Opinion
No. 5-336 / 04-1714
Filed June 29, 2005
Appeal from the Iowa District Court for Polk County, Leo Oxberger, Judge.
John Henss appeals from the denial of his petition for judicial review. AFFIRMED.
John L. Henss, Des Moines, appellant pro se.
Thomas J. Miller, Attorney General, and Pamela D. Griebel, Assistant Attorney General, for appellee.
Considered by Vogel, P.J., and Miller and Hecht, JJ.
John Henss appeals from the denial of his petition for judicial review. We now affirm.
I. Background Facts and Proceedings.
In 1992, Henss, then licensed as a Certified Public Accountant (CPA), and his public accounting firm were named defendants in a lawsuit brought by the United States Department of Labor. That litigation culminated in a decision of the Eighth Circuit Court of Appeals. See Martin v. Feilen, 965 F.2d 660, 663 (8th Cir. 1992). That court's decision established that Henss structured an Employee Stock Ownership Plan (ESOP) for a Des Moines-based company in 1977. Henss then recommended and the company undertook a series of transactions between 1977 and 1985 resulting in the complete loss of the company's ESOP retirement plans and the eventual failure of the company. The federal court decision further established that the transactions involved substantial self-dealing and constituted a breach of Henss's fiduciary duties owed under the Employee Retirement Income Security Act (ERISA). Id. at 664. The federal court permanently enjoined Henss from serving directly or indirectly as (1) a fiduciary for any ESOP, (2) a service provider to any ERISA plan, and (3) a fiduciary or service provider for any other plan subject to ERISA. Id. at 671-673.
A complaint against Henss was filed with the Iowa Accountancy Examining Board (agency) in 1993. The complaint alleged Henss had engaged in (1) conduct discreditable to the public accounting profession, and (2) otherwise dishonest and/or grossly negligent conduct in the practice of public accounting. A properly noticed hearing was held on May 16, 1994. The federal court ruling in Feilen was considered by the agency as evidence supporting the complaint against Henss.
The agency found Henss had committed "an egregious violation of the public trust." The agency (1) revoked Henss's CPA certificate, (2) ordered him to pay a civil penalty of $1,000, (3) required him to notify his clients of the revocation and supply such notice to the agency within thirty days, and (4) enjoined him from holding himself out as a CPA in any manner. Henss sought judicial review of the 1994 revocation. In 1995, the agency action was affirmed by the district court based on its conclusion that the agency's findings were supported by substantial evidence.
The district court noted in its 1995 decision on judicial review that no equal protection or due process arguments were presented before the agency or in an application for rehearing. It also noted Henss had failed to assert any claim of discriminatory prosecution before the agency. Accordingly, the district court concluded these issues, to the extent raised, were not preserved for judicial review.
In 1996, Henss applied to the agency for reinstatement of his CPA certificate. A properly noticed hearing on the issue of reinstatement was held before the agency on May 20, 1997. Noting the wholesale disregard of its conditions on revocation — including the failure to pay the civil penalty and to notify clients of the revocation — the agency refused to reinstate Henss's certificate. Henss again sought judicial review before the district court. However, the district court was unable to discern whether the assignments of error contained in Henss's petition challenged the agency's 1997 decision declining to reinstate the certificate or the agency's 1994 decision to revoke the certificate. The district court dismissed the 1997 petition for judicial review as untimely to the extent it sought review of the 1994 agency decision, and ordered a more specific statement of any challenge to the 1997 agency decision. Henss filed his response to the district court's order for a more specific statement; however, no further action on the petition for judicial review was taken by Henss, and the case languished in the district court for six years. Because the clerk of court failed to provide Henss with the appropriate dismissal notice for want of prosecution, and because Henss had complied with the district court order directing him to provide a more specific statement, the district court eventually set the 1997 judicial review petition for hearing.
The judicial review hearing was held on September 24, 2004. The district court noted both issues raised in the 1997 judicial review petition involved attacks directed at the 1994 agency decision to revoke Henss's certificate rather than challenges to the 1997 agency refusal to reinstate the certificate. The district court therefore dismissed the petition, finding it failed to raise any timely challenge to the 1997 decision not to reinstate the certificate. Henss now appeals.
Iowa Code section 17A.3 (1997) requires all petitions for judicial review of an agency's final decision in a contested case to be filed within thirty days of the issuance of the agency's final decision.
II. Scope and Standard of Review.
Review of an agency determination is for errors at law. Cobb v. Employment Appeal Bd., 506 N.W.2d 445, 447 (Iowa 1993). We review district court decisions on judicial review of agency action under the standards of Iowa Code chapter 17A (1997). Locate.Plus.Com, Inc. v. Iowa Dep't of Transp., 650 N.W.2d 609, 612 (Iowa 2002). As the district court is itself acting in an appellate capacity to correct errors of law on the part of the agency, on appeal "we apply the standards of Iowa Code section 17A.19(8) to the agency action to determine whether our conclusions are the same as those of the district court." Swanson v. Employment Appeal Bd., 554 N.W.2d 294, 296 (Iowa Ct.App. 1996).
An agency's findings of fact are binding on the court where such determinations "are clearly vested by a provision of law in the discretion of the agency." Mycogen Seeds v. Sands, 686 N.W.2d 457, 465 (Iowa 2004). The agency here is given specific authority to revoke a CPA's certificate if it finds the person has committed, among others, (1) acts constituting dishonesty or gross negligence in the practice of public accounting, or (2) conduct discreditable to the accounting profession. Iowa Code § 542C.21 (1993). The agency is likewise granted authority to determine whether it would be in the public interest to reinstate the revoked certificate of a person. Id. § 542C.24. On review we are therefore bound by the factual determinations made by the agency if supported by substantial evidence. Mycogen Seeds, 686 N.W.2d at 465. Evidence is substantial if a reasonable mind would accept it as adequate to reach a finding. Swanson, 554 N.W.2d at 296.
In 2001, chapter 542C was repealed by the legislature, and reinstated as chapter 542. The relevant sections vesting authority in the agency to both revoke and reinstate a certificate are now contained in Iowa Code sections 542.10 and 542.12 (2005) respectively.
III. Discussion.
Henss's 1997 judicial review petition filed with the district court following the agency's denial of his first application for reinstatement raises two issues: (1) whether Henss's certificate was revoked in accordance with due process following a contested case hearing, and (2) whether the agency erred in finding the federal court's decision in Feilen provides substantial evidence supporting the revocation. As was aptly noted by the district court, both issues raised by Henss on judicial review are direct challenges to the agency's 1994 revocation ruling. As we have indicated, Henss sought judicial review of the 1994 revocation, claiming the agency's 1994 decision was unsupported by substantial evidence and the federal court's decision could not supply substantial evidence. Because these claims were resolved by the agency against Henss and affirmed by the district court on judicial review, Henss is precluded from re-litigating those issues through his 1997 judicial review petition. Fischer v. City of Sioux City, 654 N.W.2d 544, 547 (Iowa 2002); Iowa Coal Mining Co. v. Monroe County, 555 N.W.2d 418, 441 (Iowa 1996).
Henss, however, attempts to side-step entrenched principles of res judicata by advancing a theory that he suffered prejudice when he was given no opportunity to rebut "considerable" evidence supplied by a newly discovered "secret witness." Henss contends he was denied due process as a consequence of the agency's consideration of the evidence supplied by that witness, and thus the revocation of his certificate is void. The record indicates that in 1995 the district court, in reviewing the agency's 1994 revocation ruling, found no due process or equal protection issues were raised before the agency during either the contested case hearing or through an application for rehearing, and therefore those issues were not preserved for judicial review. Additionally, Henss has failed to explain how he was prejudiced by the involvement of the "secret witness." Finding no reason for departing from the district court's conclusion that no meritorious challenge to the 1997 agency ruling on reinstatement was advanced by Henss's 1997 petition for judicial review, we affirm the agency's denial of Henss's 1997 application for the reinstatement of his CPA certificate.
The "secret witness" to which Henss refers was James Craig of the United States Department of Labor, who had apparently provided the agency with some sort of assistance "in ensuring that the [Henss] matter was fully and properly addressed by the [agency]." The "newly discovered evidence" consists of a cover letter from the assistant attorney general handling the revocation proceedings to Craig thanking him for his assistance, the nature of which is not detailed in the letter or elsewhere in the record.