Opinion
2013 CA 1509
08-21-2014
LOUISIANA BOARD OF ETHICS v. CHARLOTTE RANDOLPH AND CHARLOTTE RANDOLPH D/B/A RANDOLPH PUBLICATIONS, L.L.C.
R. Gray Sexton Jennifer L. Jackson Baton Rouge, Louisiana and Jerald P. Block Thibodaux, Louisiana Counsel for Defendant/Appellant Charlotte Randolph Kathleen M. Allen Tracy M. Barker Baton Rouge, Louisiana Counsel for Plaintiff/Appellee Louisiana Board of Ethics
NOT DESIGNATED FOR PUBLICATION ON APPEAL FROM THE ETHICS ADJUDICATORY BOARD THE DIVISION OF ADMINISTRATIVE LAW
STATE OF LOUISIANA
NUMBER 2011-20532-ETHICS- A
JOHN O. KOPYNEC, ALYCIA G. O'BEAR, AND SUZANNE K. SASSER, ADMINISTRATIVE LAW JUDGES R. Gray Sexton
Jennifer L. Jackson
Baton Rouge, Louisiana
and
Jerald P. Block
Thibodaux, Louisiana
Counsel for Defendant/Appellant
Charlotte Randolph
Kathleen M. Allen
Tracy M. Barker
Baton Rouge, Louisiana
Counsel for Plaintiff/Appellee
Louisiana Board of Ethics
BEFORE: KUHN, HIGGINBOTHAM, AND DRAKE, JJ.
Disposition: REVERSED AND RENDERED.
KUHN, J.
Defendant-Appellant, Charlotte Randolph, appeals a decision of the Louisiana Ethics Adjudicatory Board (EAB) finding that she violated La. R.S. 42:1111(C), a provision of the Louisiana Code of Governmental Ethics (Ethics Code), by receiving a thing of economic value from an entity having a contractual or financial relationship with the public agency for which she served. For the following reasons, we reverse.
Louisiana Revised Statutes 42:1101 et seq.
FACTS AND PROCEDURAL HISTORY
At all pertinent times, Mrs. Randolph was an elected public official serving as the Parish President of Lafourche Parish. In that capacity, she executed a written agreement (the "Agreement") with British Petroleum (BP) on May 11, 2010, to accept a one-time $1,000,000.00 donation for the purpose of assisting Lafourche Parish in recovering from the oil spill caused by the April 2010 Deepwater Horizon oil rig explosion. The Agreement gave Lafourche Parish "full discretion to determine the appropriate use" of the donation to accomplish this purpose. Further, the payment was expressly made irrevocable and nonrefundable. The Parish passed a resolution accepting the donation on May 25, 2010. During the remainder of the 2010 calendar year, BP also provided Lafourche Parish with several ATVs, various electronic equipment, construction of several breach closures, meals, telephones, helicopter rides, and an assistant for Mrs. Randolph, all in connection with the oil spill.
On June 18, 2010, Mrs. Randolph and her husband, George Randolph, d/b/a Randolph Publications, LLC, entered into an agreement with BP to lease a camp they owned in Grand Isle, Louisiana to house BP workers assisting in the oil spill cleanup. BP paid the Randolphs exactly the same rental rate it paid to other Grand Isle residents, which was $100.00 per day/per bed. The Randolphs received a total of $50,000.00 in lease payments between June 18 to October 23, 2010.
Upon learning of an ethics decision in an unrelated case, Mrs. Randolph terminated the lease with BP and reported her lease agreement with BP to the Louisiana Board of Ethics (the Board). The Board subsequently filed a charge against Mrs. Randolph alleging that she violated La. R.S. 42:1111(C)(2)(d) by receiving a thing of economic value from an entity that had a contractual, business, or financial relationship with Lafourche Parish by virtue of the May 2010 Agreement with BP. At that time, Lafourche Parish still had funds remaining from the BP payment
Following a hearing, the EAB rendered a decision concluding that Mrs. Randolph violated La. R.S. 42:1111(C) and imposing a $10,000.00 fine and a $50,000.00 penalty for that violation. On motion for rehearing, the EAB maintained its original decision, except that it reduced Mrs. Randolph's fine to $5,000.00, noting that it had not previously given full consideration to the fact that she "self reported her conduct" to the Board. Mrs. Randolph now appeals, arguing in four assignments of error that the EAB legally erred in concluding that she violated La. R.S. 42:1111(C) and in assessing her with a fine and penalties.
STANDARD OF REVIEW
Judicial review of the decision of the EAB is conducted in accordance with the Louisiana Administrative Procedure Act (APA). La. R.S. 42:1143; La. R.S. 49:950 et seq. The reviewing court may reverse or modify the agency decision if substantial rights of the appellant are prejudiced because the administrative findings, inferences, conclusions, or decisions are: (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 of law; (5) arbitrary, capricious, or an abuse of discretion; or (6) not supported and sustainable by a preponderance of evidence as determined by the reviewing court. La. R.S. 49:964(G); Schmitt v. Louisiana Board of Ethics, 00-0341 (La. App. 1st Cir. 3/28/01), 808 So.2d 524, 525. On legal issues, the reviewing court gives no special weight to the findings of the administrative tribunal, but conducts a de novo review of questions of law and renders judgment on the record. Schmitt, 808 So.2d at 525.
DISCUSSION
The threshold issue before us is whether a contractual, business, or financial relationship within the contemplation of La. R.S. 42:1111(C)(2)(d) and 42:1115(A)(1) existed between BP and Lafourche Parish at the time that Mr. and Mrs. Randolph leased their Grand Isle camp to BP. The Board argues that the May 2010 Agreement created such a relationship between BP and the Parish. This determination is crucial, because Mrs. Randolph and her husband were prohibited by the Ethics Code from leasing their camp to BP only if such a relationship existed.
Louisiana Revised Statutes 42:1111(C) provides, in pertinent part, that:
(2) No public servant and no legal entity in which the public servant exercises control or owns an interest in excess of twenty-five percent, shall receive any thing of economic value for or in consideration of services rendered, or to be rendered, to or for any person during his public service unless such services are:
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(d) Neither performed for nor compensated by any person from whom such public servant would be prohibited by R.S. 42:1115(A)(1) ... from receiving a gift. [Emphasis added.]
With respect to prohibited sources, La. R.S. 42:1115(A)(1) provides that:
A. No public servant shall solicit or accept, directly or indirectly, any thing of economic value as a gift or gratuity from any person or from any officer, director, agent, or employee of such person, if such public servant knows or reasonably should know that such person:
(1) Has or is seeking to obtain contractual or other business or financial relationships with the public servant's agency [.] [Emphasis added.]
For purposes of the Ethics Code, La. R.S. 42:1102(20.1) defines "service" to mean, in pertinent part, "the leasing, rental, or sale of movable or immovable property."
For purposes of the Ethics Code, La. R.S. 42:1102(20.1) defines "service" to mean, in pertinent part, "the leasing, rental, or sale of movable or immovable property."
The Agreement at the center of the instant matter is a gratuitous inter vivos donation. Under La. C.C. art. 1468, a donation inter vivos is defined as "a contract by which a person ... gratuitously divests himself, at present and irrevocably, of the thing given in favor of another ... who accepts it." Additionally, La. C.C. art. 1910 provides that "[a] contract is gratuitous when one party obligates himself towards another for the benefit of the latter, without obtaining any advantage in return." The gratuitous nature of the payment by BP and the lack of reciprocal obligations by the Parish is demonstrated by the following pertinent language from the Agreement.
B. BP desires to assist the Parish by providing One Million Dollars ($1,000,000) (the "Payment") to the Parish for use as provided herein.[Emphasis added.]
NOW, THEREFORE, BP and the Parish hereby agree as follows:
1. Payment. Promptly after the execution and delivery of this Agreement, BP shall provide the Payment to the Parish by wire transfer of such amount. The Payment shall be irrevocable and nonrefundable.
2. Use of the Payment. The Payment shall be used and disbursed by the Parish to pay or otherwise cover costs related to the Event [the Deepwater Horizon Oil Rig explosion and resulting oil spill]. The Parish shall have full discretion to determine the appropriate use of the Payment for such purpose and shall keep reasonably detailed records of how the Payment has been used and disbursed. The Parish shall send BP a report of disbursements of the Payment on an annual basis until the Payment has been fully spent. In addition, BP shall have reasonable access to the Parish's disbursement records and shall have the ability to make inquiries to the Parish from time to time to monitor the use and disbursement of the Payment. The parties further agree that the payment and disbursement of the Payment will be in compliance with all applicable laws and regulations.
We have conducted our review of whether the Agreement created a contractual, business, or financial relationship between BP and the Parish within the contemplation of La. R.S. 42:1111(C)(2)(d) and 42:1115(A)(1) in light of the fact that these provisions are part of the Ethics Code, violations of which subject a public official to a possible fine of up to $10,000.00, as well as the possible imposition of additional penalties. See La. R.S. 42:1153(A) & 42:1155(A). Because the violation of these Ethics Code provisions can result in the assessment of fines and/or penalties against a public official, they are penal in nature and, therefore, must be strictly construed. See Louisiana Board of Ethics v. Holden, 12- 1127 (La. App. 1st Cir. 6/25/13), 121 So.3d 113, 118; Matter of Insulation Technologies, Inc., 95-1184 (La. App. 1st Cir. 2/23/96), 669 So.2d 1343, 1350, writ denied, 96-0749 (La. 5/3/96), 672 So.2d 692; Doe v. Louisiana Board of Ethics, 12-1169 (La. App. 4th Cir. 3/13/13), 112 So.3d 339, 346-47, writ denied, 13- 0782 (La. 8/30/13), 120 So.3d 265. Additionally, any doubt in the construction of a penal statute must be resolved with lenity and in favor of the person subject to the fine or penalty. Doe, 112 So.3d at 346-47.
We are aware that in Glazer v. Commission on Ethics for Public Employees, 431 So.2d 752, 759-60 (La. 1983), the Supreme Court stated with little discussion that the Code of Ethics was not penal in nature. However, since Glazer was decided over thirty-years ago, the Supreme Court has held on several occasions, as has this Court, that statutes that impose civil fines or penalties are penal in nature and must be strictly construed. See Katie Realty, Ltd. v. Louisiana Citizens Property Insurance Corporation, 12-0588 (La. 10/16/12), 100 So.3d 324, 328-31; Iberia Medical Center v. Ward, 09-2705 (La. 11/30/10), 53 So.3d 421, 433-34; Gibbs Construction Company, Inc. v. State, Department of Labor, 540 So.2d 268, 269 (La. 1989). We believe the latter decisions indicate a shift in the Supreme Court's position regarding the penal nature of statutes, including provisions of the Code of Ethics, that impose civil fines and penalties.
Bearing these principles in mind, we conclude that no contractual, business, or financial relationship as contemplated by La. R.S. 42:1111(C)(2)(d) and 42:1115(A)(1) existed between BP and Terrebonne Parish during the period of time the Randolphs leased their camp to BP. Despite the Board's contrary contention in brief, the Agreement expressly provides that the $1,000,000.00 payment to the Parish was irrevocable and nonrefundable, a fact of particular significance to our conclusion. Furthermore, the Agreement grants the Parish "full discretion" as to how the money should be spent in connection with the oil spill -BP has no input under the Agreement regarding disbursement of the payment funds. Another significant factor is that the Agreement provides that BP shall make the irrevocable and nonrefundable $1,000,000.00 payment without requiring any further action or reciprocal obligations by the Parish other than the execution and delivery of the Agreement, which was accomplished on May 11, 2010.
Nor is our conclusion affected by the references made in the Agreement to the Parish maintaining "reasonably detailed records" of the disbursement of the payment funds, providing BP with an annual disbursements report, and allowing BP to make inquiries and to have reasonable access to the Parish's disbursement records. These references impose no obligations or duties upon the Parish other than those imposed upon it irrespective of the Agreement. As a public body, the Parish already had duties both to maintain records of how it spent the funds received from BP and to allow access to those public records. See La. Const., Art. 12, §3; La. R.S. 44:31 et seq.
Under our construction of the applicable statutes in light of their penal nature, the May 2010 Agreement comprised a one-time gratuitous donation that did not create a contractual, business, or financial relationship between BP and the Parish. Further, even though the Parish had not yet disbursed all the funds, the donation itself was fully completed at the time that the Randolphs leased their camp to BP in June 2010. Accordingly, pursuant to La. R.S. 49:964(G), we conclude the EAB legally erred in determining that Mrs. Randolph violated the prohibitions of La. R.S. 42:1111(C) and 42:1115(A)(1) because of the existence of a contractual, business, or financial relationship between BP and the Parish. In doing so, we specifically reject the Board's contention that the EAB's decision is entitled to deference by this Court, since a determination as to whether a violation occurred in this case is dependent upon the proper construction of La. R.S. 42:1111(C) and 42:1115(A)(1), which is a legal issue. See Schmitt, 808 So.2d at 525. While an agency is entitled to deference in the interpretation of its own rules and regulations, it is not entitled to deference in its statutory interpretation of applicable statutes. See Bowers v. Firefighters' Retirement System, 08-1268 (La. 3/17/09), 6 So.3d 173, 176.
Nor were the additional intermittent donations made by BP to the Parish of various movables and services during the remainder of 2010 sufficient to create such a contractual, business, and/or financial relationship, since these donations were gratuitous and imposed no obligations upon the Parish beyond acceptance thereof. See La. C.C. arts. 1468 & 1910.
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CONCLUSION
For the reasons assigned, the decision of the Louisiana Ethics Adjudicatory Board is reversed and this action against Mrs. Randolph is dismissed with prejudice. The Louisiana Board of Ethics is cast with all appeal costs in the amount of $411.95.
REVERSED AND RENDERED.