (online)
9 A.3d 4, 417 Md. 128, 2010 Md. LEXIS 700, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bayly-crossing-llc-v-consumer-protection-division-md-2010.