BY MAIRE O’NEILL
Note: The following is Part 1 of several Los Alamos Reporter articles on First Judicial District Judge Jason Lidyard’s ruling on certainly one of the biggest lawsuits against the County in recent years. The Reporter believes it is important for the community to read the extensive reasons that influenced the Court’s decision
Almost four years ago, on November 22, 2019, Los Alamos County’s former Chief Building Inspector Michael Arellano placed a stop work order on the premises at 813 Central Avenue that was then leased by Sirphey, LLC owner Prashant Jain. Jain was hoping to reopen his business, Unquarked, which he had relocated from Central Park Square as well as Siprhey, LLC.
Arellano’s action set into motion a series of events that have cost Los Alamos County and Jain thousands and thousands of dollars in legal fees, resulted in 30 hours of hearings before the Los Alamos Board of Appeals, and dozens of court hearings as Los Alamos County tried to show that the denial of the Sirphey appeal against the “red tag” was not unlawful, arbitrary or capricious.
The Los Alamos Reporter has covered the Board of Appeals as well as the cases filed in the First Judicial District Court by Sirphey in connection with their appeal against the stop work order in detail. Along the way, this coverage of District Court hearings before Judge Jason Lidyard has included Sirphey’s attorney Philip Dabney’s insistence that due process has not been afforded to them and strongly-worded concern by Judge Jason Lidyard with regard to how the County handled the administrative process of the Sirphey stop work order hearings before the Board of Appeals.
Last Tuesday, October 24, during a virtual hearing, Judge Lidyard spoke on the record for more than two hours on his ruling regarding Sirphey’s appeal from the County Board of Appeals decision to uphold the stop work order placed by Arellano.
The Court found that Los Alamos County violated the due process rights of Sirphey in every phase of the process. The Court said these violations included issuing a stop work notice without sufficient written notice of the specific basis for its issuance; delaying the appeal process from start to finish; placing the burden of proof on Sirphey when it should have been on the Building Official; and failing to issue written findings in the first instance. The Court noted that Sirphey was forced to retain attorneys after the Board of Appeals hearing and the appeal of its initial decision to the County Council, and spend thousands of dollars to get the appeal remanded to the Board of Appeals, just to get written findings that were required by the appeal ordinance in the first place.
Based on the multitude of due process violations, the Court ruled that the County did not act in accordance with the law during the hearing process.
In presenting his ruling, Judge Lidyard read extensively from transcripts of the Board of Appeals hearings.
“I will read this as it’s contained and I do need to note that many of these transcripts contain errors including who’s speaking and what was said so any reviewing court should listen to these hours of proceedings because much is gained by reading simply the transcripts. Also much is gained by listening to the infliction and the manner in which the parties conducted themselves through these proceedings,” he said.
The Court will next pronounce its ruling on the appeal issue of whether the County’s decision to uphold the stop work notice was supported by substantial evidence. That hearing is set for Wednesday, November 1, from 3 to 5 p.m.
During the appeals process, the initial Board of Appeals members were then County Council Chair Sara Scott, County Manager Harry Burgess and Terry Priestley, who was then serving as chair of the County Planning & Zoning Commission. After Scott and Burgess resigned from the Board of Appeals for unspecified reasons, they were replaced with Department of Public Utilities Director Philo Shelton and County Councilor Randall Ryti. Priestley took over the role of Board of Appeals Chair from Scott after she stepped down.
Leaphart, represented the Board of Appeals and the County Council during the appeal process while two assistant County attorneys from Leaphart’s office, Katie Thwaits and Kevin Powers, represented Arellano. At the initial meeting of the Board of Appeals in early 2020, Leaphart said since the proceeding was instituted, “a wall” had been built within the County Attorney’s office where he was representing and advising the Board of Appeals and the County Council while Thwaits and Powers were representing Arellano. He said he had advised them to separate him out from any discussions they had about the substantive efforts they are making on behalf of the Building Official, and that the wall has been maintained and would continue to be maintained through the appeal proceedings.
While all three County attorneys were involved in the process, Sirphey was not represented by legal counsel until the District Court appeals process that sought a remand for written findings. Up to that point, Prashant Jain and Cortni Nucklos represented Sirphey pro se.
Judge Lidyard began the October 24 hearing with a caveat.
“The Court will only today be able to address the question as to whether the action of the agency was otherwise not in accordance with law. The Court still needs to prepare its citations to its determination as to whether, based upon the whole record on appeal, the decision of the agency is not supported by substantial evidence, but I will have that completed shortly,” he said. “The Court will address the issue of whether the action of the agency was otherwise not in accordance with the law, and the Court finds that it was not in accordance with the law as there were several violations of procedural process that occurred during the matter before the Board of Appeals and the County Council.”
Judge Lidyard said that the stop work order issued by Arellao, which initiated the action before the Board of Appeals from which the appeal was filed by Sirphey, LLC, lacks the specificity required for purposes of providing notice under due process. Judge Lidyard said the stop was general and vague.
“A stop work order can be issued for specific reasons and those specific reasons are provided for in both the Los Alamos County Ordinances as well as the regulations of the Construction Industry Division (CID), specifically Section 10-80 of the Los Alamos County Ordinances, a stop work order may be issued whenever any work is being done in violation of the provisions of this article or in variance with the terms of the permit issued for such work,” he said.
Under the provisions of the NMAC 22.214.171.124, which governs stop work orders, Judge Lidyard said whenever contracting is being performed contrary to the CID rules, the inspector, after a verification of the TBC or other AHJ of defined terms, “may order that the work be stopped and shall give written notice of such work to the person performing the work or causing the work to be performed, and the owner of the property”.
He continued, “If the inspector discovers a life safety issue contrary to CID rules, the inspector may order that the work be stopped, giving written notice of such order to the person performing the work or causing the work to be performed. The owner of the property and the specific trade bureau chief, the person performing the work or causing the work to be performed when receiving such notice shall cease and desist performing or causing the performance of the work until authorized to proceed in writing by the AHJ or inspector. It then states the following conditions for which a stop work order may be issued, including but not limited to: a. inspection determined as a health or safety hazard, b. continuing work without full correction notice violations being corrected, c. work deviating from approved plans or materials, d. contractor not properly licensed, e. working beyond the scope of licensure, f. work not properly permitted and g. improper journeymen ratios”.
Judge Lidyard noted that Section 10-81 of the Los Alamos County Ordinance governs official discretion by the Chief Building Official, stating, “Whenever in the building regulations it is provided that anything must be done with the approval of or subject to the discretion of the Building Official or any other officer of the County, this shall be construed to give such officer only the discretion of determining whether the rules and standards established by this article have been complied with and no such provision shall be construed as giving any officer discretionary powers as to what such regulations or standards shall be or power to require conditions not prescribed by this article, or to enforce article provisions in an arbitrary or discriminatory manner.”
He said the stop work order issued in the Sirphey case provides that it was issued for the following reasons: ‘No permit for work – building, plumbing, electrical, mechanical and fire”. Pursuant to NMAC 126.96.36.199, the Chief Building Official’s obligation to perform its duty of investigation – it states under subsection d. When a violation of the statutes or code is alleged the AHJ shall investigate the allegation to obtain sufficient evidence or proof to determine whether a violation has occurred.
Judge Lidyard said case law discussing the idea of notice in the case of New Mexico Department of Workforce Solutions vs. Gardunio says “Notice is important to due process because the right to be heard has little reality or worth unless one is informed that the matter is pending and can choose for himself whether to appear or default, acquiesce or contest”.
“In the context of a stop work order the Court finds persuasive authority in Noblesville Indiana Board of Zoning Appeals vs FMG Indianapolis LLC. ….which states, ‘The stop work order did not specify the basis for its issuance’. It goes on to discuss the stop work order that was issued and then concludes…’Basic due process considerations about fair notice require that a stop work order issued by a zoning administrator be reasonably specific and concrete so as to fairly apprise the wrongdoer of the specific violation. The Court finds that that position regarding the specificity required for a stop work order is supported by New Mexico’s ordinances and codes as well as the Chief Building Officer is obligated to conduct an investigation to determine if there is sufficient evidence to establish if there is a violation and is obligated to conform his or her acts of discretion within the provisions of Ordinance 10-81,” Judge Lidyard said.
He continued, “If Mr. Arellano had performed those duties and acted within those provisions, it would have been clear to him to then make clear to Mr. Prashant Jain the reasons for his issuance of the stop work order by providing those on the stop work order itself, which is the document by which the action is commenced against a citizen to prevent further work from commencing and allowing the citizen to determine whether he or she would like to proceed with an appeal or conform his or her acts to what is stated in the stop work order. No such specificity was provided and as a result Mr. Jain had no such choice as the notice provided to him was deficient to satisfy due process”.
Judge Lidyard cited passages from volumes of transcripts of the Court of Appeals proceedings to support that finding, beginning with what the County and Arellano asserted what their position was.
Mr. Powers: Now do you see any requirements for what kind of notice is required in here?
Mr. Arellano: So no. It just says that I should notify them what they need for a permit. As the red tag states, on the red tag itself, you need a building permit, you need an electrical permit, you need a plumbing permit, and you need a mechanical permit and a fire permit. All that is letting them know in writing what they need.
Mr. Powers: Okay I won’t go too far into that. I think we’ll cover that a little bit later. Do you see a notice requirement? I don’t see the word ‘notice’ in this. Do you?
Mr. Arellano: I do not.
Proceeding in the same volume, the same transcript…
Mr. Powers: Okay. Getting to the stop work order on November 22, what are the legal requirements for the placement of a stop work order under the County Code, Mr. Arellano, to notify them of what the need is in writing? And as you have talked about, I’m going to direct you back to Exhibit 2, Section 10-80. Have you read the brief of the appellants?
Mr. Arellano: I did.
Mr. Powers: And did they request a, was notice provided by you related to the placement of the stop work order?
Mr. Arellano: It was.
Mr. Powers: And how was that notice provided?
Mr. Arellano: It was written on the red tag itself and we also emailed them several times letting them know that it was coming.
Mr. Powers: And so any notice requirements – your position is that the red tag itself is notice?
Mr. Arellano: That is correct.
Mr. Powers: Also permissible to your understanding under state regulations?
Mr. Arellano: It is.
Mr. Power: Are there additional notice requirements that are required under the state’s code?
Mr. Arellano: No, there are not.
Chairman Priestley: I’m going to stop you right there. Mr. Jain, you had a question?
Mr. Jain: Yes sir, just a clarification. Mr. Arellano under oath said that he notified us in writing and emails. He used the word ‘we’. Did he mean he, himself, emailed?
Chairman Priestley: So that will be a question that you may ask during your cross-examination.
Mr. Jain: Okay.
Mr. Powers: I ask you to take a look at Exhibit 4 that has been admitted and I’m going to ask you to look at 15.5 Chapter 3 and for those – it’s one of the last few pages – 3.10.
Chairman Priestley: Would you make sure that we’re all on the same point? I believe you said 188.8.131.52.
Mr. Powers: That’s correct, Chair.
Chairman Priestley: Stop work orders?
Mr. Powers: Yes.
Chairman Priestley: On page 3 of 5 it looks like on the bottom of the page.
Mr. Powers: May I proceed?
Mr. Jain: Yes, sir.
Chairman Priestley: Go ahead.
Mr. Powers: Mr. Arellano, is this the similar provision under the state regulations for issuance of a stop work order.
Mr. Arellano: It is.
Mr. Powers: And can you read that section
Mr. Arellano then reads Section 14.5.3-10 at which point in time Mr. Power says, “Now what is notice under this requirement to you?
Mr. Arellano: Written notice. The red tag.
Mr. Powers: So the red tag similarly provides notice of the stop work order?
Mr. Arellano: It does.
Further in the same volume Judge Lidyard read:
Mr. Jain: You had arrived on November 12 with a red tag drawn up. Is that correct?
Mr. Arellano: Yes.
Mr. Jain: At what time did you draw up the red tag, in the County building, in your office, at 813 Central Avenue. Where did you draw up the red tag?
Mr. Arellano: In my office.
Mr. Jain: Was it drawn on November 12? November 11? Do you recall?
Mr. Arellano: November 12.
Mr. Jain: Based on what inspection that red tag was drawn?
Mr. Arellano: It’s based on pictures that were provided by Adrienne Lovato of the work being done and then when I was there I could see that the work had been done.
Mr. Jain: So
Mr. Arellano: It’s easier to fill those out in the office so it’s legible instead of having to write in the vehicle or on a window.
Mr. Jain: You are admitting that you drew up a red tag without conducting the required inspection yourself before you drew it up? If your answer is no, you did not draw up the red tag before the inspection, and you said you took the red tag in your office on November 12. I ask you once again, when did you conduct the inspection?
Mr. Arellano: I’ve conducted several inspections at your place. When the red tag gets put, it can be pre-filled out that day based on the information I had received. When I get to the window because it’s open to the public to look in because there’s no shades, no anything, I can look in and see that work, yes, was done, and then the red tag was going to be put up. But at your request you asked me to come in and that just verified all the work that had been done and the appliances in the back that were put in.
Mr. Jain: So are you saying that you prepared this red tag based upon my invitation or Ms. Cortni Nucklos’s invitation in March 2019 and you had considered you had one of the reasons why you drew up the red tag was because we had appliances in the back?
Mr. Arellano: No.
Mr. Jain: Do you recall what were the reasons listed on that work – the red tag you had drawn on November 12?
Mr. Arellano: Yes I do.
Mr. Jain: What were they? Were they similar to the red tag you had placed on November 22.
Mr. Arellano: Exact wording except the date changed.
Mr. Jain: Okay. You would be able to provide this record and you are saying that November 12 and November 22 were exact same wordings – only the date changed. The date of inspection changed?
Mr. Arellano: I’m saying the red tag that was put up was the original red tag that was written on November 12. The only thing that changed was the date.
Mr. Jain: Was that crossed out or you drew up a new red tag?
Mr. Arellano: The date was just changed on the original red tag on November 12 when it was put up. The date just notified you the date the red tag was put up.
Mr. Jain: Okay. Just to clarify, you did not cross out, you just changed the 12 to 22. Correct? That’s what you’re saying?
Mr. Arellano: If you look at the document I believe you can see what is done.
“This establishes that Mr. Arellano drops the same exact stop work order twice, providing no specific reason but generality. He also states the reason why he does so is because it is too difficult to write on the hood of his truck to make his stop work order legible. Continuing on,” Judge Lidyard said.
Mr. Jain: So on November 12 you had come prepared with a red tag – just in case a red tag was warranted depending on the pictures you had received before. You were going to see the space from the windows?
Mr. Arellano: No. Based on the pictures – that was enough to put up a red tag.
Mr. Jain: Was there any attempt made to call me for inspection and will the phone records show this on November 12?
Mr. Arellano: No. The red tag is the ‘please call us and let us know what’s going on. We need to have some documentation and some dialogue’.
“This seems to be a continual theme of Mr. Arellano’s position – that red tags are simply put up to cause an individual to make contact with him. But that is not what a stop work order is meant to do. In fact, as we will hear as I read through further in the transcript portions, when Mr. Jain did attempt to contact Mr. Arellano, he refused to communicate and provided no explanation. So the assertion that a red tag is merely to communicate isn’t even substantiated by what Mr. Arellano did in the way of his conduct. But that’s the least of our worries as a stop work order is not meant simply to cause someone to speak and determine whether or not a permit was required or not for work. It is to provide a person specific notice as to what it is that they need to do to comply or to remove a violation that’s occurring,” Judge Lidyard said.
He then proceeded to read from the transcript from July 14, 2020
Mr. Jain: To your knowledge were there sinks present at 813 Central Avenue in March 29 walkthrough, which pre-dates the appellant’s lease?
Mr. Arellano: I believe there was one.
Mr. Jain: Could you repeat that number again sir?
Mr. Arellano: I said I do believe there was one.
Mr. Jain: Does your brief, or is it your opinion that we installed new sink in the space.
Mr. Arellano: I don’t know.
Mr. Jain: You do not know whether your brief says whether we installed new sink or not?
Mr. Arellano: I don’t know whether it says that specifically or whether you installed a new sink or not. I haven’t been back to your establishment.
Mr. Jain: Is it your understanding that we have installed new sinks in the space.
Mr. Arellano: As stated before, I don’t know. I haven’t been back to see if you put in a new sink or not. I don’t know.
Mr. Jain: So in November when you placed the stop work order, it wasn’t because we had placed a new sink because you don’t whether we placed a new sink or not. Correct?
Mr. Arellano: I don’t know if you replaced a new sink or not.
Mr. Jain: Right, I understand that sir. I’m just simply asking to further verify that the stop work order – that one of the reasons for which the stop work order was placed, was not related to a new sink being installed. Is that correct?
Mr. Arellano: The stop work order dealt with any plumbing that was being done.
Mr. Jain: Right, that is correct sir, because you specified you don’t know whether a new sink was installed or not. So there is no possible scenario where your stop work – one of the reasons why it would be placed would be related to a new sink being installed. Correct?
Mr. Arellano: If you were putting a new sink there, it would be a requirement to get a permit for that. Yes, sir.
Mr. Jain: I understand what you’re saying, that putting a new sink in would require a permit. The question I asked was slightly different. The question I asked was, given that you do not know whether or not a new sink has been installed at 813 Central Avenue, it can’t possibly be a reason listed on the stop work order. Is that correct?
Mr. Arellano: I did not put specific items on that stop work order. I did not put the sink. It was general.
“Mr. Arellano agrees that he provided no specificity in his stop work order, that it was general, which allows this type of examination to have to occur where Mr. Arellano vacillates between his reasons for issuing the stop work order as he is able to do so within the general statement of his stop work order,” said Judge Lidyard, as he proceeded to Volume 4.
Mr. Jain: Is this hole in the wall one of the reasons why you put the stop work order at 813 Central Avenue?
Mr. Arellano: It could be.
Mr. Jain: Sorry, I’m asking you a very definite question, sir. You put the stop work order at 813 Central Avenue. Is this hole in the wall one of the reasons you placed that stop work order. Yes or no?
Mr. Arellano: The answer is depending on the type of construction and whether there’s a separation required between the kitchen and the dining area it would require certain things. I don’t know without a code analysis. That’s why we asked the design professional to do a code analysis so that we could answer those types of questions. So to answer your question – I don’t know.
“Mr. Arellano here concedes that he failed to uphold his duty to investigate,” Judge Lidyard said. He read further from Volume 4 where Priestley examines Arellano.
Chairman Priestley: So it’s hard to read but it looks to me – can you read what you wrote in the middle of that? What was the reason for the stop work order?
Mr. Arellano: It says, “no permit for work – building, plumbing, electrical, mechanical and fire”.
Chairman Priestley: That’s very broad.
Mr. Arellano: Yes sir.
Chairman Priestley: There’s really, if I was to receive that, I don’t know what I would do with that. So what would you expect? What is your expectation as a building official when you issue a stop work order like that?
Mr. Arellano: It’s for somebody to contact us so then we can then determine what’s needed.
Chairman Priestley: Okay. And how do they know to do that?
Mr. Arellano: Well typically it says I believe it has our – let me look at a bigger picture.
Chairman Priestley: So if I go to Exhibit 18 it’s a blank stop work order.
Mr. Arellano: On the top it says contact the Building Department within three working days of the posting of this notice.
Chairman Priestley: Okay.
Mr. Arellano: At the very, very top. So we want people to get with us so we can then move forward with it. The red tag is a tool to get people to start communicating with us or to get the process moving along.
Chairman Priestley: So you issued the stop work order yourself?
Mr. Arellano: That’s correct.
Chairman Priestley: And I think you answered this question before but I want to make sure I understand the answer. Very simply, why did you on November 22 issue at stop work order?
Mr. Arellano: They had submitted plans that were not even close to being complete or didn’t meet the handout with the requirements that we had for a design professional. They’re putting in plumbing. They’re putting in plumbing, all these appliances new that they’re going to, they’re going to be installed, so all that drove me to place the red tag because I had given them an additional – not the two days he had requested but close to 10 days to make sure that what we received was adequate so that we could move forward.
list. It Chairman Priestley: So was the purpose of the red tag to give them a list of concerns?
Mr. Arellano: It is. It’s a notification – hey you’re doing work without a permit. Some of this may or may not require stuff. Let’s go in there, take a look – this is what you need. That’s basically what that is in a nutshell. I did these on different properties and we went in and they didn’t need a permit for what they were doing so the red tag was removed and it was done. I hope I answered your question.
Chairman Priestley: So what I would like for us to stop doing, now that we heard the reason for the red tag, and sworn testimony for the reason of the red tag, is a general concern, it’s just paraphrased – apologize. It’s just a general concern based on previous visits to the location and discussions with the appellee. So Mr. Jain, as you continue cross examination, I’m not going to allow you to go to the specific about this, what about that, what about this, what about that. You heard the rationale for the red tag. And in Mr. Arellano’s testimony, he did not offer up this specific, this specific, this specific. He gave some examples but I don’t believe it was intended to be a conclusive was a more general statement. So I’m not going to allow you to talk about every single activity that may or may not have happened on your property. Does that make sense?
Mr. Jain: It does not sir. So are we assuming here that stop work orders should be placed even for the activity which has not happened?
Mr. Priestley: I think Mr. Arellano just answered the question of why he placed the red tag. Okay? That is why he placed the red tag. You’ve heard that. You’ve asked that question and you’ve heard him answer that question. That is why he placed the red tag. Now, whether you agree with his reasoning for it or not, that is why he placed the red tag.
Mr. Jain: Am I allowed to refer to any statement he has stated on why he placed the red tag. Or this is the only statement I can refer to moving forward?
Chairman Priestley: So I’m going to say this one more time. I just asked Mr. Arellano why he placed the red tag. He gave the answer. Now there may have been specific questions about this and that and this and that were part of the testimony, but on November 22 he placed the red tag for the reasons he stated.
Mr. Jain: Should I continue my questioning Mr. Chair.
Chairman Priestley: If you’re ready to continue questioning, that’s great.
Mr. Jain: Mr. Arellano, I believe you stated – this was Mr. Priestley that stated it – but he was paraphrasing you, that it was general concerns that led you to place the stop work order. Is that correct?
Mr. Arellano: Yes.
Mr. Jain: And it wasn’t any specific work, just general concerns that led to the stop work order. Correct?
Mr. Arellano: You could say that. Yes.
Mr. Jain: And the idea of the stop work order is so that the entity could contact you and you could provide specifics of then the work was done, which led to the stop work order. Correct?
Mr. Arellano: You could state it like that.
Details of the ruling hearing will be continued in Part 2, which starts where Judge Lidyard reads from the transcript, the remainder of the questioning of Mr. Arellano by Mr. Jain.