IN THE COURT OF APPEALS OF NORTH CAROLINA

No. COA 15

- 1257

Filed: 20 September 2016

Watauga County, No. 14 CVS 416

DALE THOMAS WINKLER and DJ’S HEATING SERVICE, Petitioners,

v.

STATE BOARD OF EXAMINERS OF PUMBLING, HEATING AND FIRE

SPRINKLERS CONTRACTORS, Respondent.

Appeal by petitioners from order entered 22 June 2015 by Judge Jeff Hunt in

Watauga County Superior Court. Heard in the Court of Appeals 12 April 2016

.

Bailey & Dixon, L.L.P., by Jeffrey P. Gray, for petitioners

- appellants.

Young Moore & Henderson, P.A., by Angela Farag Craddock, John N.

Fountain, and Reed N. Fountain, for respondent

- appellee.

STROUD , Judge.

Petitioners Dale Thomas Winkler and DJ’s Hearing Serv ice ( “ Winkler” 1 )

appeal from the trial court’s order affirming respondent State Board of Examiners of

Plumbing, Heating, and Fire Sprinklers Contractors (the “ Board”)’s order revoking

Winkler’s license. This case arises out of a series of failures by many different people

to prevent or discover the source of a deadly leak of carbon monoxide into a hotel room

1 Although Mr. Winkler appeals in both his individual capacity and through his business, DJ’s

Heating Service, for ease of reading, we refer to petitioners simply as “Winkler” throughout this

opinion.WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 2

- at a Best Western Hotel in Boone, North Carolina, until after three people had died

and one was injured by the carbon monoxide leak. But the question presented to this

Court is not who is responsible for these tragedies. Our question is simply whether

the Board had jurisdiction and authority to impose disciplinary action upon Winkler

for the work he performed at the hotel. Based upon the applicable s tatutes and

regulations, we find that the Board did not have jurisdiction over Winkler’s inspection

of the pool heater and exhaust system, although it did have jurisdiction over the later

planned installation of an HVAC system in another part of the hotel. Because the

discipline imposed was tailored to address the pool heater issue instead of the HVAC

installation issue, we reverse and remand for entry of a new order with sanctions

based solely upon Winkler’s planned installation of an HVAC system which wa s not

within his license.

I. Background

The basic facts regarding the relevant events at the Best Western Hotel in

Boone are not in dispute. The hotel was managed by Appalachian Hospitality

Management (the “ hotel management ”). Sometime in 2011, the hotel maintenance

staff “ replaced a propane gas pool heater with a used propane gas pool heater” which

had previously been used “ at another hotel managed by Appalachian Hospitality

Management.” In February 2012, the replacement propane pool heater “ was

converted from propane gas to natural gas [by] Independence Oil and Gas.” TheWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 3

- converted heater was permitted and inspected by “ the local Authority Having

Jurisdiction, ” the Town of Boone. The pool heater was in “ an equipment room

adjacent to the pool.”

Over a year after the conversion of the heater to propane gas, the hotel

maintenance staff was concerned the pool heater was “ not functioning or the pilot

light would not light.” On or about 13 April 2013, the hotel management’s

maintenance staff asked Winkler, who was operating his business at the time as DJ’s

Heating Service, “ to examine the pool heater and get it running.” Mr. Winkler was

licensed by the Board of Examiners of Plumbing, Heating and Fire Sprinkler

Contractors wi th a “ Heating Group 3 Class II (H

- 3

- II)” license which is “ limited to

HVAC work on detached residential structures.” The Board also issues a different

level of license, H

- 3

- I, which covers “ all H

- 3 systems regardless of location unless the

combined system s at the site exceed 15 tons.” Mr. Winkler’s employment history and

experience before going into business as DJ’s Heating Service included service and

installation of HVAC systems. He had also been employed “ by a propane gas company

where he was actively involved in service on gas lines and setting tanks for propane

fuel.” Some members of the maintenance staff at the hotel knew Mr. Winkler because

he had done some work on their residential properties.WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 4

- Exactly what Mr. Winkler was asked to do, and what he did, on 13 April 2013

is crucial to the determination of jurisdiction in this case, so we will focus on these

facts. The Board found as follows:

10. On or about April 13, 2013, [Winkler] examined the

heater, and found that the gas supply had been cut o ff.

Along with the Best Western Motel maintenance staff,

[Winkler] cut the fuel on, and put the pool heater in

operation. [Winkler] did not examine or inspect the

exhaust or venting system for the pool heater at that time,

and was not asked to do so.

I n his testimony before the Board, Mr. Winkler described what he did that day

as follows:

[T]he only thing we done was [sic] broke the union loose.

Verified the unit did not have any gas. Let maintenance

know that. They went searching for the reason, bei ng they

are the ones that said gas was turned off in the ceiling.

They turned the gas back on. We verified the pool heater

had gas. Checked for leak. They lit the pool heater back.

We left.

Testimony of various hotel employees was consistent with Mr

. Winkler’s

description of what he did that day. Thus, in short, the pool heater was not working

because the gas was not turned on; they turned the gas back on and relit the pool

heater. It is not entirely clear from either the evidence or findings wheth er Mr.

Winkler personally turned the gas to the heater back on or the hotel maintenance

staff did, but either way, no physical change was made to the pool heater other than

turning the gas back on and lighting the heater. No parts were removed or installe d.WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 5

- No one knew why the gas had been cut off. The hotel maintenance staff did not ask

Mr. Winkler to “ examine or inspect the exhaust or venting system” that day and he

did not do so.

Three days later, two people died in Room 225, which was “ above the po ol

equipment room.”

11. On April 16, 2013, Daryl Jenkins and Shirley

Jenkins rented Room 225 at the Best Western Motel, which

room was located above the pool equipment room where the

pool heater was located.

12. On April 16, 2013, Daryl Jenkins and S hirley

Jenkins died in Room 225. Autopsies were performed on

Daryl Jenkins and Shirley Jenkins shortly thereafter and

blood samples were submitted for a toxicology report.

Carbon monoxide poisoning was not immediately identified

-- or even suspected

--

when Mr. and Mrs. Jenkins died, by either the emergency medical personnel who

responded or by the fire department for the Town of Boone, which assisted on the call,

or by the hotel maintenance staff, or by the police department. Despite the

simultaneous d eaths of the husband and wife, everyone involved believed the deaths

to be from “ natural causes. ” But apparently the possibility of a gas leak may have

occurred to the hotel owner, Mr. Mallatere, because he closed the room and asked

that the gas fireplace in Room 225 be checked.

About three or four days after the Jenkins’ deaths in Room 225, the hotel

maintenance staff again called Mr. Winkler, this time to check for gas leaks to theWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 6

- fireplace in the room; he found none. After this, Mr. Malaterre asked the

maintenance staff to have Mr. Winkler come back to the hotel again to check the

venting from the pool heater. Mr. Winkler came a few days later to check the exhaust

from the pool heater, and he and the hotel maintenance manager confirmed that it

was v enting. Mr. Winkler also advised the hotel maintenance staff that he did not

have equipment to check for carbon monoxide leaks but gave them the name of a

company which would have the proper equipment to do carbon monoxide testing. No

one called that com pany to have the room checked for carbon monoxide.

Room 225 remained closed for several more weeks, until 31 May 2013, not

because of any problem with the room, but “ just out of respect” due to the death of

Mr. and Mrs. Jenkins there, according to the ass istant general manager. The next

day, on 1 June 2013, the toxicology report for the Jenkins was completed and “ [a]

lethal concentration of carbon monoxide” was found in their blood. But the results of

the toxicology tests were not immediately provided to the hotel maintenance staff or

the Board.

Still unaware of the results of the Jenkins’ toxicology test results, on 8 June

2013, the hotel rented Room 225. Jeffrey Williams, a minor, and his mother stayed

there. Jeffrey died and his mother was injured. When the fire department responded

to this second call for a death in Room 225, they “ immediately called for a rescue

truck which carried [the carbon monoxide] monitoring equipment at the time, and

. .WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 7

- . that’s when we got some positive hits on the monit or.” Due to the positive carbon

monoxide readings, the fire department “ isolated a much larger area than what we

had, and called for one of the Hazmat teams” from Asheville, and “ secured the

building overnight.” At this point, a variety of inspectors des cended upon the hotel

building, doing many tests and inspections and ultimately determining that carbon

monoxide was coming from the pool heater into Room 225. Carbon monoxide was

leaking from the pool heater in the equipment room, up through the wall int o Room

225 above, and was venting from the pipe that ended on the outer wall of the hotel

just below the intake for the air conditioner for Room 225. Toxicology reports

regarding Jeffrey and his mother confirmed that “ [e]xcessive amounts of carbon

monoxide were found in their blood.”

Unrelated to the pool heater issues, during the period from 4 June 2013 to 7

June 2013, the hotel maintenance staff also called Mr. Winkler “ regarding the HVAC

systems servicing the breakfast area, the lobby area and the laundry room” because

they “ were not operating properly.” Mr. Winkler determined that “ one system needed

a relay, another needed a blower or fan motor and a third needed replacement.” The

hotel ordered the parts, and Mr. Winkler wa s to “ install or repair the systems when

the equipment arrived.” After installing the new equipment, the breakfast area

system still did not work, so a “ complete replacement was then ordered. The newWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 8

- equipment arrived, addressed to [Winkler] at the Best W estern, on June 7, 2013.”

Mr. Winkler was to install the new equipment, but

Upon his arrival at the Best Western on June 8, 2013,

. . . Winkler observed the yellow tape placed around the scene

by the police. [Winkler] then informed the maintenance

staff that he (Winkler) should not be present, and stated

that he had previously told hotel staff he did not have a

commercial license. The maintenance staff denied

[Winkler] made such prior statement.”

The Board noted that Winkler’s license did not qualify him to “ contract, install

or replace HVAC installations at the Best Western Motel” because it is “ not a single

family residential structure” and “ [t]he aggregate tonnage ” of the equipment at the

hotel “ was far in excess of the 15 ton limitation of any H

- 3 license, let alone an H

- 3

-

II license.”

The investigations of the source of the carbon monoxide in Room 225 that

followed the third death in the room found an egregious series of errors, going all th e

way back to the initial installation of the pool heater in 2011. The Board’s order in

this case identified the following deficiencies, listed here in roughly chronological

order:

1. The manufacturer of the replacement pool heater installed by the hotel

mai ntenance staff in 2011 “specified that the equipment not be converted

from propane to natural gas.”WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 9

- 2. Room 225 had a “combustible gas detector and alarm which had been

located near the floor as appropriate for a facility using propane. An

occupied structu re using natural gas should locate such devices near the

ceiling, as natural gas is lighter than air. This device would not detect CO

in either location.”

3. The pool heater was a “natural draft appliance” which is “required to be

vented or exhausted eithe r by a flue extending higher than the roof, or by

the use of a forced draft system or power venter.”

4. “The non

- functioning power venter was rated at approximately 75000 BTU

capacity while the pool heater which had been substituted at the Best

Western had a capacity of 250,000 BTU’s as reflected on the equipment

label. Even when functioning, such a power venter was unlikely to exhaust

all the harmful gasses.”

5. The pool equipment room where the pool heater was located “also contained

standard pool chemical s, which . . . were highly corrosive to metal, such as

the venting pipes from the pool heater to the exterior of the building, and

corrosive air and gasses were being drawn into and through the pool heater

and exhaust flue. Evidence of corrosion was visib le without the use of any

equipment.”WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 10

- 6. “In plain sight near the pool heater were a group of wires hanging in the air

not connected to the pool heater but terminated with wire nuts. The wires

were intended to supply power for a power venter which had been

disconnected, likely well before [Winkler’s] arrival.”

7. “[T]he pool heater was utilizing a side wall to connect the vent pipe to the

exterior of the Motel but no power venter was functioning; in addition, the

rise of the slope of the flue pipe did not com ply with the State Mechanical

Code.”

8. Despite the improper conversion from propane to natural gas and other

deficiencies, including its location in the equipment room and lack of proper

venting, the replacement pool heater was permitted and passed inspect ion

by the Town of Boone.

9. Someone “had installed or altered penetrations of the fire

- rated walls

without adequate firestopping, eventually allowing products of combustion

to travel into and through a stud cavity and enter room 225.”

10. “[T]he vent pipe f

or the pool heater had multiple holes in both the double

wall and the improperly used single wall vent pipe as a result of extensive

corrosion.” This corrosion had “developed and existed over a substantial

period of time.”WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 11

- On or about 24 January 2014, th e Board filed a Notice of Hearing instituting

disciplinary action against Winkler, alleging violations of N.C. Gen. Stat. § 87

- 23(a)

arising out of Mr. Winkler’s “ service call[s]” to the hotel (1) on or about 13 April 2013

regarding the pool heater; (2) in “ late April or early May” 2013 regarding venting of

the pool heater; and (3) from 4 June 2013 to 7 June 2013 regarding the HVAC system

in the breakfast area. On or about 9 May 2014, Winkler moved to dismiss the Notice

of Hearing, alleging that the Board did not have jurisdiction over his actions arising

out of the inspection or evaluation of the pool heater because “ [t]he Board’s enabling

statute, Article 2 of the Chapter 87 of the General Statutes, only contemplates

‘ installation, ’ or possibly an intent to install, such as contracting to install without a

license of [sic] the appropriate license. ”

On 13 May 2014, the Board held a hearing “ to determine whether to revoke or

suspend the license of [Winkler] on grounds of violation of G.S. 87

- 23(a) which

provides that the Board may revoke or suspend the license of any plumbing, heating

or fire sprinkler contractor who fails to comply with any provision or requirement of

Chapter 87, Article 2, or for gross negligence, incompetence, or misconduct in the

prac tice of or in carrying on the business of either a plumbing, heating or fire

sprinkler contractor[.]” The Board issued its order on 10 June 2014, denying

Winkler’s motion to dismiss and imposing various sanctions upon Winkler, including

suspension of his license for one year and imposing requirements during that year toWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 12

- “ enroll in, attend and complete” several “ courses intended to remedy the deficiencies

in knowledge revealed by this order,” as well as other requirements. Winkler’s failure

to complete all of the courses and other requirements would result in permanent

revocation of his license.

On 25 July 2014, Winkler filed a petition for judicial review and stay of decision

and order with the Superior Court of Watauga County, for review under N.C. Gen.

Stat. § 150B

- 43 et seq

. and N.C. Gen. Stat. § 87

- 23(a). The superior court stayed the

Board’s order pending review. Winkler’s appeal was heard on 20 April 2015, and the

superior court entered its order affirming the Board’s decision on 22 June 2015. In

the order, the court noted that its standard of review was “ dictated by the issues

presented[,]” citing Mann Media, Inc. v. Randolph Cty. Planning Bd.

, 356 N.C. 1, 12,

565 S.E.2d 9, 17 (2002). The superior court engaged in de novo review of whether the

B oard violated “ subsections G.S. 150B

- 51(b)(1), (2), (3), or (4) of the APA,” and

“ [w]here the substance of the alleged error implicates subsection 150B

- 51(b)(5) or (6),

the reviewing court applies the “ whole record test.’ ” N.C. Dep ’t of Env’ t & Natural

R es. v. Carroll

, 358 N.C. 649, 659, 599 S.E.2d 888, 895 (2004) (citation omitted). The

order concluded that upon whole record review of “ each Finding of Fact contained in

the Order entered by the Board, ” “ each Finding of Fact is supported by substantial

ev idence contained in the Record” and that the Board’s “ Conclusions of Law are

supported by the Finding[s] of Fact[.]” The court also addressed Winkler’s motion toWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 13

- dismiss for lack of jurisdiction under N.C. Gen. Stat. § 87

- 21, and using de novo

review, con cluded that

the acts and omissions of [Winkler] fell within the

statutory authority of the Board to regulate and discipline

[Winkler]. The Court also notes [Winkler was] involved in

activities beyond simply the acts and omissions relating to

the pool hea ter.

The superior court thus denied Winkler’s motion to dismiss for lack of

jurisdiction, affirmed the Board’s order, and dissolved the stay issued during the

pendency of the appeal. On 1 July 2015, Winkler gave notice of appeal from the order.

The tri al court granted Winkler’s motion for stay of the Board’s decision and order

pending review by this Court.

II. Standard of Review

The standard of review on appeal to this Court depends upon the issue

presented.

On judicial review of an administrative agency’s

final decision, the substantive nature of each assignment

of error dictates the standard of review. Reversal or

modification of the agency’s final decision is permitted only

when the reviewing court determi nes a petitioner’s

substantial rights may have been prejudiced as a result of

the agency’s findings, inferences, conclusions, or decisions

being:

(1) In violation of constitutional provisions;

(2) In excess of the statutory authority or

jurisdiction o f the agency;

(3) Made upon unlawful procedure;WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 14

- (4) Affected by other error of law;

(5) Unsupported by substantial evidence

admissible

. . . in view of the entire record as

submitted; or

(6) Arbitrary or capricious, or an abuse of

discretion.

Th e first four grounds are “ law

- based” inquiries

warranting de novo review. The latter two grounds are

“ fact

- based” inquiries warranting review under the whole

record test. Under de novo review, a court considers the

matter anew and freely substitutes its own judgment for

the agency’s. Under the whole

- record test, a court

examines all the record evidence

-- that which detracts

from the agency’s findings and conclusions as well as that

which tends to support them

-- to determine whether there

is substantial evidence to justify the agency’s decision.

Substantial evidence is relevant evidence a reasonable

mind might accept as adequate to support a conclusion.

Trayford v. N.C. Psychology Bd. , 174 N.C. App. 118, 120

- 21, 619 S.E.2d 862, 863

- 64

(2005), aff’d per curiam , 360 N.C. 396, 627 S.E.2d 462 (2006) (citations, quotation

marks, and brackets omitted).

III. Disciplinary Jurisdiction

Winkler’s first argument on appeal is that “ [t]he trial court erred as a matter

of law by rejecting the N.C. Supreme Court’s opinion in [ Elliott v. N.C. Psychology

Bd.

, 348 N.C. 230, 498 S.E.2d 616 (1998),] and thereby concluding the Board was not

in excess of its statutory authority and jurisdiction and its action was not based on

unlawful procedure.” Winkler contends that “ th e Board lacks jurisdiction over the

activity of a licensee that does not amount to an ‘ installation, ’ and was a mereWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 15

- inspection, evaluation or equipment check.” Winkler challenges the Board’s

jurisdiction under N.C. Gen. Stat. Chapter 87, Article 2 as a m atter of law. Because

this argument presents a legal question, we review it de novo

. Trayford

, 174 N.C.

App. at 121, 619 S.E.2d at 864. For purposes of this argument, we will assume that

the Board’s findings of fact were supported by substantial evidenc e.

Winkler’s jurisdictional argument is based primarily upon the enabling

statutes of the Board in Chapter 87, Article 2, of the North Carolina General Statutes.

Specifically, N.C. Gen. Stat. § 87

- 21(a)(5) (2015) defines those who “ shall be deemed

and h eld to be engaged in the business of plumbing, heating, or fire sprinkler

contracting” as follows:

(5) Any person, firm or corporation, who for a valuable

consideration, (i

) installs, alters or restores, or offers to

install, alter or restore

, either plumbing, heating group

number one, or heating group number two, or heating

group number three, or (ii) lays out, fabricates, installs,

alters or restores, or offers to lay out, fabricate, install,

alter or restore fire sprinklers, or any combinat ion thereof,

as defined in this Article, shall be deemed and held to be

engaged in the business of plumbing, heating, or fire

sprinkler contracting; provided, however, that nothing

herein shall be deemed to restrict the practice of qualified

registered pro fessional engineers. Any person who installs

a plumbing, heating, or fire sprinkler system on property

which at the time of installation was intended for sale or to

be used primarily for rental is deemed to be engaged in the

business of plumbing, heating, or fire sprinkler contracting

without regard to receipt of consideration, unless exempted

elsewhere in this Article.WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 16

- Id. (Emphasis added).

Winkler holds a Class II license under N.C. Gen. Stat. § 87

- 21(b)(1) (2015),

which covers “ plumbing and heating s ystems in single

- family detached residential

dwellings.” North Carolina General Statute § 87

- 23 (2015) sets forth the Board’s

authority to “ revoke or suspend” a license or to “ order the reprimand or probation of”

a licensed contractor:

(a) The Board shall have power to revoke or suspend

the license of or order the reprimand or probation of any

plumbing, heating, or fire sprinkler contractor, or any

combination thereof, who is guilty of any fraud or deceit in

obtaining or renewing a license, or who fails to comply with

any provision or requirement of this Article, or the rules

adopted by the Board, or for gross negligence,

incompetency, or misconduct, in the practice of or in

carrying on the business of a plumbing, heating, or fire

sprinkler contractor, or a ny combination thereof, as defined

in this Article. Any person may prefer charges of such

fraud, deceit, gross negligence, incompetency, misconduct,

or failure to comply with any provision or requirement of

this Article, or the rules of the Board, against any

plumbing, heating, or fire sprinkler contractor, or any

combination thereof, who is licensed under the provisions

of this Article. All of the charges shall be in writing and

investigated by the Board. Any proceedings on the charges

shall be carried out by the Board in accordance with the

provisions of Chapter 150B of the General Statutes.

N.C. Gen. Stat. § 87

- 23(a) (emphasis added).

But N.C. Gen. Stat. § 87

- 21(c) (2015) exempts certain acts from “ [t]he

provisions” of Article 2 of Chapter 87:WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 17

- (c) To Whom Article Applies.

-- The provisions of this

Article shall apply to all persons, firms, or corporations

who engage in, or attempt to engage in, the business of

plumbing, heating, or fire sprinkler contracting, or any

combination thereof as defined i n this Article. The

provisions of this Article shall not apply to those who make

minor repairs or minor replacements to an already installed

system of plumbing, heating or air conditioning, but shall

apply to those who make repairs, replacements, or modif ications to an already installed fire sprinkler system.

Minor repairs or minor replacements within the meaning of

this subsection shall include the replacement of parts in an

installed system which do not require any change in energy

source, fuel type, or routing or sizing of venting or piping.

Parts shall include a compressor, coil, contactor, motor, or

capacitor.

Id. (emphasis added).

The Board has also adopted regulations, by its authority under Chapter 87,

which exclude certain repairs or alterations to an existing system from the ambit of

“ minor repairs” within the meaning of N.C. Gen. Stat. § 87

- 21(c). Specifically, any

“ connection, repair or alteration which if poorly performed creates a risk” of carbon

monoxide exposure is not a “ minor repair” or “ alteration ” :

.0506 MINOR REPAIRS AND ALTERATIONS.

(e) Any connection, repair or alteration which if poorly

performed creates risk of fire or exposure to carbon

monoxide, open sewage or other gases is not a minor repair,

replacement or alteration.

(f) The failure to enumerate above any specific type of

repair, replacement or alteration shall not be construed in

itself to render said repair, replacement or alteration as

minor within the meaning of G.S. 87

- 21(c).WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 18

- 21 N.C. Admin. Code 50.0506(e)

- (f) (2016)

.

In addition, the regulations include the following relevant “ Guidelines on

Disciplinary Actions”:

(a) The provisions of G.S. 87, Article 2, the rules of the

Board and the matters referenced therein are the

guidelines by which the conduct of an entity subject to the

authority of the Board are evaluated.

. . . .

(f) The Board may revoke the license of any licensee where

it is found that the licensee through a violation of G.S. 87,

Article 2, has increased the risk of:

(1) exposure to carbon monoxide or o ther

harmful vapors

. . . .

(g) This Rule is not intended to limit the authority of the

Board or the variety of facts for which action is required in

a particular situation.

(h) Any of the foregoing actions may result in a probation

period or combination of suspension and probation.

Condition of probation may include remediation,

education, reexamination, record

- keeping or other

provisions likely to deter future violation or remedy

perceived shortcomings.

21 N.C. Admin. Code 50.0412(e) (2016).

The pa rties agree that we review the interpretation of the applicable statutes

de novo

.

The interpretation of a statute is a question of law and thus

is reviewed de novo in an administrative appeal. ButWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 19

- because this statute instructs a state agency to promulg ate

regulations to administer it, there is an additional layer of

review. If the statutory language is unambiguous and the

statutory intent clear, this Court must give effect to that

unambiguous language regardless of the agency’s

interpretation. But if the statute is silent or ambiguous on

an issue, this Court must defer to the agency’s

interpretation as long as the agency’s interpretation is

reasonable and based on a permissible construction of the

statute.

Total Renal Care of N.C., LLC, v. N.C. Dept. of Health and Human Servs.

,

__ N.C.

App.

__, __, 776 S.E.2d 322, 326 (2015) (citations and quotation marks omitted). In

addition, North Carolina common law did not provide for the regulation of the

businesses of installation of heating systems, so these s tatutes are “ in derogation of

the common law and penal in nature.” Elliott

, 348 N.C. at 235, 498 S.E.2d at 619.

We are therefore required to strictly construe them. Id. ( “ It is well settled that

statutes which are in derogation of the common law and whi ch are penal in nature

are to be strictly construed.”).

In strictly construing these regulatory statutes, our Supreme Court has

directed that we must focus upon “ the conduct specifically prohibited” and not upon

the “ underlying objectives and general princ iples” of Article 2 of Chapter 87. Id. at

236, 498 S.E.2d at 620.

Instead, as noted above, the Court of Appeals focused on

the policy objectives and general purpose of the Ethics

Code.

The Court of Appeals agreed that the Ethics CodeWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 20

- prohibits sexual relations with clients. However, it noted

that the Code never suggests that dual relationships of a

sexual or social nature are permissible after therapy is

terminated. By focusing on the underlying objectives and

general principles of the Ethics Code, rather than the

conduct specifically prohibited, the Court of Appeals erred.

Accordingly, we reverse the Court of Appeals and hold that

the Ethics Code must be strictly construed.

Id. (citations and quotation marks omitted). Yet we are also not to construe the

statutes “ ‘stintingly

. . . to provide less than what their terms would ordinarily be

interpreted as providing. Strict construction of statutes requires only that their

applic ation be limited to their express terms, as those terms are naturally and

ordinarily defined.’ ” Id. at 237, 498 S.E.2d at 620 (quoting Turlington v. McLeod

,

323 N.C. 591, 594, 374 S.E.2d 394, 397 (1988)).

Winkler argues that the Board has “ neither standi ng nor authority to conduct

a hearing or attempt to discipline anyone of any allegation related to anything other

than an installation (or contracting to install).” Winkler notes that Article 2 of

Chapter 87 “ never once uses the word ‘ inspection ’ (or ‘eva luation’ or any similar word

or term.)”. The Board strenuously argues that “ installation ” of a system is not

required and that Winkler’s “ incompetence” in failing to recognize the hazards posed

by the pool heater and increased risk of exposure to carbon m onoxide are sufficient

to confer jurisdiction upon the Board. The Board contends that the harm to the

occupants of Room 225 in this case was “ the precise kind of harm the legislatureWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 21

- intended to bring under the authority of the Board ‘in order to protect the public

health, comfort and safety.’ ” More specifically, the Board contends:

When, as here, the risk of exposure to carbon monoxide is

increased by the work of one holding himself out to be a

heating contractor who lacks the skill and proficiency to

e ven ascertain the risk for that harm, regardless of

whether that risk flowed from repair work on an existing

system or installation of a new system, the lethal

consequence of exposure to the carbon monoxide is the

same. For reason of public safety, the Bo ard therefore

expressly retains jurisdiction to regulate work involving

“ any connection, alteration or repair which if poorly

performed increases the risk of exposure to carbon

monoxide. ”

Although we agree that this is most likely the type of harm whic h the

Legislature intended to avoid by its regulation of heating contractors, our review is

not based upon the Legislature’s intent or general policy concerns. As directed by

Elliott

, we are guided by “ the conduct specifically prohibited” and not upon the

“ underlying objectives and general principles.” Id. at 236, 498 S.E.2d at 620. Thus

we must examine the “ conduct specifically prohibited” in this case to see if Winkler’s

actions fall within Article 2. Id.

As noted above, Winkler does not challenge the Board’s findings of fact in this

portion of his argument but only the legal conclusion that his actions in the “ service

calls” for the pool heater were actions in violation of Article 2. It is undisputed that

Winkler did not “ install” or offer to instal l the pool heater, as the Findings of FactWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 22

- show that the installation had been done

-- and very poorly done

-- years before. The

Board therefore focuses upon the words “alter ” and “ restore ” as used in N.C. Gen.

Stat. § 87

- 21(a)(5):

Any person, firm or co rporation, who for a valuable

consideration, (i) installs, alters or restores

, or offers to

install, alter or restore, either plumbing, heating group

number one, or heating group number two, or heating

group number three

. . . shall be deemed and held to b e

engaged in the business of plumbing, heating, or fire

sprinkler contracting[.]

(Emphasis added).

The Board argues that Winkler “ ‘restored’ ” the pool heater on “ 13 April 2013

when he restored the gas connection to the unit,” thereby putting it back int o

operation. The Board relies upon the definition of “ restore ” from the Merriam

Webster Dictionary, 6 th Ed. 2005, “ ‘to put back into use or service’ ” or “ ‘to put or

bring back into a former or original state.’ ” Essentially, this reading of “ restore ” is

so broad as to cover simply turning the heater on. Nonetheless, even if the meaning

of “ restore ” is so broad as to cover the mere act of turning an existing heating system

on, there is no dispute that Winkler is “ engaged in the business of” heating

con tracting and that he is licensed by the Board to engage in this business. N.C. Gen.

Stat. § 87

- 21(a)(5). Thus, the question here is whether his actions as to the pool

heater fall within Article 2’s authorization of disciplinary action, as it clearly exem ptsWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 23

- certain actions. The actions for which the Board may impose discipline are more

specifically limited and delineated by N.C. Gen. Stat. § 87

- 21(c).

Article 2 generally applies to anyone in business as a heating contractor, but

N.C. Gen. Stat. § 87

- 21( c) exempts certain acts from “ [t]he provisions” of Article 2 of

Chapter 87:

The provisions of this Article shall not apply to those who

make minor repairs or minor replacements to an already

installed system of plumbing, heating or air conditioning,

.

. . . Minor repairs or minor replacements within the

meaning of this subsection shall include the replacement of

parts in an installed system which do not require any

change in energy source, fuel type, or routing or sizing of

venting or piping. Parts shall include a compressor, coil,

contactor, motor, or capacitor.

N.C. Gen. Stat

. § 87

- 21(c).

Thus, the disciplinary provisions of Article 2 do not “ apply to those who make

minor repairs or minor replacements to an already installed system of plumbing,

heating or air conditioning.” Id. The pool heater was installed in 2011 and thus it

was an “ already installed system,” so Winkler’s actions are subject to discipline only

if they were more than “ minor repairs” or otherwise included under Article 2’s

coverage. Id. It is undisputed that Winkler did not replace any parts of the pool

he ater or its exhaust system and he did not change the “ energy source, fuel type, or

routing or sizing of venting or piping” so he did not “ repair” the system or “ replace”

any component of the system as contemplated by N.C. Gen. Stat. § 87

- 21(c).WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 24

- Furthermor e, even if we take the factual findings as true and Winkler did all

that the Board claims and found he did, none of those actions are actions regulated

by N.C. Gen. Stat. § 87

- 21(a)(5). At most, the facts would show that Winkler turned

the gas on. This i s not enough to constitute an installation, alteration, or restoration

under N.C. Gen. Stat. § 87

- 21(a)(5). As a practical matter, if we were to read the

statute as the Board requests, a contractor would have to hold the highest level

license before he co uld even examine or inspect a problem with an existing system to

determine if he is capable of fixing it, since he could be subject to discipline in the

event of any future harm caused by the system even if he did not actually repair it.

There would be no practical use for different levels of licensure by the Board.

The Board, however, argues that Winkler’s actions constituted more than

“ minor repairs” and thus were covered by Article 2 based upon the regulations

addressing risk of carbon monoxide exposur e, so our analysis is still not over. The

applicable regulations further define “ minor repairs” or “ minor alterations” by

excluding from this category “ any connection, repair or alteration which if poorly

performed creates risk of

. . . exposure to carbon monoxide.” 21 N.C. Admin. Code

50.0506. But this regulation first requires that something be done to the “ already

installed system,” N.C. Gen. Stat. § 87

- 21(c)

-- a “ connection, repair or alteration.” 21

N.C. Admin. Code 50.0506. It also does not cove r all connections, repairs or

alterations but only those which “ if poorly performed” create a risk of carbonWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 25

- monoxide exposure. Id. But based upon the Board’s findings of fact, Winkler did not

“ repair” the pool heater as defined by N.C. Admin. Code 50.05 06, nor did he perform,

poorly or otherwise, any “ connection, repair or alteration[,]” id.

, to the “ already

existing system.” N.C. Gen. Stat. § 87

- 21(c).

At this point, the Board falls back to the “ Guidelines on Disciplinary Actions”

which provide that “ The Board may revoke the license of any licensee where it is

found that the licensee through a violation of G.S. 87, Article 2, has increased the risk

of: (1) exposure to carbon monoxide or other harmful vapors.

. . .” 21 N.C. Admin.

Code 50.0412(f). On ce again, however, this regulation first requires “ a violation ” of

Article 2, which takes us back to the above analysis, which finds Winkler’s actions

were exempted from Article 2, since Winkler did not replace or repair the already

existing system. Essen tially, based upon the Board’s findings, Winkler inspected or

evaluated the pool heater and its exhaust system, but the words “ inspection ” and

“ evaluation” are not included under Article 2. Article 2 addresses installations of

systems and non

- minor repair s or replacements to existing systems, but it does not

cover inspections or evaluations of existing systems, no matter how poorly performed.

The Board’s order does not make any findings addressing any connection,

repair, or alteration to the existing sys tem which would be covered under Article 2

but relies generally upon the increase of risk of carbon monoxide exposure.

Specifically, the Board made the following relevant conclusions of law:WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 26

- 19. The actions of

. . . Winkler and his firm increased the

ri sk of exposure to carbon monoxide for persons in the

vicinity of the venting system within the meaning of Board

rules 21NCAC.0506, and Board Rule 21NCAC.0412.

20. The foregoing evidence, particularly Findings of

Fact numbers 9, 10, and 16 through 26 est ablish

incompetence and violations of 87

- 23.

The findings of fact upon which the Board relied in making this conclusion are

as follows:

9. On or about April 13, 2013, Mr. Winkler, doing

business as DJ’S Heating Service, was asked by the

maintenance staf

f employed by Appalachian Hospitality

Management to examine the pool heater and get it running.

The maintenance staff was concerned the heater was not

functioning or the pilot light would not light.

10. On or about April 13, 2013, [Winkler] examined the

heater, and found that the gas supply had been cut off.

Along with the Best Western Motel maintenance staff,

[Winkler] cut the fuel on, and put the pool heater in

operation. [Winkler] did not examine or inspect the

exhaust or venting system for the pool heater at that time,

and was not asked to do so.

. . . .

16. At the time of Mr. Winkler’s examination of the

venting and exhaust system of the pool heater, he was

aware that there had been two deaths at that time in Room

225, thought to be from natur al causes, and knew that

Appalachian Hospitality Maintenance had sufficient

concern

. . . as to the proper venting of flue gasses to ask

[Winkler] to check the systems.

17. Simple and reasonable observation of the pool heater

by a heating contractor sho uld cause the contactor toWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 27

- observe that the pool heater was a natural draft appliance.

A heating contractor should know that such a system is

required to be vented or exhausted either by a flue

extending higher than the roof or by the use of a forced

draf t system or power venter. In addition, a heating

contractor should know that a natural draft appliance

draws air from the room as well as exhaust from the flame

and discharges both into the flue.

18. Mr. Winkler knew or should have noticed that the

r oom and the humid air in the room containing the pool

heater also contained standard pool chemicals, which

chemicals were highly corrosive to metal, such as the

venting pipes from the pool heater to the exterior of the

building, and corrosive air and gasse s were being drawn

into and through the pool heater and exhaust flue.

Evidence of corrosion was visible without the use of any

equipment.

19. Mr. Winkler knew or should have known that a vent

pipe in such a location was prone to corrosion and that any

holes in the flue would result in discharge of dangerous flue

gasses inside the Best Western Motel and thereby expose

its occupants to the same.

20. In plain sight near the pool heater were a group of

wires hanging in the air not connected to the pool heater

but terminated with wire nuts. The wires were intended to

supply power for a power venter which had been

disconnected, likely well before [Winkler’s] arrival.

Evidence of that disconnection was readily discernible by a

minimally appropriate visual inspection

.

21. During all relevant times, the pool heater was

utilizing a side wall to connect the vent pipe to the exterior

of the Motel but no power venter was functioning; in

addition, the rise of the slope of the flue pipe did not comply

with the S tate Mechanical Code.WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 28

- 22. [Winkler] also went outside the building to examine

the terminus of the exhaust vent. He or one of the

maintenance men was able [to] place his hand inside the

metal cover over the end of the exhaust and feel warm air

coming out when the pool heater was running, and those

present discussed that fact. It was not necessary to remove

the cover because it was severely corroded. The flue gasses

exiting the pipe were rising and heat waves in the air were

visualized. A heating contractor should know that the heat

should be blowing out, not drifting up, if the power vent

was operating properly.

23. A heating contractor would be placed on notice of the

existence of hazardous conditions by observing the natural

draft appliance, the corrosion visible inside the equipment

room and outside at the terminus of the f lue pipe, the

disconnected wires, the manner in which the exhaust was

discharging and the fact there was no vent extending

higher than the roof of the building.

24. As a result of the absence of both a power venter and

a flue pipe or exhaust extending above the roof, the exhaust

venting system was dependent upon an insufficient

natural draft to vent dangerous gasses such as carbon

monoxide.

25. The non

- functioning power venter was rated at

approximately 75000 BTU capacity while the pool heater

which had been substituted at the Best Western had a

capacity of 250,000 BTU’s as reflected on the equipment

label. Even when functioning, such a power venter was

unlikely to exhaust all the harmful gasses.

26. Mr. Winkler failed to shut the system down, fa iled

to instruct the maintenance staff not to operate it, failed to

call the gas company and advise them to shut off the gas,

nor replace the power venter and connect the control wiring

to the power venter, nor carry out investigation or

evaluation of the efficacy of the venting between the ceilingWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 29

- of the room where the pool heater was located and the

exterior of the building. [Winkler] left the pool heater in

operation, despite the readily observable hazards.

(Emphasis added).

In the next finding, the Board notes that Winkler made “ two visual

examinations” of the system. Overall, the findings demonstrate that Winkler

examined or inspected the system visually. He did not perform any “ repair” or

“ replacement” of parts; instead the Board found that he failed to “ replace the power

venter” and failed to “ connect the control wiring.” Of course, his “ failure” to do these

things would be consistent with the fact that his license would not allow him to

“ replace the power venter” or to “ connect the control w iring.” At the most, what

Winkler did would be commonly called an “ evaluation” or “ inspection ”

-- or an

“ examination” as noted in the findings of fact. We have no doubt that a poorly

- done

or incompetent evaluation or inspection might fail to discover pr oblems with a

heating system which allow exposure to carbon monoxide to continue

-- that is exactly

what happened here, more than once, and not only by Winkler

-- but Article 2 simply

does not cover “ evaluations” or “ inspections ” of existing systems. Even if we accept

the Board’s findings that many of the hazardous features of the pool heater and its

exhaust system were clearly visible and should have been obvious to any heating

contractor

-- despite the fact that neither the inspector for the Town of Boon e nor theWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 3 0

- licensed gas company which converted the heater to natural gas had ever noticed

them

-- inspections and evaluations are simply not covered by Article 2. 2

We do not know why the Legislature chose not to include inspections of

already

- installed s ystems in the coverage of Article 2, or for that matter why it chose

to exclude “ minor repairs” and “ minor replacements,” N.C. Gen. Stat. § 87

- 21(c), but

we are required to strictly construe the statute and to focus on “ the conduct

specifically prohibited” and not upon the “ underlying objectives and general

principles.” Elliott

, 348 at 236, 498 S.E.2d at 620. Under that standard, the Board

acted beyond its disciplinary jurisdiction by imposing sanctions for Winkler’s

inspections of the pool heater and exh aust system. To the extent that the Board’s

order imposed discipline for these actions, it must be vacated.

Winkler has raised three other issues on appeal related to his examination of

the pool heater and exhaust system, including whether the Board’s fi ndings of fact

were supported by substantial evidence and whether the Superior Court properly

conducted whole record review, but given our determination that the Board did not

have jurisdiction to impose discipline for Winkler’s actions as to his examinati on of

the pool heater and exhaust system, we need not address these arguments. Yet we

note, however, that the Board also made findings and imposed discipline based upon

2 In fact, only an extensive multidisciplinary evaluation of the hotel building and equipment

by many experts after the second incident revealed all of the problems with the system as described

by the Board’s order.WINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 31

- Winkler’s plan to replace the HVAC system for the lobby and breakfast area of the

hot el. These actions occurred from 4 June 2013 through 7 June 2013 and are related

to the matters discussed above only because they occurred at the same hotel and came

to the attention of the Board because of the tragic events of 8 June 2013.

Winkler’s bri ef does not challenge the findings of fact as to the HVAC system

and makes no legal argument challenging the Board’s conclusion that Winkler was

not qualified to install the new HVAC system which had been delivered to the hotel.

Winkler simply states that he “ knew the limitation of his license, but thought he could

do ‘like kind’ installations since he could service any size system and the Board’s law

and administrative rules allow for certain like

- kind installations.” It is essentially

undisputed that Wi nkler was mistaken in his belief that his license qualified him to

install the new HVAC system in the hotel because it was a “ like kind” installation,

and the Board did have jurisdiction to impose discipline for this violation of 21 Admin.

Code 50.0403 (20 16). But the Board’s order found multiple violations by Winkler,

and the violations related to the pool heater and exhaust system were the primary

focus of the order and the disciplinary measures imposed. We therefore remand the

matter to the Board to en ter a new order addressing only the disciplinary matters

related to the planned installation of the HVAC system in the breakfast and lobby

area of the hotel. In the order on remand, the discipline imposed should be based

only upon the violations occurring during the period of 4 June 2013 through 7 JuneWINKLER V. STATE BD. OF EXAM’RS OF PLUMBING, HEATING & FIRE

SPRINKLERS CONTRACTORS

Opinion of the Court

- 32

- 2013, without consideration of the earlier events related to the pool heater or exhaust

system. The Board does not have jurisdiction to impose discipline beyond that

appropriate to address the violation of 21 N.C. Admin. Code 50.0403 by contracting

to install the HVAC system.

IV. Conclusion

Accordingly, while we affirm the Board’s finding that Winkler was not

qualified to install the HVAC system, we find that the Board lacked jurisdiction to

impose discip line regarding his inspection of the pool heater and exhaust system,

which was ultimately the primary basis of the disciplinary provisions of the Board’s

order. We reverse and remand for entry of a new order with sanctions solely based

on Winkler’s planne d installation of the HVAC system.

AFFIRMED IN PART; RE VERSED AND REMANDED IN PART.

Judges BRYANT and DIETZ concur.