Daybell v. Department of Workforce Services, Workforce Appeals Board

IN THE UTAH COURT OF APPEALS
‐‐‐‐ooOoo‐‐‐‐
Terrie Daybell, ) MEMORANDUM DECISION
)
Petitioner, ) Case No. 20110073‐CA
)
v. ) FILED
) (August 16, 2012)
Department of Workforce Services, )
Workforce Appeals Board, ) 2012 UT App 229)
Respondent. )
‐‐‐‐‐
Original Proceeding in this Court
Attorneys: Blain H. Johnson, Ogden, for Petitioner
Suzan Pixton, Salt Lake City, for Respondent
‐‐‐‐‐
Before Judges Voros, Thorne, and Christiansen.
VOROS, Associate Presiding Judge:
¶1 Petitioner Terrie Daybell seeks judicial review of a decision of the Workforce
Appeals Board requiring her to repay unemployment benefits she received and
imposing a civil penalty for fraud in the aggregate amount of $21,070. We decline to
disturb the Board’s decision.
¶2 Daybell was employed full time as a manager for a call center company
beginning in 2007, but was laid off due to a reduction in force in early 2009. She filed a
claim for unemployment insurance benefits with the Department of Workforce Services
on March 9, 2009 and started receiving benefits the week ending March 21, 2009. From
that date through February 6, 2010, Daybell received more than $21,000 in
unemployment benefits. While receiving unemployment benefits, Daybell worked as a
mortgage loan officer for Key West Funding, Inc., a mortgage brokerage.1 Daybell
considered herself to be an independent contractor, not an employee of Key West.2 Key
West paid Daybell’s commissions to a corporation created by Daybell for tax purposes.
¶3 On advice of her accountant, Daybell did not pay herself from the corporation
until the end of 2009. During 2009, Daybell earned $28,575 in commissions from her
mortgage business. She deducted $25,207 in business expenses for 2009, and paid
herself the remaining $3,368. Daybell’s business expenses included approximately $700
per month paid to “independent contractors”—including her children—for cleaning her
home office and distributing business cards, as well as dining and other expenses in
varying amounts.
¶4 When she initially filed for unemployment benefits in March 2009, Daybell
disclosed to the Department that she worked part‐time as a mortgage loan officer five
hours a week. She reported that she had made no money from that work since the end
of 2007. She did not disclose that she had generated $7,209 in commissions from Key
West in the previous two months. In September 2009, Daybell applied for an extension
of benefits. She again reported that she had made no money from her work as a
mortgage loan officer. At that point, Daybell had generated commissions totaling
$22,026, all paid to her corporation. In automated reports filed each week during the
period she received unemployment benefits, Daybell answered “no” to the question
“[d]uring the week, did you work?” However, Daybell originated fifteen loans during
that period. These loans were the source of her commissions.
1
Daybell had worked as mortgage loan officer for Key West on at least a part‐
time basis since 2003.
2
Key West paid Daybell commission as an independent contractor for loans she
originated. The Department determined, based on an audit it conducted around late
2009 or early 2010, that all mortgage loan officers working for Key West were in fact
employees. Accordingly, commissions Daybell earned in 2009, totaling $28,575.05, were
deemed wages. Key West did not appeal that decision. Stearns Lending, which
purchased Key West in early 2010, changed Daybell’s tax status to that of an employee
in March 2010.
20110073‐CA 2
¶5 The Department issued a decision on March 25, 2010. The decision disqualified
Daybell from receiving benefits, established an overpayment of $21,269, and assessed a
civil penalty in the same amount. The decision was based on the ground that Daybell
had failed to accurately report her work and earnings, thereby knowingly withholding
material information in order to receive benefits to which she was not entitled. This
decision left Daybell owing the Department $42,538.
¶6 A series of appeals followed. In the course of the proceedings, Daybell
participated in two hearings before two separate Administrative Law Judges. The first
ALJ affirmed the disqualification and penalty on the basis that Daybell had not timely
appealed. The Board, however, reversed that decision and reduced the overpayment
and penalty to $2,928. Daybell then requested reconsideration of this decision,
specifically asking the Board to recalculate the overpayment amount based on figures
she had reported in tax filings. The Board determined on reconsideration that there was
insufficient evidence in the record to support its original decision, and remanded the
case to a second ALJ to “hold a new hearing, take additional testimony, and admit
additional documents” concerning Daybell’s deductions and income from her activities
as a mortgage loan officer.
¶7 The second ALJ determined, based on the Department’s audit of Key
West—newly discovered by the ALJ—that Daybell was an employee of Key West and
thus not self‐employed. The ALJ affirmed the prior disqualification but modified the
overpayment and penalty to a combined total of $21,070. Daybell appealed that
decision to the Board. In November 2010, the Board affirmed the second ALJ’s decision
in its entirety, and later denied her request for reconsideration. This decision left
Daybell owing a total of $21,070 for the repayment and penalty. Daybell now
challenges the Board’s November 2010 decision.
¶8 Daybell challenges the decision on three grounds. First, she contends that the
second ALJ exceeded his authority by reconsidering the question of Daybell’s
employment status on remand. Second, she contends that the Board should have
determined that her claimed deductions and write‐offs were reasonable, regardless of
her employment status. Third, she contends that the Board’s finding of fraud is not
supported by substantial evidence. We will reverse an administrative agency’s findings
of fact “only if the findings are not supported by substantial evidence.” Drake v.
Industrial Comm’n, 939 P.2d 177, 181 (Utah 1997). We will disturb the Board’s
20110073‐CA 3
application of law to facts only if it “exceeds the bounds of reasonableness and
rationality.” Nelson v. Department of Emp’t. Sec., 801 P.2d 158, 161 (Utah Ct. App. 1990)
(internal quotation marks omitted).
¶9 Daybell first contends that when the Board remanded her case for a new hearing
before a second ALJ, the purpose of the remand was narrow. She quotes the Board’s
decision: “Additional testimony and documentary evidence is needed to show the
deductions and write‐offs which reduced [Daybell’s] gross income from $28,575.05 to
$3,368 . . . and how they relate to [Daybell’s] business selling mortgages.” Daybell
argues that the second ALJ “in effect, overturned the decision of the Board” when he
found that Daybell was an employee.
¶10 The Department responds that the ALJ did not exceed his authority because the
purpose of the Board’s remand was more open‐ended. It provided for a new hearing,
not a reopening of the previous hearing. According to the Department, “The Board
instructed the ALJ to gather additional testimony and additional documents.” The
Board gave a specific instruction to gather evidence on the issue of deductions and
write‐offs to “ensur[e] this information was obtained in the new hearing, since it was
not adequately covered in the original hearing,” and not, the Department argues, to
limit the hearing to the issue of Daybell’s deductions and income exclusively.
Moreover, the Department asserts that the Board “cured any potential defect in the
remand” when it subsequently “adopted the ALJ’s decision . . . in full,” having
reviewed the entire record, including the audit on which the ALJ’s finding of
employment was based.
¶11 Daybell has not demonstrated that the ALJ exceeded his authority on remand.
The Board has authority under the Administrative Code to remand a case to the
Department or ALJ when appropriate and to request additional information or
evidence. See Utah Admin. Code R994‐508‐305(3)–(4). The Board’s remand instructions
did not explicitly limit what evidence the ALJ could consider in the new hearing. The
Department audit—which made specific conclusions as to Daybell’s employment status
and therefore its treatment of the very income at issue in the hearing—seems well
within the scope of the remand. Daybell cites no rule or other authority that would
limit the ALJ’s consideration of the audit. Accordingly, we decline to disturb the
Board’s decision on this basis.
20110073‐CA 4
¶12 Daybell next contends that she is entitled to a determination that the deductions
and write‐offs that she claimed in tax filings are reasonable, regardless of whether she
was self‐employed or employed by Key West. She argues simply, “the analysis is the
same.” In either case, Daybell asserts, she “would be eligible to have her income
reduced by legitimate and reasonable business expenses.” Daybell offers no
explanation, citations to the record, or legal analysis for this conclusory statement.
Because this issue is inadequately briefed, we decline to consider it. See Utah R. App. P.
24(a)(9) (setting forth briefing requirements); Allen v. Friel, 2008 UT 56, ¶ 9, 194 P.3d 903(“An appellate court is not a depository in which [a party] may dump the burden of
argument and research.” (citation and internal quotation marks omitted)); see also State
v. Davie, 2011 UT App 380, ¶ 16, 264 P.3d 770 (“‘Utah courts routinely decline to
consider inadequately briefed arguments.’” (quoting State v. Bryant, 965 P.2d 539, 549
(Utah Ct. App. 1998))).
¶13 Finally, Daybell contends that throughout the series of appeals and decisions by
the first and second ALJs and the Board, all “have continuously ignored the weight of
the evidence in finding [Daybell] committed fraud.” We review the Board’s findings of
fact under a substantial evidence standard. See Drake v. Industrial Comm’n, 939 P.2d 177,
181 (Utah 1997). The substantial evidence standard requires “more than a mere scintilla
of evidence” but “something less than the weight of the evidence.” Grace Drilling v.
Board of Review, 776 P.2d 63, 68 (Utah Ct. App. 1989) (internal quotation marks omitted).
Substantial evidence is the “quantum and quality of relevant evidence . . . adequate to
convince a reasonable mind to support a conclusion.” First Nat’l Bank of Boston v.
County Bd. of Equalization, 799 P.2d 1163, 1165 (Utah 1990) (internal quotation marks
omitted). “We give deference to the initial decision maker on questions of fact because
it stands in a superior position from which to evaluate and weigh the evidence and
assess the credibility and accuracy of witnesses’ recollections.” Drake, 939 P.2d at 181.
¶14 The law requires claimants for unemployment benefits who report false
information or omit material information, and who consequently receive benefits to
which they are not entitled, to repay the benefits they inappropriately received. See
Utah Code Ann. § 35A‐4‐405(5)(c) (Supp. 2009). The law also requires such claimants to
pay a civil penalty equal to the benefits the claimant received “by direct reason of [the
claimant’s] fraud.” Id. § 35A‐4‐405(5)(c)(ii). To establish fraud for purposes of
disqualification and assessment of a civil fraud penalty, the Department must establish
three elements: materiality, knowledge, and willfulness. Utah Admin. Code R994‐406‐
20110073‐CA 5
401(1). However, “[t]he absence of an admission or direct proof of intent to defraud
does not prevent a finding of fraud.” Id. R994‐406‐401(3); see also Mineer v. Board of
Review, 572 P.2d 1364, 1366 (Utah 1977) (holding that “the intention to defraud is shown
by the claims themselves which contain false statements” and that filing such claims
“evidences a purpose or willingness to present a false claim in order to obtain lawful
benefits” and thus is a “manifestation[] of intent to defraud”).
¶15 Daybell contends that she was “[truthful] and accurate in her representations,
both written and verbal.” She argues that on “several occasions” she disclosed orally to
the Department that she had received commission checks from Key West “but that she
had not personally taken any money out of the corporation,” and “the Department
accepted her verbal report as being sufficient.” According to Daybell, a Department
representative told her in response to her disclosure that she “did not have a reporting
obligation if she did not disburse funds to herself from the corporation.” However,
Daybell provides no citation to the record that shows any evidence that these
communications occurred. This contention is thus inadequately briefed. See Utah R.
App. P. 24(a)(9) (requiring appellant to provide “citations to . . . parts of the record
relied on”).
¶16 In addition, the ALJ and the Board found that Daybell was not forthright about
her work‐related activities or earnings, that the information she did provide to the
Department was misleading, and that the Department advised her that she had no
reporting obligation based on Daybell’s misrepresentations. Daybell has not persuaded
us that the ALJ’s findings are based on evidence insufficient to convince a reasonable
mind. See Johnson v. Board of Review of Indus. Comm’n, 842 P.2d 910, 911 (Utah Ct. App.
1992). We see nothing unreasonable about a finder of fact disbelieving a claimant who
maintains—without corroborating evidence—that the Department advised her that she
could collect unemployment benefits while working and sequestering thousands of
dollars in commissions in a wholly‐owned corporation to be paid out later.3
¶17 In sum, Daybell has not shown us that the Board’s decision is unsupported by
sufficient evidence. Accordingly, we decline to disturb it.
3
Daybell does not challenge the rules or statutes that set the terms by which the
Department may base a finding of fraud. Daybell also does not challenge the
Department’s assertion that the law requires the Department to assess a civil penalty
without exercising any discretion.
20110073‐CA 6
____________________________________
J. Frederic Voros Jr.,
Associate Presiding Judge
‐‐‐‐‐
¶18 WE CONCUR:
____________________________________
William A. Thorne Jr., Judge
____________________________________
Michele M. Christiansen, Judge
20110073‐CA 7