Billy M. Woods v. Commonwealth of Virginia DMV ( 1998 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Bray and Senior Judge Hodges
Argued at Norfolk, Virginia
BILLY M. WOODS
OPINION BY
v. Record No. 0284-97-1 JUDGE JAMES W. BENTON, JR.
FEBRUARY 3, 1998
COMMONWEALTH OF VIRGINIA
DEPARTMENT OF MOTOR VEHICLES
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
Robert B. Cromwell, Jr., Judge
Martin A. Thomas (Decker, Cardon, Thomas &
Weintraub, on brief), for appellant.
Jeffrey A. Spencer, Assistant Attorney
General, for appellee.
Based upon the Department of Motor Vehicles' policy to
suspend or revoke the sales license of anyone convicted of a
felony within the preceding five years, the Commissioner revoked
Billy H. Woods' license to sell motor vehicles. Woods contends
the Department's policy constitutes an improper promulgation of a
rule in violation of the Administrative Process Act and violates
his right to due process by arbitrarily revoking his license
without the process afforded by statute. For the reasons that
follow, we reverse the order and remand for reconsideration.
I.
The evidence before the administrative hearing officer
proved that Woods was first licensed by the Department as a motor
vehicle salesperson eighteen to twenty years ago. On December
15, 1994, Woods, who was then working as a construction
supervisor, pleaded guilty in federal court to a felony charge of
credit card fraud in violation of 15 U.S.C. § 1644(a). This
felony conviction did not arise out of the business of selling
motor vehicles.
Following the conviction, Woods was again employed as a
motor vehicle salesperson. After beginning his employment as a
salesperson, Woods mistakenly believed that his license to sell
motor vehicles had expired, and he applied for renewal of his
license on January 19, 1995. In his application for renewal,
Woods disclosed his conviction and supplied the Department with
the pertinent court documents. The Department then conducted an
administrative review to determine whether Woods' license should
be revoked pursuant to Code § 46.2-1575(13). 1 An informal fact
finding conference was held. See Code § 9-6.14:11. Following
the conference, the Department informed Woods that in accordance
with its policy his license was being revoked because he had been
convicted of a felony. Woods then requested a hearing pursuant
to Code § 9-6.14:12.
At the administrative hearing, Woods' supervising sales
manager testified that Woods was the automobile dealership's best
1
In pertinent part, Code § 46.2-1575(13) reads as follows:
A license or certificate of dealer
registration or qualification issued under
this subtitle may be denied, suspended, or
revoked on any one or more of the following
grounds:
* * * * * * *
13. Having been convicted of a felony.
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employee. He testified that Woods was honest and well-liked, had
a good sales record, had a strong work ethic, and had been the
top salesperson for four months in a row. The vice president and
general manager of the automobile dealership testified as to
Woods' "impeccable" integrity and stated that the dealership
would like to keep Woods as a salesperson.
L.S. Stupasky, the Department's representative, testified
that in 1994 the Department reviewed its policy concerning felony
convictions. At that time, he and another Department employee
sent the following memorandum to the Commissioner of the
Department:
This is a follow up to the "Felony
Conviction" meeting held on Wednesday, June
29th and to confirm the DMV management
decision and current policy guidelines
followed by the Dealer Licensing Section.
The following policy addresses "denial" of an
application for a license as a
salesperson/motor vehicle dealer where the
applicant has been convicted of a felony. If
you affirm the prior decision and current
process, please sign the attached approvals
sheet.
CURRENT POLICY GUIDELINES FOR DENIAL
* Currently on Probation/Parole status.
* Felony conviction occurred within five
years of the application date.
* Code Authority - § 46.2-1575 Grounds for
denying, suspending, or revoking
licenses or certificates for dealer
registration or qualification.
A license or certificate may be denied
on any one or more of the following
grounds:
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"13. Having been convicted of a
felony;"
Stupasky testified that pursuant to the policy contained in
this internal memorandum, he is required to recommend revocation
whenever a licensee has been convicted of a felony. He further
testified that prior to 1994, the Department's practice regarding
felony convictions had been to revoke only the license of a
licensee who had been convicted of a felony related to the
business of selling motor vehicles. That policy had been in
existence from 1988, when Code § 46.2-1575 was enacted, until the
Commissioner changed the policy in 1994.
Stating that "[i]t is the policy of the Department of Motor
Vehicles to revoke the license [of] any salesperson that has been
convicted of a felony within the past five years," the hearing
officer recommended revocation of Woods' license. The hearing
officer ruled that the endorsements of Woods' sales manager and
general manager were "not sufficient to overcome the statutory
authority and the Department's policy."
The Commissioner accepted the hearing officer's
recommendation and revoked Woods' motor vehicle sales license for
five years from the date of his felony conviction. The
Commissioner's decision stated that the revocation was consistent
with Code § 46.2-1575(13) and "the DMV policy to revoke the
salesperson license of anyone convicted of a felony within five
years of the date of the application." The decision also stated
that "[a]lthough representation of your good character is
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commendable, that information is not sufficient to allow you to
remain licensed in contravention of the Code of Virginia and DMV
policy."
After the Commissioner entered his final decision revoking
Woods' license, Woods filed a petition for appeal to the circuit
court. The circuit court judge affirmed the Commissioner's
decision revoking Woods' license.
II.
Code § 46.2-1508 states that "[i]t shall be unlawful for any
person to engage in business in the Commonwealth as a motor
vehicle . . . salesperson without first obtaining a license." At
all times relevant to the issues in this case, the Commissioner
of the Department of Motor Vehicles was the entity charged with
issuing and enforcing the licensing requirements. See Code
§ 46.2-1508 - 46.2-1527.8. 2 Indeed, Code § 46.2-1575 provided
that "[a] license . . . issued under this subtitle may be denied,
suspended or revoked [by the Commissioner of the Department of
Motor Vehicles] on any one or more of the following
grounds: . . . 13. Having been convicted of a felony."
(Emphasis added). The statute specified eighteen grounds for
which a license may be denied, suspended or revoked.
2
In 1995, the General Assembly amended the provisions of
Article 2 (Motor Vehicle Dealer Licenses), Code § 46.2-1508 to
§ 46.2-1521, and Article 8 (Denial, Suspension, and Revocation of
Dealer Licenses), Code § 46.2-1574 to § 46.2-1579, to substitute
the Motor Vehicle Dealer Board, see Code § 46.2-1500, for the
Commissioner. See 1995 Acts of Assembly, ch. 767.
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The evidence at the administrative hearing proved that the
Commissioner's statutory authority to deny, suspend, or revoke a
license for the conviction of a felony was first enacted in 1988.
See 1988 Acts of Assembly, ch. 865. The evidence also proved
that prior to 1994, the Department exercised its discretion under
this provision of the statute to revoke the licenses of those
licensees who had been convicted of felonies related only to the
business of selling motor vehicles. However, in 1994, the
Commissioner acted on a recommendation from the Department's
management and instituted a policy that required the Department
to suspend or revoke, without exception, the license of any
licensee who had been convicted of any felony. Indeed, the
Department's representative testified at the administrative
hearing that when an applicant or current holder of a license has
a felony conviction the employee who reviews the application
always recommends to the Commissioner, pursuant to the
Department's current policy guidelines, that the license be
denied or revoked.
Thus, in 1994, the Department changed its earlier policy and
enacted a policy that eliminates any discretion from the
Department's review of the license status of a person who has
been convicted of a felony. The current policy mandates, without
exception, the suspension or revocation of the license of any
salesperson convicted of a felony. The Department applied this
changed policy to Woods' application. Thus, the Department
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enforced in a case decision a "policy guideline" that it adopted
as a standard for applying the statutory mandate of Code
§ 46.2-1575(13).
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III.
In Virginia Board of Medicine v. Virginia Physical Therapy
Association, 13 Va. App. 458, 413 S.E.2d 59 (1991), aff'd, 245
Va. 125, 427 S.E.2d 183 (1993), this Court ruled as follows:
Under the [Administrative Process Act],
"rule" and "regulation" are defined as "any
statement of general application, having the
force of law, affecting the rights or conduct
of any person, promulgated by an agency in
accordance with the authority conferred on it
by applicable basic laws." Code
§ 9-6.14:4(F) (emphasis added). "Promulgate"
means to publish or to announce officially,
and is commonly used in the context of the
"formal act of announcing a statute."
Black's Law Dictionary 634 (5th ed. 1983).
The [Administrative Process Act] and the
Virginia Register Act provide the procedure
for the promulgation and adoption of a rule
or regulation. An agency's rule or
regulation is invalid if the agency failed to
comply with these statutes in the
promulgation process.
13 Va. App. at 466, 413 S.E.2d at 64. This Court noted that
rules that are not promulgated according to the statutory
procedure of the Administrative Process Act and the Virginia
Register Act are invalid as "de facto" rules. Id.
However, in Jackson v. W, 14 Va. App. 391, 419 S.E.2d 385
(1992), we noted that this Court has held that "[i]n order to
carry out its [statutory] purpose, an agency may adopt an
'"interpretative rule" without the binding force of law.'" Id.
at 399, 419 S.E.2d at 390 (quoting Bader v. Norfolk Redev. &
Hous. Auth., 10 Va. App. 697, 702, 396 S.E.2d 141, 144 (1990)).
We held that when the legislature authorizes an agency to
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supervise the administration of a regulatory act, the agency may
establish guidelines for its employees to use in applying the
statute so as to give effect to the intent and spirit of the
legislation. See Jackson, 14 Va. App. at 399, 419 S.E.2d at
389-90. Thus, we held that a state agency may issue to its
employees "guidelines . . . [that] are . . . interpretative rules
adopted in order to carry out the agency's purpose of
implementing the Commonwealth's policy [contained in the agency's
basic law]." Id. at 400, 419 S.E.2d at 390. 3
3
Other jurisdictions recognize the power of administrative
agencies to adopt interpretative rules or guidelines. See, e.g.,
General Electric Co. v. Gilbert, 429 U.S. 125, 141-42 (1976)
(noting that interpretative rules need not be authorized by
legislative enactments and should be given weight if persuasive);
Waverly Press v. Department of Assess. & Tax., 539 A.2d 223, 227
(Md. 1988) (holding that "interpretative rules 'only interpret
the statute to guide the administrative agency in the performance
of its duties until directed otherwise by decisions of the
courts'"); Town of Northbridge v. Town of Natick, 474 N.E.2d 551,
556 (Mass. 1985) (ruling that agencies may adopt internal
policies for carrying out their duties; however, those "policy
statements do not have the legal force of a statute or
regulation"); Shenango Township Bd. of Supervisors v.
Pennsylvania Public Util. Comm'n, 686 A.2d 910, 914 (Pa. Cmwlth.
1996) (holding that "a statement of policy does not have the
force of law, . . . is merely interpretive in nature . . . [,
and] is only persuasive so long as it represents an accurate
interpretation of the relevant statute or other authorities from
which it is derived."); Great American Nursing Centers v.
Norberg, 567 A.2d 354, 356 (R.I. 1989) (recognizing that "an
interpretive rule is not specifically authorized by a legislative
enactment; rather, it is promulgated by an administrative agency
for the purpose of guidance and definition"); Appalachian Power
Co. v. Tax. Dept., 466 S.E.2d 424, 434 (W. Va. 1995) (holding
that "[i]nterpretative rules . . . merely clarify an existing
statute or regulation[,] . . . need not go through the
legislative authorization process[,] . . . do not have the force
of law . . . [, and are not] irrevocably binding on the agency or
the court.").
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Based upon the evidence in this record, we cannot say that
the Commissioner's adoption of the guidelines in 1994 is the type
of "de facto" rule that this Court condemned in Virginia Board of
Medicine. When the Department enforced Code § 46.2-1575(13)
prior to 1994, the policy of the Department was to exempt from
suspension the licenses of salespersons whose felony convictions
did not relate to the business of selling motor vehicles. The
record does not establish whether this was a written policy or
unwritten practice. However, in 1994, the Commissioner approved
a written policy guideline statement that informed Department
employees charged with reviewing licensees' applications of the
guidelines that were to be employed from that date forward. As
in Jackson, we believe that the Commissioner adopted an
"interpretative rule" for the purpose of fulfilling the
Department's responsibility to administer the statute.
IV.
Although we find that the Commissioner did not adopt a "de
facto" rule when he approved the new interpretative guidelines,
we do find that the policy guidelines are inconsistent with the
statute. See Jackson, 14 Va. App. at 400, 419 S.E.2d at 390.
The General Assembly used discretionary language in drafting
Code § 46.2-1575. The statutory language evinces a recognition
on the part of the General Assembly that, in some cases, license
revocation may not be an appropriate remedy. Indeed, the General
Assembly specified eighteen separate grounds that "may" give rise
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to adverse action. The Department and Woods agree that the
statute granted the Department the discretion to suspend or
revoke a license to sell motor vehicles where the licensee has
been convicted of a felony.
When the Department established its mandatory revocation
policy, however, it foreclosed any opportunity for a licensee who
was affected by the policy to appeal to the discretionary
authority of the Commissioner. Although the statute authorizes
the use of discretion, the current policy guidelines allow no
discretion to be exercised in determining whether a felony
conviction will result in revocation or suspension of a license.
The policy guidelines direct that a revocation or suspension
must be imposed following a felony conviction. Clearly, the
decision to revoke Woods' license did not result from the
exercise of discretion; it was a mandatory act taken in
accordance with an internal policy which directly contradicted
the intent of the General Assembly when it enacted the statute.
In granting the Department the discretion to revoke
licenses, the General Assembly intended for the Department to
determine, on a case-by-case basis, whether revocation properly
serves the interests of the public. In those cases in which
revocation would not serve the interests of the public and would
work an injustice, the General Assembly intended for the
Department to exercise its discretion in applying the statute.
Under the mandatory revocation policy, however, the Department
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fails to exercise its discretion and revokes licenses in all
cases involving felony convictions, without considering the best
interests of the public or the purpose of the statute. We note
that the policy guidelines do not provide such a mandatory
feature for any of the other seventeen grounds specified in Code
§ 46.2-1575.
The record of the informal fact finding conference, the
recommendation of the hearing officer, and the final agency
decision all reference "the [Department's] policy" to suspend or
revoke the license of anyone convicted of a felony without
exception or consideration of other circumstances. We hold that
the Department's policy guidelines are inconsistent with the
statute because they remove from the Department's review of
licensees the discretion granted by statute.
Accordingly, we reverse the decision and remand the case for
reconsideration in accordance with the discretionary standard
enacted within Code § 46.2-1575.
Reversed and remanded.
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