Carruthers v. Board of Horse Racing

No. 84-515
IN THE SUPREME COURT OF THE STATE OF P40TJTANA

114 THE MATTER OF THE PETITION OF
AL CARRUTHERS AND TOM WILLIAMS,

Petitioners and Appellants,

THE BOARD OF HORSE RACIIJG OF THE
DEPARTIIENT OF COPWRCE OF THE
STATE OF MONTANA,
Respondent and Respondent..

APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Gordon Bennett, Judge presiding.

COUNSEL OF RECORD:

For Appellants:
Robert J. Holland and R. Brian Holland, Butte,
Montana
For Respondent:
Geoffrey L. Brazier, Dept. of Comerce, Helena,
Montana

Submitted on Briefs: Feb. 22, 1985
Decided: 231 1985

Filed:

Clerk
Mr. Justice L. C. G u l b r a n d s o n d e l i v e r e d t h e O p i n i o n of the
Court.

A 1 C a r r u t h e r s and Tom W i l l i a m s (hereinafter appellants)

appeal from a judgment of t h e D i s t r i c t Court o f the First

Judicial District, Lewis and Clark County, affirming a

decision of t h e Board of Horse Racing ( h e r e i n a f t e r Board).

W affirm.
e

F o l l o w i n g t h e e l e v e n t h r a c e a t t h e L a s t Chance Meet i n

Helena, Montana, on July 17, 1983, the stewards ruled on

several claims of foul. One of the rulings disqualified

appellants' horse from s e c o n d p l a c e and moved it t o e i g h t h

place.

A p p e l l a n t s a p p e a l e d t h e s t e w a r d s ' d e c i s i o n t o t h e Board

and a h e a r i n g was h e l d b e f o r e t h e B o a r d ' s h e a r i n g e x a m i n e r on

October 21, 1983. The e v i d e n c e p r e s e n t e d a t that hearing

consisted of a video tape of the race, o t h e r documentary

evidence, depositions and sworn testimony. The hearing

examiner's proposed findings, conclusions and order were

i s s u e d on O c t o b e r 2 7 , 1983. H e reversed t h e decision of t h e

stewards after f i n d i n g t h e r e was s u b s t a n t i a l evidence t h a t

t h e c o n t a c t between a p p e l l a n t s ' h o r s e and a n o t h e r h o r s e d i d

not i n t e r f e r e with t h e other horse s o a s t o a f f e c t i t s f i n i s h

o r t h e outcome o f t h e r a c e .

The Board i s s u e d a f i n a l o r d e r and d e c i s i o n o n J a n u a r y

3 1 , 1984 a d o p t i n g i n p a r t t h e f i n d i n g s o f f a c t by t h e h e a r i n g

e x a m i n e r and r e j e c t i n g h i s d e c i s i o n . The Board s t a t e d t h a t

p a r t o f t h e f i n d i n g s w e r e n o t b a s e d on c o m p e t e n t s u b s t a n t i a l

evidence and that the reasoning as to the effect of the

contact between the h o r s e s was e r r o n e o u s . The Board then

affirmed t h e stewards' decision.
 On February 29, 1984, appellants requested judicial

review of the Board's decision pursuant to Montana ' s

Administrative Procedure A c t , s e c t i o n 2-4-101, MCA, e t . seq.

(MAPA). Appellants contended that their horse should be

restored to second p l a c e because t h e Board's d e c i s i o n was:

(1) made o n u n l a w f u l p r o c e d u r e ; ( 2 ) a f f e c t e d by l e g a l e r r o r ;

( 3 ) c l e a r l y e r r o n e o u s i n v i e w o f t h e e v i d e n c e on r e c o r d ; and

(4) arbitrary or capricious or an abuse of discretion.

Following the Board's answer, a pretrial conference was

s c h e d u l e d f o r A p r i l 2 3 , 1984.

A t t h e conference, t h e c o u r t requested t h a t t h e p a r t i e s

s u b m i t b r i e f s o n w h e t h e r t h e s t e w a r d s o r t h e Board and i t s

h e a r i n g examiner w e r e t h e o r i g i n a l triers o f f a c t and what

standards of review applied i n t h i s case. On A p r i l 2 4 , 1984,

after the conference, the District C o u r t made this minute

entry:

"Pursuant t o t h e p r e - t r i a l conference t h e
Court o r d e r e d respondent [ t h e Board] t o
f i l e a b r i e f w i t h i n 10 d a y s , p e t i t i o n e r
[ a p p e l l a n t s ] t o f i l e a n o p p o s i n g b r i e f 10
d a y s l a t e r , and r e s p o n d e n t h a s 5 d a y s
thereafter t o f i l e a reply brief, a t
w h i c h t i m e t h e m a t t e r w i l l b e deemed
submitted."

The parties submitted their briefs and the District Court

i s s u e d a n o p i n i o n and o r d e r on J u l y 2 6 , 1984 a f f i r m i n g t h e

d e c i s i o n o f t h e Board.

Appellants filed a motion for relief from judgment,

p u r s u a n t t o R u l e 60 ( b ) M.R.Civ.P. They a l l e g e d s u r p r i s e i n

t h a t t h e D i s t r i c t C o u r t had r e q u e s t e d t h e p a r t i e s o n l y b r i e f

the questions discussed at pretrial conference and had

r e s e r v e d d i s c u s s i o n on o t h e r i s s u e s u n t i l a l a t e r d a t e . The

m o t i o n was deemed d e n i e d a f t e r t h e D i s t r i c t C o u r t f a i l e d t o

ru1.e o n it w i t h i n t h e t i m e l i m i t s o f R u l e 5 9 ( d ) M.R.Civ.P.
 A p p e l l a n t s p r e s e n t one i s s u e on a p p e a l :

Did the District Court err in disregarding the

p r o c e d u r e i t t o l d t h e p a r t i e s i t would f o l l o w and i n i s s u i n g

a f i n a l o r d e r and judgment p r i o r t o h e a r i n g argument on t h e

m e r i t s of t h e case?

A t t h e heart of t h i s issue stands the question of t h e

D i s t r i c t C o u r t ' s p r o c e d u r e and s c o p e of r e v i e w when h e a r i n g

an appeal from an administrative proceeding. Vita-Rich

Dairy, I n c . v. Dept. o f Bus. Reg. ( 1 9 7 6 ) , 170 Mont. 341, 553

P.2d 980 s e t s f o r t h t h r e e b a s i c p r i n c i p l e s i n d e t e r m i n i n g t h e

scope of judicial review. First, a limited review

strengthens the administrative p r o c e s s by encouraging full

and c o m p l e t e p r e s e n t a t i o n of evidence t o t h e agency having

specialized knowledge and experience. Second, judicial

economy requires that functions be assigned according to

ability. The agency is a specialist in the substantive

matter and the court is a specialist in constitutional

issues, statutory interpretation, t h e requirements of a Fair

h e a r i n g and t h e d e t e r m i n a t i o n o f w h e t h e r s u b s t a n t i a l e v i d e n c e

supports a finding. T h i r d , a l i m i t e d j u d i c i a l i n q u i r y on t h e

f a i r n e s s o f t h e p r o c e d u r e , q u e s t i o n s o f l a w , and t h e e v i d e n c e

supporting the decision acts as a check on the agency's

actions. These p r i n c i p l e s u n d e r l y t h e M P s e c t i o n p r o v i d i n g
AA

for judicial review of agency a c t i o n i n a contested case.

Section 2-4-704, MCA (part of MAPA) states, in part, as

follows:

" ( 1 ) The r e v i e w s h a l l b e c o n d u c t e d by t h e
court without a jury and shall be
confined t o t h e record. I n c a s e s of
alleged irregularities in procedure
b e f o r e t h e agency n o t shown i n t h e
r e c o r d , p r o o f t h e r e o f may b e t a k e n i n t h e
court. The c o u r t , upon r e q u e s t , s h a l l
h e a r o r a l argument and r e c e i v e w r i t t e n
briefs.
 " (2) The c o u r t may n o t s u b s t i t u t e i t s
judgment f o r t h a t o f t h e a g e n c y a s t o t h e
w e i g h t o f t h e e v i d e n c e on q u e s t i o n s o f
fact. The c o u r t may a f f i r m t h e d e c i s i o n
o f t h e a g e n c y o r remand t h e c a s e f o r
f u r t h e r proceedings. The c o u r t may
reverse or modify the decision if
s u b s t a n t i a l r i g h t s o f t h e a p p e l l a n t have
been prejudiced because the
administrative Findings, inferences,
conclusions, o r decisions are:

" (c) made upon u n l a w f u l p r o c e d u r e ;

"(d) affected by other error of law;

" (e) c l e a r l y erroneous i n view o f t h e
reliable, probative, and substantial
e v i d e n c e on t h e whole r e c o r d ;

" (f) arbitrary or capricious or
c h a r a c t e r i z e d by a b u s e o f d i s c r e t i o n o r
clearly unwarranted exercise of
discretion ... "
Appellants contend t h a t t h e D i s t r i c t C o u r t ' s f a i l u r e t o

hear oral argument as they requested prevented a full

presentation of t h e i r case. Section 2-4-704(1), MCA p r o v i d e s

t h a t t h e D i s t r i c t C o u r t ' s review i s g e n e r a l l y confined t o t h e

record but that the court may hear oral argument if

requested. The r e c o r d on a p p e a l d o e s n o t r e f l e c t a r e q u e s t

for oral argument. The m i n u t e e n t r y made b y t h e D i s t r i c t

Court a f t e r t h e p r e t r i a l conference s t a t e s t h a t " t h e m a t t e r

will he deemed submitted" following the filing of briefs.

The District Court's decision reflects a review of the

record. Under t h e s e circumstances, t h e D i s t r i c t Court d i d

n o t e r r i n r e a c h i n g a d e c i s i o n w i t h o u t h e a r i n g o r a l argument.

Case l a w h a s c l a r i f i e d t h e s t a n d a r d s o f r e v i e w s e t o u t

i n s e c t i o n 2-4-704, MCA. Findings of f a c t by a n a g e n c y a r e

binding on the court "if there is substantial, credible

evidence in the record." City of Billings v. Billings

F i r e f i g h t e r s Local No. 521 (Mont. 1 9 8 2 ) , 651 P.2d 627, 632,
39 S t . R e p . 1 8 4 4 , 1849. T h e r e is a b r o a d e r s c o p e o f r e v i e w on

legal questions. "Where t h e i n t e n t o f s t a t u t e s i s u n c l e a r ,

d e f e r e n c e w i l l be g i v e n t o t h e a g e n c y ' s i n t e r p r e t a t i o n ...
Where it appears that the legislative intent is clearly

contrary to agency interpretation, the courts will not

h e s i t a t e t o r e v e r s e on t h e b a s i s o f 'abuse of d i s c r e t i o n . I "

(Citations omitted. ) City of Billings v. Billings

F i r e f i g h t e r s L o c a l No. 5 2 1 , 651 P.2d a t 632. A p p e l l a n t s have

the burden of showing their rights were substantially

p r e j u d i c e d by an a r b i t r a r y o r c a p r i c i o u s o r c l e a r l y e r r o n e o u s

agency d e c i s i o n . City of B i l l i n g s v. Montana Human R i g h t s

Commission (Mont. 1984), 6 8 1 P.2d 33, 39, 4 1 St.Rep. 688,

696.

In this case, appellants contended below that the

D i s t r i c t C o u r t s h o u l d reverse t h e a g e n c y ' s d e c i s i o n because

their rights had been prejudiced. They alleged that the

agency's decision was factually erroneous in view of the

e v i d e n c e on r e c o r d , the r e s u l t of l e g a l e r r o r and b a s e d on ,

unlawful procedure. With r e g a r d t o t h e f i n d i n g s o f f a c t , t h e

District Court correctly found appellants had not carried

their burden and the Board had properly considered the

evidence in making findings different than those of the

h e a r i n g examiner.

The D i s t r i c t C o u r t found no l e g a l e r r o r on t h e r e c o r d .

The Board and the hearing examiner had applied different

interpretations of A.R.M. 58-22.807(4) based on varying

definitions of the word "jostle. " The District Court

c o r r e c t l y deferred t o t h e Board's i n t e r p r e t a t i o n o f t h e t e r m

noting they were acting within t h e i r d i s c r e t i o n t o apply a

d e f i n i t i o n when " j o s t l e " was n o t d e f i n e d i n t h e r e g u l a t i o n s .
 The record reviewed by the District Court reflected

p r o p e r p r o c e d u r e w i t h no p r e j u d i c e t o a p p e l l a n t s . The Board

changed findings of fact by the hearings examiner after

stating they were not based on competent, substantial

e v i d e n c e and m o d i f i e d h i s l e g a l c o n c l u s i o n s f o r t h e r e a s o n s

that the hearing examiner inserted "something i n the rule

[A.R.M. 58-22.8071 that has been omitted" and applied an

incorrect standard of review. T h i s a c t i o n was w i t h i n the

bounds of s e c t i o n s 2-4-621 and 2-4-623, MCA, and t h e D i s t r i c t

Court correctly determined the procedure used was

appropriate.

The judgment o f t h e D i s t r i c t C o u r t i s a f f i

t