Norwalk Auto Sales, Inc. v. State of Connecticut Department of Motor Vehicles et al. (2011)

MEMORANDUM OF DECISION ON APPEAL

The plaintiff, Norwalk Auto Sales, Inc., appeals from the order of a hearing officer of the Connecticut Department of Motor Vehicles, dated October 28, 2009 [# 2, Return of Record] ordering the plaintiff, a purported seller of motor vehicles, to return eleven of twelve dealer plates to the Commissioner of the Department of Motor Vehicles.   The following is the procedural history of this matter.

On July 31, 2009, at a compliance conference, the Commissioner, through representatives of the Department of Motor Vehicles, demanded return of nine of the twelve dealer plates issued to the plaintiff because of a lack of sales.   The plaintiff refused and demanded a hearing.

A hearing was held on September 30, 2009.   Following the hearing, on October 28, 2009, the hearing officer found that the plaintiff failed to return the plates on demand and concluded that, “The refusal of this Respondent to return dealer's plates in its possession is a violation of the terms of Section 14-64(11), and constitutes a justifiable basis for the Commissioner to invoke the mechanisms authorized under Section 14-58(b).”  The hearing officer ordered the plaintiff to return all but one of the dealer plates. [# 2, Return of Record.]

STANDARD OF REVIEW:

The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact.   The court shall affirm the decision of the agency unless the court finds that substantial rights of the person appealing have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:  (1) In violation of constitutional or statutory provisions;  (2) in excess of the statutory authority of the agency;  (3) made upon unlawful procedure;  (4) affected by other error of law;  (5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record;  or (6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.   If the court finds such prejudice, it shall sustain the appeal and, if appropriate, may render a judgment under subsection (k) of this section or remand the case for further proceedings.   For purposes of this section, a remand is a final judgment.

General Statutes Section 4-183(j).

CLAIMS ON APPEAL:

The plaintiff disputes that the Department of Motor Vehicles has the statutory authority to demand return of dealer plates once they are issued, merely because of a lack of sales, pursuant to §§ 14-58 and 14-64(11) of the General Statutes.

§ 14-64(11) states, “The commissioner may suspend or revoke the license or licenses of any licensee or impose a civil penalty of not more than one thousand dollars for each violation on any licensee or both, when, after notice and hearing, the commissioner finds that the licensee ․ (11) has failed to secure or to account for or surrender to the commissioner on demand official registration plates or any other official materials in its custody.”

As to § 14-58, it is subsection (b) which is at issue here.   At the time of these events, § 14-58(b) read as follows:

b) Each such licensee shall, instead of registering each motor vehicle owned by such licensee or temporarily in such licensee's custody, make application to the commissioner for a general distinguishing number and mark, and the commissioner may issue to the applicant a certificate or certificates of registration containing the distinguishing number and mark assigned to such applicant, and made in a form and containing any further information that the commissioner may determine, and, thereupon, each motor vehicle owned by the applicant or temporarily in the applicant's custody shall be regarded as registered under and having assigned to it such general distinguishing number and mark until sold.   For the registration of all motor vehicles, registered under a general distinguishing number and mark, the commissioner shall charge a fee at the rate of seventy dollars per year.   No new car dealer may be issued more than one such registration for each ten sales transactions in a year or no repairer or limited repairer may be issued more than three registrations in a year, unless such licensee makes application for an additional registration to the commissioner, in such form and containing such information as the commissioner may require to substantiate such request.   No used car dealer may be issued more than three such registrations in a year, provided an additional registration may be issued for each ten sales transactions in excess of thirty such transactions upon submission of such application for an additional registration.   The commissioner may issue to each such licensee such additional registrations as the commissioner deems necessary.   The commissioner may withdraw any registration previously issued or may limit the number of registrations which any licensee is eligible to receive or to hold, in any case where the licensee has been found to be in violation of any of the provisions of section 14-64.

In 2010, the legislature amended this statute in Public Act 10-110, which, inter alia, added language to the last sentence of § 14-58(b), which now states, “The commissioner may withdraw any registration previously issued or may limit the number of registrations which any licensee is eligible to receive or to hold, if the commissioner determines that a licensee does not require such number of registrations or if a licensee has been found to be in violation of any of the provisions of section 14-64, as amended by this act.”   [Emphasis added.]

The defendants in their brief assert that this amendment was a technical change to the statute, making it retroactive.   However, this language is more than a technical change.   It gives authority to the Commissioner of Motor Vehicles to do exactly what the Department of Motor Vehicle sought to do which precipitated this appeal.   The defendants conceded this issue at oral argument, which was heard on January 7, 2011.

The sole remaining issue, therefore, is whether either of these statutes, as they existed in 2009, gave authority to the Commissioner of the Department of Motor Vehicles to withdraw a certain number of the registrations [i.e., dealer plates] if he determines the recipient does not require them.   Clearly, the Commissioner of the Department of Motor Vehicles now has the authority to withdraw the dealer plates as he sought to do in 2009.

The hearing officer, in the ninth finding of fact, states, “There is no language in Section 14-58(b) prohibiting the Commissioner from making such a demand.   Furthermore, there is specific language therein that authorizes the issuance of additional dealer plates precisely because of a particular number of sales transactions.”   This appears to be a legal assertion rather than a finding of fact.   The hearing officer's analysis is that the Commissioner has the authority to do something because the statute doesn't prohibit it.   That is not a correct analysis of authority vested pursuant to statute.   Statutes confer authority.   They do not curtail authority which, under our common law, the Commissioner would not otherwise possess.  “The power of an administrative agency to prescribe rules and regulations under a statute is not the power to make law, but only the power to adopt regulations to carry into effect the will of the legislature as expressed by the statute ․ The [agency] then has a delegated discretion, which, to be properly exercised, where it has binding consequences, must obey the statutory commands of the [Uniform Administrative Procedure Act, General Statutes § 4-166, et seq.]”  Salmon Brook Convalescent Home, Inc. v. Commission on Hospitals & Health Care, 117 Conn. 356, 363, 417 A.2d 358 (1979).   The defendants had no statutory authority to withdraw dealer plate registrations at the time of their demand in 2009, although they do now.   At oral argument, the defendants conceded this as well.

The plaintiff claims the findings, inferences, conclusions, or decisions of the hearing officer were in violation of constitutional or statutory provisions;  in excess of the statutory authority of the agency;  made upon unlawful procedure;  clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record;  and/or arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

In reviewing the claims made by the plaintiff, the court follows the “substantial evidence test” of the Uniform Administrative Procedure Act. “In challenging an administrative agency action, the plaintiff has the burden of proof ․ The plaintiff must do more than simply show that another decision maker, such as the trial court, might have reached a different conclusion.   Rather than asking the reviewing court to try the case de novo, ․ the plaintiff must establish that substantial evidence does not exist in the record as a whole to support the agency's decision.”  (Citation omitted;  internal quotation marks omitted.)  Tarullo v. Inland Wetlands & Watercourses Commission, 263 Conn. 572, 584, 821 A.2d 734 (2003).

This court's “ultimate duty is to determine, in view of all of the evidence, whether the agency, in issuing its order, acted unreasonably, arbitrarily, illegally or in abuse of its discretion.”  Solomon v. Connecticut Medical Examining Board, 85 Conn.App. 854, 859-60, 859 A.2d 932 (2004), cert. denied, 273 Conn. 906, 868 A.2d 748 (2005).

The plaintiff's position is that the defendants did not have authority to demand the return of dealer plates based on lack of sales pursuant to General Statutes § 14-58(c) as it existed at the time and, therefore, cannot claim that the refusal to return the plates was a violation of General Statutes § 14-64(11), the violation of which would enable the defendants to withdraw the registration of the plates pursuant to § 14-58(c).  The plaintiff correctly asserts that this is circular logic.

The defendants' position is that it is entitled to demand the dealer plates back from the plaintiff pursuant to General Statutes § 14-58 as it existed in 2009 and the failure of the plaintiff to comply was a violation of § 14-64(11).   There is no language in § 14-58 as it existed at that time providing for the department to make a demand of its plates based upon a lack of sales.   It is the position of the defendant department and commissioner that the absence of a legislative mechanism to demand the plates back for lack of sales would lead to an absurd result.

However, the defendants have overlooked a mechanism that existed at the time and exists today, that of the renewal process, controlled by the defendants.   Dealer plates are subject to renewal.  General Statutes § 14-22(a) states, in relevant part, “A motor vehicle registration issued pursuant to this chapter [246] shall expire in accordance with schedules established by the commissioner ․ The commissioner shall prescribe the date and manner or renewing registrations.”   As conceded by the defendants at oral argument, the commissioner could have made a determination prior to the renewal date that the plaintiff's sales did not justify renewal of all, some or any of the dealer plates.   The department had the option of not renewing all, some or any of the plates, thereby controlling the number of plates possessed by the plaintiff.

This is further evidenced by the Commissioner's sending of a renewal notice for all of the plaintiff's dealer plates in 2010, after taking the position in 2009 that the plaintiff was not entitled to all or some of the plates.   Copies of the renewal notice, completed application by the plaintiff and the stamping of payment by the Department of Motor Vehicles were attached to the plaintiff's brief and document that the defendants have billed the plaintiff and accepted payment for registration of the very same plates which they claim the plaintiff should have surrendered.   This is long after the hearing officer rendered his opinion and while this matter was pending on appeal.   Such action certainly undermines the defendants' position that the plaintiff is in violation of § 14-64(11).

The court finds that the 9th finding of fact of the hearing officer is in error.  “A finding of fact is clearly erroneous when there is no evidence in the record to support it ․ or when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.”  (Internal quotation marks omitted.)  Cifaldi v. Cifaldi, 118 Conn.App. 325, 330-31, 983 A.2d 293 (2009).   The 9th finding of the hearing officer is not a finding of fact.   Rather, it is a conclusion of law concluding the defendants had statutory authority for its actions merely because the statutes did not state that the defendants didn't have the authority.   The department and commissioner had no statutory authority to make demand of return of the dealer plates based upon lack of sales as the statutory language of General Statutes § 14-58 existed in 2009.   Therefore, the plaintiff was not in violation of § 14-64(11) for failing to comply with the demand.   The defendants had no authority to withdraw the registration of the plates pursuant to § 14-58(c).

CONCLUSION:

The appeal is sustained.   The plaintiff may retain its dealer plates based upon the administrative proceedings which took place in 2009.   This decision is based solely on the construction of § 14-58(c) as it existed in 2009, not in its present form.   Specifically, the defendants are not constrained by this decision as to any future action they may deem appropriate under the present form of § 14-58(c).  No costs are awarded to any party.

Robert E. Young, J.

Young, Robert E., J.