Commission auditors discovered alleged violations at various motor vehicle dealerships (collectively, dealers). The dealers are:
Allstars Auto Group, Inc. (Allstars);
Amir Used Car, Inc. (Amir);
Amiri Mbubu Auto Sales, LLC (Mbubu);
Automotive Solution Corp. (Automotive);
Empire Auto Finance, Inc. (Empire);
Independence Auto Sales, LLC (Independence);
JMC Auto Sales, LLC (JMC); and
Old Vine Auto Dealer, LLC (Old Vine).
The dealers requested hearings after receiving notices of proposed action from the Commission. The Commission denied the requests, determining that the dealers failed to raise sufficient disputes of adjudicative facts or issues of law, and rendered a final decision imposing its proposed fines and suspensions.
The Appellate Division affirmed, agreeing that there were no adjudicative facts in dispute, and holding that there was no absolute right to a hearing before a license suspension.
We disagree and find that, 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, we reverse the judgment of the Appellate Division and remand.
I.
Because this appeal arises from a final agency determination denying a hearing, the facts below are gathered from the submissions of the parties.
Each of the 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, including failing to keep certain business records on the premises, N.J.A.C. 13:21-15.4(g), failing to completely fill out
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. For example, one dealer alleged the records were temporarily with his accountant, while another claimed to have had the records on his person when traveling to and from an auction.
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 letter claimed that the relevant records were, in fact, maintained on the premises of each dealer but provided no explanation as to why they were unavailable during the audits. One dealer submitted an amended response to the notice of proposed suspension and argued that the Commission lacked statutory authority to suspend or revoke a dealer's license without a hearing.
The Commission denied the second request for hearing for all dealers. The Chairman and Chief Administrator sent a letter to each dealer explaining that the Commission considered the previous communications from the dealers to be admissions of the violations and that counsel's new letters did not create a sufficient dispute of fact or law to entitle the dealers to a hearing. The Chairman's letter informed the dealers of their right to appeal.
The dealers moved for reconsideration of the denial of a hearing. The Commission denied the motion, concluding that the dealers had failed to demonstrate a probability of success on the merits. The dealers separately appealed the Commission's final orders to the Appellate Division.
The dealers then petitioned this Court for certification, which we granted.
II.
A.
The dealers argue that the imposition of fines and suspensions without a hearing was procedurally improper. The dealers assert that they were entitled to a hearing before the imposition of a license suspension, pursuant to N.J.S.A. 39:10-20. They posit that the authority to determine whether a matter is a contested case allows the agency head to determine whether the agency will hear the case or refer it to the Office of Administrative Law (OAL), not whether to grant a hearing at all.
According to the dealers, the Commission lacks the statutory authority to impose the fines at issue. They claim N.J.S.A. 39:10-20 allows the Commission to impose fines only for statutory violations, not for the violation of Commission regulations. The dealers assert the same reasoning applies to the imposition of the license restoration fee, and the Commission must enact a regulation to impose the fines and fees.
The Commission asserts that the dealers were entitled only to a "reasonable opportunity to be heard," and they were afforded that opportunity. It argues that an in-person hearing is not required. When no material facts are in dispute, the Commission continues, no contested case hearing is necessary. The Commission contends it offered the dealers the opportunity to be heard through their hearing requests, and their admissions rendered an in-person hearing unnecessary.
Addressing the issue of the fines and fees, the Commission argues that N.J.S.A. 39:10-20 authorizes it to impose a fine of up to $500 for first-time violations by a licensee. It asserts that it abided by the statute in fining the dealers $1500 each for three violations and fining Mbubu $2500 for five violations. The Commission contends that its regulations allow it to suspend licenses for rule violations and that all violations were supported by substantial, credible evidence -- the dealers' admissions.
III.
Judicial review of agency determinations is limited. Russo v. Bd. of Trs., PFRS,
(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law;
(2) whether the record contains substantial evidence to support the findingson which the agency based its action; and
(3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.
[ In re Stallworth,, 194, 208 N.J. 182 (2011) (quoting In re Carter, 26 A.3d 1059 , 482, 191 N.J. 474 (2007) ).] 924 A.2d 525
However, a reviewing court is "in no way bound by [an] agency's interpretation of a statute or its determination of a strictly legal issue." Dep't of Children & Families, DYFS v. T.B.,
IV.
A.
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." In re Fanelli,
When it enacted the Motor Vehicle Security and Customer Service Act, L. 2003, c. 13, the Legislature established the Commission
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: "[t]he chief administrator shall,
Commission regulations provide specific guidance regarding hearings. N.J.A.C. 13:21-15.14(a) provides that, unless circumstances not relevant here are present, "the Chief Administrator will send a Notice of Proposed Disciplinary Action" to a dealer
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 or if the licensee does not respond to the Notice of Proposed Disciplinary Action within 25 days from the date of the notice, the Chief Administrator shall issue a Final Administrative Determination" that can be appealed to the Superior Court, Appellate Division. 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" that must accord with the APA and the Uniform Administrative Procedure Rules. N.J.A.C. 13:21-15.14(d).
Based on the foregoing, the decision to grant or deny a requested hearing hinges on the presence or absence of "issues of material fact or potentially mitigating circumstances." A "material fact" is "[a] fact that is significant or essential to the issue or matter at hand." Black's Law Dictionary 670 (9th ed. 2009). A "mitigating circumstance" is "[a] fact or situation that does not justify or excuse a wrongful act or offense but that reduces the degree of culpability and thus may reduce" the severity of the sanction imposed for a regulatory violation. See id. at 277.
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 OAL for consideration by an Administrative Law Judge as a contested case pursuant to N.J.S.A. 52:14B-2 and -9. See generally In re Appeal of
Agencies can refer contested cases to the OAL. "Administrative adjudication continues to be the agency's responsibility, although it is still usually effectuated through a bifurcated process in which the hearing and decisional phases are handled separately."
"The right to decide contested cases is an integral part of the administrative process." Ibid."Administrative agencies carry out their regulatory responsibilities not only through rulemaking or informal administrative action, but also through adjudication of contested cases."
B.
We now apply those principles as well as the plain language of the statute to the facts of this case. We find that 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
The Commission points to its regulations governing hearings to support its decision to proceed without a hearing. 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), we find 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 pro se filings by the dealers were perhaps inarticulate in emphasizing disputed facts or law, but they clearly requested a hearing to contest the Commission action or present evidence of mitigating circumstances. Counsel's letters, although sent after the Commission's submissions deadline, remove any doubt regarding the dealers' intent to challenge the imposition of fines and suspensions. Those letters deny each alleged violation.
We hold that 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.
Because we find that the Commission could not impose the proposed sanctions without a hearing, we address only briefly 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]." We find 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.
V.
The judgment of the Appellate Division is reversed and the matter is remanded for further proceedings consistent with this opinion.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, SOLOMON, and TIMPONE join in JUSTICE FERNANDEZ-VINA's opinion.
Notes
Several relevant administrative provisions have since been amended, changing, for example, section (a) to section (g). We provide the year for clarity when necessary.
It bears noting that the burden of proving the charges is on the Commission and there are no verified facts in this record as far as we can discern.