# Monarch Acad. Balt. Campus, Inc. v. Balt. City Bd. of Sch. Comm'rs

> Court of Appeals of Maryland · December 18, 2017 · 457 Md. 1

URL: https://www.frixlaw.com/law-library/cases/4229853

## Case

- **Full name:** MONARCH ACADEMY BALTIMORE CAMPUS, INC., Et Al. v. BALTIMORE CITY BOARD OF SCHOOL COMMISSIONERS
- **Court:** Court of Appeals of Maryland
- **Decided:** December 18, 2017
- **Citations:** 457 Md. 1; 175 A.3d 757
- **Precedential status:** Published
- **Opinion:** Opinion by Getty
- **Judges:** Barbera, Greene, Adkins, McDonald, Watts, Hotten, Getty
- **Cited by:** 11 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4229853

## How later opinions describe it (automated extraction)

- stating that just because a claim is properly within the primary jurisdiction of an administrative agency “does not mean that the circuit court is divested of jurisdiction over the claim[], or necessitate[] the dismissal of the action before the court”; instead, the appropriat…

## Opinion text

Monarch Academy Baltimore Campus, Inc., et al. v. Baltimore City Board of School
Commissioners, No. 7, September Term, 2017. Opinion by Getty, J.

CIVIL PROCEDURE – APPEALABILITY OF A STAY ORDER – Maryland Code,
Courts & Judicial Proceedings Article § 12-301
This is a case involving charter schools. The operators of charter schools (“Charter School
Operators”) in Baltimore City filed a breach of contract claim in the Circuit Court for
Baltimore City against the Baltimore City Board of School Commissioners. The circuit
court entered an order staying (“Stay Order”) the breach of contract action, and Charter
School Operators appealed. The Court of Appeals determined that the Stay Order
suspended all claims before the circuit court and failed to specify what conditions the
Charter School Operators must complete in order for their breach of contract claims to
resume before the circuit court. Under these limited circumstances, the Court of Appeals
held that the Stay Order effectively put the operators of charter schools out of court and
was an appealable final judgment.

APPEAL – ABUSE OF DISCRETION
The Stay Order was an appealable final judgment because there was no indication that the
circuit court judge reviewed or considered either the prior proceedings or the prior decision
of another circuit court judge and because the Stay Order was devoid of necessary detail,
the circuit court judge abused his discretion in issuing the Stay Order.

ADMINISTATIVE LAW – PRIMARY JURISDICTION
Under the doctrine of primary jurisdiction, a court must determine whether an issue or
issues in a case must first be resolved by an agency “which, under a regulatory scheme,
have been placed within the special competence of an administrative body[.]” Arroyo v.
Bd. of Educ. of Howard Cty., 381 Md. 646, 658 (2004) (quoting United States v. Western
Pacific R.R. Co., 352 U.S. 59, 63-64 (1956)). The Court of Appeals determined that a
central issue underlying the Charter School Operators’ breach of contract claims was
whether they had received “an amount of county, State, and federal money for elementary,
middle, and secondary students that is commensurate with the amount disbursed to other
public schools in the local jurisdiction[,]” as mandated in Maryland Code, Education
Article § 9-109. And, the Court of Appeals held that because the State Board of Education
(“State Board”) has not provided a formal rule or regulation interpreting the charter school
“commensurate” funding requirement suitable for application by courts, disputes involving
charter school commensurate funding generally remain within the special competence of
the State Board. Therefore, the Court of Appeals concluded that the State Board had
primary jurisdiction over the commensurate funding issues underlying Charter School
Operators’ breach of contract action, and that on remand the circuit court would be within
its discretion to enter a more definite order staying proceedings to permit the parties to
obtain a ruling from the State Board as to the commensurate funding issues in dispute.
Circuit Court for Baltimore City
Case No. 24-C-15-005507
Argued: September 11, 2017
IN THE COURT OF APPEALS
OF MARYLAND

No. 7

September Term, 2017

MONARCH ACADEMY BALTIMORE
CAMPUS, INC., ET AL.

v.

BALTIMORE CITY BOARD OF SCHOOL
COMMISSIONERS

Barbera, C.J.
Greene,
Adkins,
McDonald,
Watts,
Hotten,
Getty,

JJ.

Opinion by Getty, J.
Greene, Watts and Hotten, JJ., concur and
dissent.

Filed: December 18, 2017

2
This Court has twice addressed appeals in which public charter schools alleged that

a local school board failed to meet the requirement in Maryland Code, Education Article

(“ED”) § 9-109 to provide the charter schools with funding that is “commensurate with the

amount disbursed to other public schools in the local jurisdiction.” See Frederick Classical

Charter Sch., Inc. v. Frederick Cty. Bd. of Educ., 454 Md. 330 (2017), reconsideration

denied (Aug. 24, 2017); Balt. City Bd. of Sch. Comm'rs v. City Neighbors Charter Sch.,

400 Md. 324 (2007). However, in both of those cases, charter schools initially challenged

a local school board’s proposed annual funding allocation in an administrative adjudicatory

proceeding before the State Board of Education (“the State Board”), and the dispute came

before the courts only when one of the parties subsequently filed a petition for judicial

review of the State Board’s decision.

In contrast, the Petitioners in the instant case, thirteen operators of charter schools

in Baltimore City (the “Charter School Operators”),1 sought to obtain relief in a similar

commensurate funding dispute by filing breach of contract complaints against the

Respondent, the Baltimore City Board of School Commissioners (the “City Board”),

directly in the Circuit Court for Baltimore City without first seeking review before the State

1
Petitioners are the following Baltimore City charter school operators: Afya
Baltimore, Inc., Baltimore International Academy Inc., Baltimore Montessori, Inc., City
Neighbors Charter School, Inc., City Neighbors Hamilton, Inc., City Neighbors High
School, Inc., Creative City Public Charter School Foundation, Inc., Empowerment Center,
Inc., Experiential Environmental Education, Inc., Kipp Baltimore, Inc., Patterson Park
Public Charter School, Inc., Southwest Baltimore Charter School, Inc., and Monarch
Academy Baltimore Campus, Inc. Some operators run a single charter school in Baltimore
City, while others operate more than one charter school.
Board. The contracts at issue all contained a provision in which the City Board agreed to

“allocate Commensurate Funding to the [Charter] School Operator,” and to provide

information as to its own finances and how it had reached a specific per-pupil

commensurate funding figure for the charter school. The Charter School Operators

contended that the City Board breached those contractual requirements by not providing

information as to its finances and commensurate funding calculations and by failing to

provide the correct amount of commensurate funding for the 2015-16 school year.

After the cases were consolidated before the circuit court, the City Board moved to

dismiss the case or stay the proceedings on the grounds that the State Board had primary

jurisdiction over commensurate funding determinations. After holding a hearing, Judge

Julie Rubin concluded that the State Board had “provided sufficient guidance” regarding

the meaning of commensurate funding so that the circuit court was “no longer obliged to

punt the issue to the expertise of the administrative body.” Therefore, she declined to

invoke the primary jurisdiction doctrine and denied the motion to dismiss.

On the same day as it filed its motion to dismiss before the circuit court, the City

Board filed a petition for declaratory relief before the State Board, requesting that the State

Board declare that its funding formula complies with ED § 9-109 and has resulted in

commensurate funding. After Judge Rubin’s order, the State Board dismissed the petition,

noting that the circuit court had “asserted its jurisdiction.” Thereafter, the City Board filed

a counterclaim against the Charter School Operators before the circuit court. The Charter

School Operators moved to dismiss the counterclaim, and a hearing on their motion to

dismiss was scheduled before the circuit court. At that hearing, Judge Alfred Nance

2
questioned counsel as to the procedural background of the case, instructing them to “[t]ell

me what happened that causes you to rightfully be in my courtroom.” After a brief recess

and off-the-record discussion in chambers, counsel for the City Board made an oral motion

to dismiss the Charter School Operators’ complaints. Judge Nance, after hearing

arguments for and against the motion, determined that “in lieu of” granting the motion he

would issue an order staying proceedings in the circuit court “pending administrative

review of the parties’ dispute by the State Board of Education.”

After the Stay Order ruling, the parties moved to proceed on separate procedural

tracks. The Charter School Operators appealed from the circuit court’s Stay Order to the

Court of Special Appeals, while the City Board once again filed a petition for declaratory

relief before the State Board. The State Board once again dismissed the City Board’s

petition, stating that “the case remain[ed] within the jurisdictional purview of the courts.”

Subsequently, in a reported opinion, the Court of Special Appeals dismissed the Charter

School Operators’ appeal after concluding that the circuit court’s Stay Order was not an

appealable order. Monarch Acad. Balt. Campus, Inc. v. Balt. City Bd. of Sch.

Commissioners, 231 Md. App. 594, 619 (2017). The Charter School Operators filed a

petition for writ of certiorari from that dismissal, which we granted on April 4, 2017.

Monarch Acad. Balt. Campus v. Balt. City Bd. of Sch. Comm’rs., 452 Md. 523 (2017).

On appeal to this Court, the Charter School Operators contend that the circuit court’s

Stay Order was a final and appealable judgment, and therefore urge us to hold that the

Court of Special Appeals erred in dismissing the appeal. The Charter School Operators

3
further assert that the State Board does not have primary jurisdiction over their breach of

contract claims, and therefore the circuit court erred in entering the Stay Order.

When a court determines that a party’s claim is within the authority of an

administrative agency under the doctrine of primary jurisdiction, it is ordinarily entirely

appropriate under the primary jurisdiction doctrine to enter a stay to permit that party to

bring his or her claim before the appropriate agency. Then, after the agency has had the

opportunity to evaluate and rule on the claim, a party may ordinarily seek judicial review

before the circuit court. In this appeal, however, we are confronted with a rare and unique

set of circumstances in which there is a strong likelihood that the Charter School Operators

would not be able to obtain an administrative ruling on their breach of contract claim.

Here, the State Board is the only agency to which the Charter School Operators can

bring their claim at the juncture at which the Stay Order was entered, and they can only do

so in the form of a petition for declaratory relief. However, the agency has twice denied

petitions for declaratory relief in this case, citing in the first denial the lack of any factual

record upon which it could review and issue a declaratory judgment. Despite the arguments

raised by the City Board in this appeal, there is no guarantee that the State Board would

grant a third petition for declaratory relief under the circumstances present here. The State

Board’s prior declaratory rulings and this Court’s precedent set forth a detailed and highly

fact specific inquiry for charter school funding disputes. Of great significance to our

decision, the contract between parties requires certain financial information to be

disclosed by the City Board to the Charter School Operators. However, the Charter School

Operators allege that they did not receive that information. If true, the Charter School

4
Operators simply may not have enough information to successfully frame a declaratory

petition to the State Board, or to obtain a declaratory order from the State Board that fully

resolves the charter school funding issues raised in their Complaint. And, although there

is the potential for a limited discovery process before the State Board, it is discretionary

and even if employed may not be sufficient to address this concern.

Finally, the Stay Order was entered in a rushed and improper manner, before there

was any opportunity for discovery as to the information necessary for the resolution of the

charter school funding claims, and without clear guidance to the State Board as to exactly

what issues needed to be resolved before the matter could resume before the circuit court.

Thus, the rushed and non-specific Stay Order at issue here further exacerbated the

difficulties facing the Charter School Operators in pursuing an administrative remedy and

eventually being able to return to court for a judicial resolution of their claim.

Therefore, under the above-described unique circumstances of this case, we shall

hold that the Stay Order was a final and appealable judgment and therefore shall reverse

the judgment of the Court of Special Appeals dismissing the appeal. We shall also hold

that the circuit court abused its discretion in staying the proceeding in order for the parties

to seek administrative review because the court did not first allow for discovery and did

not provide guidance as to how and when the case would resume in circuit court. However,

we shall also hold that the State Board retains primary jurisdiction as to the underlying

commensurate funding issues in dispute and that, after discovery before the circuit court is

concluded, it will be appropriate for the circuit court to enter a more definite order staying

proceedings for review of those issues before the State Board.

5
BACKGROUND

A. Primary Jurisdiction

The doctrine of primary jurisdiction derives from “the relationship between

legislatively created administrative remedies and alternative statutory, common law or

equitable judicial remedies.” Prince George’s Cty. v. Ray’s Used Cars, 398 Md. 632, 644

(2007). We have explained the relationship between those remedies as follows:

[W]henever the [General Assembly] provides an administrative and
judicial review remedy to resolve a particular matter or matters, the
relationship between that administrative remedy and a possible alternative
judicial remedy will ordinarily fall into one of three categories:

[T]he administrative remedy may be exclusive, thus
precluding any resort to an alternative remedy. Under this
scenario, there simply is no alternative cause of action for
matters covered by the statutory administrative remedy.

[T]he administrative remedy may be primary but not
exclusive. In this situation, a claimant must invoke and
exhaust the administrative remedy, and seek judicial review of
an adverse administrative decision, before a court can properly
adjudicate the merits of the alternative judicial remedy.

[T]he administrative remedy and the alternative judicial
remedy may be fully concurrent, with neither remedy being
primary, and the plaintiff at his or her option may pursue the
judicial remedy without the necessity of invoking and
exhausting the administrative remedy.

United Ins. Co. of Am. v. Maryland Ins. Admin., 450 Md. 1, 14-15 (2016) (quoting Ray’s

Used Cars, 398 Md. at 644 (quoting Zappone v. Liberty Life Ins. Co., 349 Md. 45, 60-61

(1998))) (emphasis in original) (footnote omitted).

When a party’s claim(s) could properly be brought before either a court or an

administrative agency, the agency remedy will generally be deemed primary “whenever

6
enforcement of the claim requires the resolution of issues which, under a regulatory

scheme, have been placed within the special competence of an administrative body[.]”

Arroyo v. Bd. of Educ. of Howard Cty., 381 Md. 646, 658 (2004) (quoting United States v.

Western Pacific R.R. Co., 352 U.S. 59, 63-64 (1956)). This Court has held that “[n]o fixed

formula exists for applying the doctrine of primary jurisdiction[,]” and that “[i]n every case

the question is whether the reasons for the existence of the doctrine are present and whether

the purposes it serves will be aided by its application in the particular litigation.” Id. at

658-59 (quoting Western Pacific R.R. Co., 352 U.S. at 63-64). However, the Court has

recognized that “[i]n the absence of specific statutory language indicating the type of

administrative remedy, there is a rebuttable presumption that an administrative remedy was

intended to be primary.” United Ins., 450 Md. at 15 (citing Zappone, 349 Md. at 63).

Of significance to this appeal, even when a court ultimately determines that one or

more claims filed before it are properly within the primary jurisdiction of an administrative

agency, that does not mean that the circuit court is divested of jurisdiction over the claim(s),

or necessitates the dismissal of the action before the court. Instead, the doctrine only

applies to preclude the court from adjudicating the claim(s) “until a final administrative

determination is made.” Arroyo, 381 Md. at 660 (emphasis in original). Thus, the

appropriate action for a trial court in such an instance is generally not to dismiss the

claim(s), but rather to “stay further proceedings regarding the judicial complaint” until the

party can obtain a final administrative determination as to the issue in dispute. Carter v.

Huntington Title & Escrow, LLC, 420 Md. 605 (2011); see also Maryland Reclamation

Assocs., Inc. v. Harford Cty., Maryland, 382 Md. 348, 367 (2004).

7
B. Authority of the State Board of Education

The General Assembly has vested the State Board of Education with expansive

authority to interpret the provisions of the Education Article. Pursuant to ED § 2-205, the

State Board has the authority to: “[d]etermine the elementary and secondary educational

policies of this State,” ED § 2-205(b); “[a]dopt bylaws, rules, and regulations for the

administration of the public schools” which “have the force of law when adopted and

published,” ED § 2-205(c); “explain the true intent and meaning” of the Education Article

and its own regulations and “decide all controversies and disputes” regarding those

provisions, ED § 2-205(e); and, “exercise general control and supervision over the public

schools and educational interests of this State,” ED § 2-205(g).

We have explained that the State Board’s authority under section 2-205 “constitutes

a visitatorial power of such comprehensive character as to invest the State Board with the

last word on any matter concerning education policy or the administration of the system of

public education.” Frederick Classical, 454 Md. at 370 (quoting City Neighbors, 400 Md.

at 342-43). We have held that the State Board’s visitatorial power “is not unlimited,” and

it is the courts that ultimately must decide purely legal questions. Id. at 371 (quoting City

Neighbors, 400 Md. at 343). But, “‘the broad statutory mandate given to [the State Board]

requires that special deference be given to its interpretation of statutes that it administers,’

. . . over and above that generally afforded to other administrative agencies[.]” Id. at 370

(quoting City Neighbors, 400 Md. at 343).

C. Administrative Remedies Before the State Board

8
At the local level, the twenty-three Maryland counties and Baltimore City each have

a school board that has oversight and control of education matters in its jurisdiction. Each

local school system also has a superintendent—or, in Baltimore City, a Chief Executive

Officer—who is the administrator of that system and is responsible for enforcing the rules

and policies of both the local school board and the State Board, and for implementing State

law. See ED §§ 4-101, 4-102, 4-108. A county superintendent’s decision may be appealed

to a local school board within thirty days. ED § 4-205(3). And, if a party is dissatisfied

with the local school board’s decision, that party may appeal to the State Board within

thirty days from the decision of the local school board. Id.; see also Md. Code Regs.

(“COMAR”) 13A.01.05.02(A)-(C) (describing the required contents of an appeal to the

State Board, and a deadline to file the appeal “within 30 calendar days of the decision of

the local board”).

However, and of great significance to the present dispute, there is also another

process through which parties may ask the State Board to resolve a dispute as to the

meaning and proper application of State educational law or State Board rules, regulations,

or policies. If there is an “existing case or controversy” between an aggrieved party and a

local school board, either party—the aggrieved party or the local school board—may at

any time file “a petition for declaratory ruling by the State Board on the interpretation of

a public school law or regulation of the State Board that is material to [that] existing case

or controversy.” COMAR 13A.01.05.02(D).

D. Charter Schools and Commensurate Funding

9
Charter schools are a statutorily created alternative to traditional public schools that

are “in the nature of semi-autonomous public schools,” operating “under a contract with a

State or local school board.” City Neighbors, 400 Md. at 328. “The contract, or charter

[agreement], defines how the school will be structured, staffed, managed, and funded, what

programs will be offered, and how the school will operate and account for its activities.”

Id. In Maryland, charter schools are governed by the Maryland Public Charter School

Program (“Charter School Program”), ED §§ 9-101 et seq., which “sets forth a process for

establishing new charter schools as well as monitoring, oversight, and accountability

standards for charter schools once they are established.” Frederick Classical, 454 Md. at

344. The purpose of the Charter School Program is to “establish an alternative means

within the existing public school system in order to provide innovative learning

opportunities and creative educational approaches to improve the education of students.”

ED § 9-101(b).

Charter schools operate under the supervision of the local school board of the county

or local jurisdiction in which they are located. See ED § 9-103 (stating that local school

boards are the “public chartering authority” for the granting of a charter agreement); ED §

9-102(11) (mandating that charter schools operate “under the supervision of the public

chartering authority from which its charter is granted and in accordance with its charter”

and, with limited exceptions, “the provisions of law and regulation governing other public

schools”). Charter schools also receive funding from their local school board. ED § 9-109

provides a mandate for public funding of public charter schools:

10
A county board shall disburse to a public charter school an amount of county,
State, and federal money for elementary, middle, and secondary students that
is commensurate with the amount disbursed to other public schools in
the local jurisdiction.

(Emphasis added.) As we noted in Frederick Classical, “[t]he statutory interpretation of

[ED § 9-109] and deciphering the meaning of ‘commensurate’ in this context has required

extensive administrative deliberations” by the State Board. 454 Md. at 345.

a. City Neighbors Declaratory Rulings

In 2005, the State Board issued a set of three declaratory rulings, which constituted

its first definitive statements interpreting the meaning of ED § 9-109 and the commensurate

funding requirement. We have previously referred to these rulings, which ultimately came

before this Court in our decision in City Neighbors, as the “City Neighbors declaratory

rulings.” See Frederick Classical, 454 Md. at 346.

In the City Neighbors declaratory rulings, the State Board set forth a detailed, multi-

step formula for calculating a charter school’s per-pupil funding that the State Board would

deem to be “commensurate” with funding provided to other public school students:

The State Board concluded that ED § 9-109(a) “expressed a
legislative intent that a charter school ‘receive federal, State, and local
funding in an amount proportionate to the amount of funds expended for
elementary, middle, and secondary level students in the other public schools
in the same system.’” [City Neighbors, 400 Md. at 336.] Furthermore, the
State Board determined that the calculation of commensurate funds must
include “‘funding for services for which students in the public charter schools
are eligible such as free and reduced price meals, pre-kindergarten, special
education, English-language learners, Perkins, Title I, and transportation.’”2

2
“Perkins” refers to the Federal Carl D. Perkins Vocational Education Act. See 20
U.S.C. §§ 2301 et seq. “Title I” refers to Title I of the Federal Elementary and Secondary
Education Act of 1965, as amended from time to time. See 20 U.S.C. §§ 6301 et seq.

11
[Id.] The Board further specified that the commensurate funding was to be
calculated by starting with the local school system’s total annual operating
budget that includes all federal, State, and local funding,3 and dividing by
enrollment for the previous year4 to reach an average per-pupil figure, overall
and for each major category of spending. Id. at 336-37. Then, after
deducting two percent for central office administrative costs, the State Board
directed that local boards multiply the average per-pupil figure “by the
student enrollment of the charter school to determine the total funding
amount for the charter school.” Id. at 337.

The State Board determined that “[b]ecause the total school system
operating budget encompassed all funds,” including funds for specific
services, “the average per[-]pupil amount derived from [the total operating
budget] figure would be sufficient for the charter school to deliver the
services for which its students were eligible.” Id. The State Board noted,
however, that charter schools “would have to make budgetary allocations in
light of the students’ eligibility requirements” under federal or state law “and
in doing so must comply with all applicable Federal and State requirements.”
Id. “For the special services that must be provided to eligible students,” the
State Board determined that “[a] charter school could elect either to provide
the services directly or have them provided by the school system, but if it
opted for the latter, it would be required to reimburse the school system for
the proportionate cost of those services.” Id. at 337-38. A charter school
would also need to reimburse the local school board “‘for salary, local
retirement, and other fringe benefit costs for the public school employees
working in the charter school as well as for regular services and supplies that
the charter school requests the local school system to provide.’” Id. at 338.

Frederick Classical, 454 Md. at 347-48 (footnotes in original) (bracketed text added).

3
The State Board noted that for the purposes of this calculation, “the total annual
school system operating budget amount shall exclude appropriations for debt service and
for adult education[.]” City Neighbors Charter School v. Balt. City Bd. of Sch. Comm’rs,
MSBE Op. No. 05-17 (May 26, 2005), at 4 n.2.
4
The State Board explained that in calculating the per-pupil allocation, school
systems “shall use the approved school system annual operating budget for the year in
which the charter school application is filed.” City Neighbors Charter Sch. v. Balt. City
Bd. of Sch. Comm’rs, MSBE Op. No. 05-17 (May 26, 2005), at 4 n.3. However, because
the enrollment count for each school year is not finalized until November, “the school
system enrollment count for the previous school year shall be used for the calculation.” Id.

12
Of significance to this appeal, the State Board also stated that the detailed formula

it had set forth “should be used as ‘guidance and direction’ to [ ] other charter school

applicants and local school systems ‘for the refinement of their working relationships on

behalf of the public school children throughout this State.’” Id. at 349 (quoting City

Neighbors, 400 Md. at 339).

b. This Court’s City Neighbors Opinion

Several local school boards, including the City Board, took issue with the State

Board’s formula and filed petitions for judicial review of the State Board’s decision. Those

petitions ultimately came before this Court on appeal in City Neighbors, 400 Md. 324

(2007).

We began our analysis in City Neighbors by considering the local school boards’

claim that the declaratory rulings were in effect a binding “regulation” and must be deemed

invalid because they were not issued in conformance with the requirements of Maryland

Code, State Government Article (“SG”) § 10-101 et seq. for formal rulemaking through

regulations. 400 Md. at 344. We rejected that claim, noting that declaratory rulings are

generally treated by courts “more in the nature of contested case adjudications than the

adoption of a regulation.” Id. at 345. And, we held that declaratory rulings as “a

permissible mechanism by which [the State Board] may exercise its statutory authority to

‘explain the true intent and meaning’ of the public school laws and decide ‘controversies

and disputes’ under those laws.” Id. at 346. We therefore concluded that the State Board

“was well within its discretion to proceed in the manner it did—adjudicating the cases

13
before it and offering ‘guidance’ to other applicants, rather than proceeding with more

formal and binding regulations.” Id.

Turning to the principal question of whether the State Board “had properly

construed and applied ED § 9-109(a),” we concluded that the statute was “patently

ambiguous.” Id. at 346-47. We reviewed the statute’s legislative history and concluded

that the General Assembly had clearly intended “that the determination of commensurate

funding would necessarily be on a per[-]pupil basis.” Id. at 355. However, we also

determined that the General Assembly had not specified “what was commensurate and how

[ ] the amount disbursed to other public schools [was] to be determined,” and that it “must

have envisioned” that the State Board, “the body [the General Assembly] has consistently

vested with the ultimate administrative authority to interpret, explain, and apply the public

education laws,” would interpret the meaning of those terms. Id.

Finally, we addressed the city and county boards’ specific complaints about the

State Board’s formula: “the requirement that the funding be disbursed in cash, rather than

in services, inclusion of Title I and special education expenses, and the limitation of the

deduction for administration expenses to 2% in the calculation of commensurate funding.”

Id. at 356. We found no legal error in any of those claims. Noting that the statute calls for

the disbursement of “money,” the Court concluded that while charter schools may

“negotiate for the provision of services” such services “cannot be forced on the charter

schools at the whim of the county boards.” Id. The Court also held that the State Board

was “clearly entitled” to conclude that “commensurate” funding to charter schools must

include funding for Title I and special education funds “to the extent that students in the

14
charter school are eligible for those services.” Id. And the Court held that with respect to

the 2% cap in central administrative costs, the State Board reasonably determined that

“charter schools, being somewhat autonomous, would not need and should not be subject

to the full range of control exercised by the central administration over the regular public

schools, and that they therefore should not be charged with a share of that total expense.”

Id. at 356-57.

c. Frederick Classical

In Frederick Classical, our most recent case to examine charter school funding, the

Frederick County Board of Education withheld transportation funding from the calculation

of its annual per-pupil commensurate funding allocation to Frederick Classical, a charter

school, because the school did not provide transportation services to its students. 454 Md.

at 341. Frederick Classical contested the withholding of the transportation funds before

the local school board and, when it summarily refused to amend the allocation, appealed

to the State Board. Id. The State Board held that, as a matter of law, “a charter school is

not automatically entitled to funds for services it does not provide.” Id. at 363. It therefore

concluded that the local school board’s withholding of transportation funds from Frederick

Classical’s per-pupil allocation “was not contrary to state law” and was “consistent with

[its] past rulings.”5 Id.

5
In the alternative, the State Board also decided that the charter school was not
entitled to transportation funds because of language in its charter agreement with the local
board.

15
This Court, however, reversed the decision of the State Board. We determined that

the State Board’s ruling was contrary to its own precedent in the City Neighbors declaratory

rulings. We held that under the formula set forth in those rulings a local school board

calculating a charter school’s annual per-pupil allocation “generally must include in that

calculation funds budgeted for any of the services expressly identified in the declaratory

rulings—including funds for transportation services.” Id. at 392. Although local school

boards are not required to include in the calculation “funds for services that have detailed

eligibility requirements under state and federal law when the charter school does not meet

those eligibility requirements,” we established that “there are no such eligibility

requirements” for transportation services for the general student population.6 Id.

Consequently, we concluded that, under the City Neighbors declaratory rulings

formula, “a local school board must [] include the funds budgeted for [transportation] when

calculating a charter school’s per-pupil allocation, regardless of whether a charter school

provides transportation services to its general student population.” Id. As the State Board

had incorrectly ruled that withholding transportation funding when Frederick Classical did

not provide transportation services was “consistent with [its] prior rulings,” when in fact it

was not, we held that its ruling was an abuse of discretion. Id. at 405-406.

We then considered whether, on remand, the State Board was required to adhere to

its own City Neighbors declaratory formula for calculating a charter school’s

6
Under ED § 8-410, certain qualifying special education students must receive
transportation services.

16
commensurate funding, or if it had the discretion to modify that formula. Id. at 406. We

recognized that administrative agencies are generally accorded “ample latitude to adapt

their rules and policies to the demands of changing circumstances,” and may generally

proceed either through adjudications or through more formal notice-and-comment

rulemaking. Id. at 406-07 (quoting Montgomery Cty. v. Anastasi, 77 Md. App. 126, 137

(1988)). However, we also determined that courts have imposed some limits on agency

discretion to change policies or rules, and highlighted two of those limits. First, if the

policy that is being changed is “a policy of general application, embodied in or represented

by a rule” then “the change must be accomplished by rulemaking.” Id. at 408 (quoting

CBS Inc. v. Comptroller of the Treasury, 319 Md. 687, 696 (1990)). Second, an agency’s

discretion may be circumscribed “when there is substantial reliance on the agency’s settled

standard or interpretation and a change would have a detrimental impact.” Id. at 409.

We concluded that the first limitation that an existing rule may only be changed

through new rulemaking did not apply because the guidance set forth in the City Neighbors

declaratory rulings was not a formal “rule of widespread application.” Id. However, we

also noted that over a decade had passed since the State Board issued the City Neighbors

declaratory rulings, but that the State Board “has never adopted a formal rule or regulation

of general application interpreting the ‘commensurate’ funding requirement of ED § 9-

109.” Id. at 410. Accordingly, we concluded that “charter schools and their staff and

student population have substantial reliance interests in the current State Board approach

to determine a commensurate allocation of funds to their charter school in the City

Neighbors declaratory rulings.” Id. at 411. In light of those reliance interests, we held that

17
“if the State Board proceeds through an adjudicatory approach, it must offer a rational

explanation for such a change in its written decision.” Id. at 412. “That rational

explanation,” we emphasized, “must include how its new interpretation or approach is in

keeping with the plain language and, where ambiguous, the legislative history and statutory

purpose of ED § 9-109 and the Charter Schools Program statute as a whole, and account

for the substantial reliance interests of charter school operators, staff and students,

prospective charter school applicants, and local school boards.” Id.

We therefore remanded the case to the State Board “to render a decision as to the

claims raised by Frederick Classical consistent with our holdings . . . .” Id. at 422. And,

we specifically stated that if the State Board determined “that Frederick Classical is entitled

to additional funds” then the State Board “shall issue an order calculating the exact amount

of additional funds owed based upon Frederick Classical’s enrollment during the relevant

years, and directing the [local school board] to pay that amount.” Id.

E. Facts and Procedural History of the Instant Appeal

a. The Charter School Operators Complaints

In the fall of 2015, the Charter School Operators filed individual breach of contract

complaints against the City Board in the Baltimore City Circuit Court. The complaints,

which raised “substantively similar” breach of contract claims stemming from charter

agreement contracts entered into between each charter school and the City Board, were

subsequently consolidated by the circuit court.7

7
Judge Rubin originally ordered that the proceedings in the consolidated cases be
captioned as The Monarch Academy Baltimore Campus, Inc. v. Baltimore City Board of
18
In the complaints, the Charter School Operators alleged that they entered into

similar contracts with the City Board to operate one or more charter schools in Baltimore

City (collectively, the “Contract”). The complaints quoted a provision of the contract

regarding funding of the Charter Schools and financial transparency in the funding process,

and provided annotations for terms defined elsewhere in the Contract. Including relevant

annotations, the provision as quoted in the complaints reads as follows:

6.1 OPERATING FUNDS. The parties agree that Title 98 requires
funding of the charter school that is commensurate with the amount disbursed
to other public schools in the local jurisdiction, and that Commensurate
Funding9 is integral to this contractual relationship and essential to the
School Operator’s ability to operate the School hereunder and that all funds
provided by the [City Board] to the school are to be used solely for the benefit
of the school and its students. Accordingly, during each school year during
the Term, the School Board shall allocate Commensurate Funding to the
School Operator for the following school year pursuant to Applicable

School Commissioners, Case No. 24-C-16-000320. This order was later stricken and a
subsequent order was issued to title the proceedings in the consolidated cases as Baltimore
International Academy Inc. v. Baltimore City Board of School Commissioners, Case No.
24-C-15-005507. For this case, we will utilize the titling found in the Court of Special
Appeals case.

On appeal to this Court, the Charter Schools have submitted one representative
complaint, filed by Afya Baltimore, Inc. against the City Board, which they assert is
“substantially similar” to the other consolidated complaints. The record also contains a
second complaint, filed by Petitioners City Neighbors Charter School, Inc., City Neighbors
Hamilton, Inc., and City Neighbors High School, Inc.
8
“Title 9” is defined as “the Public Charter School Act of 2003, Title 9 of the
Education Article of the Maryland Annotated Code (‘Maryland Public Charter School
Program’), and any regulations promulgated hereunder (as now and hereafter in effect, and
as may be amended or modified . . . .”
9
“Commensurate Funding” is defined as “a per pupil funding level consistent with
and generally equivalent to the average level of resources provided to similar students
across the School System.”

19
Requirements.10 Any financial commitment on the part of the [Baltimore
City] School System contained in this Agreement is subject to the annual
appropriation by the [City Board]. The [City Board’s] staff shall deliver to
the School Operator a draft of the funding formula including the amount of
the estimated per pupil allocation for the applicable school year (determined
in accordance with the [City Board’s] “approved funding formula” and
Applicable Requirements) and will make a good faith effort to deliver these
materials in no less than two weeks prior to the budget (distinct from the
Budget of the School Operator covered in Section 6.2) submission deadline
for the School, such deadline to be consistent with the deadline for all School
System schools. The draft document will include: (i) the School System’s
budget and line item amounts necessary to calculate the per pupil allocation,
and (ii) copies of any materials or documentation related thereto that is
delivered to the [City Board] for public presentation. Additionally, the [City
Board] agrees to make reasonable efforts to provide to the School Operator
background information on the methodology and assumptions behind the
calculations as soon as such materials are available.

(Emphasis and bracketed text added, additional footnotes omitted).

The complaints raised a single count for breach of contract. Specifically, the Charter

School Operators asserted that the City Board breached the provision quoted above by

failing to provide the Charter School Operators with commensurate funding, and also by

failing to provide them with the budget and financial information specified in the provision.

The Charter School Operators claimed that the City Board had “never” provided

commensurate funding in line with the City Neighbors declaratory rulings formula,11 and

10
“Applicable Requirements” is defined as “Title 9, federal laws and regulations,
all other state laws and regulations, all [City Board] [p]olicies, rules[,] and regulations, all
[Baltimore City] School System guidance and requirements, all court orders, consent
decrees, requirements relating to correct action taken by [the Maryland State Board of
Education], and [Maryland State Department of Education] requirements.”
11
Although the Charter School Operators did not cite to a specific State Board
ruling, subsequent filings clarify that they were referring to the City Neighbors declaratory
ruling.

20
that the City Board has instead repeatedly “unilaterally changed their methodology in

developing the amount to be disbursed to charter schools.” And, they more specifically

asserted that the City Board failed to provide the Charter School Operators with

commensurate funding for Fiscal Year 2016, i.e., the 2015-16 school year.

According to the Charter School Operators, the Baltimore School System’s Chief

Financial Officer provided charter schools with a “Revised Per Pupil” allocation for the

2015-16 school year of $9387. The Charter School Operators maintained that per-pupil

figure “reflected an expectation that the State of Maryland . . . would cut State funding to

the System by approximately $35 million.” However, the City Board ultimately adopted a

budget for the 2015-16 school year that “reflected the restoration of over $27 million in

State funding and increases of $3 million dollars in City funding and $3 million from ‘other

revenue sources’ as compared to the earlier projections.” Nonetheless, the Charter School

Operators claimed that the City Board, “without explanation, kept the charter school per

pupil at the previously stated [$9387].” That figure is, according to the Charter School

Operators, 1.77% less than that provided for charter schools in the 2014-15 school year

budget. At the same time, the Charter School Operators asserted that the City Board

adopted a budget for traditional (non-charter) public schools that was roughly the same as

provided in the 2014-15 school year budget.12

12
In addition, the Charter School Operators also alleged that the $9387 represents a
decrease below the Fiscal Year 2014 and Fiscal Year 2011 school years, despite significant
increases in System funds since Fiscal Year 2011. The Charter School Operators also point
out that “[t]he System’s total budgeted allocation to . . . charter schools for Fiscal Year
21
The Charter School Operators also claimed that the City Board had not met its

contractual requirement to provide detailed information as to its finances and the basis of

its calculations of the annual per-pupil commensurate funding allocation. Instead, the

Charter School Operators alleged that the City Board “from year to year, arbitrarily

presented charter school operators with take-it-or-leave-it charter school per pupil figures

derived using varying (or no) calculation methodology, inflated estimates of overall

System enrollment, and unsupported and dubious financial and budget figures.”

Specifically, they claimed that for the 2015-16 school year, the City Board provided only

two single page documents in support of the $9387 “Revised Per Pupil” allocation.

b. Initial Motions to Dismiss or Stay the Action

The City Board filed motions “to dismiss, or in the alternative, motion to stay” the

complaints. In an accompanying memorandum, the City Board contended that “at the

heart” of the Charter School Operators complaints were the alleged failure of the City

Board to provide commensurate funding for charter school students as required under ED

§ 9-109. The City Board insisted that under the primary jurisdiction doctrine the

commensurate funding dispute is “for the State Board to decide in the first instance.”13

2016 . . . represents 9.3% of the total System budget . . . even though charter school
students are more than 15% of the total enrollment.”
13
The City Board also contended that the Charter School Operators failed to make
a prima facie case for breach of contract and failed to allege exhaustion of contractual
remedies.

22
The Charter School Operators opposed the City Board’s motions, asserting that the

circuit court, and not the State Board, “has proper jurisdiction over this breach of contract

action.” They also noted that the relief they were seeking included “monetary damages,”

which they contended was not available in a declaratory action before the State Board. In

the alternative, the Charter School Operators insisted that “[e]ven if the State Board had

jurisdiction and [was] able to provide the [Charter School Operators] with relief,” the State

Board had already issued a “comprehensive” interpretation of commensurate funding

under ED § 9-109, which was “litigated through final affirmance by the Court of Appeals.”

Thus, they claimed that “‘primary jurisdiction’ has already been satisfied.” Finally, they

requested that even if the court determined that the commensurate funding dispute needed

to first be resolved by the State Board, the court should permit the matter to proceed

through the discovery phase of litigation in circuit court and merely stay any ruling on a

motion for summary judgment or beginning a trial on the breach of contract claim pending

the decision of the State Board.14

On January 8, 2016, Judge Rubin held a hearing on the City Board’s motion to

dismiss, at which both parties offered extensive arguments as to whether the State Board

had primary jurisdiction over the parties’ dispute. The City Board argued that, although

the case was a breach of contract action, the claim that the City Board did not provide

funding for charter schools that was commensurate with funding provided to traditional

14
The Charter School Operators also contended in their motion that they had stated
sufficient factual allegations to satisfy the elements of a breach of contract claim, and that
they had satisfied the pre-suit notice requirements of the contract.

23
public schools “boils down to whether there has been compliance with [ED § 9-109].” The

City Board argued that, under this Court’s holding in City Neighbors, ED § 9-109 was

ambiguous and the State Board had the primary authority to interpret it. The City Board

acknowledged that the State Board had previously set forth a working definition of

commensurate funding and a formula for calculating that funding in the City Neighbors

declaratory rulings, but insisted that neither the State Board nor this Court has ever said

“that is the only formula that can be used.” The circuit court questioned the City Board’s

counsel on that point, resulting in the following exchange:

Judge Rubin: So the question that really I think where the
rubber meets the road in this instance is has the
issue of commensurate funding already been
determined and so to send it back [to the State
Board] is not only unnecessary, but, arguably,
inefficient and potentially unfair[.] . . . [T]he flip
side is that every single time a charter school
takes issue or challenges that proper
commensurate funding has been placed, at least
the way I see the logical extension of your
arguments is that . . . the State Board of
Education will always be entitled to make that a
moving target.

City Board Counsel: But that’s what [the State Board has] said in their
opinions. I agree with that. If they came out with
-- if the statute said this is what you need to do
and here are the details or if [the State Board]
came up with a regulation that said this is exactly
how it needs to be done . . . then I would say no[.]
[B]ut in a situation where you have this guidance
. . .then I think the State Board of Education
should weigh in on these issues and has to weigh
in on these issues . . . .

24
In response, the Charter School Operators argued that under some circumstances, a

party may elect to proceed before the circuit court for its breach of contract claim even if

that claim implicated provisions of the Education Article. Specifically, they contended that

“once the State Board has had the opportunity to have a crack at interpreting its statutes,”

parties may file a claim dependent on that interpretation before the circuit court. And, they

disputed the City Board’s contention that the State Board would have discretion to depart

from its previous interpretation and formula for calculating commensurate funding if the

parties’ dispute proceeded to adjudication before the State Board.

The Charter School Operators also opposed the City Board’s alternative request that

the case be stayed. They pointed out that their claim that the City Board had breached its

contractual obligations to provide information as to its budget and finances did not depend

on the interpretation of a statute or regulations by the State Board and was “squarely before

only the [c]ircuit [c]ourt.” They also argued that if the case proceeded before the State

Board, discovery to obtain that information would be restricted compared to the discovery

available in circuit court. The Charter School Operators therefore contended that even if

the court found that the commensurate funding dispute was in the primary jurisdiction of

the State Board, rather than grant a stay, the court should permit the case to proceed through

discovery in the circuit court. Finally, they requested that if any issue in the case needed

to go before the State Board, that the court issue “very specific instructions as to what

exactly the State Board would need to accomplish or could accomplish on any proceeding

that would be appropriate,” and also explain how to “bring this [matter] back to [the circuit

court] for actual resolution and remedies.”

25
During the hearing, Judge Rubin noted that the City Board’s reluctance to disclose

the facts supporting the commensurate funding calculations left the Charter School

Operators in a disadvantaged position considering the “illusory” nature of commensurate

funding:

Judge Rubin: [T]o the extent that the concept of commensurate
funding or what it means in each charter school
contract could be different from the next charter
school contract because there are different things
in play, as [City Board has] argued, on some
level does this not raise an issue that in essence
when the charter school contracts for, among
other things, its commensurate funding, that its
entitlement to whatever commensurate funding
is . . . somewhat illusory? In other words, we’ll
tell you what it is once you complain that we
haven’t given it to you.

Judge Rubin thereafter issued a comprehensive oral ruling from the bench, in which

she ultimately determined that the State Board had “provided sufficient guidance”

regarding the meaning of commensurate funding, including the “requisite factors to be

considered, the data to be considered.” She therefore concluded that the circuit court was

“no longer obliged to punt the issue to the expertise of the administrative body,” but rather,

it was entitled “to decline to invoke primary jurisdiction.” 15 Accordingly, she denied the

motion to dismiss.

c. The City Board’s Initial Petition for Declaratory Ruling

15
Judge Rubin also held that the complaints did state sufficient facts that, if accepted
as true, could support a breach of contract claim. And, she agreed that the Charter School
Operators had complied with the contractual pre-suit notice requirements.

26
On November 9, 2015, the same day that the City Board filed its motions to dismiss

the complaints in the circuit court, it also filed a petition with the State Board, requesting

that the State Board declare that its funding formula complied with ED § 9-109 and resulted

in commensurate funding. The Charter School Operators thereafter moved to dismiss the

declaratory petition. After Judge Rubin denied the City Board’s motions to dismiss before

the circuit court, the State Board dismissed the City Board’s petition for declaratory ruling.

In a written order, the State Board noted that the circuit court had “asserted its jurisdiction”

on the issue, and it did not serve the interests of conserving judicial (and quasi-judicial)

resources to have parallel proceedings.

The State Board also addressed whether it should stay or dismiss the declaratory

petition, and explained that the City Board had failed to present it with sufficient facts from

which it could declare the law:

Having reviewed the Petition, we find that it fails to present any
facts concerning the funding formula that the Baltimore City Public
School System (BCPSS) actually used to fund the charter schools. . . .
The Petition is, in essence, a request for an evidentiary hearing at which time
BCPSS states that it will present the facts and the formula it used.

A request for a declaratory judgment must present a “justiciable
controversy, rather than abstract, hypothetical, or contingent questions.”
Miller v. Augusta Mut. Ins. Co., 157 F. App’x. 632, 637 (4th Cir. 2005). The
Petition here presents no concrete facts from which we could declare the law.

(Emphasis added). The Charter School Operators requested that the State Board compel

the City Board to disclose its commensurate funding information. In a request for an appeal

in front of the State Board, a party must provide “a statement of the facts necessary to an

understanding of the appeal.” COMAR 13A.01.05.02(A)(3). While an appellant may

27
request to “present additional evidence on the issues in an appeal,” the State Board must

first deem the additional evidence as “material” and “that there were good reasons for the

failure to offer the evidence in the proceedings before the local board.” COMAR

13A.01.05.04(C). After satisfying these factors, the State Board may, but is not required

to: (a) “[r]emand the appeal to the local board for the limited purpose of receiving the

additional evidence,” or (b) “[r]eceive the additional evidence.” COMAR

13A.01.05.04(C). Here, the Charter School Operators did not possess the “additional

evidence” of commensurate funding information and thus did not have the ability to present

“additional evidence” in its petition to the State Board. Adhering to the confines of

COMAR, the State Board was unwilling, and statutorily unable, to conduct evidentiary

hearings regarding the disputed commensurate funding information.

d. Further Proceedings Before the Circuit Court

Subsequently, the City Board filed a counterclaim against the Charter School

Operators before the circuit court. In the counterclaim, the City Board contended that it

had provided the Charter School Operators with administrative services whose value were

significantly greater than 2% of the charter schools’ commensurate funding allocation, and

that the 2% cap on administrative services stated in the City Neighbors declaratory rulings

should only apply to mandatory functions “that may only be performed by the central office

of a local school system.” The City Board therefore requested that the circuit court issue a

declaratory ruling stating which services provided to charter schools were “mandatory”

and subject to the 2% deduction. And, the City Board requested that either the value of the

additional, non-mandatory services provided be counted as commensurate funding

28
received from the City Board, or in the alternative, that the Charter School Operators be

required to reimburse the City Board for the cost of those services to prevent unjust

enrichment.16

The Charter School Operators moved to dismiss the City Board’s counterclaim for

failure to state a claim upon which relief can be granted.17 On April 18, 2016, the circuit

court held a hearing on the Charter School Operators’ motion to dismiss. At that hearing,

Judge Nance questioned counsel about the procedural history of the case:

May I beg a question of both parties -- or both sides, if you would, please?
Tell me procedurally what happened in this case, procedurally in terms of
what [the Charter School Operators] did before it got to being a litigation in
the Circuit Court for Baltimore City. . . . My understanding is, is that if there
is a dispute, the dispute is raised with the local board. If there is a problem
in the resolution by the local board there is an administrative process. That
is the reason for my question. . . . Tell me what happened that causes you
to rightfully be in my courtroom.

(Emphasis added). Counsel for the City Board responded to the judge’s question:

I wish I were in front of you I think in January we had a hearing on a motion
to dismiss where we argued exactly what Your Honor is stating, the doctrine
of primary jurisdiction that this case should be stayed in favor of the State
Board . . . making a determination of these issues and our motion was denied.

16
The counterclaims also made a number of breach of contract claims against the
Charter School Operators.
17
The Charter School Operators asserted that the City Board’s claim for declaratory
relief should be dismissed because the issue it raised was already included in the Charter
School Operators’ complaints. They also claimed that the City Board’s unjust enrichment
claim should be dismissed because such claims are unavailable when there is an express
contract between the parties. Finally, as to the breach of contract claims asserted by the
City Board in its counterclaims, the Charter School Operators maintained that the City
Board had not provided sufficiently detailed factual allegations to meet the Maryland
pleading requirements for those claims.

29
Counsel for the City Board also informed the judge that there had been an administrative

proceeding pending before the State Board, but that it had been dismissed after Judge

Rubin’s order directing that the case proceed to trial.

Judge Nance thereafter took a brief recess during which he “had an opportunity to

review . . . part of the matters procedurally in chambers.” Upon returning to the bench, the

judge noted that the City Board “would like to make an oral motion at this time.” The City

Board then moved to dismiss “on the basis that the appropriate tribunal or court or body to

hear this matter is the State Board of Education.” Citing City Neighbors, counsel for the

City Board stated that the “case law is very clear that [the State Board] should be the first

one to take up matters such as the ones that have been raised by the Plaintiff here relating

to intricate, detailed, and important issues of public policy relating to education and

educational funding.”

Counsel for the Charter School Operators responded that the claim raised in their

complaints was for breach of contract, and the resolution of such disputes is for the courts

and did not need to first be resolved by the State Board. He also argued that proceeding

before the State Board would provide no remedy in the form of monetary damages. And,

he argued that the issue of commensurate funding had already been settled and affirmed by

the courts, thus “satisfying the requirements of primary jurisdiction of letting the

administrative agency have a crack at setting out the interpretation.”

At one point in the hearing, Judge Nance questioned counsel for the Charter School

Operators as to what proceedings had taken place before the City Board. Counsel

30
responded that the Charter School Operators had not sought a hearing or opinion from the

City Board. Later in the hearing, Judge Nance stated the following:

I want to make sure that this [c]ourt says specifically that it believes that
[the Charter School Operators] have a duty to seek administrative
review of a local [school] board and if not [then the State] Board as to
that which is asserted and claimed by [the Charter School Operators] in this
case for there to be an administrative review as to your claims before it comes
to the [c]ircuit [c]ourt.

(Emphasis added).

At the conclusion of the hearing, Judge Nance granted the Charter School

Operators’ motion to dismiss the City Board’s counterclaims without prejudice. The judge

also determined that, while granting the City Board’s verbal motion to dismiss was not

appropriate, “in lieu of [the City Board’s] motion to dismiss, this [c]ourt is granting an

order to stay as to these matters pending administrative review and appeal.” The following

day, Judge Nance entered a written order to that effect, which in pertinent part ordered that

the consolidated action was stayed “pending administrative review of the parties’ dispute

by the State Board of Education” (the “Stay Order”).

e. The City Board’s Second Petition for Declaratory Ruling

After the Stay Order was issued, the City Board filed a second petition for

declaratory ruling before the State Board.18 Unlike in its initial petition for declaratory

relief filed before the State Board, the City Board provided a partial explanation of its

18
A partial copy of the second petition was included in the Appendix to the City
Board’s brief to this Court. That copy did not include any of the exhibits referenced in the
petition.

31
charter school funding formula for the 2015-16 school year. The City Board stated that the

City School System’s “Total Operating Budget, for the 2015-16 school year was

$1,322,461,846.” The City Board explained that in calculating charter schools funding, it

began by excluding numerous categories of funds from that figure, including: “restricted

funds,”19 funds for debt servicing, adult education, retiree health benefits, pre-

kindergarten,20 and “non-public education,”21 contributions from the City School System’s

19
The declaratory petition asserted that the City School System segregates funds in
its budget into three categories: the General Fund, the Special Fund, or the Enterprise Fund.
According to the City Board, “the Special Fund and the Enterprise Fund are restricted” and
funds in those categories “can only be used for certain purposes.” It is unclear from the
petition, however, if the restrictions on the use of those funds derive from State or federal
law, or from City Board policy. The City Board also stated in the petition that “individual
charter schools receive upward adjustments to the base cash per-pupil for all restricted
funds to which they are entitled.” But it is unclear whether the Charter School Operators
would be entitled to receive any of the funds labelled as restricted, and if so, the amounts
to which they would be entitled.
20
The declaratory petition asserted that Baltimore City calculated “full-day [pre-
kindergarten] to [be] approximately 4,000 students,” a population spread across both
traditional public schools and some charter schools. The City Board maintained that it
provides “the same level of financial support . . . on the same basis” to all schools providing
pre-kindergarten. However, the City Board asserts that it excludes funding for the program
from its charter funding allocation, and does not count those students towards its overall
enrollment total, “[b]ecause the [pre-kindergarten] program benefits all schools, both
traditional and charter, and is an underfunded expense that City Schools is required to
provide[.]”
21
The City Board asserted in its petition that for a small population of students “with
physical, emotional, and developmental needs that cannot be adequately met in Baltimore
City public schools,” it is required by law to “pay for alternative placements” in private
schools for those students.

32
annual fund balance22 and “non-state/local revenue,”23 funding for special education

students, funding for students with limited English language proficiency (“ESOL” funds),

and funding for specialized transportation services, primarily for special education

students. The excluded funds amount to $572,978,187, or slightly over 43% of the City

Board’s total operating budget for the 2015-16 school year.

The City Board stated that its total budget after “adjusting” for the restricted funds

was $749,483,659. The City Board explained that it divided that figure by the population

of students enrolled in kindergarten through the twelfth grade in the City School System

from the previous year, 78,631, to reach a per-pupil figure of $9532. The City Board

explained that it then deducted 2% from that figure for central administrative costs, as

permitted by prior State Board precedent. And, the City Board stated that it added an

additional $46 to the per-pupil total as part of a “negotiated adjustment,”24 to reach a “base

cash charter per pupil allocation” of $9387.

22
The fund balance is “money that was not used in prior operating years.” In some
years, the City School System funds a portion of its budget expenses with a contribution
from the fund balance.
23
The City School System lists earnings from certain sources separately, including
“interest on investment earnings, tuition payments from students who live outside of
Baltimore City, payments for rental and special use of [its] buildings, revenue from cellular
telephone towers placed on [its] buildings, vending machine contracts, and other revenue
sources.” The City Board contends these sources are “not federal, state, or local
appropriations for K-12 education.”
24
In the declaratory petition, the City Board asserts that it “agreed” to a
“placeholder” base cash per-pupil figure of $9387 early in 2015 in order to provide “budget
stability” for charter schools while it was waiting for final figures for the State contribution
to its budget and projected enrollment. Once the final figures were received, the base cash-
per pupil under its formula was $9341, which was $46 less than the $9387 figure it had
33
Finally, the City Board then added to the $9387 proposed allocation the cost of

various “needs-based” services that it provides “in-kind” to charter schools, which it valued

at $3496, to reach a total figure of both cash and in-kind services of $12,883. It contended

that figure was slightly higher than would have been reached under the approved State

Board methodology, and thus was “commensurate” funding under ED § 9-109 and State

Board guidance.25 Furthermore, the City Board contended that its funding formula,

including all of the exclusions and its insistence on providing certain services “in-kind”

instead of as a cash allocation, was consistent with State Board precedent. Therefore, the

City Board requested that the State Board declare that it had provided commensurate

funding for the 2015-16 school year.

However, the City Board also asked that the State Board reconsider some of the

guidance it had provided in the City Neighbors declaratory rulings. Specifically, the City

Board contended that the limitation that it can only deduct up to 2% of a charter school’s

funding allocation for the cost of central administrative services “does not remotely cover

the true cost of those services, resulting in an unfair subsidy for charter schools.” The City

Board therefore requested that the State Board entirely “eliminate the 2% cap or lift it to

previously provided to charter schools. However, it elected not to modify the original
figure.
25
The City Board also contended that, in reviewing whether its funding formula
resulted in commensurate funding, the State Board should apply the deferential standard
of review stated in COMAR 13A.01.05.05(A)-(C), under which the decision of the City
Board would be considered “prima facie” correct unless “arbitrary, unreasonable, or
illegal.”

34
cover the actual cost of all services” that the City Board provides centrally. In the

alternative, the City Board requested that if the State Board reaffirms the 2% cap, that it

“clarify that the 2% cap covers only a limited number of services and that City Schools can

require reimbursement from charter schools for [additional services.]”26

The Charter School Operators filed a motion to dismiss the State Board’s petition,

contending that it was “outside of the State Board’s jurisdiction because it asks for

extensive fact finding instead of interpretation of laws,” and because they had appealed the

circuit court’s Stay Order to the Court of Special Appeals. In the State Board’s order, the

State Board considered the disposition of the “ongoing dispute.” The State Board

specifically referenced Judge Rubin’s holding that “the Circuit Court had proper

jurisdiction” when the circuit court denied the petition to dismiss Charter School

Operators’ complaint. The State Board then stated that “the Circuit Court case is stayed

and that [the Charter School Operators] have appealed the stay to the Court of Special

Appeals.” As a result, the State Board held that the “case remains pending in the judicial

system” and entered an order dismissing the petition “because the case remains within the

jurisdictional purview of the courts.”

f. Appeal to the Court of Special Appeals

The Court of Special Appeals stated that the Charter School Operators had presented

a single issue before it on appeal, which it had rephrased:

26
The City Board also requested that the State Board clarify whether the deduction
is 2% of its total operating budget, or 2% of its total operating budget minus permissible
deductions.

35
Did the circuit court err in staying the proceedings pending administrative
review on the ground that the State Board has primary jurisdiction over the
issues raised in the complaint?

Monarch Acad., 231 Md. App. 594, 600 (2017). However, the court declined to resolve

that issue. Instead, it determined sua sponte27 that “the circuit court’s order is not an

appealable order,” because it was neither a final judgment nor an appealable order under

the collateral order doctrine, and therefore dismissed the appeal. Id. at 600, 619.

The Court of Special Appeals noted that “to constitute a final judgment, a trial

court’s ruling ‘must either decide and conclude the rights of the parties involved or deny a

party the means to prosecute or defend rights and interests in the subject matter of the

proceeding.’” Id. at 613 (quoting Md. Bd. of Physicians v. Geier, 451 Md. 526, 545

(2017)). The intermediate appellate court determined that the Stay Order “did not conclude

the rights of the parties or adjudicate all of the claims in the action.” Id. at 613–14. And,

relying on federal case law, the court concluded that the Stay Order did not have the effect

of putting the Charter School Operators out of court, “because it merely directed that the

parties first go to the State Board[.]” Id. at 613-15 (discussing Crystal Clear Commc’ns,

27
Before the Court of Special Appeals, the City Board filed a motion to dismiss the
appeal on the ground that the circuit court’s stay order was not an appealable order.
Monarch Acad., 231 Md. App. at 612 n.10. The court denied the motion, “with leave to
seek that relief in Appellee’s brief,” but the City Board did not “include a motion to dismiss
in its brief or request a ruling on whether the Stay Order was an appealable order.” Id. Nor
was the issue raised in oral argument before the court. Id. Nonetheless, after oral argument,
the court “requested the parties to address whether the Stay Order was an appealable order”
in written supplemental filings. Id. The City Board thereafter “filed a memorandum stating
its view that the Stay Order was not an appealable order,” but also requested that the Court
of Special Appeals “in the interest of judicial economy and jurisdictional clarity,” issue a
ruling on the merits and hold that the State Board had primary jurisdiction over the dispute.

36
Inc. v. SW Bell Tel. Co., 415 F.3d 1171, 1175-78 (10th Cir. 2005) and Occidental Chem.

Corp. v. Louisiana Pub. Serv. Comm’n, 810 F.3d 299, 305-307 (5th Cir. 2016)). The court

also held that the Stay Order was not appealable under the collateral order doctrine. Id. at

615-19.

F. Appeal to this Court and Questions Presented

The Charter School Operators filed a petition for writ of certiorari to this Court from

the decision of the Court of Special Appeals, which we granted on April 4, 2017. Monarch

Acad., 452 Md. 523 (2017). In the petition, the Charter School Operators presented several

issues for our review, which we have rephrased and reordered:

1. Is the circuit court’s Stay Order an appealable order?

2. Did the circuit court abuse its discretion in entering the Stay Order prior to the
conclusion of discovery and without providing guidance to the parties?

3. Does the doctrine of primary jurisdiction require that proceedings before the circuit
court be stayed in order to permit the State Board to resolve the issue of whether the
City Board has provided the Charter School Operators with commensurate
funding?28
28
In their petition for writ of certiorari, the Charter School Operators presented the
following three questions for review:

1) Is a trial court’s issuance of an indefinite stay of plaintiffs’ action, requiring
“administrative review of the parties’ dispute,” an appealable order where it imposes a
condition that (a) is beyond the control of the plaintiffs to satisfy and (b) requires that
plaintiffs undertake actions that even if satisfied would substantively impair plaintiffs’
substantive and procedural rights?

2) Did the trial court err in determining that the State Board of Education has
“primary jurisdiction” over the Charter School Operators’ contract actions and, as a
consequence, staying the proceedings “pending administrative review of the parties’
dispute by the State Board of Education?”

3) If Question (2) is answered in the negative, then what process is available to
plaintiffs both at the State Board and then in court that would permit their claims to be fully
37
STANDARD OF REVIEW

The issue of whether the circuit court’s Stay Order is a final and appealable

judgment, or is appealable even if not a final judgment under the collateral order doctrine,

is a question of law that an appellate court reviews de novo. Balt. Home All., LLC v.

Geesing, 218 Md. App. 375, 381 (2014). Likewise, whether the State Board has primary

jurisdiction over some or all of the issues raised by the Charter School Operators, so that

they “must exhaust administrative remedies” before the State Board prior to seeking review

in circuit court is “a legal issue which the Court of Appeals reviews de novo.” United Ins.

Co. of Am. v. Maryland Ins. Admin., 450 Md. 1, 14 (2016); see also Falls Road Community

Ass’n, Inc. v. Balt. Cty., 437 Md. 115, 134 (2014).

As to the circuit court’s sua sponte entry of the Stay Order “in lieu” of dismissing

the Charter School Operators’ complaints, a court’s decision to grant or deny a stay order

is generally within its discretion, and is reviewed for an abuse of discretion. Fishman v.

Murphy ex rel. Estate of Urban, 433 Md. 534, 546 (2013); see also Geier v. Maryland State

Bd. of Physicians, 223 Md. App. 404, 450 (2015), reconsideration denied (July 31, 2015);

Bechamps v. 1190 Augustine Herman, LC, 202 Md. App. 455, 460 (2011). There is an

abuse of discretion when the trial court ruling was “clearly against the logic and effect of

facts and inferences before the court[ ] . . . or when the ruling is violative of fact and logic.”

Fishman, 433 Md. at 546 (quoting Aventis Pasteur, Inc. v. Skevofilax, 396 Md. 405, 419

heard and adjudicated, with relief granted, and that would not deprive Petitioners of their
substantive rights?

38
(2007)). In order to be reversed a circuit court’s decision generally must be “well removed

from any center mark imagined by the reviewing court and beyond the fringe of what that

courts deems minimally acceptable.” Skevofilax, 396 Md. at 418-19 (quoting Wilson v.

John Crane, Inc., 385 Md. 185, 198-99 (2005)).

DISCUSSION

“In Maryland, appellate jurisdiction, except as constitutionally created, is statutorily

granted.” Schuele v. Case Handyman & Remodeling Servs., LLC, 412 Md. 555, 565

(2010). And, “[w]here appellate jurisdiction is lacking, the appellate court will dismiss the

appeal on its own motion.” Id. (quoting Gruber v. Gruber, 369 Md. 540, 546 (2002)).

Therefore, we must first decide whether the Stay Order is appealable before turning to

whether the Stay Order was an abuse of discretion, and whether the underlying

commensurate funding issue must be referred to the State Board under the doctrine of

primary jurisdiction.

A. Appealability of the Stay Order

a. Finality of Judgment

Pursuant to Maryland Code, Courts & Judicial Proceedings Article (“CJ”) § 12-301,

a party may generally appeal only from “a final judgment entered in a civil or criminal case

by a circuit court.”29 However, as the Court noted in Metro Maintenance Systems South,

29
“[T]here are only three exceptions to that final judgment requirement: appeals
from interlocutory orders specifically allowed by statute; immediate appeals permitted
under Maryland Rule 2-602; and appeals from interlocutory rulings allowed under the
common law collateral order doctrine.” Addison v. Lochearn Nursing Home, LLC, 411
Md. 251, 273 (2009) (quoting Salvagno v. Frew, 388 Md. 605, 615 (2005)). Here, the
circuit court did not expressly “direct the entry of final judgment” as required for an
39
Inc. v. Milburn, CJ § 12-301 “does not define finality, but instead leaves it to this Court to

determine what makes a judgment ‘final.’” 442 Md. 289, 297 (2015).

This Court has “often stated that the purpose of the final judgment rule is to avoid

piecemeal appeals . . . and [that] the reason for avoiding piecemeal appeals is the promotion

of judicial efficiency.” Brewster v. Woodhaven Bldg. & Dev., Inc., 360 Md. 602, 616

(2000). One important aspect of judicial efficiency is avoiding the “interruption of the trial

court process by repeated application to appellate courts.” Id. Specifically:

Postponing review until the final judgment, or minimizing the number of
occasions for interlocutory appeal, also is important to avoid interference
with the trial process. . . . Repeated interruptions of the trial court process .
. . may require wasteful losses of familiarity with the case by court and
perhaps counsel as well.

Id. (quoting Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, 15A Fed.

Practice & Proc. § 3906, 277 (2d ed. 1991)). The Court has emphasized that such an

invidious interruption of the trial process “cannot occur” when there is a grant of a motion

to transfer a case to another venue or court, explaining that “[i]n the transferring court,

immediate appeal under Rule 2-602(b). Nor is this a permissible interlocutory appeal under
statute. CJ § 12-303 describes the interlocutory orders that a party may appeal from in a
civil case. However, none of the parties has contended that the circuit court’s stay order is
an appealable interlocutory order under that statute, and the stay order does not fit in any
of the permissible categories of appealable orders listed in the statute.

The Charter School Operators do contend that this Court has appellate jurisdiction
to resolve this appeal under the collateral order doctrine. However, we have held that “the
collateral order doctrine in Maryland is very limited” and that it “should be applied
sparingly in only the most extraordinary circumstances.” Schuele, 412 Md. at 572 (internal
quotation marks and citations omitted). As we believe that the appealability of the circuit
court’s Stay Order can be resolved under the final judgment rule, we need not reach the
Charter School Operators arguments as to the collateral order doctrine.

40
there are no longer any proceedings to interrupt, for the proceedings have been

terminated[,]” while “[i]n the receiving court, the proceedings cannot be interrupted,

because they have not yet begun.” Id.

The Court has also provided guidance as to when a judgment is “final” and

appealable. We have held that “[i]n order to be an unqualified, final disposition, an order

of a circuit court must be ‘so final as either to determine and conclude the rights involved

or to deny the appellant the means of further prosecuting or defending his or her rights and

interests in the subject matter of the proceeding.’” Metro Maintenance, 442 Md. at 299

(quoting Rohrbeck v. Rohrbeck, 318 Md. 28, 41 (1989)) (italicized emphasis in original)

(additional emphasis added). Thus, “[e]ven if the order does not decide and conclude the

rights of the parties, it nevertheless will be a final judgment if it terminates the proceedings

in that court and denies a party the ability to further prosecute or defend the party’s rights

concerning the subject matter of the proceeding.” Id. Such an order has been described as

one that “has the effect of ‘put[ting] the [party] out of court.’”30 Id. (quoting McCormick

v. St. Francis de Sales Church, 219 Md. 422, 426-27 (1959)) (emphasis added).

30
In Metro Maintenance, the Court also identified two other “attributes” that a
ruling “ordinarily” must have in order to be a final judgment: “unless the court acts
pursuant to Maryland Rule 2-602(b) to direct the entry of a final judgment as to less than
all of the claims or all of the parties, it must adjudicate or complete the adjudication of all
claims against all parties” and “it must be set forth and recorded in accordance with Rule
2-601.” 442 Md. at 298.

In the instant case, the circuit court’s Stay Order stayed all claims in the consolidated
actions before it pending administrative review by the State Board. Therefore, the Stay
Order was a decision that affected “all claims against all parties” in the case. And, the
question of whether the Stay Order was effectively an “adjudication” of those claims is
subsumed in the question of whether the Stay Order was a final disposition of the matters
41
We have held that the “key question” as to whether an order that terminates

proceedings in a particular court has the effect of putting a party out of court is “whether

the order contemplates that the parties will no longer litigate their rights in that court.” Id.

In Metro Maintenance, we referenced our holding in Moore v. Pomory, 329 Md. 428, 431

(1993) as providing an “illustration” of the distinction between “an order that terminates

the proceedings in a particular court and one that does not”:

In [Moore], the Court held that an order dismissing a complaint in its entirety
“without prejudice” was a final judgment because it terminated the
proceeding in the particular court. By contrast, the Court stated, an order
of dismissal that expressly allows a plaintiff to file an amended complaint
does not terminate the proceedings, as it anticipates further proceedings
in the same court. Although a party has no obligation to file an amended
complaint and there may be no further proceedings, the case remains pending
in the event an amended complaint is filed. Once an amended complaint
is filed, the parties may continue to litigate their interests in the same
proceeding before the same court. Thus, when an order anticipates
additional proceedings in the same court during which the parties may
continue to litigate their rights in the particular matter, the order does not
terminate the proceedings in that court, and is not a final judgment.

before the court that had the effect of putting the Charter School Operators out of court.
See e.g., Black’s Law Dictionary (10th ed. 2014) (defining “adjudication” as a “judgment,”
which is “[a] court’s final determination of the rights and obligations of the parties in a
case”).

The remaining attribute of proper recordation under Rule 2-601 is “a creature of
court rule.” Hiob v. Progressive Am. Ins. Co., 440 Md. 466, 489 n.21 (2014). Accordingly,
“parties may waive the separate document requirement” on appeal. Id. Here, that is
precisely what occurred; neither party has raised the issue of Rule 2-601 recordation before
this Court. Furthermore, before the Court of Special Appeals, the City Board explicitly
asked that court to issue a ruling on the merits of the primary jurisdiction dispute “in the
interest of judicial economy and jurisdictional clarity[,]” despite the lack of recordation of
judgment. Therefore the issue of recordation of judgment under Rule 2-601 has been
waived.

42
Metro Maintenance, 442 Md. at 300-301 (emphasis added). We have consistently

recognized that any order that contemplates parties will no longer litigate their rights in

that court is a final judgment. See e.g., Brewster, 360 Md. at 615–16 (holding that an order

of the circuit court transferring a case to another circuit court under venue or forum non

conveniens grounds is an appealable final judgment because no further proceedings will

occur in the court of original jurisdiction); Ferrell v. Benson, 352 Md. 2, 7 (1998) (holding

that an order transferring a case from circuit court to District Court is a final judgment

because it terminates the proceedings in the circuit court, even though proceedings continue

in the District Court); Horsey v. Horsey, 329 Md. 392, 402 (1993) (holding that an order

compelling arbitration is a final judgment because it terminates the proceedings in that

court, even if proceedings continue before the arbitrator).

The issue before the Court in Metro Maintenance was whether a circuit court’s

remand of a case to an administrative agency for further proceedings, prior to the circuit

court conducting any review of the agency’s decision, was a final judgment. 442 Md. at

293-94. In that case, a truck driver quit his job, claiming racially motivated mistreatment,

and applied for unemployment benefits to the Department of Labor, Licensing, and

Regulation (“DLLR”). Id. at 294. A DLLR claim examiner denied him benefits on the

grounds that he had quit his job “without good cause.” Id. Mr. Milburn appealed within

the agency, but the claim examiner’s ruling was upheld by a hearing examiner, and then

adopted by the DLLR Board of Appeals. Id. at 295. Mr. Milburn thereafter appealed to

the circuit court. Id. However, before the circuit court, the DLLR filed a motion requesting

that the court remand the case to the agency before the court conducted its judicial review

43
so that the Board could review the hearing examiner’s decision. Id. at 296. The circuit

court granted the remand request, without reaching the merits of the claims on appeal. Id.

In evaluating whether the remand order was a final and appealable judgment, we

noted that many remands by a circuit court to an agency, which by their nature contemplate

additional proceedings before the agency, “may appear to be non-final in nature[.]” Id. at

301. However, we stated that under “principles of finality” in Maryland administrative

law, “many such remands are appealable final judgments.” Id. at 301.31 Applying those

principles, we considered whether the remand order at issue put the parties effectively out

of court. Id. at 308. We concluded that it did not, and that “the work of the [c]ircuit [c]ourt

here is not done” and explained:

Unlike an order transferring a case to another circuit court, to the District
Court, or to an arbitration panel, the remand order here contemplates that
judicial review awaits the return of the case following the remand.
Specifically, once the Board has an opportunity to review its decision, and
possibly correct what it perceives as an omission or defect, the [c]ircuit
[c]ourt would then . . . determine whether the decision reflects a correct
understanding of the law and whether there is “competent, material, and
substantial” evidence to support it. This type of remand is thus nothing more
than a brief delay in the ongoing review of the agency decision . . . that did
not divest [the circuit court] of its continuing jurisdiction over the case. It is
not a termination of the proceedings in that court.

Id. at 308-09 (internal quotation marks and citations omitted). We also concluded that the

remand at issue was “akin to the example that the Court offered in Moore of a non-final

31
Specifically, we held that as a general rule “a remand after a circuit court has
conducted judicial review that precludes the parties from further contesting or defending
the validity of the agency’s decision in that court—and leaves nothing further for the court
to do—is a final judgment.” Metro Maintenance, 442 Md. at 304.

44
order—dismissal of a complaint with leave to amend.” Id. at 309. We explained that while,

in both instances, “the parties have, in a sense, been ‘put out of court,’ . . . in both cases

there is a strong potential, bordering on certainty, that the issue at hand . . . will be back for

determination by the circuit court.” Id.

b. The Court of Special Appeals Opinion

The parties have not presented, and we have not found, any Maryland cases in which

courts have had occasion to apply the final judgment principles elucidated in Metro

Maintenance and the other cases discussed above to the specific circumstances presented

in this case―where a circuit court determines under the doctrine of primary jurisdiction

that a party must exhaust his remedy before an administrative agency prior to the court

ruling on an issue in the case before it, and stays proceedings to permit that party to exhaust

the administrative remedy. However, the Court of Special Appeals relied on two federal

cases which addressed the appealability of a stay in factually similar situations:

[I]n Crystal Clear Commc’ns, Inc. v. SW Bell Tel. Co., 415 F.3d 1171,
1173 (10th Cir. 2005), a federal trial court issued an order similar to the one
here, staying a lawsuit filed by several payphone providers against
Southwestern Bell Telephone Company, pending the resolution of certain
issues by federal and state agencies. The United States Court of Appeals for
the Tenth Circuit noted that, although a decision to stay litigation ordinarily
does not constitute a final judgment, there is an exception for a stay order
that puts a party “effectively out of court.” Id. at 1175 (quoting Moses H.
Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 10 n.11 (1983)).
The [c]ourt held, however, that the order in that case, staying the proceedings
in court pending resolution of certain issues by the agencies pursuant to the
primary jurisdiction doctrine, with contemplation of return to court, was not
a final decision. Id. at 1176-78.

That is not to say that a stay order pending administrative review can
never qualify as a final judgment. In Occidental Chem. Corp. v. Louisiana
Pub. Serv. Comm’n, 810 F.3d 299, 305, 307 (5th Cir. 2016), the United States

45
Court of Appeals for the Fifth Circuit addressed whether an order by a federal
court indefinitely staying proceedings to allow the Federal Energy
Regulatory Commission to act on an administrative complaint was a final
judgment when the court retained jurisdiction for a later determination on the
merits. The Fifth Circuit held that the order in that case “functioned as a
final decision” because it resulted in Occidental being “effectively out of
court” for a protracted and indefinite period, and therefore, the order was
appealable.

Monarch Acad., 231 Md. App. at 614-15 (italicized emphasis in original). The Court of

Special Appeals concluded that the facts of this case are more in line with the Tenth

Circuit’s holding in Crystal Clear, 415 F.3d 1171 (10th Cir. 2005). In a footnote, the court

noted that the Charter School Operators would appear to be able to file a petition for

declaratory review to the State Board under COMAR 13A.01.05.02(D). Id. at 615 n.12.

Although the court noted that the State Board had “declined to weigh in on the issue while

the matter was simultaneously being pursued in court,” it determined that justification for

declining to take up a declaratory petition “no longer is applicable.” Id. at 615. The court

therefore concluded that “there is no indication that there will be a substantial delay in

obtaining an administrative ruling” and that “the Stay Order does not place the Charter

School[] [Operators] ‘effectively out of court.’” Id.

We agree with the intermediate appellate court that both federal cases―which, like

Maryland law, recognize that an order that puts a party effectively out of court is a final

judgment―are persuasive authority. However, as we shall explain, we believe that the

more apt decision under the circumstances is the Fifth Circuit’s holding in Occidental

Chemical Corp. that a stay order that places a party effectively out of court for a “protracted

and indefinite period” is a final and appealable judgment.

46
c. Analysis

Generally, a stay order to permit a party to bring a claim before an administrative

agency will only temporarily put a party “out of court” and will carry with it the “strong

potential, bordering on certainty, that the issue at hand . . . will be back for determination

by the circuit court” if either of the parties is dissatisfied with the agency’s decision and

seeks judicial review before the circuit court. See Metro Maintenance, 442 Md. at 309.

However, under the unique circumstances of this case, the Stay Order issued by the circuit

court was a final and appealable order that had the effect of putting the Charter School

Operators entirely out of court with no clear procedural path they could follow to return to

court within a reasonable period of time.

First, the Stay Order suspended all claims before the circuit court, and no proceeding

was pending before the State Board at the time the order was entered. Thus, similar to the

transfer of cases between courts discussed in Brewster, 360 Md. at 602, 613-19, appellate

review of the Stay Order would not interrupt any ongoing trial process or administrative

process before the State Board. Therefore, appellate review of the Stay Order does not

conflict with the underlying purpose of the final judgment rule of avoiding piecemeal

appeals that interrupt the trial court and erode judicial efficiency. In this case, there is

simply no pending proceeding before any judicial or quasi-judicial body that would be

interrupted by appellate review.

Second, unlike the dismissal without prejudice in Moore, 329 Md. at 433, or the

remand order in Metro Maintenance, 442 Md. at 310, the Stay Order does not specify what,

precisely, the Charter School Operators need to do in order for proceedings to resume

47
before the circuit court. The Stay Order merely states that proceedings in the consolidated

breach of contract action are stayed “pending administrative review of the parties’ dispute

by the State Board of Education.” It does not specify which issues in the case need to be

resolved by the State Board in order for the breach of contract action to resume before the

circuit court, or how the Charter School Operators should bring those issues before the

State Board for administrative review.

The lack of clarity in the Stay Order might be of no moment if there were a clear

procedural mechanism through which the Charter School Operators could bring their

breach of contract claim before the State Board and obtain a ruling or decision as to all

aspects of that claim. However, the only procedural route available to the Charter School

Operators at this juncture―filing a petition to the State Board for a declaratory ruling under

COMAR 13A.01.05.02(D)―would not lead to a full resolution by the State Board of their

breach of contract claim.

Initially, the State Board may decline to issue a declaratory ruling for issues that do

not involve public educational laws or its own regulations. See COMAR 13A.01.05.02(D)

(stating that a party may file a petition for declaratory ruling by the State Board only as to

“the interpretation of a public school law or regulation of the State Board that is material

to an existing case or controversy.”). Thus, the Charter School Operators will be unable to

obtain a declaratory ruling as to the first part of their breach of contract claim, their

allegation that the City Board failed to provide them with the budget and financial

information specified in the Contract. That allegation does not involve any public school

law or State Board regulation; it is a pure contract law claim.

48
The State Board does not have the discretion to refuse to decide an issue involving

the interpretation of a public education law or State Board regulation that is material to a

live controversy or dispute when such an issue is properly put before it in a declaratory

petition. See e.g., Bd. of Educ. for Dorchester Cty. v. Hubbard, 305 Md. 774, 788-90

(1986) (citing Bd. of Educ. of Garrett Cty. v. Lendo, 295 Md. 55, 65-66 (1982)) (holding

that in the instance of a case requiring an explanation of the ‘true intent and meaning’ of a

provision of the Education Article or a State Board bylaw, a litigant has the choice of either

going first to the county superintendent under [ED] § 4-205 and then on up the appellate

ladder, or going directly to the State Board under [ED] § 2-205” and that “the State Board

is required to hear appeals taken under either section 2-205 or 4-205.”). Here, it does

appear that the Charter School Operators could file a petition with the State Board seeking

a declaratory ruling as to a key issue underlying their breach of contract claim, namely,

whether the City Board’s proposed charter school funding allocation for the 2015-16

school year is commensurate funding under ED § 9-109 and State Board precedent. That

petition would certainly present the State Board with the interpretation of a matter of State

public educational law.

However, a declaratory ruling issued by the State Board, like any State agency

declaratory ruling, generally is based solely “on the facts set forth in the petition.” SG §

10-305(b). Accordingly, even when a petition for declaratory ruling raises an issue

involving the interpretation of a public educational law or State Board regulation material

to an existing case or controversy, the petition must set forth sufficient facts to enable the

State Board to declare the meaning of the law. In this case, the State Board has already

49
denied two similar petitions for a declaratory ruling filed by the City Board, stating that it

was denying the first petition in part because it lacked “concrete facts from which [it] could

declare the law.”

Since that denial, the City Board ultimately divulged some details of its funding

formula for charter schools for the 2015-16 school year in its second petition for

declaratory ruling filed before the State Board. But, that information is incomplete and

one-sided, and may not be sufficient for the State Board to determine whether the City

Board’s proposed funding allocation is commensurate under the complex, multi-step

formula and approach developed by the State Board. For instance, the City Board did not

fully explain why certain funds were “restricted” and excluded from the calculation of

commensurate funding. Nor did the City Board describe which, if any, of the “in-kind”

services that it was providing to charter schools instead of cash funding had been

affirmatively requested by charter schools. And, the Charter School Operators note in their

brief to this Court that they “believe the City Board has not, as a factual matter, used

correct, accurate numbers to perform the funding calculation.” Thus, the Charter School

Operators may still lack sufficient concrete facts and information about the City Board’s

finances and commensurate funding formula to successfully petition the State Board to

declare whether the City Board’s proposed funding allocation is commensurate funding.

The State Board does have a procedural option available to it to develop a more

detailed factual record as to the City Board’s finances and charter school funding formula.

As counsel for the Charter School Operators and the City Board discussed in oral

arguments before this Court, the State Board does not have dedicated administrative law

50
judges (“ALJs”). However, the State Board can refer a case to the Office of

Administrative Hearings (“OAH”) for a fact-finding hearing before an ALJ. See COMAR

13A.01.05.06(C) (providing that, in an appeal or declaratory ruling action before the State

Board, “[u]pon review of the record, the State Board may transfer the case to the Office of

Administrative hearings for the scheduling of a hearing before an administrative law

judge.”) (Emphasis added). But the decision of whether to transfer a case to the OAH is

generally a discretionary matter.32 And, as a recent State Board decision indicates, the

State Board generally declines to transfer petitions for declaratory rulings to the OAH:

The superintendent [of the Board of Education of Howard County], alleging
a host of factual disputes, requests that this case be transferred to OAH. That
request is inappropriate in this proceeding. Specifically, in cases in which
the parties petition for declaratory rulings, the State Board’s legal obligation
is to issue an “interpretation of a public school law or regulation of the State
Board that is material to an existing [case or] controversy.” COMAR
13A.01.05.02(D). Neither that regulation nor the statute giving the State
Board authority to interpret the true intent and meaning of State education
law, [ED] § 2-205(e), envision that a declaratory ruling proceeding before
this Board is one in which the underlying factual controversy between the
parties was intended to be resolved. . . .

In re Bd. of Educ. of Howard Cty. v. Foose, MSBE Op. No. 17-13 (2017). Thus, if the

State Board follows the same policy it stated in Foose, the Charter School Operators will

32
COMAR 13A.01.05.07(A) provides that “[t]he State Board shall transfer an
appeal to the Office of Administrative Hearings for review by an administrative law judge”
under certain circumstances, including “[a]n appeal upon review in which the State Board
finds that there exists a genuine dispute of material fact.” However, that finding is itself a
discretionary matter. And, the Charter School Operators are likely to be unable to dispute
the figures provided by the City Board and show a material dispute of fact as to those
figures unless and until they can conduct further discovery.

51
have no further opportunity to obtain information as to the City Board’s finances and

budget figures before the State Board.

In light of the highly uncertain path forward for the Charter School Operators if they

were to file a petition for declaratory ruling before the State Board at the present juncture

of the litigation, we are not confident that there is “a strong potential, bordering on

certainty” that they would obtain a declaratory ruling from the State Board sufficient to lift

the stay and resume proceedings on their breach of contract claim before the circuit court.

See Metro Maintenance, 442 Md. at 309.

Finally, even assuming arguendo that the State Board did elect to grant a declaratory

petition and use the administrative procedures available to it to develop a more detailed

factual record as to the commensurate funding issue, the proceedings that would follow

would likely be indefinite and protracted. If the State Board referred the case to the OAH,

the parties would have the opportunity to conduct limited discovery and a fact-finding

hearing before an ALJ. COMAR 28.02.01.01 et seq. (describing the rules of procedure for

discovery and hearings before an OAH administrative law judge).33 The ALJ designated

by OAH could then proceed to make findings, conclusions of law and recommended

rulings, which would be referred to the State Board. See COMAR 13A.01.05.07(E). The

State Board would then need to make a final ruling based on those findings and

33
We note that while discovery is available before the OAH, it is significantly less
comprehensive than that available before the circuit court. Compare COMAR 28.02.01.13
and 28.02.01.14 (providing for limited written discovery requests and subpoenas before
the OAH) with Maryland Rule 2-401 et seq. (providing for discovery before the circuit
court, including depositions, interrogatories, and requests for production).

52
recommendations. See COMAR 13A.01.05.09. Presumably, given the financial stakes for

the parties, the losing party would then start an appeals process before the courts by filing

a petition for judicial review of the State Board’s decision before the circuit court. See

COMAR 13A.01.05.11 (summarizing procedures for appealing final decision of State

Board to the circuit court). If that appeals process was followed to its full extent, with

additional appeals to the Court of Special Appeals and this Court―as occurred recently in

Frederick Classical―the process could drag on for years before the Charter School

Operators could obtain a final decision as to the appropriate commensurate funding for the

2015-16 school year, from which it could then move to reopen its breach of contract action.

Therefore, under the persuasive authority stated in Occidental Chemical Corp., 810 F.3d

299 (5th Cir. 2016), the Stay Order would most likely place the Charter School Operators

out of court for a protracted and indefinite period and is akin to a final judgment.

In sum, we conclude that: appellate review of the Stay Order would not result in

piecemeal appeals or undermine judicial efficiency; the Stay Order is unclear as to what

issues need to be resolved by the State Board, and how and when the Charter School

Operators would be able to resume proceedings in the circuit court; and there is a

substantial likelihood that the Stay Order will result in the Charter School Operators being

effectively out of court for a prolonged and indefinite period. For those reasons, we hold

that the Stay Order is an appealable final judgment under these narrow circumstances.

B. Whether the Stay Order is an Abuse of Discretion

As we have held that the Stay Order is a final and appealable judgment, the issue of

whether the circuit court’s issuance of the Stay Order was an abuse of its discretion is

53
properly before us. For the following reasons, we conclude that the Stay Order was an

abuse of discretion.

Judge Nance interrupted counsel during the motions hearing as to the counterclaims

filed by the City Board to raise sua sponte the issue of whether the Charter School

Operators’ complaints were properly before the circuit court, instructing counsel to “[t]ell

me what happened that causes you to rightfully be in my courtroom.” Then, after a brief

recess, Judge Nance invited the City Board’s counsel to make an oral motion to dismiss

the complaints. During subsequent oral arguments as to that motion to dismiss, the City

Board argued that the issue of commensurate funding must be referred to the State Board

under the doctrine of primary jurisdiction. Judge Nance seems to have agreed with the

City Board, stating “[the Charter School Operators] have a duty to seek administrative

review of a local [school] board and if not [then the State] Board.” Ultimately, Judge

Nance entered the Stay Order “in lieu of” granting the motion to dismiss.

Initially, contrary to Judge Nance’s statements, the Charter School Operators were

not required to seek administrative review before the City Board or State Board prior to

filing their breach of contract action before the circuit court, and appear to have had a good

reason for not doing so. The Charter School Operators allege that they could not have

appealed to the City Board the proposed charter school funding allocation for the 2015-16

school year that they received from the Baltimore School System staff. If we assume that

the Charter Operators are correct, without deciding that issue, then the only available path

to bring their dispute before the State Board would be to file a petition for declaratory

review before the State Board. However, there is no statutory or regulatory basis for the

54
State Board to award damages in a declaratory ruling. COMAR 13A.01.05.05 et seq.34

And, as the Charter School Operators correctly point out, prior declaratory rulings in which

the State Board decided that local school boards failed to provide commensurate funding

to charter schools resulted in those charter schools not receiving reimbursement from their

local school boards. Thus, the Charter School Operators logically decided to instead first

bring a breach of contract action in circuit court, which would permit them to potentially

recover monetary damages from the City Board.

Moreover, as to primary jurisdiction, Judge Rubin had previously issued a ruling

denying the City Board’s first motion to dismiss the complaints on that ground. The

parties’ extensively briefed the issue of primary jurisdiction in written motions and

memoranda for that motion to dismiss, and Judge Rubin held a hearing in which she heard

extensive oral arguments from counsel regarding whether the commensurate funding issue

must be first decided by the State Board. Judge Rubin denied the motion, based in part on

her finding that the State Board had provided sufficient guidance as to how to determine

whether a charter school was receiving commensurate funding that the issue did not need

to be brought first before the State Board under primary jurisdiction. Although counsel for

the City Board informed Judge Nance of the prior ruling by Judge Rubin, there is no clear

34
We held in Frederick Classical that if the State Board ultimately decides that a
local school board failed to provide a charter school commensurate funding for a given
school year, the State Board should issue an order “calculating the exact amount of
additional funds owed . . . and directing the local school board to pay that amount.” 454
Md. at 422. However, that ruling was limited to an ED § 4-205 appeal from a local school
board decision, which is distinct from a declaratory petition filed directly before the State
Board.

55
indication in the record that Judge Nance reviewed that ruling prior to issuing the Stay

Order.

A circuit court judge is not necessarily bound to respect an earlier legal ruling in a

given case made by a fellow circuit court judge in the same way that a circuit court judge

must respect a legal ruling in a given case by an appellate court under the doctrine of the

law of the case. See e.g., Elec. Gen. Corp. v. Labonte, 454 Md. 113, 140 (2017) (“The

doctrine of the law of the case typically does not apply to a decision of a trial court because,

‘as a general principle, one judge of a trial court ruling on a matter is not bound by the prior

ruling in the same case by another judge of the court.’”) (quoting Scott v. State, 379 Md.

170, 184 (2004)). However, it is concerning for a trial judge to effectively reverse a prior

ruling made by another judge of the same court in the same case without even

acknowledging that he is doing so, and without any indication in the record that he had

reviewed and considered the earlier decision of his colleague.

The reversal in this case is particularly concerning because important arguments

were raised during the course of proceedings on the first motion to dismiss the complaints

before Judge Rubin. Specifically, the Charter School Operators argued against the

imposition of an immediate stay in both their written response to the City Board’s first

motion to dismiss and during oral arguments as to that motion before Judge Rubin. They

contended that if the circuit court felt that the case must first proceed before the State Board

under the doctrine of primary jurisdiction, the court should allow the case to proceed

through discovery before the circuit court. And, during oral arguments before Judge Rubin,

they argued that if a stay was issued the court should provide “very specific instructions as

56
to what exactly the State Board would need to accomplish or could accomplish on any

proceeding that would be appropriate,” and also explain how to “bring this [matter] back

to [the circuit court] for actual resolution and remedies.”

However, unlike in the first motion to dismiss, the City Board did not request a stay

as an alternative to a dismissal in the oral motion to dismiss before Judge Nance. Instead,

Judge Nance ordered that the circuit court proceedings be stayed sua sponte at the very end

of the hearing “in lieu of” granting the motion to dismiss. Thus, during the hearing before

Judge Nance, the Charter School Operators had no reason to offer, and did not offer, similar

arguments against an immediate stay.

Despite the arguments raised before Judge Rubin that a stay order needed detailed

instructions, the Stay Order did not clearly state which issues needed to be resolved before

the State Board and how the Charter School Operators could bring the case back and

resume proceedings before the circuit court.35 Furthermore, the Stay Order immediately

stayed all proceedings before the circuit court, thereby precluding the Charter School

Operators from conducting any further discovery before the circuit court. As noted above,

without the opportunity to conduct additional discovery as to the City Board’s finances and

funding formula, the Charter School Operators may be unable to successfully bring any of

35
In TON Servs., Inc. v. Qwest Corp., the Tenth Circuit found that an order
transferring a case under primary jurisdiction should be specific, or otherwise it is an abuse
of discretion. 493 F.3d 1225, 1238-41 (10th Cir. 2007) (finding that the district court
abused its discretion due to the court “misidentifying the issues to be referred and failing
to clearly direct its primary jurisdiction referral . . . .”).

57
the issues in their case before the State Board through the only procedural mechanism

available to them at this juncture, a petition for declaratory ruling.

In summary, the Stay Order reversed the prior decision of Judge Rubin without any

indication that Judge Nance had reviewed the earlier proceedings and decision before

Judge Rubin. And, during the proceedings before Judge Rubin, the Charter School

Operators raised cogent arguments against a stay, pointing out the importance of

conducting discovery in circuit court in order to be able to successfully take the case before

the State Board, as well as the need for clear instructions as to which issues needed to be

resolved by the State Board. However, Judge Nance imposed the Stay Order sua sponte,

and there is no indication that he was aware of or addressed the concerns regarding the

open-ended and unclear stay. For these reasons, we hold that Judge Nance’s decision to

impose the Stay Order was an abuse of discretion, and we shall vacate the Stay Order.

Our holding today does not suggest that in every instance where a party files an

action in circuit court that could also have been brought before an administrative agency,

that party is entitled to discovery in circuit court before a stay may be issued under the

doctrine of primary jurisdiction. Instead, we hold only that discovery must be permitted to

proceed before the circuit court under the unique circumstances of this case.

Here, the Charter School Operators have a Contract with the City Board, under

which the City Board was required to provide the Charter School Operators with detailed

information as to its finances and charter school funding formula. The Charter School

Operators, however, allege that the City Board has failed to provide them with such

information for the 2015-16 school year. And, in the absence of discovery as to the City

58
Board’s finances and charter school funding formula, the Charter School Operators may

not be able to successfully bring any issue in the case before the State Board. Further, even

if they were able to bring some or all of the issues in the case before the State Board, they

may not be able to conduct any further discovery or fact-finding before the State Board.

In many other situations, when a party does not have a contractual or other right to

obtain information from a state agency, or when there is a clear administrative process

available for a party to obtain an administrative ruling or resolution, it would likely be

appropriate for a court to stay a case under the doctrine of primary jurisdiction prior to

permitting the case to proceed to discovery.

C. Primary Jurisdiction Before the State Board

As we have held that the Stay Order was an abuse of discretion because of its vague

and open-ended nature, and because it occurred prior to the conclusion of discovery before

the circuit court, we shall remand the case to the circuit court. However, once discovery is

concluded on remand, the circuit court will once again be confronted with the question of

whether a new, more specific stay order must be entered under the doctrine of primary

jurisdiction to permit the State Board to review whether the City Board’s proposed charter

school allocation was commensurate funding. Therefore, in order to provide guidance to

the parties and the circuit court on remand, we shall also address whether the State Board

must decide the commensurate funding issue under the doctrine of primary jurisdiction.

See Md. Rule 8-131(a).

Under the doctrine of primary jurisdiction, the only question before the court is

whether an issue in the case must first be resolved by an agency “which, under a regulatory

59
scheme, [has] been placed within the special competence of an administrative body[.]”

Arroyo, 381 Md. 646, 658 (2004) (quoting Western Pacific R.R. Co., 352 U.S. at 63-64).

Unl

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4229853. Public record. Not legal advice.