ALLSTARS AUTO GROUP, INC v. NEW JERSEY MOTOR VEHICLE COMMISSION

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 
 

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-01

A-2107-14T2

A-2108-14T2

A-2109-14T2

A-2111-14T2

A-2112-14T2

A-2113-14T2

A-2114-14T2

ALLSTARS AUTO GROUP, INC.,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

________________________________

INDEPENDENCE AUTO SALES, LLC,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

AUTOMOTIVE SOLUTION CORP.,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

EMPIRE AUTO FINANCE, INC.,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

JMC AUTO SALES, LLC,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

OLD VINE AUTO DEALER, LLC,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

AMIR USED CAR, INC.,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

AMIRI MBUBU AUTO SALES, LLC,

Appellant,

v.

NEW JERSEY MOTOR VEHICLE

COMMISSION,

Respondent.

_________________________________

February 1, 2017

 

Argued on November 1, 2016 Decided

Before Judges Messano, Espinosa and Suter.

On appeal from the New Jersey Motor Vehicle Commission.

Thomas G. Russomano argued the cause for appellants (Schiller & Pittenger, P.C., attorneys; Jay B. Bohn and Mr. Russomano, on the briefs).

Elaine C. Schwartz, Deputy Attorney General, argued the cause for respondent (Christopher S. Porrino, Attorney General, attorney; Josh Lichtblau, Assistant Attorney General, of counsel; Ms. Schwartz, on the briefs).

PER CURIAM

Appellants Allstars Auto Group, Inc. (Allstars), Independence Auto Sales, LLC (Independence), Automotive Solution Corp. (Solution), Empire Auto Finance, Inc. (Empire), JMC Auto Sales, LLC (JMC), Old Vine Auto Dealer, LLC (Old Vine), Amir Used Car, Inc. (Amir), and Amiri Mbubu Auto Sales, LLC (Amiri) (collectively appellants or licensees) are licensed motor vehicle dealers, who appeal from final administrative decisions of the New Jersey Motor Vehicle Commission (MVC), denying their hearing requests and imposing temporary license suspensions and fines for their failure to comply with certain MVC regulations. Appellants contend they are entitled to a contested case hearing under the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -15, even though they each individually admitted to facts that substantiated the regulatory violations.

I.

Appellants each operate out of a building in Bridgeton, with separate minimally accommodated offices consisting only of a plywood desk, chair, phone, lamp, small file cabinet and safe. In August 2014, MVC inspectors conducted audits of each dealer to ensure compliance with applicable MVC regulations. See N.J.A.C. 13:21-15.1 to -15.15. Although we will address the individual regulatory violations later in our opinion, the dealers were cited for the following: failing to keep business records on location, N.J.A.C. 13:21-15.4(g); failing to completely fill out and account for dealer reassignments, N.J.A.C. 13:21-15.7; failing to account for dealer plates, N.J.A.C. 13:21-15.11(a); and failing to produce a dealer plate ledger, N.J.A.C. 13:21-15.11(c).

The MVC issued each licensee a Notice of Proposed Suspension (Notices), which detailed the applicable regulations and how they had violated them, the proposed period of license suspension and fine.2 The Notices advised appellants they could "accept the proposed action" or "may request a hearing concerning this proposed action." The Notices provided that the "hearing request must be in writing." Each licensee was to "specify all disputed material facts and legal issues you or your attorney intend to raise and must present all arguments you wish the Commission to consider." The Notices provided "[i]f your hearing request fails to set forth any disputed facts, legal issues or arguments of such issues, the hearing request will be denied and the proposed denial . . . will constitute the Commission's final decision . . . ."

The licensees, all of whom were self-represented, each submitted a hearing request or request for a pre-hearing conference, which in some manner admitted to the violations assessed: Allstars stated that its records "are stored at a recordkeeping facility"; Independence stated that its records were in the possession of its owner; Solution stated that all business documents were "at the copy store where [they were] dropped off to make duplicates" and the owner was unable to pick them up; Empire stated that the owner had the documents with him at the auctions; JMC stated that it was unaware that the records had to be maintained on site; Old Vine stated that its owner took files home to review in anticipation of filing tax returns; Amir stated that its business records were at the accountant's; and Amiri stated that it was "pleading guilty" to the violations assessed.

The MVC issued an Order of Suspension, Final Administrative Determination letter (Orders) to each dealer and, consistent with MVC regulation N.J.A.C. 13:21-15.14(f), denied each of the licensees' hearing requests. These Orders found that the "submitted request failed to identify any disputed material fact(s), legal issue(s) and/or specific mitigating circumstances to be resolved at a hearing." The Orders then found each dealer to be in violation of the stated regulations, and imposed a $1500 fine, $200 restoration fee and a ten-day temporary license suspension, except for Amiri, who was fined $2500 and suspended for twenty days. The Orders advised the licensees they had forty-five days to appeal from the agency's final decision.

Appellants retained counsel, who also submitted a hearing request for each dealer. Counsel's letter contended that there was a "lack of factual support for the allegations set forth in the [notices]," and that appellants "[dispute] each and every allegation set forth in the [notices]." In these letters, counsel further stated that each appellant "did have the records requested on the licensed premises" and that they were "available upon request"; that it "is accounting for its dealer plates . . . in a logbook or ledger with plate number, [VIN] numbers and the location of the garage"; that it "did not fail to produce to [sic] log or ledger required"; or that it "did not fail to account for its reassignments." Counsel did not acknowledge his clients' prior admissions to facts that substantiated their violation of the MVC regulations or explain why the required records were not available for MVC inspection at the time of the audit.

The MVC Chairman and Chief Administrator (the Administrator) responded to counsel's letters on October 21, 2014, denying each hearing request in a "Denial of Hearing Request/Final Decision" (Final Decision). The Administrator cited the admissions made by the licensees to the alleged regulatory violations and that counsel's subsequent letters "fail[ed] to provide details sufficient to raise genuine issues of disputed fact." Specifically, the licensees "failed to produce [their] business records at the licensed location . . . , failed to produce or have at the business location all business records, failed to account for reassignments and dealer plates, and failed to produce a dealer plate ledger." The Administrator then found that each licensee violated MVC regulations, and ordered their temporary suspensions and fines.

Appellants' counsel requested reconsideration of the hearing request denials, the reopening of the cases under MVC's "inherent powers," and a stay of enforcement.

The Administrator denied these requests on November 21, 2014, noting that appellants had not shown a "probability of success on the merits," because each appellant had admitted to the respective regulatory violations. The Administrator observed that appellants failed to account for discrepancies between counsel's assertions and those of his clients, who admitted the records were not present at the time of the inspections. The Administrator stated the administrative action was based on "regulations that clearly define the dealer's obligations with respect to the records" and explained he had the ability to deny a hearing "where the licensee fail[ed] to show a genuine dispute of material fact" under N.J.A.C. 13:21-15.14(f) because that regulation authorized "the Chief Administrator to issue a final decision appealable to the Appellate Division if there are no material facts in dispute." The Administrator drew his authority from N.J.S.A. 52:14F-5(e), N.J.A.C. 13:21-15.14, and applicable case law, which allowed for a decision based on the record when there were no "disputed material facts." These appeals were filed based on the October 21, 2014 Final Decision.3

On appeal, appellants contend they had an "absolute right" to a hearing before the MVC suspended their licenses, and that N.J.A.C. 13:21-15.14 is invalid to the extent it would deny that hearing right where there are no "material facts in dispute." Appellants also contend "that the MVC had no authority to impose sanctions including fines or civil penalties for violations of the MVC regulations."

II.

Our scope of review of this administrative agency decision is limited. "An administrative agency's final quasi-judicial decision will be sustained unless there is a clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record." In re Herrmann, 192 N.J. 19, 27-28 (2007) (citing Campbell v. Dep't of Civil Serv., 39 N.J. 556, 562 (1963)). "The burden of demonstrating that the agency's action was arbitrary, capricious or unreasonable rests upon the [party] challenging the administrative action." In re Arenas, 385 N.J. Super. 440, 443-44 (App. Div.), certif. denied, 188 N.J. 219 (2006). "It is settled that '[a]n administrative agency's interpretation of statutes and regulations within its implementing and enforcing responsibility is ordinarily entitled to our deference.'" Wnuck v. N.J. Div. of Motor Vehicles, 337 N.J. Super. 52, 56 (App. Div. 2001) (alteration in original) (quoting In re Appeal by Progressive Cas. Ins. Co., 307 N.J. Super. 93, 102 (App. Div. 1997)).

Appellants contend their cases were "contested cases" under the APA. A contested case is defined as one "in which the legal rights, duties, obligations, privileges, benefits or other legal relations of specific parties are required by constitutional right or by statute to be determined by an agency by decisions, determinations, or orders . . . after opportunity for an agency hearing . . . ." N.J.S.A. 52:14B-2. Appellants cite two statutes as authority for evidentiary hearings in their matters. First, they contend N.J.S.A. 39:10-20 expressly requires a hearing before the MVC can suspend their licenses, even temporarily. That statute, in relevant part, provides

The chief administrator may suspend for a period less than the unexpired term of a license or revoke a license, after hearing, for a violation of any provision of this chapter, or for a violation of the rules and regulations promulgated pursuant thereto . . . The chief administrator shall, before suspending or revoking the license, and at least 10 days prior to the date set for the hearing, notify the holder of the license, in writing, of any charges made, and shall afford him an opportunity to be heard in person or by counsel.

[N.J.S.A. 39:10-20.]

Second, as licensees of the MVC, appellants cite N.J.S.A. 52:14B-11 as additional authority for a hearing, which statute provides that "[a]ny agency that has authority to suspend a license without first holding a hearing shall promptly upon exercising such authority afford the licensee an opportunity for hearing in conformity with the provisions of this act."

We reject appellants' contention that the MVC erred as a matter of law in denying each dealer an evidentiary hearing under N.J.S.A. 39:10-20 or under the APA because none of the matters presented disputed adjudicative facts.

Our analysis of this issue begins but does not end by simply identifying the statutory authority for a hearing. Under the APA, the agency head has exclusive authority to determine which cases are contested cases within the intent of the APA. N.J.S.A. 52:14F-7(a); N.J.A.C. 1:1-4.1; Sloan ex rel. Sloan v. Klagholtz, 342 N.J. Super. 385, 392 (App. Div. 2001). However, where adjudicative facts4 are not in dispute, there is no need for a trial-type evidentiary hearing. In re the Request for Solid Waste Util. Customer Lists, 106 N.J. 508, 517 (1987) (citing Bally Mfg. Corp. v. N.J. Casino Control Comm'n, 85 N.J. 325, 334, appeal dismissed, 454 U.S. 804, 102 S. Ct. 77, 70 L. Ed. 2d 74 (1981)). We have held that when a statute authorizes the right to a "plenary hearing" but there are no disputed issues of fact, the summary decision procedures of the APA apply to permit resolution without an evidentiary hearing. See Contini v. Bd. of Educ. of Newark, 286 N.J. Super. 106, 118-20 (App. Div. 1995), certif. denied, 145 N.J. 372 (1996) (supporting the principle that "[a]n evidentiary hearing is mandated only when the proposed administrative action is based on disputed adjudicatory facts" (alteration in original) (internal quotation marks and citations omitted)). "It is the presence of disputed adjudicative facts, not the vital interests at stake, that requires the protection of formal trial procedure[s]." J.D. ex rel. D.D.H. v. N.J. Div. of Developmental Disabilities, 329 N.J. Super. 516, 525 (App Div. 2000) (citing High Horizons, supra, 120 N.J. at 53).

Appellants simply are wrong that they were entitled to an evidentiary hearing under N.J.S.A. 39:10-20 or N.J.S.A. 52:14B-11 when there were no adjudicative facts in dispute. It follows then that N.J.A.C. 13:21-15.14, which permits a MVC licensee to request a hearing concerning proposed disciplinary action, validly provides that "[i]f there are no material facts in dispute or specific mitigating circumstances subject to proof . . . the Chief Administrator shall issue a Final Administrative Determination appealable only to the Appellate Division of the Superior Court." The regulation recognizes the law as we have explained it. The MVC may decide what cases are contested and then can resolve cases without a trial-type hearing where there are no disputed adjudicative facts.

III.

The MVC denied appellants' requests for a hearing because it determined there were no disputed adjudicative facts in light of the admissions made by each dealer. We review the decisions by the MVC to determine whether they are supported by substantial credible evidence in the record. See Phila. Newspapers, Inc. v. Bd. of Review, 397 N.J. Super. 309, 318 (App. Div. 2007), certif. denied, 195 N.J. 420 (2008). We must sustain the agency's action in the absence of a "'clear showing' that it is arbitrary, capricious, or unreasonable or that it lacks fair support in the record[.]" Circus Liquors, Inc. v. Governing Body of Middletown, 199 N.J. 1, 9 (2009). Here, we affirm the decisions of the MVC because there was ample support in the record for the final agency decisions, which were not arbitrary nor capricious.5 We analyze these cases based upon the common regulatory violations.

A.

All appellants were alleged to have violated N.J.A.C. 13:21-15.4(g). That regulation requires "[a]ll business records . . . shall be maintained for three years on the licensed premises and shall be made available to the Commission during normal business hours on request." The regulation allows for records to be maintained off-site, but only if "a dealership maintains branches or a licensee operates multiple licensed dealerships under common ownership or control." N.J.A.C. 13:21-15.4(a). The MVC notices of proposed suspension all advised the dealers that "none of your business records were at your license location." The record does not indicate any appellant maintained multiple dealer locations.

In response to the MVC, each licensee admitted to not having the required records on the premises when the inspectors were there. Allstars' owner, Andrei Khaladzinski, stated in his request for a pre-hearing conference that the records "are stored at the recordkeeping facility we use," which was a business in Brooklyn and were "available for review upon the Commission's request." Independence's owner, Ahmed Said, who was not present during the audit, stated in his letter that the records were in his "physical and personal possession" on the day in question, as he had been trying to sell the business. Solution's president Sergei Razgulov's letter stated that all the paperwork was "at the copy store where it was dropped off to make duplicates of all paperwork that [he has]." At the same time, he had to go overseas and was unable to pick them up. Empire's owner, Sayed Azam, admitted in his hearing request that the business records were not on-site. JMC's owner, Miguel Clermont, admitted in his hearing request that the business records were not on-site because he "was unaware that the records had to be maintained in [his] office as [he] was not provided with that information by MVC or their representatives." Old Vine's president, Andres Castro, admitted in his hearing request that he took files home with him to review ahead of giving them to his accountant in anticipation of filing tax returns and that this was why "some of the business records were not in the office when [he] was audited." Amir's owner, Fazal Ahmad, admitted in his hearing request that "[a]ll business records were with the accounting [sic] at the time of audit and weren't available for the inspector to see." Amiri's owner, Okoro Ifeanyi, explained in his hearing request that he had been out of the country for two months because of the death of his mother and his own illness and that he was "pleading guilty" to the charges assessed as a result of the compliance audit, but that he was requesting a pre-hearing conference "to negotiate my fines because business is slow and economy [sic] is dead."

Appellants' counsel subsequently denied these admissions in letters to the MVC, but he provided no certifications or credible evidence to support the denials nor did he attempt to explain why his representations differed from the admissions of the owners. In light of the admissions that the records were not on the premises, there was ample evidence to support MVC's finding that each licensee violated N.J.A.C. 13:21-15.4(g) without the need for a plenary hearing.

B.

Six appellants were charged with and found to have violated MVC regulation N.J.A.C. 13:21-15.7, which requires that a motor vehicle dealer fill out all dealer reassignments6 completely, and account for the same upon the request of the MVC. Dealer reassignments are part of the books and records to be maintained at the licensees' place of business. N.J.A.C. 13:21-15.4(a). None of the appellants who were charged with violating this regulation had completely filled out the dealer reassignments or could account for the reassignments on the day of the MVC audit. Allstars' owner explained in his request for a hearing that the dealer reassignments were not filled out because they sold a number of vehicles wholesale at dealer's auctions. Also, he had the reassignment book in his possession (and not at the premises) at the time of the audit. Solution was unable to account for its reassignments at the time of the audit, but its hearing request stated it now had them in order. Empire's owner admitted that he carried the reassignment book with him when he went to the auctions, but that he did have all reassignments in order. JMC was unable to account for its reassignments at the time of the audit. Similarly, neither Amir nor Amiri could account for their reassignments when MVC conducted its audit.

Appellants' counsel denied that the dealers violated these regulations, but again provided no certifications or credible evidence to support the denials nor did he attempt to explain why his representations differed from the admissions of the owners. In light of the admissions by the owners that the reassignments could not be accounted for and were not present at the time of the audit, there was substantial evidence to support MVC's finding, without an evidentiary hearing, that each licensee violated N.J.A.C. 13:21-15.7.

C.

All eight appellants were found to have violated MVC regulation N.J.A.C. 13:21-15.11, which required that a dealer account for all dealer plates, including the plate number; VINs of all vehicles to which the plate was assigned, along with dates of assignment; and the location at which the vehicle to which the plate is assigned is garaged (if not on the premises). Then, a "dealer who fails upon the demand of the Commission to produce the [ledger] shall, upon notice and opportunity to be heard, be subject to suspension or revocation of the motor vehicle dealer's license." N.J.A.C. 13:21-15.11(c). The MVC notices of suspension alleged the dealers had not accounted for dealer plates or dealer plate ledgers, which are to be maintained at the business location. N.J.A.C. 13:21-15.4(a).

Allstars' owner admitted that no ledger was maintained despite the use by that business of dealer plates. He explained that "[w]e do not maintain dealer plate ledger due to the fact that we use dealer plates only to transport vehicles to and from auctions, repair facilities, and/or test drives. No dealer plates are assigned or left on vehicles garaged outside of our premises." Independence was unable to produce dealer plates or a dealer plate ledger. The owner admitted the plates and ledger were not at the premises, stating that he needed them for the process of selling his business. Solution was unable to produce dealer plates or a dealer plate ledger at the audit. The owner's letter to MVC stated that because he buys damaged cars for export, all of the plates were off-site at the garage that fixes the cars. Empire's owner explained he only used dealer plates to deliver vehicles to and from the auctions. He was not able to produce dealer plates or a ledger. JMC, Old Vine, Amir and Amiri were all unable to produce dealer plates or a dealer plate ledger at the time of the audit.

Appellants' counsel denied that the dealers violated these regulations but lacked any certifications or credible evidence to support the denials. We are satisfied the record provided substantial evidence to support MVC's findings that each licensee violated N.J.A.C. 13:21-15.11(a) and that no fact-finding hearing was necessary.

IV.

We reject appellants' contention that they could not be fined or suspended based on these administrative violations. We are to "liberally construe" the powers of an administrative agency that are expressly granted to it "so that the agency can fulfill the Legislature's purpose," and recognize "that an agency's express authority is augmented by such incidental authority as may be reasonably necessary or appropriate to effectuate the expressly delegated authority." Solid Waste, supra, 106 N.J. at 516 (citations omitted).

The fines were authorized by N.J.S.A. 39:10-20, which provides that the "chief administrator may impose a fine not to exceed $500 for a first offense and $1000 for any subsequent offense upon the holder of a license for a violation of any provision of this chapter." That the agency could have, but did not, promulgate a schedule of fines for regulatory violations, did not deprive the agency of its statutory power to impose fines on a case-by-case basis for violations of its regulations. An agency may proceed in executing its legislatively granted functions by promulgating regulations or by case-by-case adjudication. See In re Appeal of Certain Sections of the APA, 90 N.J. 85, 92 (1982) ("Administrative agencies are empowered to effectuate their regulatory responsibilities through either rulemaking or adjudication."). We have no need to review the amount of the fines because appellants' have only challenged the MVC's ability to impose the fine.7

There also is no question that the MVC had the statutory and regulatory authority to temporarily suspend appellants' licenses. See N.J.S.A. 39:10-20 (providing that the MVC "may suspend for a period less than the unexpired term of a license . . . for a violation of any provision of this chapter, or . . . of the rules and regulations promulgated pursuant thereto"). The MVC promulgated N.J.A.C. 13:21-15.5 to allow for the suspension of a dealer's license for regulatory violations. Again, we have no need to review the length of the license suspensions because, aside from the argument that they should have had an evidentiary hearing, appellants do not contend that the suspensions for the acknowledged regulatory violations were arbitrary or capricious.

Affirmed.

1 These are back-to-back appeals consolidated for the purpose of this opinion because the cases share the same legal issue.

2 Each appellant received a fine of $1,500 and a license suspension of ten days, with the exception of Amiri which received a fine of $2,500 and a license suspension of twenty days.

3 All the dealers have paid the fines and served their periods of suspension. Their licenses have been restored.

4 "Adjudicative facts usually answer the question of who did what, where, how, why, with what motive . . . ." High Horizons Dev. Co. v. N.J. Dep't of Transp., 120 N.J. 40, 49 (1990).

5 Appellants state they are "not challenging a factual determination following a plenary hearing; appellant[s are] challenging the denial of the hearing itself."

6 Although a motor vehicle dealer is to present a certification of ownership to the MVC for motor vehicles it purchases in the State, where the dealer "does not submit the evidence of purchase, upon resale of the motor vehicle he shall execute and attach to the certificate of ownership a dealer reassignment certificate," which are issued in lots by the MVC. N.J.S.A. 39:10-11(g).

7 In a footnote, appellants assert the assessed $200 restoration fee had no authority under N.J.S.A. 39:10-19, which permits initial and renewal licensing fees of $200. We see no reason why, as part of the adjudicative process, the MVC cannot impose additional charges for license restoration after a suspension.