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Office of Regulatory Affairs v. Eic Inspection Agency Corporation

March 17, 2011


Per curiam.


Submitted January 24, 2011

Before Judges Rodriguez and Grall.

EIC Inspection Agency Corporation (EIC) appeals a final order of the Acting Commissioner of the Department of Community Affairs (Department). The Commissioner assessed EIC a $1500 penalty for violating its obligations under the State's Uniform Construction Code Act, N.J.S.A. 52:27D-119 to -141 (the Act), and the Department's regulations, N.J.A.C. 5:23-1.1 to -12A-6. EIC is an on-site inspection agency authorized to act in lieu of a code or subcode official and subject to civil penalties pursuant to the Act. See N.J.S.A. 52:27D-124(i)(1), -126, -138.

EIC appeals, contending that the Department did not afford EIC "peer review" required by N.J.A.C. 5:23-5.25(d)(6) or present adequate evidence of the violations at the hearing on the contested case in the Office of Administrative Law, N.J.S.A. 52:14B-9 to -12. EIC also asserts that the penalties are unauthorized. We reject those claims for the reasons set forth below.

The purposes of the Act include ensuring "adequate maintenance of buildings and structures throughout the State and to adequately protect the health, safety and welfare of the people." N.J.S.A. 52:27D-120(e). The Commissioner has authority to effectuate the goals of the Act by promulgating regulations and prosecuting violators in administrative proceedings. N.J.S.A. 52:27D-124, -138.

EIC is authorized by the Commissioner to inspect for violations of the Act's elevator subcode; that authorization allows EIC to be retained by a municipal authority to act in lieu of the municipality appointing a local subcode official to inspect elevators. N.J.S.A. 52:27D-124(a), (i), -126(a)-(c); N.J.A.C. 5:23-4.12. An on-site inspection agency's initial authorization is good for one year. N.J.A.C. 5:23-4.12(e). Consequently, an authorized agency must apply annually for reauthorization. N.J.A.C. 5:23-4.12(f). To obtain the essential reauthorization, an applicant must submit information requested by the Department. Ibid.

There are consequences for an on-site inspection agency that submits an incomplete or inaccurate application form for authorization and reauthorization. Upon determining that any "authorization or reauthorization was based on the submission of fraudulent or materially inaccurate information," the Department may, "[i]n addition to any other remedies provided by the regulations," suspend or revoke the on-site inspection agency's authorization. N.J.A.C. 5:23-4.15(a).

EIC's violations are based on the answer it supplied to a single question on several of the forms it submitted for its annual reauthorization. The question at issue is: "Have any legal actions occurred this year involving the agency or its employees?" The Administrative Law Judge and the Commissioner concluded that this question requires an on-site inspection agency to report legal actions filed during the calendar year. From 2001 to 2007, EIC answered that question "no."

A competitor of EIC, Municipal Inspection Corporation, gave the Department the results of a docket search indicating EIC's involvement in eight lawsuits between 2001 and 2007. The Department investigated and at the hearing in the Office of Administrative Law introduced evidence showing: in 2001, a case was filed against EIC and EIC later settled that case for $120,000; in 2002, a case was filed against EIC, and EIC's owner admitted that its insurance carrier provided its defense; and, in 2003, EIC filed an answer to an amended complaint in a third action filed that year. With respect to the other lawsuits, the Department had no evidence to establish that EIC was served with the complaints or participated in the litigation.

The Administrative Law Judge found violations, and the Commissioner found that EIC failed to report the actions filed in 2001, 2002, and 2003, and the Commissioner concluded that the violations were unintentional, not willful, and as a consequence subject to a $500 penalty.

We reject EIC's challenge to the adequacy of the evidence; it was sufficient to establish three violations. This court must accept factual determinations of an agency when "satisfied" that the evidence and inferences drawn from the evidence support them. Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587 (2001) (internal quotations omitted). Here, the evidence shows that EIC participated in three separate legal actions filed in three separate years that it never disclosed.

We also reject EIC's claim that the Commissioner could not assess a civil penalty without first having the case reviewed by a "review committee" in accordance with N.J.A.C. 5:23-5.25(d)(6). The regulation requires peer review for persons "licensed under the respective subcodes." Ibid. Pursuant to N.J.A.C. 5:23-4.12(a), on-site inspection agencies like EIC do not receive licenses. As noted above, they receive "authorization." N.J.A.C. 5:23-5.25(d), (d)(6). It is true that the Commissioner cannot authorize a private on-site inspection agency unless its management and technical personnel are certified by the Commissioner in accordance with N.J.A.C. 5:23-5. N.J.A.C. 5:23-4.12(d)(2). But the on-site agency itself is not licensed, and the Commissioner did not take this action against an employee of EIC in his or her individual capacity.

We turn to consider EIC's claim that the Commissioner's imposition of civil penalties for these violations is unauthorized. EIC correctly notes that the regulation addressing its provision of false and materially inaccurate information does not expressly authorize monetary sanctions or refer to a regulation that does. Instead, the regulation permits revocation or suspension of authorization or ...

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