St. Louis Metropolitan Towing v. Director of Revenue , 2014 Mo. App. LEXIS 969 ( 2014 )

IN THE MISSOURI COURT OF APPEALS
WESTERN DISTRICT
ST. LOUIS METROPOLITAN TOWING, )
)
Appellant, )
) WD77241
v. )
) OPINION FILED:
) September 2, 2014
DIRECTOR OF REVENUE, )
)
Respondent. )
Appeal from the Circuit Court of Cole County, Missouri
The Honorable Daniel R. Green, Judge
Before Division I: Mark D. Pfeiffer, Presiding Judge, and
Lisa White Hardwick and Karen King Mitchell, Judges
St. Louis Metropolitan Towing (“Metro Towing”) appeals the Judgment of the Circuit
Court of Cole County, Missouri, affirming the Administrative Hearing Commission‟s (“AHC”)
dismissal of Metro Towing‟s petition for review regarding the Director of Revenue‟s
(“Director”) letter notifying Metro Towing that its application for a salvage dealer license had
already been denied. We affirm.
Factual and Procedural Background
Metro Towing is a partnership owned by William A. Bialczak and Kenneth J. Bialczak
and operating in St. Louis, Missouri. On December 3, 2010, William and Kenneth Bialczak each
pleaded guilty to income tax evasion under 26 U.S.C. § 7201. On January 18, 2013, the Director
received Metro Towing‟s application for a license as a salvage dealer or dismantler, a body shop
or rebuilder, and a scrap processor1 (“January 18 Application”). William and Kenneth Bialczak
were listed as the two owners/partners of Metro Towing.
On February 4, 2013, the Director sent Metro Towing a “Notice of Refusal to Issue or
Renew License” (“February 4 Decision”). The February 4 Decision stated that the Director‟s
decision to reject Metro Towing‟s January 18 Application was due to Metro Towing‟s failure to
meet the requirements of section 301.559.32 and 12 CSR 10-23.160, which require an applicant
for licensure as a salvage dealer to be of good moral character. Additionally, the Director
refused to issue or renew the license because the applicant had “within ten years prior to the date
of the application, been finally adjudicated and found guilty, or entered a plea of guilty . . . for
[an] offense, an essential element of which is fraud, dishonesty, or an act of violence; or for any
offense involving moral turpitude.” § 301.562.2(3). The February 4 Decision notified Metro
Towing that if it was adversely affected by the decision, it must file an appeal with the AHC
within thirty days after the decision was mailed.
Metro Towing did not appeal the February 4 Decision to the AHC. Instead, on June 10,
2013, Metro Towing re-submitted its application (“June 10 Application”) in substantially similar
form as the January 18 Application.
The Director sent a letter to Metro Towing on June 11, 2013 (“June 11 Letter”), returning
the June 10 Application and check to Metro Towing and notifying Metro Towing that the
Director had already received the original January 18 Application to renew, which it had denied
on February 4, 2013.
1
Each business is defined in section 301.010.
2
All statutory references are to the Revised Statutes of Missouri 2000, as updated through the 2012
Cumulative Supplement.
2
On June 12, 2013, Metro Towing filed an administrative review request with the AHC to
appeal the Department‟s June 11 Letter. On July 29, 2013, the AHC issued its decision
dismissing Metro Towing‟s request for review, stating:
[Metro Towing] failed to timely appeal the Director‟s February 4 decision; as a
consequence, the Director‟s determination that its owners lacked the good moral
character required for licensure by § 301.559.3 and 12 CSR 10-23.160 must stand,
at least until the prima facie presumption embodied in that decision no longer
applies. The June 11 letter is not a “decision of the Director” from which [Metro
Towing] may appeal under § 621.050.
The AHC also concluded that failure to dismiss Metro Towing‟s request for review
“would create a „whack-a-mole‟ situation, where the Director is required to repeatedly deny
identical applications until the applicant obtains the desired approval, resulting in an unwarranted
increase in the Department‟s cost of administering the licensing statute.”3
Metro Towing filed a petition for administrative review on August 16, 2013, in the
Circuit Court of Cole County. The circuit court issued its findings of fact, conclusions of law,
and judgment on December 31, 2013, upholding the AHC‟s decision.
Metro Towing appeals.
Standard of Review
“In an appeal following judicial review of an agency‟s administrative action, [an
appellate court] reviews the decision of the agency, not the circuit court.” TAP Pharm. Prods.,
Inc. v. State Bd. of Pharmacy, 238 S.W.3d 140, 141 (Mo. banc 2007). Article V, section 18 of
the Missouri Constitution provides for judicial review of final administrative agency “decisions,
findings, rules and orders” to determine whether they are authorized by law and “are supported
3
At oral argument, counsel for Metro Towing advocated that we need not worry about the “whack-a-mole”
repeated application filings (in lieu of complying with the required statutory and regulatory appellate process)
dilemma because counsel personally had not seen such a dilemma in the past thirty years and we should treat the
present situation of a rejected licensure applicant bypassing the statutory and regulatory appellate scheme by filing a
new identical application as a “no harm-no foul” situation. We are not, however, permitted to ignore the law.
3
by competent and substantial evidence upon the whole record.” Section 536.140.2 further
provides that the scope of judicial review extends to a determination of whether the action of the
agency: is in violation of constitutional provisions; is in excess of the statutory authority of the
agency; is unsupported by competent and substantial evidence on the record; is otherwise
unauthorized by law; is made upon unlawful procedure or without a fair trial; is arbitrary,
capricious, or unreasonable; or involves an abuse of discretion. Questions of law are reviewed
de novo. § 536.140.3.
Analysis
Metro Towing asserts two points on appeal, both contending that the AHC had no
statutory authority to refuse its administrative appeal or give preclusive effect to the February 4
Decision. Because Metro Towing‟s points are sufficiently related, we consider them together.
One of the requirements for licensure as a salvage dealer is that the Director must be
satisfied that “each of the partners . . . of the applicant, if a partnership . . . , is of good moral
character.” § 301.221.1. The Director has established guidelines to determine if an applicant for
registration as a salvage dealer should be denied registration because of lack of good moral
character:
(1) Except with a showing of evidence to the contrary, the following will be
considered prima facie evidence on which the registration of a . . . salvage
dealer . . . will be denied because of lack of good moral character if the
applicant:
....
(B) Within five (5) years preceding the application, has been convicted in any
federal or state court of a felony . . . .
12 CSR 10-23.160 (emphasis added). William and Kenneth Bialczak were listed on the
January 18 Application as the two owners/partners of Metro Towing. Both of them pleaded
guilty to income tax evasion on December 3, 2010, which was prima facie evidence under the
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guidelines that they lacked the good moral character for licensure. 12 CSR 10-23.160(1). There
is no evidence in the record that Metro Towing requested a hearing to rebut that presumption by
“showing substantial rehabilitation or improvement in character.” 12 CSR 10-23.160(2). In its
February 4 Decision, the Department cited section 301.559.3 and 12 CSR 10-23.160 as well as
section 301.562.1 as the bases for rejecting Metro Towing‟s January 18 Application because its
owners lacked good moral character and had recent felony convictions for tax evasion.
Under section 621.050.1, any person or entity has the right to appeal to the AHC “from
any finding, order, [or] decision” made by the Director “by the filing of a petition with the
[AHC] within thirty days after the decision of the [D]irector is placed in the United States mail
or within thirty days after the decision is delivered, whichever is earlier.” The Director‟s
decision is required to contain a notice of the right to appeal. § 621.050.1.4 “Failure to comply
with statutory time for appeal in an administrative proceeding results in a lapse of jurisdiction
and loss of right of appeal.” Cmty. Fed. Sav. & Loan Ass’n v. Dir. of Revenue, 752 S.W.2d 794,
799 (Mo. banc 1988) (citing Springfield Park Cent. Hosp. v. Dir. of Revenue, 643 S.W.2d 599
(Mo. 1983); Randles v. Schaffner, 485 S.W.2d 1 (Mo. 1972); Cardinal Glennon Mem’l Hosp.
Coffee Shop v. Dir. of Revenue, 624 S.W.2d 115 (Mo. App. W.D. 1981)).
The procedures applicable to an appeal from the Director‟s decision to the AHC are those
established by chapter 536. § 621.050.2. To be entitled to judicial review of a final agency
decision, section 536.100 requires the aggrieved party to “exhaust[ ] all administrative remedies
provided by law.” “The purpose of exhaustion is to prevent premature interference with agency
4
As required by section 621.050.1, the Director included a notice of this right to appeal in the February 4
Decision:
You are further notified that, if you were adversely affected by this decision, you may file an
appeal with, and have a hearing before, the Administrative Hearing Commission, PO Box 1557,
Jefferson City, MO 65102, as provided by Chapter 621, RSMo. Such appeal must be filed with
the Administrative Hearing Commission within thirty days after the date this decision was mailed.
5
processes so that the agency may function efficiently and so that it may have an opportunity to
correct its own errors, to afford the parties and the courts the benefit of its experience and
expertise, and to compile a record that is adequate for judicial review.” Parker v. City of Saint
Joseph, 167 S.W.3d 219, 221 (Mo. App. W.D. 2005) (internal quotation omitted). “Exhaustion
occurs when every step of the administrative procedure has been completed and the agency
renders a final decision.” Id. If the agency arrives at a terminal, complete resolution of the case,
then a decision is final. Id.
Metro Towing opted not to exercise its right under section 621.050 to appeal the
February 4 Decision rejecting Metro Towing‟s application for a salvage dealer‟s license to the
AHC. Because Metro Towing did not appeal the Director‟s February 4 Decision to the AHC
within thirty days after the decision was mailed to Metro Towing, the Director‟s decision was
final for purposes of administrative review and not subject to collateral attack. State ex rel.
Lohman v. Latimer, 4 S.W.3d 560, 562 (Mo. App. S.D. 1999).
Metro Towing presented no new information in the June 10 Application5 for the
Director‟s consideration, particularly with regard to Metro Towing‟s ownership. By submitting
the June 10 Application, Metro Towing attempted to bypass the AHC and the procedures
mandated by the General Assembly for judicial review. Metro Towing had an adequate remedy
to challenge the Director‟s denial of its application for a salvage dealer license, but it let the time
for seeking that remedy expire. See Shelton v. Farr, 996 S.W.2d 541, 543 (Mo. App. W.D.
1999). It cannot revive its action by filing a second substantially identical application. Metro
Towing‟s failure to appeal the February 4 Decision to the AHC rendered the Director‟s decision
5
At oral argument, counsel for the Director conceded that if Metro Towing were to file a subsequent
application that did, in fact, provide the Director with relevant new information, the Director may look upon such
application as a materially different licensure application that may invoke the requirement of a new evaluation of
such application. Since that factual scenario is not before us, however, we need not and do not address it.
6
regarding denial of Metro Towing‟s salvage dealer license application final and not susceptible
to collateral attack.6
Points I and II are denied.
Conclusion
The decision of the circuit court affirming the decision of the AHC is affirmed.
Mark D. Pfeiffer, Presiding Judge
Lisa White Hardwick and Karen King Mitchell, Judges, concur.
6
Metro Towing cites to Jones v. Director of Revenue, 981 S.W.2d 571 (Mo. banc 1998) and Normandy
School District v. City of Pasadena Hills, 70 S.W.3d 488 (Mo. App. E.D. 2002), in support of its contention that,
effectively, it is entitled to ignore its statutory and regulatory appeal requirements upon an adverse licensure
decision from the Director by simply re-submitting the same application to the Director. Neither case aids Metro
Towing. In Jones, there were administrative actions against two separate entities responsible for the same tax
assessments—a corporation and a separate individual. Jones, 981 S.W.2d at 573. The corporation did not appeal
the assessment and the court concluded that the “corporation‟s failure to exhaust its administrative remedies renders
its assessment final and immune to collateral attack.” Id. at 575. However, the separate individual who received a
subsequent assessment for the same tax obligation was permitted to appeal because, as one who was merely in
privity with the corporation, the individual was not precluded from litigating the alleged tax obligation because there
had not been a previous judgment on the merits. Id. Unlike Jones, Metro Towing is not a party in privity to the
February 4 Decision—it is the party who received the adverse ruling from the Director. Thus, like the corporate
entity in Jones, Metro Towing is not permitted to collaterally attack the February 4 Decision by re-filing a
subsequent application substantially identical to the January 18 Application that had already been denied. The
Normandy case is also distinguishable. In Normandy, the party receiving an adverse administrative ruling attempted
to appeal the administrative decision, but skipped a step in the appellate process, leading to a dismissal of its appeal.
Normandy, 70 S.W.3d at 490. After the dismissal, the appealing party re-submitted its appeal to the appropriate
administrative review tribunal and the court concluded that res judicata would not operate to bar the administrative
appeal. Id. Here, conversely, Metro Towing never attempted to appeal from the original adverse ruling of the
February 4 Decision. Thus, Normandy is inapposite.
7