Annual Report: Complaint/Advisory Ops. No. 00-18
BEFORE THE STATE PUBLIC INTEGRITY COMMISSION
IN AND FOR THE STATE OF DELAWARE
In Re: DALE R. DUKES, et. al
Complaint/Advisory Ops. No. 00-18
FINAL RULING ON COMPLAINT AND ADVISORY OPINIONS
Decision by: John E. Burris, Chair; Arthur G. Connolly, Jr., Vice Chair;
Commissioners Clifton H. Hubbard, Mary Jane Willis, and Arthur V. Episcopo
I. INTRODUCTION
The State Public Integrity Commission issued a ruling on March 31, 2000 holding that Dale R. Dukes, a Sussex County Council member and the other Sussex County Council members did not have conflicts of interest which would disqualify them from participating in a re-zoning matter scheduled for presentation at the April 4, 2000 meeting of Sussex County Council. That ruling (Attachment "A-1"), stated that an opinion providing a more detailed discussion of the law would be forth coming. What follows is that further discussion of the law.
II. JURISDICTION AND FACTS
On March 7, 2000, a complaint was filed with the Public Integrity Commission alleging that Mr. Dukes (hereinafter "Respondent"), a Sussex County Council member, may have a conflict of interest and should not participate in a vote on a re-zoning matter on April 4, 2000 or thereafter. The matter to be considered is Carl M. Freeman Communities' (hereinafter "Freeman") proposal to develop approximately 887 acres near Fenwick Island into a 2,895-home development. The Freeman proposal needs County Council's approval to re-zone the acreage from its present Farm and Agriculture status to a high-density zone. It is alleged that if Mr. Dukes' participates, his private company, Dukes' Lumber Co., might profit if the development is approved, and if Freeman or his subcontractors then decide to buy building supplies from his company.
By statute, when a complaint is filed the Respondent has statutory rights to such things as personal service of the complaint, a specific time to answer, an opportunity to be heard, and the right to subpoena witnesses, etc. See, 29 Del. C. § 5810. Mr. Dukes waived such rights so the Commission could expedite its proceedings and render a decision before the April 4, 2000 Sussex County Council meeting. Mr. Dukes did, however, request an advisory opinion under 29 Del. C. § 5807(c) concerning the issue.
Because other County Council members have private business interests which also might allegedly profit, the County's legal counsel, Richard Berl, also asked for an advisory opinion on their situations. The other Council members and their private enterprises are: (1) Lynn J. Rogers, President, Rogers Sign Company, Inc., a commercial sign and outdoor advertising company; (2) Finley B. Jones, Jr., President, M.A. Willey & Sons, a steel material supply company; (3) George B. Cole, Realtor, Sea Coast Realtor (Eastern Sussex County) and owner, Beach Plum Antiques; and (4) Vance C. Phillips, president, Vance Phillip, Inc., Woodrow W. Phillips Spray Co., V.P. Produce, and Realtor, Laurel Realty (Western Sussex County).
The only Council member who has had a contract or an account indirectly with Freeman is Mr. Rogers, who did approximately $1,000 worth of sign work as a subcontractor for a company which contracted with Freeman on an earlier and different project. All Council members deny that they have: (1) an agreement with Freeman for future contracts; (2) sold any real property to Freeman; or (3) own or have an interest in any land in the vicinity of the development which will benefit from this project if it is approved.
III. APPLICABLE LAW
Complainant alleges that common law decisions prior to the enactment of the State Code of Conduct are not applicable. But we decided that issue in 1997. See, e.g., Commission Op. Nos. 97-24 and 97-30. We held that the Code of Conduct provision which restricts government officials from reviewing or disposing of matters before their government entity if they have a personal or private interest which tends to impair their independent judgment in performing official duties is a codification of the common law.
Conflict of interest statutes do not generally abrogate the common law unless expressly so provided. Id. (citing 63 Am. Jr. 2d Public Officers and Employees § 253). The General Assembly did not expressly abrogate the common law. Nor did it impliedly repeal the common law restricting officials from participating when a conflict of interest was alleged in a zoning situation. Delaware courts have recognized that there must be order, certainty, and stability in land use laws. See, e.g., Stafursky v. County Council of Sussex, Del. Ch., C.A. No. 1242, C. Allen (August 12, 1987); Acierno v. Folsom, Del. Supr., 337 A.2d 309 (1975). To hold that the common law does not apply could result in this Commission destablizing long-standing Delaware decisions on zoning and conflict of interests restrictions.
At common law, when government officials act on zoning matters and a conflict of interest or personal interest is alleged, the standard to be applied depends on whether the government officials were acting in a: legislative, ministerial, or quasi-judicial capacity. (See cases cited herein). The decision on which standard to apply turns on the particular facts--e.g., what is the alleged "personal or private interest"; how would such an alleged interest affect the official's judgment; what type of zoning interest is being considered; and what is the official's capacity (role) in deciding the zoning issue.
Having concluded that common law decisions apply in this situation, we next address the facts in the context of the three common law standards which Courts have applied when an alleged conflict results from a zoning matter.
IV. BACKGROUND TO THE DECISION
(A) Zoning Decisions in General
Council Member Dukes' authority to vote on the zoning issue is being challenged because he has a private business which allegedly might benefit from a favorable decision on the matter. When Delaware Courts review challenges to zoning decisions, a threshold issue is whether the decision maker was participating in: (1) a "legislative" capacity; (2) "judicial" capacity; or (3) a "ministerial" capacity. This is true regardless of the basis of the zoning challenge, e.g., due process, Freedom of Information (FOIA) violation, or conflict of interest. See, e.g, Lawson v. Sussex County Council, Del. Ch., C.A. No. 1615-S, C. Allen (August 6, 1995) p. 8(zoning is a "legislative action," but some aspects are "quasi-judicial"); Conner v. Shellburne, Inc., Del. Supr., 281 A.2d 608 (1971) (zoning hearings of Levy Court were quasi-judicial in nature); Green v. Sussex County Planning and Zoning Commission, Del. Ch., 340 A.2d 852(1974)(zoning hearing of County Council is basically similar to the law making process of any legislative body); East Lake Partners v. City of Dover Planning Commission, Del. Super., 655 A.2d 821(1974)); See also, other cases cited herein).
If the capacity in which the official acts is legislative, then substantial deference is given and courts will decline to question the motives of the official who participated in the zoning decision, even if a possible presence of a conflict of interest is alleged. See generally, Zoning: Proof of Bias or Conflict of Interest in Zoning Decision, 32 Am. Jur. Proof of Facts 3d § 5 (hereinafter "Zoning: Proof of Bias or Conflict"); See, e.g., Lawson at 8-10 (when zoning is viewed as a legislative action, the court will not substitute its judgment for the legislative body, absent fraud or bad faith); Krahmer v. McClafferty, Del. Super, 288 A.2d 678 (1972)(when government body acts in legislative capacity, courts will not inquire into the motives of or inducements to the officials as to what may have influenced them in passing the act or resolution, absent fraud or bad faith).
A more probing standard is used if the act is characterized as quasi-judicial. Id; See, e.g., Shellburne, Inc. v. Roberts, Del. Supr., 238 A.2d 331(1967) (when quasi-judicial body acts, there is a presumption of honesty and integrity and court will look at motive if complainant establishes a prima facie case to overcome the presumption).
A "matter" is considered "ministerial" when the duty is prescribed with such precision and certainty that nothing is left to discretion or judgment. Darby v. New Castle Gunning Bedford Education Assoc., Del. Supr., 336 A.2d 209, 211(1975). Where government officials are bound by zoning regulations, there is no discretion of choice involved. State ex rel. Rappa v. Buck, Del. Super., 275 A.2d 795 (1971). Thus, if the matter is merely "ministerial" the presence or absence of a conflict of interest is immaterial. Since Mr. Dukes and the other Council members do exercise discretion and judgment in ruling on zoning matters, we hold that the "ministerial" standard does not apply.
(B) Identifying the Capacity in Which the Council Members are Acting
Having disposed of the "ministerial standard," the threshold issue is now whether the County officials would be acting in a legislative or judicial capacity.
Delaware Courts decide if an official is acting on a zoning matter in a legislative or quasi-judicial capacity; or a combination thereof by looking at the specific structure of the land use laws. There is no Delaware case dealing directly with which test would be applied to Sussex County Council members in a re-zoning situation. However, Delaware Courts have decided the standard to be applied under the specific zoning laws of other counties and cities. See, Lawson, C.A. No. 1615-S (zoning is a "legislative function," but some aspects are "quasi-judicial"); Conner, 281 A.2d 608 (zoning hearings of Levy Court are quasi-judicial); East Lake, 655 A.2d 821 (comparing site development decision to subdivision decision, Court recognized that the City's Planning Board could act, in part, in all three capacities).
From those decisions it is clear that the capacity in which an official acts turns on the complexities of the particular area's zoning laws. As this Commission finds no authority interpreting which capacity would apply to Sussex County Council members based on the structure of the Sussex County Zoning laws, we test the issues under both the legislative and quasi-judicial standards.
(1) LEGISLATIVE CAPACITY STANDARD
Delaware Courts will not inquire into the motives of public officials who act in a legislative capacity on zoning actions if they act within the scope of their admitted powers, unless the complaining party proves bad faith or fraud on the part of the official. Campbell v. Commissioners of Bethany Beach, Del. Supr., 139 A.2d 493 (1958).
In Campbell, it was alleged that zoning Commissioners approved the zoning of a new state highway through Bethany Beach, because it would increase their individual property values. Id. at 239. The Delaware Supreme Court said there was "absolutely no evidence of capriciousness or bad faith or fraud." It noted that as a matter of law, the Commissioners had complete power to act on the matter. Id. Regarding the allegation that they were motivated to approve the request because of their desire for personal gain, the Court said "[T]he short answer is:" most of the property lying east of Delaware Avenue would presumably benefit from any increase in value as a result of a new highway. Id. at 240. The mere fact of "possible enhancement" of their personal properties did not preclude their participation, because as a practical matter, no Board of Commissioners could then be obtained to validly consent to a new highway since, by law, all Commissioners were property owners. Id.
As in Campbell, it is "possible" that all Council members could personally gain if the ordinance is passed. For example, Freeman "might" decide he wants: Mr. Dukes' building supplies; Mr. Findley's steel materials; Mr. Cole and Mr. Phillip's real estate sales expertise; Mr. Cole's antiques to dress up the developer's show home; or Mr. Rogers signs to announce the coming of the new development or identifying the location, etc. But Mr. Dukes and the other Council members have each represented that they: (1) have no agreement with Freeman for future contracts; (2) have not sold any real property to Freeman; and (3) do not own or have an interest in any land in the vicinity of the development which will benefit from this project if it is approved.
Under the statute, and at common law, to prove that an official has a "personal interest," sufficient to impair his judgment, complainant must overcome "a strong presumption of honesty and integrity." Beebe Medical Center, Inc. v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, J. Terry (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996); See also, Shellburne, 238 A.2d 331(when acting within scope of authority, there is a rebuttable presumption of good faith and propriety of conduct that inures to all public officers); Mack v. Kent County Vocational-Tech Sch. Dist., Del. Super., C.A. No. 86A-AU-2, J. Bush (May 20, 1987). However, the complaint recites "the mere fact" that if the ordinance is passed, then Mr. Dukes "might" profit. All well-pleaded allegations must be accepted as true. Kershaw Excavating v. City Systems, Inc., Del. Supr., 581 A.2d 1111 (1990). However, inferences and speculative facts are not to be assumed as true without specific allegations of fact to support such inferences or conclusions. Bergstein v. Texas Int'l Co., Del. Ch., 453 A.2d 467 (1982), appeal den., Del. Supr., 461 A.2d 695 (1983)(alleged Board member's private enterprise would benefit from decision). Here, it is merely alleged that the officials "might" profit if the ordinance is passed and if the developer then decides to do business with one or all of those officials. This allegation is more tenuous than in Campbell, where the Court ruled that there was no evidence of fraud or bad faith. Id. at 139 A.2d 493. Where there is no showing of bad faith or fraud, Courts will dismiss the complaint. Klaw v. Pau-Mar Construction Co., Del. Supr., 135 A.2d 123 (1957).
Accordingly, we dismiss the complaint against Council Member Dukes, and advise Mr. Dukes, and all Council members, that to the extent any action on the re-zoning matter would be in their legislative capacity, they are not precluded from participating.
(2) JUDICIAL CAPACITY STANDARD
We find that even under the stricter judicial/quasi-judicial standard there is no violation of the State Code of Conduct. When the judicial standard is applied, complainant must again overcome "a strong presumption of honesty and integrity." Beebe Medical Center, Inc. v. Certificate of Need Appeals Board, Del. Super., C.A. No. 94A-01-004, J. Terry (June 30, 1995) aff'd, Del. Supr., No. 304 (January 29, 1996). Delaware Courts have noted how remote and nebulous alleged conflicts can be. Thus, for the interest to be sufficient to require an official to recuse himself, the claim cannot be merely conclusory. Shellburne, 238 A.2d 331; Camas v. Delaware Board of Medical Practice, Del. Super., C. A. No. 95A-05-008, J. Graves (November 21, 1995). We have held that claims can not be based on suspicion and innuendo. Their must be hard facts. (Commission Op. No. 96-75(citing CACI, Inc-Federal v. United States, Fed. Cir., 719 F.2d 1567(1967). Here, the hard facts support the presumption of honesty and integrity.
(A) There is no evidence of a violation of 29 Del. C. § 5805 (a)(2)(b) or (a)(1).
Officials may not review or dispose of matters if they have a personal or private interest which tends to impair independent judgment in performing official duties. 29 Del. C. § 5805 (a)(1). By law, an official's judgment would tend to be impaired if their financial interest would benefit to a lesser or greater extent than other private enterprises similarly situated. 29 Del. C. § 5805 (a)(2)(b). Here, the allegations merely say that Mr. Dukes' private business "might" profit "if" the ordinance is passed, and "if" Freeman or his subcontractors then decide to do business with Mr. Dukes. The allegations require several assumptions before any interest would exist: (1) the ordinance will pass; (2) the developer or his subcontractors will use Mr. Dukes' company or the companies of other Council members; and (3) their companies would benefit to a greater or lesser extent than other similar private enterprises. Such assumptions are too indefinite and speculative to support a finding of a disqualifying conflict of interest, particularly in light of each member of Council's denial of the existence of any agreements related to the planned project.
Even assuming the first two speculative requirements are met, no facts support the allegation that their private enterprises would benefit more than other private enterprises which offer similar products or services. For example, the developer could deal with a building supply company other than Mr. Dukes' from the same local area, such as Masten Lumber and Building Supply. Similarly, he could select companies other than those of the remaining Council members for the other goods and services he needs. As no facts indicate that the Council Members' businesses would benefit to a lesser or greater extent than other similarly situated private enterprises, the allegations fail to meet the element required by law--that their financial interests would benefit to a greater extent than others similarly situated.
The next question is whether the speculative, prospective interests would be sufficient to create any associational relationship "personal or private interest" between the Council members and Freeman which would tend to impair judgment under 29 Del. C. § 5805 (a)(1). "The decision as to whether a particular interest is sufficient to disqualify is necessarily a factual one and depends upon the circumstances of the particular case." Prison Health Services Inc. v. State, Del. Ch., C.A. No. 13,010, V.C. Hartnett III (July 2, 1993)(citing Van Itallie v. Borough of Franklin Lakes, N.J. Supr., 146 A.2d 111, 116 (1958).
In Van Itallie, it was alleged that an official who participated in a zoning decision had a personal interest because his brother-in-law held a low-level position with the company seeking the zoning action. The Court held that the official's familial relationship with an employee of the company which was seeking the decision was not an interest sufficient to require recusal. Similarly, Delaware Courts have held that the mere allegation of a relationship without additional facts to support a charge of a conflict of interest is insufficient to state a claim. Camas v. Delaware Board of Medical Practice, Del. Super., C. A. No. 95A-05-008, J. Graves (November 21, 1995)(no facts were given to support an allegation that a State officer's marital relationship created a conflict of interest where her spouse investigated a claim for his employer, a private hospital, against a doctor of that hospital and a claim of improper medical practice against that doctor for the same matter came before her State board).
Here, all Council members deny that they have any agreement with Freeman for future contracts, etc. No facts indicate any personal or private ties to Freeman. Thus, the allegations of a personal or private relationship are speculative and conclusory, without facts to support the type of relationship between the officials and Freeman that is sufficient to create the type of interest which Courts deem to be sufficient.
(B) The Facts Do Not Support the Claim of an Appearance of Impropriety
As the conclusory and speculative allegations are insufficient to establish that the officials have the requisite "personal or private interest," the question becomes whether the facts are sufficient to support the allegation of an appearance of impropriety.
In deciding if there is an appearance of impropriety, we consider the totality of the circumstances. Commission Op. No. 96-78. However, those circumstances must be contained within the framework of the Code's purpose which is to achieve a balance between a "justifiable impression" that the Code is being violated by an official, while not "unduly circumscribing" their conduct so that citizens are encouraged to assume public office and employment. 29 Del. C. § 5802(1) and 5802(3). To achieve that balance, we must start with the strong legal presumption of honesty and integrity to which public officials are entitled. Beebe. Added to that presumption are the following legally significant facts:
(1) Capable Citizens Would be Discouraged from Holding Public office if Remote and Speculative Interests were Enough to defeat the Purpose of the Code of Conduct. The balance that must be struck when public officials are alleged to have remote and speculative interests was well expressed by the Court in a New Jersey zoning decision. The statute, similar to Delaware's, restricted local planning officials from acting "on any matter in which he has either directly or indirectly any personal or financial interest." The Court said:
Local governments would be seriously handicapped if every possible interest, no matter how remote and speculative, would serve as a disqualification of an official. If this were so, it would discourage capable men and women from holding public office. Of course, courts should scrutinize the circumstances with great care and should condemn anything which indicates the likelihood of corruption or favoritism. But in doing so they must also be mindful that to abrogate a municipal action at the suggestion that some remote and nebulous interest is present, would be to unjustifiably deprive a municipality in many important instances of the services of its duly elected or appointed officials. The determinations of municipal officials should not be approached with a general feeling of suspicion, for as Justice Holmes said, "Universal distrust creates universal incompetency." Van Itallie at 269.
Similarly, we have held that in deciding if there is an appearance of impropriety because of an alleged prior professional or social relationship, it is improper to ascribe evil motives to a public official based only on suspicion and innuendo; not on hard facts. (Commission Op. No. 96-75(citing CACI, Inc-Federal v. United States, Fed. Cir., 719 F.2d 1567(1967)).
That conclusion is consistent with a Delaware decision where it was alleged that there was an appearance of impropriety under a provision of the Lawyer's Rules of Professional Conduct because of the business relationship created by the individual's State role and his private employment. The Court said: Absent the existence of a conflict, it would not disqualify the individual based on an unarticulated concern for the "appearance of impropriety." It noted that appearances of impropriety claims have been criticized as being too "imprecise, leading to ad hoc results." Moreover, such unsubstantiated claims were sometimes used as a tactical tool just to disqualify an official from participating when, in fact, there was no conflict. Seth v. State of Delaware, Del. Supr., 592 A.2d 436 (1991)).
As in Seth, here, the public position and private employment created the alleged appearance problem, but there were no articulated, specific facts to support the claim. Just as the rules of conduct for lawyers are not to be used for tactical purposes to disqualify officials when there is no conflict, so too the State Code of Conduct should not be used for tactical purposes to disqualify public officials when there is, in fact, no conflict. Here, based solely on appearances without any supporting facts, it is alleged that Mr. Dukes should be disqualified because he "might" profit--if the developer's proposal is approved; and if the developer or if his subcontractor decides to buy supplies for Mr. Dukes' company. Apparently no other Council members were questioned about the possibility that their private businesses might be enhanced. The only complaint filed was against Mr. Dukes. After he was charged, the Town attorney, understanding that if the charges against Mr. Dukes constituted a conflict of interest, then all Council members would have the same conflict, sought an advisory opinion not only for Mr. Dukes but for all Council members.
Delaware Courts have noted that zoning decision makers are residents of the town or county for which they are responsible. As such, they bring their experience as citizens and residents of the town or county. When exercising judgment they are required by their office to follow a process set-out by statute or dictated by due process. They need not approach their duties with no preconceptions about the course that would best promote the public good. Pettinaro Enter. v. Stango, Del. Ch., C.A. Nos. 1488, 1501, C. Allen (July 24, 1992).
(2) The Council Members' Discretion is Restrained by State and Local Zoning Law. Having concluded that speculative claims do not support the purpose of the Code, we also note that Sussex County Council Members are to comply with the State Comprehensive Development law when making zoning decisions. 9 Del. C., Chapters 68 and 69. Delaware courts have held that the State law limits the discretion of those making land use decisions and that such "limits on discretion" are legally and judicially significant. Lawson, C.A. No. 1615-S; See, Green v. County Council of Sussex County, Del. Ch., 508 A.2d 885 (1986). Land use decisions are also restrained by local zoning laws and regulations. See, Sussex County Code, Chapter 99. The local restraints include the requirement that the developer must consult with such sources as the County's Land Use Planning staff; the County Engineer; the State's Department of Natural Resources, the State Fire Marshal's office and other professional and technical representatives as deemed necessary. Id. Public hearings are held so property owners can provide input, and a Committee then submits a report with recommendations to the Council. Id. Thus, the developer's application is reviewed by a multitude of persons for compliance with not only the State comprehensive plan, but local ordinances and regulations, with public input, before Council ever votes.
As zoning laws limit the discretion of those making land use decisions, such "limits on discretion" are of importance when it is alleged that there may be an appearance that an official's discretion/judgment would be impaired because of a mere possibility that he might benefit from a land use decision.
(3) Like Delaware, other jurisdictions have held that claims of conflicts of interest in the zoning context can be too remote and nebulous to require an official to recuse. A review of case decisions from other jurisdictions, reveals that before the courts would hold that an interest in the zoning "matter" being considered, was sufficient to create a conflict, they required some ascertainable benefit; not speculative benefits based on conclusory allegations. See, "Zoning: Proof of Bias and Conflict." See, Van Itallie 146 A.2d 111 (1958) (cited by Delaware Court in Prison Health). Moody v. University Park, Tex. App., 278 S.W.2d 915(1955) and Touphoeus v. Joy, N. J. Super., 196 A.2d 250 (1963).
Complainant must overcome a strong legal presumption of honesty and integrity. Beebe, C.A. No. 94A-01-0004; Mack, C.A. No. 86A-AU-2. Here, the presumption of honesty and integrity is bolstered by facts which Delaware Courts have found to be legally significant, such as the legal restraints imposed by State and local zoning laws. In stark contrast, is the conclusory allegation that the activity could create a strong potential for a conflict.
V. CONCLUSION
Based on the foregoing law and facts, the complaint against Council Member Dale Dukes is dismissed as the speculative allegations fail to establish either a conflict of interest or even the appearance of a conflict. Further, we find that all Council members, like Mr. Dukes, might possibly enhance their private interests if the re-zoning request is approved. However, they, like Mr. Dukes, can only be said to have a potential speculative interest, which is insufficient to require recusal.
Sincerely,
John E. Burris, Chair
State Public Integrity Commission
JEB:lha
Attachment A - Commission's Ruling of March 31, 2000
