Title: MATTER OF CARRUTHERS v BD OF HOR
Citation: N/A
Docket Number: 84-515
State: Montana
Issuer: Montana Supreme Court
Date: May 23, 1985

No. 84-515 IN THE SUPREME COURT OF THE STATE OF P 4 0 T J T A N A 1 1 4 THE MATTER OF THE PETITION OF AL CARRUTHERS AND TOM WILLIAMS, Petitioners and Appellants, THE BOARD OF HORSE RACIIJG OF THE DEPARTIIENT OF COPWRCE OF THE STATE OF MONTANA, Respondent and Respondent.. APPEAL FROM: District Court of the First Judicial District, In and for the County of Lewis & Clark, The Honorable Gordon Bennett, Judge presiding. COUNSEL OF RECORD: For Appellants: Robert J. Holland and R . Brian Holland, Butte, Montana For Respondent: Geoffrey L. Brazier, Dept. of Comerce, Helena, Montana Filed: Submitted on Briefs: Feb. 22, 1985 Decided: 231 1985 Clerk M r . J u s t i c e L. C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. A 1 C a r r u t h e r s and Tom Williams ( h e r e i n a f t e r a p p e l l a n t s ) appeal from a judgment o f t h e D i s t r i c t Court o f t h e F i r s t J u d i c i a l District, Lewis and Clark County, a f f i r m i n g a d e c i s i o n o f t h e Board o f Horse Racing ( h e r e i n a f t e r Board). W e a f f i r m . Following t h e e l e v e n t h r a c e a t t h e L a s t Chance Meet i n Helena, Montana, on J u l y 17, 1983, t h e stewards r u l e d on s e v e r a l claims o f f o u l . One o f t h e r u l i n g s d i s q u a l i f i e d a p p e l l a n t s ' horse from second p l a c e and moved it t o e i g h t h p l a c e . Appellants appealed t h e stewards' d e c i s i o n t o t h e Board and a h e a r i n g was h e l d b e f o r e t h e Board's h e a r i n g examiner on October 2 1 , 1983. The evidence presented a t t h a t h e a r i n g c o n s i s t e d o f a video t a p e o f t h e r a c e , o t h e r documentary evidence, d e p o s i t i o n s and sworn testimony. The hearing examiner's proposed f i n d i n g s , conclusions and o r d e r w e r e i s s u e d on October 2 7 , 1983. H e reversed t h e d e c i s i o n o f t h e stewards a f t e r f i n d i n g t h e r e was s u b s t a n t i a l evidence t h a t t h e c o n t a c t between a p p e l l a n t s ' h o r s e and another h o r s e d i d n o t i n t e r f e r e w i t h t h e o t h e r horse s o a s t o a f f e c t i t s f i n i s h o r t h e outcome o f t h e r a c e . The Board i s s u e d a f i n a l o r d e r and d e c i s i o n on January 31, 1984 adopting i n p a r t t h e f i n d i n g s o f f a c t by t h e h e a r i n g examiner and r e j e c t i n g h i s d e c i s i o n . The Board s t a t e d t h a t p a r t o f t h e f i n d i n g s w e r e n o t based on competent s u b s t a n t i a l evidence and t h a t t h e reasoning a s t o t h e e f f e c t o f t h e c o n t a c t between t h e h o r s e s was erroneous. The Board then affirmed t h e stewards' d e c i s i o n . O n February 29, 1984, a p p e l l a n t s requested j u d i c i a l review o f t h e Board's d e c i s i o n pursuant t o Montana ' s Administrative Procedure A c t , s e c t i o n 2-4-101, MCA, e t . seq. (MAPA). Appellants contended t h a t t h e i r h o r s e should b e r e s t o r e d t o second p l a c e because t h e Board's d e c i s i o n was: (1) made o n unlawful procedure; (2) a f f e c t e d by l e g a l e r r o r ; ( 3 ) c l e a r l y erroneous i n view of t h e evidence on record; and ( 4 ) a r b i t r a r y o r c a p r i c i o u s o r an abuse o f d i s c r e t i o n . Following t h e Board's answer, a p r e t r i a l conference was scheduled f o r A p r i l 23, 1984. A t t h e conference, t h e c o u r t requested t h a t t h e p a r t i e s submit b r i e f s on whether t h e stewards o r t h e Board and its h e a r i n g examiner w e r e t h e o r i g i n a l triers o f f a c t and what s t a n d a r d s o f review a p p l i e d i n t h i s case. On A p r i l 24, 1984, a f t e r t h e conference, t h e D i s t r i c t Court made t h i s minute e n t r y : "Pursuant t o t h e p r e - t r i a l conference t h e Court ordered respondent [ t h e Board] t o f i l e a b r i e f w i t h i n 10 days, p e t i t i o n e r [ a p p e l l a n t s ] t o f i l e an opposing b r i e f 10 days l a t e r , and respondent has 5 days t h e r e a f t e r t o f i l e a r e p l y b r i e f , a t which t i m e t h e m a t t e r w i l l be deemed submitted." The p a r t i e s submitted t h e i r b r i e f s and t h e D i s t r i c t Court i s s u e d an opinion and o r d e r on J u l y 26, 1984 a f f i r m i n g t h e d e c i s i o n o f t h e Board. Appellants f i l e d a motion f o r r e l i e f from judgment, pursuant t o Rule 60 (b) M.R.Civ.P. They a l l e g e d s u r p r i s e i n t h a t t h e D i s t r i c t Court had requested t h e p a r t i e s o n l y b r i e f t h e q u e s t i o n s discussed a t p r e t r i a l conference and had reserved d i s c u s s i o n on o t h e r i s s u e s u n t i l a l a t e r d a t e . The motion was deemed denied a f t e r t h e D i s t r i c t Court f a i l e d t o ru1.e on it w i t h i n t h e time l i m i t s o f Rule 59 ( d ) M.R.Civ.P. Appellants p r e s e n t one i s s u e on appeal: Did t h e D i s t r i c t Court err i n d i s r e g a r d i n g t h e procedure it t o l d t h e p a r t i e s it would follow and i n i s s u i n g a f i n a l o r d e r and judgment p r i o r t o h e a r i n g argument on t h e m e r i t s o f t h e case? A t t h e h e a r t o f t h i s i s s u e s t a n d s t h e q u e s t i o n o f t h e D i s t r i c t C o u r t ' s procedure and scope of review when h e a r i n g an appeal from an a d m i n i s t r a t i v e proceeding. Vita-Rich Dairy, Inc. v. Dept. o f Bus. Reg. (1976), 170 Mont. 341, 553 P.2d 980 sets f o r t h t h r e e b a s i c p r i n c i p l e s i n determining t h e scope o f j u d i c i a l review. F i r s t , a l i m i t e d review s t r e n g t h e n s t h e a d m i n i s t r a t i v e p r o c e s s by encouraging f u l l and complete p r e s e n t a t i o n o f evidence t o t h e agency having s p e c i a l i z e d knowledge and experience. Second, j u d i c i a l economy r e q u i r e s t h a t f u n c t i o n s be assigned according t o a b i l i t y . The agency i s a s p e c i a l i s t i n t h e s u b s t a n t i v e m a t t e r and t h e c o u r t i s a s p e c i a l i s t i n c o n s t i t u t i o n a l i s s u e s , s t a t u t o r y i n t e r p r e t a t i o n , t h e requirements o f a F a i r h e a r i n g and t h e determination of whether s u b s t a n t i a l evidence s u p p o r t s a f i n d i n g . Third, a l i m i t e d j u d i c i a l i n q u i r y on t h e f a i r n e s s o f t h e procedure, q u e s t i o n s o f law, and t h e evidence supporting t h e d e c i s i o n a c t s a s a check on t h e agency's a c t i o n s . These p r i n c i p l e s underly t h e M A P A s e c t i o n p r o v i d i n g f o r j u d i c i a l review o f agency a c t i o n i n a c o n t e s t e d case. Section 2-4-704, MCA ( p a r t o f MAPA) s t a t e s , i n p a r t , a s follows: "(1) The review s h a l l be conducted by t h e c o u r t without a jury and s h a l l be confined t o t h e record. I n c a s e s of a l l e g e d i r r e g u l a r i t i e s i n procedure b e f o r e t h e agency n o t shown i n t h e record, proof t h e r e o f may be t a k e n i n t h e c o u r t . The c o u r t , upon r e q u e s t , s h a l l hear o r a l argument and r e c e i v e w r i t t e n b r i e f s . " (2) The c o u r t may n o t s u b s t i t u t e i t s judgment f o r t h a t o f t h e agency a s t o t h e weight o f t h e evidence on q u e s t i o n s o f f a c t . The c o u r t may a f f i r m t h e d e c i s i o n of t h e agency o r remand t h e c a s e f o r f u r t h e r proceedings. The c o u r t may reverse o r modify t h e d e c i s i o n i f s u b s t a n t i a l r i g h t s o f t h e a p p e l l a n t have been prejudiced because t h e a d m i n i s t r a t i v e Findings, i n f e r e n c e s , conclusions, o r d e c i s i o n s a r e : " (c) made upon unlawful procedure; " ( d ) a f f e c t e d by o t h e r e r r o r o f law; " (e) c l e a r l y erroneous i n view o f t h e r e l i a b l e , p r o b a t i v e , and s u b s t a n t i a l evidence on t h e whole record; " (f) a r b i t r a r y o r c a p r i c i o u s o r c h a r a c t e r i z e d by abuse o f d i s c r e t i o n o r c l e a r l y unwarranted e x e r c i s e o f d i s c r e t i o n . . . " Appellants contend t h a t t h e District C o u r t ' s f a i l u r e t o hear o r a l argument a s t h e y requested prevented a f u l l p r e s e n t a t i o n of t h e i r case. Section 2-4-704(1), MCA provides t h a t t h e D i s t r i c t C o u r t ' s review i s g e n e r a l l y confined t o t h e record b u t t h a t t h e c o u r t may h e a r o r a l argument i f requested. The record on appeal does n o t r e f l e c t a r e q u e s t f o r o r a l argument. The minute e n t r y made by t h e D i s t r i c t Court a f t e r t h e p r e t r i a l conference s t a t e s t h a t " t h e m a t t e r w i l l he deemed submitted" following t h e f i l i n g o f b r i e f s . The District C o u r t ' s d e c i s i o n r e f l e c t s a review of t h e record. Under t h e s e circumstances, t h e D i s t r i c t Court d i d n o t err i n reaching a d e c i s i o n without h e a r i n g o r a l argument. Case law has c l a r i f i e d t h e s t a n d a r d s o f review s e t o u t i n s e c t i o n 2-4-704, MCA. Findings o f f a c t by an agency a r e binding on t h e c o u r t " i f t h e r e i s s u b s t a n t i a l , c r e d i b l e evidence i n t h e record." C i t y o f B i l l i n g s v. B i l l i n g s F i r e f i g h t e r s Local No. 521 (Mont. 1 9 8 2 ) , 651 P.2d 627, 632, 39 St.Rep. 1844, 1849. There is a broader scope o f review on l e g a l q u e s t i o n s . "Where t h e i n t e n t o f s t a t u t e s i s u n c l e a r , deference w i l l be given t o t h e agency's i n t e r p r e t a t i o n . . . Where it appears t h a t t h e l e g i s l a t i v e i n t e n t is c l e a r l y c o n t r a r y t o agency i n t e r p r e t a t i o n , t h e c o u r t s w i l l n o t h e s i t a t e t o r e v e r s e on t h e b a s i s o f 'abuse o f d i s c r e t i o n . I " ( C i t a t i o n s omitted. ) C i t y o f B i l l i n g s v. B i l l i n g s F i r e f i g h t e r s Local No. 5 2 1 , 651 P.2d a t 632. Appellants have t h e burden o f showing t h e i r r i g h t s were s u b s t a n t i a l l y prejudiced by an a r b i t r a r y o r c a p r i c i o u s o r c l e a r l y erroneous agency d e c i s i o n . C i t y o f B i l l i n g s v. Montana Human Rights Commission (Mont. 1 9 8 4 ) , 681 P.2d 33, 39, 4 1 St.Rep. 688, 696. I n t h i s c a s e , a p p e l l a n t s contended below t h a t t h e D i s t r i c t Court should reverse t h e agency's d e c i s i o n because t h e i r r i g h t s had been prejudiced. They a l l e g e d t h a t t h e agency's d e c i s i o n was f a c t u a l l y erroneous i n view o f t h e evidence on r e c o r d , t h e r e s u l t o f l e g a l e r r o r and based on , unlawful procedure. With regard t o t h e f i n d i n g s o f f a c t , t h e District Court c o r r e c t l y found a p p e l l a n t s had n o t c a r r i e d t h e i r burden and t h e Board had p r o p e r l y considered t h e evidence i n making f i n d i n g s d i f f e r e n t than t h o s e o f t h e hearing examiner. The D i s t r i c t Court found no l e g a l e r r o r on t h e record. The Board and t h e h e a r i n g examiner had a p p l i e d d i f f e r e n t i n t e r p r e t a t i o n s o f A.R.M. 58-22.807(4) based on varying d e f i n i t i o n s o f t h e word " j o s t l e . " The D i s t r i c t Court c o r r e c t l y d e f e r r e d t o t h e Board's i n t e r p r e t a t i o n o f t h e t e r m n o t i n g t h e y w e r e a c t i n g w i t h i n t h e i r d i s c r e t i o n t o apply a d e f i n i t i o n when " j o s t l e " was n o t defined i n t h e r e g u l a t i o n s . The record reviewed by t h e D i s t r i c t Court r e f l e c t e d proper procedure w i t h no p r e j u d i c e t o a p p e l l a n t s . The Board changed f i n d i n g s o f f a c t by t h e h e a r i n g s examiner a f t e r s t a t i n g t h e y were n o t based on competent, s u b s t a n t i a l evidence and modified h i s l e g a l conclusions f o r t h e reasons t h a t t h e h e a r i n g examiner i n s e r t e d "something i n t h e r u l e [A.R.M. 58-22.8071 t h a t h a s been omitted" and a p p l i e d an i n c o r r e c t s t a n d a r d o f review. This a c t i o n was w i t h i n t h e bounds of s e c t i o n s 2-4-621 and 2-4-623, MCA, and t h e D i s t r i c t Court c o r r e c t l y determined t h e procedure used was a p p r o p r i a t e . The judgment o f t h e D i s t r i c t Court i s a f f i t