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Berg v. North Dakota State Board of Registration for Professional Engineers and Land Surveyors

Supreme Court of North Dakota

December 11, 2018

Michael Berg, Appellee and Cross-Appellant
v.
North Dakota State Board of Registration for Professional Engineers and Land Surveyors, Appellant and Cross-Appellee Apex Engineering Group, Inc., Appellee
v.
North Dakota State Board of Registration for Professional Engineers and Land Surveyors, Appellant Scott Olson, Appellee
v.
North Dakota State Board of Registration for Professional Engineers and Land Surveyors, Appellant Dain L. Miller, Appellee and Cross-Appellant
v.
North Dakota State Board of Registration for Professional Engineers and Land Surveyors, Appellant and Cross-Appellee Thomas Welle, Appellee and Cross-Appellant
v.
North Dakota State Board of Registration for Professional Engineers and Land Surveyors, Appellants and Cross-Appellees Timothy Paustian, Appellee
v.
North Dakota State Board of Registration for Professional Engineers and Land Surveyors, Appellant

          Appeals from the District Court of Burleigh County, South Central Judicial District, the Honorable David E. Reich, Judge.

          Lyle W. Kirmis (argued), Bismarck, ND, for appellants and cross-appellees.

          Robert G. Hoy (argued) and Andrew D. Cook (on brief), West Fargo, ND, for appellee and cross-appellant Michael Berg. Michael J. Geiermann (argued), Bismarck, ND, for appellee Apex Engineering Group, Inc. and appellee Scott Olson. Kasey D. McNary (argued) and Ronald H. McLean (appeared), Fargo, ND, for appellee and cross-appellant Dain L. Miller and appellee Timothy Paustian. Ronald H. McLean (argued) and Kasey D. McNary (appeared), Fargo, ND, for appellee and cross-appellant Thomas Welle.

          OPINION

          Jensen, Justice.

         [¶ 1] The North Dakota State Board of Registration for Professional Engineers and Land Surveyors ("Board") appeals from district court judgments affirming in part, reversing in part, and remanding to the Board its disciplinary decisions against Michael Berg, Apex Engineering Group, Inc., Scott Olson, Dain Miller, Thomas Welle, and Timothy Paustian. We conclude a preponderance of the evidence supports the Board's disciplinary decisions. We affirm in part and reverse in part.

         I

         [¶ 2] Berg, Olson, Miller, Welle and Paustian ("Respondents") are former employees of Ulteig Engineers, Inc. Olson was terminated from Ulteig in 2009. On November 2, 2010, Berg, Miller, Welle, and Paustian resigned from Ulteig and, along with Olson, started a competing business, Apex.

         [¶ 3] In the months before leaving Ulteig, the Respondents engaged in the formation of Apex and their discussions included acknowledging that Apex would be competing with Ulteig. Olson sent emails suggesting Apex might be taking over some of Ulteig's work because Ulteig would not be able to complete the work after the Respondents left. The emails also mentioned how the Respondents were required to keep Ulteig's best interests in mind while employed by Ulteig. The final version of the Apex business plan stated "[i]t is also our intention to offer to complete current contracts that Ulteig holds but will not be able to complete now that key individuals are no longer with the company."

         [¶ 4] Following the Respondents' departure from Ulteig, Ulteig sued Apex and filed an ethics complaint with the Board, alleging Berg, Olson, Miller, Welle and Paustian violated the Professional Engineers' Code of Ethics by disclosing Ulteig's confidential information and failing to disclose a potential conflict of interest by not informing Ulteig of their decision to form Apex. Ulteig also alleged the Respondents knowingly participated in a plan to seek employment for Apex on projects that Ulteig had been contracted to perform before the Respondents' departure from Ulteig.

         [¶ 5] Following a December 2014 hearing, the Board found that each of the Respondents had violated one or more of the provisions of the code of ethics. The Board found Miller, Welle, and Paustian had improperly disclosed Ulteig's confidential information. The Board found Welle disclosed to Olson Ulteig's confidential salary information and a 2008 Ulteig business plan. The Board also found Welle had an adverse interest relating to a water/wastewater services contract from the city of Fargo while employed by Ulteig, and after leaving Ulteig, represented Apex in the same project. The Board found Miller disclosed to Olson Ulteig's confidential information relating to its transportation sector. The Board found Paustian downloaded the contents of his Ulteig laptop hard drive onto an external hard drive before leaving Ulteig and accessed the external hard drive from his Apex laptop.

         [¶ 6] The Board found Welle, Berg, and Miller failed to disclose a potential conflict of interest. The Board found their judgment or quality of services could have been influenced because they failed to disclose their participation in the planning and formation of Apex.

         [¶ 7] The Board also found Berg, Olson, and Welle knowingly participated in a plan to seek employment for Apex on projects Ulteig had been contracted to perform prior to their departure from Ulteig. The Board's order discussed a Ulteig contract in Jamestown that Apex knew about and became involved in after Apex was formed. The Board suspended Berg, Olson, and Miller from the practice of engineering for 60 days and suspended Welle for six months. The Board issued Paustian and Apex letters of reprimand.

         [¶ 8] The Respondents appealed the Board's disciplinary decisions to the district court. The court affirmed the Board's decision that Welle, Berg, and Miller failed to disclose a potential conflict of interest. The court reversed the determination that Miller, Welle, and Paustian had improperly disclosed confidential information. The court also reversed the decision that Berg, Olson, and Welle knowingly participated in a plan to seek employment for Apex on projects Ulteig had been contracted to perform before their departure from Ulteig. The court remanded to the Board for reconsideration the discipline imposed on Berg, Olson, Miller, Welle, and Paustian in light of the court's reversal of the disciplinary decisions. The court also awarded attorney fees to Berg, Welle, Apex, Olson, Miller, and Paustian.

         [¶ 9] On appeal to this Court, the Board argues the district court wrongfully reversed the Board's disciplinary decisions because the decisions were supported by a preponderance of the evidence. The Board also argues the district court erroneously awarded attorney fees to the Respondents. On cross-appeal, Berg, Miller, and Welle argue they did not have a conflict of interest after deciding to form Apex.

         II

         [¶ 10] Chapter 43-19.1, N.D.C.C., governs the licensing of engineers and land surveyors, and authorizes the Board to regulate the practice of engineering and surveying, including the adoption of a code of ethics. See N.D.C.C. §§ 43-19.1-01 and 08. The Board is "an administrative agency within the purview of chapter 28-32," the Administrative Agencies Practice Act. N.D.C.C. § 43-19.1-01.

         [¶ 11] Under N.D.C.C. § 28-32-46, we must affirm the Board's disciplinary decision unless:

1. The order is not in accordance with the law.
2. The order is in violation of the constitutional rights of the appellant.
3. The provisions of this chapter have not been complied with in the proceedings before the agency.
4. The rules or procedure of the agency have not afforded the appellant a fair hearing.
5. The findings of fact made by the agency are not supported by a preponderance of the evidence.
6. The conclusions of law and order of the agency are not supported by its findings of fact.
7. The findings of fact made by the agency do not sufficiently address the evidence presented to the agency by the appellant.
8. The conclusions of law and order of the agency do not sufficiently explain the agency's rationale for not adopting any contrary recommendations by a hearing officer or an administrative law judge.

         [¶ 12] Under N.D.C.C. § 28-32-49, we review an administrative appeal from a district court judgment in the same manner as the district court reviews the agency's decision under N.D.C.C. § 28-32-46. Crawford v. Dir., N.D. Dep't of Transp., 2017 ND 103, ¶ 3, 893 N.W.2d 770. This Court has also noted the following with regard to our review of an agency decision:

In reviewing an agency's findings of fact, we do not make independent findings of fact or substitute our judgment for that of the agency; rather, we determine only whether a reasoning mind reasonably could have concluded the agency's findings were supported by the weight of the evidence from the entire record. Power Fuels, Inc. v. Elkin, 283 N.W.2d 214, 220 (N.D. 1979). We defer to the agency's opportunity to judge witnesses' credibility. Koehly [v. Levi], 2016 ND 202, ΒΆ 16, 886 N.W.2d 689. Once the facts are established, their ...

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