The opinion
NO. COA13-1321
NORTH CAROLINA COURT OF APPEALS
Filed: 7 October 2014
HANS KINDSGRAB,
Petitioner-Appellant,
v. Wake County
No. 12 CVS 16903
STATE OF NORTH CAROLINA BOARD OF
BARBER EXAMINERS,
Respondent-Appellant.
Appeals by petitioner and respondent from orders entered 3
May 2013 and 11 September 2013 by Judge Howard E. Manning, Jr.,
in Wake County Superior Court. Heard in the Court of Appeals 23
April 2014.
Harris & Hilton, P.A., by Nelson G. Harris, for petitioner-
appellant.
N.C. Board of Barber Examiners, by W. Bain Jones, Jr., and
Allen, Pinnix & Nichols, P.A., by M. Jackson Nichols and
Catherine E. Lee, for respondent-appellant.
McCULLOUGH, Judge.
Hans Kindsgrab (“petitioner”) appeals from the Order On
Petition For Judicial Review filed 11 September 2013. The State
of North Carolina Board of Barber Examiners (“respondent” or
“the Board”) appeals from the interlocutory order denying its
Motion To Dismiss Petition For Judicial review filed 3 May 2103
and from the Order On Petition For Judicial Review filed 11
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September 2013. For the following reasons, we affirm in part
and reverse in part.
I. Background
Petitioner is an owner of Maybe Someday, Inc., which owns
and operates franchises of “The Barbershop – A Hair Salon for
Men” at three locations in the triangle area – Cary, Durham, and
Raleigh. At all times relevant to this appeal, each location
held a Cosmetic Arts Salon License issued by the North Carolina
State Board of Cosmetic Art Examiners.
In 2012, an investigation by barber examiner William Graham
revealed that the Cary and Raleigh locations displayed barber
polls and advertised barber services without barber permits and
without licensed barbers on the premises. As a result, Graham
issued “Notice[s] Of Violation[s]” to the Raleigh and Cary
locations on 31 July 2012 specifying fraudulent
misrepresentation in violation of N.C. Gen. Stat. § 86A-20 and
N.C. Admin. Code tit. 21, r. 6O.0107. Following the notices
issued by Graham, on 7 September 2012, the Board sent petitioner
a Notification of Probable Cause to Fine and ordered petitioner
to pay civil penalties, attorney’s fees, and costs.
By letter to the Board dated 2 October 2012, petitioner
requested an administrative hearing to contest the fraudulent
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misrepresentation charges. On 3 October 2012, the Board
responded to petitioner by letter providing notice that an
administrative hearing had been scheduled for 22 October 2012.
The hearing took place as scheduled.
Following the 22 October 2012 hearing, the board issued its
Final Decision on 6 November 2012. Among the conclusions issued
by the board were the following:
10. Petitioner must comply with the
statutes and administrative rules concerning
barber shops, barbering services and use of
a barber pole.
11. The preponderance of the evidence
established that it [sic] the Board properly
cited Petitioner for misrepresenting itself
as a barber shop or barber salon when it
failed to have a barber shop permit and a
licensed barber at each of its franchise
locations in Cary and Raleigh.
The Board then ordered petitioner to “pay one thousand dollars
($1,000.00) in civil penalties for fraudulent misrepresentations
concerning attempts to barber and provide barber services
without a shop permit and a licensed barber on the premises at
the Cary and Raleigh locations[, five hundred dollars ($500.00)
per location,]” and to “pay one thousand six hundred fifty
dollars ($1,650.00) in attorney’s fees and costs for services
rendered by the Board Counsel and staff.”
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On 3 December 2012, petitioner filed a Petition For
Judicial Review in Wake County Superior Court seeking review of
the Board’s Final Decision. After numerous motions by both
sides attempting to settle the record, on 26 April 2013,
respondent filed a Motion To Dismiss Petition For Judicial
Review on the basis that petitioner failed to “specifically
state the grounds for exception[.]” Respondent’s motion to
dismiss came on to be heard with the motions to settle the
record on 3 May 2013. Following the hearing, the trial court
filed an order denying respondent’s motion to dismiss.
Respondent’s Petition For Judicial Review came on to be
heard in Wake County Superior Court before the Honorable Howard
E. Manning, Jr., on 4 September 2013.
In an Order On Petition For Judicial Review filed 11
September 2013, the trial court affirmed the Board’s Final
Decision in part and reversed in part. Specifically, the trial
court found the Board’s findings to be supported by substantial
evidence and found the board’s conclusions to be supported by
the findings of fact and the whole record. The trial court also
made the following more specific findings:
4. The Court affirms in part Paragraph 1
of the Order portion of the Final Agency
Decision which holds that Petitioner’s
businesses, The Barber Shop – A Hair Salon
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For Men, were providing barber services
without a barber shop permit and a licensed
barber on the premises at Respondent’s Cary
and Raleigh locations.
5. The Court affirms in part the Final
Agency Decision, which holds that Petitioner
is not allowed to use or display a barber
pole for the purpose of offering barbering
services, and Petitioner is ordered to
remove the barber pole unless licensed by
Respondent Board.
6. The Court affirms in part the Final
Agency Decision which holds that
Petitioner’s businesses, advertising of its
services as a barber shop is a
misrepresentation and confusing and
deceptive to the consuming public, and
Petitioner is ordered to remove and cease
such advertisements unless licensed by
Respondent Board.
7. The Court reverses in part the Final
Agency Decision in its imposition of fines
because the Court concludes that Respondent
Board does not have the statutory authority
to impose fines on persons or entities not
licensed by the Board.
8. The Court reverses in part the Final
Agency Decision in its imposition of
attorney fees and costs for services
rendered by the Board Counsel and staff
because the Court concludes that Respondent
Board does not have the statutory authority
to impose such fees and costs on persons or
entities not licensed by the Board.
Based on these findings, the trial court ordered the imposition
of civil penalties and the award of attorney’s fees and costs
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for services be reversed. Both petitioner and respondent
appealed.
II. Discussion
“When reviewing a superior court order concerning an agency
decision, we examine the order for errors of law. The process
has been described as a twofold task: (1) determining whether
the trial court exercised the appropriate scope of review and,
if appropriate, (2) deciding whether the court did so properly.”
Poarch v. N.C. Dep’t of Crime Control & Pub. Safety, _ N.C. App.
_, _, 741 S.E.2d 315, 318 (2012) (quotation marks and citations
omitted).
A. Petitioner’s Appeal
The sole issue raised on appeal by petitioner is whether
the trial court exceeded the permissible scope of review when it
ordered him to remove the barber pole and cease advertising
barber services unless licensed by the Board. Petitioner
contends the trial court did and that those portions of the
trial court’s order must be reversed. We agree.
N.C. Gen. Stat. § 150B-51 governs the scope of judicial
review of an agency decision. It provides in pertinent part:
(b) The court reviewing a final decision
may affirm the decision or remand the case
for further proceedings. It may also reverse
or modify the decision if the substantial
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rights of the petitioners may have been
prejudiced because the findings, inferences,
conclusions, or decisions are:
(1) In violation of constitutional
provisions;
(2) In excess of the statutory authority
or jurisdiction of the agency or
administrative law judge;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Unsupported by substantial evidence
admissible under G.S. 150B-29(a),
150B-30, or 150B-31 in view of the
entire record as submitted; or
(6) Arbitrary, capricious, or an abuse of
discretion.
(c) In reviewing a final decision in a
contested case, the court shall determine
whether the petitioner is entitled to the
relief sought in the petition based upon its
review of the final decision and the
official record. With regard to asserted
errors pursuant to subdivisions (1) through
(4) of subsection (b) of this section, the
court shall conduct its review of the final
decision using the de novo standard of
review. With regard to asserted errors
pursuant to subdivisions (5) and (6) of
subsection (b) of this section, the court
shall conduct its review of the final
decision using the whole record standard of
review.
N.C. Gen. Stat. § 150B-51 (2013).
Pursuant to N.C. Gen. Stat. §§ 86A-5 & -27, the Board has
the power to assess civil penalties. See N.C. Gen. Stat. § 86A-
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5(a)(6) (2013). The Board does not, however, have the power to
issue injunctions. Thus, in accordance with its powers, the
Board did not enjoin petitioner, but simply found petitioner was
properly cited for fraudulent misrepresentations and ordered
petitioner to pay civil penalties, attorney’s fees, and costs.
As detailed more fully above, petitioner petitioned the
trial court to review the Board’s assessment of civil penalties,
attorney’s fees, and costs. Upon reviewing the case, the trial
court reversed portions of the Board’s Final Decision and held
the Board did not have the statutory authority to impose civil
penalties, attorney’s fees, and costs on non-licensees. The
trial court did, however, affirm the Board’s conclusions that
petitioner was subject to the Barber Act, Chapter 86A of the
General Statues, and violated certain rules related to
advertising barber services. Yet, in addition to affirming
those portions of the Board’s Final Decision related to
advertising, the trial court ordered petitioner to remove the
barber pole and cease advertising barber services unless
licensed by the Board.
Defendant now contends the decretal portions of the trial
court’s order ordering the removal of the barber pole and
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cessation of advertising barber services were beyond the scope
of the trial court’s review.
Although the Barber Act provides an avenue for the Board to
seek an injunction in superior court, see N.C. Gen. Stat. § 86A-
20.1 (2013) (“The Board . . . may apply to the superior court
for an injunction to restrain any person from violating the
provisions of this Chapter or the Board's rules.”), respondent
concedes that it did not pursue that avenue, nor raise the issue
in the underlying contested case. Nevertheless, citing In re
Alamance County Court Facilities, 329 N.C. 84, 94, 405 S.E.2d
125, 129 (1991) (“Generally speaking, the scope of a court's
inherent power is its ‘authority to do all things that are
reasonably necessary for the proper administration of
justice.’”) (quoting Beard v. N.C. State Bar, 320 N.C. 126, 129,
357 S.E.2d 694, 696 (1987)), respondent contends that it was
within the inherent power of the court to enjoin petitioner from
displaying the barber pole and advertising barber services. We
disagree.
Given that N.C. Gen. Stat. § 86A-20.1 provides an avenue
for respondent to seek an injunction and respondent did not
pursue that avenue, we hold the trial court, acting on its own
to issue relief outside the authority of the Board, acted
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outside the scope of review provided in N.C. Gen. Stat. § 150B-
51. The only issues before the trial court for review were
those issues decided by the Board – the assessment of civil
penalties, attorney’s fees, and costs. As a result, we reverse
those portions of the trial court’s order that mandate
petitioner remove the barber pole and cease advertising barber
services.
B. Respondent’s Appeal
In respondent’s appeal, respondent first argues the trial
court erred in its 3 May 2013 order by denying its Motion To
Dismiss Petition For Judicial Review. Specifically, respondent
contends dismissal was appropriate because petitioner failed to
make specific exceptions to the Board’s Final Decision.
N.C. Gen. Stat. § 150B-46 governs the contents of petitions
for judicial review from final agency decisions. It provides,
“[t]he petition shall explicitly state what exceptions are taken
to the decision or procedure and what relief the petitioner
seeks.” N.C. Gen. Stat. § 150B-46 (2013). This Court has
recognized that “‘[e]xplicit’ is defined in this context as
‘characterized by full clear expression: being without vagueness
or ambiguity: leaving nothing implied.’” Gray v. Orange County
Health Dept., 119 N.C. App. 62, 70, 457 S.E.2d 892, 898 (1995)
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(quoting Vann v. N.C. State Bar, 79 N.C. App. 173, 173-74, 339
S.E.2d 97, 98 (1986)). Applying that definition of explicit in
both Gray and Vann, this Court held the trial courts erred in
denying the respondents’ motions to dismiss because the
petitions at issue were not “sufficiently explicit” to allow
effective judicial review where the petitioners did not except
to particular findings of fact, conclusions of law, or
procedures. Gray, 119 N.C. App. at 71, 457 S.E.2d at 899, Vann,
79 N.C. App. at 174, 339 S.E.2d at 98.
Respondent now argues for a similar result in the present
case because petitioner did not take exception with specific
findings of fact, conclusions of law, or procedures. Respondent
claims petitioner made only general assertions of error that
fail to meet the required standards of specificity under N.C.
Gen. Stat. § 150B-46. We disagree.
Although petitioner did not except to specific findings or
conclusions by the Board, petitioner clearly stated exceptions
to the Board’s Final Decision. These exceptions include the
following:
a. Petitioner is not a licensed or
registered barber (hereinafter “a
Licensee”), and the Board’s powers over
individuals who are not Licensees are
limited to making a criminal referral
alleging a violation of N.C.G.S. § 86A-20,
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or seeking injunctive relief from the Court
as provided for under N.C.G.S. § 86A-20.1.
The Board’s imposition of fines and costs on
Petitioner is beyond the power granted by
the General Assembly; the Final Decision is
in excess of the statutory authority or
jurisdiction of the Board, and, in
accordance with N.C.G.S. § 150B-51(b)(2),
the Final Decision must be reversed.
b. Even if N.C.G.S. § 86A-27 applies to
individuals who are not Licensees, N.C.G.S.
§ 86A-27(d) specifically provides that the
Board may only impose fees and costs on “the
licensee”, and Petitioner is not a Licensee.
Under the circumstances, imposition of costs
and attorney’s fees on Petitioner is in
excess of the statutory authority or
jurisdiction of the Board, and, in
accordance with N.C.G.S. § 150B-51(b)(2),
the Final Decision must be reversed.
c. N.C.G.S. § 86A-14 provides:
The following persons are exempt from the
provisions of this Chapter while engaged
in the proper discharge of their duties:
. . . .
(5) Persons who are working in licensed
cosmetic shops or beauty schools and are
licensed by the State Board of Cosmetic
Art Examiners.
As the Board recognizes, each of Maybe
Someday’s locations has a Cosmetic Arts
Salon License through Petitioner, and,
therefore, in accordance with the provisions
of N.C.G.S. § 86A, Petitioner is exempt from
the provisions of the Barber Act. Under the
circumstances, the Final Decision is in
excess of the statutory authority or
jurisdiction of the Board, and, in
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accordance with N.C.G.S. § 150B-51(b)(2),
and [sic] it must be reversed.
d. A primary basis for the Board’s
contention that Petitioner was “attempting
to barber by fraudulent misrepresentations”
is that Maybe Someday’s locations have a
“barber pole” in the reception area, without
a barber permit for the shop. With respect
to the use of the “barber pole”, the Board
holds that 21 NCAC 06Q.0101 “states that no
person shall use or display a barber pole
for the purpose of offering barbering
services to the consuming public without a
barber shop permit.” In fact, 21 NCAC
06Q.0101 does not state anything of the
sort. The cited section of the North
Carolina Administrative Code simply provides
“[e]very establishment permitted to practice
barbering shall display at its main entrance
a sign which is visible from the street, and
whose lettering is no small[er] than three
inches, stating ‘barber shop,’ ‘barber
salon,’ ‘barber styling’ or similar use of
the designation, ‘shop, salon or styling’ or
shall display a ‘barber pole’ . . [. .]”
Thus, the cited section of the North
Carolina Administrative Code imposes
obligations on barbers, it does not prohibit
any act by individuals who are not
Licensees.
. . . .
Under the circumstances, the Final Decision,
in accordance with the provisions of
N.C.G.S. § 150B-51(b)(2), and/or N.C.G.S. §
150B-51(b)(4), and/or N.C.G.S. § 150B-
51(b)(6), must be reversed.
Considering these exceptions in the context of the
petition, we find the Petition For Judicial Review “sufficiently
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explicit” to allow effective judicial review. Thus, we hold the
trial court did not err in denying respondent’s motion to
dismiss.
In the second issue raised by respondent on appeal,
respondent argues the trial court erred in concluding that
“Respondent Board does not have the statutory authority to
impose such fines on persons or entities not licensed by the
Board.” Upon review of the statutes, regulations, and relevant
law, we agree.
Among the powers and duties assigned to the Board is the
power “to assess civil penalties pursuant to [N.C. Gen. Stat. §]
86A-27.” N.C. Gen. Stat. § 86A-5(a)(6). N.C. Gen. Stat. § 86A-
27(a) in turn provides, in pertinent part, “[t]he Board may
assess a civil penalty not in excess of five hundred dollars
($500.00) per offense for the violation of any section of this
Chapter or the violation of any rules adopted by the Board.”
N.C. Gen. Stat. § 86A-27 (2013).
A plain reading of N.C. Gen. Stat. § 86A-27(a) reveals no
indication that the imposition of civil penalties is limited
solely to licensees. In fact, as respondent points out, where
portions of the statute are intended to apply exclusively to
licensees, the statute unambiguously provides for it; for
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example, N.C. Gen. Stat. § 86A-27(d), which governs the
assessment of attorney’s fees and costs in Board proceedings,
provides that “[t]he Board may in a disciplinary proceeding
charge costs, including reasonable attorneys' fees, to the
licensee against whom the proceedings were brought.” N.C. Gen.
Stat. § 86A-27(d) (emphasis added). Where there is no limiting
language in N.C. Gen. Stat. § 86A-27(a), we will not read
limiting language into the statute.
Moreover, N.C. Gen. Stat. § 86A-27(c) provides that “[t]he
Board shall establish a schedule of civil penalties for
violations of this Chapter and rules adopted by the Board.” The
Board has done so beginning with N.C. Admin. Code tit. 21, r.
6O.0101. As argued by respondent, the rules promulgated by the
Board pursuant to the Administrative Procedure Act, Chapter 150B
of the General Statutes, indicate that fines may be imposed on
non-licensees. See N.C. Admin. Code tit. 21, r. 6O.0102 (June
2014) (setting forth a schedule of civil penalties for operating
a barber shop without first filing an application for a barber
shop license or without a valid permit).
Particularly relevant to this case, the schedule of civil
penalties provides that “[t]he presumptive civil penalty for
barbering or attempting to barber by fraudulent
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misrepresentations . . . : 1st offense $500.00.” N.C. Admin.
Code tit. 21, r. 6O.0107 (June 2014). A subsequent regulation
explains that
[e]xcept as provided in Chapter 86A of the
General Statutes, the Board:
(1) will find fraudulent
misrepresentation in the following
examples:
(a) An individual or entity operates
or attempts to operate a barber
shop without a permit;
(b) An individual or entity advertises
barbering services unless the
establishment and personnel
employed therein are licensed or
permitted;
(c) An individual or entity uses or
displays a barber pole for the
purpose of offering barber
services to the consuming public
without a barber shop permit[.]
. . . .
N.C. Admin. Code tit. 21, r. 6Q.0101 (June 2014). Thus, it is
clear from the Board rules that civil penalties may be assessed
for violations by an “individual or entity”, not just against
those licensed by the Board.
In response to respondent’s argument, petitioner argues
that if the Board has statutory authority to impose civil
penalties on non-licensees, that authority is unconstitutional
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because it constitutes a grant of judicial power to the Board
that is not “reasonably necessary” to accomplish the Board’s
purpose.
North Carolina’s Constitution provides that “[t]he
legislative, executive, and supreme judicial powers of the State
government shall be forever separate and distinct from each
other.” N.C. Const. art. I, § 6. As our Supreme Court
explained in State, ex rel Lanier, Comm’r of Ins. v. Vines, 274
N.C. 486, 164 S.E.2d 161 (1968),
The legislative authority is the authority
to make or enact laws; that is, the
authority to establish rules and regulations
governing the conduct of the people, their
rights, duties and procedures, and to
prescribe the consequences of certain
activities. Usually, it operates
prospectively. The power to conduct a
hearing, to determine what the conduct of an
individual has been and, in the light of
that determination, to impose upon him a
penalty, within limits previously fixed by
law, so as to fit the penalty to the past
conduct so determined and other relevant
circumstances, is judicial in nature, not
legislative.
Id. at 495, 164 S.E.2d at 166. Our Constitution, however, also
provides that “[t]he General Assembly may vest in administrative
agencies established pursuant to law such judicial powers as may
be reasonably necessary as an incident to the accomplishment of
the purposes for which the agencies were created.” N.C. Const.
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art. IV, § 3. “Whether a judicial power is ‘reasonably
necessary as an incident to the accomplishment of the purposes
for which’ an administrative office or agency was created must
be determined in each instance in the light of the purpose for
which the agency was established and in the light of the nature
and extent of the judicial power undertaken to be conferred.”
Lanier, 274 N.C. at 497, 164 S.E.2d at 168.
What began as a narrow interpretation of “reasonably
necessary” in Lanier has since become more liberal, permitting
administrative agencies guided by proper standards to exercise
discretion in assessing civil penalties. See In re Appeal from
Civil Penalty Assessed for Violations of Sedimentation Pollution
Control Act, 324 N.C. 373, 381-82, 379 S.E.2d 30, 35 (1989).
Applying the less mechanical approach in In re Civil Penalty,
our Supreme Court upheld a civil penalty imposed by the North
Carolina Department of Natural Resources and Community
Development for violations of the Sedimentation Pollution
Control Act as reasonably necessary. Id.
As petitioner states, “[t]he purposes of the Board are to
license barbers and to prevent anyone who is not licensed as a
barber from practicing barbering.” See N.C. Gen. Stat. § 86A-1
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(2013). As with most agencies, these purposes serve to protect
the public.
Now on appeal, petitioner contends the Board has all the
tools necessary to accomplish its purposes by referring non-
licensees engaged in the practice of barbering for criminal
prosecution pursuant to N.C. Gen. Stat. § 86A-20 and seeking to
enjoin non-licensees from practicing barbering pursuant to N.C.
Gen. Stat. § 86A-20.1. While we recognize that N.C. Gen. Stat.
§§ 86A-20 & -20.1 provide means to accomplish the Board’s
purposes, they are not the exclusive means. As the Court noted
in In re Civil Penalty, other avenues to prohibit violations,
such as injunctions, take time during which irreparable damage
may occur. “The power to levy a civil penalty is therefore a
useful tool, since even the threat of a fine is a deterrent.”
324 N.C. at 381, 379 S.E.2d at 35.
Similarly, in this case we hold that the imposition of
civil penalties on non-licensees is reasonably necessary for the
Board to serve its purpose of preventing non-licensees from
engaging in the practice of barbering.
III. Conclusion
For the reasons discussed above, we affirm the trial court
in part and reverse in part.
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Affirmed in part; reversed in part.
Judges CALABRIA and ELMORE concur.