Reed v. Arvis Harper Bail Bonds, Inc. , 368 S.W.3d 69 ( 2010 )

PAUL E. DANIELSON, Justice.

liAppellants Tommy Reed and the Arkansas Professional Bail Bond Licensing Board (the Board) appeal the order of the Pulaski County Circuit Court reversing the Board’s decision to suspend the company license of appellee Arvis Harper Bail-bonds, Inc., and the professional bail bondsman license of appellee Arvis Harper, Jr. Appellants’ sole point on appeal is that the circuit court erred by reversing the Board’s decision based upon its finding that the statute establishing the Board violates- the constitution. We agree and reverse the order of the circuit court.

On November 3, 2007, the Board filed a complaint against appellees Arvis Harper, Jr., and Arvis Harper Bail Bonds, Inc. (hereinafter collectively “Arvis Harper”). The complaint | ^alleged that Arvis Harper executed a bond that was not secured properly and that the unsecured amount exceeded the company’s unsecured limits. A hearing was held before the Board on April 11, 2008.

At the hearing, Arvis Harper first challenged the constitutionality of the Arkansas Professional Bail Bond Company and Professional Bail Bondsman Licensing Act, Ark. Code Ann. § 17-19-106 (Repl.2001) ¹, which creates the Board. Section 17-19-106 requires that one member of the Board be a municipal or circuit judge. Ark.Code Ann. § 17-19-lÓ6(b)(3)(A). Ar-vis Harper argued that such a requirement was unconstitutional because it violated the doctrine of separation of powers. Additionally, Arvis Harper alleged that the Board used improper procedure because it failed to give them twenty days to correct the problem as provided for in the Board’s own rules.

Arvis Harper’s constitutional challenge and a motion to cancel the hearing based upon the alleged use of improper procedure by the Board were both denied by the Board. The hearing proceeded and, upon its conclusion, the Board suspended the license of both Arvis Harper Bail Bonds, Inc., and Arvis Harper, Jr., individually, for thirty days because the company exceeded the maximum amount of unsecured commitment allowed. Additionally, the Board adopted the findings of facts and conclusions of law that it believed supported the suspensions.

[jOn April 16, 2008, Arvis Harper filed a complaint for judicial review in the circuit court. After reviewing the material and hearing the argument of counsel, the circuit court reversed the decision of the Board. The circuit court concluded that the Board’s findings were consistent and compliant with its rules and regulations and were not based upon unlawful procedure. Additionally, the circuit court found that there was substantial evidence to support the Board’s decision and that its decision was not arbitrary and capricious. However, the circuit court did find that the statute establishing the Board, section 17-19-106, violated the separation-of-powers doctrine of the Arkansas Constitution. The Board filed a timely notice of appeal on September 1, 2009.

The Board presents only one issue on appeal; it argues that the circuit court erred by reversing the Board’s decision based upon its finding that the statute establishing the Board violates the constitution. The Board contends that the reversal of its decision was not an appropriate remedy under the Arkansas Administrative Procedure Act (APA). Alternatively, the Board argues that even were the contested legislation unconstitutional, the judicial member of the Board was a de facto official, any error would be harmless, and substantial evidence supported the Board’s decision.

In an appeal of a decision of an administrative agency under the APA, specifically Ark.Code Ann. § 25-15-212 (Repl. 2002 & Supp.2009), our review is directed, not toward the circuit court, but toward the decision of the agency, because administrative agencies are better equipped by specialization, insight through experience, and more flexible procedures than |4courts, to determine and analyze legal issues affecting their agencies. See Ford Motor Co. v. Arkansas Motor Vehicle Comm’n, 357 Ark. 125, 161 S.W.3d 788 (2004). Our review of administrative decisions is limited in scope. See id. When reviewing such decisions, we uphold them if they are supported by substantial evidence and are not arbitrary, capricious, or characterized by an abuse of discretion. See id.

However, an administrative agency lacks the authority to rule on a constitutional argument. See Arkansas Tobacco Control Bd. v. Sitton, 357 Ark. 357, 166 S.W.3d 550 (2004); see also AT & T Commc’ns of the Sw., Inc. v. Arkansas Pub. Serv. Comm’n, 344 Ark. 188, 40 S.W.3d 273 (2001). Therefore, in an appeal originating from an agency decision yet involving a constitutional challenge, the constitutional challenge must be raised before the agency in order to preserve it for the circuit court’s consideration, and this court must review the decision of the circuit court. See, e.g., Sitton, 357 Ark. 357, 166 S.W.3d 550.²

In determining whether an agency decision is supported by substantial evidence, we review the record to ascertain if the decision is supported by relevant evidence that a reasonable mind might accept as adequate to support a conclusion. See Ford Motor Co., supra. In doing so, we give the evidence its strongest probative force in favor of the administrative | ¡agency. See id. The question is not whether the testimony would have supported a contrary finding, but whether it supports the finding that was made. See id. As true for any other factfinder, it is the prerogative of the agency to believe or disbelieve any witness and to decide what weight to accord the evidence. See id.

Before challenging that the substantial evidence supported the action taken by the Board, Arvis Harper argued that the legislation creating the Board was unconstitutional. However, that claim is not properly presented in this appeal and does not warrant reversal of the Board’s decision under the APA.

Under the APA, Arvis Harper’s challenge is limited strictly to. the final action of the agency. See Ark.Code Ann. § 25-15-212(a). See also Walker v. Arkansas State Bd. of Educ., 2010 Ark. 277, 365 S.W.3d 899. Here, the final agency action was the Board’s suspension of Arvis Harper’s licenses.³ Moreover, our review is strictly limited to determining whether the substantial rights of appellees have been prejudiced because the Board’s decision was:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the agency’s statutory authority;

(3) Made upon unlawful procedure;

(4) Affected by other error or law;

(5) Not supported by substantial evidence of record; or

(6) Arbitrary, capricious, or characterized by abuse of discretion.

Ark.Code Ann. § 25 — 15—212(h) (emphasis added).

[While State Board of Workforce Education & Career Opportunities v. King, 336 Ark. 409, 985 S.W.2d 731 (1999), is cited to support Arvis Harper’s position, that case was not an appeal governed by the APA.⁴ King was a declaratory-judgment action in which King was seeking injunctive relief. See id. The circuit court there was being asked to remove a board member because of constitutional violations rather than being asked to overturn a decision of the board. See id. The instant case presents a direct challenge to the final action taken by the Board. Therefore, judicial review is limited by the APA.

In any event, regardless of the fact that the instant appeal is governed by the APA, it is well settled that a collateral attack on the authority of a de facto official cannot be maintained under the law. See Bell v. State, 334 Ark. 285, 973 S.W.2d 806 (1998). We have previously discussed what constitutes a collateral attack:

[There] can be gleaned several guidelines for determining whether a particular attack upon the title of a public official is “collateral.” By the very definition of the word if the attack is secondary, subsidiary, subordinate, i.e., related to the main matter under consideration but not strictly a part thereof, the attack is indirect and collateral. If the official’s title is questioned in a proceeding to which he is not a party or which was not instituted specifically to determine the validity of his title the attack is collateral. If the title of the officer is questioned in a proceeding in which he is a party merely because he is acting in his official capacity the attack is collateral. Lastly if the attack is made |7because it is necessary to show the officer’s want of title to lay a basis for some other relief the attack is collateral ...

Id. at 299, 973 S.W.2d at 814 (citing State v. Roberts, 255 Ark. 183, 499 S.W.2d 600 (1973) (quoting Smith v. Landsden, 212 Tenn. 543, 370 S.W.2d 557 (1963))).

The constitutional challenge made by Arvis Harper was not appropriately brought by a direct action. In the instant case, it was presented as an argument in an appeal to a decision by the Board, an appeal specifically governed by the APA. The circuit court specifically found that the actions of the Board were consistent with, and in compliance with, its rules and regulations, were not based upon unlawful procedure, were supported by substantial evidence, and were not arbitrary or capricious.

In its brief, Arvis Harper challenges the Board’s decision based on other grounds that the circuit court did not find such as unlawful procedure, violation of substantive due process, violation of equal protection, and lack of substantial evidence. Additionally, Arvis Harper presents arguments for appropriate punishment and attorney’s fees. However, Arvis Harper failed to file a cross-appeal in this case. Our case law is well settled that a notice of cross-appeal is required when the appellee seeks affirmative relief that was not granted in the lower court. See Office of Child Support Enforcement v. Pyron, 363 Ark. 521, 215 S.W.3d 637 (2005); Hoffman v. Gregory, 361 Ark. 73, 204 S.W.3d 541 (2005).

For the foregoing reasons, we must reverse the order of the circuit court and affirm the decision of the Board.

Reversed.

[¡BROWN, J., concurs. HANNAH, C.J., dissents.

1 . This version of the statute was in effect at the time of the challenge. While there is a more recent version, the contested language remains the same.

2 . While the dissent cites Arkansas Tobacco Control Bd. v. Sitton, supra, for the proposition that both an administrative agency’s decision on administrative matters and the circuit court’s decision on any constitutional issues may be reviewed by this court in the same appeal, the instant case is distinguishable. In Sitton, the constitutional challenge was to the Unfair Cigarette Sales Act, which the Arkansas Tobacco Control Board was found to have applied unconstitutionally to reach its decision. See id. The constitutional challenge was not to the Board itself, as it was here. See id.

3 . While the dissent contends that the decision reached by the Board is not at issue and wholly irrelevant to this appeal, Arvis Harper filed his complaint for judicial review from that very decision pursuant to the APA. The decision of the Board was then directly effected by the circuit court's order, which reversed that decision.

4 . Both the concurring and dissenting opinions cite this court's decision in King as providing a solution in the instant appeal. However, both opinions simply ignore the fact that King was a declaratory-judgment action in which the appellee had sought injunctive relief from the circuit court, specifically seeking that an individual be prohibited from serving on a board and certain commissions. 336 Ark. 409, 985 S.W.2d 731. Here, no such relief was ever requested. The instant appeal requires this court to determine if the circuit court correctly or incorrectly reversed a decision of the Board, a determination governed by the APA.