Opinion ID: 2536666
Heading Depth: 3
Heading Rank: 2

Heading: Whether Those Findings Supported by Substantial Evidence Were Sufficient To Affirm Denial of Button's Renewal Permit

Text: Button argues that seven of the manager's findings [12] were unsupported by substantial evidence and that, alternatively, they were insufficient to support denial of his renewal permit.
Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. [13] We will not reweigh evidence or choose between competing inferences reasonably drawn from evidence. [14]
The manager found that Button was convicted in January 2004 of a misdemeanor in Skagway for improper use of evidence of vehicle registration or certificate of title, [15] and that Button was convicted in March 2003 of violating an HBC prohibition on soliciting on public property. [16] Button argues that these findings were not supported by substantial evidence because the judgment and order relied upon by the manager were inadmissible hearsay that was not within any exception to the hearsay rule. The Alaska Administrative Code does not require hearing officers at administrative hearings to follow the Alaska Rules of Evidence. [17] The strict rules of evidence governing admissibility of hearsay in judicial proceedings do not apply to administrative hearings, and we will not reverse an administrative judgment based on hearsay unless the hearsay was inherently unreliable or jeopardized the fairness of the proceedings. [18] A hearing officer may reasonably rely on a certified copy of a record of conviction. [19] Button does not claim that the evidence of his convictions was unreliable, and we conclude that admitting the convictions into evidence did not jeopardize the fairness of the adversarial hearing. Also, the convictions were properly relied upon under the manager's explanation that hearsay could be used only to supplement or explain direct evidence. Button admitted to having been convicted of soliciting for tours in Haines, and to committing the conduct underlying the Skagway conviction. Button's own admissions provided substantial direct evidence to support the findings, even absent consideration of the hearsay evidence.
Two of the manager's factual findings and one finding made in the first instance by the assembly concerned operation of Button's catamaran during the summer of 2004:(1) on one occasion, Button asked a customer to drive Button's catamaran and pose as a potential buyer to circumvent Coast Guard safety regulations; (2) in August [Chilkat Cruises fast ferry Captain Mark] Mitcheltree witnessed Button captaining his ocean tour with an overloaded boat; and (3) Button admitted that on numerous occasions he used a customer as a crew member to overload his catamaran and circumvent Coast Guard safety regulations. Button argues that all three findings were unsupported by substantial evidence. Button argues that the first finding was unsupported by substantial evidence because the manager relied on inadmissible hearsay, a letter from the customer, Daniel Downing. Downing's letter was properly considered because hearsay is admissible at administrative hearings [20] and because it served to supplement or explain direct evidence. Downing's letter stated that on the morning of a trip he had booked with Button, Downing was told by Button that he did not have a captain for the trip and was asked by Button to run the boat, taking two other clients along with him. The letter further stated that Button told Downing that if he ran the boat under the idea that [he] was `test driving it as a prospective buyer' then [Button] could go around the Coast Guard since they watch him so closely. Downing declined. Button admitted at the hearing that he had asked Downing if he wanted to captain the boat and that Downing had declined. Button did not deny at the hearing Downing's allegation Button told Downing to pose as a potential buyer to circumvent Coast Guard regulations that require the boat to be captained by a licensed operator [21] and that limit the number of passengers. [22] Downing's letter served to supplement and explain Button's own admissions and was therefore properly considered. Together, Button's testimony and the letter are substantial evidence supporting the finding that Button asked Downing to pose as a potential buyer in order to circumvent Coast Guard safety regulations. Button argues that the second finding was unsupported by substantial evidence because he contends that he was not captaining the boat and that the boat was not overloaded. Substantial evidence did not support the findings of overloading. There was some evidence permitting the manager to find that Button was captaining the boat. [23] But there was no evidence the boat was overloaded on that occasion. There was instead evidence Button had five passengers on board that day. [24] This evidence established that Button's boat was not overloaded, [25] and there was no contrary evidence. The finding that Button captained an overloaded boat was therefore unsupported by substantial evidence. It appears that the numerous occasions component of the third finding was made by the assembly independent of the manager's findings of fact. We review the assembly's finding applying the same substantial evidence standard that we apply to the manager's findings. Button argues that because he admitted to using a passenger as a crew member one time only, the assembly's finding that he admitted he did so on numerous occasions was not supported by substantial evidence. Button did admit at the hearing that he had asked a passenger to pose as a crew member on one occasion, in order to circumvent Coast Guard regulations. The manager's finding that Button used a passenger as `crew' so he could overload his boat was therefore supported by substantial evidence. But there was no evidence Button admitted to doing so on more than one occasion. Substantial evidence therefore did not support the numerous occasions part of the third finding.
The manager made two additional findings: (1) in June 2004 Button pressured Captain Mitcheltree to exceed the capacity of Captain Mitcheltree's fast ferry in order to transport some of Button's passengers; and (2) Button admitted he stopped in the middle of a public roadway and impeded the flow of traffic, in violation of the Haines Tour Operator Code of Conduct. Button argues that the first finding was not supported by substantial evidence because the evidence was as consistent with an inference that he merely appealed to Captain Mitcheltree or reasonably requested boarding, as it was with an inference that he pressured Captain Mitcheltree. The evidence was undisputed that in June 2004 Button attempted to secure passage for several of his tour customers on Captain Mitcheltree's ferry, but was unable to get all of them on board because the ferry was full. Captain Mitcheltree testified that Button put a couple of little girls in front of me and was like these two little girls don't take up much room ... why can't you take a couple of little kids. Captain Mitcheltree described this as a pressure situation in which Button was trying to make him feel like the bad guy. Button admitted at the hearing that it [c]ould've happened. This was substantial evidence from which the manager could have concluded that Button pressured Captain Mitcheltree, and could have rejected Button's characterization that he reasonably requested boarding. We will not reweigh the evidence or choose between competing inferences reasonably drawn from the evidence. [26] Button next argues that the public roadway finding was not supported by substantial evidence because much of the evidence the manager relied on was inadmissible hearsay. The record contains several complaints that Button stopped in the middle of the road. The clerk testified that she received these complaints. Button admitted at the hearing that he stopped two or three times in or on the road to pick people up or let people off. The hearsay evidence supporting this finding was not unreliable. [27] The manager therefore properly considered the complaints and the clerk's testimony to explain or supplement Button's own admissions. That evidence was substantial evidence supporting the finding that Button stopped in the middle of the road.
Whether the findings were sufficient to justify denial is a question of law involving agency expertise. We therefore apply the reasonable basis test, [28] under which we defer to the agency unless its interpretation is plainly erroneous and inconsistent with the regulation. [29] The borough has a significant interest in ensuring the safety of local tour operators, and it may interpret its code to achieve that purpose, provided there is a reasonable basis for the interpretation. Button argues that the manager's findings were insufficient to support denial of his renewal application. Button argues that the criminal convictions were insufficient to support nonrenewal for four reasons. First, he argues that the version of the HBC in effect when his permit was denied did not permit nonrenewal on the basis of violations of applicable law. The borough responds that the pre-amendment HBC impliedly permitted nonrenewal on the basis of violations of applicable law. The March 2005 HBC amendments explicitly authorize nonrenewal if grounds exist for denial, revocation, or suspension of a permit. [30] Pre-amendment, the HBC stated that permits would be renewed in accordance with chapter[s] 5.04 and [5.18] [31] but did not specify which provisions applied to renewals. Former chapter 5.04 stated that violation of any applicable local, state, or federal law or regulation was grounds for denial, revocation, or suspension of a permit. [32] But former chapters 5.04 and 5.18 did not specify that violation of an applicable law was also ground for nonrenewal. The borough appears to have interpreted both the pre-and post-amendment versions of the code to allow nonrenewal based on violations of applicable law. That interpretation was not plainly erroneous or inconsistent with the text of the HBC provisions. [33] We hold that the pre-amendment HBC permitted nonrenewal for violations of applicable law. Second, Button argues that the assembly's reliance on an HBC amendment impermissibly applied the amendment retroactively. The borough responds that the amendment was clarifying or curative and therefore could be applied retroactively. Because the pre-amendment code permitted nonrenewal for violations of applicable law, it is unnecessary to determine whether the amended version applied retroactively. Third, Button argues that the conduct underlying the convictions was unrelated to his Haines commercial tour permit because the Skagway conviction occurred outside the Haines Borough several years before nonrenewal and because the Haines conviction involved offering free rides, not tours for a fee. The borough responds that the Skagway conviction was for a violation of applicable law because, although the violation occurred outside of the Haines Borough, it was directly related to Button's tour operations, and the plain language of the HBC is not limited to violations of Haines ordinances. The borough argues that the Haines conviction is self-evidently applicable. The HBC does not define the phrase applicable law. [34] The phrase is therefore susceptible to a range of permissible definitions. Webster's Third New International Dictionary defines applicable as having relevance, or fit, suitable, or right to be applied. [35] We hold that, at minimum, to be applicable a law must be relevant to the subject of the permit. The borough defines applicable law as any law that is fit, suitable, pertinent, and appropriate. Button argues for a narrower definition, encompassing only violations occurring within the borough and involving paid tours within the borough. We apply the reasonable basis standard in deciding whether the meaning the borough attributes to applicable law is correct. [36] We will defer to the borough's interpretation unless it is plainly erroneous and inconsistent with the regulation. [37] Because the borough's definition of applicable law falls within the permissible range of definitions, and because the broader definition advanced by the borough promotes its interest in ensuring the safety of its citizens and tourists, we hold that a violation is of applicable law if the violated law is relevant to the subject matter of the permit. Both convictions were directly relevant to Button's tour operations in Haines. Both involved misuse of Button's tour vehicles, and the Haines conviction involved Button giving free rides in an attempt to solicit customers for his tours. We hold that the borough permissibly concluded that these two convictions were relevant to Button's Haines tour operations and therefore were violations of applicable law. Finally, Button argues that the borough should be estopped from basing denial of his 2005 permit on events that occurred before the borough renewed his permit in 2004. The borough responds that the doctrines of estoppel and quasi-estoppel are inapplicable because the clerk was unaware of the convictions when she granted the 2004 permit, and because Button fails to satisfy the elements for these doctrines. Courts may apply the doctrine of equitable estoppel against the state. [38] Although we have rarely held that estoppel bar[red] the state's exercise of its sovereign police powers, we nevertheless apply the estoppel test in each case. [39] To make out a claim of estoppel against the government, Button must show that (1) the borough asserted a position by conduct or words; (2) Button acted in reasonable reliance on that assertion; (3) Button suffered resulting prejudice; and (4) estopping the borough from acting against Button's permit serves the interest of justice so as to limit public injury. [40] Button fails to demonstrate that the borough asserted any position regarding the convictions simply by declining to exercise its discretion to deny Button's 2004 permit application. [41] It is therefore unnecessary to consider the other three components of the four-part test for estopping the government. [42] Button also fails to meet the test for quasi-estoppel. That doctrine applies when facts and circumstances make assertion of an inconsistent position unconscionable. [43] In evaluating quasi-estoppel claims, we have considered: (1) whether the party asserting the inconsistent position has gained an advantage or produced some disadvantage through the first position; (2) the magnitude of the inconsistency; (3) whether changed circumstances tend to justify the inconsistency; (4) whether the inconsistency was relied on by the party claiming estoppel to his detriment; and (5) whether the first assertion was made with full knowledge of the facts. [44] The relevant factors militate against finding quasi-estoppel in this case. [45] First, the borough did not gain an advantage or produce a disadvantage by renewing Button's tour permit in 2004; the borough did not benefit from granting Button's 2004 permit, and Button was no more disadvantaged by the 2005 nonrenewal than he would have been had the clerk declined to renew his permit in 2004. Second, the first assertion was made without full knowledge of all the facts, specifically the Skagway conviction and other complaints. The assertions were therefore arguably not inconsistent with one another, so the magnitude of inconsistency cannot be considered great. Third, changed circumstancesnamely the clerk's awareness of the Skagway conviction and additional complaintsjustify any inconsistency. And although Button contends that he relied on the 2004 renewal because he did not seek employment or make alternative plans, his claim is unsupported by citations to the record, and the fact that he went to work for his wife's tour brokerage business belies his contention. Finally, any reliance would have been unreasonable because Button stated that when he received the borough's August 31, 2004 letter suspending the revocation process for his 2004 permit, he knew that [he was] going to have a problem getting a renewal of [the] permit. We therefore hold that the borough is not estopped from relying on events that occurred before May 12, 2004, when the borough issued Button's 2004 renewal permit. [46] Button further argues that because the remaining supported findings did not concern violations of applicable law, and because the HBC does not explicitly provide for nonrenewal on any basis other than violations of applicable law, the remaining supported findings cannot provide a sufficient basis for nonrenewal. A renewal application may be denied for [s]ubstantial noncompliance with any term, condition, or provision of the permit. [47] Applicants must sign the Haines Tour Operator Code of Conduct, promising to abide by its provisions. [48] Those provisions include promises [t]o conduct our operations with respect for and consideration of the other users of the public lands and rights-of-way upon which we operate and [t]o not impede the flow of traffic, unreasonably, including not stopping in the roadway. Button signed the code of conduct as part of his 2004 renewal application. We hold that abiding by the code of conduct is a term, condition, or provision of the permit; therefore substantial noncompliance with the code of conduct is a permissible basis for nonrenewal. [49] Button's conduct in pressuring Captain Mitcheltree was substantial noncompliance with the code of conduct provision regarding respect and consideration of others, and stopping in the roadway was substantial noncompliance with the code of conduct provision regarding not unreasonably impeding traffic. [50] The borough was therefore entitled to rely on those incidents in deciding whether to grant the 2005 renewal application. With respect to the Downing incident, HBC 5.04.120.A.5 authorizes nonrenewal for reasons affecting the public safety or welfare. Because allowing a nonlicensed individual with unknown credentials to captain a boat for the purpose of allowing the permit holder to exceed the maximum number of passengers on board affects the public safety and welfare, the Downing incident was properly considered as a basis for nonrenewal. We consider the findings in the aggregate, not individually, [51] and hold, even though substantial evidence did not support the other two findings, that the five supported findingsabout the two criminal convictions, pressuring Captain Mitcheltree, stopping in the middle of the road, and the Downing incidentare sufficient to support denial of Button's renewal application. Additionally, the assembly stated that the convictions, standing alone, are ample reason to affirm the clerk's action. And the manager stated that Button's admitted use of a passenger as a crew member is one egregious example of [Button's] disregard of proper conduct and the law, and by itself constitutes a reasonable basis for not renewing the [p]ermit. This persuades us that the assembly would affirm nonrenewal even absent the two unsupported factual findings. A remand is therefore unnecessary.