Attorney for Appellant Attorneys for Appellees
E. Scott Treadway Steve Carter
Tabbert, Hahn, Earnest & Weddle LLP Attorney General
of Indiana
Indianapolis, Indiana Indianapolis, Indiana
David L. Steiner
Deputy Attorney General
Indianapolis, Indiana
George T. Patton, Jr.
Daniel McInerny
Melinda Shapiro
Bose McKinney & Evans
Indianapolis, Indiana
________________________________________________________________________
In the
Indiana Supreme Court
_________________________________
No. 49S04-0303-CV-00115
Thomas Breitweiser and
L. Jae Breitweiser Appellant (Defendant
below),
v.
Indiana Office of Environmental Appellees (Plaintiff
below).
Adjudication, Chief Environmental Law
Judge Wayne E. Penrod, and David Ferguson
_________________________________
Appeal from the Marion Superior Court, No. 49F12-0103-CP-001074
The Honorable Michael E. Keele, Judge
_________________________________
On Petition to Transfer from the Indiana Court of Appeals, No. 49A04-0111-
CV-505
_________________________________
June 22, 2004
Shepard, Chief Justice.
The Breitweisers filed a petition with the Indiana Department of
Environmental management (IDEM) to halt an animal feeding operation. The
petition was initially handled by an administrative law judge, whom the
Breitweisers moved to disqualify. She recused, and the chief ALJ assumed
responsibility for the case. He refused the Breitweiser’s request that he
also disqualify and entered a default judgment against them.
The question before us is: does a petitioner’s motion to disqualify
an ALJ at IDEM relieve that party of the statutory necessity under the
Administrative Orders and Procedures Act to respond to a possible default?
We say no.
Facts and Procedural History
IDEM issued David Ferguson a permit to operate a swine CAFO, an
industrial farming operation where substantial amounts of animals are kept
in small pens that are housed in larger buildings. Thomas and L. Jae
Breitweiser subsequently filed a petition for administrative review and for
stay with the Office of Environmental Adjudication (OEA). Environmental
Law Judge (ELJ) Linda Lasley conducted the proceedings. The Breitweisers
later requested that Lasley disqualify herself. They argued that Lasley
did not meet the requirements of Indiana Code § 4-21.5-7-6(a)(2) because
IDEM previously employed her, and she had not been practicing environmental
or administrative law for five years.[1] Lasley refused and was later
affirmed by Chief Environmental Law Judge Wayne Penrod on May 10, 1999.
Lasley subsequently disqualified herself from continued participation
“in the interest of efficient case administration”, and Chief ELJ Penrod
presided over the case. On May 19, 1999, the Breitweisers moved to
disqualify Judge Penrod and to vacate Lasley’s prior rulings. On May 26th,
Judge Penrod issued a “Notice of Proposed Order of Default,” noting that
the Breitweisers did not file discovery responses or responses to a pending
motion for summary judgment by the designated deadline. The Breitweisers
did not file a direct written response to this notice as permitted by
Indiana Code Annotated § 4-21.5-3-24.
Instead, on June 2, 1999, the day before an IDEM hearing on the
proposed default order, the Breitweisers filed a “Verified Complaint for
Writ of Mandate, for Temporary Restraining Order and for Preliminary and
Permanent Injunction” in Marion Superior Court. On June 15, 1999, the
court entered the following dismissal order:
Defendants . . .agree to rule upon all pending motions in the
underlying administrative matter. Defendants further agree to
stipulate that Chief Environmental Law Judge Penrod will rule on
Plaintiffs’ Motion to Disqualify Chief Administrative Law Judge Penrod
and Motion for change of Administrative Law Judge filed May 19, 1999,
prior to ruling upon other pending motions. Defendants further agree
that Chief Environmental Law Judge Penrod will rule upon Plaintiffs’
Motion to Vacate All Prior Rulings of Administrative Law Judge Lasley
filed May 19, 1999.
(Appellant’s App. at 306-07.) Two days after this ruling, Judge Penrod
entered three orders; he denied the Breitweisers’ motion for his
disqualification, denied the motion to vacate Lasley’s rulings, and found
that the Breitweisers were in default for failure to respond to discovery
requests or the proposed order of default.
The Breitweisers subsequently filed a petition for judicial review of
Judge Penrod’s ruling, in Marion Superior Court. Judge Gerald Zore denied
a motion to dismiss this petition and a parallel motion for partial summary
judgment. The case was later transferred to Judge Michael Keele, who
presided over a division of the Marion Superior Court specializing in
environmental matters. Judge Keele held that the court lacked jurisdiction
over the matter because the Breitweisers were in default; he entered an
order dismissing the Breitweisers’ complaint.
The Breitweisers appealed, and the Court of Appeals held that Judge
Penrod improperly denied the disqualification motion and that the
Breitweisers were entitled to judicial review on the merits of their claim.
Breitweiser v. Indiana Office of Environmental Adjudication, 775 N.E.2d
1175 (Ind. Ct. App. 2002). The OEA and Judge Penrod petitioned for
transfer, which we granted. Ind. Appellate Rule 58.
Notice of Default
Under the AOPA, the scope of a court's judicial review is limited to
a consideration of (1) whether there is substantial evidence to support the
agency's finding and order and (2) whether the action constitutes an abuse
of discretion or is arbitrary or capricious. Ind. Code Ann. § 4-21.5-5-14;
Rynerson v. City of Franklin, 669 N.E.2d 964, 971 (Ind. 1996). An action
of an administrative agency is arbitrary and capricious only where there is
no reasonable basis for the action. Indiana Civil Rights Comm’n v.
Delaware County Circuit Court, 668 N.E.2d 1219 (Ind. 1996).
An appellate court may reverse an agency decision only where it is
purely arbitrary or an error of law has been made. Indiana State Bd. of
Public Welfare v. Tioga Pines Living Center, Inc., 622 N.E.2d 935, 939
(Ind. 1993), cert. denied, 510 U.S. 1195 (1994); see also Ind. Code Ann. §
4-21.5-5-14(d) (2002).
The Breitweisers argue that default was improper because they were
not compelled to file a response to the proposed notice of default.[2]
They rely on Indiana Code Ann. § 4-21.5-3-24(b), which states that within
seven days, a party “may” file a written motion against the proposed notice
of default. While the Breitweisers were not obligated to respond to the
proposed notice of default, they are not saved from the consequences
associated with their decision not to respond. It is apparent that the
legislature had foreseen that a person may not wish to respond, for it has
declared that “if a party has failed to file a written motion under
subsection (b), the administrative law judge shall issue the default or
dismissal order.” Ind. Code Ann. § 4-21.5-3-24(c) (2002).
We have customarily regarded “shall” as imposing a mandatory
obligation. See Indiana Civil Rights Comm’n v. Indianapolis Newspapers,
716 N.E.2d 943, 947 (Ind. 1999) It was well within the Breitweiser’s right
to decide not to reply to the proposed notice of default, as they suggest.
Judge Penrod, on the other hand, was compelled by statute to issue a
default ruling against the Breitweisers when they did not submit a response
to the proposed notice of default within seven days.
The legislature has also said that a person has “waived (his) right to
judicial review” when he fails to follow the default guidelines provided
under Indiana Code Annotated § 4-21.5. Ind. Code Ann. § 4-21.5-5-4(b)
(Michie 2002). We have earlier observed the effect of this provision:
Indiana Code § 4-21.5-3-29 provides that an objection to an order of
an administrative law judge must be timely to preserve that objection
for judicial review. Indiana Code § 4-21.5-5-4 similarly provides
that a person who fails timely to object to an order waives the right
to judicial review. We have recently held that failure to file a
timely assignment of errors deprives any subsequent court of
jurisdiction and any appeal would have to be dismissed. Claywell v.
Review Board, 643 N.E.2d 330 (Ind. 1994). Therefore, the law is
clear: failure to file timely objections leads to waiver of that
issue on appeal.
Indiana Civil Rights Comm’n v. Delaware County Circuit Court, 668 N.E.2d
1219 (Ind. 1996).
So what could the Breitweisers have done? The Breitweisers had the
option to respond to the notice of default while they continued to pursue
disqualification of Judge Penrod. Had they succeeded on judicial review,
we expect the earlier administrative rulings would have been set aside.
Because they elected not to respond as AOPA permits, AOPA specifies the
consequences.
Conclusion
We affirm the trial court’s decision.
Sullivan, and Boehm, JJ., concur.
Dickson, J., dissents with separate opinion in which Rucker, J., concurs.
Dickson, Justice, dissenting.
The majority relies upon the Breitweisers' failure to timely respond
to the proposed notice of default. The Breitweisers point out, however,
that they did respond within the time allowed. They filed a verified
complaint for writ of mandate, for temporary restraining order, and for
preliminary and permanent injunction against the OEA and Judge Penrod,
which clearly asserted their claim that Judge Penrod should be disqualified
and "could not properly make any decisions in the case let alone an entry
of default." Br. of Appellants at 28.
Particularly significant is the fact that it was only after the
Breitweisers filed motions to disqualify Judge Penrod and to vacate his
orders, and for an expedited ruling on such motions, that the judge
immediately entered his notice of proposed default against them. Judge
Penrod's May 26, 1999, notice of proposed order of default recited as its
basis the Breitweisers' failure to file discovery responses due May 21,
seven days earlier, and their failure to respond to a motion to quash or
modify a subpoena duces tecum, and to a motion to dismiss or for summary
judgment, both of which responses were due on May 21, five days before the
judge's notice of proposed order of default.[3] The judge's issuance of
the order suggests the possibility that it was motivated by vindictive
retaliation.
Recognizing the importance of a neutral, unbiased adjudicatory
decisionmaker as a core requirement of fair adjudicatory decision-making,
the Court of Appeals concluded that the Breitweisers were entitled to
judicial review on the merits of their claim that Judge Penrod improperly
denied the disqualification motion. Breitweiser v. Indiana Office of
Environmental Adjudication, 775 N.E.2d 1175, 1182 (Ind. Ct. App. 2002). I
agree.
Rucker, J., concurs.
-----------------------
[1] Under the Administrative Orders and Procedures Act, an environmental
law judge hired after July 1, 1995, who has ultimate authority under
Indiana Code § 4-21.5-7-5 must:
(2) have at least five (5) years of experience practicing
administrative or environmental law in Indiana, and (3) be independent
of the department of environmental management
Ind. Code. Ann. § 4-21.5-7-6 (a)(2) & (3). “Ultimate Authority” is a term
defined by AOPA as “an individual or panel of individuals in whom the final
authority of an agency is vested by law or executive order.” Ind. Code
Ann.§ 4-21.5-1-15.
[2] A default occurs when a party fails to appear in response to process
or, having appeared, fails to obey a rule to answer and thereby
confesses the allegations of the pleading. Judgment is then rendered
without the trial of any issue of law or fact. Obviously where an
issue of fact is pending between the parties there can be no judgment
on default even though the defendant is absent at the time fixed for
trial. Under such circumstances however the court may proceed to hear
the plaintiff's evidence in the same manner as though the defendant
were present and, if a prima facie case is established, may render
appropriate judgment.
Pinkston v. Livingston, 554 N.E.2d 1173, 1176 (Ind. Ct. App. 1990) (quoting
Aetna Sec. Co. v. Sickles, 120 Ind. App. 300, 308, 88 N.E.2d 789, 792-93
(1949) (internal citations omitted)).
[3] Indiana Code § 4-21.5-3-24(a) authorizes a notice of proposed
order of default only when a party fails to (1) file a "responsive
pleading" required by statute or rule; (2) participate in a "pre-hearing
conference, hearing or other stage of the proceeding;" or (3) "take action
on a matter" for sixty days. None of the stated reasons for trial court
action constituted a failure to file a responsive pleading or satisfies any
of the other bases for the notice under the statute.