South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
William M. Johnson and Columbiana Builders, Inc. vs. SCDLLR

AGENCY:
South Carolina Department of Labor, Licensing and Regulation

PARTIES:
Appellant:
William M. Johnson and Columbiana Builders, Inc.

Respondents:
South Carolina Department of Labor, Licensing and Regulation, Contractors' Licensing Board
 
DOCKET NUMBER:
96-ALJ-11-0189-AP

APPEARANCES:
Brian P. Robinson, Esquire, for Appellant

Dwight G. Hayes, Esquire, for Respondent
 

ORDERS:

ORDER AND DECISION
VACATED AND REMANDED

STATEMENT OF THE CASE

This matter comes before me on appeal from an April 4, 1996 Order of the Contractors' Licensing Board (Board) with the South Carolina Department of Labor, Licensing, and Regulation (Department). Following a contested case hearing and subsequent follow-up proceeding, the Board issued its Final Decision wherein it found a violation by William Johnson (Johnson or Appellant) of S.C. Code Ann. § 40-11-240 (Supp. 1995) for incompetence in the practice of his profession, and revoked Johnson's contractor's license.

The Appellant set forth the following issues on appeal in his brief: 1) the Board violated Johnson's Due Process rights by failing to give adequate notice that new issues would be raised at the March 28, 1996 follow-up proceeding, 2) the Board did not allow Johnson to conduct a full cross-examination of the witnesses, 3) the Board did not give Johnson an opportunity to offer evidence or call witnesses on his own behalf at the second hearing, and 4) the Findings of Fact and Conclusions of Law of the Board were not supported by clear and convincing evidence.

For the reasons set forth below, the Order of the Board is vacated, and this case is remanded to the Board for a new hearing on the issues of the roof decking and the Certificate of Occupancy. At the hearing, the Board must afford Johnson a full opportunity to present testimony, offer evidence, and call witnesses on his behalf.

JURISDICTION

Jurisdiction on appeal is vested in the Administrative Law Judge Division (Division) pursuant to S.C. Code Ann. §§1-23-600 (Supp. 1995) and 40-11-350 (Supp. 1995). On appeal to the Division, the standard of review is limited to the record presented. An administrative law judge shall not substitute his judgment for that of an agency unless the agency's determination is affected by error of law or clearly erroneous in view of the reliable, probative, and substantial evidence of the whole record. S.C. Code Ann. §1-23-380(A)(6) (Supp. 1995); Lark v. Bi-Lo, Inc., 276 S.C. 130, 276 S.E.2d 304 (1981).

FACTUAL BACKGROUND

On February 2, 1995 William Johnson, as owner of Columbiana Builders, Inc. (Columbiana), entered into a contract with James Long, Jr. and Duanette Grigg (Owners) to construct a floor system, interior stud walls, and a roof system, for a residence owned by Long and Grigg. All the components were made of steel and manufactured by International Building Systems. The contract price for the project was $15,000. Columbiana commenced the project in March of 1995 but stopped on May 15, 1995 due to problems between the Owners and Johnson. On July 21, 1995 after several engineers surveyed the site and discovered deficiencies in the roof, the Owners filed a complaint against Johnson with the Contractors' Licensing Board. Johnson subsequently received a Notice to Appear before the Board on September 25, 1995.

A hearing was held on October 25, 1995 with the Owners and Johnson appearing before the Board. Both sides had an opportunity to call witnesses, present testimony, and offer evidence as to who was responsible for the deficiencies in the owners' roof. After each side had presented their case, the Board elected to defer a decision regarding revocation of Johnson's license as a contractor. The Board appointed Mr. Ron Galloway, an administrator with the Department, to serve as an intermediary between the parties. The parties were to resolve their differences and come to an agreement as to correcting the problems with the roof and completing payment to Johnson. The Board warned both parties that unsatisfactory efforts would result in judgment against them by the Board.

On March 28, 1996, a second proceeding was held by the Board to hear testimony from Mr. Galloway as to what progress had been made by the parties. At this proceeding, Mr. Galloway reported that the deficiencies described at the first hearing had been corrected, but that an additional deficiency had been discovered during the intervening period. Because of this new problem, the Richland County building inspector refused to grant a Certificate of Occupancy (certificate). The Board heard additional testimony from an investigator with the Department who had inspected the site and had written a report. The Appellant was allowed to cross-examine this witness, but the Board would not allow any questions which related to the complete roof system, allowing only those related to the problem of buckling in the roof decking. At one point during the proceeding, a Board member suggested that some of Appellant's cross-examination questions constituted testimony and that Appellant should be sworn in before offering his own statements or opinions. The Board chairman stated that the proceeding was not a hearing, which apparently cut off any further attempt to allow Appellant to testify. Upon returning from an executive session, the Board ruled that the owners' inability to acquire a certificate of occupancy constituted proof of incompetency and poor workmanship by the Appellant. The Board then revoked Johnson's contractor's license and this appeal followed.

NATURE OF THE SECOND PROCEEDING

The Board contends that the second proceeding, where Mr. Galloway and two other witnesses testified, was not a hearing, subject to the formalities of due process and procedure. Instead, the proceeding was characterized as a meeting, with Mr. Galloway offering his report and the other witnesses providing supplementary information to the Board. However, the record indicates that this proceeding was, in fact, a hearing and that the basic requirements of due process were not met. A hearing is defined as "a proceeding of relative formality . . . , generally public, with definite issues of fact or law to be tried, in which witnesses are heard and evidence presented." Black's Law Dictionary 721 (6th ed. 1990). In the second proceeding, witnesses were called and heard by the Board, so the session qualified as a hearing, rather than a mere meeting or reporting session.

PETITIONER'S DUE PROCESS RIGHTS

In revoking Appellant's license, the Board failed to comply with the fundamental requirements of due process. "When the State seeks to revoke or deny a professional license, [liberty and property] interests are implicated and procedural due process requirements must be met." Brown v. S.C. State Board of Education, 301 S.C. 326, 391 S.E.2d 866 (1990). Furthermore, "No person shall be finally bound by a judicial or quasi-judicial decision of an administrative agency affecting private rights except on due notice and an opportunity to be heard." S.C. Const. Art. 1, § 22. In Johnson's case, the Board failed to comply with the notice and opportunity to be heard requirements for due process, as the Board failed to provide proper notice of the hearing to Johnson, and did not afford Johnson an opportunity to call witnesses or present testimony in his behalf.

Notice of Second Hearing

At the second hearing, the Department introduced evidence of a problem, discovered after the first hearing, involving the house's roof decking. The Richland County Building Inspector would not issue a Certificate of Occupancy for the house as a result of this problem. The Board based its revocation of Johnson's license on the inability of the Owners to obtain their Certificate. However, the record does not indicate that Johnson had notice that the Certificate or the roof decking problem were issues which the Board intended to address at the second hearing. The Administrative Procedures Act, in pertinent part, requires that a party be given "a short and plain statement of the matters asserted. If the agency or other party is unable to state the matters in detail at the time the notice is served, the initial notice may be limited to a statement of the issues involved." S.C. Code Ann. § 1-23-320(b)(4) (Supp. 1995). This requirement is echoed in S.C. Code Ann. §40-11-250 (1976), which requires that a copy of the charges against the contractor be served at least fifteen days prior to the hearing.

In Johnson's case, the notice served on him in relation to the March 28, 1996, hearing says nothing about the roof decking problem, nor does it mention the Certificate of Occupancy requirement. The notice refers to the March 28 hearing as a "follow-up," and indicates that a final decision will be made concerning Johnson's license, but contains no other information. The transcript of the first hearing does not mention the Certificate of Occupancy except in passing, and the Chairman's charge to the parties does not include any requirement that a Certificate of Occupancy must be issued prior to the second hearing. Therefore, Johnson could not have known that his fate would depend on a determination by a building inspector. In Burdge v. State Board of Medical Examiners, 304 S.C. 42, 403 S.E.2d 114 (1991), a license revocation was overturned because the licensee was "convicted" of an allegation that he had not had notice of prior to the hearing. Appellant should have been given notice of this requirement prior to any final disposition by the Board; so he could have addressed the problems, obtained for the Owners a Certificate, or investigated the project to determine if another subcontractor's work was responsible for the inadequacies found by the inspector. Procedural due process requires fair notice of the charges against a person, and the Board's notice to Johnson of the second hearing falls short of that requirement.

Opportunity to be Heard and Present Witnesses

Johnson was not afforded an opportunity to be heard or present witnesses in the second hearing. The Administrative Procedures Act states that, "Opportunity shall be afforded all parties to respond and present evidence and argument on all issues involved." S.C. Code Ann. § 1-23-320(e) (Supp. 1995). In addition, S.C. Code Ann. § 40-11-250 (1976) states in pertinent part that, "At such hearing the accused may appear personally . . . and produce the evidence of witnesses in his defense." The Board argues that Johnson never explicitly requested that he be allowed to testify or offer witnesses at the second hearing, and therefore waived his claim to a lack of procedural due process in his appeal. However, the transcript indicates that early in the second hearing, while the Department was still presenting its witnesses, a Board member recommended that Johnson be formally sworn in and allowed to offer testimony. The Chairman responded to the request by stating, "I've never said this is to be a hearing in the first place. This was a reporting session. It was never a hearing." (R. 26). The Chairman's statement effectively ended any possibility that Johnson would be allowed to testify or present other evidence beyond his cross-examination of the Department's witnesses. Given that the Chairman's statement appeared determinative as to witnesses or testimony, and also indicated that the proceeding was not a hearing, Johnson would have reasonably believed that there was no reason to bring the matter up after the Department finished with its witnesses. The Chairman's statement had a chilling effect on Johnson's actions, leading him away from additional attempts to offer evidence or testimony in his own defense. As discussed above, the Chairman's assertion that the March 28, 1996, proceeding was not a hearing was misleading and erroneous, and this tribunal will not reward the Chairman's misrepresentations by penalizing Johnson's reasonable actions in light of the limitations placed on his conduct at the hearing.

Limited Cross-Examination of the Witnesses

The Appellant alleges that the Board impermissibly restricted the scope of his cross-examination of the Department's witnesses by not allowing Appellant to challenge the credibility of the witnesses. While credibility constitutes an important factor in most cross-examinations, the Board's actions were within its discretion as the adjudicative body in the proceeding. "The examination of witnesses is generally within the discretion of the trial court. . . ." State v. Davis, 267 S.C. 283, 227 S.E.2d 662 (1976). The Board had the right to exercise its discretion and limit testimony to the issues necessary for a just adjudication. The restrictions on the Appellant's cross-examination do not constitute a deprivation of procedural due process rights.



ERRONEOUS FINDINGS OF FACT AND CONCLUSIONS OF LAW

The Appellant raised two issues relating to the Findings of Fact and Conclusions of Law set forth in the April 4, 1996 order of the Board. The Appellant alleges that the Findings of Fact are not supported by clear and convincing evidence, in violation of S.C. Code Ann. § 1-23-80(A)(6)(e) (Supp. 1995). The statute provides that a reviewing court will not substitute its judgment for that of the administrative agency as to factual matters, but that decisions may be reversed if the findings or decisions are "clearly erroneous in view of the reliable, probative and substantial evidence on the whole record." Id. "Substantial evidence is neither a mere scintilla of evidence nor evidence viewed blindly from one side of a case, but rather is evidence which, considering the record as a whole, would allow reasonable minds to reach the same conclusion that the administrative agency reached." Lark v. Bi-Lo, 276 S.C. 130, 276 S.E.2d 304 (1981).

The problems concerning the Findings of Fact largely relate to the due process violations discussed above. Inconsistencies in testimony and the credibility of witnesses can be challenged by offering contradictory testimony or evidence at trial. Thus, the Findings of Fact are not clearly erroneous, rather, they are the product of inadequate due process protection. The Appellant will have ample opportunity to refute or otherwise challenge the Findings of Fact at the new hearing. In addition, the Appellant's contentions concerning the Board's Conclusions of Law are best dealt with at a new hearing, following a full and fair opportunity to present evidence. Therefore, this tribunal need not further address Appellant's allegations, nor involve itself further in the fact-finding process. Under Hamm v. S.C. Public Service Commission, 298 S.C. 309, 380 S.E.2d 428 (1989), the Board must make specific Findings of Fact and specific Conclusions of Law following the new hearing.

CONCLUSION

The Board failed to afford the Appellant the necessary procedural due process for revocation of a professional license. Accordingly, the Board's order is vacated and this matter is remanded for a new contested case hearing on the charges levied against the Appellant. At this hearing, the Board will allow the Appellant to testify in his own behalf regarding the defects in the roof decking. Furthermore, the Board will allow the Appellant to call witnesses and introduce evidence in support of his case. Following this new hearing, the Board will issue a new Order, with specific Findings of Fact and specific Conclusions of Law that take into account the testimony and evidence of both parties.





AND IT IS SO ORDERED.



______________________________

MARVIN F. KITTRELL

CHIEF JUDGE

Columbia, South Carolina

___________, 1997


Brown Bldg.

 

 

 

 

 

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