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Allstars Auto Group, Inc. v. New Jersey Motor Vehicle Commission

Supreme Court of New Jersey

July 18, 2018

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.

          Argued January 30, 2018

          On certification to the Superior Court, Appellate Division.

          Thomas G. Russomano argued the cause for appellants (Schiller Pittenger & Galvin, attorneys; Thomas G. Russomano and Jay B. Bohn, on the brief).

          Melissa Dutton Schaffer, Assistant Attorney General, argued the cause for respondent (Gurbir S. Grewal, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel and on the brief, and Nonee Lee Wagner, Deputy Attorney General, on the brief).

          FERNANDEZ-VINA, J., writing for the Court.

         In this case, the Court is tasked with determining whether the New Jersey Motor Vehicle Commission (Commission) appropriately issued fines and suspensions without holding hearings.

         Each of the plaintiff dealers operates out of a separate office in the same building in Bridgeton. The dealerships are separately owned and the offices are sparse. Commission inspectors conducted audits of the offices pursuant to N.J.A.C. 13:21-15.13 on August 18 and 19, 2014. Inspectors alleged violations of various Commission regulations. The dealers were each charged with violating three provisions except Amiri Mbubu Auto Sales, LLC (Mbubu), which was charged with five violations.

         The Commission sent notices of proposed suspension to the dealers. It proposed a ten-day license suspension for all dealers except Mbubu. The Commission proposed a twenty-day suspension of Mbubu's license because of its greater number of violations. The notice informed the dealers that the Commission would also impose fines of $500 for each violation -- a $1500 civil penalty for each dealer except Mbubu and a $2500 penalty for Mbubu. The dealers would be required to pay a $200 license restoration fee.

         The notice also informed the dealers of their right to request a hearing. Each dealer acted pro se and requested a hearing in writing. Each provided explanations for the alleged violations but did not deny the allegations. The Commission denied the requests for hearings and issued an order of suspension/final administrative decision letter to each dealer. The Commission ruled that each dealer had "failed to identify any disputed material fact(s), legal issue(s) and/or specific mitigating circumstances to be resolved at a hearing," and interpreted the dealers' responses as admissions.

         The dealers hired one attorney to represent all of them. Counsel submitted a hearing request to the Commission on behalf of each dealer, arguing that there was a lack of factual support for the allegations and disputing each allegation. The Commission denied the second request for hearing for all dealers. The dealers moved for reconsideration, and the Commission denied the motion. The dealers separately appealed the Commission's final orders to the Appellate Division.

         The Appellate Division panel consolidated the appeals and affirmed the Commission's imposition of suspensions and fines in an unpublished opinion. The panel determined that the Commission may decide cases "without a trial-type hearing when there are no disputed adjudicative facts." The panel found that the fines challenged by the dealers were authorized by N.J.S.A. 39:10-20, and the Commission could impose fines under the statute on a case-by-case basis.

         The dealers petitioned for certification, which the Court granted. 230 N.J. 472, 480-83 (2017).

         HELD: If the reasons given by the dealers present a colorable dispute of facts or at least the presence of mitigating evidence, the Commission is required to provide an in-person hearing pursuant to N.J.S.A. 39:10-20. An in-person hearing must be held prior to a license suspension or revocation when the target of the enforcement action requests it. Accordingly, the Court reverses the judgment of the Appellate Division and remands.

         1. The Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -31, provides a road map for navigating administrative proceedings but -- with one exception not applicable here -- does not create a substantive right to an administrative hearing. Thus, the right to an administrative hearing generally must be found outside the APA. (p. 12)

         2. When it enacted the Motor Vehicle Security and Customer Service Act, the Legislature established the Commission as an independent entity within the Department of Transportation. The Legislature simultaneously enacted the Motor Vehicle Certificate of Ownership Law (MVCOL), N.J.S.A. 39:10-1 to -38, "to regulate and control titles to, and possession of, all motor vehicles in [New Jersey]." N.J.S.A. 39:10-3. The Commission is entrusted with enforcing the MVCOL, and "may make rules and regulations necessary in its judgment for the administration and enforcement thereof." N.J.S.A. 39:10-4. To facilitate the Commission's exercise of its duties, the Legislature expressly authorized it to suspend or revoke dealer licenses, but required the opportunity for a hearing. N.J.S.A. 39:10-20. The MVCOL also specifies that a post-hearing suspension may be imposed for any violation of the MVCOL itself or of the regulations adopted to implement the MVCOL. Ibid. (pp. 12-14)

         3. A dealer may "request a hearing concerning . . . proposed disciplinary action." N.J.A.C. 13:21-15.14(b). "The hearing request must be in writing, must list all contested issues of material fact, issues of law, and mitigating circumstances that the applicant or licensee intends to demonstrate." N.J.A.C. 13:21-15.14(c). If a hearing request is made, the regulation provides for two possible outcomes. N.J.A.C. 13:21-15.14(f) 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." On the other hand, "[i]f the Chief Administrator finds that there exist issues of material fact or potentially mitigating circumstances, the matter will be referred for a hearing." N.J.A.C. 13:21-15.14(d). The decision to grant or deny a requested hearing hinges on the presence or absence of "issues of material fact or potentially mitigating circumstances." (pp. 14-15)

         4. If "issues of material fact or potentially mitigating circumstances are present," a hearing must be held pursuant to N.J.A.C. 13:21-15.14(d). That hearing may be conducted by the Commission itself or referred to the Office of Administrative Law (OAL) for consideration by an Administrative Law Judge as a contested case pursuant to N.J.S.A. 52:14B-2 and -9. It is for the agency head to decide initially whether to refer the matter to the OAL. (pp. 15-17)

         5. The plain language of N.J.S.A. 39:10-20 -- which provides that licenses may be suspended "after hearing" and specifies that "[t]he chief administrator shall, before suspending or revoking a 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" (emphases added) -- mandates a hearing here. Although the regulations provide that the Commission may issue a final decision without a hearing when "no material facts" are in dispute and no "specific mitigating circumstances" are alleged, N.J.A.C. 13:21-15.14(f), that provision did not authorize the Commission to forego a hearing in these circumstances. Each of the dealers requested a hearing, and each request provided facts that the dealers intended to argue would constitute defenses to the alleged violations or would at least mitigate their severity. The Commission must provide an in-person hearing to the dealers before suspending their licenses, so that any disputed facts or questions of law may be resolved, and any mitigating circumstances presented. The Court does not, however, determine whether the Commission must conduct the hearing itself or refer the matter to the OAL. The decision of whether to make that referral resides with the Commission. (pp. 17-19)

         6. As to the dealers' contention that the agency lacks the authority to impose fines for violations of its regulations, the Legislature amended the MVCOL to allow the Commission to impose fines in 2007. N.J.S.A. 39:10-20 provides that "[t]he chief administrator may impose a fine not to exceed $500 for a first offense and $1, 000 for any subsequent offense upon the holder of a license for a violation of any provision of [Chapter 10 of Title 39]." The Court finds that N.J.S.A. 39:10-20 explicitly authorizes the Commission to impose such fines and that no promulgation of a fine schedule for each regulation is necessary. (pp. 19-20)

         REVERSED.

          CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, SOLOMON, and TIMPONE join in JUSTICE FERNANDEZ-VINA's opinion.

          FERNANDEZ-VINA, JUSTICE.

         In this case, the Court is tasked with determining whether the New Jersey Motor Vehicle Commission (Commission) appropriately issued fines and suspensions without holding hearings.

         Commission auditors discovered alleged violations at various motor vehicle dealerships ...


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