Joseph Larocca and Larocca Auto Sales, Inc. Versus Louisiana Motor Vehicle Commission

• Court: Louisiana Court of Appeal
• Decided: May 10, 2023
• Docket: 22-CA-197
• Status: Unknown

Opinion

JOSEPH LAROCCA AND NO. 22-CA-197 LAROCCA AUTO SALES, INC. FIFTH CIRCUIT VERSUS COURT OF APPEAL LOUISIANA MOTOR VEHICLE COMMISSION STATE OF LOUISIANA

ON APPEAL FROM THE TWENTY-FOURTH JUDICIAL DISTRICT COURT PARISH OF JEFFERSON, STATE OF LOUISIANA NO. 819-515, DIVISION "O" HONORABLE DANYELLE M. TAYLOR, JUDGE PRESIDING

May 10, 2023

STEPHEN J. WINDHORST JUDGE

Panel composed of Judges Robert A. Chaisson, Stephen J. Windhorst, and John J. Molaison, Jr.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED SJW RAC JJM COUNSEL FOR PLAINTIFF/APPELLEE, LAROCCA AUTO SALES, INC. Robert G. Harvey, Sr.

COUNSEL FOR DEFENDANT/APPELLANT, LOUISIANA MOTOR VEHICLE COMMISSION Adrian F. LaPeyronnie, III WINDHORST, J.

Appellant, Louisiana Motor Vehicle Commission, appeals the trial court’s

March 10, 2022 judgment, which reversed and dismissed an administrative

adjudication against appellee, LaRocca’s Auto Sales, Inc. For the reasons that

follow, we affirm in part the trial court’s judgment dismissing the administrative

adjudication. The trial court’s judgment is reversed in part and remanded for further

proceedings as to the award of costs and attorney’s fees.

PROCEDURAL HISTORY and FACTS

This appeal involves an administrative proceeding before the Louisiana Motor

Vehicle Commission (herein after “LMVC” or “the Commission”). The

Commission is the state agency that is authorized to enforce the Louisiana Motor

Vehicles Sales Finance Act (“LMVSFA”), La. R.S. 6:969.1, et seq.1 The

Commission’s executive director filed a complaint and notice of hearing charging

LaRocca’s Auto Sales, Inc. (“LaRocca’s Auto”) with a violation of La R.S. 6:969.35.

The complaint alleged that “since at least October 2019” LaRocca’s Auto has been

engaging in the business of making consumer loans and/or origination of consumer

credit sales without first having acquired a sales finance license as required under

the LMVSFA.

The following facts and evidence were adduced at the March 8, 2021 hearing

before the Commission.

Antoine Derouen, a compliance investigator with the Commission, testified

he was advised by the Commission’s licensing department that LaRocca’s Auto was

offering financing on its website. The licensing department requested that he visit

LaRocca’s Auto’s premises to investigate and determine if LaRocca’s Auto is

required to obtain a sales finance license. He was also informed that the address for

1 La. R.S. 6:969.6 defines “Commission” as the Louisiana Motor Vehicle Commission and the Commission’s authority to enforce the LMVSFA is set forth in La. R.S. 6:969.40 D.

22-CA-197 1 LaRocca’s Auto, 2604 West Napoleon, in Metairie, was the same address as Car

City Autoplex (“Car City”) and that they shared the same inventory based on their

respective websites.

Mr. Derouen testified that on October 14, 2019, prior to visiting LaRocca’s

Auto’s premises, he reviewed the websites for LaRocca’s Auto and Car City. He

determined that they shared the same inventory and confirmed that LaRocca’s

Auto’s website offered financing. Mr. Derouen stated that the website offered

financing through an online application with a link that stated “Apply Online.” The

link redirected him to the “loan application page,” which he printed. He testified

that this application indicates to the Commission that LaRocca’s Auto is offering

financing.

Mr. Derouen stated he also called the phone number listed on LaRocca’s

Auto’s website to “shop the dealership for financing” and an individual answered

“Car City Autoplex.” He informed the individual that he called the phone number

for LaRocca’s Auto. The individual identified himself as Frank Amos and stated

that he was the manager of LaRocca’s Auto and Car City. Mr. Amos informed him

that both businesses “shared the same phone number that – you could obtain the

same vehicle, and that he handles both.” Mr. Derouen stated that he wanted to view

a vehicle and was told to make an appointment online. Mr. Amos told him that he

could complete the application online “to speed up the process. That way, they

would already have my credit run and see how much I was approved for ahead of

time.” Based on the information he acquired, Mr. Derouen determined that he

should visit LaRocca’s Auto and advise the owner that a sales finance license was

required.

Upon arrival at LaRocca’s Auto, Mr. Derouen spoke with Mr. Amos, who

remembered him because Car City recently obtained a sales finance license. Mr.

Derouen testified that Mr. Amos confirmed that he was the manager for LaRocca’s

22-CA-197 2 Auto and Car City, that he handles the daily operations for both businesses, and that

both businesses were originating loans. Mr. Derouen informed Mr. Amos that a

sales finance license was required and gave him an application to be completed by

the owner of LaRocca’s Auto, Joseph LaRocca, within 30 days. Mr. Amos indicated

that he would assist Mr. LaRocca with completing the application because he

recently obtained a sales finance license for Car City. Later during his testimony,

Mr. Derouen testified that Mr. Amos stated that “since he handled the day to day

administrative duties for Mr. LaRocca he would be the one completing it.” While

he was at LaRocca’s Auto’s premises, Mr. Derouen took two photographs of a

“LaRocca Auto Sales” sign on the building shared by LaRocca’s Auto and Car City.

Mr. Derouen again spoke with Mr. Amos a few days later and was informed

that Mr. LaRocca was not present, but that Mr. LaRocca was given the application.

He followed up on November 15, 2019, and Mr. Amos notified him that they needed

additional time to submit the application. He informed Mr. Amos that he needed to

speak with Mr. LaRocca, who called him back “a couple of hours later.” Mr.

LaRocca stated that there was “some confusion between him and Mr. Amos” and he

“only received the application two days prior” and he requested an additional two

weeks. When the application was not received, Mr. Derouen testified that he

attempted to contact Mr. LaRocca at his place of business and spoke with Mr. Amos.

Mr. Amos informed him that the application was complete, but Mr. LaRocca was

attempting to obtain additional documents. Mr. LaRocca was granted an additional

two-week extension. However, when he followed up, Mr. Amos told him that Mr.

LaRocca obtained an attorney and would not be filing the application.

At the hearing, Mr. Derouen was shown the website, which still contained a

link to “Apply Online” for financing. However, when the page was redirected, the

loan application listed Car City instead of LaRocca’s Auto. Although the website

contained this change, the loan application page still had LaRocca’s Auto’s name

22-CA-197 3 right above it and the application had not been removed from the website. Mr.

Derouen testified that LaRocca’s Auto is offering financing due to the loan

application being on its website. He testified that the determining factor is that the

loan application was on its website and according to “LMVC law,” LaRocca’s Auto

was originating loans. He stated that offering and taking loan applications is “a part

of originating,” which requires a license. Mr. Derouen stated that as of the date of

this hearing, a loan calculator, which calculates payments, was now also offered on

the website. Mr. Derouen testified that in his opinion the “mere offering” of finance

is sufficient to trigger a violation of the statute if a sales finance license is not

obtained under the law.2

On cross examination, when asked if LaRocca’s Auto is “making a consumer

loan,” Mr. Derouen replied “Yes, sir. His business is offering financing.” He

testified that “Mr. LaRocca via his website and the used car dealership is offering

financing to consumers.” Mr. Derouen affirmatively stated that his evidence that

LaRocca’s Auto was “making a consumer loan” was the blank application on the

website with the business’ name on the application. Mr. Derouen testified that

LaRocca’s Auto’s manager, Mr. Amos, confirmed that LaRocca’s Auto was

“offering financing via the website,” and he “handles all day-to-day operations” for

LaRocca’s Auto. Mr. Derouen conceded that he did not find nor attempt to locate a

loan application filled out by Mr. LaRocca on behalf of LaRocca’s Auto. He

testified that “originating a loan” constitutes “taking the application and then

forwarding it.” When questioned about the language in La. R.S. 6:969.35 that

specifically refers to a fine for “each contract originated,” Mr. Derouen conceded

that he did not find any contracts completed by Mr. LaRocca on behalf of LaRocca’s

2 During Mr. Derouen’s testimony, the hearing notice, photographs, and website pages were offered and admitted into evidence. The Commission also offered printouts from the Louisiana Secretary of State’s website to show that LaRocca’s Auto and Car City, two separate businesses, are operating out of the same location. It is undisputed that Car City has a sales finance license.

22-CA-197 4 Auto. Mr. Derouen stated LaRocca’s Auto is in violation of the statute because the

“website has a blank application” for financing, which a consumer can complete.

He testified that under “LMVC law that is offering financing, and also constitutes

originating a loan.” He stated that “offering financing” constitutes the “beginning

of originating the loan,” and therefore, LaRocca’s Auto is required to obtain a sales

finance license.

Mr. Derouen acknowledged that the phone number on the website [504-304-

0094] was answered “Car City Autoplex,” not LaRocca’s Auto. He stated that when

he asked, Mr. Amos confirmed that LaRocca’s Auto and Car City share the same

phone number and the same building.” Mr. Amos advised that Mr. LaRocca owned

the lot that his dealership, Car City, is currently located and that he is the manager

and handles the daily operations for both businesses. When he inquired as to how

the sale of the vehicles would be handled since the inventory and price were the

same on both websites, Mr. Amos informed him that “he was the one that made the

final determination.” Mr. Amos further confirmed that LaRocca’s Auto and Car

City both originate loans. Based on his conversation with Mr. Amos, Mr. Derouen

stated that he did not investigate further to determine if the number listed was in fact

LaRocca’s Auto’s phone number. He also testified that based on statements by Mr.

Amos and the LaRocca’s Auto sign on the building, he “knew” LaRocca’s Auto

“was operating out of that location.” He further acknowledged that he did not

investigate the website. He testified that he did not know how to determine the

owner of the website and he did not know how a website is created.

When asked if he learned during his investigation that Mr. LaRocca did not

sell used cars, Mr. Derouen replied “[h]is business sells used cars. Mr. LaRocca is

there two days. Mr. Amos handles the day-to-day business. LaRocca’s Auto Sales

22-CA-197 5 is in the business of selling cars and offering financing.”3 Mr. Derouen confirmed

that each time he called the business, he was not able to speak to Mr. LaRocca. He

testified that Mr. Amos told him Mr. LaRocca was not present and that he was

seldom at the dealership. He testified that Mr. Amos stated that Mr. LaRocca visited

the dealership lot “no more than two days a month,” and he indicated that he

confirmed this fact with Mr. LaRocca.

Mr. Derouen testified that when he visited Mr. Amos at that location in March

or April 2019 in regard to Car City’s necessity to obtain a sales finance license, he

did not observe the LaRocca’s Auto sign on the building. He stated that “there was

no signage . . . everything was Car City.” He testified that LaRocca’s Auto was not

brought to his attention until October of 2019. He stated that if he had been aware

at that time, he would have inquired as to LaRocca’s Auto. He stated that even

though both businesses operate in the same location, they would each need a sales

finance license if they were both offering finance.

Lessie House, the executive director of the Commission, testified that she filed

the complaint against LaRocca’s Auto. She testified that it is the Commission’s

position that LaRocca’s Auto is required to obtain a sales finance license for the

business being conducted at its location. Ms. House testified that it is the

Commission’s “regular interpretation of the law” that “offering finance activities,”

such as those shown on the website, requires a sales finance license. She explained

that one entity (i.e., Car City) being licensed to offer financing at the same location,

does not authorize the unlicensed entity (i.e., LaRocca’s Auto) to offer financing.

LaRocca’s Auto is required to have its own licensing.

On cross-examination, Ms. House acknowledged that she was familiar with

LaRocca’s Auto based on “an incident many years ago where Mr. LaRocca filed a

3 At this point, counsel for the Commission clarified that the violation hearing notice was against LaRocca’s Auto and not against Mr. LaRocca personally.

22-CA-197 6 complaint against one of our Commissioners.” She confirmed she had the ability to

“look up his license” and see how long LaRocca’s Auto has been in business. She

stated that the Commission is “a small agency . . . and we look when we can.”

Ms. House was referred to the complaint sent to LaRocca’s Auto stating that

LaRocca’s Auto was in violation of La. R.S. 6:969.35, alleging that it was “making

consumer loans or origination of consumer credit sales.” Counsel for LaRocca’s

Auto inquired as to whether the Commission was alleging that LaRocca’s Auto was

“making consumer loans.” Ms. House testified that she does not know whether

LaRocca’s Auto is “making consumer loans.” She stated that the Commission did

not charge LaRocca’s Auto with “making consumer loans.” She testified that the

Commission alleged that LaRocca’s Auto is “originating consumer credit sales” by

taking an application for a consumer loan on its website. She stated that although a

definition of origination is not in the language of the statute, it has been the position

of the Commission that the origination of a loan “starts with the taking of an

application.” She conceded the word “application” is also not in the language of the

statute but testified that the word “origination” means “from the beginning.” She

testified that the beginning of a consumer loan is an application, such as the

application on the website. She further testified that the word “origination” means

“an offer of sales financing” and/or an “offer to finance.” She confirmed that the

Commission does not have any written evidence that LaRocca’s Auto completed an

application offered on the website.

During her testimony, Ms. House was questioned by one of the

Commissioners, Price LeBlanc, Jr., about finance contracts at dealerships. He asked

if she was “aware that almost every retail contract, retail loan contract, that’s

originated at auto dealerships – the dealer is actually the lender, on the contract, as

is legally the lender on that contract until – he sells that loan to a finance source,” to

which she replied “Yes, sir.” Counsel for the Commission interrupted Mr.

22-CA-197 7 LeBlanc’s questioning to point out that whether “they got funded in the dealer’s

name or not” was not before the Commission. He stated that the Commission was

not “looking at any he actually funded.” He reiterated that the issue before the

Commission was whether LaRocca’s Auto was “offering financing” and that the

Commission was “not prosecuting any particular loan that was made.” Counsel for

the Commission asserted that LaRocca’s Auto is not charged with “the $1,000 a day

portion of the statute for actually engaging – taking loan application and selling it

off or issuing the credit . . . He’s charged, as it’s clearly stated, with originating by

offering to finance on his website with applications.” After further discussion

between counsel as to whether the Commission had any applications filled out by

LaRocca’s Auto and whether LaRocca’s Auto had any contracts filled out, Ms.

House stated that the Commission was “not prosecuting any particular loan that was

made.” She testified that the application offered on the website is the beginning of

the contract referred to in the statute. She stated that “[i]t’s the origination of the

loan process.”

Joseph LaRocca testified that he is the owner of LaRocca’s Auto located at

4604 West Napoleon Avenue, in Metairie. He testified that LaRocca’s Auto’s phone

number is 504-887-2801 and that LaRocca’s Auto has been licensed to sell used cars

in Louisiana for approximately 31 years. He stated that he currently sells used cars

“through referrals or people, past customers, they call me” and “then I go and take

care of it for them.” Mr. LaRocca testified that he only has three or four vehicles

remaining on the lot. He testified that he does not do any financing of the cars that

he sells and he does not send individuals to banks or finance companies for

financing. Mr. LaRocca was shown the application on the website that provides,

“Apply for an Auto Loan at LaRocca’s,” to which he testified that he had not seen it

before this hearing. Mr. LaRocca testified that he did not put the form on the internet

22-CA-197 8 and that the phone number on the website is not the phone number for LaRocca’s

Auto. He said that he did not know whose phone number was on the website.

Mr. LaRocca testified that he leases a part of his property located at 4604 West

Napoleon Avenue to Car City and Mr. Amos. Mr. LaRocca stated he used to operate

his dealership there exclusively and at that time, he would spend every day at that

location selling cars. He testified that he does not do that anymore; instead, he is

only there once or twice a month. He testified that although he maintains his license

and has three or four cars on the lot, his full-time occupation is taking “care of

construction and personal properties.”

He testified that he objected to the Commission’s allegation that he is in

violation of the statute because he is not making consumer loans or originating

consumer credit sales. Mr. LaRocca stated that Mr. Amos is his tenant and he is

aware that Mr. Amos has his own dealership. Mr. LaRocca confirmed that there is

a sign on the building for LaRocca’s Auto, but emphasized that it has been in the

same place for “at least 20 some-odd years.” He testified that Mr. Amos would

“occasionally” sell one of his vehicles on the lot, but reiterated that he only has three

or four vehicles remaining on the lot. He testified that it was his intention to leave

the sign up and also that Mr. Amos wanted to benefit from his “long years in

business, to get all my goodwill.” Mr. LaRocca testified that when he received the

investigative report with Mr. Amos name in it, he contacted him. He testified that

he never agreed that LaRocca’s Auto’s phone number would be the same as Car

City, and in fact, LaRocca’s Auto’s phone number has never changed and has been

the same “for years.” In addition to letting Mr. Amos benefit from his goodwill, he

testified that he left up the LaRocca’s Auto sign because it is required by the Used

Motor Vehicle Commission to have a sign and a phone number in order to maintain

a used motor vehicle dealership license.

22-CA-197 9 Mr. LaRocca testified that he does not remember speaking with Mr. Derouen.4

He advised that he is the only person that answers the phone number for LaRocca’s

Auto. If someone wanted to speak with him, they could reach him at the number for

LaRocca’s Auto, 504-887-2801, or on his cell phone. He testified that Mr. Amos

did not inform him that the Commission wanted him to fill out an application for a

sales finance license. Mr. Amos only left a name and phone number on his desk and

said that the Commission wanted him to call. Mr. LaRocca testified that he is not

associated in any way with Car City and Mr. Amos is not the manager of LaRocca’s

Auto. He stated he did not tell Mr. Derouen that he was going to fill out the

application or that he was gathering documents and he did not tell Mr. Amos to

advise Mr. Derouen anything. Mr. LaRocca further testified that he did not have

anything to do with the website using the LaRocca’s Auto name, nor did he authorize

or give Mr. Amos permission to create the website. He first learned about the

website at the first hearing held on this complaint.5

On cross examination, Mr. LaRocca testified he was not aware of the website

in his name or the application on the website until the first hearing on January 25,

2021. Immediately after the hearing, he contacted Mr. Amos. He said he could not

say he “was surprised or not surprised” when he learned about the website, but he

did question Mr. Amos about the website and application. Mr. Amos told him he

created the website because he knew he “could get a lot of goodwill out of it.” Mr.

LaRocca testified that he told Mr. Amos to remove the application from the website.

Mr. Amos told him that he put a request in to someone to remove the application

from the website but “that it takes a while for them to correct any website.” When

asked why he did not personally take down the application from the website, Mr.

4 When asked if he remembered talking to Mr. Derouen, Mr. LaRocca testified: “I can’t say that I have. I don’t remember.” 5 A hearing on this complaint was originally started on January 25, 2021, via Zoom. The hearing was subsequently continued to March 8, 2021, via Zoom, because Mr. Derouen was unavailable that day.

22-CA-197 10 LaRocca stated that he did not have authority to remove content from a website that

someone else created.

Mr. LaRocca emphasized that Mr. Amos was his tenant, who pays him rent.

He testified that “if some customer comes in and is inquiring about one of my

vehicles, I would hope he’ll sell it.” If he is able to sell one of his few remaining

vehicles, Mr. LaRocca testified that he does pay Car City “half of his commission.”

He testified that Mr. Amos “can do whatever he wants with my cars as long as he

can move them.” However, Mr. LaRocca testified that Mr. Amos is not running his

business nor does he answer the phone for LaRocca’s Auto. Mr. LaRocca again

testified that he is the only individual that answers the phone for LaRocca’s Auto.

Mr. LaRocca stated that he does not get involved in Mr. Amos’s marketing

techniques because he [LaRocca’s Auto] only has “two or three cars” and he rents

the lot to Mr. Amos. Mr. LaRocca testified that he does not believe he is responsible

for how Mr. Amos markets the cars on the lot.

Mr. Amos testified that he is the owner and manager of Car City, a used car

dealership, located at 4604 West Napoleon Avenue. He testified that he has been at

that location for four and a half years. He testified that he does not own any part of

LaRocca’s Auto. He stated that he rents the lot from Mr. LaRocca and is his tenant.

Mr. LaRocca has a couple of cars on the lot, but he does not do anything to sell them.

He testified that he sells “whatever the customer wants.” If he sells one of the few

cars on the lot that belong to Mr. LaRocca, he does receive half the commission.

However, Mr. Amos testified that he does not “even sell a car a month” for

LaRocca’s Auto because there are “only a few on the lot.” He stated he’s a

“salesman.” Mr. Amos testified that he does not handle LaRocca’s Auto business.

Mr. Amos stated that he created the LaRocca’s Auto website and placed the

photographs showing the dealership name, LaRocca’s Auto, and the application on

the website. He testified that Mr. LaRocca did not have any input in the content on

22-CA-197 11 the website. He testified that he controls the website and pays for it from Car City’s

bank account. Mr. Amos testified that the LaRocca’s Auto and Car City websites

are “cam websites.” He explained that when you sign up for a website, the company

automatically places your company name on the website. He testified that he did

not direct the company to place LaRocca’s Auto’s name at the top of the application;

it “came along with the website design.” He stated that each page of the website is

not individually designed; rather, it is “a website that they already have laid out,

basically.” He testified that he and Mr. LaRocca discussed the website and the

application after the first hearing on this complaint and Mr. LaRocca asked him to

remove the application. He contacted the company that created the website for him

and requested that the application be removed from the website. He stated that he

needed to follow up with them because they did not remove the application, they

only changed the application to state Car City.

Mr. Amos testified that he wanted to leave the LaRocca’s Auto sign on the

building because he wanted to benefit from Mr. LaRocca’s goodwill. He stated that

was also his intention in using the LaRocca’s Auto’s name on the website. He

testified that Mr. LaRocca did not give him authority or permission to put the

application on the website. He testified that he thought he could put it on the website

because he did not think he was breaking a rule. Mr. Amos testified that he did not

tell Mr. Derouen (1) that Car City shared the same phone number with LaRocca’s

Auto; (2) that he was the manager for LaRocca’s Auto; (3) that he handles all of Mr.

LaRocca’s business at LaRocca’s Auto; (4) that LaRocca’s Auto originates loans;

(5) that he would help Mr. LaRocca fill out the application for the sales finance

license; (6) that Mr. LaRocca would submit the application within 30 days; or (7)

that Mr. LaRocca hired an attorney. He specifically testified that he could not have

confirmed that LaRocca’s Auto originated loans because it does not. He stated that

he was aware that Mr. LaRocca had a separate phone number for LaRocca’s Auto

22-CA-197 12 and that the phone number on the LaRocca’s Auto website is the phone number for

Car City. Mr. Amos testified that he does not know Mr. LaRocca’s schedule, but he

does come in a couple of days a month. Although he may occasionally sell one of

Mr. LaRocca’s cars, he does not “run the business.”

Mr. Amos testified that Car City has a sales finance license, and had

previously received a notice from the Commission stating that he needed a sales

finance license. He testified that he obtained a sales finance license only because he

felt pressured, and proceeding with a hearing would cost more money.

At the conclusion of the hearing, counsel for LaRocca’s Auto requested time

to submit proposed findings of fact and conclusions of law, which was granted by

the Commission. On March 23, 2021, counsel for LaRocca’s Auto submitted a post-

hearing memorandum, in which counsel argued that LaRocca’s Auto is not a lender,

does not make consumer loans, and is not a source for origination of consumer credit

under La. R.S. 6:969.35. LaRocca’s Auto further contended that the Commission

failed to produce a single contract of consumer credit allegedly generated by

LaRocca’s Auto and argued that the application on the website did not constitute a

loan origination of a credit sale. The memorandum did not contain any proposed

findings of fact or conclusions of law by LaRocca’s Auto.

On May 17, 2021, the parties appeared before the Commission for a ruling.

Counsel for LaRocca’s Auto stated that he did not make any proposed findings of

fact or conclusions of law because LaRocca’s Auto is not a lender based on the

definitions in the statutes. Counsel for the Commission proposed three findings of

fact and one conclusion of law, all of which were adopted by the Commission.

On June 16, 2021, the Commission issued the following findings of fact and

conclusion of law, assessing a fine and costs against LaRocca’s Auto:

22-CA-197 13 Findings of Fact: 1. LaRocca’s Auto Sales, Inc. is a used motor vehicle dealer; 2. LaRocca’s Auto Sales, Inc. publicly advertised to make consumer loans to purchase motor vehicles using Internet advertising; 3. LaRocca’s Auto Sales, Inc. did not possess a Louisiana Motor Vehicle Commission Sales Finance license at the time it engaged in public advertising to make consumer loans. Conclusion of Law: 1. LaRocca’s Auto Sales, Inc. engaged in the business of making consumer loans without the required license in violation of Louisiana Administrative Code Title 6. Part VII. Chapter 10-B Louisiana Motor Vehicle Sales Finance Act §969.35. [Emphasis added.]

Considering the findings of fact and conclusion of law, the Commission, pursuant to

its authority under La. R.S. 32:1251, et seq., assessed LaRocca’s Auto a fine in the

amount of $500.00 and court costs in the amount of $4,746.52 to be paid to the

Commission.

LaRocca’s Auto appealed to the Twenty-Fourth Judicial District Court

seeking judicial review of the Commission’s judgment. On February 22, 2022, at

the conclusion of the hearing, the trial court found that LaRocca’s Auto was not a

“Lender” under La. R.S. 6:969.6(20) and therefore, LaRocca’s Auto “did not

originate consumer credit transactions under the statute.” On March 10, 2022, the

trial court issued a judgment reversing the Commission’s “Findings of Fact No. 2

and No. 3” and its sole conclusion of law. The trial court dismissed the

administrative action of the Commission against LaRocca’s Auto, finding that the

“substantial rights of [LaRocca’s Auto] have been prejudiced and [the

Commission’s] decision of June 16, 2021 is in error of law, arbitrary and capricious,

is in excess of statutory authority, and is not supported by a preponderance of the

evidence.” The trial court further awarded LaRocca’s Auto $571.12 in costs and

$9,000 in attorney’s fees to be paid by the Commission.

22-CA-197 14 The Commission timely filed this appeal, seeking reversal of the trial court’s

judgment and reinstatement of the Commission’s administrative adjudication

against LaRocca’s Auto.

STANDARD OF REVIEW

Review of an administrative agency’s decision is narrower than the standard

of review applied to civil and criminal cases. Spears v. Louisiana Board of Practical

Nurse Examiners, 16-587 (La. App. 5 Cir. 06/15/17), 223 So.3d 679, 687. A party

aggrieved by a final agency decision in an administrative adjudication proceeding is

entitled to have that decision initially reviewed by the trial court of the parish in

which the agency is located. La. R.S. 49:978.1 A & B (formerly La. R.S. 49:964).6

The review shall be conducted by the trial court without a jury and “shall be confined

to the record.” La. R.S. 49:978.1 D. “It is elementary that a court’s function is not

to weigh de novo the available evidence and to substitute its judgment for that of the

agency.” Spears, 223 So.3d at 687-688 (quoting Save Ourselves, Inc. v. La.

Environmental Control Commission, 452 So.2d 1152, 1159 (La. 1984)).

Functioning as a court of appeal, the trial court is a court of record and cannot receive

new evidence. McCall v. Parish of Jefferson, 15-103 (La. App. 5 Cir. 10/28/15),

178 So.3d 174, 176.

A party aggrieved by the trial court’s decision is entitled to appeal to the

appropriate appellate court as in other civil cases. La. R.S. 49:979 (formerly La.

R.S. 49:965).7 When an appellate court reviews the trial court’s judgment, no

deference is owed by the appellate court to the trial court’s factual findings or legal

conclusions, “just as no deference is owed by the Louisiana Supreme Court to factual

findings or legal conclusions of the court of appeal.” Spears, 223 So.3d at 688,

(quoting Tomorrow’s Investors, LLC v. State, 11-1616 (La. App. 1 Cir. 03/23/12),

6 La. R.S. 49:964 was redesignated as La. R.S. 49:978.1 by Acts 2022, No. 663, §1. 7 La. R.S. 49:965 was redesignated as La. R.S. 49:979 by Acts 2022, No. 663, §1.

22-CA-197 15 92 So.3d 364, 367, writ denied, 12-886 (La. 06/01/12), 90 So.3d 444); Kelley Blue

Book Co., Inc. v. Louisiana Motor Vehicle Commission, 16-281 (La. App. 5 Cir.

12/07/16), 204 So.3d 1139, 1145, writ denied, 17-32 (La. 02/10/17), 216 So.3d 49.

An appellate court sitting in review of an administrative agency reviews the findings

and decision of the administrative agency and not the decision of the trial court.

Department of Children and Family Services Matter of J.M., 20-309 (La. App. 5 Cir.

03/31/21), 316 So.3d 178, 181-182; Sylvester v. City of New Orleans Through Code

Enforcement and Hearings Bureau, 17-283 (La. App. 4 Cir. 10/11/17), 228 So.3d

285, 287.

Therefore, an appellate court reviews the trial court’s judgment de novo and

conducts an independent review of the relevant facts and law. Elio Motors, Inc. v.

Louisiana Motor Vehicle Commission, 18-545 (La. App. 5 Cir. 03/27/19), 268 So.3d

1132, 1148, writ denied, 19-656 (La. 06/17/19), 274 So.3d 572. Consequently, this

court will conduct its own independent review of the record in accordance with the

standards set forth in La. R.S. 49:978.1 G to determine (1) if the findings of a

statutory violation are supported by the facts of the record [findings of fact] and the

applicable law [conclusions of law], and (2) if the administrative agency exceeded

its authority or acted without a rational basis in imposing penalties. Id. at 136.

La. R.S. 49:978.1 G provides for the scope of judicial review of agency

decisions and sets forth the exclusive grounds upon which an administrative

agency’s decision may be reversed or modified:

G. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because of the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional or statutory provisions; (2) In excess of the statutory authority of the agency; (3) Made upon unlawful procedure; (4) Affected by other error of law;

22-CA-197 16 (5) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or (6) Not supported and sustainable by a preponderance of evidence as determined by the reviewing court. In the application of this rule, the court shall make its own determination and conclusions of fact by a preponderance of evidence based upon its own evaluation of the record reviewed in its entirety upon judicial review. In the application of the rule, where the agency has the opportunity to judge the credibility of witnesses by first-hand observation of demeanor on the witness stand and the reviewing court does not due regard shall be given to the agency’s determination of credibility issues.

Any one of the six grounds listed in the statute is sufficient to modify or

reverse an agency determination. Department of Children and Family Services

Matter of J.M., 316 So.3d at 181. An arbitrary decision shows “disregard of

evidence or of the proper weight thereof” while a capricious decision “has no

substantial evidence to support it or the conclusion is contrary to substantiated

competent evidence.” Carpenter v. State, Dept. of Health and Hospitals, 05-1904

(La. App. 1 Cir. 09/20/06), 944 So.2d 604, 612, writ denied, 06-2804 (La. 01/26/07),

948 So.2d 174; Spears, 223 So.3d at 688. Where the law allows the agency to

exercise discretion, the statute’s plain language concludes that such exercise must

be neither abusive nor clearly unwarranted. Carpenter, 944 So.2d at 612; La. R.S.

49:978.1 G(5). Subsection G(5) is used in reviewing an agency's exercise of

discretion, its conclusions of law, and mixed questions of fact and law. Subsection

G(6) is used in reviewing questions of fact and requires that due regard be given to

credibility determinations based on an agency's or a tribunal's firsthand observations

of witnesses. Elio Motors, Inc., 268 So.3d at 1148; Carpenter, 944 So.2d at 608-

610. However, a fact-finder's “disbelief of witnesses...cannot be used as a means to

supplant affirmative proof where none exists and thus afford the basis for a

judgment.” Carpenter, 944 So.2d at 610, citing Stroik v. Ponseti, 97-2897 (La.

09/09/97), 699 So.2d 1072, 1080. It is also well settled that “speculation, conjecture,

near possibility, and even unsupported probabilities, are not sufficient to support a

22-CA-197 17 judgment.” Id., citing Pierce v. Phoenix Ins. Co., 213 So.2d 73, 76 (La. App. 1 Cir.

1968).

When the issue on judicial review involves the agency's evaluation of the

evidence and application of law to facts, the court's review becomes intertwined.

Elio Motors, Inc., 268 So.3d at 1149. Credibility determinations of evidence are

considered as factual questions under La. R.S. 49:978.1 G(6), but the application of

the law to the facts is a legal conclusion subject to analysis under La. R.S. 49:978.1

G(5). Id.; Carpenter, 944 So.2d at 609; Wild v. State, Dept. of Health and Hospitals,

08-1056 (La. App. 1 Cir. 12/23/08), 7 So.3d 1, 6-7.

DISCUSSION

On appeal, the Commission contends that the trial court erred (1) in reversing

the Commission’s Findings of Fact Nos. 2 and 3; (2) in reversing the sole conclusion

of law; and (3) in awarding LaRocca’s Auto court costs and attorney’s fees.

Specifically, the Commission contends that the findings of fact and conclusion of

law are factually and legally supported under La. R.S. 49:978.1 G, and that it did not

exceed its authority or act without a rational basis in imposing penalties against

LaRocca’s Auto. The Commission also asserts that the trial court exceeded its

authority in awarding costs and attorney’s fees to LaRocca’s Auto. Accordingly, the

Commission contends that the trial court’s judgment should be reversed and the

Commission’s administrative adjudication against LaRocca’s Auto should be

reinstated. For the following reasons, we find the Commission’s arguments are

without merit.

The Commission filed a complaint against LaRocca’s Auto for its alleged

violation of La. R.S. 6:969.35, which provides in pertinent part:

A. (10) Unless a person has first obtained a license from the commission or is exempt from licensing under R.S. 6:969.36, he shall not engage in the business of making consumer loans or the origination of consumer credit sales subject to this Chapter.

22-CA-197 18 * * * D. Any person violating this Section may be fined one thousand dollars for each contract originated or purchased or for each debt waiver or debt forgiveness agreement issued or guaranteed without that person being properly licensed. The fine shall be payable to the commission. [Emphasis added.] 8

The Commission’s Finding of Fact No. 1

It is undisputed that LaRocca’s Auto is a used motor vehicle dealer as found

by the Commission. This fact is supported by evidence in the record. Mr. LaRocca

testified that he is the owner of LaRocca’s Auto, which is located at 4604 West

Napoleon Avenue in Metairie, and that LaRocca’s Auto is a licensed dealer of used

cars.

The Commission’s Findings of Fact Nos. 2 and 3

The Commission found that LaRocca’s Auto publicly advertised to make

consumer loans to purchase motor vehicles using internet advertising and that

LaRocca’s Auto did not possess a sales finance license at the time it engaged in

public advertising to make consumer loans. The Commission contends that these

findings of fact and conclusion of law are factually and legally supported by the

record pursuant to the standard of review set forth in La. R.S. 49:978.1 G.

It is undisputed that LaRocca’s Auto does not possess a sales finance license.

However, based on a review of the entire record and giving “due regard” to the

Commission’s opportunity for first-hand observations at the hearing, we find the

Commission’s finding that LaRocca’s Auto publicly advertised to make consumer

loans to purchase motor vehicles using internet advertising is “not supported and

sustainable by a preponderance of evidence” as required by La. R.S. 49:978.1 G(6).

8 La. R.S. 6:969.41 provides:

A. Any person who willfully violates any provision of this Chapter shall be subject to a fine by the commission in an amount not to exceed five thousand dollars per violation. B. The commission may render judgment for costs, or any part thereof, against any party to proceedings held or scheduled to be held before the commission as it may consider equitable. These costs shall include but shall not be limited to court reporter fees, commission attorney fees, the mileage and per diem of the commission, and other applicable reasonable costs. C. Any person who is required to be licensed under this Chapter and who fails to timely obtain a license as herein provided may be ordered by the commission to pay a penalty of one hundred dollars in addition to the regular license fee herein provided.

22-CA-197 19 The complaint sent to LaRocca’s Auto alleged that “since at least October

2019,” LaRocca’s Auto “has been engaging in the business of making consumer

loans and/or origination of consumer credit sales” pursuant to La. R.S. 6:969.35. At

the hearing, after extensive questioning of the witnesses and discussions between

counsel and the Commission as to whether the Commission was alleging that

LaRocca’s Auto completed any applications or contracts, or was engaged in the

business of making consumer loans, counsel for the Commission and its witnesses

unequivocally clarified numerous times that LaRocca’s Auto was not charged with

“making consumer loans.” The Commission and its witnesses explicitly stated that

LaRocca’s Auto was charged with “the origination of consumer credit sales”

because LaRocca’s Auto was “offering” financing on its website through a

credit/loan application. Counsel for the Commission argued, and its witnesses

testified, that it is the position of the Commission that “offering” financing (i.e., the

blank credit/loan application on the website) is the beginning of originating a

consumer credit sales.

Thus, all of the evidence presented by the Commission attempted to show that

LaRocca’s Auto was “originating” consumer credit sales, not “making consumer

loans.” The findings of fact only state that LaRocca’s Auto was engaged in the

business of “making consumer loans,” which is clearly “not supported and

sustainable by a preponderance of evidence.” Moreover, the Commission and its

counsel expressly stated that LaRocca’s Auto was not charged with “making

consumer loans,” and that the Commission was not intending to prove that

LaRocca’s Auto was “making consumer loans.”

The Commission argues, citing Chaumont v. City of New Orleans, 20-17 (La.

App. 4 Cir. 06/03/20), 302 So.3d 39, 50, that the jurisprudence holds that where the

findings of fact and the reasons therefor are necessarily implicit in the record and the

administrative determination is supported and sustainable by a preponderance of

22-CA-197 20 evidence, the administrative decision is not invalid merely because the agency failed

to explicitly articulate that which is self-evident.

Specifically, Counsel for the Commission argues that during the proceeding,

the Commission knew the complaint against LaRocca’s Auto was solely for its

“origination of consumer credit sales;” and not for making consumer loans. The

Commission contends that it “is implicit in the record that all evidence submitted

was for the purpose of proving that LaRocca’s Auto violated La. R.S. R.S. 6:969.35

by its origination of consumer credit sales.” Thus, the Commission asserts that its

“decision/order are supported and sustainable by a preponderance of the evidence.”

To the extent LaRocca’s Auto argues that the Commission’s judgment may be

invalid due to the wording of the judgment, we find this argument is without merit

for the following reasons.

First, the holding in Chaumont, supra, is distinguishable from the facts of this

case. In Chaumont, the administrative hearing officer found that plaintiff violated

certain provisions of the New Orleans city Code and Comprehensive Zoning

Ordinance governing short-term rental properties. Chaumont, 302 So.3d at 42.

Plaintiff appealed and the trial court affirmed the administrative hearing officer. Id.

Plaintiff appealed alleging in part that the trial court erred in dismissing her

suspensive appeal because the hearing officer failed to dictate her findings of fact

and conclusions of law as required by La. R.S. 49:958.9 Id. at 45. The Fourth Circuit

held that the Administrative Procedure Act (“APA”) only applies to state agencies

and thus, the City of New Orleans (“the City”), a municipality, was excluded from

complying with the APA. Id. at 49-50. The court further found that even if the

hearing officer was subject to the provisions of La. R.S. 49:958, her failure to include

findings of fact and conclusions of law in her decision was not fatal. Id. at 50. The

9 La. R.S. 49:958 was re-designated as La. R.S. 49:977 by Acts 2022, No. 663, §1.

22-CA-197 21 court explained that the City presented evidence that showed that plaintiff violated

the City’s ordinances and plaintiff did not offer any evidence in opposition. Id. In

that case, the court found that although the hearing officer did not expressly

articulate the basis of her decision under La. R.S. 49:958, the reasons for her ruling

were evident from the record. Id. The court found that the failure to provide factual

findings or conclusions of law under the circumstances of that case did not invalidate

the hearing officer’s ruling. Id.

Chaumont is distinguishable from the present case. In this case, the

Commission, unlike the administrative agency in Chaumont, did in fact articulate

specific findings of fact and conclusions of law. Upon review of the record, we find

that the issue of whether the alleged violation was for making consumer loans or for

the origination of consumer credit sales was discussed in depth and with some

confusion throughout the hearing. Although the Commission stated at different

times during the hearing that it was not charging or alleging that LaRocca’s Auto

was “making consumer loans,” the findings of fact and conclusions of law

articulated by the Commission specifically found that LaRocca’s Auto was in fact

“making consumer loans.” The findings of fact and conclusions of law did not

include “origination of consumer credit sales.”

The Commission argues that it was clear that LaRocca’s Auto was charged

with a violation of engaging in the origination of consumer credit loans. While the

evidence offered during the proceeding focused on the “offering” of finance through

the application on the website (i.e., the alleged origination of consumer credit sales

violation), the record is equally clear that there were numerous discussions and

questions as to whether LaRocca’s Auto engaged in the business of making

consumer loans and whether an actual completed contract was needed for making

consumer loans and/or origination of consumer credit sales. This confusion as to the

specific violation with which LaRocca Auto was charged by the Commission can

22-CA-197 22 also be seen by the questions posed by Mr. LeBlanc, one of the commissioners, to

Ms. House during her testimony concerning completed finance contracts.

Consequently, contrary to the Commission’s argument, the findings of fact and the

reasons suggesting a finding that LaRocca’s Auto was engaged in the “origination

of consumer credits sales,” instead of “making consumer loans,” is not implicit in

the record. The Commission made an express finding that LaRocca’s Auto was

“making consumer loans.” Based upon a review of the Commission’s specific

findings of fact, the administrative determination by the Commission that LaRocca’s

Auto was “making consumer loans” is not supported and sustainable by a

preponderance of evidence and is not self-evident.

Secondly, the record shows that the findings of fact were specifically

suggested by counsel for the Commission and were adopted without change by the

Commission. Therefore, the Commission cannot now state that the language used

in the findings of fact necessarily included “origination of consumer credit sales” or

that it was implicit and self-evident that the Commission found and intended to

conclude that LaRocca’s Auto engaged in the origination of consumer credits based

on the record. The findings of fact do not support the Commission’s assertion.

Thirdly, even assuming the Commission meant to include “origination of

consumer credit sales” in the findings of fact or that this finding was implicit and

self-evident in the record, and pretermitting a discussion of the word “origination,”

the conclusion that LaRocca’s Auto originated consumer credit sales is not

supported by the record and sustainable by a preponderance of evidence. The

Commission contended that LaRocca’s Auto was “offering” finance through an

application on the LaRocca website and thus, was engaging in the origination of

consumer credit sales. Although the website is named LaRocca’s Auto and the

credit/loan application located on the website includes LaRocca’s Auto’s name, the

undisputed evidence established that (1) Mr. Amos, the owner and manager of Car

22-CA-197 23 City, created the “LaRocca’s Auto” website without Mr. LaRocca’s knowledge,

permission, or authority; (2) Mr. Amos was not the manager of LaRocca’s Auto; (3)

Mr. Amos did not handle the daily operations of LaRocca’s Auto; (4) Mr. Amos was

not the agent of LaRocca’s Auto;10 (5) Mr. LaRocca was not aware of the website or

application on the website until the first hearing on January 25, 2021, clearly after

the alleged violation in the complaint; (6) Mr. LaRocca immediately requested Mr.

Amos to remove the application from the website; and (7) Mr. LaRocca had no

authority or control over the website content and no authority to remove the

application from the website because it was created by Mr. Amos. Thus, a finding

that LaRocca’s Auto engaged in the making of consumer loans or the origination of

consumer credit sales via the application on the website, is likewise not supported

or sustainable by a preponderance of evidence.

Accordingly, for the reasons stated herein, we find the Commission’s findings

of fact and credibility determinations are not supported and sustainable by a

preponderance of evidence as required under La. R.S. 49: 978.1 G(6).

The Commission’s Conclusion of Law

La. R.S. 49: 978.1 G(5) permits a court to reverse or modify an administrative

determination if the determination is “arbitrary or capricious or characterized by

abuse of discretion or clearly unwarranted exercise of discretion.” In determining

the present matter, the Commission heard testimony and received evidence at the

hearing as to whether LaRocca’s Auto violated La. R.S. 6:969.35. Based on its

findings of fact, the Commission concluded that LaRocca’s Auto engaged in the

business of making consumer loans without the required license in violation La. R.S.

6:969.35.

10 The Commission offered as an exhibit a printout from the Secretary of State’s Office showing the owners, officers and agents of LaRocca’s Auto and Car City. Mr. Amos is not listed in any capacity as an agent or officer of LaRocca’s Auto.

22-CA-197 24 For the reasons stated herein, upon our independent review of the record in

accordance with the standards provided by La. R.S. 49:978.1 G(5), we find that the

Commission’s findings of fact that La Rocca’s Auto publicly advertised to make

consumer loans to purchase motor vehicles without a sales finance license is not

supported and sustainable by a preponderance of evidence. We further find based

on the applicable law and facts of this case that the Commission’s legal conclusion

that LaRocca’s Auto engaged in the business of making consumer loans without the

required sales finance license in violation La. R.S. 6:969.35, was arbitrary and

capricious. Consequently, we find the Commission exceeded its authority and acted

without a rational basis in assessing a fine and costs against LaRocca’s Auto.

Even assuming that the Commission’s findings of fact and conclusion of law

implicitly included “origination of consumer credit sales,” the facts do not support a

finding that LaRocca’s Auto engaged in the business of making consumer loans

and/or the origination of consumer credit sales under La. R.S. 6:969.35.

The starting point in the interpretation of any statute is the language of the

statute itself, as what a legislature states in the text of a statute is considered the best

evidence of its intent and will. Mayeux v. Charlet, 16-1463 (La. 10/28/16), 203

So.3d 1030, 1036. When a law is clear and unambiguous and its application does

not lead to absurd consequences, the law shall be applied as written and no further

interpretation may be made in search of the intent of the legislature. La. C.C. art. 9;

La. R.S. 1:3; La. R.S. 1:4. However, when the language of the law is susceptible of

different meanings, it must be interpreted as having the meaning that best conforms

to the purpose of the law. La. C.C. art. 10; La. R.S. 1:3.

Statutes which authorize the imposition of a penalty must be strictly

construed. Elio Motors, Inc., 268 So.3d at 1150; Gibbs Const. Co., Inc. v. State,

Dept. of Labor, 540 So.2d 268 (La. 1989). An administrative agency must act in

conformity with its statutory authority, which it cannot exceed. Elio Motors, Inc.,

22-CA-197 25 268 So.3d at 1150; Benson & Gold Chevrolet, Inc. v. Louisiana Motor Vehicle

Commission, 403 So.2d 13, 20 (La. 1981). An administrative agency “cannot go

too far afield from the letter of the law even if it perceives that it is furthering the

law’s spirit.” Benson & Gold Chevrolet, 403 So.2d at 20.

La. R.S. 6:969.35 provides in pertinent part:

A. (1) Unless a person has first obtained a license from the commission or is exempt from licensing under R.S. 6:969.36, he shall not engage in the business of making consumer loans or the origination of consumer credit sales subject to this Chapter. * * * D. Any person violating this Section may be fined one thousand dollars for each contract originated or purchased or for each debt waiver or debt forgiveness agreement issued or guaranteed without that person being properly licensed. The fine shall be payable to the commission. [Emphasis added.]

To determine whether LaRocca’s Auto is in violation of La. R.S. 6:969.35, it is

necessary to look at the meaning of the words used in the statute. See La. R.S.

6:969.35; La. R.S. 6:969.6; La. R.S. 6:969.7;11 15 U.S.C. 1601 et seq.; 12 C.F.R.

226.1 et seq.

“Consumer loan” is defined as “a loan of money or its equivalent made by a

lender, the proceeds of which are used by the consumer to purchase or refinance the

purchase of a motor vehicle, or which proceeds are used for personal, family, or

household purposes, including debts created by the use of a lender credit card,

revolving loan account, or similar arrangement, as well as insurance premium

financing, with the lender acquiring a purchase money security interest in the

purchased motor vehicle.” La. R.S. 6:969.6(9). “Lender” is defined as “the

originator of credit under a consumer loan, as well as any assignee or transferee of

the consumer's contract.” La. R.S. 6:969.6(20). “Consumer credit sale”12 is defined

11 La. 6:969.7 provides in pertinent part: A. As a general rule of construction, persons may look to comparable rules, definitions, and principles under the Federal Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z of the Board of Governors of the Federal Reserve System, 12 C.F.R. 226.2 seq., for guidance in further defining and interpreting terms and concepts that are not otherwise defined or specified under the provisions of this Chapter. 12 “Credit sale” is defined as “a sale in which the seller is a creditor.” 12 C.F.R. 226.2(16). “Credit sale” is also defined as “any sale in which the seller is a creditor.” 15 U.S.C. 1602(h).

22-CA-197 26 as “the sale of a motor vehicle on credit13 under which the seller14 acquires a purchase

money security interest in the purchased vehicle, and incident to which a credit

service charge15 is charged and the consumer is permitted to defer all or part of the

purchase price or other consideration in two or more installments excluding the

down payment.” La. R.S. 6:969.6(8). “Seller” is defined as the seller of a motor

vehicle, including the seller of a motor vehicle under a consumer credit sale, as well

as any assignee or transferee of the consumer's contract.” La. R.S. 6:969.6(30).

“Consumer” is defined as “a natural person who enters into a consumer loan or

consumer credit sale of a motor vehicle to be used primarily for personal, family, or

household purposes.” La. R.S. 6:969.6(6). “Contract” is defined as “the consumer's

retail installment contract, note, agreement, or other evidence of indebtedness

executed in connection with a motor vehicle credit transaction.” La. R.S.

6:969.6(10). “Motor vehicle credit transaction” is defined as “a consumer loan or a

consumer credit sale involving a Louisiana consumer, or that is otherwise made

13 Pursuant to 12 C.F.R. 226.2(14), “Credit” is defined as “the right to defer payment of debt or to incur debt and defer its payment.” “Credit” is also defined as “the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment.” 15 U.S.C. 1602(f). 14 “Creditor” is defined in pertinent part as: (i) A person who regularly extends consumer credit that is subject to a finance charge or is payable by written agreement in more than four installments (not including a down payment), and to whom the obligation is initially payable, either on the face of the note or contract, or by agreement when there is no note or contract. * * * (v) A person regularly extends consumer credit only if it extended credit (other than credit subject to the requirements of §226.32) more than 25 times (or more than 5 times for transactions secured by a dwelling) in the preceding calendar year. If a person did not meet these numerical standards in the preceding calendar year, the numerical standards shall be applied to the current calendar year. A person regularly extends consumer credit if, in any 12–month period, the person originates more than one credit extension that is subject to the requirements of §226.32 or one or more such credit extensions through a mortgage broker. “Creditor” is also defined as referring “only to a person who both (1) regularly extends, whether in connection with loans, sales of property or services, or otherwise, consumer credit which is payable by agreement in more than four installments or for which the payment of a finance charge is or may be required, and (2) is the person to whom the debt arising from the consumer credit transaction is initially payable on the face of the evidence of indebtedness or, if there is no such evidence of indebtedness, by agreement. Notwithstanding the preceding sentence, in the case of an open-end credit plan involving a credit card, the card issuer and any person who honors the credit card and offers a discount which is a finance charge are creditors.” 15 U.S.C. 1602(g). 15 “Credit service charge” is defined, in pertinent part, under La. R.S. 6:969.6(14) as “the sum of the following”: (a)(i) All charges payable directly or indirectly by the consumer and imposed directly or indirectly by the seller as a requirement of the extension of credit, including any of the following types of charges that are applicable: interest; time price differential; service; carrying or other charge, however denominated; points and discount fees; and premium or other charge for any guarantee or insurance protecting the extender of credit against the consumer's default or other credit loss. (ii) Charges paid by the consumer for investigating the consumer's credit worthiness.

22-CA-197 27 subject to this Chapter.” La. R.S. 6:969.6(24). “Motor vehicle” is defined in

pertinent part as a “used transportation device, including automobiles . . . that are

operated over the public highways and the streets of this state.” La. R.S.

6:969.6(23)(a).

The words “engage” and “origination” are not defined in this Chapter. The

meaning and/or interpretation of these words, especially origination, were discussed

in the proceeding before the Commission.

On appeal, the Commission contends 15 U.S.C.A. 1602 is beneficial in

interpreting “origination” because it defines a mortgage originator to mean “any

person who, for direct or indirect compensation or gain, or in the expectation of

direct or indirect compensation or gain . . . assists a consumer in obtaining or apply

to obtain a residential mortgage loan.” The Commission also asserts that pursuant

to 12 C.F.R. 226.1, one of the elements consider in the application of Regulation Z

is that an individual or business extends credit when credit is offered or extended to

consumers. The Commission argues that the testimony from Ms. House and Mr.

Derouen and the evidence, including the LaRocca’s Auto credit/loan application,

established that LaRocca’s Auto’s “offer of credit to finance sales of its used cars

along with the providing of credit and loan applications is LaRocca’s Auto’s

engaging in the business of making consumer loans or the origination of consumer

credit sales.” Additionally, the Commission argues that because the legislature did

not define “engagement” or “origination,” this court must give deference to the “long

standing interpretation” by the Commission as to the meaning of La. R.S. 6:969.35

with regards to the administrative agency’s application of the statute. In this case,

the Commission asserts that Ms. House testified that the long standing interpretation

is that origination of consumer credit sales includes offering an application for credit

to a consumer and offering it via the website. We disagree.

22-CA-197 28 While the administrative construction given to a statute by the agency

responsible for its implementation may be a persuasive indication of its true meaning

in some instances, an administrative interpretation cannot be given weight where it

is contrary to or inconsistent with the statute, and determination of legislative intent

is a judicial matter. See Triangle v. PPG Indus., Inc., 332 So.2d 777, 782 (La. 1976);

City of Baton Rouge/Parish of East Baton Rouge v. 200 Government Street, LLC,

08-510 (La. App. 1 Cir. 09/23/08), 995 So.2d 32, 38, writ denied, 08-2554 (La.

01/09/09), 998 So.2d 726; Boyd v. Louisiana Real Estate Com’n, 581 So.2d 304 (La.

App. 1 Cir. 1991).

Black’s Law Dictionary defines “engage” as “to employ or involve oneself;

to take part in; to embark on.”16 Originator is defined as “someone who conceives

of something and starts it” or “the entity that initiates a funds transfer subject to the

UCC article 4A.”17 Origination fee is defined as “a fee charged by a lender for

preparing and processing a loan.”18 Originate is defined as “to take or have origin:

Begin” or “to give rise to: Initiate.”19

La. R.S. 6:969.35 provides that unless a person has first obtained a license

from the commission or is exempt, he shall not “engage in the business of making

consumer loans or the origination of consumer credit sales.” Under the plain

language of the statute, we find the statute does not mandate that a person who offers

a blank credit/loan application on a website be required to be licensed. We find the

Commission’s interpretation of the statute, under the facts of this case, are contrary

to and/or inconsistent with the statute. Considering the plain language of the statute

and the definitions set forth herein, we find the statute was intended to apply to those

who shall “engage in the business of making consumer loans or the origination of

16 Black’s Law Dictionary (11th ed. 2019). 17 Id. 18 Id. 19 “Originate.” Merriam-Webster.com Dictionary, Merriam-Webster, https://www.merriam-webster.com/dictionary/originate. Accessed 7 Feb. 2023.

22-CA-197 29 consumer credit sales” (i.e., a lender and/or creditor). The facts as submitted to the

Commission through evidence and testimony did not support or sustain by a

preponderance of evidence a finding that LaRocca’s Auto is a lender and/or creditor

for the purpose of engaging in the business of making consumer loans or the

origination of consumer credit sales.20 Moreover, Mr. Amos, who was not a manager

or agent of LaRocca’s Auto, without authority of Mr. LaRocca, created the website

that contained a blank credit/loan application. The record further shows that Mr.

LaRocca had no knowledge of the website or the application prior to the first hearing

and it is undisputed that he had no control over the content of the website because it

was not created by him. It is also undisputed that Mr. Derouen did not investigate

who created the website or whether Mr. Amos had authority to create the website

and/or offer a blank credit/loan application on the website.

Upon our independent review of the record in accordance with the standards

set forth in La. R.S. 49:978.1 G, we find that the Commission’s findings of fact that

LaRocca’s Auto publicly advertised to make consumer loans to purchase motor

vehicles without a sales finance license is not supported and sustainable by a

preponderance of evidence. We further find based on the applicable law and facts,

the Commission’s legal conclusion that LaRocca’s Auto engaged in the business of

making consumer loans without the required sales finance license in violation La.

R.S. 6:969.35, was arbitrary and capricious. Consequently, for the numerous

reasons stated herein, we find the Commission exceeded its authority and acted

without a rational basis in assessing a fine and costs against LaRocca’s Auto for an

alleged violation of La. R.S. 6:969.35. Accordingly, we affirm in part the trial

court’s judgment reversing the Commission’s Findings of Fact Nos. 2 and 3 and the

20 In this case, the Findings of Fact and Conclusion of Law were based on the Commission’s findings that LaRocca’s Auto was “making consumer loans,” not that LaRocca’s Auto was engaged in the origination of consumer credit sales.

22-CA-197 30 Commission’s conclusion of law, and the trial court’s dismissal of the administrative

proceeding against LaRocca’s Auto.

Costs and Attorney’s Fees

The Commission contends the trial court erred in awarding costs and

attorney’s fees to LaRocca’s Auto. In its appellate brief, the Commission argues

that the law does not authorize the award of costs and attorney’s fees against the

Commission pursuant to La. R.S. 49:964.1 A. The Commission asserts that this

statute authorizes assessments against an agency only when the agency files for

judicial review and in this case, LaRocca’s Auto petitioned for judicial review.

Therefore, the Commission asserts that there was no statutory basis for the trial court

to assess costs and attorney’s fees against the Commission.

In opposition, LaRocca’s Auto argues that La. R.S. 49:965.1 governs appeals

by “small businesses, i.e., the public.” LaRocca’s Auto contends that under this

statute the trial court had authority to assess costs and attorney’s fees as it deemed

reasonable under the statute.

In reply, the Commission contends that LaRocca’s Auto did not submit

evidence that it satisfied the “applicable criteria set forth in 13 C.F.R. Part 121” to

establish that it is classified as a “small business” entitled to “reasonable litigation

expenses.” Additionally, the Commission asserts that if La. R.S. 49:965.1 is

applicable, the trial court exceeded its authority under the statute by awarding $9,571

in costs and attorney’s fees to LaRocca’s Auto and against the Commission. The

Commission contends that the statute provides a maximum award of $7,500 in

attorney’s fees and costs. Thus, if entitled, any award for costs and attorney’s

expenses is limited to $7,500.

Under Louisiana law, attorney’s fees are recoverable only where specifically

authorized by statute or contract. Hoffman v. 21st Century North America Ins. Co.,

14-2279 (La. 10/02/15), 209 So.3d 702, 707; Garden Lakes Condominium

22-CA-197 31 Homeowners Ass’n, Inc. v. Perrier, 10-1016 (La. App. 5 Cir. 05/24/11), 66 So.3d 1147,

1148. La. R.S. 49:978.2 (formerly La. R.S. 49:964.1)21 provides in pertinent part:

A. If an agency or official thereof, or other person acting on behalf of an agency or official thereof, files a petition for judicial review of a final decision or order in an adjudication proceeding and such agency, official, or person does not prevail in the final disposition of the judicial review, the agency shall be responsible for the payment of reasonable attorney fees and court costs of the other party.

La. R.S. 49:980 (formerly La. R.S. 49:965.1)22 provides in pertinent part: A. When a small business files a petition seeking: (1) relief from the application or enforcement of an agency rule or regulation, (2) judicial review of the validity or applicability of an agency rule, (3) judicial review of an adverse declaratory order or ruling, or (4) judicial review of a final decision or order in an adjudication proceeding, the petition may include a claim against the agency for the recovery of reasonable litigation expenses. If the small business prevails and the court determines that the agency acted without substantial justification, the court may award such expenses, in addition to granting any other appropriate relief. * * * D. As used in this Section: (1) “Reasonable litigation expenses” means any expenses, not exceeding seven thousand five hundred dollars in connection with any one claim, reasonably incurred in opposing or contesting the agency action, including costs and expenses incurred in both the administrative proceeding and the judicial proceeding, fees and expenses of expert or other witnesses, and attorney fees. (2) “Small business” means a small business as defined by the Small Business Administration, which for purposes of size eligibility or other factors, meets the applicable criteria set forth in 13 Code of Federal Regulations, Part 121, as amended.

Contrary to the Commission’s assertion, and based on the clear language of

the statute, La. R.S. 49:978.2 is not applicable to this proceeding because the

Commission did not file for judicial review with the trial court. Here, LaRocca’s

Auto filed a petition for judicial review with the trial court and therefore, the

provisions of La. R.S. 49:980 appear to apply to the award of costs and attorney’s

fees to LaRocca’s Auto and against the Commission, if the criteria of the statute

applies to the facts of this proceeding.

21 La. R.S. 49:964.1 was re-designated as La. R.S. 49:978.2 by Acts 2022, No. 663, §1. 22 La. R.S. 49:965.1 was re-designated as La. R.S. 49:980 by Acts 2022, No. 663, §1.

22-CA-197 32 La. R.S. 49:980 is penal in nature because it provides for an award of

reasonable litigation expenses, including attorney’s fees and costs. Spine

Diagnostics Center of Baton Rouge, Inc. v. Louisiana State Bd. Of Nursing ex rel.

Louisiana Dept. of Health and Hospitals, 08-813 (La. App. 1 Cir. 12/23/08), 4 So.3d

854, 869, writs denied, 09-144 (La. 04/13/09), 5 So.3d 163 and 09-188 (La.

04/13/09), 5 So.3d 163. It is a well-settled rule of statutory construction that penal

statutes must be strictly construed and their provisions shall be given a genuine

construction according to the fair import of their words, taken in their usual sense,

with regard to the context and with reference to the purpose of the provision. Id.

This rule of law has specifically been applied in the area of administrative law.

Gibbs Constr. Const. Co., 540 So.2d at 269; Benson & Gold Chevrolet, Inc., 403

So.2d at 20.

For a court to have authority to award the expenses of an administrative

proceeding, it must be shown that the “small business” (1) prevailed in court and (2)

“the agency acted without substantial justification.” Mid-City Automotive, LLC v.

Louisiana Department of Public Safety, 19-1219 (La. App. 1 Cir. 05/11/20), 304

So.3d 457, 464. Here, LaRocca’s Auto prevailed on its petition for judicial review

in the trial court. At the conclusion of the hearing before the trial court, the trial

court requested counsel for LaRocca’s Auto to prepare a judgment and to leave a

blank space for costs and attorney’s fees. The trial court then requested counsel for

LaRocca’s Auto to submit an itemized invoice with costs and attorney’s fees for its

consideration as to any amount to be awarded to LaRocca’s Auto. After the

judgment was prepared and circulated, counsel for LaRocca’s Auto submitted the

judgment and an invoice with costs in the amount $586.12 and attorney’s fees in the

amount of $16,135.00 to the trial court for its consideration. The trial court signed

and issued the judgment, awarding LaRocca’s Auto costs in the amount of $571.12

and attorney’s fees in the amount of $9,000.

22-CA-197 33 An award of attorney’s fees will not be modified on appeal absent a showing

of an abuse of discretion. Zydeco’s II, LLC v. Certain Underwriters at Lloyd’s,

London, 19-562 (La. App. 5 Cir. 05/28/21), — So.3d —, 2021WL2178482, writs

denied, 21-1755 (La. 02/08/22), 332 So.3d 665 and 21-1745 (La. 02/08/22), 332

So.3d 640. When awarding attorney’s fees, the trial court must determine the

reasonableness of the attorney's fees to be awarded. Rivet v. State, Dep’t of Transp.

and Dev., 96-145 (La. 09/05/96), 680 So.2d 1154, 1160, 1161. The trial court should

consider the following factors in determining a reasonable amount of attorney’s fees

to award: (1) the ultimate result obtained; (2) the responsibility incurred; (3) the

importance of the litigation: (4) the amount of money involved; (5) the extent and

character of the work performed; (6) the legal knowledge, attainment, and skill of

the attorneys; (7) the number of appearances involved; (8) the intricacies of the facts

involved; (9) the diligence and skill of counsel; and (10) the court's own knowledge.

Id.

Based on the record and for the following reasons, the trial court erred in

awarding costs and attorney’s fees: (1) the record does not show that the trial court

made a finding that the Commission acted without substantial justification pursuant

to La. R.S. 49:980 A; (2) the record does not contain any evidence to show that the

trial court considered the Rivet factors in awarding attorney’s fees and no evidence

was introduced at the hearing; (3) the trial court’s award exceeds the maximum

amount of reasonable litigation expenses as set forth in La. R.S. 49:980 D(1); (4) the

record does not contain any evidence that LaRocca’s Auto is a “small business” as

classified pursuant to La. R.S. 49:980 D(2); and (5) the record does not support the

trial court’s award of costs, which is less than the amount requested by LaRocca’s

Auto.23 Accordingly, the trial court’s judgment awarding costs in the amount of

23 The invoice is not itemized as to costs; rather, it only states the alleged total amount of costs. Therefore, it does not appear based on the record, that the trial court appropriately determined the reasonableness of the costs alleged by LaRocca’s Auto.

22-CA-197 34 $571.12 and attorney’s fees in the amount of $9,000 is reversed and the matter is

remanded for further proceedings on the issue of costs and attorney’s fees.

DECREE

For the foregoing reasons, the trial court’s judgment is affirmed in part as to

reversing the Commission’s Findings of Fact Nos. 2 and 3 and the Commission’s

Conclusion of law and dismissing the administrative proceeding against LaRocca’s

Auto. The trial court’s judgment is reversed in part and remanded for further

AFFIRMED IN PART; REVERSED IN PART; and REMANDED

22-CA-197 35 SUSAN M. CHEHARDY CURTIS B. PURSELL

CHIEF JUDGE CLERK OF COURT

SUSAN S. BUCHHOLZ FREDERICKA H. WICKER CHIEF DEPUTY CLERK JUDE G. GRAVOIS MARC E. JOHNSON ROBERT A. CHAISSON LINDA M. WISEMAN STEPHEN J. WINDHORST FIRST DEPUTY CLERK JOHN J. MOLAISON, JR. CORNELIUS E. REGAN, PRO TEM FIFTH CIRCUIT MELISSA C. LEDET JUDGES 101 DERBIGNY STREET (70053) DIRECTOR OF CENTRAL STAFF POST OFFICE BOX 489 GRETNA, LOUISIANA 70054 (504) 376-1400

(504) 376-1498 FAX www.fifthcircuit.org

NOTICE OF JUDGMENT AND CERTIFICATE OF DELIVERY I CERTIFY THAT A COPY OF THE OPINION IN THE BELOW-NUMBERED MATTER HAS BEEN DELIVERED IN ACCORDANCE WITH UNIFORM RULES - COURT OF APPEAL, RULE 2-16.4 AND 2-16.5 THIS DAY MAY 10, 2023 TO THE TRIAL JUDGE, CLERK OF COURT, COUNSEL OF RECORD AND ALL PARTIES NOT REPRESENTED BY COUNSEL, AS LISTED BELOW:

22-CA-197 E-NOTIFIED 24TH JUDICIAL DISTRICT COURT (CLERK) HONORABLE DANYELLE M. TAYLOR (DISTRICT JUDGE) ROBERT G. HARVEY, SR. (APPELLEE) ADRIAN F. LAPEYRONNIE, III (APPELLANT)

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