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 |