Allstars Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n

• Decision Date: 18 July 2018
• Docket Number: 078991,A-72/73/74/75/76/77/78/79 September Term 2016
• Citation: 189 A.3d 333,234 N.J. 150
• Parties: 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. Empire Auto Finance, Inc., Appellant, v. New Jersey Motor Vehicle Commission, Respondent. JMC Auto Sales, LLC, Appellant, v. New Jersey Motor Vehicle Commission, Respondent. Old Vine Auto Dealer, LLC, Appellant, v. New Jersey Motor Vehicle Commission, Respondent. Amir Used Car, Inc., Appellant, v. New Jersey Motor Vehicle Commission, Respondent. Amiri Mbubu Auto Sales, LLC, Appellant, v. New Jersey Motor Vehicle Commission, Respondent.
• Court: New Jersey Supreme Court

234 N.J. 150

189 A.3d 333

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.

Empire Auto Finance, Inc., Appellant,

v.New Jersey Motor Vehicle Commission, Respondent.

JMC Auto Sales, LLC, Appellant,

v.New Jersey Motor Vehicle Commission, Respondent.

Old Vine Auto Dealer, LLC, Appellant,

v.New Jersey Motor Vehicle Commission, Respondent.

Amir Used Car, Inc., Appellant,

v.New Jersey Motor Vehicle Commission, Respondent.

Amiri Mbubu Auto Sales, LLC, Appellant,

v.New Jersey Motor Vehicle Commission, Respondent.

A-72/73/74/75/76/77/78/79 September Term 2016

078991

Supreme Court of New Jersey.

Argued January 30, 2018

Decided July 18, 2018

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

JUSTICE FERNANDEZ-VINA delivered the opinion of 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.

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 required forms for reassignments, N.J.A.C. 13:21-15.7(b)(1), failing to account for reassignments, N.J.A.C. 13:21-15.7(b)(2), failing to account for dealer plates, N.J.A.C. 13:21-15.11(a) (2014),¹ failing to produce a logbook or ledger for dealer plates, N.J.A.C. 13:21-15.11(a)(2) (2014), failing to maintain a landline phone, N.J.A.C. 13:21-15.4(h), issuing a temporary tag without a bona fide sale or lease of a vehicle, N.J.A.C. 13:21-15.9(a), failing to obtain proof of insurance before issuing a temporary tag, N.J.A.C. 13:21-15.9(d) (2014), issuing a nonresident temporary tag without a bona fide sale or lease of a vehicle, N.J.A.C. 13:21-15.10(a), failing to obtain proof of insurance before issuing a nonresident temporary tag, N.J.A.C. 13:21-15.10(e), and failing to display a dealership license, N.J.A.C. 13:21-15.4. The inspectors did not allege each dealer violated every regulation; the dealers were each charged with violating three provisions except 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. 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 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 orders imposed the proposed penalties and informed each dealer when their suspensions would begin and end. The orders also informed the dealers that the orders reflected the "Final Decision of the Chairman and Chief Administrator of the Motor Vehicle Commission," and that any appeal must be made to the Appellate Division of the Superior Court.

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 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." Considering the dealers' concessions in their initial responses to the Commission, the panel found that the violations were supported by substantial credible evidence in the record. The Appellate Division also determined that the facts in the letter submitted by counsel lacked any support in the record and did not explain the prior statements by the dealers. 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 then petitioned this Court for certification, which we granted. 230 N.J. 472, 480-83, 169 A.3d 970 (2017).

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.

B.

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...