Dep't of Prof'l v. Best Buy Stores, LP

• Decision Date: 04 February 2014
• Docket Number: Record No. 1483-13-2
• Court: Virginia Court of Appeals
• Parties: DEPARTMENT OF PROFESSIONAL AND OCCUPATIONAL REGULATION, BOARD FOR CONTRACTORS v. BEST BUY STORES, LP

DEPARTMENT OF PROFESSIONAL AND OCCUPATIONAL REGULATION,BOARD FOR CONTRACTORS v. BEST BUY STORES, LP

Record No. 1483-13-2

COURT OF APPEALS OF VIRGINIA

FEBRUARY 4, 2014

UNPUBLISHED

Present: Judges Huff, Chafin and Decker

Argued at Richmond, Virginia

MEMORANDUM OPINION^* BY

JUDGE GLEN A. HUFF

FROM THE CIRCUIT COURT OF PRINCE WILLIAM COUNTY

Lon E. Farris, Judge

Elizabeth B. Myers, Assistant Attorney General (Kenneth T. Cuccinelli, II, Attorney General; Joshua N. Lief, Senior Assistant Attorney General; Steven P. Jack, Assistant Attorney General, on briefs), for appellant.

Martin Schubert (John D. McGavin; Bancroft, McGavin, Horvath & Judkins, P.C., on brief), for appellee.

The Department of Professional and Occupational Regulation, Board for Contractors ("Board") appeals a ruling of the Circuit Court of Prince William County ("circuit court") reversing the June 5, 2012 decision by the Board finding Best Buy Stores, LP ("Best Buy") in violation of 18 VAC 50-22-260(B)(8) and -260(B)(27). The circuit court reversed the Board explaining that the Board reached an arbitrary and capricious decision. The circuit court further ruled that "as a matter of law" Best Buy is not required to obtain "a contractor's license with a gas fitting specialty."

On appeal, the Board contends that the circuit court erred 1) in not finding waiver of Best Buy's argument that the installation of a replacement gas dryer was not the act of contractingwhich requires a contractor's license with the appropriate gas fitting specialty classification, 2) by using the incorrect standard of review in interpreting the Board's decision that Best Buy was acting in this matter as a general contractor, and 3) in its interpretation of §§ 54.1-1100 and 54.1-1102(A) of the Code of Virginia and related regulations of the Board when reviewing the Board's decision that Best Buy was acting in this matter as a general contractor. For the following reasons, this Court affirms the decision of the circuit court.

I. BACKGROUND

On appeal, "[w]e view the facts in this case 'in the light most favorable to sustaining the [Board's] action and take due account of the presumption of official regularity, the experience and specialized competence of the [Board], and the purposes of the basic law under which the [Board] has acted.'" Nat'l College of Bus. & Tech., Inc. v. Davenport, 57 Va. App. 677, 680-81, 705 S.E.2d 519, 521 (2011) (quoting Sentara Norfolk Gen. Hosp. v. State Health Comm'r, 30 Va. App. 267, 279, 516 S.E.2d 690, 696 (1999)). So viewed, the evidence is as follows.

Best Buy is a retail sales business specializing in consumer electronics, major appliances, home office products, entertainment software, and photography equipment. This case began with a customer's purchase of a gas dryer. In keeping with Best Buy's policy, a sales contract was signed by both the customer and Best Buy's sales representative before the purchase was consummated.

Best Buy maintains a standing Appliance Installation Master Services Agreement ("agreement") with Optima Services Solution, LLC ("contractor") to perform or arrange the installation of all gas appliances sold by Best Buy in Virginia. Contractor "is an independent contractor in the business of providing and engaging Subcontractors to provide delivery, installation, re-installation, call center services and related installation and delivery services as may be required to satisfy the needs of [contractor's] clients." The agreement between Best Buyand contractor designates contractor as the "General Contractor." Additionally, "[n]o Best Buy employee ever installs gas appliances in Virginia" and Best Buy's agreement with contractor requires that contractor "be licensed under all applicable laws, rules, and regulations."

On March 8, 2011, Stephen Bender ("Bender") purchased a gas dryer from Best Buy in Gainesville, Virginia. In addition to paying for the gas dryer, Bender paid for the installation of the dryer at his home and paid for required accessories including a dryer vent kit and a gas line cable, which were necessary to comply with the building code. Pursuant to the agreement, contractor arranged for Washington Home Services ("subcontractor") to perform the installation, although subcontractor was unlicensed in Virginia. Upon learning that the required gas permit was not obtained by subcontractor, Bender complained to Best Buy's customer service - staffed by contractor - who arranged to have a properly licensed subcontractor inspect the installation.

On March 15, 2011, Bender filed a complaint with the Board. On September 20, 2011, a report of findings was submitted to the Board, alleging Best Buy violated 18 VAC 50-22-260(B)(8) (failing to use a legible written contract that was signed before commencement of work) and -260(B)(27) (practicing in the specialty area of gas fitting without a gas contractor license). In response, the Board conducted an informal fact-finding conference ("IFFC") on February 17, 2012.

At the IFFC, Best Buy presented evidence regarding its installation policy. Best Buy's representatives testified that under Best Buy's business practice, the customer signs the Appliance Installation Terms and Conditions form at the Best Buy store at the time of purchase. That form is "very detailed" and "makes it very clear that a third-party will be performing the installation. At the time of the sale, Best Buy salespersons ask questions about the customer's existing connections and appliances and, if necessary, require the customer to purchase additional accessories to ensure they will be in compliance with applicable building codes afterthe installation. Best Buy was unable to produce the Appliance Installation Terms and Conditions form that had been signed by Bender.

The agreement between Best Buy and contractor specifies contractor as the "general contractor" and provides that contractor is responsible for a "warranty of both materials and workmanship, and a guarantee of remediation." Additionally, the agreement states "[contractor] shall be solely responsible for the conduct of all such Subcontractors and any Service Providers actually performing the [installation] Services . . . ." Furthermore, contractor provides "inbound and outbound telephone customer support . . . for the Services provided to Best Buy and its customers . . . ." The agreement requires contractor to send a properly licensed subcontractor to the customer's home to install the appliance and make the connection with the gas line. The subcontractor brings a "control form" with Best Buy's logo to the job site, which the customer and installer initial after the work is completed. Best Buy's "installations are for direct replacement only . . . [s]o if you don't have an existing . . . appliance already in your home, [Best Buy] [won't] offer or sell the service." Moreover, if a job requires more than a connection or additional work is discovered after the sale, contractor's subcontractor has permission to enter into a separate contract with the customer to provide such services.

On March 12, 2012, the presiding officer prepared a summary of the IFFC ("summary") recommending a finding that Best Buy violated both charges. After reviewing the record, the Board voted to adopt the presiding officer's recommendations that Best Buy violated 18 VAC 50-22-260(B)(8) and -260(B)(27), to impose monetary sanctions totaling $850, and to require Best Buy to have a member of responsible management successfully complete a Board-approved remedial education class within 90 days.

Best Buy filed a petition for appeal with the circuit court on August 2, 2012. In support of its appeal, Best Buy asserted that it did not provide a specialty gas fitting service or residentialcontracting as it is a retailer and does not construct, remove, repair, or improve residential buildings.¹ After hearing briefs and oral argument, the circuit court ruled from the bench that Best Buy was not required to hold a contractor's license with a gas fitting specialty, and reversed the decision of the Board. This appeal followed.

II. ANALYSIS

The Board presents three assignments of error on appeal. First, the Board contends that Best Buy waived its argument that installing replacement gas dryers was not an act of contracting because they failed to raise the argument during the proceedings before the Board. Second, the Board asserts that the circuit court erred by using the incorrect standard of review in interpreting the Board's decision. Lastly, the Board contends that the circuit court erred in its interpretation of Code §§ 54.1-1100 and 54.1-1102(A) and 18 VAC 50-22-260(B)(8) and -260(B)(27) when reviewing the Board's decision that Best Buy was acting as a general contractor.

A. Standard of Review

Judicial review of an agency decision is authorized by Code § 2.2-4027 of the Virginia Administrative Process Act ("VAPA"). "Judicial review of an agency decision is limited to determining '1. [w]hether the agency acted in accordance with law; 2. [w]hether the agency made a procedural error which was not harmless error; and 3. [w]hether the agency had sufficient evidential support for its findings of fact.'" Commonwealth ex rel. Va. State Water Control Bd. v. Blue Ridge Envtl. Def. League, Inc., 56 Va. App. 469, 480, 694 S.E.2d 290, 296 (2010)(alterations in original) (quoting Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 241, 369 S.E.2d 1, 6 (1988)), aff'd, 283 Va. 1, 720 S.E.2d 138 (2012).

"On reviewing the claims of error, an agency's factual determination is given substantial judicial deference, and is reviewed 'only for whether they have support in substantial evidence.'" Id. (quoting Mazloumi v. Dep't of Envtl. Quality, 55 Va. App. 204, 208, 684 S.E.2d 852, 854 (2009)). On appeal of an agency's determination of law,

"where the question involves an interpretation which is within the specialized competence of the agency and the agency has been entrusted with wide discretion by the General Assembly, the

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