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Matter of Fichner

June 18, 1996


On certification to the Superior Court, Appellate Division, whose opinion is reported at 282 N.J. Super. 422 (1995).

The opinion of the court was delivered by O'hern, J. Chief Justice Wilentz and Justices Handler, Pollock, Garibaldi, Stein and Coleman join the Justice O'HERN's opinion.

The opinion of the court was delivered by: O'hern

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

In the Matter of the Suspension or Revocation of the License of Joseph Fichner, Jr., etc. (A-125-95)

Argued March 11, 1996 -- Decided June 18, 1996

O'HERN, J., writing for a unanimous Court.

The State Plumbing License Law of 1968 created the Board of Examiners of Master Plumbers (Board) and authorized it to license and regulate plumbers throughout the State. The Board examines and licenses those plumbers meeting the qualifications necessary to become a "master plumer." The Board has promulgated regulations that define occupational misconduct and fraud and set forth the penalties for such acts. Pursuant to the regulations, a plumber who charges excessive prices commits occupational misconduct.

The Board originally consisted of seven members: three master plumbers with ten years experience, one local plumbing inspector who has held such an appointment for at least ten years, one journeyman plumber with ten years experience, and two representatives of the public having no association with the plumbing industry. The Legislature added two additional members to represent the interest of the public, one of which is a holder of a designated office or position in a department of the Executive Branch of State Government that is closely related to the plumbing profession. Because the State Government position and one of the public member positions were vacant, only a seven-member Board participated in the final decision in this case.

Joseph Fichner, Jr. is a licensed master plumber. The Board has twice charged Fichner with occupational misconduct because of fraudulent business practices, including charging excessive prices. From the first set of charges that occurred in 1988, the Board found Fichner guilty of occupational misconduct and fraud for overcharges to five customers. Fichner was reprimanded, ordered to provide restitution, and fined $5,000. That decision was affirmed by the Appellate Division.

The current group of charges, consisting of eight counts, was filed by the Attorney General on July 30, 1992 and focused on Fichner's conduct in dealing with seven customers. The Attorney General alleged that Fichner engaged in fraud and occupational misconduct by charging excessive prices and by providing misleading explanations of his prices and services. The Attorney General, in her capacity as counsel to the Board, retained Robert Muller, a licensed master plumber accepted as an expert, to visit the homes of each customer to determine what work was done, and to present his opinion as to the reasonableness of the charges based on the time and parts used at each job. Muller calculated that Fichner had overcharged each customer, often by as much as 100%.

Fichner challenged the methodology and theory of excessive pricing used by Muller. Fichner presented several plumbing and accounting experts who testified that prices should be derived by calculating several factors, including office overhead. Those experts concluded that even if one accepted the time and parts estimates offered by the State's expert, Fichner's fees were not excessive, but simply reflected his overhead plus a profit margin ranging from negative to 39% profit.

The Board adopted the methodology and Conclusions of the State's expert and concluded that Fichner's charges were excessive in all seven cases. In addition, the Board relied on Fichner's misleading use of the term "rebuilt" and his use of illegible estimates as evidence that his conduct was fraudulent. The Board assessed $35,000 in civil penalties; ordered Fichner to make restitution to each customer; ordered him to pay administrative costs of $10,000; and ordered a suspension of his license for five years, agreeing to stay that suspension if Fichner paid all of the penalties.

On 10/1/93, Fichner appealed the Board's final decision to the Appellate Division, arguing that: the regulations were vague and infringed on his freedom of contract; one claim was barred by res judicata; and the decision was based on erroneous factual and legal Conclusions. During the pendency of the appeal, Fichner moved for dismissal or for leave to amend the appeal and expand the record. Fichner informed the Appellate Division that two of the Board's members had not been eligible to sit on the Board. In early 1995, Fichner discovered that a third member was also ineligible. The Appellate Division ordered the State to submit the specific credentials of each Board member who had participated, and to explain how those credentials related to the statutory mandates. The Attorney General conceded that two of the three members were ineligible, but contended that their votes should still be counted under the common-law de facto officer doctrine, which typically holds valid the acts of a person exercising the duties of a public office under the color of authority, if the acts are in the interests of the public and third persons.

The Appellate Division concluded that three of the Board members were ineligible, rejecting the Attorney General's arguments concerning the de facto officer doctrine. The court reasoned that the haphazard appointment of so many statutorily unqualified persons to a Board with such important functions displays indifference to the appointment process and, thus, does not deserve the protection of the de facto officer doctrine. The court also determined that the vote of a fourth member could not be counted because that member had not attended any of the hearings. Because the governing statute requires that a decision to discipline be made by a majority of the members of the entire Board, the Appellate Division invalidated the Board's decision. The court remanded for a hearing before a properly constituted Board, without considering any of Fichner's other arguments.

The Supreme Court granted the State's petition for certification.

HELD: in the circumstances of this case, a reconstituted Board of Examiners of Master Plumbers should reconsider the charges against Joseph Fichner, Jr., and may do so on the record already developed in these proceedings.

1. The de facto officer doctrine is founded on principles of practicality and convenience in the administration of Justice. New Jersey law has long recognized the existence of the de facto officer doctrine. The questioned members of the Board had been duly appointed by the Governor but certain requirements or conditions of office had not been met; therefore, those members were de facto officers. (pp. 10-12)

2. The U.S. Supreme Court has declined to invoke the de facto officer doctrine in cases that involve basic constitutional protections designed in part for the benefit of the litigants. Here, the error in the composition of this Board is not of constitutional dimension. The Court does not agree with the Appellate Division that the qualifications of the public member were established for the benefit of the litigants, nor is it at all certain that the qualifications of the other members were established for the benefit of the licensees. Nevertheless, in the unusual circumstances of this case, the Appellate Division's Disposition will stand. In the future, however, challenges to the statutory composition of a board must be made prior to the Conclusion of the Board proceedings. Here, a remand for reconsideration of the matter by a properly composed Board will serve the interest of the public and the licensee. It is not necessary to conduct a new hearing; the Board may impose discipline on the basis of the existing record. It is in the public interest that this four-year litigation be resolved with reasonable promptness. Principles of administrative due process will be satisfied by a careful assessment of the record and the extent of any penalty may be reconsidered in light of that assessment. (pp. 13-18)

As MODIFIED, the judgment of the Appellate Division is AFFIRMED.


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