Sanchez v. State

• Court: Colorado Supreme Court
• Writing for the Court: Berardini, P.C., Brian J. Berardini, Denver; KIRSHBAUM
• Citation: Sanchez v. State, 730 P.2d 328 (Colo. 1986)
• Decision Date: 22 December 1986
• Docket Number: 84SC449
• Parties: Georgene SANCHEZ, Rocco Bomareto, Jr., and R & D Enterprises, Inc., Petitioners, v. STATE of Colorado and Natalie Meyer, as Secretary of State, Respondents.

Page 328

730 P.2d 328

Georgene SANCHEZ, Rocco Bomareto, Jr., and R & D Enterprises, Inc., Petitioners, v. STATE of Colorado and Natalie Meyer, as Secretary of State Respondents.

No. 84SC449.

Supreme Court of Colorado En Banc.

Dec. 22, 1986.

Rehearing Denied Jan. 20, 1987.

Eugene Deikman, P.C., Craig Murdock, Denver, for petitioner Sanchez.

C.J. Berardini, P.C., Brian J. Berardini, Denver, for petitioner Bomareto.

George T. Ashen and James E. Freemyer, Denver, for petitioner R & D Enterprises, Inc.

Duane Woodard, Atty. Gen., Charles B. Howe, Chief Deputy Atty. Gen., Richard H. Forman, Sol. Gen., and Maurice G. Knaizer, Asst. Atty. Gen., Denver, for respondents.

Sheila H. Meer, P.C., Sheila H. Meer, Denver, for amicus curiae Smith-Harst & Associates, Inc. KIRSHBAUM, Justice.

In Sanchez v. State, 697 P.2d 400 (Colo.App.1984), the Court of Appeals concluded that the trial court erroneously reversed an order of the Colorado Secretary of State (the Secretary) revoking licenses for sale of fireworks previously granted to petitioners Georgene Sanchez, Rocco Bomareto and R & D Enterprises, Inc. ¹ Having granted certiorari to review the judgment of the Court of Appeals, we affirm insofar as it reverses the district court's judgment, but do so on grounds different from those expressed by the Court of Appeals.

On separate occasions in 1979 and 1980, investigators from the Secretary's office visited the petitioners' business sites and purchased fireworks. ² Subsequently, each petitioner was served with a complaint and notice of hearing issued by the Secretary alleging violations of the terms of the previously issued license to sell fireworks. The complaints basically stated that each petitioner, without shipping the fireworks out of Colorado, had sold fireworks to individuals who were not entitled to use said fireworks in Colorado; that such conduct was prohibited by statute, by express terms of the license, and by provisions of the license application form; and that the petitioner must appear at an administrative hearing for a determination of whether the license should be revoked. In 1980 and early 1981, separate evidentiary hearings were conducted pursuant to section 24-4-105, 10 C.R.S. (1982), to determine whether the particular license should be revoked pursuant to the provisions of sections 12-28-102, 12-28-105(1)(c), and 12-28-109, 5 C.R.S. (1978). ³ In each case, the hearing officer found that the licensee had violated the terms of the license by making retail sales of fireworks to unauthorized individuals without shipping such fireworks out of state and revoked the license for one year.

The petitioners filed separate complaints for judicial review in the district court pursuant to section 24-4-106, 10 C.R.S. (1982). ⁴ Sanchez and R & D Enterprises argued in their petitions for review that section 12-28-105 is unconstitutionally vague. Bomareto, in his petition for review, argued that the state had exceeded its jurisdiction in revoking his license because he had not first been convicted of a misdemeanor as required by section 12-28-109.

The cases were consolidated for review, and oral argument commenced before the district court on March 14, 1983. During the oral argument Sanchez argued, for the first time, that the state had failed to comply with requirements of section 24-4-104(3), 10 C.R.S. (1982), by not affording her an initial opportunity to comply with the terms of section 12-28-105. Although the other petitioners did not address this issue in the course of their arguments, all of the petitioners adopted at the outset of the hearing all arguments made by any of the petitioners. The Secretary argued that the failure to raise this issue earlier precluded its consideration and, alternatively, that section 24-4-104(3) did not require an agency to grant a licensee an opportunity to comply when the licensee's violations were deliberate and willful.

The district court reversed the Secretary's orders of revocation on the ground that, in the absence of an express finding that the licensees' conduct was willful and deliberate, the Secretary was required by section 24-4-104(3) to give the licensees reasonable opportunities to comply with section 12-28-105. The district court also held that this conclusion rendered determination of any other issues unnecessary. In reversing the district court's judgment, the Court of Appeals concluded that the Secretary had complied with the requirements of section 24-4-104(3) and that section 12-28-105 was not unconstitutionally vague.

I

A

The petitioners first argue that the Court of Appeals erred in determining that the Secretary complied with the requirements of section 24-4-104(3) in revoking petitioners' licenses. The Secretary contends that the petitioners waived their right to argue this issue by failing to raise it prior to oral argument before the district court. We conclude that the issue was properly preserved for review. We further conclude that the Court of Appeals properly reversed the district court's judgment, but erred in failing to order a remand to the Secretary for the purpose of making requisite findings.

The petitioners did not expressly raise the issue of the Secretary's compliance with the terms of section 24-4-104(3) until oral argument before the district court. The district court determined that the issue had been implicitly raised in Bomareto's administrative hearing by his response to the petition, wherein he asserted that the Secretary's authority to revoke a fireworks license is limited by the terms of section 12-28-109, 5 C.R.S. (1982), which statute authorizes revocation of a fireworks license upon the licensee's conviction of a misdemeanor offense. ⁵ However, the argument that one statute--section 12-28-109--establishes the exclusive means by which the Secretary may revoke fireworks licenses does not suggest that a question of the Secretary's compliance with another statute--section 24-4-104(3)--is simultaneously being asserted. Furthermore, the particular issue of noncompliance with section 24-4-104(3) found by the district court to be dispositive--the Secretary's failure to make an express finding of deliberate and willful conduct--could not have been asserted until after the challenged order was entered.

On appeal, the petitioners have not asserted that this issue of the Secretary's compliance with section 24-4-104(3) was implicitly raised at any administrative hearing. They instead contend that the question of the effect of the Secretary's failure to make what they perceive to be a necessary finding under the statute is a jurisdictional matter and, therefore, is appropriate for consideration at any point in the proceedings. Issues affecting subject matter jurisdiction may be raised at any time. Pueblo West Metropolitan District v. Southeastern Colorado Water Conservancy District, 717 P.2d 955 (Colo.1986); see C.R.C.P. 12(h)(3). Whether the absence of a finding by the Secretary concerning the nature of the petitioners' conduct may be characterized as a "jurisdictional" issue requires examination of the relevant legislative scheme.

Section 12-28-106, 5 C.R.S. (1978), authorizes the Secretary to issue licenses for the sale of fireworks. It is undisputed that licensing and revocation procedural provisions of the State Administrative Procedure Act, found in section 24-4-104, govern the exercise of this authority. Sections 24-4-104(1) and (3) provide:

(1) In any case in which application is made for a license required by law, the agency, with due regard for the rights and privileges of all interested persons, shall set and conduct the proceedings in accordance with this article unless otherwise required by law.

....

(3) No revocation, suspension, annulment, limitation, or modification of a license by any agency shall be lawful unless, before institution of agency proceedings therefor, the agency has given the licensee notice in writing of facts or conduct that may warrant such action, afforded the licensee opportunity to submit written data, views, and arguments with respect to such facts or conduct, and, except in cases of deliberate and willful violation, given the licensee a reasonable opportunity to comply with all lawful requirements.

These provisions confirm the Secretary's general authority to issue and revoke fireworks licenses.

Any administrative agency which is subject to the terms of section 24-4-104 has qualified, not absolute, authority to revoke a license. In most circumstances, there is no such authority unless the licensee has first been given a reasonable opportunity to correct conduct that would warrant the sanction of revocation. However, in circumstances wherein the violation is determined to have been deliberate and willful, the General Assembly has in effect declared that the administrative authority may revoke a license without affording the licensee a reasonable chance to comply with the applicable requirements. This distinction no doubt reflects legislative consideration of the fact that many deliberate and willful acts that violate legislative or regulatory requirements are isolated, unique and not replicable and, therefore, cannot subsequently be conformed to an acceptable behavioral norm. These provisions are not mere procedural safeguards. They define the revoking authority of the administrative agency. As such, they may be deemed "jurisdictional," and the question of their applicability may be raised at any time.

B

In Sanchez, the Court of Appeals stated as follows:

[T]he time between the giving of notice and the date of hearing provided the plaintiffs with ample "opportunity to comply with all lawful requirements" if they were able so to do.

Sanchez, 697 P.2d at 402.

The record does not support this conclusion. The only factual issue discussed during the administrative proceedings was whether the petitioners' conduct in making sales to undercover investigators for the Secretary violated...