Brent Brown Dealerships v. Tax Commission, Motor Vehicle Enforcement Division

2006 UT App 261, 139 P.3d 296, 2006 Utah App. LEXIS 275, 2006 WL 1700457
CourtCourt of Appeals of Utah
DecidedJune 22, 2006
DocketNo. 20050333-CA
StatusPublished
Cited by3 cases

This text of 2006 UT App 261 (Brent Brown Dealerships v. Tax Commission, Motor Vehicle Enforcement Division) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brent Brown Dealerships v. Tax Commission, Motor Vehicle Enforcement Division, 2006 UT App 261, 139 P.3d 296, 2006 Utah App. LEXIS 275, 2006 WL 1700457 (Utah Ct. App. 2006).

Opinions

OPINION

McHUGH, Judge:

¶ 1 Brent Brown Dealerships (Brent Brown) seeks judicial review of a final decision of an Administrative Law Judge (ALJ) upholding a $135,000 fine levied by the Utah State Tax Commission (Commission) against Brent Brown for allowing unlicensed salespeople to sell ears. See Utah Code Ann. §§ 41-3-201(2), -210(6), -702(l)(c)(vii) (2005). We affirm.

BACKGROUND

¶ 2 The Motor Vehicle Enforcement Division (MVED) of the Commission received a tip from a former employee of Brent Brown that salespeople at Brent Brown were selling cars without first obtaining licenses. MVED began investigating four dealerships of the Brent Brown Automotive Group, including Brent Brown Toyota, Brent Brown Chevrolet/Buick, Brent Brown Dodge/Chrysler/Jeep, and the Orem Auto Plaza.

¶ 3 Sergeant Eric MacPherson headed the investigation and assembled a team of investigators that visited the dealerships on February 10, 2004. During this visit, MacPher-son and his team discovered that none of the salespeople carried licenses as required by sections 41-3-201(2) and 41-3-210(6). See id. §§ 41-3-201(2), -210(6). The investigators then examined the personnel files of the salespeople and learned that at least fifty-one salespeople had sold 306 vehicles over a period of twenty months without motor vehicle sales licenses as required by statute. Brent Brown asserted that because it had acquired a number of dealerships, it centralized human resources and payroll into one position, which was filled by Erlene Ashburn. Brent Brown stated that Ashburn was instructed to take care of licensing as part of her human resources duties. Brent Brown further stated that once a salesperson was hired at one of the four dealerships, that dealership would make sure that the new employee had completed a license application form and would issue a check for the $30 licensing fee, and then forward the form and the check to Ashburn, who was to send them to the Commission. However, investigators failed to find any evidence of license applications in the personnel files of the unlicensed salespeople. Instead, salespeople who were interviewed stated that they were unaware that they needed a license. None of those interviewed indicated that they had completed licensing forms.

¶4 During the investigation, MacPherson assisted Brent Brown in obtaining licenses on an expedited basis for all of its salespeople. Two days after the investigators visited the dealerships, all salespeople at Brent Brown had licenses.

¶ 5 MacPherson determined that Brent Brown had violated section 41-3-201(2), which prohibits a person from acting as a vehicle salesperson without first obtaining a license, and section 41-3-210(6), which prohibits a dealer from assisting unlicensed salespeople in sales of motor vehicles. See id. Section 41-3-702 sets forth a graduated schedule of penalties for assisting an unlicensed salesperson in sales of motor vehicles: $250 for the first offense, $1000 for the second offense, and $5000 for third and subsequent offenses. See id. §§ 41-3-702(l)(c)(vii), —702(2) (a) (iii). MacPherson recommended assessing a penalty of $1,168,000. He calculated this figure by determining that an “offense” under the statute occurred every time an unlicensed salesperson sold a vehicle.

¶ 6 MVED later reduced the fine to $135,000, determining that an “offense” occurred when an unlicensed salesperson sold at least one vehicle during the relevant time period, from June 2002 to February 2004. Thus, MVED decided that offenses should [299]*299not be counted according to the number of cars sold, but rather by the number of unlicensed salespeople who had made sales of one or more cars. Unlicensed salespeople who had not sold any vehicles during the relevant time period were not counted in the total fine. The $135,000 fine represented thirty-four unlicensed salespeople who had sold at least one vehicle during the time period in question. Each of the four Brent Brown dealerships was assessed $250 for the first offense, $1000 for the second offense, and $5000 for every additional offense. MVED had never assessed a fine as large as that levied against Brent Brown. MVED officials testified, however, that they had never encountered such an egregious violation of the licensing laws.

¶ 7 On July 6, 2004, MVED sent notices of the violations to each of the four dealerships. Brent Brown requested a hearing before the Appeals Division of the Commission, and on August 17, 2004, the Commission held an initial hearing. The ALJ upheld the $135,000 fine. Brent Brown appealed that decision and requested a formal hearing, which was held on February 28, 2005, before a different ALJ of the Appeals Division of the Commission. The ALJ upheld the decision from the initial hearing and the imposition of the $135,000 fine. Brent Brown then appealed to the Utah Supreme Court, which transferred the case to this court.

ISSUES AND STANDARDS OF REVIEW

¶ 8 When reviewing the Commission’s decision, we “grant the [C]ommission deference concerning its written findings of fact, applying a substantial evidence standard on review.” Utah Code Ann. § 59-l-610(l)(a) (2004). We “grant the [Commission no deference concerning its conclusions of law, applying a correction of error standard, unless there is an explicit grant of discretion contained in the statute at issue before the appellate court.” Id. § 59 — 1—610(l)(b). Regarding the statutes at issue in this case, “the parties have not cited us to, and we have been unable to find, any explicit grant of discretion” to the Commission “to interpret or apply the language of [those] sectionfs].” OSI Indus., Inc. v. Utah State Tax Comm’n, 860 P.2d 381, 383 (Utah Ct.App.1993); see also Utah Code Ann. §§ 41-3-201(2), -210(6), -702. We therefore review the Commission’s interpretation and application of the statutes for correctness. See OSI Indus., Inc., 860 P.2d at 383.

ANALYSIS

¶ 9 Brent Brown contends that the Commission’s decision should be reversed because (1) the ALJ incorrectly interpreted the meaning of the term “offense” in section 41-3-702; (2) the $135,000 fine violates the Excessive Fines Clause of the United States and Utah Constitutions; (3) the fine violates due process because no notice of the violations was given before the fine was assessed; and (4) MVED departed from its prior practice by falling to give notice of the violations before assessing the fine. Each of these arguments is addressed below.

I. Interpretation of the Term “Offense”

¶ 10 Brent Brown first contends that the ALJ incorrectly interpreted the term “offense” in section 41-3-702(2)(a)(iii). See Utah Code Ann. § 41-3-702(2)(a)(iii). Section 41-3-210(6) states that “[a] dealer may not assist an unlicensed dealer or salesperson in unlawful activity through active or passive participation in sales, or by allowing use of his facilities or dealer license number, or by any other means.” Id. § 41-3-210(6).

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Bluebook (online)
2006 UT App 261, 139 P.3d 296, 2006 Utah App. LEXIS 275, 2006 WL 1700457, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brent-brown-dealerships-v-tax-commission-motor-vehicle-enforcement-utahctapp-2006.