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Boards must pay licensee’s attorney fees in discipline case over deadly pool heating installation

State law allows attorney fees against professional licensing boards, the Supreme Court of North Carolina held June 5. The court overruled a lower court's textual analysis that had determined the relevant statutory clause made an exception for disciplinary actions.

Daryl Mitchell,

(Winkler v. North Carolina State Board of Plumbing, Heating and Fire Sprinkler Contractors)

Daryl Mitchell,

In 2013, heating and ventilation licensee Dale Winkler was hired by a hotel despite the fact that Winkler was only licensed for residential work. As a result of this work, three guests died of carbon monoxide poisoning in the room over the gas supply of the pool heating system on which Winkler had worked.

An investigation by the board determined the guests were killed by a gas leak from the pool heater and suspended Winkler’s license for a year. Winkler appealed that decision, challenging the board’s jurisdiction to discipline him for work exceeding the scope of his license.

Surprisingly, a state court of appeals agreed that the board did not have jurisdiction to discipline a licensee for unlicensed practice that killed three people and remanded the case to the board.

Adding insult to injury, Winkler filed for attorney’s fees, arguing that the board should have known it did not have authority to discipline him for the deaths. A trial court agreed and awarded Winkler $30,000.

The board appealed that award, and a state Court of Appeals reversed, holding that the relevant section of North Carolina statutory law excludes licensing boards from attorney fees resulting from disciplinary cases. That decision involved a complicated analysis of the text—down to the placement of commas—of the controlling laws.

Winkler appealed up to the Supreme Court of North Carolina, which issued a decision affirming the lower court’s decision to allow fee awards against licensing the board, but denying Winkler’s fees, in particular.

The textual analysis centered around an awkward clause in section 6-19.1 of the North Carolina general statutes. That clause allows attorney fee awards “In any civil action, other than an adjudication for the purpose of establishing or fix-ing a rate, or a disciplinary action by a licensing board, brought by the State . . .”

The board argued that this clause excludes disciplinary actions from fees, while Winkler argued that the commas found in the sentence meant the clause should be read to include such cases.

The court, in a long grammatical analysis by Chief Justice Cheri Beasley, noted that the clause actually contains a punctuation error regardless of which of the two interpretations it supports. Thus, no plain meaning could be discerned from the text alone, and a deeper analysis of the text through the mechanism of legislative intent was in order.

That analysis favored the allowance of attorney fee awards against licensing boards. Justice Beasley, wrote that “the General Assembly could not have intended to except disciplinary actions by a licensing board from the category of civil actions because such disciplinary actions are not civil in nature.”

“In any civil action, other than an adjudica-tion for the purpose of establishing or fixing a rate, or a disciplinary action by a licensing board, brought by the State or brought by a party who is contesting State action . . . unless the prevailing party is the State, the court may, in its discretion, allow the prevailing party to recover reasonable attorney’s fees, including attorney’s fees applicable to the administrative review portion of the case.”

–Section 6-19.1, North Carolina General Statutes.

Under North Carolina law, “civil actions” are defined in part as being prosecuted in a court, while disciplinary proceedings are administrative procedures adjudicated by a government agency. “Indeed,” she continued, “a disciplinary action does not become a civil action until either party petitions for judicial review.”

In addition, later clauses in the relevant sections of law refer to attorney’s fees incurred in the “administrative review” portions of cases, indicating that the legislature had intended fees to be awarded in administrative cases like disciplinary actions.

As bad as that section of the decision was for licensing boards across the board, the rest was squarely in the board’s favor. Although the Court ruled that disciplinary actions are subject to legal fees, it also held that, in Winkler’s case, no award was justified.

The section of law that authorizes fees also restricts them to matters in which an agency acted “without substantial justification,” Justice Beasley noted. That was not the case here.

Although Winkler was ultimately not subject to discipline because a lower court determined that his actions did not meet the technical definition necessary to authorize board action, she wrote, “We cannot agree . . . that the Board’s arguments were irrational or illegitimate in light of the facts.” Winkler’s actions in the course of his work had killed three people, and the board was justified in thinking that it was authorized to discipline him.