McQuay v. Arkansas State Bd. of Architects

• Decision Date: 22 April 1999
• Docket Number: No. 98-995,98-995
• Parties: Boyce MCQUAY, Appellant, v. ARKANSAS STATE BOARD OF ARCHITECTS, Appellee.
• Court: Arkansas Supreme Court

Page 499

989 S.W.2d 499

337 Ark. 339

Boyce MCQUAY, Appellant, v. ARKANSAS STATE BOARD OF ARCHITECTS, Appellee.

No. 98-995.

Supreme Court of Arkansas.

April 22, 1999.

John Russell Elrod, Vicki Bronson, Fayetteville, for Appellant.

J. Winston Bryant, Atty. Gen., Warren T. Readnour, Asst. Atty. Gen., Little Rock, for Appellee.

RAY THORNTON, Justice.

Appellant, Boyce McQuay, appeals from the assessment of a penalty of $48,000 for practicing architecture without a license. The Arkansas State Board of Architects (the Board) imposed the penalty following a hearing before the Board on April 18, 1995, and the Benton County Circuit Court affirmed the Board's order. Appellant raises four points on appeal, and we find that one of the points has merit. Accordingly, we reverse and remand with instructions to return the case to the Board for further actions consistent with this opinion.

Appellant was not registered or licensed as an architect; however, in September 1992, appellant prepared construction documents for Woodland Manor Nursing Home. In January 1993, appellant prepared construction documents for Cobb/Vantress Laboratory Facility, and in August 1993 and in 1994, appellant designed and prepared construction documents in two phases for Atkinson Internal Medical Clinic. The statutes that frame the issues before us are codified at Ark.Code Ann. §§ 17-14-102, 17-14-203, and 17-14-301 (Supp.1993). ¹

Standard of Review

The standard of review in this area of the law is well-developed. Review of administrative decisions is limited in scope. Such decisions will be upheld if they are supported by substantial evidence and are not arbitrary, capricious, or characterized by an abuse of discretion. In re Sugarloaf Mining Co., 310 Ark. 772, 840 S.W.2d 172 (1992). The appellate court's review is directed, not toward the circuit court, but toward the decision of the agency. That is so because administrative agencies are better equipped by specialization, insight through experience, and more flexible procedures than courts, to determine and analyze legal issues affecting their agencies. Id.

The standard is consistent with the provisions of the Administrative Procedure Act, which requires that the scope of appellate review under the act be limited. The Administrative Procedure Act states:

(g) The review shall be conducted by the court without a jury and shall be confined to the record, except that in cases of alleged irregularities in procedure before the agency, not shown in the record, testimony may be taken before the court. The court shall, upon request, hear oral argument and receive written briefs.

(h) The court may affirm the decision of the agency or remand the case for further proceedings. It may reverse or modify the decision if the substantial rights of the petitioner have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:

(1) In violation of constitutional or statutory provisions (2) In excess of the agency's statutory authority;

(3) Made upon unlawful procedure;

(4) Affected by other error or law;

(5) Not supported by substantial evidence of record; or

(6) Arbitrary, capricious, or characterized by abuse of discretion.

Ark.Code Ann. § 25-15-212 (Repl.1996). Appellant alleges that: (1) the enabling statute of Ark.Code Ann. § 17-14-203 is itself unconstitutional; (2) the Board's order was not based on substantial evidence; (3) the Board's order was arbitrary, capricious, and an abuse of discretion; and (4) the circuit court violated Ark.Code Ann. § 25-15-212(g) because it did not allow oral arguments to be held in this matter. We will consider these arguments in the sequence in which they are raised.

Constitutionality of Ark.Code Ann. § 17-14-203

In appellant's first point on appeal he argues that Ark.Code Ann. § 17-14-203(d) is unconstitutional. Specifically, appellant claims this statute is unconstitutional because it gives the Board unbridled discretion in imposing penalties. The pertinent language of the statute states:

The board may, after providing notice and a hearing, levy civil penalties, in an amount not to exceed one thousand dollars ($1,000) for each violation, against those individuals or entities found to be in violation of this chapter or rules and regulations promulgated thereunder, with each day of violation to constitute a distinct and separate offense.

Ark.Code Ann. § 17-14-203(d).

We have held that discretionary power may be delegated by the legislature to the licensing authority, but it is essential that reasonable guidelines be provided. Patton v. Ragland, Com'r & Charles v. Gordon, Com'r, 282 Ark. 231, 668 S.W.2d 3 (1984). This guidance must include appropriate standards by which the administrative body is to exercise this power. Arkansas State Bd. of Pharmacy v. Hall, 243 Ark. 741, 421 S.W.2d 888 (1967). We have further noted that a statute or ordinance which in effect reposes an absolute, unregulated, and undefined discretion in an administrative agency bestows arbitrary powers and is an unlawful delegation of legislative powers. Alcoholic Beverage Control v. R.C. Edwards Dist. Co., 284 Ark. 336, 681 S.W.2d 356 (1984) (citing 1 AM.JUR.2d Administrative Law § 108 (1962)). However, it is essential that challenges to the constitutionality of the statute must be raised before the agency itself.

We recently pointed out that we will not set aside an administrative determination upon a ground not presented to the agency because to do so would deprive the agency of the opportunity to consider the matter, make its ruling, and state the reasons for its action. Arkansas Bd. of Exam'rs v. Carlson, 334 Ark. 614, 976 S.W.2d 934, 941 (1998). The same applies to constitutional arguments not raised at the agency level. See Arkansas Health Servs. Agency v. Desiderata, Inc., 331 Ark. 144, 958 S.W.2d 7 (1998) (approving the rule adopted by the court of appeals in Hamilton v. Jeffrey Stone Co., 6 Ark.App. 333, 641 S.W.2d 723 (1982) that even though the Workers' Compensation Commission may not have authority to declare statutes unconstitutional, such constitutional issues should first be raised at the Administrative Law Judge or Commission level, because such issues often require an exhaustive analysis that is best accomplished by an adversary proceeding, which can only be done at the hearing level). Because the issue was not properly developed before the Board, we do not review the question of whether the statute is unconstitutionally broad in giving the Board unbridled discretion.

Substantial Evidence

In point two, appellant contends that the Board's decision was not supported by substantial evidence. We review the evidence to determine if there is substantial evidence to support the agency's decision. Mid-South Rd. Builders, Inc. v. Arkansas Contractors Lic. Bd., 328 Ark. 630, 946 S.W.2d 649 (1997). Substantial evidence has been defined as valid, legal, and persuasive evidence that a reasonable mind might accept as adequate to support a conclusion, and force the mind to pass beyond conjecture. Bohannon v. Arkansas Bd. of Nursing, 320 Ark. 169, 895 S.W.2d 923 (1995). The appellant has the burden of proving an absence of substantial evidence. Mid-South, supra. It is the prerogative of the agency to believe or disbelieve any witness and to decide what weight to accord the evidence. Bohannon, supra.

Substantial evidence was presented that appellant acted as an architect without a license. With regard to appellant's defense that he was working under the direction of an architect, J.H.E. Johnson, a licensed architect hired by the Board to investigate appellant's actions testified that Steve Saunders, a partner in Polk, Stanley, Saunders, and Associates (PSSA), an architectural firm with whom appellant claimed to have formed a joint venture, sent appellant a letter regarding Woodland Manor Nursing Home which stated PSSA could not "put their name on any architectural project which we have not designed." Johnson further testified that on the building permit for the Woodland Manor Nursing Home project appellant's name was listed as architect or designer of the project. Additionally, Johnson offered copies of numerous canceled checks from Woodland Manor Nursing Home paid to appellant. Of the estimated $450,000 for the total cost of the Woodland Manor Nursing Home project, PSSA received $4,800 and appellant received $24,000 for his services.

Johnson testified further as to appellant's activities in regard to the Cobb/Vantress project. Johnson testified that in a letter from appellant to Steve Saunders, appellant stated that "the red lines you indicated on the preliminaries are reflected in these drawings" and expressed a view that "I'm still not sure you're comfortable with how we are handling their job." He further stated that according to a letter received by Joe Stanley, PSSA received only 20% of the fees collected from the project.

Saunders testified at the hearing about PSSA involvement with the two projects. Saunders explained that he had "red-lined" preliminary drawings given to him by appellant for both projects. He further stated that he "played no role" in the drafting of the plans for the two projects, nor did he think anyone in his firm drafted the plans. Finally, Saunders stated that he was not aware that Cobb/Vantress had been built or that PSSA was listed as the architect of record on that project.

Joe Stanley, a partner in PSSA, testified regarding PSSA and appellant's involvement in the projects. He testified that it was his understanding that PSSA was to act strictly as a consultant to appellant and was not to be listed as the architect on the projects.

Testimony was also presented that would support a finding that the work performed by appellant on Atkinson Internal Medical Clinic was in violation of the statute. Johnson testified that the plans for the original project, which was later scaled down, were drawn by appellant. H...