CADDNAR
DNR v. Barnes (21-028F), 16 CADDNAR 18
Administrative Cause Number: 21-028F
Administrative Law Judge: Elizabeth Gamboa
Petitioner Counsel: Ihor Boyko
Respondent Counsel: Glen E. Koch, II
Date: July 31, 2023
[EDITOR’S NOTE: The original format of the Administrative Law Judge’s Findings of Fact, Conclusions of Law, and Final Order has been modified to correspond with CADDNAR format. The Final Order has been relocated to the beginning of this document.]
FINAL ORDER
68. Alfred E. Barnes, a/k/a Bruce Barnes, is hereby assessed a total civil penalty of $160,000.00 for engaging in the business of timber buying without obtaining a registration.
69. The Department did not present sufficient evidence to prove that Respondent failed to pay for timber as agreed on four occasions.
FINDINGS OF FACT AND CONCLUSIONS OF LAW WITH FINAL ORDER
Procedural Background and Jurisdiction
1. On June 28, 2021, Petitioner, the Department of Natural Resources (hereinafter Department) filed a Complaint to Impose Civil Penalties for Violations of the Timber Buyer Act (“Act”) against Alfred Barnes, a/k/a Bruce Barnes (hereinafter Respondent) with the Natural Resources Commission (hereinafter Commission). See Complaint to Impose Civil Penalties for Violations of the Timber Buyer Law (Complaint).
2. The Complaint alleged sixteen violations of the Act for engaging in business as a timber buyer without a license and four violations for failing to pay timber growers as agreed. The Department requested a civil penalty of $10,000 for each buying timber without a license violation and $1,000 for each failure to pay timber growers. See Complaint.
3. By filing the Complaint, the Department initiated a proceeding governed by Ind. Code § 4-21.5-3, also referred to as the Administrative Orders and Procedures Act (AOPA) and the administrative rules adopted by the Commission at 312 IAC 3-1 to assist with the implementation of AOPA. See IC § 4-21.5-3-1, et seq.
4. Administrative Law Judge (ALJ) Sandra Jensen was appointed to preside over this matter pursuant to IC 14-10-2-2. By Notice issued July 2, 2021, ALJ Jensen scheduled a Prehearing Conference (PHC) for July 28, 2021. The PHC was rescheduled for August 12, 2021, on ALJ Jensen’s motion. See Notice of Prehearing Conference and Notice of Rescheduled Prehearing Conference.
5. On July 6, 2021, Glen Koch entered an appearance and filed an answer to the Department’s Complaint on behalf of Respondent. No affirmative defenses were alleged in Respondent’s answer. See Answer to Complaint.
6. The PHC was held telephonically on August 12, 2021. A Telephonic Status Conference (TSC) was scheduled for April 20, 2022 at the PHC. See Report of Prehearing Conference.
7. Due to ALJ Jensen’s retirement, ALJ Dawn Wilson was appointed by the Commission to preside over the matter. ALJ Wilson withdrew from the case in December, 2021 due to her retirement from the Commission and vacated the April 20, 2022 TSC. ALJ Gamboa was then assigned to preside over the case and a TSC was scheduled for May 24, 2022. See Notice of Case Reassignment and Order Vacating Previously Scheduled Event; Notice of Assignment of Administrative Law Judge and Order Setting Telephonic Status Conference.
8. At the TSC on May 24, 2022, the parties agreed to a case management schedule that provided a deadline of August 26, 2022 for the Department to file a dispositive motion. Respondent was given until September 30, 2022 to respond to the Department’s motion. See Report on Telephonic Status Conference.
9. The Department filed a Motion for Summary Judgment on August 26, 2022. See Petitioner DNR’s Motion for Summary Judgment (Motion).
10. After being granted an extension of time within which to file a Response, Respondent filed a Response to Motion for Summary Judgment (Response) on October 26, 2022. Respondent did not dispute the Department’s evidentiary material but argued that a hearing was required on the issue of whether aggravated civil penalties should be imposed. Id.
11. The Department was granted summary judgement on the issue of whether Respondent committed 16 violations of the Act for engaging in business as a timber buyer without the required certificate. The Department’s motion on the issue of whether aggravated civil penalties should be imposed was denied. See Interlocutory Order on Summary Judgment (Interlocutory Order).
12. The Department did not raise the issue of violations for failing to pay timber growers in its motion for summary judgment. See Motion.
13. At a TSC held January 10, 2023, an administrative hearing was scheduled for June 8, 2023 by agreement of the parties. See Report on Telephonic Status Conference and Case Management Order.
14. The administrative hearing took place at the Commission’s Division of Hearings hearing room at the Indiana Government Center in Indianapolis, Indiana on June 8, 2023. The Department was represented by its counsel, Ihor Boyko. The Respondent appeared in person and by counsel, Glen Koch.
15. The following witnesses provided testimony at the administrative hearing: Duane McCoy, Detective Sergeant Aaron Mullet and Detective Sergeant Trent Stinson.
16. The following exhibits were accepted into the record at the administrative hearing by stipulation: Department’s exhibits 1, 1-A and exhibits 2-7.
17. Respondent did not present evidence.
Findings of Fact[1]
18. After Duane McCoy (“McCoy”), the Department’s Timber Buyer Licensing Forester, received complaints about Respondent’s business practices, he referred the complaints to the Department’s Law Enforcement Division for further investigation. See McCoy testimony.
19. Respondent was a Licensed Timber Buyer Agent in Indiana in 1986 and Licensed Timber Buyer in Indiana in 1993-1995, 1997 and 1998. Respondent has not held a Timber Buyers License or Agent Card since 1999. Id.; Exhibit 1.
20. The Department filed a complaint against the Respondent with the Commission under administrative cause number 98-153F in 1998, seeking civil penalties for violations of the Act. The Commission found Respondent failed to maintain a surety bond as required by the Act, failed to maintain an adequate security as required by the Act, and failed to pay as agreed for timber purchased from two timber growers as required by the Act. See DNR v. Bruce Barnes, d/b/a Barnes Firewood & Logging, 8 CADDNAR 152 (2000)(hereinafter Barnes I).
21. In Barnes I, the Commission cited two administrative cases under cause numbers 98-096F and 98-158F, in which the Commission adjudicated that Barnes violated the Act. In administrative cause number 98-096F, the Petitioners obtained a default judgment against Respondent for failing to pay a “50% share” for timber cut on their property. In administrative cause number 98-158F, the Petitioners obtained a stipulated judgment against Barnes for Barnes’s failure to pay for timber. See Barnes I, 8 CADDNAR at 155.
22. In a final order in Barnes I, issued August 15, 2000, the Commission entered a presumptive penalty of $500 for failing to maintain a surety bond; an aggravated penalty of $1,000 for failing to maintain adequate bond; an aggravated penalty of $1,000 for failing to pay one of the timber growers and an aggravated penalty of $600 for failing to pay the other timber grower. This resulted in a total civil penalty of $3,100. See Id.
23. As of August 23, 2022, Barnes still owed $1,750.00 of the civil judgment imposed in Barnes I. See McCoy testimony; Exhibit 1-A. McCoy was not aware of any payments made to the Department since August 23, 2022. See Id.
24. On April 12, 2011, Respondent pled guilty to a Class A Misdemeanor charge of being an unregistered Timber Buyer[2] in Monroe Circuit court under cause number 53C02-1102-CM-0043. Judgment was withheld for one year on the condition Respondent received no additional criminal convictions within that year. Under the terms of the plea agreement, the case was dismissed on April 18, 2012 and did not result in a criminal adjudication. See Detective Sergeant Aaron Mullet (Mullet) testimony; Exhibit 6.
25. Respondent pled guilty to acting as an unregistered timber buyer in Martinsville City Court under Case No. 55H01-1306-CM-2262 on December 3, 2013. See Mullet testimony; Exhibit 7.
26. In March 2016, Mullet, a Department Law Enforcement Detective, began investigating allegations Respondent engaged in business as a timber buyer without securing a registration in Greene County, Indiana. Mullet’s investigation spanned four years, from 2016 to 2020. See Mullet testimony, Exhibit 3.
27. Respondent voluntarily participated in interviews with Mullet in October 2017 and in June 2020. Respondent explained he did not purchase standing timber. Rather, he purchased cut timber “on 50/50 shares,” meaning Respondent gave the timber grower 50% of the selling price for the timber sold and Respondent kept the other 50%. See Exhibit 3.
28. In both interviews, Mullet discussed the Act with Respondent and informed Respondent selling “on shares” was considered selling for the purpose of the Act. See Mullet testimony; Exhibit 3.
29. Respondent was eventually charged with seven counts of engaging in business as a timber buyer without securing a registration from 2015 to 2019 in Greene Superior Court under cause number 28D01-2005-F6-000181. See Mullet Testimony, Exhibit 2.
30. Respondent entered a guilty plea in the Greene County cases to one count of engaging in business as a timber buyer without a certificate and the remaining counts were dismissed. Respondent was placed on probation and ordered to pay fines and costs. See Exhibit 2.
31. Detective Sergeant Trent Stinson (Stinson) of the Department’s Law Enforcement Division began investigating allegations that Respondent engaged in the business of timber buying without securing a certificate in Lawrence County, Indiana in January 2020. See Stinson testimony; Exhibit 5.
32. Stinson’s investigation revealed six instances of Respondent engaging in business as a timber buyer without a certificate during the summer of 2019. See Stinson testimony; Exhibit 5.
33. During his investigation, Stinson interview three timber growers in Lawrence County who had not received payment from Barnes for timber cut in 2019: Don and Georgia Oakley, New Life Trinity Tabernacle and Michael and Sherri Alexander. See Stinson testimony; Exhibit 5.
34. McCoy appraised trees that had been cut at the Oakley property in March 2020. McCoy found twenty-six trees had been harvested from the property worth about $5,637.00. See McCoy Testimony; Exhibit 5.
35. Eight trees, which McCoy appraised at $900 to $950, were harvested from the New Life Trinity Tabernacle property. See Id.
36. McCoy determined fifteen trees were harvested from the Alexander property with an approximate value of $1,500. See Id.
37. McCoy did not observe significant environmental damage at any of the properties when he appraised the timber. See Id.
38. Stinson has not had contact with any of the timber growers since 2020. See Stinson testimony; Exhibit 5.
39. Respondent pled guilty to one count of being an unregistered timber buyer in Lawrence County. The other charges were dismissed. See Exhibit 4.
Conclusions of Law
40. The Department, through its Division of Forestry, is charged with administration of Ind. Code § 25-36.5-1, also known as the Indiana’s Timber Buyers Act.
41. The Commission has adopted rules found at 312 IAC 14-4 to assist in the implementation of IC § 25-36.5-1.
42. As the ultimate authority in this matter, the Commission conducts its review de novo. IC 4-21.5-3-14(d). The Commission must consider and give proper weight to the evidence rather than deferring to the determination by the Department. Daniel v. Johnston & Fultz Excavating, 12 CADDNAR 317, 318 (2011).
43. The Department bears the burden of providing sufficient evidence to support the allegations in its Complaint. Peabody Coal Co. v. Ralston, 578 NE.2d 751, 754 (Ind. Ct. App. 1991).
44. Failing to pay as agreed for any timber purchased is a violation of the Act. IC § 25-36.5-1-4.
45. A person who engages in business as a timber buyer without securing a registration violates IC § 25-36.5-1-10.
46. The Department may, pursuant to Ind. Code 4-21.5-3-8, initiate a proceeding against a timber buyer or timber cutter seeking to have civil penalties imposed if there is reason to believe the timber buyer or timber cutter has violated the Act.
47. Ind. Code § 25-36.5-1-13.5 provides:
In addition to other penalties prescribed by this chapter, the director may, under IC 4-21.5, impose a civil penalty on a person who violates this chapter. A civil penalty imposed under this section may not exceed the following limits:
(1) For engaging in business as a timber buyer without securing a registration certificate under this chapter, ten thousand dollars ($10,000)
(2) For acting as the agent of a timber buyer without holding an agent’s license under this chapter, ten thousand ($10,000).
(3) For other violations of this chapter, one thousand dollars ($1,000).
48. The maximum penalty for engaging in business as a timber buyer without securing a registration certificate as required by I.C. 25-36.5 is $10,000. The maximum penalty for failing to pay, as agreed, for timber, is $1,000. IC § 25-36.5-1-13.5; 312 IAC 14-4-3.
49. Subject to the mitigating and aggravating factors set out in 312 IAC 14-4-3, the presumptive civil penalty for each of the above-listed violations is one-half of the maximum penalty. 312 IAC 14-4-3(c).
50. The mitigating factors that may be considered are:
(1) the person assessed a civil penalty has not previously been adjudicated by the commission or a court to have violated IC 25-36.5-1 or this article.
(2) the violation appears to have been unintentional.
(3) The violation was an isolated occurrence.
(4) No timber grower has suffered harm as a result of the violation or, if harm was suffered, full restitution was tendered promptly;
(5) Significant environmental harm was not suffered as a result of the violation.
312 IAC 14-4-3(d).
51. The aggravating factors that may be considered are:
(1) The person assessed a civil penalty has previously been adjudicated by the commission or a court to have violated IC 25-36.5-1 or this article.
(2) The violation appears to have been intentional.
(3) A pattern of violations has occurred.
(4) A timber grower has suffered harm as a result of the violation, and full restitution for the harm has not been tendered.
(5) Significant environmental harm was suffered as a result of the violation, and the harm has not been mitigated pursuant to a plan approved by the division director.
312 IAC 14-4-3(e).
52. The Department alleged Barnes engaged in business as a timber buyer without a certificate on sixteen occasions and failed to pay timber growers, as agreed on four separate occasions.
53. Summary judgment was granted in favor of the Department regarding the sixteen allegations of acting as a timber buyer without proper certification. However, the question of whether he failed to pay for timber as agreed on four separate occasions was not raised by the Department in its Motion.
54. The Department alleged Respondent failed to pay three timber growers in Lawrence County, Indiana, and one in Montgomery County, Indiana. See Complaint.
55. The evidence the Department presented at the hearing does not support a finding Respondent failed to pay the named individuals as agreed. While the evidence shows that Respondent had not paid three property owners as listed in Exhibit 7 in February 2020, there is no evidence to support a finding Respondent had not paid the property owners by the time of the hearing.
56. The Department also alleged Respondent failed to pay for timber as agreed in Montgomery County. No evidence was provided to support this allegation.
57. With regard to the imposition of a civil penalty for acting as an unregistered buyer, the following aggravating circumstances listed in 312 IAC 14-4-3(e) are present:
a) Barnes was previously adjudicated by the Commission for violating the Act in 2000, before each of the violations alleged in this matter.
b) Barnes’ violations appear to have been intentional. In Barnes I, the Commission clarified that “buying on shares” was a transaction regulated by the Act. Respondent continued his “buying on shares” practice in Greene County. He denied knowing buying on shares was regulated by the Act during an interview with Mullet. Even after being reminded by Mullet that buying on shares was indeed governed by the Act, Respondent continued to engage in this practice in Lawrence County - while he was under in investigation in Greene County.
c) The number of transactions in which Respondent engaged shows a pattern of violations covering a span of about 20 years.
58. The only mitigating circumstance presented is that there is no evidence of significant environmental harm.
59. Respondent argued that Respondent’s cooperation with law enforcement is a mitigating factor. This is not a mitigating factor listed in 312 IAC 14-4-3.
60. Further, the aggravating circumstances present here significantly outweigh the single mitigating circumstance.
61. For the first time in closing argument, Respondent’s counsel argued the Department is not entitled to claim a civil penalty for each violation of the Act alleged in a Complaint. According to Respondent, only one “aggregate” civil penalty may be imposed for all violations alleged in the Motion.
62. Imposing civil penalties for each violation of the Act is consistent with previous decisions of the Commission. See DNR v. Richardson, 15 CADDNAR 126, 127 (2020), Barnes I.
63. Respondent admitted that the Department could avoid this argument by filing a separate complaint for each violation. Requiring the Department to file separate complaints for each allegation not only taxes state resources but could put respondents in the position of having to defend several complaints rather than having all complaints joined in one complaint.
64. Respondent also raised several constitutional arguments in his closing argument. The Department argued the constitutional arguments amount to affirmative defenses; therefore, the arguments were waived because they were not timely raised.
65. Affirmative defenses must be set forth in a responsive pleading. Ind. Trial Rule 8(C). See Ind. Code 4-21.5-3-14(c). Where, as here, a prehearing conference is held in an administrative action, affirmative defenses must be disclosed in the prehearing conference. Ind. Code 4-21.5-3-14(c); 312 IAC 3-1-4. Failure to timely raise affirmative defenses results in waiver of the defenses.
66. “An affirmative defense is a defense ‘…which, in effect, admits the essential allegations of the complaint, but asserts additional matter barring relief.’” Molargik v. West Enterprises, Inc., 605 N.E.2d 1197, 1199 (Ind. Ct. App., 1993).
67. Respondent’s constitutional arguments amount to affirmative defenses because they would bar the Department from getting the full relief it seeks. Because Respondent did not timely raise the affirmative defenses, they are waived.