BY MAIRE O’NEILL
First Judicial District Judge Jason Lidyard on Friday withdrew his prior order allowing Sirphey, LLC owner Prashant Jain’s attorney Philip Dabney 90 days of discovery in the case against Los Alamos County and former Building Official Michael Arellano. After hearing long arguments from Dabney and the County’s retained attorney Donald DeCandia, Judge Lidyard announced that his desire for further information and full understanding of the context to the County’s conduct in the case is not necessary to his decision. He reset the matter for April 29 when he will announce his ruling.
The parties were before Judge Lidyard on the County’s expedited motion to reconsider an order requiring discovery. DeCandia, speaking first, said the Court can see that the parties are actually in agreement that discovery is not necessary for the Court to rule on another motion filed by Sirphey for sanctions against the County. He said Sirphey apparently realizes that they endorsed the idea that discovery is necessary and that means that they didn’t properly support their Rule 11 motion (for sanctions) and under those circumstances the motion should be denied.
Judge Lidyard interrupted DeCandia and asked what led him to believe that his statement meant that he could not reach a finding that the sanctions were appropriate. DeCandia said because the Court decided it needed more information before it could rule.
“That was my understanding of how the Court was approaching it and why the Court ordered discovery,” DeCandia replied. Judge Lidyard asked him how he knew the Court wasn’t interested in seeing if there was mitigation to the circumstances or grounds for not issuing sanctions.
“Essentially you’re saying that the Court didn’t think there was sufficient evidence – go out and get the evidence – as if I’m wanting to sanction someone ,” Judge Lidyard said.
DeCandia replied, “I don’t take the position that that was the Court’s view of things but I think that if more information was needed then we’re at status quo, that the motion fails. Perhaps I’m wrong but we’ve resisted discovery and the Court went ahead and ordered it. I know where the Court is coming from but I guess it’s really just academic now because the parties do agree that we don’t need discovery to have the Court rule on the motion”.
Judge Lidyard noted that DeCandia submitted an affidavit by an individual who essentially submitted to the Court some facts surrounding the County’s decision to take the approach that they did in this case.
“Why should Mr. Dabney have to settle with what was submitted in the affidavit and not get an opportunity to talk to this individual to see the information that the affidavit is based upon to see what they based those statements on?” Judge Lidyard said.
DeCandia responded that Dabney didn’t ask for that because the statements are pretty straight forward and they’re not going to change with discovery.
“The statements are that there are no other proceedings that came out of a Board of Appeals that was constituted under (Ordinance) 10-84. And you couple that with our briefing which points out that no other body applies that same language and so regardless of why the Court thought discovery would be appropriate, the Court has what it needs now or felt it needed to proceed with a ruling.” DeCandia said. “What we’ve shown is that there is no other ordinance or no other administrative body that applies the term ‘findings and decision’ and that’s a matter of simple research that all counsel could do. We gave the search in our brief. And the affiant has confirmed that this was the only proceeding that they could find that came up on their 10-84 and therefore the only proceeding that involves the term “findings and decision’. We know from this that there is no long-standing practice on the part of the County that’s different from the process that was used in deciding the appellant’s appeal alone.”
He said there’s no other comparable proceedings where others have been treated differently and there is no point to discovery now that it is known that Sirphey takes the same position.
“They said that if the County doesn’t want discovery – they made the point the Court is making – the Court is giving the County the opportunity to find some last-ditch facts and what I’m saying is that we’ve provided the record that the Court needs here and since we know that there are no other proceedings interpreting that language and that language is what the Court’s order requiring discovery gets to,” DeCandia said. “We know that this is a case of first impression for the County in interpreting ‘findings and decision’ and it’s a case of first impression for the Court. Cases of first impression are uniquely ill-suited for a sanction. So the County now has the Court’s interpretation of the term ‘findings and decision’ and that interpretation is that that language is the equivalent of findings of fact and conclusions of law.,” he said. “The County has that interpretation going forward and used it in the proceedings on remand. That result was not self-evident from the get go when this case first came up to this Court. We could not predict that the Court would interpret the ordinance in that particular way.”
DeCandia argued that the Board of Appeals determination that the Sirphey failed to show that the issuance of a red tag was unlawful, arbitrary or capricious was a finding. He said he has never been on the receiving end of a Rule 11 sanction and it shouldn’t happen here.
“The standard is not one of whether the Court disagrees with you. We filed our motions to dismiss in good faith. If we didn’t file those motions our clients would have had the right to wonder why we didn’t. The positions we’ve taken throughout this case certainly have not been frivolous or woefully reckless or baseless.Our client is entitled to defend itself. It’s entitled to raise issues about whether a case should be dismissed,” he said.
DeCandia noted that the County has been up front with the Court at every step. He said he stands by his signature on the filings in the case.
Dabney’s response began with a strong statement that DeCandia’s position that Sirphey somehow agrees with that there shouldn’t be any further discovery is incorrect.
“Maybe he just misconstrued what we said but our position is that if the Court believes that discovery is appropriate, which it has already ruled, then the Court should require discovery,” Dabney said.
He said the County Council heard his arguments about the Board of Appeals decision in the second appeal about three days earlier.
“They deliberated for three or four hours and they could not come up with a majority to sustain the findings and so the findings are now determined to be standing. The appeals board’s findings stand because the County Council couldn’t decide whether to sustain them or reverse them, so our next step will be to come forward with a new petition for a writ of certiorari,” he said. Certiorari is a court process to seek judicial review of a decision of a lower court or government agency.
“In my preparation for those oral arguments, I came across some information that I frankly shocked me that I couldn’t figure out before, but I’m stunned by what I’ve discovered and it’s information that certainly Mr. DeCandia and his law firm should have discovered and is definitely information that the County knew about and they didn’t show Mr. DeCandia,” Dabmey said. “Maybe he’s excused from Rule 11 sanctions but the County should be sanctioned because this borders on fraud, not just sanctionable conduct.”
He noted that the primary focus in the initial appeal that was determined to be premature was that there was a lack of findings issued by the County.
“Section B of 10-84 explicitly required findings and a decision in writing and the procedural scheduling order that is attached to our initial motion for sanctions which was issued by the County on February 21 of 2020 has a sentence that says that a copy of the decision shall be forwarded to the County Council with copies to the parties. I previously pointed out that it appears the CountyAttorney or somebody removed the words ‘findings and’ from that sentence of the scheduling order that required findings of fact and conclusions of law. That seemed suspicious to me; I thought somebody just made a mistake but I know the County Attorney is not prone to mistakes so I was suspicious of that,” he said.
In preparing for the oral argument, Dabney said he went back and read 10-84 several times because he was looking for the burden of proof that was required by Sirphey or by any party as well as the standard of review and what the level of proof was that whoever the party was who was carrying the burden of proof was required to present.
“It doesn’t exist, your honor. It’s not in 10-84. There is no burden of proof described. It doesn’t tell us who carries the burden of proof and it doesn’t set forth a standard of review for the appeals board in reviewing whatever it is the Building Official did or did not do in having this hearing. So that’s a constitutional problem in my view. It creates a due process vagueness issue that probably could have been cured in some form or fashion but not in the fashion in which it was cured,” Dabney said.
“The original procedural order that was written behind closed doors in a closed session (I’m certain by the County Attorney) and contains the following language, ‘The appellant bears the burden to show that the action by the appellee was arbitrary, capricious or not in accordance with law”.
He said a later paragraph states that “The action of the Building Official shall be affirmed unless a majority affirms that by substantial evidence that the action of the Building Official was arbitrary, capricious or not in accordance with the law”.
“Those two paragraphs were created…without notice to my client that he was going to bear the burden of proof even though the ordinance is silent about who bears the burden of proof that he would have to prove arbitrary and capricious conduct or not in accordance with the law even though the ordinance is silent about that and that his burden of proof was by substantial evidence which is not the proof that ordinarily occurs in this kind of case I would think. It’s higher than the 50 percent plus one, maybe not as high as ‘clear and convincing evidence’. It’s not something that was contained in the ordinance and the County put in this procedural and scheduling order,” Dabney said.
He said then the Board of Appeals scheduled a meeting.
“ They duly noticed the meeting and (Councilor) Sara Scott at the time was the chair of the appeals board so she chaired the meeting. In the transcript of the meeting, my client was present, his assistant Cortni Nucklos was present, the three board members were present, Alvin Leaphart, the County Attorney was present and the primary focus of the meeting was to pass this procedural and scheduling order. When you get the transcript you will see that my client raised his hand, Cortni Nucklos raised her hand several times prior to this order being approved 3-0 by the appeals board,” Dabney said “They weren’t allowed to ask questions about it and they were shut down by Sara Scott. She would not let them ask a single question.”
He said then the Board of Appeals approved the procedural and scheduling order 3-0 and after they approved his client raised his hand, wanting to ask questions about the procedural and scheduling order.
“And Sara Scott shut him down again and told him that the procedural and scheduling order had already been approved and so he couldn’t ask questions about it. Then she said this, ‘Okay, the procedure is the same appeals procedure generally used for other matters in the County’. Mr. DeCandia has been telling you that this is a case of first impression and you shouldn’t award sanctions because they didn’t know what they were doing and they didn’t know how to do it but Sara Scott told my client in February 2020 that this is the same procedure that we use in every County hearing like this. So which one is it?” he asked.
“I submit to you that the County engaged in the worst kind of oppressive, due-process abusing conduct against my client that you could possibly think of, in order to prevent any meaningful examination of what this reckless Building Official was doing and try to understand why and get to the bottom of it to protect a citizen who was simply trying to open a business in a pre-existing place that needed no construction. Yes, we need discovery and I now know where to start digging. There’s a rat in this hole and it really smells terribly bad. I would submit that you deny the motion for reconsideration and allow the 90 days of discovery to begin,” Dabney said.
Judge Lidyard recalled that he had watched the meeting in question while reviewing video of more than 25 hours from the first Board of Appeals hearing. Dabney reminded the Court that Sirphey was not represented by counsel at that proceeding and was facing three lawyers, two for the Building Official and one for the County. He said there were other issues going on at the time.
“(They) included that the chair who shoved the procedural order down my client’s throat was at the same time engaged in discussions with the owner of the building where my client was leasing for five years with a five-year option to renew – with two parties, the owner of the building and a buyer, the purchase of the building for the purpose of demolishing it and building something else, and she publicly announced that later but she clearly had a conflict of interest and the County had adverse interest in our client while they were doing this,” Dabney said. “That may explain why they did what they did but I think the fact that they had an ordinance without the due process requirements and they filled in the blanks explains why the County appeals board with the help of the County Attorney took out the language about written findings.”
He said that’s more than a Rule 11 violation in his view, that he doesn’t know how deep DeCandia’s law firm dug into those issues and that maybe he’s not entitled to know but that the bottom line is there’s no question in his mind that the County violated Rule 11.
“I think that the law firm also violated Rule 11 because even if they didn’t know about that, they certainly knew that findings were required and that the word ‘findings’ was taken out of the procedural and scheduling order and instead of sending it back to remand at an appropriate time, they spent a year in front of (the Court) you arguing frivolous positions. I think more discovery is necessary to get to the real bottom of what’s going on and I would ask that you allow it,” he concluded.
DeCandia in response said this was the first time he had heard of a problem with the standard of review.
“Obviously we would want an opportunity to brief that; we shouldn’t be required to just assume that Mr. Dabney is correct in everything that he said here. I will say that 10-84 c talks about how Council will overturn the Board’s decision only if it’s unsupported by evidence, arbitrary or capricious or not supported by the law. I think that’s for another day. That doesn’t go to whether the positions taken in this case are sanctionable. And I am really surprised to hear that their position is that discovery is necessary when that’s not what they told you in their response. Their response says if appellees do not want to engage in discovery or produce evidence to support their claims for the Court, then the Court should grant the appellant’s motion for sanctions. In other words, the Court should rule,” he said.
DeCandia said he thought he was entitled when coming into the hearing to take Sirphey at their word that they don’t need discovery and that discovery is only to benefit the County.
“Once again we have counsel coming with brand new arguments and a soliloquy and we haven’t had an opportunity to scrutinize. These are some kind of supplement to Rule 11 motion, I think it’s too late or at a minimum we should have the opportunity to respond to these serious allegations in writing after actually seeing the argument that the appellant wanted to present today. They told you discovery is not necessary. We’ve explained how the Court has exactly what the Court was looking for in order to rule on the motion, and after three briefs from the appellant, I think the issue is before the Court so we would oppose further briefing on the motion and use of these statements of counsel to sanction the County,” DeCandia said.