author: RANDALL, Judge.

text:
    C.B., a minor, by her mother and natural guardian, L.B., and L.B., individually, Appellants, v. EVANGELICAL LUTHERAN CHURCH IN AMERICA, Respondent, Southwestern Minnesota Synod of the Evangelical Lutheran Church in America, Respondent, Immanuel American Lutheran Church, Respondent, Oscar Stene, Respondent, Pearl Stene, Respondent.
    No. A06-295.
    Court of Appeals of Minnesota.
    Jan. 16, 2007.

      Jeffrey R. Anderson, Kathleen P. O’Connor, Jeff Anderson & Associates, P.A., St. Paul, MN, for appellants.
    Daniel J. Connolly, Faegre & Benson, LLP, Minneapolis, MN, for respondent Evangelical Lutheran Church in America.
    Patrick D. Reilly, Erstad & Riemer, P.A., Minneapolis, MN, for respondent Southwestern Minnesota Synod of the Evangelical Lutheran Church in America.
    Richard P. Mahoney, Victor Lund, Ma-honey, Dougherty and Mahoney, P.A., Minneapolis, MN, for respondent Immanu-el American Lutheran Church.
    Oscar Stene, Pearl Stene, Fulda, MN, pro se respondents.
    Considered and decided by HALBROOKS, Presiding Judge, RANDALL, Judge, and STONEBURNER, Judge.
   OPINION

RANDALL, Judge.

Appellants C.B. and L.B., daughter and mother, appeal from summary judgment dismissing their claims for negligent supervision, respondeat superior, and ratification against respondent churches. This action arose in connection with the sexual abuse of C.B. by respondent Oscar Stene, an ordained Lutheran minister in good standing who, although retired, occasionally presided over services in respondents’ churches. Appellants argue that (1) the district court erred by dismissing their respondeat superior claim because genuine issues of material fact remain as to whether respondent Stene was employed by respondent churches and whether his conduct was foreseeable; (2) the district court erred by dismissing appellants’ negligent-supervision claim because genuine issues of material fact remain as to whether respondent Stene’s abuse was foreseeable and preventable; and (3) by its conduct following notification of respondent Stene’s abuse, the churches ratified Stene’s acts sufficiently to become liable for the harm done to appellant C.B. Respondents argue that appellants’ claims are barred by the Establishment Clause and the Religious Freedom Clause because a resolution of appellants’ claims would require this court to become impermissibly entangled with religion. We affirm.

FACTS

This appeal stems from the sexual abuse of appellant C.B., a minor, by respondent Oscar Stene, a retired Lutheran minister. Oscar Stene was ordained a Lutheran minister in 1960, and served a congregation in Madison from 1960 through 1966. In 1966, Oscar Stene became the pastor of respondent Immanuel American Lutheran Church (IALC) in Fulda, where he served until 1978. Thereafter, Oscar Stene served as pastor of the South Blue Earth and North Blue Earth churches in Brice-lyn, until he retired in 1991.

After retiring, Oscar Stene and his wife, Pearl Stene, returned to Fulda to live at their farm. Although officially retired, Oscar Stene served as interim pastor at several local congregations from 1991 through 2002. In fact, Oscar Stene filled such a position at IALC from 1991 to 1992. He also served as the fill-in pulpit supply minister several times at various churches in the region between 1991 and 2002. A fill-in minister was needed when the regular pastor was on vacation or not available for any other reason. Oscar Stene’s duty as the fill-in minister was to conduct the one-hour Sunday morning worship service and he received a $100 honorarium for each service.

C.B.’s mother, appellant L.B., became acquainted with the Stenes in 1974 when Oscar Stene was the pastor at IALC. L.B.’s fiancée, Curt, along with his family, were close friends with the Stenes and, over the course of the next few years, L.B. also developed a close relationship with the Stenes. L.B. would sometimes refer to the Stenes as her parents and, during the four years prior to her marriage to Curt, L.B. lived with the Stenes. When L.B. and Curt were married in 1979, Oscar Stene was chosen to perform the marriage ceremony.

■ After the Stenes moved to Bricelyn, the families had minimal contact with each other. During this time period, L.B. and Curt had two children, a daughter, C.B., and a son. When the Stenes returned to Fulda in 1991, they resumed their close relationship with L.B. and her husband, and began to develop a close relationship with C.B. and her brother. The Stenes often spent Christmas and birthdays with L.B. and her family, and the Stenes regularly babysat C.B. and her brother. The children also regularly visited the Stene farm to play with the animals. Eventually, C.B. began referring to Oscar Stene as “Grandpa Oscar” and Pearl Stene as “Grandma Pearl.”

In late 1999 or early 2000, C.B. began occasionally spending the night at the Stenes. At about the same time, C.B. was having difficulty with her school work. Because Pearl Stene was a retired teacher, she offered to help C.B. improve her grades. L.B. agreed and C.B. went to the Stene’s farm on numerous occasions for Pearl Stene’s tutoring.

On June 18, 2002, after spending the previous evening at the Stenes, C.B. told L.B. that she had been sexually abused by Oscar Stene. According to C.B., she was touched inappropriately by Oscar Stene on June 17, 2002. C.B. also claimed that Oscar Stene engaged in similar conduct in 1998. It is undisputed that the incidents of sexual abuse occurred at the Stene farm.

After being informed of the abuse, L.B. and her husband initially sought the advice of Pastor Allan Bakke, the pastor of IALC at the time of the abuse. According to L.B., Pastor Bakke advised the family to “stay silent.” Although Pastor Bakke disputes this allegation, police were not informed of the abuse until November 2002, when an unnamed person finally contacted the police about the incidents of abuse. Oscar Stene was subsequently charged in connection with the allegations and eventually pleaded guilty to second-degree criminal sexual conduct. Both Oscar Stene and Pastor Bakke were asked by the synod to resign.

In November 2003, C.B. instituted this civil action, through her parents, against Oscar and Pearl Stene, respondent Evangelical Lutheran Church in America (ELCA), respondent Southwestern Minnesota Synod of the Evangelical Lutheran Church in America (the Synod), and the IALC. The first six counts of the complaint are solely against Oscar Stene and/or his wife Pearl (the Synod did not participate in this appeal). The last four counts at issue are against the named church entities.

The respondent church entities are. part of a specific structural network of the Evangelical Lutheran Church. The ELCA is a national organization that is involved in a number of ministries. A synod is a geographic unit of the ELCA assigned to congregations in its area. A congregation is a group of believers in a particular area, often referred to by the name of the local church. The relationships among the ELCA, the synod, and the congregation are governed by the constitution of the individual synod as well as the Constitution for Synods of the Evangelical Lutheran Church in America.

After discovery, respondents ELCA, the Synod, and the IALC (collectively respondents) moved for summary judgment. At the time of the summary judgment motion, appellants withdrew their claims against respondents for breach of fiduciary duty, fiduciary fraud, and duty to warn. Appellants retained their claims against respondents for vicarious liability and negligence. The district court granted respondents’ motion for summary judgment, holding that there was no employment relationship between respondent churches and Oscar Stene. The district court also concluded that the abuse occurred outside of the work-related limits of time and place and were not related to his employment duties. The district court’s order left the claims against the Stenes pending, and then entered a Rule 54.02 order to allow appellants to proceed with this appeal.

ISSUES

I. Did the district court err by dismissing appellants’ respondent superior claims?

II. Did the district court err by dismissing appellants’ negligent supervision claim?

III. Did respondent churches’ conduct, following notification of Oscar Stene’s abuse, constitute ratification of the abuse for purposes of liability?

IV. Are appellants’ claims barred by the Establishment Clause and the Religious Freedom Clause?

ANALYSIS

Summary-judgment motions are granted when the pleadings, depositions, answers to interrogatories, and admissions, together with any affidavits, show that there is no genuine issue of material fact and that a party is entitled to judgment as a matter of law. Fabio v. Bellomo, 504 N.W.2d 758, 761 (Minn.1993). On a motion for summary judgment, “a court may not weigh the evidence or make factual determinations.” State ex rel. Hatch v. Allina Health Sys., 679 N.W.2d 400, 406 (Minn.App.2004) (quoting Fairview Hosp. & Health Care Servs. v. St. Paul Fire & Marne Ins. Co., 535 N.W.2d 337, 341 (Minn.1995)). “[T]he reviewing court must view the evidence in the light most favorable to the party against whom judgment was granted.” Fabio, 504 N.W.2d at 761. A reviewing court need not defer to ■ a district court’s decision on a pure question of law. Frost-Benco Elec. Ass’n v. Minn. Pub. Utils. Comm’n, 358 N.W.2d 639, 642 (Minn.1984).

I.

Under “respondeat superior, an employer is vicariously liable for the torts of an employee committed within the course and scope of employment.” Fahrendorff v. N. Homes, Inc., 597 N.W.2d 905, 910 (Minn.1999) (quotation omitted).

Whether an employment relationship exists is an issue of fact when the evidence is disputed. [FJactors traditionally used to determine the nature of a work relationship are: (1) the right to control the means and manner of performance; (2) the mode of payment; (3) furnishing of materials and tools; (4) control of premises where work is performed; and (5) right of employer to hire and discharge. The right to control is the most significant factor.

Olson v. First Church of Nazarene, 661 N.W.2d 254, 261 (Minn.App.2003) (citations and quotation omitted).

Appellants argue that the district court erred by dismissing their respondeat superior claim because there are issues of material fact as to whether Oscar Stene was employed by respondent churches. The evidence as to the employment relationship issue is undisputed. The dispute concerns the application of the undisputed facts to the law. Thus, whether Oscar Stene was employed by respondent churches at the time of the abuse is a question of law. See Morton Bldgs., Inc. v. Comm’r of Revenue, 488 N.W.2d 254, 257 (Minn.1992) (stating that the application of law to undisputed facts is a question of law).

With respect to the Evangelical Lutheran Church, the record reflects that when a local church needs a new pastor, the local synod makes recommendations from a “call roster” according to which pastors the synod believes might best fit the needs of the congregation. The congregation’s board or its designated committee then interviews the prospective pastors and discusses with them the terms of employment. The congregation then votes before extending a call to a prospective pastor, and a two-thirds majority vote of those congregation members present is required to issue a call.

Once a congregation selects a pastor, the congregation sets the terms of the pastor’s employment, including pay and benefits, as well as the place and time for services. The congregation also defines the role of its pastor and determines the pastor’s duties. The congregation further supplies its pastor with a parsonage and determines how much vacation will be afforded to the pastor. Finally, the congregation is the body with the authority to fire its pastor and may do so by vote.

Appellants argue that an employment relationship existed between Oscar Stene and respondent churches because Oscar Stene was an ordained minister in good standing with the church and on the “clergy roster.” Although appellants do not appear to dispute the congregation’s relationship with its minister, appellants assert that evidence in the record demonstrates that the Synod and the ELCA exercised enough control over a pastor’s ministry to prove an employment relationship existed with those entities. Appellants argue that an employment relationship is reflected by evidence that the Synod and the ELCA determine who is qualified to be a minister and demand- that ministers agree and abide by the Synod’s and the ELCA’s constitutions and by-laws. Appellants also contend that evidence that the ELCA and the Synod are involved in the disciplinary process of ministers, and can remove a minister from his or her position, further demonstrates that the ELCA and the Synod exercise significant control over a minister’s performance.

There is evidence in the record tending to support appellants’ legal argument (not on disputed fact issues — we are cognizant that on motions for summary judgment, the nonmoving party gets the benefit of the doubt and the benefit of rational inferences). Both the Synod and the ELCA have constitutions under which a minister must abide. There is evidence in the record that both the Synod and the ELCA can be involved in the disciplinary process. For example, testimony by church officials indicated that if the Synod or the ELCA became aware of inappropriate behavior by a minister, the church entities could request that the minister resign. If the pastor declined to resign, the ELCA and the Synod could use the process of discipline outlined in the constitutions to force his or her resignation. Nevertheless, the fact that the Synod and the ELCA set certain standards for Lutheran ministers, and can be involved in disciplinary proceedings, does not automatically mean a true employment relationship exists. Respondents reiterate from the district court’s order an analogy between the facts here and the relationship between a lawyer and the Minnesota Supreme Court. The Minnesota Supreme Court, through the Rules of Professional Conduct, sets forth the rules and standards by which lawyers must adhere. If these rules are violated, the Minnesota Supreme Court may discipline the responsible attorney. But this relationship between the supreme court and the disciplined attorney is not an employment relationship. There has to be something more. Such is the case here. The Synod and the ELCA have some limited control over the pastor. But, as noted, the congregation, not the umbrella entity, has the responsibility for hiring and firing the pastor, setting forth the terms and conditions of employment, supplying the pastor with parsonage, vacation and supplies, and paying the pastor. Based on the Olson factors, it is the congregation, not the Synod and the ELCA, which “employs” the minister.

Appellants also contend that respondent IALC was Oscar Stene’s employer. We disagree. Between 1966 and 1978, Oscar Stene was the full-time pastor at IALC and at that time was considered an employee of the church. But Oscar Stene retired in 1991. The record reflects that when the IALC needed a fill-in pastor because the full-time pastor was unavailable, the church would contact a retired pastor, such as Oscar Stene, and request that he fill in. When Oscar Stene “filled-in” as a retired pastor, he was paid approximately $60-80 for each day that he provided his service. The IALC did not withhold taxes from Oscar Stene’s paycheck and Stene was not provided with vacation or health benefits. The record shows that Oscar Stene occasionally served as a fill-in pastor at other churches rather than just the IALC. As a retired minister, Oscar Stene was more of an independent contractor than an employee of IALC.

The record shows that in light of his retired status, respondent church entities exhibited little control over Oscar Stene. The church entities’ constitutions did mandate that even though retired, pastors like Stene were to abide by the moral and ethical standards set forth in the constitutions. We can only note that, for example, a general statement that the Ten Commandments apply to both regular and retired ministers does not mean that under civil law, an employer-employee relationship must now exist. As a retired minister, none of the church entities were in a position to supervise Stene’s conduct. There is nothing in the record indicating that Oscar Stene was involved in any of the “normal” duties required of non-retired ministers. Oscar Stene was under no obligation to accept a request to fíll-in, and there is nothing in the record indicating that the IALC was obligated to contact Oscar Stene when a fill-in pastor was needed. Although Oscar Stene temporarily served as interim pastor at IALC shortly after he retired, his role as interim pastor occurred long before the abuse. We conclude that the district court did not err in holding that no employment relationship existed between Oscar Stene and the respondent church entities. Thus, because Oscar Stene was not an employee of any of the respondent church entities, respondents are not vicariously liable for Stene’s abusive behavior.

If we were to conclude that an employment relationship existed between Oscar Stene and respondents, appellants’ claims fail because the abuse did not occur within the scope of employment. See Fahrendorff, 597 N.W.2d at 910 (stating that there is liability only if the abuse occurred within the scope of employment). Under the doctrine of respondeat superior, “liability stems not from any fault of the employer, but from a public policy determination that liability for acts committed within the scope of employment should be allocated to' the employer as a cost of engaging in that business.” Id. The supreme court has interpreted the doctrine in Minnesota to hold an employer liable for even the intentional misconduct of its employees when “(1) the source of the attack is related to the duties of the employee, and (2) the assault occurs within work-related limits of time and place.” Id. (quotation omitted). “[A]n important consideration in determining whether an act is related to the duties of employment is whether the act was foreseeable.” Hagen v. Burmeister & Assocs., Inc., 633 N.W.2d 497, 504 (Minn. 2001). When the evidence in the record is conclusive on all of the necessary elements or there is an absence of evidence to support a necessary element, no fact issue is presented for the jury and the scope of employment is determined as a matter of law. See Lange v. Nat’l Biscuit Co., 297 Minn. 399, 404, 211 N.W.2d 783, 786 (1973).

Here, the record reflects that appellants’ family was good friends with the Stenes. The parties often gathered for holidays, including Christmas and birthdays. The Stenes often babysat C.B. and her brother, and C.B. testified that she occasionally referred to Oscar and Pearl Stene as grandpa and grandma. At the time of the abuse, C.B. visited the Stene farm to play with the animals and to be tutored by Pearl Stene. The tutoring provided by Pearl Stene was in connection with C.B.’s school work and not for religious reasons. There is no allegation that C.B. went to visit Oscar Stene for any type of religious counseling or any other reason connected to his status as a retired minister. In fact, C.B. testified that she never attended any religious service conducted by Oscar Stene and knew the Stenes primarily as “family friends.” Oscar Stene’s conduct did not occur within the ambit of any type of church work, whether time or place.

II.

Appellants argue that the district court erred in dismissing their negligent supervision claim because genuine issues of material fact remain as to whether Oscar Stene’s abuse was foreseeable and preventable. Appellants contend that Oscar Stene’s abuse was foreseeable based on the following “red flags”: (1) C.B.’s frequent overnight visits with the Stenes; (2) the Stenes’ lavishing of inappropriate and expensive gifts on C.B.; and (3) on at least one occasion, C.B. had to be dragged, kicking and screaming, by her parents to the Stene car to spend time with the Stenes.

“Negligent supervision derives from the doctrine of respondeat superior,” so that a plaintiff must prove that the employee’s action occurred within the scope of employment. M.L. v. Magnuson, 531 N.W.2d 849, 858 (Minn.App.1995), review denied (Minn. Jul. 20, 1995). To make out a successful claim for negligent supervision, the plaintiff must prove (1) “the employee’s conduct was foreseeable;” and (2) “the employer failed to exercise ordinary care when supervising the employee.” Oslin v. State, 543 N.W.2d 408, 415 (Minn.App.1996), review denied (Minn. Apr. 1, 1996). In negligence cases, “foreseeability” means a level of probability that would lead a prudent person to take effective precautions. Fahrendorff, 597 N.W.2d at 912. If the abusive behavior was objectively foreseeable, then the inquiry must focus on whether the employer took reasonable precautions, beforehand, to prevent the abuse. Ponticas v. K.M.S. Investments, 331 N.W.2d 907, 911 (Minn.1983).

Here, appellants’ negligent supervision claim fails because Oscar Stene was not an employee of the respondent church entities at the time of the abuse. Appellants have failed to provide any evidence that any of the respondent church entities were aware of the alleged “red flags.” Even if respondents were aware of the alleged “red flags,” appellants fail to establish how these “red flags” should have put respondents on notice of the abuse. In light of appellants’ relationship with the Stenes, it would not be abnormal for C.B. to spend the night at the Stenes, or for the Stenes to buy nice gifts for somebody they considered to be their granddaughter. It is not abnormal for a teenager to put up a fuss when instructed that she spend time with a tutor to work on her school work. There is nothing in these “red flags” to indicate that Oscar Stene was abusing C.B., or that respondents were aware of the existence of these “red flags.” See Oslin, 543 N.W.2d at 415 (stating that there must be some factual evidence that the employer has some basis for suspecting that a certain employee has such dangerous proclivities).

III.

Appellants argue that by not taking immediate disciplinary action against Oscar Stene when they learned of the abuse, respondent churches ratified Stene’s behavior. Appellants contend that the ratification of Oscar Stene’s behavior is sufficient to impose liability to respondents for the harm caused by the abuse.

Under appellants’ ratification theory, “[a]n employer can assume liability for the tortious conduct of its employee by approving and ratifying such conduct, irrespective [of] whether that conduct is intentional or negligent.” DeBose v. Bear Valley Church of Christ, 890 P.2d 214, 230 (Colo.App.1994), rev’ d on other grounds, 928 P.2d 1315 (Colo.1996). However, ratification is inapplicable here because “ratification has only been found in the context of an employer-employee relationship.... ” Powell v. City and County of Denver, 973 F.Supp. 1198, 1204 (D.Colo.1997). As discussed above, there is no employer-employee relationship between Oscar Stene and the respondent church entities.

IV.

Finally, respondent ELCA argues that notwithstanding the employment issues between Oscar Stene and respondent churches, the Establishment Clause and the Religious Freedom Clause bar subject matter jurisdiction over appellants’ claims because resolving appellants’ claims would require this court to become impermissibly entangled with religion. We disagree. Subject-matter jurisdiction is a question of law reviewed de novo. Odenthal v. Minn. Conference of Seventh-Day Adventists, 649 N.W.2d 426, 434 (Minn.2002).

“Whether a governmental regulation creates excessive entanglement usually depends on the character and purpose of the institution involved, the nature of the intrusion into religious administration, and the resulting relationship between the government and the religious authority.” Mrozka v. Archdiocese of St. Paul and Minneapolis, 482 N.W.2d 806, 811 (Minn.App.1992), review denied (Minn. May 24, 1992). “Excessive entanglement is, ultimately, a question of degree.” Black v. Snyder, 471 N.W.2d 715, 721 (Minn.App.1991), review denied (Minn. Aug. 29, 1991). Conduct that resulted in external and secular harm is not protected by the First and Fourteenth Amendments. Mrozka, 482 N.W.2d at 811.

Here, appellants’ claims arise out of standard tort law and require a determination of whether Oscar Stene was an employee of respondent churches and whether the abuse occurred within the scope of the alleged employment. These determinations do not require us to interpret doctrinal matters. Examination of these matters does not constitute excessive entanglement in doctrinal matters. We take judicial notice that clergy have, for years, been found tortiously liable (when the proof is there) for abuse of others, and on several occasions, the doctrine of re-spondeat superior brought in their employer churches for payment of damages because the record disclosed the necessary tie to the employer’s work place.

DECISION

The evidence demonstrates there was no employment relationship between Oscar Stene and respondent churches for purposes of respondeat superior. With no employment relationship, appellants’ claims against respondents for vicarious liability, negligent supervision, and ratification, fail.

The district court applied the law to undisputed facts and we find that summary judgment was appropriate.

Respondents were properly involved in the case and properly brought into court and do not have -“doctrinal immunity” under the First Amendment.

Affirmed.


source: Caselaw Access Project

license: Public Domain

text:
    Bob FINE, Respondent, v. Jim BERNSTEIN, Relator, State of Minnesota Office of Administrative Hearings, Respondent.
    No. A05-2393.
    Court of Appeals of Minnesota.
    Jan. 23, 2007.

      Bob Fine, Minneapolis, MN, pro se respondent.
    Alan W. Weinblatt, Jyotsna Asha Shar-ma, Luke M. Kuhl, Weinblatt & Gaylord, PLC, St. Paul, MN, for relator.
    Lori Swanson, Attorney General, Kenneth E. Raschke, Jr., Assistant Attorney General, St. Paul, MN, for respondent Office of Administrative Hearings.
    Considered and decided by RANDALL, Presiding Judge, HALBROOKS, Judge, and STONEBURNER, Judge.
   OPINION

RANDALL, Judge.

Respondent filed a complaint with the Minnesota Office of Administrative Hearings in response to campaign materials prepared and disseminated by relator. The complaint alleged violations of the Minnesota Fair Campaign Practices Act, specifically Minn.Stat. §§ 21 IB.04 and .06 (2004). The office of administrative héar-ings found relator in violation of section 21 IB.06 because of three statements included on a campaign flyer. Relator was assessed an $800 penalty. We affirm.

FACTS

Relator Jim Bernstein (“Bernstein”) was a candidate in the November 8, 2005 election for the Minneapolis Park and Recreation Board (“Park Board”) in the sixth park district. Respondent Bob Fine (“Fine”), the incumbent; was first elected to the Park Board in 1997 as an at-large park commissioner, and was re-elected in 2001. Fine has served as Park Board president since 2002. As president, Fine did not serve- on any Park Board committees.

During his campaign for election, Bernstein distributed flyers and published campaign advertisements. On October 12, 2005, Fine filed a complaint with the office of administrative hearings (“OAH”) against Bernstein, alleging that Bernstein violated the Minnesota Fair Campaign Practices Act, specifically Minn.Stat. §§ 211B.04 and .06 (2004), by preparing and disseminating campaign materials without a disclaimer and containing false statements. .

Bernstein’s flyer compared his positions to Fine’s positions on seven park-related issues. Fine first saw the flyer in October 2005, and subsequently spoke with people, including reporters, about what he considered to be false statements in the flyer. Fine did not distribute rebuttal materials or respond to the flyer with his own campaign materials, explaining that, “I feel it’s below me to talk about negative things, and I’m above that. I consider statements that are absolutely false about me to have to respond to those issues is below me.”

On October 14, 2005, an administrative law judge (“ALJ”) determined that Fine’s complaint set forth prima facie violations of Minn.Stat. §§ 211B.04 and .06. By order dated October 20, 2005, the ALJ found probable cause to believe that Bernstein violated Minn.Stat. §§ 211B.04 and .06 in certain regards, but not in all aspects alleged. The matter was subsequently set for an evidentiary hearing before a panel of three administrative law judges (the “panel”) pursuant to Minn.Stat. § 211B.35, subd. 1 (2004).

The evidentiary hearing was held on October 31 and November 2, 2005. On November 7, 2005, the panel issued its opinion, concluding that Bernstein’s newspaper advertisement and three statements on the flyer were not in violation of the Minnesota Fair Campaign Practices Act. The panel did find the following three statements in the flyer to be in violation of Minn.Stat. § 211B.06:

(1) More funding for speedy removal of trees infected by Dutch Elm disease and replant new trees? — Doesn’t Support;
(2) Provide superintendent with a $500,000 slush fund? — Yes!; and
(3) Fund and finish Lake of the Isles restoration? — Not a priority.

The OAH fined Bernstein $800 for the violations. Pursuant to Minn.Stat. § 211B.36, subd. 5 (2004), Bernstein appealed by certiorari to this court.

ISSUES
I. Did the OAH err in concluding that three statements in a campaign flyer violated Minn.Stat. § 21 IB.06 (2004)?
II. Does the OAH’s use of a penalty matrix constitute unpromulgated rulemaking in violation of the Minnesota Administrative Procedures Act?

ANALYSIS

I.

Agency decisions are presumed correct, and this court defers to an agency’s expertise and its special knowledge in the field of its technical training, education, and experience. Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977). An agency decision will be reversed only when it constitutes an error of law, when the findings are arbitrary and capricious, or when the findings are unsupported by substantial evidence. In re Hutchinson, 440 N.W.2d 171, 176 (Minn.App.1989), review denied (Minn. Aug. 9, 1989). Air agency’s conclusions are not arbitrary and capricious if a rational connection between the facts found and the choice made is articulated. In re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 277 (Minn.2001). Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Nat’l Audubon Soc’y v. Minn. Pollution Control Agency, 569 N.W.2d 211, 215 (Minn.App.1997), review denied (Minn. Dec. 16, 1997). On appeal, the appealing party bears the burden of establishing that the findings of the agency are unsupported by. the evidence in the record, considered in its entirety. Reserve Mining Co., 256 N.W.2d at 825.

In a hearing before an ALJ panel, the complainant bears the burden of proof, and a violation of Minn.Stat. § 211B.06 (2004), relating to false statements in campaign materials, must be proved by clear and convincing - evidence. Minn.Stat. § 211B.32, subd. 4 (2004). To prove that Bernstein violated Minn.Stat. § 211B.06, Fine needed to prove by clear and convincing evidence that the campaign materials distributed by Bernstein contained false statements, and either that Bernstein knew the statements to be false, or that he recklessly disregarded whether the statements were false.

The OAH determined that three statements included on Bernstein’s flyer violated Minn.Stat. § 211B.06, subd. 1. Bernstein argues that the OAH’s conclusion is based on erroneous findings that Bernstein made false statements and that the statements were made with actual malice.

MinmStat. § 211B.06, subd. 1 states:

A person is guilty of a gross misdemeanor who intentionally participates in the preparation, dissemination, or broadcast of paid political advertising or campaign material with respect to the personal or political character or acts of a candidate ... that is designed or tends to elect, injure, promote, or defeat a candidate for nomination or election to a public office ... that is false, and that the person knows is false or communicates to others with reckless disregard of whether it is false.

(Emphasis added.) ■ A violation of Minn. Stat. § 211B.06, subd. 1, requires a finding of both a false statement and actual malice or reckless disregard. Riley v. Jankowski, 713 N.W.2d 379, 399 (Minn.App.2006), review denied (Minn. July 19, 2006).

The OAH concluded that “[Fine] has shown by clear and convincing evidence that [Bernstein] violated Minn.Stat. § 211B.06, subd. 1, by preparing and disseminating campaign material that contained [three] false statements that [Bernstein] knew were false or communicated to others with reckless disregard of whether they were false.... ” The panel also found that “[t]he violations were multiple and were committed knowingly or with reckless disregard of the truth.”

A. Political Speech

Bernstein argues that his statements, made during an election campaign, criticizing his opponent, an elected public official, are completely protected by the First Amendment. The First Amendment to the United States Constitution provides in relevant part that, “Congress shall make no law ... abridging the freedom of speech, or of the press.... ” U.S. Const. amend. I. These First Amendment protections apply with equal force to the States. Alexander v. City of St. Paul, 303 Minn. 201, 204 n. 5, 227 N.W.2d 370, 372 n. 5 (1975).

The seminal case of N.Y. Times v. Sullivan highlighted our “profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open.... ” 376 U.S. 254, 270, 84 S.Ct. 710, 721, 11 L.Ed.2d 686 (1964). The First Amendment “ ‘has its fullest and most urgent application’ to speech uttered during a campaign for political office.” Eu v. San Francisco County Democratic Cent. Comm., 489 U.S. 214, 223, 109 S.Ct. 1013, 1020, 103 L.Ed.2d 271 (1989) (citing Monitor Patriot Co. v. Roy, 401 U.S. 265, 272, 91 S.Ct. 621, 625, 28 L.Ed.2d 35 (1971)). “The ‘election campaign is a means of disseminating ideas as well as attaining political office.’ ” Id. (citing Ill. Bd. of Elections v. Socialist Workers Party, 440 U.S. 173, 186, 99 S.Ct. 983, 991, 59 L.Ed.2d 230 (1979)). During the pre-election campaign period, the public has a right to know an incumbent’s previous actions and the details of programs proposed by candidates to be enacted into law and administered. Pledges by candidates to follow certain paths are not only expected, but desirable, so that voters may choose between proposed agendas that affect the public. See N.Y. Times, 376 U.S. at 269, 84 S.Ct. at 720 (stating that constitutional protections for speech and press were “fashioned to assure unfettered interchange of ideas for bringing about political and social changes desired by the people”). “[I]n order to protect a vigorous marketplace in political ideas and contentions, we ought to accept the proposition that those who place themselves in a political arena must accept a degree of derogation that others need not.” Ollman v. Evans, 750 F.2d 970, 1002 (D.C.Cir.1984) (Bork, J., concurring). Statements criticizing official conduct do not lose constitutional protection merely because they are criticisms and effectively diminish an official’s reputation. See N.Y. Times, 376 U.S. at 279, 84 S.Ct. at 725.

Bernstein is correct in his assertion that political speech receives greater protection under the First Amendment; however, the liberty of speech is not an absolute right. Near v. Minn., 283 U.S. 697, 708, 51 S.Ct. 625, 628, 75 L.Ed. 1357 (1931). A state’s police power permits a state to punish an abuse of the freedom of speech. Id; see Stromberg v. People of Cal., 283 U.S. 359, 368, 51 S.Ct. 532, 535, 75 L.Ed. 1117 (1931). The Supreme Court in Gitlow v. New York stated:

It is a fundamental principle, long established, that the freedom of speech ... which is secured by the Constitution, does not confer an absolute right to speak or publish, without responsibility, whatever one may choose, or an unrestricted and unbridled license that gives immunity for every possible use of language and prevents the punishment of those who abuse this freedom.

268 U.S. 652, 666, 45 S.Ct. 625, 630, 69 L.Ed. 1138 (1925). Political speech is protected under the First Amendment, but, this protection is not absolute. Simply because Bernstein’s assertions are political statements made during an election campaign does not shield him from a state’s ability to punish an abuse of the liberty of speech.

B. Opinion or Fact

Bernstein argues that the OAH erred in categorizing his statements as actionable statements of fact rather than as protected statements of opinion. The First Amendment protects statements of opinion. Hunt v. Univ. of Minn., 465 N.W.2d 88, 93 (Minn.App.1991). This protection exists because (supposedly) there is no such thing as a false opinion. See Gertz v. Robert Welch, Inc., 418 U.S. 323, 339-40, 94 S.Ct. 2997, 3007, 41 L.Ed.2d 789 (1974). Four factors are used to distinguish a protected statement of opinion from an actionable statement of fact: (1) a statement’s precision and specificity; (2) a statement’s verifiability; (3) the social and literary context in which the statement was made; and (4) a statement’s public context. Janklow v. Newsweek, Inc., 788 F.2d 1300, 1302-03 (8th Cir.1986).

The statement in question is not necessarily the literal phrase published but rather what a reasonable reader would have understood the author to have said: “Expressions of opinion, rhetoric, and figurative language are generally not actionable if, in context, the audience would understand the statement is not a representation of fact.” Jadwin v. Minneapolis Star & Tribune Co., 390 N.W.2d 437, 441 (Minn.App.1986). Determining whether a statement is an opinion or a fact is a question of law. Lund v. Chicago & Nw. Transp. Co., 467 N.W.2d 366, 368 (Minn.App.1991), review denied (Minn. Jun. 19, 1991). “In considering such questions of law, reviewing courts are not bound by the decision of the agency and need not defer to agency expertise.” St. Otto’s Home v. Minn. Dep’t of Human Servs., 437 N.W.2d 35, 39-40 (Minn.1989).

Throughout his brief, Bernstein relies upon Kennedy v. Voss, a Minnesota Supreme Court decision stating that the statute is “directed against the evil of making false statements of fact and not against criticism of a candidate or unfavorable deductions derived from the candidate’s conduct.” 304 N.W.2d 299, 300 (Minn.1981) (discussing predecessor statute, Minn.Stat. § 210A.04 (1980)). In Kennedy, a candidate used a fact — an incumbent’s “no” vote on a county budget — to infer that the incumbent did not support any of the individual items in the budget. Id. The incumbent supported various items in the budget, however, voted “no” because the budget included an appropriation with which the incumbent disagreed. Id. at 299-300. The Minnesota Supreme Court held that the inferences, even though extreme and illogical, did not come within the purview of the statute. Id. at 300. The court pointed out that the public was adequately protected from the candidate’s extreme and illogical inferences by the incumbent’s rebuttal flyers. Id. The campaign process provided voters with an opportunity to judge for themselves what inferences could properly be drawn from the candidates’ records. Id.

Bernstein argues that his statements, similar to those in Kennedy, are his unfavorable deductions, based on Fine’s public record of action and inaction. Contrary to Bernstein’s assertion, we conclude that Kennedy differs from the present case in several respects. First, the predecessor statute used in Kennedy required only a finding of a false statement. 304 N.W.2d at 300. Second, the appellant in Kennedy was seeking to void the election results. Id. Finally, Fine never engaged in a blanket vote against any of the programs commented on in Bernstein’s statements. Instead, Park Board records, which Bernstein admittedly reviewed, indicated Fine’s support of Dutch Elm disease funding and the Lake-of-the-Isles project. Park Board records also indicated the falsity of • Bernstein’s statement regarding the “slush fund.”

1. “More funding for speedy removal of trees infected by Dutch Elm disease and replant new trees? — Doesn’t Support”

Bernstein argues that this statement is neither precise nor verifiable since the degree of one’s support is neither quantifiable nor provable. Additionally, Bernstein argues that his statement appeared in a campaign flyer, where criticisms are expected. The OAH, however, simply found the statement to be a false fact. We agree.

Consistent with Bernstein’s argument, the statement is neither precise nor specific, as ordinary minds could disagree with the meaning of “more.” However, evidence established that Fine fully supported $800,000 in increased funding in 2004 and an additional $1 million in 2005 for the Park Board’s project. These were verifiable facts in Park Board records. Bernstein testified to reviewing Park Board records, and claimed that “more funding” meant that Fine did not support “more” funding than the $1 million of additional funding recommended by Park Board staff. Bernstein’s purported meaning of “more” is not evident from the context, is disingenuous, and not likely to be the ordinary meaning attached to the statement by a reasonable person. A reasonable person would have read the statement and understood that Bernstein was referring to Fine’s support of “additional” funding, which is a fact that could be — and was — proven false because of Fine’s actual support of increased funding in both 2004 and 2005. Bernstein could have expressed an opinion about Fine’s overall support for tree removal projects, but his actual statement was properly characterized as an assertion of fact that was known to be false.

2. “Provide Superintendent with a $500,000 slush fund? — Yes!”

Bernstein argues that this statement is an expression of opinion about the lack of adequate parameters or guidelines for spending. The OAH found the statement to be a false factual assertion, because the fund was not an undesignated fund and the superintendent was not authorized to spend $500,000 without supervision. We agree. The parties do not dispute that Fine supported the 2005 budget, which contained a provision for an “investment” or “innovation” fund. Sufficient information was available from the Park Board regarding the nature of the fund, including that Fine supported the 2005 budget, that the superintendent could only make expenditures of up to $50,000 without Park Board approval, and that the fund was never authorized. The OAH emphasized that the term “slush fund” carries a negative connotation to the reasonable person. “Today the phrase [slush fund] always carries connotations of moral impropriety, and sometimes of legal impropriety.” Bryan A. Garner, A Dictionary of Modem Legal Usage 813 (2d ed. 1995).

Again, Bernstein could have expressed an opinion about Fine’s support of discretionary funds, but a reasonable reader would understand the statement, in this context, to be a factual description of a particular fund and the fact is false. Fine did not support a “slush fund,” as a reasonable person understands that term.

3. “Fund and finish Lake of the Isles restoration? — Not a Priority”

Bernstein argues that whether something is a “priority” is a matter of opinion and unverifiable. The OAH found this to be a false statement given evidence showing that the project had been one of the Park Board’s highest priorities for several years. We agree.

In general, “priority” can be a subjective term. Here, the Park Board utilized a priority ranking scheme for projects. It was documented in Park Board records that the Lake-of-the-Isles project had always been an “A” priority project. In this context, “priority” has a specific factual meaning. The evidence illustrated that Fine voted in favor of the project receiving the highest priority level and, further, that he attempted to obtain additional funding through his membership on the Minneapolis Board of Estimate and Taxation. These two facts are readily ascertainable from Park Board official records. The truth or falsity of the statement was demonstrable and verifiable. Bernstein’s assertion regarding Lake of the Isles constituted a distorted fact.

We understand Bernstein’s argument that “mere opinions” are protected. But in examining the statements and giving due deference to the credibility determinations made by the OAH, it was not unreasonable for the OAH to characterize the challenged statements as “facts.”

C. Actual Malice or Reckless Disregard
“Actual malice” is a term of art; it means that the defendant acted “with knowledge that [the publication] was false or with reckless disregard of whether it was false or not.” For example, as the Supreme Court has noted, a statement may have been made with actual malice if it “is fabricated by the defendant, is the product of his imagination, ... is based wholly on an unverified anonymous telephone call [or if] the publisher’s allegations are so inherently improbable that only a reckless man would have put them in circulation.” Moreover, “actual malice” does not mean that the defendant acted with ill will or spite.
Notably, the standard for “reckless disregard for truth” is a subjective one; reckless disregard does not mean “recklessness” in the ordinary sense of extreme negligence. Instead, “reckless disregard” requires that a defendant make a statement while subjectively believing that the statement is probably false.

Chafoulias v. Peterson, 668 N.W.2d 642, 654-55 (Minn.2003) (citations and quotations omitted). A complaint filed with the OAH alleging a violation of Minn.Stat. § 211B.06, subd. 1, is not a defamation action; however, the plain language of the statute includes the definition of actual malice set forth in Chafoulias. Riley, 713 N.W.2d at 399. Therefore, in Riley, this court deemed it appropriate to analyze actual malice similarly to a defamation case. Id. When determining whether Bernstein acted with actual malice, the issue was whether Bernstein knew that the statement was false or made the statement with reckless disregard as to whether or not it was false.

1. “More funding for speedy removal of trees infected by Dutch Elm disease and replant new trees? — Doesn’t Support”

During 2004, the Park Board incurred unexpectedly high costs associated with the removal of trees affected by Dutch Elm disease. To remedy the problem, the Park Board approved $800,000 of additional funding in 2004 and increased funding by $1 million in 2005. Fine supported and voted in favor of both increases.

Having reviewed Park Board records, Bernstein testified that he could not find any evidence of Fine supporting additional funds above the amounts recommended by Park Board staff. Bernstein apparently planned to propose funding above Park Board staff recommendations. The statement in Bernstein’s campaign literature did not make this distinction. Instead, the flyer stated that Fine doesn’t support more funding (period!), when, in fact, Fine actually had supported additional funding in both 2004 and 2005. Bernstein knew that his statement was false or made the statement with reckless disregard of whether or not it was false.

2. “Provide Superintendent with a $500,000 slush fund? — Yes!”

At the end of 2004, Park Board staff presented a recommended budget for 2005. The recommended budget contained a $500,000' “investment” or “innovation” fund for capital improvement projects. The fund’s purpose was to provide the superintendent with the ability and authority to undertake projects with quick paybacks, i.e., projects that would save the Park Board money in the near future by way of decreased operating costs. The Park Board, including Fine, supported the recommended 2005 budget, with the inclusion of the investment fund. The investment fund, however, was never formally-voted upon, after being tabled by the administration and finance committee.

Bernstein testified to reviewing Park Board records regarding the investment fund and deciding to identify it as a “slush fund” in his campaign materials. Bernstein utilized this terminology because of his belief in the discretionary nature of the fund and the lack of accountability attached to spending the fund money. At trial, however, Bernstein acknowledged that the superintendent could only spend $50,000 per project from the fund.

Bernstein relied upon widely distributed literature published by Minneapolis Citizens for Park Board Reform, a citizens’ group advocating for a new Park Board, discussing the investment fund which Fine had made no effort to refute. However, Bernstein knew at the time he published his flyer that the proposal for the fund had been tabled and that the superintendent’s discretionary authority was limited to $50,000. Bernstein knew that his statement was false or made the statement with reckless disregard for whether or not it was false.

3. “Fund and finish Lake of the Isles restoration? — Not a Priority”

During the last five years, the Lake-of-the-Isles restoration project has been a “top priority” item for the Park Board before the state legislature. Fine testified to attending various neighborhood, legislative, and Park Board meetings focusing on this project. Fine also advocated for the project through his position on the Minneapolis Board of Estimate and Taxation.

Bernstein consulted Park Board online records, following which he concluded that because Fine had not “proposed any additional funding to fix Lake of the Isles,” the project was “not a priority” for Fine. The ALJ panel concluded that Bernstein engaged in “faulty logic,” because the project had, over several years, held the Park Board’s highest legislative priority. If Bernstein reviewed Park Board records, as he claims, the priority ranking of the project was obvious. Bernstein acted with reckless disregard by publishing and disseminating this statement.

D. Arbitrary and Capricious

Bernstein argues that the OAH’s decision was arbitrary and capricious. An agency’s ruling is arbitrary and capricious if it

(a) relied on factors not intended by the legislature; (b) entirely failed to consider an important aspect of the problem; (c) offered an explanation that runs counter to the evidence; or (d) the decision is so implausible that it could not be explained as a difference in view or the result of the agency’s expertise.

White v. Minn. Dep’t of Natural Res., 567 N.W.2d 724, 730 (Minn.App.1997) (quotation omitted), review denied (Minn. Oct. 31, 1997). “[T]he agency’s conclusions are not arbitrary and capricious so long as a rational connection between the facts found and the choice made has been articulated.” Blue Cross & Blue Shield, 624 N.W.2d at 277 (quotation omitted).

Bernstein argues that the OAH decision was inconsistent, “attempt[ing] to issue Solomonic ‘divide the baby in half decisions, finding some statements to be in violation and others not....” We find the decision neither arbitrary nor capricious. As previously discussed, the OAH based its findings of actual malice or reckless disregard on Bernstein’s testimony that he read and reviewed Park Board records. Adequate relevant evidence is in the record to support the OAH decision.

II.

On writ of certiorari, we determine whether the agency violated the constitution, exceeded its authority, engaged in unlawful procedure, erred as a matter of law, issued a decision unsupported by substantial evidence, or acted arbitrarily or capriciously. Minn.Stat. § 14.69 (2004). A reviewing court defers to the agency’s expertise in fact finding, and will affirm the agency’s decision if it is lawful and reasonable. Reserve Mining Co., 256 N.W.2d at 824-26. When reviewing questions of law, however, we are not bound by the agency’s decision and need not defer to the agency’s expertise. No Power Line, Inc. v. Minnesota Envtl. Quality Council, 262 N.W.2d 312, 320 (Minn.1977). Bernstein argues that the penalty matrix is a set of rules that have not undergone the requisite public notice and comment period required by the Minnesota Administrative Procedures Act.

An ALJ panel finding violations of Minnesota Statute chapter 211A or 211B may impose sanctions ranging from issuance of a reprimand to imposition of a maximum civil penalty of $5,000. Minn. Stat. § 211B.35, subd. 2 (2004). The OAH developed the penalty matrix as guidance “in order to assure some consistency from one case to the next.” (http://unm.oah. state.mn.us/faircampaign/Campaign PenaltyMatrixMm). The OAH recognizes that “[e]very case is different, and each penalty will be selected to reflect the specific facts of the case.” Id. Since the OAH has only recently been charged with the responsibility of adjudicating some charges of illegal political campaign activity, it developed the matrix “[u]ntil the office gains more experience that will permit it to refine the penalty matrix.... The Office anticipates that additional experience will cause it to change the matrix.” Id.

The matrix provides a range of penalties for infractions based on the gravity and willfulness of the violation found. Id. The matrix is in conformity with MinmStat. § 14.045, subd. 3(a) (2004), which provides:

3. Factors, (a) If a statute or rule gives an agency discretion over the amount of a fine, the agency must take the following factors into account in determining the amount of the fine:
(1) the willfulness of the violation;
(2) the gravity of the violation, including damage to humans, animals, and the natural resources of the state;
(3) the history of past violations;
(4) the number of violations;
(5) the economic benefit gained by the person by allowing or committing the violation; and
(6) other factors that justice may require.

The OAH argues in the alternative, if the matrix is considered an unpromulgated rule, that Bernstein’s penalty still should not be vacated. The penalty imposed upon Bernstein, $800, was within, and at the low end, of the statutorily provided range. The OAH found that Bernstein’s “violations were multiple, done knowingly or with reckless disregard of the truth.” Since the factors used to determine Bernstein’s penalty, willfulness and gravity of the violation, are consistent with those mandated in Minn.Stat. § 14.045, subd. 3(a), we conclude the penalty is valid.

Bernstein argues that the penalty matrix is unconstitutional because it “levies penalties for ‘negligent,’ ‘ill-advised,’ ‘ill-considered,’ and ‘inadvertent’ violations.” But a violation of Minn.Stat. § 211B.06 requires a showing of a false statement and actual malice or reckless disregard. Bernstein was not fined on the basis of any statement found to be “negligent” or “inadvertent.” Reckless disregard requires a showing of more than negligence. Riley, 713 N.W.2d at 399.

The penalty assessed on Bernstein was within the statutorily prescribed limits of $0 to $5,000. The OAH’s use of the penalty matrix as guidance for consistency, coupled with the recognition that each case is fact specific, did not constitute de facto rulemaking.

DECISION

It was neither arbitrary nor capricious for the OAH to find that Bernstein acted with actual malice or reckless disregard by publishing and disseminating false factual statements. The finding of statutory violations is affirmed.

The use of a penalty matrix by the OAH did not constitute unpromulgated rulemak-ing. The penalty imposed was proper.

Affirmed.

      . It is unclear from his brief, but Bernstein does not appear to challenge the constitutionality of Minn.Stat. § 21 IB.06. Instead, Bernstein merely claims that his statements were protected under the First Amendment. The constitutionality of Minn.Stat. § 21 IB.06 has not been challenged; therefore, the issue is not addressed here.

      . The Park Board’s priority ranking system is as follows: “A" (top priority); "B” (secondary priority); and "E" (monitor and assist efforts of others).

      . Bernstein, in a reply brief, seeks to limit the issues on appeal to those raised in his petition for writ of certiorari and moves to strike portions of Find's brief that raise new issues. In his brief, Fine discusses three statements found by the OAH not to be in violation of Minn.Stat. § 21 IB.06, and the issue of section 211B.04, presence of a disclaimer. Fine does not fully brief these matters and, for the most part, raises these remarks as comparisons in his discussion of the issues before the court. Fine failed to file a notice of review pursuant to Minn. R. Civ.App. P. 106. (“A respondent may obtain review of a judgment or order entered in the same action which may adversely affect respondent by filing a notice of review with the clerk of the appellate courts.”). Since Fine failed to file a notice of review, only the issues raised by relator are before this court.

      . The campaign matrix is not set out in chapter 14. The matrix is available at the OAH website (http://www.oah.state.mn.us/ faircampaign/CampaignPenaltyMatrix.htm).

      . 2004 Minn. Laws ch. 277, § 7, at 1167 (enacting Minn.Stat. § 21 IB.32, subd. 1 Administrative Remedy; Exhaustion. "A complaint alleging a violation of chapter 211A or 21 IB must be filed with the office. The complaint must be finally disposed of by the office before the alleged violation may be prosecuted by a county attorney.”).


author: PER CURIAM. VANDE WALLE, Chief Justice,

text:
    2007 ND 8
    In the Matter of the DISCIPLINARY ACTION AGAINST Eugene F. BURESH, a Person admitted to the Bar of the State of North Dakota Disciplinary Board of the Supreme Court of the State of North Dakota, Petitioner, v. Eugene F. Buresh, Respondent.
    No. 20060230.
    Supreme Court of North Dakota.
    Jan. 16, 2007.

      Brent J. Edison, Assistant Disciplinary Counsel, Bismarck, N.D., for petitioner.
    James S. Hill, Zuger Kirmis & Smith, Bismarck, N.D., for respondent.
   DISBARMENT ORDERED

PER CURIAM.

[¶ 1] A hearing panel of the Disciplinary Board found that attorney Eugene F. Buresh violated Rules 1.15(a) and (b) of the North Dakota Rules of Professional Conduct, and Rule 1.2(A)(3) of the North Dakota Rules of Lawyer Discipline. The hearing panel recommended Buresh be suspended from the practice of law for eighteen months, make complete restitution to Jennifer Jacobs, and pay the costs and expenses associated with the disciplinary proceeding. Buresh argues his suspension should be for six months. Disciplinary counsel argues for disbarment. We decline to adopt the hearing panel’s eighteen-month suspension recommendation. Instead, we order Buresh disbarred from the practice of law, that he shall make complete restitution by paying Jennifer Jacobs $30,946.45, together with interest at 6 percent per annum from and after June 30, 2005, and that he pay the costs and expenses associated with the disciplinary proceeding of $3,126.00.

I

[¶ 2] Buresh was admitted to practice law in North Dakota on October 10, 1979. In 2004, Buresh was retained by Lynn Jacobs and her family to represent them in the sale of the family farm. When Buresh was retained, the parties agreed Buresh would be paid an hourly rate. Buresh was to take his payment from the sale proceeds. Buresh was a sole practitioner when he began representing the Jacobs family. However, the sale proceeds were not received until Buresh joined the law firm of Reichert & Herauf. The proceeds, however, were deposited in the Buresh Law Office Trust Account. As of June 28, 2005, the trust account contained $206,336.34. On June 30, 2005, Buresh wrote checks out of the trust account to pay the Jacobs family. Jacobs’ aunt received $103,168.17. Jacobs and her brother-in-law each received $20,633.64. Jacobs’ son received $30,950.44, and her daughter, Jennifer Jacobs,- received a check for $30,950.45.

[¶ 3] Acting under her daughter’s power of attorney, Jacobs presented the check from Buresh for payment on or around September 5, 2005. The check was returned for non-sufficient funds (“NSF”). After assurances of payment from Buresh, Jacobs presented the check a second time, but once again it was returned NSF. For the next two months, Jacobs attempted to obtain the money from Buresh. Buresh made various promises that the check had been mailed, but Jacobs never received it. Buresh was attempting to “buy time” until the trust account was replenished. On December 20, 2005, Jacobs filed a complaint with the Disciplinary Board. The Supreme Court ordered that Buresh’s license to practice law be suspended on an interim basis effective January 30, 2006. Buresh complied with this Court’s directives by terminating his practice, pending the disposition of the disciplinary proceedings.

[¶ 4] Between approximately February 8, 2005, and August 31, 2005, Buresh disposed of, used, or transferred approximately $28,500 of the trust account funds “to ward off a temporary financial office crisis.” On December 28, 2005, the Bu-resh Law Office Trust Account had a balance of $2,544.10, leaving the trust account short by $28,406.35 to pay the NSF check. Buresh used most of the remaining trust account balance to pay another client. Less than $50 remained in the trust account as of January 31, 2006.

[¶ 5] On July 20, 2006, Buresh’s disciplinary hearing was held in Dickinson. Buresh admitted violating Rules 1.15(a) and (b) of the North Dakota Rules of Professional Conduct. The hearing panel found Buresh violated N.D.R. Prof. Conduct 1.15(a) and (b), and N.D.R. Lawyer Discipl. 1.2(A)(3). The hearing panel rejected Buresh’s offer of a Consent to Discipline. The hearing panel recommended Buresh be suspended from the practice of law for eighteen months, make restitution of $30,946.45, together with interest to Jennifer Jacobs, with reinstatement conditional on payment being made, and pay the costs and expenses associated with the disciplinary proceeding. Neither party filed an objection to the hearing panel’s recommendation. This Court, on its own motion under N.D.R. Lawyer Discipl. 3.1(F)(2) directed the parties to submit briefs on the adequacy of the recommended sanction.

II

[¶ 6] Disciplinary proceedings are reviewed by this Court de novo on the record. Disciplinary Bd. v. Chinquist, 2006 ND 107, ¶ 7, 714 N.W.2d 469. Due weight is given to the findings, conclusions, and recommendations of the hearing panel, but this Court does not act as rubber stamp. Id. Disciplinary counsel has the burden of proving each alleged disciplinary rule violation by clear and convincing evidence. Id. Each disciplinary matter must be considered on its own facts to decide which sanction, if any, is appropriate. Id.

A

[¶ 7] Buresh admits he violated N.D.R. Prof. Conduct 1.15(a) and (b), which provided, before the August 1, 2006, amendments

(a) A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be deposited in one or more identifiable interest bearing trust accounts in accordance with the provisions of paragraph (d). Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer in the manner prescribed in paragraph (f).
(b) Upon receiving, in connection with a representation, funds or other property in which a client or third person has an interest, a lawyer shall promptly notify the client or third person. Except as stated in this rule or otherwise permitted by law or by agreement with the client, a lawyer shall promptly deliver to the client or third person any funds or other property that the client or third person is entitled to receive and, upon request by the client or third person, shall promptly render a full accounting regarding such property.

The hearing panel found Buresh violated N.D.R. Lawyer Discipl. 1.2(A)(3), which provides:

A. Grounds for Discipline. A lawyer may be disciplined for the following misconduct:
(3) Engaging in conduct involving dishonesty, fraud, deceit or misrepresentation.

Under de novo review, we conclude the evidence clearly and convincingly establishes Buresh violated N.D.R. Prof. Conduct 1.15(a) and (b), and N.D.R. Lawyer Discipl. 1.2(A)(3).

B

[¶ 8] Disciplinary counsel argues disbarment is the proper sanction. Counsel contends disbarment is more appropriate than an eighteen-month suspension because Buresh has yet to pay Jennifer Jacobs; Jennifer Jacobs suffered a loss of over $30,000; and, Buresh was deceitful in his dealings with Lynn Jacobs. Buresh argues he should be given a shorter suspension, such as six months, so that he may return to the practice of law and make restitution to Jennifer Jacobs.

[¶ 9] The North Dakota Standards for Imposing Lawyer Sanctions determine the appropriate sanctions for violations of the Rules of Professional Conduct. Chinquist, 2006 ND 107, ¶ 21, 714 N.W.2d 469. In North Dakota, sanctions for lawyer misconduct include ■ disbarment, suspension, reprimand, admonition, and probation. Id. When deciding a sanction, a court considers the duty that was violated; the lawyer’s mental state at the time; potential or actual injuries caused by the lawyer’s misconduct; and, any aggravating or miti-. gating factors. N.D. Stds. Imposing Lawyer Sanctions 3.0.

[¶ 10] “Disbarment is generally appropriate when a lawyer knowingly converts client property and causes injury or potential injury to' a client;” “when a lawyer knowingly deceives a client with the intent to benefit the lawyer or another, and causes serious injury or potential serious injury to a client;” and, when “a lawyer engages in serious conduct a necessary element of which includes intentional interference with the administration of justice, false swearing, misrepresentation, fraud, extortion, misappropriation, or theft.” N.D. Stds. Imposing Lawyer Sanctions 4.11, 4.61, and 5.11(a). Rules 4.11 and 5.11, N.D. Stds. Imposing Lawyer Sanctions, allow disbarment for one instance of stealing from a client or lying to a client for the lawyer’s benefit. Disciplinary Bd. v. Rau, 533 N.W.2d 691, 695 (N.D.1995).

[¶ 11] “A lawyer’s conversion of- a client’s funds to his own use is impossible to condone and is one of the least excusable acts of misconduct for which a lawyer can be disciplined.” Disciplinary Bd. v. Dosch, 527 N.W.2d 270, 273 (N.D.1995). Buresh converted Jennifer Jacobs’ money to pay for his personal and office expenses. This caused injury to Jennifer Jacobs and she has yet to receive the substantial amount of money she is owed. Buresh repeatedly and knowingly deceived Jacobs into believing she would receive the money, so that he could buy himself time to replenish the trust account. By repeatedly and knowingly lying to Jacobs, Buresh misrepresented his ability and intent to pay.

[¶ 12] Aggravating factors to consider in a disciplinary matter include a lawyer’s prior disciplinary offenses; dishonest or selfish motive; a pattern of misconduct; multiple offenses; and, the lawyer’s substantial experience in the law. N.D. Stds. Imposing Lawyer Sanctions 9.22. Mitigating factors include the lack of a prior disciplinary record; no dishonest or selfish motive; personal or emotional problems; a good faith effort to make restitution or to rectify the consequences of the misconduct; and, the lawyer’s character or reputation. N.D. Stds. Imposing Lawyer Sanctions 9.32.

[¶ 13] Buresh, to date, has failed to pay Jennifer Jacobs the money he owes her. Buresh blatantly and repeatedly lied to Jacobs when she exerted her right to ask about the status of the check he had promised and was required to produce. Bu-resh’s misconduct involved a large sum of money. With twenty-six years of experience practicing law, Buresh had substantial experience in the law. Buresh’s mitigating factors include his lack of a prior disciplinary record and his character and reputation. Buresh’s aggravating factors outweigh his mitigating factors and, therefore, make disbarment the appropriate sanction.

[¶ 14] Disciplinary counsel argues that disbarment is appropriate for Buresh because he committed a criminal act. “A lawyer may be disciplined for ... [c]ommitting a criminal act that reflects adversely on the lawyer’s honesty, trustworthiness, or fitness as a lawyer.” N.D.R. Lawyer Discipl. 1.2(A)(2). • An individual is guilty of misapplying entrusted property if the individual disposes of, uses, or transfers any interest in property that has been entrusted to the individual as a fiduciary in a manner that the individual knows is not authorized and that the individual knows to involve a risk of loss or detriment to the property owner. N.D.C.C. § 12.1-23-07. Buresh has not been charged with the crime of misapplication of entrusted property. However, “[a] criminal conviction is not a condition precedent to a discipline proceeding when the facts themselves warrant discipline.” Disciplinary Bd. v. Kaiser, 484 N.W.2d 102, 108 (N.D.1992) (citation omitted). We have concluded that Buresh has committed misconduct and he may be disciplined because of his actions, even though he has not been charged with a crime under N.D.C.C. § 12.1-23-07.

Ill

[¶ 15] We accept the hearing panel’s finding that Buresh clearly and convincingly violated N.D.R. Prof. Conduct 1.15(a) and (b), and N.D.R. Lawyer Discipl. 1.2(A)(3). We order Buresh disbarred from the practice of law, that he shall make complete restitution for the NSF check by paying Jennifer Jacobs $30,946.45, together with interest at 6 percent per annum from and after June 30, 2005, and that he pay the costs and expenses associated with the disciplinary-proceeding of $3,126.00.

[¶ 16] BENNY A. GRAFF, S.J., and MARY MUEHLEN MARING, DANIEL J. CROTHERS, and DALE V. SANDSTROM, JJ., concur.

[¶ 17] The Honorable BENNY A. GRAFF, S.J., sitting in place of EAPSNER, J„ disqualified.

VANDE WALLE, Chief Justice,

concurring and dissenting.

[¶ 18] I agree Buresh violated the North Dakota Rules of Professional Conduct and the North Dakota Rules of Lawyer Discipline noted in the majority opinion. However I would follow the Hearing Panel’s recommendation of an 18-month suspension.

[¶ 19] The term “disbarment” may carry a tone of finality. In reality, where disbarment is not permanent, and I do not understand the majority opinion to permanently disbar Buresh, the difference between disbarment and suspension is essentially a factor of time rather than one of finality. Thus, N.D. Stds. Imposing Lawyer Sanctions 2.1 provides:

Disbarment. Disbarment terminates the individual’s status as a lawyer. Where disbarment is not permanent, procedures should be established for a lawyer who has been disbarred to apply for readmission, provided that:
(1) no application should be considered for five years from , the effective date of disbarment; and
(2) the petitioner must show by clear and convincing evidence:
(a) successful completion of the bar examination, and
(b) rehabilitation and fitness to practice law.

Compare these requirements with suspension as defined by Standard 2.2:

Suspension. Suspension is the removal of a lawyer from the practice of law for a specified minimum period of time. The time period prior to application for reinstatement should not be more than three years. When applicable, procedures should be established to allow a-suspended lawyer to apply for reinstatement, but a lawyer who has been suspended should not be permitted to return to practice until he has completed a reinstatement process demonstrating rehabilitation and fitness to practice law.

[¶ 20] Although not specified by the rule governing suspension, we have also required suspended lawyers to take all or a portion of the bar examination as part of the reinstatement process. See, e.g., In Re Reinstatement of Ellis, 2006 ND 194, 721 N.W.2d 693; Matter of Allen, 262 N.W.2d 25 (N.D.1978); Application of Christianson, 253 N.W.2d 410 (N.D.1977). The applicant who has been disbarred and the applicant who has been suspended must each demonstrate rehabilitation and fitness to practice law. Thus, when a suspended lawyer is required to take the bar examination as a condition of reinstatement, the difference between disbarment and suspension is a factor of time and the difference may be as little as the time between the maximum suspension of three years, when a suspended lawyer is eligible for reinstatement, and the minimum five years when a disbarred lawyer may be eligible for readmission.

[¶ 21] It is difficult to argue that Bu-resh should not be disbarred. While, as the majority notes, each case must be decided on its own merits, I nevertheless believe it is this Court’s responsibility to maintain some proportionality in the discipline imposed on wayward lawyers. In comparison, see, for example, this Court’s order in Disciplinary Action Against Kaiser, 484 N.W.2d 102 (N.D.1992) in which the Court decided that two episodes of testifying falsely under oath, which had a profound effect on a legal proceeding producing actual, serious, and long-lasting injuries, warranted a two-year suspension from the practice of law. There were mitigating and aggravating factors present in Kaiser and there are mitigating and aggravating factors present here.

[¶ 22] If disbarment is to be the ultimate discipline in each instance of misconduct as defined by N.D. Stds. Imposing Lawyer Sanctions 4.11, 4.61 and 5.11, there is no proportionality. But, those standards by their own terms are “generally” appropriate in the specified instances and do not require a lockstep application.

[¶ 23] I recognize, as the majority observes, that we must exercise our own judgment in these matters. But, as the majority also recognizes, we give due weight to the recommendations of the Hearing Panel. Because I believe the Hearing Panel, in arriving at its recommendation of 18 months suspension provided that proportionality, I would adopt the recommendations of the Panel with the addition that upon applying for reinstatement Buresh must furnish evidence of the successful completion of the Professional Responsibility Examination.

[¶ 24] Gerald W. Vande Walle, C.J.

      . Effective August 1, 2006, N.D.R. Prof. Conduct 1.15 was amended. As amended, Rule 1.15(a) reads:
      A lawyer shall hold property of clients or third persons that is in a lawyer’s possession in connection with a representation separate from the lawyer’s own property. Funds shall be deposited in one or more identifiable interest bearing trust accounts in accordance with the provisions of paragraph (f). Other property shall be identified as such and appropriately safeguarded. Complete records of such account funds and other property shall be kept by the lawyer in the manner prescribed in paragraph (h).
      Former Rule 1.15(b) is now Rule 1.15(d) after the August 1, 2006, amendments.