John M. Surprenant v. Board for Contractors

COURT OF APPEALS OF VIRGINIA
Present: Chief Judge Fitzpatrick, Judges Coleman and Lemons
Argued at Salem, Virginia
JOHN M. SURPRENANT
OPINION BY
v. Record No. 2522-98-3 JUDGE DONALD W. LEMONS
JULY 6, 1999
BOARD FOR CONTRACTORS AND
WAYNE J. TORRE
FROM THE CIRCUIT COURT OF ROANOKE COUNTY
Roy B. Willett, Judge
Brian R. Jones (Jones & Glenn, P.L.C., on
briefs), for appellant.
Terry N. Grimes (King, Fulghum, Snead,
Nixon & Grimes, P.C., on brief), for appellee
Wayne J. Torre.
John B. Purcell, Jr., Assistant Attorney
General (Mark L. Earley, Attorney General;
John C. Wilkinson, Jr., Assistant Attorney
General, on brief), for appellee Board for
Contractors.
John M. Surprenant appeals the decision of the trial court
affirming an award by the Board for Contractors ("Board") under
the Virginia Contractor Transaction Recovery Act (VCTRA).
Finding no reversible error, we affirm the ruling of the trial
court.
I. BACKGROUND
On October 1, 1987, John Surprenant received a contractor's
license from the Board under the name "U-Nique Builders."
Sometime prior to October 3, 1991, Surprenant incorporated his
trade name as "Unique Builders, Inc." ("Unique"). Surprenant
did not notify the Board that his business had been incorporated
or that it would be contracting with the license he obtained on
October 1, 1987. Surprenant also holds a state contractor's
license under the trade name, "J.M.S. Builders/Developers,"
which expires on October 21, 1999.
On October 7, 1991, Wayne J. Torre (Torre) and Unique
entered into a contract for the construction of a home for Torre
in Roanoke County, Virginia. Construction of the home ended in
1993. On June 10, 1993, Torre filed in the Circuit Court for
Roanoke County a motion for judgment against Surprenant in his
individual capacity and against Unique alleging breach of
contract. Unique filed a counterclaim, also alleging breach of
contract. A bench trial occurred in February, 1995.
On May 22, 1995, the court in the underlying litigation 1
found in favor of Torre against Unique and awarded damages in
the amount of $25,164. The judgment was later modified and
increased to $54,184 with interest from February 22, 1995 until
paid. Although damages were not awarded against Surprenant
individually, in its order dated May 22, 1995, the court in the
underlying litigation stated that it "found that the defendants
1
This opinion refers to circuit court rulings in two
different matters. The circuit court that decided the breach of
contract litigation will be referred to as the "court in the
underlying litigation." The circuit court that decided the
appeal from the agency will be referred to as "the trial court."
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made certain misrepresentations as further described ore tenus
by the court." The ore tenus description of the court in the
underlying litigation characterized the misrepresentations as
"material" and "asked counsel to submit briefs concerning the
applicability of the Virginia Consumer Protection Act to the
facts of this case."
In its final order dated September 25, 1995, the court in
the underlying litigation found that "the facts adduced at trial
fall within the Virginia Consumer Protection Act by Unique
Builders, Inc." Following the judgment, Unique ceased doing
business. Surprenant assumed responsibility for all projects
under construction contracted under Unique's name.
On October 2, 1995, Torre filed a claim for $54,184 with
the Contractor Transaction Recovery Fund (the "Fund"). On
August 28, 1997, the Board sent Torre notice of an informal
fact-finding conference which, pursuant to Code § 9-6.14:11 of
the Virginia Administrative Process Act ("VAPA"), was held
before the Board's Recovery Fund Committee ("Committee") on
September 10, 1997. The Committee found evidence that the
contractor breached the contract; however, the Committee
recommended that the claim be denied, because it found no
evidence of "improper or dishonest conduct."
On October 8, 1997, the Board unanimously accepted the
Committee's report and pursuant to a letter sent by the Board on
October 10, 1997, all parties were notified of the Board's
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decision to deny the claim. On November 19, 1997, Torre's
counsel sent a letter to the Board stating his intention to
appeal the final order upon its issuance.
The Committee reconsidered Torre's claim at a second
informal fact-finding conference on December 10, 1997. Prior to
the hearing, Torre's counsel requested a continuance, which the
Board denied. The fact-finding conference was held without
Torre or his counsel present. The Committee again voted to deny
the claim.
The Committee notified the parties that the Committee would
present its summary of the December 10, 1997 report to the Board
on January 14, 1998, and recommend that the claim be denied.
The Board informed both Surprenant and Torre by certified letter
that they could appear before the Board and respond to the
summary. The letter sent to Surprenant was returned to the
Board unopened on January 14, 1998. The hearing was held on
January 14, 1998, and counsel for Torre appeared. The Board
concluded that Torre had stated a valid claim for recovery and
awarded him $10,000 from the Fund.
The Board entered its final order on January 28, 1998. On
February 1, 1998, the Board received Surprenant's notice of
appeal. On September 3, 1998, a hearing was held in the County
of Roanoke Circuit Court. On October 1, 1998, the trial court
affirmed the Board’s final order and dismissed Surprenant's
appeal. Surprenant appeals the dismissal
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II. STANDARD OF REVIEW
Pursuant to Code § 54.1-1114, our review of this case is
governed by the VAPA, codified at Code §§ 9-6.14:1 et seq. Our
scope of review is limited to those facts which appear in the
agency record. See Code § 9-6.14:17. In reviewing an agency
decision, the trial court must determine:
1. Whether the agency acted in accordance
with law;
2. Whether the agency made a procedural
error which was not harmless error; and
3. Whether the agency had sufficient
evidential support for its findings of
fact.
Johnston-Willis v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1, 7
(1988).
Based upon the standard of review,
[e]rrors of law fall into two categories:
first, whether the agency decision-maker
acted within the scope of his authority, and
second, whether the decision itself was
supported by the evidence. Where the agency
has the statutory authorization to make the
kind of decision it did and it did so within
the statutory limits of its discretion and
with the intent of the statute in mind, it
has not committed an error of law in the
first category. The second category of
error is limited to a determination whether
there is substantial evidence in the agency
record to support the decision.
Id. (citation omitted).
When considering whether substantial evidence in the agency
record supports the decision, "the reviewing court may reject
the agency's findings of fact only if, considering the record as
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a whole, a reasonable mind would necessarily come to a different
conclusion." Id. (citation omitted).
III. "IMPROPER AND DISHONEST CONDUCT"
The Board's final order states that based "on the finding
of the court that Surprenant violated the Virginia Consumer
Protection Act, the Board concludes that the acts of Surprenant
fall within the statutory definition of improper and dishonest
conduct." Surprenant argues that this finding is erroneous on
the ground that because the court in the underlying litigation
specifically held that neither Surprenant nor Unique committed
common law fraud, his actions did not meet the statutory
definition of "improper or dishonest conduct."
Code § 54.1-1118 defines "improper or dishonest" conduct
for purposes of the VCTRA as follows:
Improper or dishonest conduct includes only
the wrongful taking or conversion of money,
property or other things of value which
involves fraud, material misrepresentation
or conduct constituting gross negligence,
continued incompetence or intentional
violation of the Uniform Statewide Building
Code. The term improper or dishonest
conduct does not include mere breach of
contract.
"A primary rule of statutory construction is that courts
must look first to the language of the statute. If a statute is
clear and unambiguous, a court will give the statute its plain
meaning." Va. Employment Comm'n v. Davenport, 29 Va. App. 26,
29-30, 509 S.E.2d 522, 524 (1999) (citations omitted). By use
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of the disjunctive "or" in the language of the statute, the
legislature evidenced its intention to hold a regulant liable
under the VCTRA for conduct including but not limited to fraud.
Improper or dishonest conduct under the VCTRA may involve either
"fraud" or a "material misrepresentation" or "actions of gross
negligence" or "continued incompetence" or an "intentional
violation of the Uniform Statewide Building Code."
In addition, although the court in the underlying
litigation did not include a finding of "improper or dishonest
conduct" under the VCTRA, in its judgment, Torre was not
estopped from recovering under the Act. Code § 54.1-1120(A)(7)
states:
A claimant shall not be denied recovery from
the Fund due to the fact the order for the
judgment filed with the verified claim does
not contain a specific finding of "improper
or dishonest conduct." Any language in the
order which supports the conclusion that the
court found that the conduct of the regulant
involved improper or dishonest conduct may
be used by the Board to determine
eligibility for recovery from the Fund.
Here, the court in the underlying litigation found that
Surprenant made a material misrepresentation in his contract
with Torre and violated the Virginia Consumer Protection Act.
Pursuant to Code § 54.1-1120(A)(7), the factual findings of the
court in the underlying litigation provide a basis for the Board
to find improper or dishonest conduct as defined in Code
§ 54.1-1118.
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IV. FACT-FINDING PROCEEDINGS OF THE BOARD
Surprenant argues that the Board erred in holding more than
one informal fact-finding conference on this matter. Surprenant
also argues that the trial court erred in affirming the Board's
decision because it was based on evidence presented after the
informal fact-finding conference, in violation of the VAPA and
the Board's own regulations. In addition, Surprenant argues
that the trial court erred in affirming the Board's decision
which relied upon Torre's affidavit.
A. Number of Fact-finding Conferences
The Board's review of claims brought under the VCTRA is
governed by the VAPA. See Code § 54.1-1114. Code § 9-6.14:11
of the VAPA states:
Agencies shall ascertain the fact basis for
their decisions of cases through informal
conference or consultation proceedings
unless the named party and the agency
consent to waive such a conference or
proceeding to go directly to a formal
hearing.
The Committee met on September 10, 1997 and recommended
that the Board deny Torre's claim. The Board heard the case on
October 8, 1997, and adopted the reasons of the Committee and
voted to deny the claim. On December 10, 1997, upon request of
the Board's legal counsel, the case was reconsidered before the
Committee in a second fact-finding conference. Nothing in the
VAPA limits the number of fact-finding conferences to one. We
cannot say the Committee improperly held two fact-finding
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conferences. Moreover, Surprenant did not object to the second
fact-finding conference on December 10, 1997; he participated in
it.
B. January 14, 1998 Meeting
On January 14, 1998, the Board met to consider the
Committee’s recommendation. Both parties received notice of the
meeting. Counsel for Torre appeared before the Board and
submitted documents. Surprenant did not appear. In its final
order, the Board stated:
On January 14, 1998, the Board reviewed this
claim. In attendance was Terry N. Grimes,
Esquire, counsel for Torre, who made a
presentation and submitted documents. Based
on information presented and on the findings
of the court that Surprenant violated the
Virginia Consumer Protection Act, the Board
concludes that the acts of Surprenant fall
within the statutory definition of improper
and dishonest conduct.
Surprenant argues that the Board violated the VAPA by
considering evidence presented by Torre's counsel at that
meeting, stating, "evidence is to be submitted only during the
Informal Fact Finding Conference." The VAPA mandates as
follows: "[a]gencies shall ascertain the fact basis for their
decisions of cases through informal conference or consultations
proceedings unless the named party and the agency consent to
waive such a conference or proceeding to go directly to a formal
hearing. . . ." Code § 9-6.14:11. Following the informal
fact-finding conferences, the board or commission meets to
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render a decision, where "persons who participated in the prior
proceeding shall be provided an opportunity to respond at the
board or commission meeting to any summaries prepared by or for
the board or commission." Code § 9-6.14:11(C).
Surprenant never objected to the presentation by Torre's
counsel nor the introduction of documents at the meeting on
January 14, 1998. Pursuant to the certified letter sent to his
home, Surprenant had notice of his opportunity to appear before
the Board. Surprenant neither filed any objections to Torre's
presentation of evidence before the Board nor requested a
rehearing on this basis. Surprenant may not raise matters on
appeal that he did not bring before the agency. See Pence
Holdings, Inc. v. Auto Center, Inc., 19 Va. App. 703, 454 S.E.2d
732 (1995).
C. Torre's Affidavit
Surprenant argues that the trial court erred in affirming
the Board’s decision that relied in whole or in part on Torre's
affidavit. Surprenant contends that "every allegation of
wrongful or dishonest conduct set forth in Torre's affidavit had
been litigated and resolved against [Torre]" and could not
constitute a basis upon which the Board found a claim in Torre's
favor. Surprenant maintains that the findings of the court in
the underlying litigation that no cause of action for
misrepresentation existed against Surprenant or Unique precludes
the Board's relitigation of the same issue in a different forum.
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Pursuant to the requirements of the VCTRA, Torre, the
claimant, was required to file an affidavit setting forth the
elements of his statutory claim. See Code § 54.1-1120(A)(1).
The Board did not base its decision on Torre's affidavit. The
Board relied upon "information presented [at the January 14,
1998 hearing] and on the findings of the court that Surprenant
violated the Virginia Consumer Protection Act."
Pursuant to Code § 54.1-1120(A)(7), the Board can find
grounds of improper or dishonest conduct by a regulant in the
language of any order that supports its finding. Here, the
basis of the Board's decision was not Torre's affidavit but the
orders of May 22 and September 25, 1995 from the court in the
underlying litigation. The language contained in the orders was
sufficient to support the Board's decision, and the trial court
did not err in affirming the Board's decision.
V. JUDGMENT AGAINST "REGULANT"
The VCTRA provides a limited means of recovery for a claim
against a regulant that remains unsatisfied. A regulant is
defined as "any individual, person, firm, corporation,
association, partnership, joint venture or any other legal
entity licensed by the Board for Contractors." Code
§ 54.1-1118. The money judgment in the underlying litigation
was against Unique. Surprenant argues that Unique never held a
license from the Board and therefore could not be considered a
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regulant. Surprenant contends that he was the only regulant
recognized by the Board.
A review of the record reveals that Surprenant did not
raise this issue before the Board. Surprenant's argument before
the Board was confined to whether he had committed acts of
"improper or dishonest" conduct for purposes of the VCTRA.
Surprenant never maintained before the Board that he could not
be held responsible as a regulant under the Act based upon a
judgment against Unique. In Pence Holdings, 19 Va. App. at 707,
454 S.E.2d at 734, we stated, "an appellant, under the
provisions of the APA, may not raise issues on appeal from an
administrative agency to the circuit court that it did not
submit to the agency for the agency's consideration." Having
failed to raise the issue before the administrative agency, he
was precluded from raising the issue before the trial court. We
also decline to consider it on appeal.
VI. CONCLUSION
The order of the trial court affirming the award of the
Board is affirmed.
Affirmed.
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