Jes Constr., LLC v. Bd. for Contractors

JES CONSTRUCTION, LLC v. BOARD FOR CONTRACTORS, DEPARTMENT OF PROFESSIONAL ANDOCCUPATIONAL REGULATION

Record No. 0888-18-1

COURT OF APPEALS OF VIRGINIA

DECEMBER 26, 2018

UNPUBLISHED

Present: Chief Judge Huff, Judge AtLee and Senior Judge Frank

Argued at Norfolk, Virginia

MEMORANDUM OPINION^* BY JUDGE ROBERT P. FRANK

FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH

Stephen C. Mahan, Judge

Jeffrey L. Marks (Kaufman & Canoles, P.C., on briefs), for appellant.

Joshua E. Laws, Assistant Attorney General (Mark R. Herring, Attorney General; Stephen A. Cobb, Deputy Attorney General; Heather Hays Lockerman, Senior Assistant Attorney General and Section Chief, on brief), for appellee.

The Board for Contractors (Board) found that appellant, JES Construction, LLC (JES), violated 18 VAC 50-22-260.B.33 by failing to obtain a building permit before beginning work and burying footings before they were inspected. The Board imposed a $5,000 fine and placed JES on probation for two years. JES appealed the ruling to the Circuit Court of the City of Virginia Beach, which upheld the Board's decision.

BACKGROUND

"In accordance with familiar principles of appellate review, 'we review the facts in the light most favorable to sustaining the Board's action.'" Crutchfield v. State Water Control Bd., Dep't of Envtl. Quality, 45 Va. App. 546, 553-54 (2005) (quoting Atkinson v. Va. Alcohol Beverage Control Comm'n, 1 Va. App. 172, 176 (1985)).

JES is a business specializing in foundation repair. On February 19, 2015, JES contracted with a homeowner to make certain foundation repairs to the home, which was located in Henrico County. The contract provided that JES would obtain a permit for its work. On April 23, 2015, six days into the project, the homeowner contacted JES and inquired whether a permit had been obtained. JES said that it had requested a permit but it had not been delivered. On April 24, 2015, the homeowner learned from the County that JES had not yet applied for a permit. The next day, JES applied for a permit, but the request was rejected. JES corrected the deficiency, and the County issued the permit on May 15, 2015.

On May 27, 2015, a County building inspector went to the subject property to examine the footings but was unable to do so because JES had covered over the footings with dirt. JES had failed to request a footings inspection prior to burying the footings. Later, JES uncovered the footings, and the County ultimately approved the inspection.

The homeowner filed a complaint with the Department of Professional and Occupational Regulation on June 19, 2015, contending that JES had failed to timely obtain a building permit.

By letter dated August 12, 2016, the Board advised JES that it would conduct an informal fact finding (IFF) conference on September 20, 2016. In accordance with Code §§ 2.2-4019 and 2.2-4021, the notice advised JES of the following rights:

1. To have reasonable notice of the conference;

2. To appear in person, or by counsel, or other qualified representative, before the Board, one of its subordinates, or a hearing officer, for an informal presentation of factual data, argument, or proof in connection with the complaint;

3. To have notice of any contrary fact basis or information in the possession of the Board, which the Board may rely upon in making an adverse decision; 4. To receive a prompt decision; and

5. To be informed, briefly and generally in writing, of the factual or procedural basis for any adverse decision by the Board.

The notice provided additional information that

[t]he board may require remedial education, revoke or suspend a license or fine a licensee when a licensee has been found to have violated or cooperated with others in violating any provision of Chapter 11 (§ 54.1-1100 et seq.) of Title 54.1 of the Code of Virginia, or any regulation of the board.

The notice stated that Code § 54.1-201(7) set forth, in part, "the powers and duties of regulatory boards," as follows:

To place a regulant on probation or revoke, suspend or fail to renew a certificate or license for just causes as enumerated in regulations of the board. Conditions of probation may include, but not be limited to the successful completion of remedial education or examination.

The notice further informed JES that "the Board is initiating an IFF Conference in order to obtain the facts necessary to make a decision regarding the regulatory issues involved in this matter" and that JES could subpoena witnesses on its behalf. The notice stated that the conference "is not an adversarial proceeding and there will not be any cross-examination[,]" but "clarifying questions may be asked." The notice advised JES that "[a]ll of the information and testimony presented during the IFF Conference will form the Agency Record." The notice stated that the presiding officer may prepare a summary after the IFF conference and "may recommend one of the following to the Board: (1) close the case with no violation; (2) find a violation and impose a sanction; or (3) schedule the case for a formal administrative hearing." The notice informed JES that the summary would be submitted to the Board, which could "accept, reject, or modify" it. Finally, the notice stated that the "maximum sanctions for a regulatory violation are revocation of [licensee's] license and a monetary penalty up to the amount of $2,500 per regulatory violation."

Charles Davis, chief operating officer of JES, and Scott Davis, an engineer and vice-president of JES, participated in the IFF conference. The company admitted that it had failed to obtain the required permit before commencing the work and attributed its failure to do so to its own administrative shortcomings. Scott Davis said that whether a permit was required was a "gray area" and varied from one locality to another. He acknowledged, however, that in the case before the Board, the homeowner specifically had requested that a permit be obtained. Davis further said that JES "want[ed] to do the right thing" and had hired more staff to handle permits and inspections.

Following the hearing, the presiding officer found that JES had failed to obtain a building permit prior to the commencement of work and to request a footing inspection prior to covering the footing. He recommended a $1,000 fine.¹

By letter dated October 24, 2016,² the Board included a "Corrected Summary" of the IFF conference, advised JES that the Board would meet on November 8, 2016, and could amend the summary, by "adding fines and/or raising the amount of the fine, as well as revoking or suspending a license." The letter also stated that "[t]he Board may consider any prior disciplinary actions in making its final case decision." The letter informed JES that

[a]t the Board meeting, participants may respond to the Agency Record and the Corrected Summary only. Participants may not present any new information or bring any new witnesses. Participants will be permitted to speak for five minutes. This is your final opportunity to make a presentation to the Board before a final decision is made.

The letter directed JES to contact the Board if it had any questions.

Scott Davis and Charles Davis attended the November 8, 2016 Board meeting on behalf of JES. The minutes of the meeting, which are part of the agency record, reflect that Scott Davis addressed the Board and "shared [JES's] agreement with the Recommendation" from the IFF conference. The Board adopted the summary from the conference in part and found that JES had violated 18 VAC 50-22-260.B.33.³ The Board then proceeded to determine the sanctions to be imposed and considered seven prior violations by JES, which also involved the "failure to obtain required building permits and/or inspections." JES had entered consent orders in six of the cases.

After a motion was made to increase the fines for the two violations and revoke JES's license, Scott Davis was allowed to address the Board again. He said that JES had "undergone a major revamping" of office personnel and had hired additional persons "to ensure that all permits are pulled and inspections scheduled." He requested that the Board not revoke the company's license.

Despite the earlier consideration of such a revocation, the Board heeded Davis's request and did not revoke the license. The Board imposed a total fine of $5,000 and placed JES on a two-year probationary period, with the condition that another violation of 18 VAC 50-22-260.B.33 would result in an automatic revocation of the license. The Board also required a remedial education class. These sanctions were imposed by order of November 8, 2016. The order advised JES that pursuant to Rule 2A:2, it had thirty days to note an appeal of the Board's decision.

JES appealed to the Circuit Court of the City of Virginia Beach. The appeal was heard on June 27, 2017. Counsel for JES told the court that JES wanted the matter remanded to the Board for a formal hearing under Code § 2.2-4020 because no "reasonable mind could have [concluded] that a two-year probation" was an appropriate sanction for a "matter which involved a $3,500 contract." Counsel emphasized in his argument to the court that JES would not have contested a less harsh punishment.

The court upheld the Board's decision and gave detailed reasons for its rulings. The court first rejected JES's argument that it was denied a formal hearing under Code § 2.2-4020 and thus deprived of an opportunity to make its position known to the Board. The court held that the IFF conference under Code § 2.2-4019 had given JES the procedural due process to which it was entitled and that a further formal hearing was not required.

The court found that the Board had violated Code § 2.2-4019(A)(iii) by not providing JES with specific notice that the seven prior violations would be considered by the Board in determining the sanctions to be imposed on JES.⁴ However, the court also found that JES waived the Board's failure to provide the information because JES did not object at...