Title: McCarter v. Pomeroy

State: north-dakota

Issuer: North Dakota Supreme Court

Document:

466 N.W.2d 562 (1991) Mark Alan McCARTER, Appellant, v. Earl R. POMEROY, as Insurance Commissioner for the State of North Dakota, Appellee. Civ. No. 900233. Supreme Court of North Dakota. February 21, 1991. *563 Thomas O. Smith, of Zuger, Kirmis, Bolinske & Smith, Bismarck, for appellant. Appearance by Brent J. Edison, Bismarck. Lynn M. Boughey, Sp. Asst. Atty. Gen., Minot, for appellee. VANDE WALLE, Justice. Mark Alan McCarter has appealed from a district court judgment affirming a decision of the Commissioner of Insurance revoking McCarter's nonresident insurance agent's license. We affirm. After discovering in December, 1988, that McCarter had consented to the revocation of his Minnesota license in 1983, the Commissioner initiated proceedings in January, 1989, to revoke McCarter's nonresident insurance agent's license, which had been continuously in force since 1982. The Minnesota consent order revoking McCarter's Minnesota insurance agent's license recited in part: The complaint involved here alleged violation of §§ 26.1-26-15[1] and 26.1-26-42(4), (6), (12), (13)[2], N.D.C.C. *564 At the hearing on the complaint, counsel for the Commissioner introduced Exhibit 1, the consent order revoking McCarter's Minnesota license, and Exhibit 2, the statement of charges involved in the Minnesota revocation, and rested. McCarter then moved to dismiss the charges under §§ 26.1-26-15 and 26.1-26-42(4), (6), N.D.C.C. The hearing officer took the motion under advisement and McCarter presented his defense. McCarter testified that the allegations in the Minnesota consent order were not true. On cross examination, McCarter testified: The State then introduced Exhibits 6-16 showing that on applications for licenses in eleven other states, all made after the Minnesota revocation, McCarter had indicated that he had not had any insurance agent licenses revoked. McCarter did not object to the exhibits or attempt to limit the scope of their admissibility. The hearing officer proposed the following findings of fact: The hearing officer denied McCarter's motion to dismiss the charges under §§ 26.1-26-15 and 26.1-26-42(4), N.D.C.C.; granted his motion to dismiss the charge under § 26.1-26-42(6), N.D.C.C.; and concluded that there were violations of § 26.1-26-42(4), (12), (13), N.D.C.C. The hearing officer recommended a $500 fine, rather than the suspension or revocation of McCarter's license. The Commissioner adopted the hearing officer's findings of fact and most of his conclusions of law. Like the hearing officer, the Commissioner denied McCarter's motion to dismiss the charges under §§ 26.1-26-15 and 26.1-26-42(4), N.D.C.C., and found violations of § 26.1-26-42(4), (12), (13), N.D.C.C. Unlike the hearing officer, the Commissioner denied McCarter's motion to dismiss the charge under § 26.1-26-42(6), N.D.C.C. The Commissioner found, in addition to the violations found by the hearing officer, violations of §§ 26.1-26-15 and 26.1-26-42(2), (6), N.D. C.C. The Commissioner made the following additional conclusions of law: The Commissioner revoked McCarter's nonresident insurance license. The district court affirmed the Commissioner's decision and McCarter appealed, contending (1) that all alleged statutory violations other than those under § 26.1-26-42(12), (13), N.D. C.C., should have been dismissed when the *566 State rested after introducing the exhibits showing the Minnesota revocation; (2) that revocation was barred by § 28-01-18(2), N.D.C.C.; (3) that the Commissioner denied McCarter a fair hearing by amending the complaint to include a statutory violation not specified in the complaint; and (4) that the Commissioner denied him a fair hearing by not following the hearing officer's recommendations. We disagree with McCarter's contention that all alleged statutory violations, except § 26.1-26-42(12), (13), N.D.C.C., should have been dismissed when the State rested after introducing the two exhibits showing the Minnesota license revocation. In our view, the evidence of the Minnesota revocation also supported the charges under § 26.1-26-42(4), (6), N.D.C.C., and was also relevant to § 26.1-26-15, N.D.C.C., made applicable to agents with existing licenses by § 26.1-26-42(4), N.D.C.C. McCarter contends that proceedings to revoke his North Dakota license were barred by § 28-01-18(2), N.D.C.C., because not commenced within two years of the Minnesota revocation in 1983. The Commissioner promptly initiated proceedings to revoke McCarter's North Dakota license upon discovering the Minnesota revocation in December 1988. Section 28-01-18, provides: A statute of limitations in a civil proceeding is an affirmative defense. Hagen v. Altman, 79 N.W.2d 53 (N.D.1956). Generally, a party relying on a statute of limitations has the burden of proving that the action is barred. 54 C.J.S., Limitations of Actions § 294 (1987). "Although courts generally apply general statutes of limitation to administrative proceedings, the opposite is true with respect to proceedings which are in the public interest, such as proceedings to suspend or revoke a license to practice medicine." Anno., Applicability of Statute of Limitations or Doctrine of Laches to Proceeding to Revoke or Suspend License to Practice Medicine, 51 A.L.R.4th 1147, 1151 (1987). See also, 2 Am.Jur.2d, Administrative Law § 322 (1962). In a case involving the revocation of an insurance agent's licenses, the court in Ready v. Grady, 243 Cal. App. 2d 113, 116, 52 Cal. Rptr. 303, 306 (1966), observed: "The function of an administrative proceeding such as the one here involved is neither criminal nor quasi-criminal in character. It has been held that the purpose is not the punishment of the licensee, but rather the protection of the public." From the arguments presented, we are not persuaded that § 28-01-18(2), N.D.C.C., barred revocation of McCarter's license. However, because of our resolution of other issues raised in this case concerning violations that did occur within two years, such as lying on applications for licenses in other states, we do not determine if the district court correctly concluded that § 28-01-18(2), N.D.C.C., was inapplicable to this case. The complaint filed in this case sought to revoke McCarter's nonresident insurance agent's license under §§ 26.1-26-15 and 26.1-26-42(4), (6), (12), (13), N.D. C.C. The hearing officer found violations of § 26.1-26-42(4), (12), (13), N.D.C.C., and recommended dismissal of allegations involving § 26.1-26-42(6), N.D.C.C. The Commissioner found violations under §§ 26.1-26-15 and 26.1-26-42(4), (6), (12), (13), N.D.C.C. In addition, based on Exhibits 6-16, showing that on applications for insurance agent licenses in eleven other states McCarter had indicated that he had not had any insurance agent licenses revoked, the Commissioner on his own motion "conform[ed] the complaint to adhere to the evidence presented at hearing," and concluded that McCarter had violated § 26.1-26-42(2), N.D.C.C.: McCarter contends that the Commissioner denied his right to a fair hearing by amending the complaint on his own motion to include a statutory violation not specified in the complaint and notice of hearing. As McCarter has noted in his brief, "[t]he Administrative Agencies Practices Act, Chapter 28-32, N.D.C.C., does not contain any provision for amendments of administrative complaints to conform to evidence presented at an administrative hearing." In appeals from administrative agency decisions, this court has applied some of our North Dakota Rules of Civil Procedure to proceedings commenced before administrative agencies. See, e.g., Shafer v. Job Service, 464 N.W.2d 390 (N.D.1990); Sande v. State, 440 N.W.2d 264 (N.D.1989); Evanson v. Wigen, 221 N.W.2d 648 (N.D. 1974). In Colgate-Palmolive Co. v. Dorgan, 225 N.W.2d 278 (N.D.1974), however, this court held that an administrative hearing examiner could not impose a judicial sanction under Rule 37, N.D.R.Civ.P., for failure to comply with a discovery request. In civil actions, Rule 15(b), N.D.R.Civ.P., authorizes the amendment of pleadings to conform to the evidence, providing in part: McCarter has not presented any persuasive reason why administrative pleadings should not be allowed to be similarly amended. The Commissioner could have initiated a new proceeding in response to the statutory violations disclosed by the evidence at the hearing. Williams Electric Cooperative, Inc. v. Montana-Dakota Utilities Co., 79 N.W.2d 508 (N.D.1956). Although he did not object to the introduction of Exhibits 6 through 16 or try to limit the scope of their admissibility, McCarter argues that "there is no showing in this case that the alleged violation by McCarter of Section 26.1-26-42(2) was `tried by express or implied consent of the parties.'" McCarter has not alleged or demonstrated any way in which he was prejudiced because the Commissioner amended the administrative complaint to conform to the evidence admitted at the hearing, rather than initiating a new proceeding based upon the evidence admitted at the hearing. In a case such as this, where investigative, accusative, and adjudicative functions are united in one, it clearly would be a better practice for an administrative officer to provide a respondent with notice of an intent to amend administrative pleadings to conform to the evidence and to provide an opportunity to be heard, rather than summarily amending without such notice and opportunity. Under the circumstances presented, however, we find no reversible error in the procedure employed by the Commissioner. Finally, McCarter contends that, by failing to follow the hearing officer's recommendation, the Commissioner did not afford him a fair hearing. The hearing officer recommended a $500 fine, rather than suspension or revocation of McCarter's license. The Commissioner rejected the hearing officer's recommendation and revoked McCarter's license. An administrative officer is not required to adopt a hearing officer's recommendations. Matter of Stone Creek Channel Improvements, 424 N.W.2d 894 (N.D.1988). We have said, however, that the decision of an administrative officer who rejects a hearing officer's recommendations should satisfactorily explain the rationale for not following the hearing officer's recommendations. Redwood Village Partnership, Ltd. v. North Dakota Dep't of Human Services, 420 N.W.2d 333 (N.D.1988); Medcenter One, Inc. v. Job Service North Dakota, 410 N.W.2d 521 (N.D.1987); Schultz v. North Dakota Dep't of Human Services, 372 N.W.2d 888 (N.D.1985). *568 The Commissioner found that McCarter had committed more statutory violations than the hearing officer found and viewed the violations as being more serious than did the hearing officer. We have already addressed the additional violations. As to the serious nature of the violations in the Commissioner's view, the Commissioner stated in his decision: The Commissioner's decision finding more statutory violations than the hearing officer did and explaining his view of the seriousness of the violations adequately explains his rationale for not following the hearing officer's recommendation. Affirmed. ERICKSTAD, C.J., and LEVINE, MASCHKE and GIERKE, JJ., concur. [1] "26.1-26-15. License requirementCharacter. An applicant for any license under this chapter must be deemed by the commissioner to be competent, trustworthy, financially responsible, and of good personal and business reputation." [2] Section 26.1-26-42, N.D.C.C., provides in pertinent part: "26.1-26-42. License suspension, revocation, or refusalGrounds. The commissioner may suspend, revoke, or refuse to continue or refuse to issue any license issued under this chapter if, after notice to the licensee and hearing, the commissioner finds as to the licensee any of the following conditions: * * * * * * "2. An acquisition or attempt to acquire a license through misrepresentation or fraud. * * * * * * "4. Any cause for which issuance of the license could have been refused had it then existed and been known to the commissioner at the time of issuance. "6. In the conduct of affairs under the license, the licensee has used fraudulent, coercive, or dishonest practices, or has shown oneself to be incompetent, untrustworthy, or financially irresponsible. * * * * * * "12. A violation of, or noncompliance with, any insurance laws, or violation of any lawful rules or orders of the commissioner or of a commissioner of another state. "13. The licensee's license has been suspended or revoked in any other state, province, district, or territory."