Source: http://mn.gov/law-library-stat/archive/ctapun/0202/834.htm
Timestamp: 2017-10-24 04:15:47
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Robert Bohn, d/b/a Old Mill Pawn, Relator, vs. City of Hastings, et al., Respondents. C5-01-834, Court of Appeals Unpublished, February 5, 2002.
C5-01-834
Robert Bohn,
d/b/a Old Mill Pawn,
City of Hastings, et al.,
George L. May, Terence G. O'Brien Jr., May & O'Brien Law Offices, 204 Sibley Street, Suite 202, Hastings, MN 55033 (for relator)
Susan M. Sager, League of Minnesota Cities, 145 University Ave. West, St. Paul, MN 55103-2044 (for respondents)
Following a contested hearing, the Hastings City Council suspended Robert Bohn's pawnbroker license for violations of Hastings, Minn., City Code § 5.45, subd. 11 (2001). The council found that from January 2001 through April 2001, Bohn failed to make daily and accurate transaction reports to the Hastings Police Department. Substantial evidence in the record supports the council's finding that Bohn failed to accurately report transactions, but the record does not support a finding that Bohn violated the Hastings City Code by failing to transmit reportable transactions to the Hastings Police Department through the automated pawn system. We, therefore, affirm in part, reverse in part, and remand to the council to determine the appropriate penalty.
Old Mill Pawn is a pawnshop located in Hastings. From 1994 until her death in November 2000, Juanita Bohn was the licensed owner and operator of Old Mill Pawn. Juanita Bohn's husband, Robert Bohn, assisted her in the operation of Old Mill Pawn and took over the operation on her death. Robert Bohn submitted his application for a pawnbroker's license in January 2001. In March 2001, the city of Hastings notified Bohn of alleged violations of the city's pawnbroker ordinance and scheduled a hearing before the Hastings City Council. The city withheld action on Bohn's application pending the outcome of the hearing.
Hastings enacted a comprehensive ordinance regulating pawnbrokers in 1999. The ordinance requires Class A licensees to transmit specific information on reportable transactions by modem from their computers to the Hastings Police Department. Old Mill Pawn is a Class A licensee. The ordinance states, as part of its purpose, an intention to "implement[] and establish[] the required use of the automated pawn system." Hastings, Minn., City Code § 5.45, subd. 1 (2001). The phrase “automated pawn system" (APS) is not defined by the ordinance, and, at the hearing, the phrase was used both to refer generically to all methods of computerized record keeping for pawn shops and to refer specifically to an electronic record-keeping system developed and maintained by the city of Minneapolis. The Minneapolis APS receives information electronically from pawnshops within the metropolitan area and makes that information available to law enforcement agencies throughout the state.
The Minneapolis APS does not provide or require reporting pawnshops to use a specific type of software, but it only accepts information that meets the APS interchange file specifications. If the submitted information does not meet the specifications, it is rejected and an error log is transmitted to the submitting pawnshop. Old Mill Pawn uses one of the four common pawnshop software programs. None of the programs are completely APS compatible and information has to be reconfigured to meet the interchange specification.
Hastings activated its automated pawn system in February 2000. It provided Old Mill Pawn with a list of software programs that were believed to be compatible with APS. Old Mill Pawn had previously installed one of the listed programs on its existing computer, an older model that still used DOS rather than Windows. Representatives from Hastings, the Minneapolis APS, and Old Mill Pawn believed that this combination would be adequate to communicate with the Minneapolis APS, but from the inception, Old Mill Pawn encountered major reporting difficulties. Minneapolis APS records produced at the hearing indicated that from February 2000 to February 2001, Old Mill Pawn had 728 reporting errors and from February to April 2001, an additional 111 errors. The number of errors does not equate to the number of transactions because multiple errors can occur within one transaction, and the errors multiply each day they remain in the system or when the flawed transmission is used to form the basis for an extension of a pawned item.
Using Minneapolis APS records, Hastings attempted to show that between February 2000 and April 2001, Old Mill Pawn failed to transmit daily reports of transactions to the Hastings Police Department. The Hastings police sergeant who administers the pawnshop ordinance testified that the reports were simultaneously submitted by modem to the Hastings Police Department and the Minneapolis APS, but the Hastings Police Department received the transaction reports independently. Thus, the Hastings Police Department could receive the reports even when the Minneapolis APS could not. Old Mill Pawn's computer consultant similarly testified that the Hastings Police Department could receive transaction reports when the Minneapolis APS could not.
Following the hearing, the council resolved to suspend Old Mill Pawn's license for 30 days with a reduction to 15 days if Old Mill Pawn corrected its reporting errors and had no new errors during the first 15 days of suspension. The council also imposed a six-month probationary period. The council based its action on two findings: (1) “[f]rom January 2001 through April 2001, Old Mill Pawn consistently failed to make daily transaction reports to the Hastings Police Department, as required by the Pawnbroker Ordinance, Hastings City Code, § 5.45 subd. 11,” and (2) “[f]rom January 2001 through April 2001, Old Mill Pawn consistently failed to make accurate transaction reports to the Hastings Police Department, as required by the Pawnbroker Ordinance, Hastings City Code § 5.45 subd. 11.”
On appeal, Bohn argues that (1) the evidence does not support the council’s finding that he failed to make accurate reports to the Hastings Police Department, (2) the evidence does not support the council's finding that he failed to make daily transaction reports to the Hastings Police Department, and (3) the council exceeded its authority and acted in an arbitrary and capricious manner by attaching conditions to the license suspension.
Decisions of administrative agencies, including cities, are presumed to be correct, and this court will reverse or modify an agency decision only if a party's substantial rights have been prejudiced because the decision exceeded the agency's statutory authority, was made upon unlawful procedure, was affected by other error of law, or was arbitrary or capricious. See Minn. Stat. § 14.69 (2000) (enumerating criteria for judicial review of agency decisions); In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 279 (Minn. 2001); Hard Times Cafe, Inc. v. City of Minneapolis 625 N.W.2d 165, 173 (Minn. App. 2001) (applying principles of Minnesota Administrative Procedure Act to city councils). Review is limited to the evidence in the record, and the decision is upheld if the administrative action has a legal basis demonstrated by substantial evidence. Cable Communications Bd. v. Nor-West Cable Communications P’shp, 356 N.W.2d 658, 668 (Minn. 1984).
Substantial evidence in the record supports the council’s finding that Old Mill Pawn failed to make accurate reports to the Hastings Police Department. Subdivision 11(1) of section 5.45 requires that “[a]ll required records must be transmitted completely and accurately after the close of business each day.” Not all of the 728 errors that accumulated between February 2000 and February 2001 are relevant to the council’s finding that Old Mill Pawn failed to make accurate reports from January through April 2001. But the evidence separately demonstrated that Old Mill Pawn had 111 errors in the time period beginning in February 2001 and ending in mid-April 2001.
Old Mill Pawn has not shown that the reports submitted to Minneapolis APS varied in any way from the reports submitted to the Hastings Police Department. The testimony established that the reports were simultaneously submitted even though separately received. The identified errors ranged from incorrectly submitted eye or hair color descriptions of the customer, to invalid customer zip codes entries, to incorrect identification of pawned guns or jewelry. Bohn contends that his software program was inherently flawed in its ability to transmit information on guns and jewelry and that the flaw relating to jewelry transactions could not be corrected. Even accepting Bohn's contention as valid, the evidence still establishes a number of inaccuracies in the 2001 reports that are not explained by computer incompatibility. These errors included invalid personal identification information, incorrect customer zip codes, and problems with serial numbers on some of the pawned goods; all types of information that a person attempting to pawn stolen goods would want to falsify. Furthermore, the evidence showed that other pawnbrokers using the same software did not have nearly as many errors as Old Mill Pawn.
Substantial evidence established that Old Mill Pond failed to submit accurate transaction reports to the Hastings Police Department from January 1, 2001, through April 2001. See Cable Communications Bd., 356 N.W.2d at 668(defining substantial evidence as: such relevant evidence as a reasonable mind might accept to support a conclusion; greater than a scintilla of evidence; and evidence considered in its entirety). We, therefore, uphold the city council’s finding on this violation of the ordinance.
The city council’s finding that Bohn failed to make the required transaction reports to the Hastings Police Department is, however, unsupported by the law and the evidence. Hastings, Minn., City Code § 5.45, subd. 11 requires Class A pawnbrokers (i.e. pawnbrokers who submit over 400 billable transactions to the Hastings Police Department in a 12-month span) to report “reportable transactions” to the Hastings Police Department via modem “after the close of business each day.” Hastings, Minn., City Code § 5.45, subds. 4, 11(A). “Reportable transactions” are defined by the city code as “[e]very transaction conducted by a pawnbroker in which merchandise is received through a pawn, purchase, consignment, or trade, or in which a pawn is renewed, extended, or redeemed.” Hastings, Minn., City Code § 5.45, subd. 2 (2001).
The exact language of the city council’s finding is: “[f]rom January 2001 through April 2001, Old Mill Pawn consistently failed to make daily transaction reports to the Hastings Police Department, as required by the Pawnbroker Ordinance, Hastings City Code § 5.45, subd. 11.” The ordinance, however, does not require pawnbrokers to make reports daily to the Hastings Police Department, but only each day in which they have a reportable transaction. If Old Mill Pawn did not have a reportable transaction or if the store was closed, no report would need to be filed with the Hastings Police Department. Consequently, the failure to make daily reports in itself is not a violation of the Hastings City Code.
The law could still support the council’s finding if the finding is interpreted to mean that Old Mill Pawn failed to make the required daily reports on days when reportable transactions occurred. Even accepting this interpretation, the city has not established that reportable transactions occurred at Old Mill Pawn that were not reported to the Hastings Police Department during 2001.
The only evidence offered by the city to support its claim that Old Mill Pawn failed to make the required reports was a calendar chart displaying an x on the day a report was received and a blank when one was not. It is unclear whether the blanks depict the days that the reports were not received by the Minneapolis APS or not received by the Hastings Police Department. Assuming that they depict days when the information was not received by the Hastings Police Department, the chart shows that in January 2001, the department received reports on 21 days and did not receive reports on 10 days. Subtracting four Sundays and two holidays, and assuming Old Mill Pawn was open on all other days, Old Mill Pawn did not submit reports on four days. Bohn testified that Old Mill Pawn had 1000-2000 transactions in the year 2000. Assuming a similar volume, using the larger number, and subtracting Sundays, Old Mill Pawn would average four transactions a day. In his testimony relating to a June 13, 2000, transaction, Bohn produced receipts that showed eight transactions on that day. Thus, it is entirely conceivable that Old Mill Pawn had four days in January 2001 in which it had no reportable transactions. The numbers on the charts for February and March are comparable to the January numbers, and the April entries, although incomplete, show that a report was received each day except Sunday.
The city offered no evidence to prove that reportable transactions occurred on the days on which the reports were not received. Therefore, the evidence does not support the finding that Old Mill Pawn violated the Hastings City Code by failing to make the required reports to Hastings Police Department. Accordingly, we reverse the city council’s finding on this violation of the ordinance.
Bohn claims that the city council acted arbitrarily and capriciously and exceeded its authority when it placed conditions on his license suspension. Because we are remanding for the council to determine a penalty based only on the finding supported by the record, Bohn's argument on the penalty may be moot. In the interest of judicial economy, however, we address Bohn's argument that the conditions are legally impermissible.
Bohn argues first that the city may not condition his suspension on reporting to the Minneapolis APS because the ordinance requires only reporting by modem to the Hastings Police Department. Hastings, Minn., City Code § 5.45, subd. 11. Bohn fails to take into account, however, the powers given to the city council in the Pawn Broker Regulation Act set out in Minn. Stat. §§ 325J.01-.13 (Supp. 2001). Minn. Stat. § 325J.05(b), states that “[a] pawnbroker shall upon request provide to the appropriate law enforcement agency a complete and accurate record of pawn transactions. If the pawnbroker provides the records in a computerized format, they must be provided in the interchange file specification format.” Minn. Stat. § 325J.05(c), defines “interchange file specification format” as “the most current version of the Minneapolis automated pawn system interchange file specification format.” Minn. Stat. § 325J.01, subd. 2 defines “appropriate law enforcement agency” as, among other entities, “the police chief of the municipality or law enforcement officers of the municipality in which a pawnbroker maintains an office.” Therefore, a full reading of the Pawnbroker Regulation Act establishes that the city of Hastings is empowered to require Old Mill Pawn to report to an appropriate law enforcement agency. In its findings, the council stated that automated reporting is important to protect the public from illegal transfers of stolen property. Thus, the council could reasonably require Old Mill Pawn to report not only to the Hastings Police Department, but also to the Minneapolis APS, a statewide automated reporting service that provides information to law enforcement agencies.
Bohn’s second argument is that the ordinance provides only for revocation and suspension and thus, any conditions are beyond the council’s power. We disagree that conditions of suspension are beyond the council’s power. "The legislature states what the agency is to do and how it is to do it.” Hirsch v. Bartley-Lindsay Co., 537 N.W.2d 480, 485 (Minn. 1995) (citation omitted). The state legislature, through Minn. Stat. § 325J.02(a), gave municipalities the power to “adopt an ordinance, issue licenses to qualified applicants, and regulate pawn transactions.” Municipalities have the power to suspend or revoke a license for failure to comply with that municipality’s ordinance. Minn. Stat. § 325J.02(d). Pursuant to this directive, Hastings passed section 5.45 of its city code. Within this section, the city has specifically reserved the right to suspend or revoke a pawnbroker's license if a pawnbroker violates the ordinance. Hastings, Minn., City Code § 5.45, subd. 19(C). Because the Minnesota Pawnbroker Regulation Act enables municipalities to order an outright revocation for ordinance violations, imposing reasonable conditions on Bohn that fall short of outright revocation is within the powers of the city council. The council did not exceed its authority by imposing conditions on Old Mill Pawn’s license.
We reverse the council's finding that Old Mill Pawn failed to make transaction reports required by the pawnbroker ordinance, but we affirm the council's finding that Old Mill Pawn failed to make accurate transaction reports to the Hastings Police Department from January through April 2001. We remand to the council to impose a penalty proportional to the violation supported by the record.