Maryland Stadium Authority v. Ellerbe Becket Inc.

407 F.3d 255, 2005 WL 1109596
Court of Appeals for the Fourth Circuit·Decided May 11, 2005·No. Nos. 04-1743, 04-2083·Published·Cited by 17 cases

Opinion

Reversed and remanded with instructions by published opinion. Judge WILLIAMS wrote the opinion, in which Judge LUTTIG and Judge GREGORY joined.

OPINION

WILLIAMS, Circuit Judge:

The Maryland Stadium Authority (Stadium Authority) and the University System of Maryland (the University) filed a lawsuit against Ellerbe Becket, Inc., an architectural and engineering firm, in Maryland state court alleging state law claims for breach of contract, negligence, and indemnification. The claims arose from Ellerbe Becket’s provision of architectural and engineering services for the construction of a new basketball arena at the University of Maryland, College Park. Ellerbe Becket timely removed the case to federal court, and before us is the Stadium Authority and the University’s interlocutory appeal of the district court’s denial of their motion to remand.1 We conclude that the district court lacked removal jurisdiction because the University is an alter ego of Maryland and, therefore, is not a “citizen” for purposes of diversity jurisdiction under 28 U.S.C.A. § 1332 (West 1993 & Supp.2004). Accordingly, we reverse and remand the case to the district court with instructions to remand the case to state court.

[257] I.

The University System of Maryland

Because the question of whether an entity is an alter ego of the state is a highly fact-intensive undertaking, we go into some detail regarding the University’s structure and operations. The University was established “to foster the development of a consolidated system of public higher education, to improve the quality of education, to extend its benefits and to encourage the economical use of the State’s resources.” Md.Code Ann., Educ. § 12-101(a) (Supp.2004). It is a body corporate and politic, defined as “an instrumentality of the State and a public corporation.” Md.Code Ann., Educ. § 12-102(a)(2) (2004). The University is an independent unit of State government performing an essential public function. Md.Code Ann., Educ. § 12-102(a)(3),(4). The University is composed of numerous campuses located throughout the state. These include: the University of Maryland, Baltimore; University of Maryland, Baltimore County; University of Maryland, College Park; University of Maryland Eastern Shore; University of Maryland University College; Bowie State University; Coppin State University; Frostburg State University; Salisbury University; Towson University; and University of Baltimore. Md. Code Ann., Educ. § 12 — 101(b)(4)(i)—(xi) (Supp.2004).

The University’s governance is entrusted to a Board of Regents (the Board), which is composed of seventeen members, all but one of whom are directly appointed by the Governor with the advice and consent of the Maryland Senate. Md.Code Ann., Educ. § 12-102(e) (2004). The Secretary of Agriculture is designated, by statute, as the other member.2 Md.Code Ann., Educ. § 12-102(c)(2) (2004). Persons appointed to the Board serve five year terms. Md.Code Ann., Educ. § 12-102(f) (2004). The University can, through the Board, exercise a broad range of powers. The University can: sue and be sued, enter into contracts, borrow money to purchase personal property, and exercise the powers of Maryland corporations. Md. Code Ann., Educ. §§ 12 — 104(b)(1)—(7) (Supp.2004). Any contract for services or capital improvements over $500,000 must be approved by the Board of Public Works (BPW).3 Md.Code Ann., State Fin. & Proc. § ll-203(e)(3)(ii)(l) (Supp.2004). The University may, subject to the approval of the Governor and General Assembly, create new institutions or merge or close existing institutions. Md.Code Ann., Educ. § 12 — 104(f) (Supp.2004). The University may, subject to the approval of the BPW, sell and purchase real property. Md.Code Ann., Educ. § 12-104(g),(h) (Supp.2004). The University is also empowered to issue revenue bonds, Md.Code Ann., Educ. § 19-102(a)(2) (Supp.2004), subject to the Legislature’s prior approval of both the project that the bonds will finance and the “[mjaximum principal amount of bonds” to be issued. Md.Code Ann., Educ. § 19 — 102(d)(l)(ii) (Supp.2004).

The Board is responsible for proposing budgets for the University, and for requesting appropriations from the General Assembly. Md.Code Ann., Educ. § 12-105(a)(1) (2004). The University may borrow money without creating a debt obli[258] gation for the State. Md.Code Ann., Educ. § 12-105(c) (2004). However, the title of any real property obtained by the University is in the name of the State, and “[a]ll property of the University is the property of the State.” Md.Code Ann., Educ. § 12 — 105(b)(2) (2004). The University submits “requests for appropriations” each fiscal year. Md.Code Ann., Educ. § 12 — 105(a)(l)(iii) (2004). These requests are “recommendations” and are not binding upon the Legislature. Md.Code Ann., Educ. § 12 — 105(a)(2)(ii) (2004). In 2002, approximately 36% of the University’s revenue was received from the state, with around 30% of the University’s revenue coming in the form of a state appropriation. About 47% of the University’s revenue came from non-governmental sources.

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Maryland Stadium Authority v. Ellerbe Becket Inc., 407 F.3d 255, 2005 WL 1109596 (4th Cir. 2005).

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