FOR PUBLICATION
ATTORNEYS FOR APPELLANT: ATTORNEY FOR APPELLEE:
JEFFREY A. MODISETT KATHRYN D. SCHMIDT
Attorney General of Indiana Burke Costanza & Cuppy LLP
Merrillville, Indiana
JON LARAMORE
Deputy Attorney General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
STATE OF INDIANA, )
)
Appellant-Defendant, )
)
vs. ) No. 45A04-9806-CV-281
)
JAMES W. LANGEN, )
)
Appellee-Plaintiff. )
APPEAL FROM THE LAKE SUPERIOR COURT
The Honorable James Danikolas, Judge
Cause No. 45D03-9601-CP-141
April 5, 1999
OPINION - FOR PUBLICATION
GARRARD, Judge
STATEMENT OF THE CASE
The State of Indiana (the "State") appeals the trial court's entry of summary judgment
in favor of James W. Langen ("Langen"). The trial court entered summary judgment
concluding that the Indiana Real Estate Commission (the "Commission") violated applicable
procedural law when it vacated an order issued by a panel of three administrative law judges
and entered its own order. Accordingly, the trial court vacated the Commission's final order
as null and void. We reverse and reinstate the Commission's final order.
ISSUES
The State presents two issues for our review which we restate as:
1. Whether the Commission violated applicable procedural law when it entered
its final order on December 19, 1995, and even assuming it did, whether the
trial court erred when it vacated the Commission's final order.
2. Whether Langen has waived judicial review of the timeliness of the
Commission's final order.
FACTS AND PROCEDURAL HISTORY
Langen, a licensed real estate broker, violated the rules governing the administration
of escrow accounts. A panel of three administrative law judges (the "Panel") heard evidence
and, on July 21, 1995, entered an order sanctioning Langen by placing his real estate license
on indefinite probation. Thereafter, on August 28, 1995, the Commission issued its notice
of intent to review the Panel's decision. The Commission provided that if the parties wished
to file briefs, the parties were required to do so by September 21, 1995. No briefs were filed
by the parties. Thereafter, on November 8, 1995, the Commission extended the time period
for issuing a final decision to December 22, 1995. The Commission issued a final order on
December 19, 1995, sanctioning Langen by suspending Langen's license indefinitely, with
the right to petition for reinstatement after six months.
Langen filed his petition for judicial review in the trial court. After considering
evidence submitted by the parties, the trial court entered summary judgment in favor of
Langen. Specifically, the trial court concluded, as a matter of law, that the Commission
violated applicable procedural law when it failed to issue its final order within sixty days of
the date the Panel's order was issued. Accordingly, the trial court vacated the Commission's
final order as null and void. On behalf of the Commission, the State appeals the trial court's
judgment.
DISCUSSION AND DECISION
Standard of Review
Our review of an administrative decision is limited to whether the agency possessed
jurisdiction over the subject matter, whether the decision was made pursuant to the proper
procedures, whether the decision was arbitrary and capricious, whether the decision was in
violation of any constitutional, statutory, or legal principles, and whether the decision was
supported by substantial evidence. Real Estate Appraiser License and Certification Bd. v .
Stewart, 695 N.E.2d 962, 964 (Ind. Ct. App. 1998). As a general rule, we give deference to
an administrative agency's findings and conclusions because of the agency's expertise in the
subject matter. Id. However, upon review of a determination by the trial court that the
agency failed to follow the proper procedures in reaching its decision, such deference is
inappropriate. Id. The court on appeal will give deference to the trial court because the trial
court heard evidence and testimony regarding the agency procedures. Ripley County Bd. of
Zoning Appeals v. Rumpke of Indiana, Inc., 663 N.E.2d 198, 203 (Ind. Ct. App. 1996), trans.
denied. We neither reweigh the evidence nor reassess witness credibility and will set aside
the trial court's findings only if they are clearly erroneous. Stewart, 695 N.E.2d at 964.
Issue One: Procedure followed by the Commission
On appeal, the State contends that the trial court erroneously vacated the
Commission's final order based upon its conclusion, as a matter of law, that the Commission
violated applicable procedural law. We agree with the State.
The relevant procedural law of the Indiana Administrative Orders and Procedures Act
("AOPA") is set out in Indiana Code Section 4-21.5-3-29. Subsection (b) of that statute
provides that after an administrative law judge issues an order, the ultimate authority for the
agency shall issue a final order affirming, modifying, or dissolving the administrative law
judge's order.See footnote
1
The ultimate authority, in this case the Commission, may serve written notice
of its intent to review any issue related to the administrative law judge's order, which notice
must identify the issues it intends to review. Ind. Code § 4-21.5-3-29(e). Subsection (f)
goes on to specifically state:
A final order disposing of a proceeding or an order remanding an order
to an administrative law judge for further proceedings shall be issued
within sixty (60) days after the latter of:
(1) the date that the order was issued under section 27 of this
chapter; (2) the receipt of briefs; or
(3) the close of oral argument;
unless the period is waived or extended with the written consent of all
parties or for good cause shown.
Ind. Code § 4-21.5-3-29(f). It is this subsection which is the center of the dispute in the
instant case.
Here, the Panel issued its decision on July 21, 1995. The Commission issued its
notice of intent to review the Panel's decision on August 28, 1995. At that time, the
Commission set a briefing schedule requiring that, if the parties chose to file briefs, the briefs
would be due by September 21, 1995. The parties, however, did not file briefs. Within sixty
days of the date briefs were due, on November 8, 1995, the Commission extended its
deadline to rule to December 22, 1995. The cause for extension noted by the Commission
was that "[t]here were several members of the Commission absent and a new member had
not had an opportunity to review the transcript and therefore did not participate." Record at
331. Consequently, "[t]he remaining members were not able to make a decision." Record
at 331. The Commission entered its final order on December 19, 1995.
In vacating the Commission's final order, the trial court concluded that the
Commission violated applicable procedural law because the order was untimely issued.
Langen argues, and the trial court agreed, that because no briefs were filed by the parties and
because no oral argument was held, the Commission was required to issue a final order by
September 19, 1995, sixty days after the Panel issued its decision. Langen maintains that
because the Commission failed to rule by September 19, 1995, and did not extend its time
for ruling within that initial sixty day period, the Panel's decision became the final decision
on his case. The State responds that the Commission did not violate applicable procedural
law and, even assuming the Commission's order was untimely, the trial court erred when it
vacated the order on that basis. We address the arguments in turn.
First, as we noted earlier, subsection (f) provides that the sixty day time period runs
from the date of the latter of three occurrences: (1) the ALJ's order, (2) the receipt of briefs,
or (3) the close of oral arguments. Ind. Code § 4-21.5-3-29(f). In the instant case, we are
not concerned with oral arguments as none were scheduled or heard. The relevant question
is whether and how the briefing schedule set by the Commission affected the sixty day time
period.
We are troubled by both Langen's and the trial court's reliance on the parties' failure
to file briefs as an indication that the sixty day time period began to run from the earliest
possible date, the date of the Panel's order. Although we acknowledge that the statutory
language indeed provides that the sixty days may run from the "receipt of briefs," that
language must be read to mean the date upon which briefs are received by the ultimate
authority or the date upon which those briefs are due, whichever comes first. To read the
language otherwise would lead to the absurd result of allowing parties to manipulate the time
period merely by deciding not to file briefs. For example, in the instant case, the
Commission set a briefing schedule for the parties providing that briefs, if parties wished to
file them, would be due by September 21, 1995. Langen essentially argues that if either he
or the State would have chosen to file briefs, the sixty day time period would not have begun
to run until those briefs were received by the Commission. Because the parties decided not
to file briefs, Langen contends that the sixty day time period actually expired before the
briefs were even due.See footnote
2
Such an illogical result could not have been intended by the
legislature.
In construing statutory language, we must presume that the legislature did not intend
an unreasonable and absurd result. Chestnut v. Roof, 665 N.E.2d 7, 10 (Ind. Ct. App. 1996).
We hold that the phrase "receipt of briefs," as it pertains to the triggering of the sixty day
time period within which the ultimate authority shall enter its final order, means either the
receipt of briefs or the close of the briefing schedule, whichever comes first. Because no
briefs were filed by the due date in the present case, the sixty day time period began to run
on September 21, 1995.
Next, we look to the Commission's extension of time. On November 8, 1995, within
sixty days of the close of the briefing schedule, the Commission extended its time to rule
until December 22, 1995 for good cause shown. See Ind. Code § 4-21.5-3-29(f) (the sixty
day time period may be extended with the written consent of all parties or for good cause
shown). Langen argues that the Commission's extension of time was arbitrary and capricious
and, thus, must be reversed. We disagree.
As we have noted, our review of an administrative agency decision is narrow and, we
will reverse the agency's action only where it is purely arbitrary, or an error of law has been
made. Indiana Civil Rights Comm'n v. Delaware County Circuit Court, 668 N.E.2d 1219,
1221 (Ind. 1996). An action of an administrative agency is arbitrary and capricious only
where there is no reasonable basis for the action. Id.
In its notice of extension of time to rule, the Commission stated that several members
were absent from the meeting and that a new member had not had an opportunity to review
the transcript and therefore did not participate. Under those circumstances, the remaining
members were unable to reach a decision. Therefore, the review of Langen's case was placed
on the agenda for the next meeting. In light of the Commission's explanation of good cause,
and our limited standard of review in administrative cases, we cannot say that there was no
reasonable basis for the Commission's decision to extend its time to rule. Langen has failed
to meet his burden of showing that the Commission's extension of time was arbitrary and
capricious.See footnote
3
Therefore, we conclude that the Commission's extension of time to rule until
December 22, 1995, was valid and, consequently, that the Commission's final order of
December 19, 1995 was timely issued.
Even if we were to conclude that the Commission's final order was issued outside of
the statutorily prescribed time period, Langen would not be entitled to summary judgment.
We must agree with the State that the phraseology of subsection (f) stating that a final order
"shall" be issued within sixty days of the three listed alternative events is directory rather than
mandatory. Although use of the term "shall" generally connotes a mandatory as opposed to
a directory import, "shall" may be construed as directory in order to preserve legislative
intent. Hancock County v. Rural Elec. v. City of Greenfield, 494 N.E.2d 1294, 1295 (Ind.
Ct. App. 1986), trans. denied. As our supreme court has explained:
The meaning and intention of the legislature are to be ascertained not
only from the phraseology of the statute but also by considering its
design, its nature and the consequences that flow from the various
interpretations.
* * * * *
All laws are mandatory in the sense that a duty of obedience is
imposed, but it does not follow that every slight departure is fatal where
the act is merely procedural and does not go to the merits. The basic
test, we believe, to determine whether the requirement is essential or
not, is to consider the consequences of the failure to follow the statute
and, in this regard, other possible interpretations.
Allen County Dept. of Pub. Welfare v. Ball Memorial Hosp. Ass'n, 253 Ind. 179, 184, 252
N.E.2d 424, 427-428 (1969); see also United Rural Elec. Membership Corp. v. Indiana &
Michigan Elec. Co., 549 N.E.2d 1019, 1022 (Ind. 1990). Thus, when a statute contains no
negative or prohibitive words and does not provide for penalties on the consequences for the
failure to follow prescribed time limits, those limits may be merely directory. See Ball
Memorial Hosp. Ass'n, 253 Ind. at 187, 252 N.E.2d at 428.
Our review of subsection (f) leads us to believe that the legislature did not intend the
prescribed time period to be essential to the validity of the Commission's final order. As is
evident from the statute, no consequences attach in the event of an untimely order and under
no circumstances has the legislature deprived the Commission of its ultimate authority to
issue its final order. The statute neither purports to restrain the Commission from issuing a
final order outside of the prescribed time period nor specifies that "adverse or invalidating
consequences follow." See Hancock County Rural Elec., 494 N.E.2d at 1296. Moreover, the
purpose and intent of the sixty day time period is to promote the prompt and expeditious
resolution of the administrative matters by the ultimate authority. The time period is not
intended as a jurisdictional prerequisite to a valid final order. Accordingly, a mandatory
construction of subsection (f) would thwart the intention of the legislature. Although we
understand Langen's frustration with the system and the length of time he has awaited a final
determination of his penalty,See footnote
4
the trial court granted him an inappropriate remedy. We
conclude that the sixty day time period is directory rather than mandatory, and the trial court
erred when it vacated the Commission's final order as null and void.
Issue Two: Waiver
Having necessarily set out the relevant statutory language and addressed the
construction of that language, we now turn to the limitations the legislature has placed on the
issues which may be raised on judicial review. AOPA provides that a person may obtain
judicial review only of an issue that was raised before the administrative agency, with two
exceptions: (1) where the issue concerns notice of the proceedings, and (2) where the
interests of justice would be served by judicial resolution of an issue arising from a change
in the controlling law occurring after the agency action was taken. Ind. Code § 4-21.5-5-10;
Indiana Educ. Employment Relations Bd. v. Tucker, 676 N.E.2d 773, 776 (Ind. Ct. App.
1997).
Langen's contention that the Commission violated applicable procedural law when it
failed to rule within sixty days of the Panel's decision should have been raised to the
Commission and preserved for review. Indeed, Langen had several opportunities to file an
objection to the Commission's failure to rule. Langen was first put on notice that the
Commission was not going to rule within sixty days of the Panel's decision when the
Commission set a briefing schedule outside of the sixty day period providing that the parties
could file briefs if they wished by September 21, 1995. Again without objection from
Langen, on November 8, 1995, the Commission extended its time to issue its final decision
until December 22, 1995. Despite ample opportunity, Langen failed to object to the
timeliness of the Commission's order until he filed his petition for judicial review. Because
the timeliness issue does not fit within the scope of either statutory exception provided by
Indiana Code Section 4-21.5-5-10See footnote
5
, Langen has waived judicial review of the issue.
In sum, Langen has waived judicial review of the timeliness of the Commission's
order and, thus, the trial court erred when it vacated the Commission's order.
Notwithstanding waiver, we conclude that the Commission ruled within the directory time
period prescribed by statute. The trial court's entry of summary judgment is reversed and the
Commission's final order is reinstated.
Reversed.
BAKER, J. concurs.
ROBB, J. concurs in result and files separate opinion.
IN THE
COURT OF APPEALS OF INDIANA
STATE OF INDIANA, )
)
Appellant - Defendant, )
)
vs. ) No. 45A04-9806-CV-281
)
JAMES W. LANGEN, )
)
Appellee-Plaintiff. )
Judge Robb, concurring in result with opinion
I concur in result. I agree that the Commission's order was timely and that the sixty-
day period provided in Ind. Code § 4-21.5-3-29 began to run on the date the parties' briefs
were due, because none were filed. However, the discussion and conclusion that the sixty-
day period, and the word "shall," is directory rather than mandatory is unnecessary to reach
this decision. In addition, since we have chosen to address the case on the merits, I do not
join in the majority opinion on the waiver issue.
Footnote: 1
The ultimate authority may also remand the matter, with or without instructions, to an
administrative law judge for further proceedings. Ind. Code § 4-21.5-3-29(b).
Footnote: 2
There is nothing in the record to indicate that the parties informed the Commission that they did
not intend to file briefs in this matter.
Footnote: 3
Langen misstates the record and argues that the trial court determined that the Commission failed
to establish good cause for its extension of time and that this court should defer to that determination. To
the contrary, in its summary judgment order, the trial court found simply that the Commission's attempt to
extend its time to rule came well after the sixty day period ran. Record at 1-2. However, the trial court
based its conclusion on its erroneous assumption that the sixty day time period began to run from the date
of the Panel's order. We have already determined that issue.
Footnote: 4
The record indicates that the initial complaint against Langen was filed on May 8, 1992.
Footnote: 5
See also Ind. Code §§ 4-21.5-5-11 and 12(a) (confining judicial review of disputed issues to the
agency's record and permitting court on judicial review to receive additional evidence only if specific
conditions are met).
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