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Administrative procedure act ambiguous

The Wisconsin Court of Appeals on Sept. 23 held that, even though an aggrieved party under sec. 227.53 served his adversary, rather than the Division of Hearings and Appeals (DHA), which issued the administrative order being appealed, the circuit court has jurisdiction to review the case.

All Star Rent A Car, Inc., held a motor vehicle dealer license issued by the Department of Transportation (DOT), permitting All Star to sell motor vehicles to retail buyers. The DOT instituted an administrative proceeding before the DHA to revoke All Star’s dealer license because of its alleged violations of statutes and regulations applicable to motor vehicle dealers.

While awaiting a hearing on the revocation, All Star sought to renew its dealer license, which the DOT denied. All Star petitioned DHA for review of the nonrenewal decision, and the two matters were consolidated in a single administrative proceeding.

In a written order dated May 15, 2003, the administrator of the DHA ordered All Star’s motor vehicle dealer license revoked and affirmed the DOT’s refusal to renew All Star’s license.

All Star then filed a petition for judicial review in Dane County Circuit Court, naming the DOT as respondent. All Star served the petition on the DOT and the attorney general’s office, but neither named DHA as a party nor served it with a petition.

The DOT moved to dismiss All Star’s petition on the grounds that the circuit court lacked both personal jurisdiction over it and subject matter jurisdiction over the petition because All Star had failed to name or serve the DHA within 30 days of DHA’s decision and order as required by sec. 227.53(1).

Circuit Court Judge Moria Krueger granted the motion to dismiss, and All Star appealed. The court of appeals reversed in a decision by Judge David G. Deininger, concluding the statutes were ambiguous whether All Star was to serve the DHA or the DOT.

Section 218.0116(2) provides that, if the DOT denies an application for a license, the application may petition the DHA, a division in the Department of Administration (DOA).

Subsection (4) provides that, if the DOT seeks to revoke or suspend a license, it may do so only by persuading the DHA that there are grounds to do so.

Subsection (9) provides that any person aggrieved by a DHA decision may obtain judicial review as provided in Chapter 227.

What the court held

Case: All Star Rent A Car, Inc. v. Wisconsin Department of Transportation, 02-2668

Issue: Are the statutes governing whom to name as respondent when seeking judicial review of administrative actions ambiguous?

Holding: Yes. The statutes are ambiguous, and a petition was wrongly dismissed where the petitioner served the DOT, rather than the DHA.

Holding: Richard J. Ward, Madison, for appellant; F. Thomas Creeron III, Madison, for respondent.

Section 227.53(1)(a)1. provides in relevant part, “Proceedings for review shall be instituted by serving a petition therefore personally or by certified mail upon the agency or one of its officials, and filing the petition in the office of the clerk of circuit court…”

Subsection (1)(a)2. requires that copies also be served upon all parties.

Nevertheless, the court held that All Star’s service only on the DOT was proper. The court wrote, “All Star maintains, however, that its service on the DOT was sufficient because the statutory service requirements are ambiguous when applied to the present facts, and thus, we must permit All Star’s petition to be considered on its merits because it could reasonably conclude that the DOT was the proper agency to be served. We agree.”

The court acknowledged that parties wishing to have administrative decisions reviewed in circuit court are required to strictly comply with statutory requirements for service of process, and a failure to do so may produce harsh consequences, citing Dietrich v. Elliott, 190 Wis. 2d 816, 827, 528 N.W.2d 17 (Ct.App.1995).

However, the continued, “[w]hen an ambiguity exists regarding the specific party to be served, procedural statutes must be construed liberally” to allow for determination of the controversy on its merits, citing McDonough v. DWD, 227 Wis. 2d 271, par. 22, 595 N.W.2d 686 (1999).

Accordingly, the court held that service was sufficient.

The court found the statutes ambiguous because of the definition of “agency” in sec. 227.01(1): “the Wisconsin land council or board, commission, committee, department or officer in the state government, except the governor, a district attorney or a military or judicial officer.”

The court noted that the DHA is not a state “board, commission, committee, department or officer,” but a division of the DOA under sec. 15.03.

The court concluded, “a reasonable person reading Wis. Stat. Sec. 227.53(1), in conjunction with sec. 227.01(1) and sec. 15.103(1), could reasonably conclude that the DHA is not an agency, and thus cannot be the entity which must be served in order to satisfy sec. 227.53(1). And, because it was the DOT that decided to seek revocation of All Star’s motor vehicle dealer license and to deny its renewal, All Star could reasonably conclude that the DOT, a ‘department’ and thus an ‘agency,’ was the proper entity to name as respondent and serve under sec. 227.53(1).”

The court also found ambiguity in sec. 227.46(2m), which provides that the decision of the administrator of the DHA is a final decision of the agency subject to judicial review und
er sec. 227.52.

The court concluded, “This last provision could reasonably be read to mean that the DHA administrator’s decision becomes the final decision of the DOT. This is so because (1) the DHA is not an ‘agency’ within the governing statutory definition, but the DOT is; (2) saying that ‘[t]he decision of the administrator of the DHA is a final decision’ of the DHA seems superfluous; and (3) when DHA personnel review administrative actions taken by other state entities, the DHA hearing examiner’s decision may ‘by rule or … Order’ become ‘the final decision of the agency’ whose action was reviewed.”

The DOT argued that the provisions plainly establish that the DHA is the final decision-maker: “The DOT points out that the DHA is an entity separate and distinct from the DOT, and it argues that the DHA is the agency whose decision is subject to review, and in turn, the agency that must be named as the respondent and served under Wis. Stat. Sec. 227.53(1). This is especially so, in the DOT’s view, when legislative history is consulted because the office of commissioner of transportation previously performed the administrative reviews of DOT dealer licensing decisions now performed by the DHA, and the commissioner’s decisions were both de novo and final for purposes of judicial review.”

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Case Analysis

The DOT also noted that sec. 218.0116 plainly states that DHA has the power to reverse or modify the DOT’s initial nonrenewal decision, and that license revocation issues shall be heard and decided upon by the DHA.

In addition, sec. 227.46(2m) provides that “the DOT itself may petition for review of an adverse decision by the DHA administrator, which would mean that if the DHA administrator’s decision were deemed ‘the final decision’ of the DOT, the DOT would in effect be seeking review of its own final decision.”

Finally, the DOT noted that the hearing took place in the offices of the DHA and that the DHA appended an unambiguous notice to its final decision that it should be named as the respondent in any petition for review.

Nevertheless, while the court acknowledged that the DOT’s definition “might well” be the more reasonable, the question is whether the statute could be subject to more than one reasonable reading, and All Star must be given the benefit of the doubt created by the ambiguous language. Because All Star could reasonably read the statutes to mean it should serve the DOT, rather than the DHA, the court concluded it must apply the service requirements liberally, and reversed the order dismissing the petition for review.

Click here for Case Analysis.

David Ziemer can be reached by email.

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