On appeal from a Final Agency Decision of the Commissioner of the Department of Community Affairs.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Stern, Sabatino and Lyons.
Petitioner James Mazzer appeals a January 29, 2007 final decision of the Commissioner of the Department of Community Affairs ("DCA") revoking his respective licenses as a building sub-code official, building inspector, plumbing sub-code official, and plumbing inspector based upon various alleged regulatory violations. The Commissioner's decision centered upon her determination that petitioner had violated a conflict-of-interest regulation, N.J.A.C. 5:23-4.5(j)2, principally because of his then-wife's ownership of stock in a construction business doing work in the municipality where petitioner was employed as a building inspector. The Commissioner modified the ruling of an administrative law judge (ALJ), who had determined, after a hearing, that petitioner's conduct only warranted a sixty-day suspension of his licenses.
Because the administrative record is incomplete concerning petitioner's alleged violation of subsection (j)2, and because there are significant factual issues under that subsection that were not expressly the subject of testimony at the hearing or of specific findings by the ALJ, we vacate, without prejudice, the sanction imposed by the Commissioner and remand this matter for further proceedings.
The City of Garfield ("the City" or "Garfield") appointed Mazzer as its building inspector,*fn1 effective June 3, 2002. This appeal concerns whether Mazzer was ineligible to serve in that municipal post because of supposed conflicts-of-interest involving him and his family members, as well as other alleged improprieties. The following chronology is relevant to our consideration of the issues.
Petitioner has worked for most of his adult life as a plumber. In 1973 petitioner started working full time for his father, who was also a plumber, after obtaining a bachelor's degree in political science. Petitioner earned his plumbing license and a master plumber's license in or about 1977 after a five-year apprenticeship. He eventually was also licensed in construction, plumbing RCS (residential), ICS (industrial), and HHS (high-rise, high hazard).
Initially, the family business focused solely on plumbing but it expanded to heating and the general construction of bathrooms, kitchens, and residential additions. In 1980, petitioner and his father incorporated their business as Mazzer, Inc. Petitioner's father was the company president and held all of the shares.
Petitioner gradually took over the management of Mazzer, Inc., starting in 1977. His father fully retired in or about 1982. Petitioner then became the 100 percent stockholder in the company. Petitioner served as a corporate officer and ran all aspects of the business until 2002.
Mazzer, Inc. started performing work for the Garfield Housing Authority ("the Housing Authority") in the 1970's. That relationship continued for many years. At times in the 1990's, Mazzer, Inc. had full-year maintenance contracts with the Housing Authority, working in all nineteen of its buildings. The contracts were obtained through competitive bidding. To service those contracts, the company regularly stationed two employees at the Authority's office five full days per week.
Petitioner learned in mid-2001 that Dominic Nasuta was going to retire as Garfield's building inspector. Petitioner recalled being asked, possibly by a member of the City Council, if he would be interested in the building inspector position. Petitioner consequently submitted a formal application to the City in September or October 2001. To be eligible for the position, petitioner needed to obtain an HHS building inspector license. Petitioner was already in the process of obtaining one, as he already had passed the HHS examination and was awaiting certification from the State. Petitioner expected to earn $49,000 to $50,000 in the inspector title, which was commensurate with what he was earning at Mazzer, Inc. Petitioner was offered the City's building inspector position in December 2001. He accepted the offer. Initially, petitioner was told that he could expect to start at the beginning of January 2002. Since petitioner did not yet possess an HHS license, the City planned to find another inspector to cover for him temporarily on any high-rise buildings until he was certified.
When petitioner was offered the position with Garfield, he realized that he could not simultaneously own a business operating in the City and serve as the City's inspector. Consequently, petitioner decided to transfer the business to his two sons, James, Jr., and Jason, and to his wife, so that the company would not lose its substantial ongoing business with the Housing Authority. Petitioner retained an attorney, Burt Binder, Esq., and a certified public accountant (CPA), Gregory Fuchs, to prepare appropriate documents that would disassociate him from the company.
Based upon the professional advice of Binder and Fuchs, petitioner executed documents that assigned to each of his sons a thirty percent (30%) stock interest in the company and a forty percent (40%) interest to his wife. Petitioner explained that he assigned a larger share to his wife because he hoped she would mediate if their sons were to have disagreements.
Petitioner's son James was named company president, his son Jason was named vice-president and his wife*fn2 was named secretary.
Petitioner executed his resignation as president of Mazzer, Inc., effective January 2, 2002, having been told by City officials that he could plan on starting as building inspector on January 6, 2002. However, the incumbent inspector, Nasuta, did not retire on schedule. This caused petitioner's appointment to be placed on hold. In the meantime, while waiting for the inspector's position to open up, petitioner continued to perform work for Mazzer, Inc., the company that had provided his only source of income for the preceding twenty-nine years. Petitioner testified that during that waiting period:
Well, I resigned only on paper. I was still doing everything. I was still working, I was doing everything that was -- I was running the company.
Finally, in May 2002, Garfield officials informed petitioner that he could start his new job the first week of June. As noted, petitioner began serving as the City's building inspector on June 3, 2002. He served in that role until he was suspended on June 10, 2005 in connection with the allegations at issue in this case. During those three years of service, petitioner evidently performed his duties capably, as the record contains no findings of subpar performance.
In February 2003, the City Manager of Garfield transmitted a written complaint about petitioner to the DCA, alleging various conflicts of interest and improper enforcement actions. The letter was referred to a DCA investigator, Joseph Bond. After reviewing the allegations, Investigator Bond concluded that the enforcement-related complaints could not be substantiated. However, Bond did find that the conflict-of-interest allegations had merit, particularly as to petitioner's apparent continued involvement with Mazzer, Inc., after his supposed resignation from the company in January 2002. Investigator Bond also perceived impropriety in the failure of Mazzer, Inc. to obtain permits for work it performed for the Housing Authority. Consequently, Bond concluded that petitioner had improperly continued his involvement in Mazzer, Inc. after assuming the post of municipal building inspector, in violation of N.J.A.C. 5:23-4.5(j)1 and 2. Bond also concluded that petitioner had misrepresented his status to the DCA. He recommended that petitioner be disciplined.
After Bond's recommended findings were reviewed by his supervisor at DCA, Gerald Grayce, and were also considered by a "peer review" group of five other plumbing sub-code officials, the DCA decided to pursue the revocation of petitioner's inspector's license, pursuant to N.J.A.C. 5:23-5.25(a). A letter of proposed revocation was transmitted to petitioner on April 28, 2005. Petitioner contested the proposed action, which resulted in the matter being referred to the Office of Administrative Law (OAL) for a hearing.
The OAL hearing examined what may be classified as four main allegations:
1. The alleged violation of N.J.A.C. 5:23-2.14 for failing to require permits for sub-code work performed on Housing Authority projects;
2. The alleged violation of N.J.A.C. 5:23-2.31 for failing to issue penalty notices on Housing Authority matters after petitioner learned that such work required permits;
3. The alleged violation of N.J.A.C. 5:23-4.5(j)1 because of petitioner's supposed failure to arrange to have an inspector from another municipality inspect Mazzer, Inc.'s work in the City of Garfield; and
4. The alleged violation of N.J.A.C. 5:23-4.5(j)2 because of petitioner's direct or indirect economic connection with Mazzer, Inc., as a business providing services within the City of Garfield or within adjacent municipalities. We now detail these allegations, and the associated proofs adduced before the administrative law judge (ALJ) at petitioner's hearing.*fn3
A. The Uncertain Need for Building Permits for Housing Authority Projects
Bond's investigation revealed that work performed by Mazzer, Inc. in 2002 and 2003 for the Housing Authority had been done without building permits. Bond also determined from the City's tax assessor that the property and buildings within the control of the Housing Authority were owned by the City of Garfield. Bond reasoned that because the properties were owned by the City, rather than by the United States, any construction or sub-code work on those properties required local permits. See N.J.A.C. 5:23-3.11 and -3.11A.*fn4 Bond further learned that on at least two occasions, not involving petitioner, permits had, in fact, been obtained by others for work performed on Authority projects.
Apart from Bond's testimony on this issue, the DCA also relied upon Bulletin No. 93-2, which it issued in October 1997.
That Bulletin points out that "[t]here has been some confusion about the appropriate authority to issue permits and conduct inspections of leased structures involving federal/state/municipal governmental entities and private parties." A chart in the Bulletin shows that if the owner of the structure is a municipality, the municipality should inspect it, and if the owner is the Federal Government, then federal authorities should perform any necessary inspections. Petitioner contended that he was not familiar with Bulletin No. 93-2, and, moreover, that he was under the misimpression that the Housing Authority's projects were federally owned and thus exempt from municipal inspection.
After gathering this information, Investigator Bond approached petitioner in June 2003, and advised him that local permits were needed on Housing Authority work. According to petitioner, that was the first time he had ever heard that the Authority's projects were subject to such municipal inspections.
Petitioner contended that no one from the Authority, nor anyone else affiliated with other contractors on those projects, ever mentioned the need for local building permits. Instead, petitioner claims that he had been told on various occasions by Authority executives that such permits were not necessary. According to petitioner, his predecessor Nasuta specifically had stated to him that local permits were unnecessary to perform work for the Authority. Nasuta allegedly told petitioner that such work was a regulatory "gray area," because Nasuta thought that the City owned the Authority's properties and the Federal Department of Housing and Urban Development ("HUD") owned the buildings.
Petitioner presented testimony on this issue from Anthony DeMarco. DeMarco had worked for twenty years at the Housing Authority, and served as the Authority's Executive Director for four years prior to his retirement in 2000. As Executive Director, DeMarco oversaw all of the construction in the Authority's nineteen buildings. DeMarco testified that during his tenure, he had been under the impression that the Authority's buildings, which were sponsored and subsidized through programs administered by HUD, were owned by the Federal Government. DeMarco noted that the Authority's projects were routinely examined by the United States Army Corps of Engineers. He recalled that HUD's inspectors ...