Tri-Cities Holdings, LLC v. Tenn. Health Servs. & Dev. Agency

TRI-CITIES HOLDINGS, LLC v. TENNESSEE HEALTH SERVICES AND DEVELOPMENT AGENCY

No. M2015-00058-COA-R3-CV

COURT OF APPEALS OF TENNESSEE AT NASHVILLE

September 18, 2015 Session

February 22, 2016

Appeal from the Chancery Court for Davidson County

No. 1465011

Carol L. McCoy, Chancellor

An attorney from Georgia, who had been admitted to practice pro hac vice in a contested case hearing before the Tennessee Health Services and Development Agency, had his privilege to practice revoked by the Administrative Judge based upon representations he made as to the status of related federal litigation. On review by the Chancery Court, the revocation was affirmed. Discerning no error, we affirm the judgment of the Chancellor.

Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Affirmed

RICHARD H. DINKINS, J., delivered the opinion of the court, in which FRANK G. CLEMENT, JR., P.J., M.S., and W. NEAL MCBRAYER, J. joined.

Jim Higgins, Nashville, Tennessee, for the appellant, Tri-Cities Holdings, LLC.

Herbert H. Slatery, III, Attorney General and Reporter; and Sara E. Sedgewick, Senior Counsel, Nashville, Tennessee, for the appellee, Tennessee Health Services and Development Agency.

OPINION

I. FACTUAL AND PROCEDURAL HISTORY

This appeal arises out of the revocation of an attorney's permission to appear pro hac vice by an Administrative Judge for conduct in the course of a contested case proceeding. The parties are the Tennessee Health Services and Development Agency ("HSDA") and Tri-Cities Holdings, LLC ("Tri-Cities"), an entity that wished to open an opiate addiction treatment center in Johnson City and applied for a certificate of need ("CON") from the HSDA pursuant to Tenn. Code Ann. § 68-11-1607. After the application was denied in June 2013, Tri-Cities initiated a contested case pursuant to Tenn. Code Ann. § 68-11-1610. As provided in Tenn. Code Ann. § 4-5-301, the contested case procedures allowed for the appointment of an Administrative Judge ("AJ") to oversee the process at the request of the agency; pursuant to the statute an AJ was appointed.

On July 8, 2013, Tri-Cities' counsel, Mr. James Dunlap, who is licensed in the State of Georgia, filed suit in the U.S. District Court for the Eastern District of Tennessee on behalf of Tri-Cities and eight potential patients of the proposed opiate treatment program ("OTP"). The suit named HSDA, the City of Johnson City, the Johnson City Board of Commissioners, and the Johnson City Board of Zoning Appeals as defendants and alleged that the city's zoning restrictions and HSDA's "statutory procedures" violated the Rehabilitation Act, 29 U.S.C. § 701 et seq, and the Americans with Disabilities Act, 42 U.S.C. § 12101, et seq.¹

On July 25, Mr. Dunlap sent a letter to the Administrative Procedures Division of the Secretary of State, containing the following request:

On behalf of my clients, I would ask your office directly to provide my clients with a reasonable modification of any and all applicable state and local rules and regulations as required under the Americans with Disabilities Act ("ADA") and the Rehabilitation Act of 1973 ("Rehabilitation Act") from your office, and to the administrative hearing officer assigned to this case, and any other applicable agency of the State of Tennessee, to allow TCH to locate its Opiate Treatment Program at 4 Wesley Court, or elsewhere, in Johnson City, Tennessee.

On July 28, Mr. Dunlap sent a substantially similar letter to the AJ who had been assigned to the case and asked that the administrative appeal "be stayed while the federal case [Tri-Cities II] is pending." HSDA's counsel responded by letter, dated July 29, stating that the HSDA did not consent to the stay. Mr. Dunlap responded by letter to the AJ that same day, again asking for a stay and for "a reasonable modification under the ADA and the Rehabilitation Act to allow TCH to locate its OTP clinic in Johnson City"; with this letter, Mr. Dunlap included the four-page table of contents of the 75-page Tri-Cities II complaint.² On July 30, Mr. Dunlap filed a Motion for Admission Pro Hac Vice, which the AJ granted on August 2.

The AJ held pre-hearing conferences in July, September, and November of 2013; on November 18, the AJ entered a scheduling order stating that "the status of the related federal litigation has not changed; therefore, the hearing in this matter will continue to be held in abeyance." On January 8, 2014, the AJ emailed counsel for both parties seeking an update on developments in the pending federal litigation. In reply, Mr. Dunlap represented that no new developments had occurred. HSDA's counsel also replied, disputing Mr. Dunlap's representation and indicating that he would file a document explaining the developments. On March 7, HSDA's counsel filed a Motion to Set for Hearing, which included as an exhibit the federal magistrate's December 10, 2013, order granting defendants' motion to stay discovery in Tri-Cities II in which the magistrate expressed concern about the stay in the administrative appeal.³

In response to HSDA's motion, on March 13, on behalf of Tri-Cities, Mr. Dunlap filed a pleading styled "Objection to Motion to Set Hearing and Demand for Reasonable Modification under the ADA." In this Objection, Mr. Dunlap asserted, inter alia, the following:

. . .[I]f this tribunal does "take HSDA's bait" and takes any action to decide this appeal before a federal court or DOJ has spoken on this case, including scheduling a hearing, Petitioner respectfully indicates that it will have no choice but to join Your Honor, in an official capacity, and this tribunal, as defendants in the pending federal court action.

Finally, Petitioner respectfully submits that, under the ADA, Your Honor and this tribunal are required to offer Petitioner a reasonable modification to allow the CON to be issued. Petition[er] respectfully submits that Your Honor's and this tribunal's continuing failure to do this creates a cause of action that Petitioner may bring against Your Honor, and the tribunal itself, and may well move DOJ to include Your Honor and this tribunal as respondents in an ADA enforcement action.

Thus, this tribunal should decline to be HSDA's and Johnson City's "fixer," despite their desperate attempts to create a non-existent "escape hatch" for their blatant violations of federal law and the penalties likely soon to be imposed against them for these violations.

***

Misery loves company and HSDA would surely love this tribunal to try to extricate HSDA from the legal swamp it has created for itself. However, this tribunal is unable to do this and, at a minimum, would just succeed in bringing further liability upon itself and become a named defendant in thefederal action. Petitioner respectfully suggests this would be an unwise and costly step for the tribunal and certainly violate principles of judicial economy at the very minimum.

(Emphasis in original.) Mr. Dunlap also claimed in the Objection to Motion to Set that "this administrative appeal process amounts to a scheme or artifice to violate the ADA."

The next day, the AJ issued an order revoking Mr. Dunlap's permission to appear pro hac vice. In that order, the AJ made numerous findings of fact and quoted Tenn. Sup. Ct. R. 19 in its entirety, as well as excerpts of Tenn. Sup. Ct. R. 8, RPC 3.3 ("Candor Toward the Tribunal"), 3.5 ("Impartiality and Decorum of the Tribunal"), and 8.4 ("Misconduct") and Tenn. Code Ann. § 39-14-112, "Extortion." The AJ then stated the following Conclusions of Law:

1. From the outset, Mr. Dunlap requested a stay of this administrative proceeding on behalf of Tri-Cities until after the related federal court action was resolved. He never disclosed to this tribunal that the federal litigation had previously been dismissed for lack of ripeness or that it was now, itself, subject to a stay in deference to the administrative proceedings.

2. Notwithstanding the recent indication from the federal court that the CON appeal should be resolved before the federal issues are addressed, Mr. Dunlap still insists that the stay of these proceedings should remain in place, and has threatened to join the Administrative Judge and this tribunal in the federal court action should the stay of the administrative proceedings be lifted and the CON appeal be set for hearing.

3. In addition, Mr. Dunlap is now demanding that this tribunal grant the requested modifications of HSDA rules and the disputed CON even though the HSDA's obligation to provide this relief is yet to be determined, either by this tribunal or in the federal courts. Mr. Dunlap's demand includes an unveiled threat that the Administrative Judge and the tribunal will face an ADA enforcement action by the Department of Justice should the Administrative Judge fail to provide the requested relief.

4. Mr. Dunlap has misrepresented to this tribunal the status of the federal litigation and has used this misrepresentation to attempt to coerce a decision by this tribunal in favor of his client without the benefit of the administrative hearing, which he demands must remain stayed.

5. Mr. Dunlap's coercion and misrepresentations are a flagrant attempt to improperly influence a judge in violation of Rules 3.3, 3.5, and 8.4 of the Tennessee Rules of Professional Conduct, as well as Tenn. Code Ann. § 39-14-112.

6. Mr. Dunlap has expressed contempt for this tribunal and these administrative proceedings, thus, there is no apparent purpose for his continued participation.

7. Mr. Dunlap's actions have unnecessarily impeded a resolution of the CON appeal and have breached the conditions on which he was granted pro hac vice admission to practice law in Tennessee. In accordance with Rule 19(c), Mr. Dunlap's permission to appear in this matter pro hac vice is appropriately and necessarily revoked.

On March 24, Tri-Cities, through its local counsel, filed a motion to reconsider the revocation of Mr. Dunlap's permission to appear pro hac vice, denying "each and every allegation of...