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Kopp v. Schrader

Court of Appeals of Maryland

June 21, 2018

NANCY K. KOPP, et al.
v.
DENNIS R. SCHRADER, et al.

          Circuit Court for Anne Arundel County Case No. C-02-CV-17-2227

          Barbera, C.J. Greene Adkins McDonald Hotten Getty Wilner, Alan M. (Senior Judge, Specially Assigned) JJ.

          OPINION

          Wilner, J.

          On its face, this case is a dispute between the State Treasurer and two former gubernatorial appointees over whether those appointees are entitled to be paid for the services they rendered in their appointed positions. It emanates, however, from a disagreement between the Governor and the General Assembly over whether the "design" of the Maryland Constitution places a limit on the Governor's appointing authority that the text of the Constitution does not place.

         It is a disagreement that, if truly requiring a judicial resolution, could have found one simply, quickly, and cleanly through a declaratory judgment action testing the validity of what the Governor did in this case.[1] Instead, the response chosen by the Legislature has brought before the Judicial Branch not just the validity of the Governor's action but a host of collateral Constitutional issues involving the duties and authority of the State Comptroller, the duties and authority of the State Treasurer, the scope of the General Assembly's budgetary authority under Article III, §52 of the Constitution, separation of powers issues under Article 8 of the Md. Declaration of Rights, the Governor's appointment and removal authority under Art. II, §§ 11 and 15 of the Constitution, Article III, § 33 of the Constitution prohibiting "special laws, " and the sovereign immunity of the State.

         BACKGROUND

          On July 6, 2016, Governor Hogan appointed Wendi Peters as Secretary of the Department of Planning. The salary for that office was set in the State Budget at $137, 749. On December 15, 2016, the Governor appointed Dennis Schrader as Secretary of the Department of Health. The salary for that office was set in the State Budget at $174, 417. Both appointments were subject to the advice and consent of the Maryland Senate. They were what is known as "recess" appointments - appointments made while the Senate was not in Session - and, pursuant to Art. II, § 11 of the Constitution, the Governor sent the names of both individuals to the Senate on the first day of the 2017 legislative Session (January 11, 2017). In accordance with Senate Rule 22A, both appointments were referred for consideration by the Senate Executive Nominations Committee.[2]

         On March 13, 2017, that Committee voted against sending Ms. Peter's nomination to the full Senate. The Governor withdrew the nomination that same day. By March 31 - the 79th day of the 90-day Session - the Committee had taken no action on Mr. Schrader's nomination, and, on that day, the Governor withdrew his nomination as well. Thus, when the General Assembly adjourned its 2017 Session on April 10, 2017, the Senate had taken no action on either nomination and the Governor had not appointed anyone else to either position. A vacancy therefore existed in both offices. On April 11 - the day following adjournment - the Governor filled those vacancies by reappointing Ms. Peters and Mr. Schrader. For the second time, they became recess appointees.

         Obviously anticipating that prospect, the General Assembly sought to thwart it during its 2017 Session by adding language to the FY 2018 Budget Bill (House Bill 150, 2017 Md. Laws, Ch. 150) that purports to preclude Ms. Peters and Mr. Schrader from being paid any part of the salary that they otherwise would have been entitled to receive as Secretaries of the respective Departments. That was done by adding to the Budget Bill transmitted to the General Assembly by the Governor pursuant to Art. III, § 52 of the Constitution a new § 30 containing the following four paragraphs:

"That no funds in this budget may be expended to pay the salary of a Secretary or an Acting Secretary of any department whose nomination as Secretary has been rejected by the Senate or an Acting Secretary who was serving in that capacity prior to the 2017 session whose nomination for the Secretary position was not put forward and approved by the Senate during the 2017 session unless the Acting Secretary is appointed under Article II, Section 11 of the Maryland Constitution prior to July 1, 2017."
"Further provided that no funds in this budget may be expended to pay the salary of a Secretary or Acting Secretary of any department who was a recess appointment in 2016 and whose nomination as Secretary was put forward and was not acted upon by the Executive Nominations Committee, or whose nomination was rejected by the Executive Nominations Committee and whose nomination was withdrawn before the full Senate acted."
"Further provided that no funds in this budget may be expended to pay the salary of an Assistant Secretary or Deputy Secretary who was a recess appointment as Secretary in 2016 and whose nomination was rejected by the Executive Nominations Committee and was withdrawn before the full Senate acted or whose nomination was not acted on or whose nomination was not acted upon by the Executive Nominations Committee."
"Nothing in this language may be construed to prohibit employment in State Government not serving in a leadership capacity in the Agency or Department in which the Secretary or Acting Secretary's nomination as Secretary was put forward and was rejected by the Executive Nominations Committee or who was not acted upon by the Executive Nominations Committee."

         There does not appear to be any dispute that the only persons to whom this language could apply or was intended to apply were Ms. Peters and Mr. Schrader. The language had no effect until July 1, 2017, when the 2018 fiscal year commenced. Ms. Peters and Mr. Schrader were paid the salaries set by law for their respective offices through June 30. There was, however, correspondence between the Governor's Office, the Attorney General's Office, the Comptroller's Office, and the Treasurer's Office regarding what would happen come July 1.

         The Attorney General's Office, in a June 27, 2017 advice letter based on prior Opinions of the Attorney General, concluded that the Governor had the Constitutional authority to make the two recess appointments. The letter continued, however, that, notwithstanding that conclusion, the language in § 30 of the Budget Bill was a valid exercise of legislative authority. In a July 3, 2017 follow-up letter, the Attorney General personally expressed his view that, even if the two recess appointments "are assumed to be valid, " § 30 effectively "stripped" the appropriation for the salaries and was a valid exercise of legislative authority under Article III, § 52(6) of the Constitution. In a response to the Attorney General, the Chief Legal Counsel to the Governor disagreed with the latter conclusion.

         Caught in the middle, the Comptroller, on July 7, 2017 formally requested the Attorney General's Office to seek "legal clarification" of the dispute through a judicial action, barring which the Central Payroll Bureau, a unit within the Office of the Comptroller, would be "obligated to follow the longstanding process that governs personnel compensation and therefore will continue to issue warrants of salary payments to Secretaries Peters and Schrader." When the Attorney General declined his request to seek judicial action, the Comptroller, pursuant to that determination, included in his payroll warrants for the pay periods on and after July 1 amounts for the salaries of the two Secretaries. The Treasurer's Office, however, reduced those warrants to exclude amounts for the salaries of Ms. Peters and Mr. Schrader for work days on and after July 1 and declined to issue payroll checks to them for any period thereafter.

         Not being paid, Ms. Peters resigned as Secretary of the Department of Planning on September 21, 2017, when she was appointed as Special Secretary of Smart Growth, a position that does not require Senate confirmation. She was paid for her service in that position. Mr. Schrader remained as Secretary of the Department of Health until January 9, 2018 - the first day of the 2018 Session of the Legislature - when the Governor nominated another person to replace him in that position. Earlier, on September 22, 2017, Mr. Schrader was appointed by the Governor to serve contemporaneously as Special Advisor for Healthcare Financing and Medicaid at the Department of Health at a salary of $174, 416. Although he was not the first person to serve contemporaneously as Secretary of the Department of Health and as head of the Medicaid program and the new position did not require Senate confirmation, the Treasurer refused to pay his salary for that position as well.

         This action was filed by Ms. Peters and Mr. Schrader in the Circuit Court for Anne Arundel County on August 2, 2017 but proceeded on an October 13 Second Amended Complaint seeking (1) a writ of mandamus to compel the Treasurer to honor the Comptroller's payroll warrants, countersign salary checks, and pay back wages, (2) a declaratory judgment that their recess appointments in April 2017 were valid, that § 30 is unconstitutional, and that the Treasurer exceeded her authority in deleting their salary payments for periods from and after July 1, 2017, and (3) injunctions restraining the Treasurer and the State from interfering with the payment of their compensation.

         The case was resolved by the Circuit Court on cross-motions for summary judgment. The court held that the recess appointments of Ms. Peters and Mr. Schrader on April 11, 2017 were valid, notwithstanding that the Governor had withdrawn his nomination of those individuals during the 2017 session. The court held further that § 30 of the FY 2018 Budget Bill was unconstitutional (1) as an impermissible attempt to add in a Budget Bill substantive provisions contrary to existing law, (2) as a violation of the separation of powers provision in Article 8 of the Declaration of Rights, (3) as an intrusion on the Governor's appointment power under Article II, § 11, (4) as an intrusion on the Governor's removal power under Article II, § 15, and (5) as a special law in violation of Article III, § 33.

         Apart from those Constitutional violations, the court also found that § 30 violated Md. Code, § 2-102(c) of the Health-General Article and §5-201(a) of the State Finance and Procurement Article, which provide an entitlement to the salaries set by law for the respective Secretarial positions. The court held that the Treasurer had a ministerial duty to honor the Comptroller's warrants and no authority to reduce them. Finally, the court held that the plaintiffs' claims were not barred by State sovereign immunity.

         Distressed by all of those rulings, the Treasurer and the State appealed. We granted certiorari prior to any proceedings in the Court of Special Appeals, and, as a result, the full conglomeration of issues raised by the parties are before us. We shall begin with the one that triggered all of this - whether the Governor had the authority to make the two recess appointments after having withdrawn his nomination of those individuals during the 2017 session.

         THE RECESS APPOINTMENTS

         The validity vel non of the Governor's reappointment of Ms. Peters and Mr. Schrader in April 2017 is governed by two provisions of the Maryland Constitution - Article II, §§ 11 and 12. Section 11 provides:

"In case of any vacancy during the recess of the Senate, in any office which the Governor has power to fill, he [or she] shall appoint some suitable person to said office, whose commission shall continue in force until the end of the next session of the Legislature, or until some other person is appointed to the same office, whichever shall first occur; and the nomination of the person thus appointed during the recess, or some other person in his [or her] place, shall be made to the Senate on the first day of the next regular meeting of the Senate."

         Section 12 places one limitation on the power conferred under § 11: "No person, after being rejected by the Senate, shall be again nominated for the same office at the same Session, unless at the request of the Senate; or be appointed to the same office during the recess of the Legislature." (Emphasis added). There is nothing ambiguous about that section. It has a plain meaning. Read in harmony with § 11, it means that, during a recess of the Senate, the Governor can appoint any suitable person he or she wants, except for a person whom the Senate has previously rejected.

         The State argues that those sections do not mean what they plainly say - that the "design" of the Constitution also prohibits the Governor from appointing someone he or she previously had appointed and nominated to the Senate but then withdrew the nomination before the Senate acted on it. That view is drawn in part from a constricted portion of debates in the Constitutional Convention of 1850, where the State contends those sections originated, and in part from the pragmatic notion that allowing the Governor to make recess appointments of persons whose nomination he or she previously withdrew would frustrate the Senate's ability to share in the appointment process.

         There are two responses to that argument. The first is the principle announced in Bd. of Elections v. Snyder, 435 Md. 30, 53 (2013) and confirmed more recently in State v. Phillips, 457 Md. 481, 487 (2018) that "because the Constitution was carefully written by its drafters, solemnly adopted by the constitutional convention, and approved by the people of Maryland, courts lack the discretion to freely depart from the plain language of the instrument." In other words, the "design" of the Constitution is to be determined from its text. If it is thought that the wording of a provision should be changed to reflect a new "design, " there is a procedure for doing that. See Article XIV, § 1.

         The State's attempt to divine some other intent from the debates in the 1850 Constitutional Convention rests on an inaccurate premise. The power of the Governor to make recess appointments and the single limitation expressed in current § 12 did not originate in the 1850 Convention, as the State seems to believe. It was added as an amendment to the 1776 Constitution in 1837 (see 1836 Md. Laws, Ch. 148, ratified in 1837), and it was an important amendment.

         The 1776 Constitution created what essentially was a parliamentary form of government. Only the House of Delegates was directly elected by the eligible voters, for a one-year term. The Senate was elected for a five-year term by a senatorial electoral college. The Governor was appointed by the Legislature for a one-year term, could not be reappointed more than twice, and had no veto power over legislation. Nearly all gubernatorial executive powers, including the power to make appointments, required the concurrence of a five-member Council, also appointed by the Legislature.

         The 1837 amendment was the ultimate product of a reform movement intended to provide a more robust balance of power between the Legislature and the Governor. It provided for the Governor to be directly elected by the people for a three-year term, which gave him an independent political base. It abolished the Council and gave the Governor the power to nominate and, with the advice and consent of the Senate, appoint all officers of the State whose offices were created by law.

         In language not, in substance, different from what we now have, the 1837 amendment gave the Governor the power "to fill any vacancy that may occur in any such offices during the recess of the Senate" subject to the one limitation that "[t]he same person shall in no case be nominated by the Governor a second time during the same Session, for the same office, in case he shall have been rejected by the Senate . . . and in case any person nominated by the Governor for any office, shall have been rejected by the Senate, it shall not be lawful for the Governor at any time afterwards, during the recess of the Senate, in case of a vacancy in the same office to appoint such rejected person to fill said vacancy." (Chapter 148, § 16).

         If there is an inference that properly may be drawn from this addition, it must be that the Legislature that proposed the amendment and the people who voted for it believed that the one limitation on recess appointments - no appointment of a person previously rejected by the Senate - sufficed to protect the legislative interest. Nothing more was needed.

         Fairly read, the debates in the 1850 Convention thirteen years later showed no inclination on the part of a majority of the delegates to reject that approach. If anything, there was greater recognition of the importance of not fettering the Governor's power to make recess appointments. The Constitution that emerged from that Convention abolished annual sessions of the General Assembly and allowed the Legislature to meet only every two years for a maximum of 70 days. Concern was expressed about the prospect of vacancies in important offices lasting for up to two years. Accordingly, although changing some of the language of the 1837 amendment, the Convention retained in its entirety the single limitation on recess appointments. The State overlooks the further fact that the issue of recess appointments also came before the 1864 and 1867 Constitutional Conventions, both of which retained, in nearly identical language and without substantial debate, what existed.

         Four times in our history, the Constitution-makers have imposed only the one limitation on the Governor's power to make recess appointments. It is not for this Court, under the guise of Constitutional interpretation, to add another one. The Senate had a fair and reasonable opportunity to reject the Peters and Schrader nominations, and it failed to do so. Absent such a rejection, the Governor was fully empowered to reappoint them once the session ended. The appointments were valid and in no way infringed upon the Constitutional authority of the Senate to advise and consent or to withhold advice and consent.[3]

          SECTION 30

         As noted, it is the addition of § 30 to the FY 2018 Budget Bill, as the Legislature's anticipatory response to the prospect of the Governor doing what he, in fact, did, that raises the host of collateral Constitutional issues. Given that we have concluded, consistently with the views previously expressed by several Attorneys General, [4] that the Governor had the Constitutional authority to make those recess appointments, the response was in no way necessary to protect the Senate's prerogatives, which were not transgressed. The question, however, is not whether that response was necessary, but only whether it is Constitutionally permissible.

         Article III, Section 52

         This Court has traced the history and explained the purpose of Art. III, § 52 of the Constitution, often referred to as the Budget Amendment, on a number of occasions.[5]We need not repeat it other than to note that the Amendment was intended to provide an intelligent way of estimating the income of the State and to assure that expenditures do not exceed that income. Together with Art. III, § 34, it has served to keep the State solvent for more than a hundred years, through wars, recessions, and other calamities.

          Section 52(3) requires the Governor to present to the General Assembly, early in its annual Session, a Budget containing "a complete plan of proposed expenditures and estimated revenues" for the coming fiscal year. Section 52(4) requires, in relevant part, that the Budget "embrace an estimate of all appropriations, " including those for "the salaries payable by the State and under the Constitution and laws of the State". (Emphasis added).[6] Section 52(5) requires the Governor, in addition to the Budget, to deliver to the presiding officers of the House and Senate a Bill "for all the proposed appropriations of the Budget, " which those presiding officers are required to introduce in their respective Houses. Section 52(5a) provides that the total appropriations as submitted by the Governor in the Budget and the Budget Bill may not exceed the total estimated revenues and prohibits the Legislature from making any changes that would cause the total appropriations to exceed the total estimated revenues.

         Section 52(6) is the critical one in this case, in particular three provisions thereof. First, it prohibits the General Assembly from amending the Budget Bill "so as to affect . . . the payment of any salaries required to be paid by the State of Maryland by the Constitution thereof." (Emphasis added). Second, with exceptions not relevant here, it provides that the General Assembly "may not alter the said bill except to strike out or reduce items therein, provided, however, that the salary or compensation of any public officer shall not be decreased during his [or her] term of office." (Emphasis added). Third, it provides that the Budget Bill, "when and as passed by both Houses, shall be a ...


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