Advisory Opinion No. 98-29

Re: Diane Cardenga, Esq.

A. QUESTION PRESENTED

The Petitioners Contractor’s Registration Board (the Board), whose members are state appointed officials, request an advisory opinion as to 1) whether they may take any form of disciplinary action against one of its own contractor members, and 2) whether claims by or against a Board member may be heard either by the Board’s hearing officer or, on appeal, by the full Board.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that members of the (Board), state appointed officials, may take any form of disciplinary action against one of their own contractor members, so long as the action is taken within the normal administrative process, the affected Board member does not participate in any aspect of the Board’s consideration of the matter, and right of appeal of the Board’s decision to the Superior Court is available to the parties. The Commission further concludes that, as a general rule (and subject to those same conditions), claims by or against a Board member may be heard either by the Board’s hearing officer or, on appeal, by the full Board. These conclusions rest upon this Commission’s determination that the additional time and expense necessary for the resolution of such claims if the administrative process is not available to the parties constitutes a hardship. See R.I. Gen. Laws § 36-14-5(e)(1).

The factors weighing in favor of a finding of hardship in this instance are compelling. First, with respect to the proceedings before the investigator(s) and hearing officer, those employees of the Board are well protected from any threat of improper influence directed towards them by a member of the Board. In essence, both the Board’s Executive Director, who is employed by the State Building Code Commission, and the Commission itself, which hires the Executive Director, the investigators and the hearing officer, act as buffers between the Board and the investigator(s) and hearing officer. Further, the statute requires that the Board be composed of four contractors who, by definition, fall within its regulatory sphere. Also, the administrative process for investigating and resolving claims/complaints against contractors exists in a form that allows speedy, relatively informal, and certainly less expensive resolution of disputes. Requiring matters involving members of the Board to bypass the administrative process would result in additional expense for all concerned and possibly delay resolution of those matters for several years. Finally, the Superior Court is available as a forum of additional resort for any party to seek review from decisions of the Board. The Commission’s conclusions necessarily depend upon the State Building Code Commission and the Board’s Executive Director continuing to act as independent buffers between the investigators and hearing officers and the Board itself.

C. DISCUSSION

1. Facts

The Contractor's Registration Board (the Board), a seven-member panel appointed by the Governor, is an administrative agency that regulates residential building contractors pursuant to R.I. Gen. Laws § 5-65-1 et seq. The Board is a state agency within the Department of Administration and operates under the jurisdiction of the State Building Code Commission. All residential building contractors are required to register annually with the Board and pay a $60.00 registration fee. The Board consists of four registered contractors, a licensed architect, a member of the state Building Code Standards Committee, and a member from the general public. See R.I. Gen. Laws § 5-65-14.

As part of its regulation duties, the Board adjudicates claims filed by consumers or other contractors against contractors under procedures set forth in the Administrative Procedures Act (APA), R.I. Gen. Laws § 42-35-1 et seq., and in regulations adopted by the Board consistent with the APA. The procedures for an adjudication are as follows: a) the Board, after receipt of a complaint, refers the matter to the staff for investigation, b) upon completion of an investigation the Board’s hearing officer convenes a hearing to consider the results of the investigation and to hear and/or consider any evidence submitted by the parties; c) following the hearing, the hearing officer issues a "proposed order," which may be appealed to the full Board; d) the full Board considers appeals during regularly scheduled monthly meetings; and e) the Board issues a final order. That order may be appealed to the Superior Court.

Only a small number (e.g., fewer than 10%) of proposed orders drafted by the hearing officer are appealed to the full Board. The entire investigative and hearing process involving the hearing officer takes approximately 2-3 months. A hearing before the Board may add an additional month to the process. Matters that proceed to the Superior Court usually take several years for resolution. Parties appearing before the hearing officer and the Board may retain counsel if they choose. Proceedings before the hearing officer are relatively informal, however, and only 30-40% of the parties appear with an attorney. The hearing officer is a full-time employee of the Contractor’s Registration Board. The hearing officer reports to and is supervised by the Board’s Executive Director. Historically, the Board has not been involved with the hiring process for the hearing officer or investigator(s) or in supervising their employment.

In addition to adjudicating complaints, the Board also regulates residential builders by enforcing complaints that a contractor failed to register with the Board and/or committed other violations (e.g., had insufficient insurance coverage, or hired non-registered subcontractors). Investigators for the Board, following an on-site inspection, issue violation tickets and assess a fine against residential builders who violate the Board's rules and regulations. After receiving such a ticket, the alleged violator may request a hearing before a hearing officer. As with complaints, the hearing officer issues a proposed order that is appealable to the full Board and, after the Board's consideration, to the Superior Court.

As an alternative means of redress, a contractor or subcontractor may file a civil action in the appropriate state court. The Board also will not hear a claim if the parties refuse to waive the arbitration clause contained in their contract.

Recently, a contractor who serves as a member of the Board filed a claim with the Board against a sub-contractor. The hearing officer issued a proposed order and the matter has been appealed to the full Board. The Board has stayed any proceedings involving the appeal pending an advisory opinion from the Ethics Commission as to whether the Code of Ethics prohibits the Board from considering the appeal or the interested contractor from appearing on his own behalf before the Board. The Board also inquires generally as to 1) what disciplinary action the Board may take against one of its own contractor members, and 2) whether claims by or against a Board member may be heard either by the Board’s hearing officer or, on appeal, by the full Board.

1.Analysis

Section 5(e) of the Code of Ethics, R.I. Gen. Laws § 36-14-5(e), provides that “[n]o person subject to the Code of Ethics shall…represent him or herself before any state or municipal agency of which he or she is a member or by which he or she is employed.” The section further provides, however, that in cases of hardship the Ethics Commission may permit such representation so long as there is full disclosure of the nature of the relationship and the official or employee recuses him or herself from the agency’s consideration and disposition of the matter at issue.

The Board here has primary regulatory responsibility for residential building contractors. By statute, the Board is the station of first resort for consideration of disputes and complaints involving such contractors. Also by statute, four registered Rhode Island contractors serve as members of the Board. By operation of the statute, those four contractors are members of the state agency that oversee all residential building contractors in the state, including themselves.

Pursuant to R.I. Gen. Laws § 5-65-1 et seq., the Administrative Procedures Act and regulations promulgated pursuant to those statutes, the Board exercises regulatory authority over residential building contractors through an investigative and hearing process. Section 5-65-15.1 provides that the State Building Code Commission shall provide the Board with “appropriate staff, including hearing official(s) and investigator(s), who shall perform their duties under the administrative supervision of the [Board’s] executive director.” The Board’s Executive Director is a member of the state’s classified service on the staff of the State Building Commissioner. R.I. Gen. Laws § 5-65-15. The Board currently employs one hearing officer. The investigator(s) and hearing officer also are members of the state’s classified service, hired by the State Building Code Commission, who serve under the supervision of the Executive Director. Therefore, by operation of statute and by practice, the Board does not exercise hiring or supervisory authority over the investigator(s) and hearing officer.

The filing of claims/complaints by or against a contractor member of the Board triggers operation of the Board’s investigative and hearing process. The process begins with the Board’s investigators and, absent an agreed upon resolution by the parties, proceeds through a hearing before the Board’s hearing officer and may include review of the hearing officer’s proposed decision by the full Board. Whether it involves interaction with the investigator(s), the hearing officer or the full Board, any appearance by a Board member in this claim/complaint process constitutes an appearance before the agency by which the member is employed. Therefore, absent a finding of hardship by the Ethics Commission, the Code of Ethics prohibits a Board member from either pursuing or defending a complaint before the Board. R.I. Gen. Laws § 36-14-5(e)(1)(a).

The factors weighing in favor of a finding of hardship in this instance are compelling. First, with respect to the proceedings before the investigator(s) and hearing officer, those employees of the Board are well protected from any threat of improper influence directed towards them by a member of the Board. In essence, both the Board’s Executive Director, who is employed by the State Building Code Commission, and the Commission itself, which hires the Executive Director, the investigators and the hearing officer, act as buffers between the Board and the investigator(s) and hearing officer. Further, the statute requires that the Board be composed of four contractors who, by definition, fall within its regulatory authority. Also, the administrative process for investigating and resolving claims/complaints against contractors exists in a form that allows speedy, relatively informal, and certainly less expensive resolution of disputes. Requiring matters involving members of the Board to bypass the administrative process would result in additional expense for all concerned and delay resolution of those matters for several years. Finally, the Superior Court is available as a forum of additional resort for any party to seek review from decisions of the Board.

In light of all of the above, the Commission hereby concludes that members of the Board may take any form of disciplinary action against one of their own contractor members, so long as the action is taken within the normal administrative process, the affected Board member does not participate in any aspect of the Board’s consideration of the matter, and right of appeal of the Board’s decision to the Superior Court is available to the parties. The Commission further concludes that, as a general rule (and subject to those same conditions), claims by or against a Board member may be heard either by the Board’s hearing officer or, on appeal, by the full Board. These conclusions rest upon the Commission’s determination that the additional time and expense necessary for the resolution of such claims if the administrative process is not available to the parties constitutes a hardship. As such, it is an exception to the prohibition set out in R.I. Gen. Laws § 36-14-5(e)(1). This Commission’s conclusions necessarily depend upon the State Building Code Commission and the Board’s Executive Director continuing to at act as independent buffers between the investigators and hearing officers and the Board itself.

Code Citations:

36-14-5(e)

36-14-5(e)(1)

36-14-5(e)(1)(a)

Keywords:

Disciplinary authority

Hardship exception