Source: http://mn.gov/law-library-stat/archive/ctapun/9804/1742.htm
Timestamp: 2017-12-18 08:51:43
Document Index: 747421574

Matched Legal Cases: ['§ 115', '§ 115', '§ 115', '§ 115', '§ 541', '§ 541']

In the Matter of the Petrofund Registration of Respondent Energy Products, Inc. Registration No. 1088. C2-97-1742, Court of Appeals Unpublished, April 21, 1998.
C2-97-1742
In the Matter of the Petrofund Registration of
Respondent Energy Products, Inc. Registration No. 1088.
File No. 12-1010-10092-2
Pete Kasal, Keefe, Kasal & Newman, 720 Century Avenue S.W., #101, Hutchinson, MN 55350 (for appellant Energy Products)
Hubert H. Humphrey III, Attorney General, Patrick M. Driscoll, Assistant Attorney General, 1200 NCL Tower, 445 Minnesota Street, St. Paul, MN 55101 (for respondent Department of Commerce)
Considered and decided by Davies, Presiding Judge, Huspeni, Judge, and Kalitowski, Judge.
Appellant Stewart Energy Products, Inc. (SEP) challenges the Commissioner of Commerce's imposition of sanctions based on the commissioner's findings that appellant's conduct in submitting costs to the Petro Board for reimbursement was likely to deceive or defraud and that appellant failed to pay its subcontractor the full amount approved and granted by the board. Appellant also claims: (1) the second Administrative Law Judge (ALJ) improperly considered issues dismissed by the first ALJ's preliminary order; (2) the statute of limitations bars an action based on SEP's conduct in submitting costs; and (3) the commissioner made no findings to support his assessment of costs. We affirm the imposition of sanctions but reverse, and remand for findings and an appropriate determination of costs.
In considering questions of law, "reviewing courts are not bound by the decision of the agency and need not defer to agency expertise." St. Otto's Home v. Minnesota Dep't of Human Servs., 437 N.W.2d 35, 39-40 (Minn. 1989). Further, "[o]n matters of statutory interpretation, this court is not bound by the determination of an administrative agency." Arvig Tel. Co. v. Northwestern Bell Tel. Co., 270 N.W.2d 111, 114 (Minn. 1978).
When reviewing findings of fact, however, even though the appellate court might reach a contrary conclusion, "the court cannot substitute its judgment for that of the administrative body when the finding is properly supported by the evidence." Vicker v. Starkey, 265 Minn. 464, 470, 122 N.W.2d 169, 173 (1963).
"[T]he assessment of penalties and sanctions by an administrative agency is not a factual finding but the exercise of a discretionary grant of power." In re Haugen, 278 N.W.2d 75, 80 n.10 (Minn. 1979). Minn. Stat. § 115C.111, subd. 2 (1996), gives the commissioner the authority to order sanctions in petroleum tank release cleanup cases.
Appellant argues that the statute does not address whether the commissioner can sanction a party for failing to pay a subcontractor the amount submitted and provided as an approved expense. Minn. Stat. § 115C.111, subd. 2(4), however, allows sanctions for making false statements. Here, the record supports the commissioner's conclusion that appellant made a false statement when it claimed it was obligated to pay $9 per cubic yard for using the land, but after receiving the reimbursement did not actually pay the subcontractor that amount.
The commissioner also concluded that appellant's conduct was "likely to deceive or defraud" by failing to submit all contracts as requested. See Minn. Stat. § 115C.111, subd. 2(3) (stating that sanctions may be imposed if the commissioner finds conduct that was likely to deceive or defraud). The Petro Board sent a letter specifically requesting copies of signed contracts relating to the application for reimbursement. SEP sent the contract that required SEP to pay the subcontractor $65 per cubic yard but withheld the companion contract, signed the same day by the same parties, that required the subcontractor to pay $56 per cubic yard back to SEP for other services. The Petro Board learned from an outside source about the second contract and requested specific figures. Only after this request did SEP provide the figures. We conclude the commissioner did not abuse his discretion in determining there was substantial evidence that SEP's conduct was "likely to deceive or defraud."
We further conclude the imposition of the penalty was supported both by appellant's conduct in failing to fully compensate its subcontractor and in deceiving the Petro Board. The penalty may be imposed in any amount that the commissioner determines "will deprive the consultant or contractor of any economic advantage gained by reason of the consultant's or contractor's conduct." Minn. Stat. § 115C.111, subd. 3. The commissioner ordered that appellant pay a $10,000 civil penalty. We cannot say the commissioner abused his discretion in depriving SEP of any gain from failing to pay the subcontractor all of the money designated by the Petro Board.
Appellant argues that the second ALJ improperly considered issues dismissed by the first ALJ in his preliminary order. We disagree. ALJs provide reports to the commissioner as recommendations and not final decisions. Hymanson v. City of St. Paul, 329 N.W.2d 324, 326-27 (Minn. 1983). Thus, the second ALJ properly reviewed the issues and evidence and made recommendations to the commissioner. The commissioner, who is the ultimate decision-maker, appropriately considered the reports of both ALJs when issuing his findings, conclusions, and order.
Appellant argues that the commissioner's allegations involving appellant's failure to submit all contracts as requested by the Petro Board are barred by the two-year statute of limitations found in Minn. Stat. § 541.07(2) (1996). We disagree. The commissioner specifically found that appellant's conduct constituted fraud. Thus, we conclude a six-year rather than two-year statute of limitations applies. See Minn. Stat. § 541.05, subd. 1(6) (1996) (stating that a six-year statute of limitations applies "for relief on the ground of fraud").
Appellant contends the commissioner abused his discretion in assessing costs of the proceedings of $11,428.55 against appellant. Because the commissioner did not make any findings about the actual costs of the proceedings, we are unable to determine whether there was an abuse of discretion. See Hibbing Taconite Co. v. Minnesota Pub. Serv. Comm'n, 302 N.W.2d 5, 12 (Minn. 1980) (stating agency must provide sufficient basis for judicial review). Therefore, we reverse and remand this issue to the commissioner for findings and an appropriate determination of costs.