NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-4955-15T2
IN THE MATTER OF RUSSELL S. CLINE. ——————————————————————————————
Argued April 27, 2017 – Decided August 17, 2017
Before Judges Lihotz and Hoffman.
On appeal from the New Jersey Motor Vehicle Commission.
Michael Confusione argued the cause for appellant Russell S. Cline (Hegge & Confusione, LLC, attorneys; Mr. Confusione, of counsel and on the brief).
Jennifer R. Jaremback, Deputy Attorney General, argued the cause for respondent New Jersey Motor Vehicle Commission (Christopher S. Porrino, Attorney General, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel; Ms. Jaremback, on the brief).
PER CURIAM
Appellant Russell S. Cline appeals from a final agency
decision issued by the Motor Vehicle Commission (MVC), which
approved the suspension of his driver's registration privileges,
pursuant to N.J.S.A. 27:23-38 and N.J.S.A. 39:5-30. The MVC
conditioned reinstatement of appellant's registration upon satisfaction of $912.30 in unpaid tolls and $12,225 in
administrative fees owed to the New Jersey Turnpike Authority
(NJTA), along with a $100 registration restoration fee. On appeal,
appellant urges the court to vacate the agency decision, arguing
the MVC did not provide timely notice of the fines and assessments,
and violated statutory law by suspending his registration
privileges prior to filing an action. Further, appellant argues
administrative fees, issued for each toll violation, are
unreasonable and the doctrine of latches bars payment because the
three-year delay in commencing administrative proceedings
prejudiced appellant's ability to contest the charges.
We reject appellant's procedural and substantive challenges
attacking the registration suspension pending satisfaction of the
outstanding tolls. However, following our review, we conclude the
record contains insufficient evidence to sustain the amount of the
administrative assessments imposed, requiring us to remand for
further proceedings.
Between August 25, 2011 and December 28, 2012, appellant,
used an E-ZPass lane even though the credit card linked to his
E-ZPass account had repeatedly declined payment. In total, he
accrued 572 toll violations. In September 2012, appellant's E-
ZPass account was closed, as provided in the E-ZPass contract,
when it remained underfunded for ninety consecutive days.
2 A-4955-15T2 In April 2013, the MVC notified appellant it would suspend
his vehicle registration privileges the following month, unless
he satisfied all outstanding tolls and administrative fees.
Arguing the claims by the MVC were erroneous, appellant requested
a formal hearing. Almost three years later, a hearing was held
before an Administrative Law Judge (ALJ), on February 25, 2016.
Three witnesses testified at the hearing. The MVC called
Carlos Caraballo, assistant violations manager for Xerox, the
company contracted "to run and maintain the electronic toll
collection system on behalf of the . . . agencies under the New
Jersey E-ZPass consortium" and Rebecca Donington, of the MVC
Department of Regulatory and Legislative Affairs. Appellant
testified on his own behalf.
Caraballo explained the procedure followed when a vehicle
exits a toll plaza through an E-ZPass lane without paying the
toll. If the vehicle is not associated with an active E-ZPass
account, or the account is unfunded, Xerox informs the MVC, which
then issued an advisory notice of enforcement to the recorded
address on the vehicle's registration. The notice included a
picture of the vehicle captured at the toll plaza, the toll due,
any applicable fees, and options to dispute the notice. Xerox
issued three notices over a 105-day period. If payment, or
challenge, is not received, the matter is transferred to pursue
3 A-4955-15T2 formal collection. Xerox also retained records of customer
contacts and phone calls regarding alleged toll violations.
Caraballo stated the administrative fee, initially set at $25
for each violation, was raised to $50 per violation during the
period relevant to the instant case. The fee offsets
administrative expenses to enforce the unpaid toll, such as the
cost of: maintaining the violation enforcement cameras, storing
the image on a server, transmitting the image, undertaking a motor
vehicle look-up, reviewing the matter, processing disputes,
printing, and postage. He stated the fee is a fixed amount and
does not vary whether the fee is paid to the MVC, or if the account
has been sent to collection. However, there are variations in
application of the administrative fee by certain toll roads.
Applicable to this matter, the NJT charges $50 for a single
violation but the GSP imposes one $50 fee for up to four tolls
missed in a single day.
Caraballo identified the toll violations on the New Jersey
Turnpike (NJT) and the Garden State Parkway (GSP) attributed to
appellant's registered vehicle. Reviewing the records of
violations, he was able to provide the date, time, place and exact
toll lane where each violation occurred. Further, he recited the
date Xerox mailed the notice of violation to appellant. Caraballo
also provided a summary sheet of the violations, tolls due, and
4 A-4955-15T2 administrative assessments, concluding unpaid tolls were $912.30
and the associated administrative fees totaled $12,200.
On cross-examination, in an effort to show the MVC's records
were not "complete," appellant questioned why certain notices of
violation, incurred during the specified period, were not listed
among records Caraballo identified. Appellant also challenged
inconsistent dates between MVC's record of violations, and notices
he received in the mail. Caraballo generally attributed the
apparent discrepancy to a change in the mail processor used by
Xerox. He confirmed "[t]he actual toll violation transactions
date and time, the name and address all match," the records
admitted into evidence, and the only discrepancy was the date the
notice was mailed. Also discussed were records showing appellant's
settlement of 478 different E-ZPass toll violations, noting the
MVC waived its claim for administration fees on these matters
because appellant resolved those claims within 105 days of the
violations, and no referral for collection was initiated.1
Donington testified that as a result of appellant's repeated
toll violations, the MVC suspended his registration. Her office
1 Caraballo explained one could use the MVC website and transfer the violations to a valid E-ZPass account for payment. He noted some of appellant's past violations were resolved this way. As a result, administrative fees were waived. We also note the hearing giving rise to this appeal did not adjudicate the other 478 violations.
5 A-4955-15T2 prepared and mailed the notice to appellant at his last reported
address on April 22, 2013. She also explained the steps necessary
for appellant to restore his registration, which included
satisfaction of the tolls, administrative fees, and a restoration
fee.
In his testimony, appellant asserted in the past he resolved
E-ZPass violations before the administrative fee attached.
Regarding the unpaid amounts now asserted as due by the MVC, he
acknowledged he received notices for the 2011 violations, but
maintained they arrived later than the date stated by Caraballo.
Appellant stated the late mailing dates limited his ability to
contact the MVC to "fix it." Further, as to violations in 2012,
appellant insisted he did not receive any written notices; however,
he confirmed his address matched the MVC's records, and also
acknowledged he received emails.
Additionally, defendant argued he could not afford the
administrative fees and believed he should not be obligated to pay
them because of the late notices. Appellant agreed he received
"a letter that said [the NJTA was] gonna [sic] stop mailing
statements," in lieu of email notices. He contacted "E-ZPass a
number of times, trying to resolve" the obligations, but agreed
he never raised the problem of late received notices. Finally,
6 A-4955-15T2 he claimed the delay in the administrative proceedings prevented
acquisition of phone records showing these calls.
On April 28, 2016, the ALJ issued his decision. He rejected
appellant's arguments, approved the suspension, and ordered
satisfaction of all amounts due. Appellant appealed to the
Commissioner of the MVC. In a decision dated June 6, 2016, the
Commissioner adopted the ALJ's findings and conclusions, with a
slight modification to the amount due. This appeal followed.
Our review of an administrative agency's final decision is
limited and we give due regard to the agency's credibility
findings. Logan v. Bd. of Review, 299 N.J. Super. 346, 347-48
(App. Div. 1997). In our review we examine
(1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.
[In re Herrmann, 192 N.J. 19, 28 (2007) (quoting Mazza v. Bd. of Trs., 143 N.J. 22, 25 (1995)).]
In this regard, we uphold the agency's determination unless a
challenger presents "a clear showing [the decision] is arbitrary,
7 A-4955-15T2 capricious, or unreasonable, or that it lacks fair support in the
record." Id. at 27-28.
The obligations of motorists using toll roads is set forth
by statute. "No vehicle shall be permitted to make use of any
highway . . . operated by the New Jersey Turnpike Authority . . .
except upon the payment of such tolls, if any, as may from time
to time be prescribed by the Authority." N.J.S.A. 27:23-25.
Further, the Legislature has authorized the MVC "in addition to
any punishment or penalty provided by other sections," to suspend
or revoke the license or registration certificate for, among other
things, nonpayment of tolls. N.J.S.A. 27:23-38; see also N.J.S.A.
39:5-30 ("Every registration certificate, every license
certificate, every privilege to drive motor vehicles, . . . may
be suspended or revoked, . . . for a violation of any of the
provisions of this Title or on any other reasonable grounds.").
On appeal, appellant first argues the MVC failed to provide
timely notice of the violations. Relying on N.J.S.A. 27:23-34.3,
he urges written notice must be provided within sixty days of the
violation. Asserting the MVC did not meet this mandate, he argues
the request for payment and the administrative assessment is out
of time, making suspension of his registration unfounded. We are
not persuaded.
8 A-4955-15T2 Importantly, appellant does not assert he was denied notice
of the proposed suspension or revocation of registration imposed
for violating toll obligations. N.J.S.A. 27:23-38 (requiring
written notice of the proposed registration revocation). Rather,
appellant's argument invokes language from N.J.S.A. 27:23-34.3(a)
which states: "If a violation of the toll collection monitoring
system regulations is committed . . . the agent of the authority
may send an advisory and payment request within 60 days of the
date of the violation to the owner of the vehicle . . . providing
. . . the opportunity to resolve the matter prior to the issuance
of a summons and complaint . . . ." The statute permits a process
to resolve disputes regarding toll obligations, prior to
initiation of legal action. Its language is permissive, and does
not compel a prerequisite to collection of unpaid tolls or the MVC
exercise of authority pursuant to N.J.S.A. 27:23-38. See Fogerty
v. Fantasy, Inc., 510 U.S. 517, 533, 114 S. Ct. 1023, 127 L. Ed.
2d 455, 469 (1994) ("The word 'may' clearly connotes discretion.").
The evidence presented in the administrative hearing reflects
Xerox issued notices to appellant of each toll violation, at his
address. The notice was issued within the period stated in
N.J.S.A. 27:23-34.3(a) and included a photograph of his license
plate at the toll plaza, the date of the offense and even the toll
lane used. See SSI Med. Servs. v. Dept. of Human Servs., 146 N.J.
9 A-4955-15T2 614, 621 (1996) (recognizing "a presumption that mail properly
addressed, stamped, and posted was received by the party to whom
it was addressed"). Later, notices were sent electronically.
Again, appellant received and ignored them.
Appellant's testimony the notices were untimely or not
received was apparently found not credible by the ALJ. We note
appellant never presented or articulated a need for more time to
resolve his challenges because of the allegedly untimely notices,
despite what he described as constant contact with E-ZPass
regarding the violations. He presented no evidence other than his
own testimony supporting his position the notices were untimely
mailed. We also observe appellant knew of the violations when
committed. For years, he purposely used the toll roads without
payment, essentially using funds due the taxpayers of this State
at his convenience. His contention of insufficient notice is at
best specious.
Appellant next claims registration suspension is permitted
only following initiation of a formal proceeding in municipal
court. In pertinent part, N.J.S.A. 27:23-34.4 provides "[t]he
municipal court of the municipality wherein a toll collection
monitoring system record was made shall have jurisdiction to hear
violations of the toll collection monitoring system regulations."
However, N.J.S.A. 27:23-38, and N.J.S.A. 39:5-30, permit the MVC
10 A-4955-15T2 to pursue administrative remedies against offenders. We do not
view these avenues as mutually exclusive.
We also are unpersuaded appellant suffered prejudice by the
delay in initiation of the administrative hearing. The record
does not show the MVC was dilatory. Further, appellant's bald
assertion is insufficient to trigger latches. See Nw. Covenant
Med. Ctr. v. Fishman, 167 N.J. 123, 141 (2001) ("The primary factor
to consider when deciding whether to apply laches is whether there
has been a general change in condition during the passage of time
that has made it inequitable to allow the claim to proceed.").
Here, suspension of appellant's registration did not occur until
the final determination was issued in June 2016. We reject his
claim of prejudice.
The final argument attacks the reasonableness of the
administrative fee attached to each toll violation.
An administrative regulation is accorded a presumption of validity against a party's challenge that the regulation is arbitrary, capricious, or unreasonable. N.J. League of Muns. v. Dept. of Cmty. Affairs, 158 N.J. 211, 222 (1999). "If procedurally regular, it may be set aside only if it is proved to be arbitrary or capricious or if it plainly transgresses the statute it purports to effectuate . . . or if it alters the terms of the statute or frustrates the policy embodied in it." In re Repeal of N.J.A.C. 6:28, 204 N.J. Super. 158, 160-61, (App. Div. 1985) (citations omitted). See also In re Adoption of N.J.A.C. 13:38-1.3(f) by the State Board
11 A-4955-15T2 of Optometrists, 341 N.J. Super. 536, 542-43 (App. Div. 2001).
[In re Reg. of Oper. Serv. Providers, 343 N.J. Super. 282, 327 (App. Div. 2001).]
Imposition of an administrative fee assessed against
violators is authorized by N.J.S.A. 27:23-34.3(a), which provides:
The authority or its agent may require as part of the advisory and payment request that the owner pay to the agent the proper toll and a reasonable administrative fee established by the authority and the based upon the actual cost of processing and collecting the violation.
Regulations promulgated by the Commissioner establish the fee
stating only: "the violating vehicle shall pay to the Authority
or its agent, the proper toll and an administrative fee in the
amount of $50.00 per violation." N.J.A.C. 19:9-9.2(b). We note
during the course of appellant's violations relevant to this
appeal, on October 17, 2011, the administrative fee was raised
from $25 to $50. See 43 N.J.R. 2672(b). This rule change was
first proposed on June 6, 2011. See 34 N.J.R. 1325(a)
("Administrative Fee for E-ZPass Violations; Video Enforcement of
Toll Violations in Garden State Parkway Exact Change Lanes;
Prohibition of Non-Passenger Vehicles in Garden State Parkway
Exact Change Lanes; Public Access to Authority Records"). The
proposed amendment to N.J.A.C. 19:9-9.2(b) noted:
12 A-4955-15T2 The administrative fee has remained unchanged at $ 25.00 since the implementation of E-ZPass in the late 1990s. A financial analysis conducted by Authority staff shows that the actual costs of enforcement have risen to $ 50.00 per violation. The Authority proposes an amendment to N.J.A.C. 19:9-9.2(b) to increase the administrative fee to $ 50.00 per violation, in order to allocate the enforcement costs to the narrow class of habitual or intentional toll violators. This increase will only affect E-ZPass violators, and the Authority's practices for the adjudication of inadvertent toll violations will remain unchanged.
The aforementioned financial analysis was not introduced into
the administrative record, nor was it a component of the State's
case below or included in its brief on appeal. When questioned
as to the total amount of fees assessed, Caraballo stated: "The
reason why is because, at one point, the administrative fee was
$25. . . . And then . . . the Turnpike increased it to 50."
Unfortunately, Caraballo's testimony establishing the costs to
justify the underlying $50 administrative fee for each toll
violation was brief and general. He said:
I mean, some of the -- some of the costs – and it's not all-inclusive, but some of the costs can be, again, mailing, print and mail, postage, envelopes, image capture, the violation enforcement cameras, storing the images on the server, transmission. So, it's all-encompassing. And there's some things I'm missing, but that was established as -- as -- $50 was established as the cost for the whole violation enforcement. . . . Handling
13 A-4955-15T2 disputes, handling payments is also a cost that is inclusive of that . . . $50 fee.
We are constrained to conclude this record is insufficient
to support the calculation of the fee as matching "the actual cost
of processing and collecting the violation" mandated by N.J.S.A.
27:23-34.3(a). Accordingly, a remand is required. See Oper.
Serv. Providers, supra, 343 N.J. Super. at 327.
We reject appellant's suggestion that because the
administrative fee significantly exceeds the toll, it is
unreasonable. The need for a sophisticated system to capture toll
violators easily shows the cost to track such individuals down
would exceed the comparatively modest cost of any given toll.
Prudently, the Legislature decided taxpayers should not bear this
burden and shifted the expense to those who commit toll violations
and fail to address their lapse. If the cost of collection is
$50, the sum does not shock the court's sense of fairness.
However, the Legislature provided the agency may charge a fee
that reflects "the actual cost of processing and collecting the
violation." N.J.S.A. 27:23-34.3(a) (emphasis added). The fee
cannot be a disguised method of generating revenue or a penalty.
While the Agency abided by the proper procedures necessary to
increase the administrative fee, we conclude the State's proofs
as to the reasonableness of the fee itself are insufficient. We
14 A-4955-15T2 owe no deference to a regulation we believe runs contrary to its
authorizing statute. See Oper. Serv. Providers, supra, 343 N.J.
Super. at 327.
An agency exercising the power of the State must act fairly
and candidly towards those whose interests may be affected by
agency action. Univ. Cottage Club of Princeton N.J. Corp. v. N.J.
Dept. of Envir. Prot., 191 N.J. 38, 57 (2007). It remains
imperative that "government must 'turn square corners.'" F.M.C.
Stores Co. v. Borough of Morris Plains, 100 N.J. 418, 426 (1985)
(quoting Gruber v. Mayor and Twp. Com. of Raritan, 73 N.J. Super.
120 (App. Div.), aff'd, 39 N.J. 1 (1962)). Accordingly, the fee
imposed must properly be based on the average cost of processing
and collection of unpaid tolls and may not be an arbitrary
estimation.
Our ruling does not require a determination of the individual
cost to pursue each toll appellant evaded on a toll-by-toll basis.
Rather, on remand, the MVC must demonstrate the computation of the
"actual cost of processing and collecting" toll violations, on a
general basis. N.J.S.A. 27:23-34.3(a). Furthermore, such fee
must be uniformly, and rationally, applied to violators throughout
the State. Testimony showing toll violations throughout the state
are processed once per day. Thus, in presenting support for
setting the administrative fee the MVC must substantiate the basis
15 A-4955-15T2 for application on a per violation basis, N.J.S.A. 27:23-34.3(a),
to ameliorate the cost of collection, and not to assess a disguised
fine. Compare Fee, Black's Law Dictionary (9th ed. 2009) (defining
fee as "a charge for labor or services"), with Fine, Black's Law
Dictionary (9th ed. 2009) (defining fine as "a pecuniary criminal
punishment or civil penalty").
We reject as unavailing appellant's claims of insufficient
ability to pay these obligations. Appellant's ample past
interactions with the MVC made him well versed an administrative
fee attached as a consequence to his decision not to pay the tolls
when due. Nevertheless, we are constrained to remand for further
proceedings to determine the proper administrative fee, and the
scope of appellant's violations warranting assessment of the
administrative fee on a rational basis.
Affirmed in part and remanded for additional review
consistent with this opinion. We do not retain jurisdiction.
16 A-4955-15T2