Summary
applying three different analyses in concluding that the agency's failure to comply with required procedure constituted mere harmless error
Summary of this case from Jones v. WestOpinion
45894 Record No. 860319
January 13, 1989
Present: Carrico, C.J., Poff, Compton, Stephenson, Russell, Thomas, and Whiting, JJ.
Justice Poff participated in the hearing and decision of this case prior to the effective date of his retirement on December 31, 1988.
The disqualification of one member of a six-member advisory board to the Commissioner of Motor Vehicles does not nullify the statutorily required recommendations of the remaining board members.
Statutory Construction — Motor Vehicle Dealers' Advisory Board — Dealership Franchise — Hearing — Rules of Court
Plaintiff motor vehicle manufacturer decided to grant a franchise for a dealership in the same market area where it already had one franchised dealer who objected on the ground that the area would not support another dealership. A hearing officer designated by the Commissioner of Motor Vehicles held a hearing and found that the evidence was insufficient to conclude that the market would not support the dealerships. Code Sec. 46.1-550.1(B) requires that before rendering any decision, the Commissioner obtain recommendations on the subject from the Motor Vehicle Dealers' Advisory Board. No two members of the board were to be dealers of the same manufacturer, but at this time two were Ford dealers. Five of the members, including the two Ford dealers, concurred in the hearing officer's recommendation. The sixth member did not respond. The Commissioner found that the existing dealership had not produced sufficient evidence to show that the market would not support all the dealerships in the line-make in the trade area after the grant of the new franchise. The existing dealership appealed the decision to the circuit court, claiming that the Commissioner had erred. The circuit court confirmed the Commissioner's findings. The dealership appealed the decision to the Court of Appeals, which reversed the decision of the circuit court on the ground that the recommendations of the members of the advisory board were a condition precedent to the Commissioner's action and, because the Commissioner had not received a recommendation from a validly constituted board, he could not act. The manufacturer appeals.
1. Arguments not made in the Court of Appeals cannot be considered by the Supreme Court. Rules 5:25 and 5:28(d).
2. Under the circumstances in this case, the disqualification of one member of the advisory board was harmless error and did not nullify the action of the remaining board members.
3. There was no evidence indicating that the dealership's rights were affected in any way by the disqualification of one board member.
4. The board does not act as a body but rather each member makes his or her recommendations to the Commissioner and there is no evidence here that there was any contact between the members before they submitted their independent recommendations.
5. Unlike a jury, which acts as a body and the findings of which are not mere recommendations, the recommendations of these members could have been disregarded by the Commissioner.
6. The statute permits one member of the board to be a Ford dealer; excluding the recommendation of either of the two Ford dealers from consideration, a majority of the board recommended granting the franchise.
Appeal from a judgment of the Court of Appeals of Virginia.
Reversed and remanded.
Joseph A. Ritok, Jr. (David F. Peters; Dykema, Gossett, Spencer, Goodnow Trigg; Hunton Williams, on briefs), for appellant.
W.T. Robey, III (Robey Irvine, on brief), for appellee.
Amicus Curiae; Commonwealth of Virginia (Mary Sue Terry, Attorney General; Walter A. McFarlane, Deputy Attorney General; Jeffrey A. Spencer, Assistant Attorney General, on brief), for appellant.
In this appeal, we decide whether the disqualification of one member of a six-member advisory board to the Commissioner of Motor Vehicles nullifies the statutorily required recommendations of the remaining individual board members.
In February 1984, Ford Motor Company (Ford), a motor vehicle manufacturer subject to the provisions of the Virginia Motor Vehicle Dealer Licensing Act, Code Sections 46.1-515 to -550.5, decided to grant a franchise for a Ford dealership in Lexington, Virginia. Because Lexington is about six miles from Buena Vista and is in the same market area, Ford gave Courtesy Motors, Inc. (Courtesy), Ford's franchised dealer in Buena Vista, written notice of its intent, as required by Code Sec. 46.1-547(d). Courtesy objected on the ground that the market area would not support another Ford dealership.
The Act has been extensively amended, and now consists of Code Sections 46.1-515 to -550.5:38.
Now Code Sec. 46.1-550.5:27(4).
A hearing officer designated by the Commissioner held the hearing required by Code Sec. 46.1-547(d) to determine if "there is reasonable evidence that after the grant of the new franchise the market will not support all of the dealerships in that line-make in the trade area." After hearing evidence and argument, the hearing officer found that the evidence was "insufficient to find that the market will not support all of the dealerships" and so advised the Commissioner.
The 1985 amendment of Code Sec. 46.1-547(d) substituted "will support" for "will not support." Acts 1985, c. 219. Current Code Sec. 46.1-550.5:27(4) retains the "will support" language.
Code Sec. 46.1-550.1(B) requires that "[b]efore rendering any decision under this article, the Commissioner shall obtain recommendations on the subject from the Motor Vehicle Dealers' Advisory Board . . . ." Code Sec. 46.1-550.2, which required appointment of the board, also provided that no two members of the board may be dealers of the same manufacturer. In the present case, one board member, Richard G. Barkhouser, was a Ford dealer in Danville, while M.G. "Ted" Britt, another member, was both a Mazda and a Ford dealer in Fairfax.
Now Code Sec. 46.1-550.5:32.
This limitation is not contained in the corresponding provision of the Act as amended, Code Sec. 46.1-517.1.
Another agent of the Commissioner sent a copy of the hearing officer's recommended decision, the proposed findings of fact, conclusions of law, and "statement of reasons" submitted by counsel for Ford and for Courtesy to each member of the six-member board. Five members responded to the agent, three in writing and two orally; all five concurred in the hearing officer's recommendation. Britt and Barkhouser were among those who responded in writing. The sixth member was unavailable for comment.
The Commissioner, after reciting his review of the evidence taken at the hearing, the briefs of counsel, and the recommendations of the members of his advisory board, found that Courtesy had not produced sufficient evidence to show that "after the grant of the new franchise, the market will not support all the dealerships in that line-make in the trade area."
Courtesy appealed the Commissioner's decision to the Circuit Court pursuant to Code Sections 46.1-539 and 9-6.14:1 to 25. In that appeal, Courtesy claimed that the Commissioner erred: (1) in acting upon the recommendation of an unlawfully constituted board; (2) in failing to make "the statutorily required finding of whether there was 'reasonable evidence' that after the grant of the new franchise, the market area will not support all of the [Ford] dealerships"; (3) in deciding the issue arbitrarily and inconsistently with his prior decisions; and (4) in deciding the case without substantial supporting evidence. After hearing oral argument and after reviewing the proceedings before the Commissioner and the briefs filed, the Circuit Court confirmed the Commissioner's findings.
Now Code Sec. 46.1-550.5:36.
Courtesy appealed that decision to the Court of Appeals, assigning the same grounds for appeal as in the Circuit Court. Without reaching the remaining grounds, the Court of Appeals reversed the decision of the Circuit Court upon the ground that the recommendations of the members of the advisory board were a condition precedent to the Commissioner's action and, because the Commissioner had not received a recommendation from a validly constituted board, he could not act.
We granted Ford an appeal from the decision of the Court of Appeals and the Commonwealth filed an amicus curiae brief. Rule 5:30(a)(1). The Commonwealth and Ford, for the first time on this appeal, argue that we should consider the actions of the board members as valid upon the " de facto officer" doctrine. We cannot consider the argument because it was not made in the Court of Appeals. See Rules 5:25; 5:28(d).
Because one member of the board was appointed in violation of the statute, the question is whether that violation nullified the individual recommendations of the remaining members of the board and resulted in the Commissioner acting without the recommendations of members of his advisory board.
The doctrine of harmless error is applicable to this administrative proceeding. Code Sec. 9-6.14:17. Under the circumstances in this case, we hold that the disqualification of one member of the advisory board was harmless error and did not nullify the action of the remaining board members. We do so for several reasons.
First, there is no evidence indicating that Courtesy's rights were affected in any way by the disqualification of one board member.
[4-5] Second, the board does not act as a body; the statute contemplates that each member make his or her recommendations to the Commissioner, and that is what was done in this case. There is no evidence that either Britt or Barkhouser had contact with each other or the other board members before each of the five board members submitted independent recommendations. Moreover, the Commissioner could have disregarded these recommendations. For these reasons, Courtesy's analogy of a juror's disqualification is inapposite. A jury acts as a body, and its findings are not mere recommendations.
Third, the statute permits one member of the board to be a Ford dealer; excluding either Barkhouser or Britt from consideration, a total of four members, a majority of the board, recommended granting the second franchise.
Accordingly, we will reverse the judgment of the Court of Appeals and remand the case to that court for consideration of Courtesy's remaining assignments of error.
Reversed and remanded.