In the Matter of the Administrative Order Issued to Steven A. Hackbarth, individually, and dba Hackbarth Roofing.

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-1572

In the Matter of the Administrative Order Issued to Steven A. Hackbarth, individually,
and dba Hackbarth Roofing.

Filed May 7, 2018
Affirmed
Reyes, Judge

Minnesota Department of Labor and Industry
File No. 80-1902-33189

Scott L. Nokes, Glencoe Law Office, Glencoe, Minnesota (for relator Steven Hackbarth)

Lori Swanson, Attorney General, Christopher M. Kaisershot, Assistant Attorney General,
St. Paul, Minnesota (for respondent department)

Considered and decided by Jesson, Presid ing Judge; Schellhas, Judge; and Reyes,
Judge.
U N P U B L I S H E D O P I N I O N
REYES, Judge
In this certiorari appeal, relator challe nges the Minnesota Commissioner of Labor
and Industry’s (the commissioner) order gr anting summary disposition to respondent
Minnesota Department of Labor and Industry (the department) based on relator’s violation
of a previously imposed 2010 consent order. We affirm.

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FACTS
Relator Steven A. Hackbarth owned a nd operated Hackbarth Roofing from 1996
until the department revoked his license pursuant to a c onsent order dated May 21, 2010
(the consent order), which prohibited relator and his company from either acting or holding
themselves out as residential- building contractors, residential remodelers, and residential
roofers. The consent order st ayed an $8,000 civ il penalty, jointly and severally, on the
condition that relator and his company comply with the order and all other laws and rules
enforced by the department.
Richard Hackbarth, relator’s uncle, owne d Richard Hackbarth Construction, Inc.,
d/b/a R.H.H., Inc. (R.H.H.), which was license d as a residential-building contractor from
2009 until its license expired on March 31, 2013. In November 2012, D.M. entered into a
$26,000 residential remodeling contract with R.H.H. at relator’s suggestion. D.M. entered
into a separate oral contract with relator for the application of spray-foam insulation. From
November 2012 until June 2013 , relator independently performed substantial remodeling
work on D.M.’s home under separate oral agr eements that were outsi de the scope of the
contract between D.M. and R.H.H.
In July 2013, relator filed a $40,500 mechan ic’s lien against D.M.’s property for his
work under the oral agreements, and R.H.H. filed a $21,400 mechanic’s lien based on its
written contract with D.M. Relator claimed th at his lien was for work that he performed
“for [D.M.] when [D.M.] was acting as his ow n general contractor for the work that was
not in the scope of the work as stated in th e [D.M.] loan documents,” for an hourly wage
of $50.
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In December 2013, relator sued D.M. in a mechanic’s-lien foreclosure action. D.M.
moved for summary judgment. In response, relator argued that disputed facts precluded
summary judgment and provided his sworn affidavit to the district court detailing work he
had completed outside of the R.H.H. contract. The district court denied D.M.’s summary-
judgment motion based, in part, on two fact questions: (1) whether D.M.’s involvement in
the project exempted relator from providing a pre-lien notice and (2) whether D.M. had
hired relator as a construction worker or a residential-building contractor.
D.M. then filed a complaint against relator with the department concerning relator’s
compliance with the 2010 consent order. The department investigated the complaint and,
in 2015, issued an administrative order ag ainst relator for performing activities as an
unlicensed residential-building contractor, unlicensed residential remodeler, or unlicensed
residential roofer in violation of the 2010 consent order and applicable statutory-licensing
requirements. The order lifted the stay on the 2010 consent orde r’s $8,000 penalty and
imposed an additional $17,000 penalty, later reduced to $7,000, for a total administrative
penalty of $15,000. The department commenced the present action in February 2016
following relator’s timely request for a he aring. The administrative-law judge (ALJ)
continued the hearing date several times to permit a final resolution of the underlying
litigation between relator and D.M.
The district court held a bench trial on May 31 and August 6, 2016. D.M. argued
that relator’s lien was invalid as a matter of law because relator knowingly engaged in
unlicensed residential-building-contractor activities. D.M. al so asserted that the consent
order prohibited relator from contracting with D.M. as he claimed he had. Relator deviated
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from his previous arguments, instead dema nding a $17,986 mechanic’s lien for the
insulation work only and abandoning the remaining balance of the lien he had filed against
D.M.’s property. But relator continued to assert that D.M. was the general contractor and
that he served only as an employee.
The district court rejected relator’s argumen ts that his work did not require licensure
and concluded that relator had acted as a residential-building contractor, in violation of the
2010 consent order, because he provided two or more specialized skills, as defined in Minn.
Stat. § 326B.802, subd. 15 ( 2016), and because he provided control over the direction of
the project. The district court invalidated the mechanic’s lien pur suant to Minn Stat.
§ 326B.845 (2016), but awarded relator an $8,270.15 judgment against D.M. for relator’s
insulation work based on a contract theory.
Thereafter, the department moved for summary disposition affirming the 2015
administrative order, which relator oppose d. The ALJ issued a recommended order
applying collateral estoppel to the previously litigated issue of whether relator acted as a
residential-building contractor in violati on of the 2010 consent order and applicable
statutory-licensing requirements. The co mmissioner adopted the ALJ’s recommended
findings of fact, conclusions of law, and or der, and affirmed relato r’s $15,000 penalty.
This certiorari appeal follows.

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D E C I S I O N
I. The commissioner did not err in applyi ng collateral estoppel to preclude
relator from contesting the district court’s factual findings and legal
conclusions.

Relator argues that the commissioner erred in adopting the district court’s factual
findings and legal conclusions through its application of collateral estoppel, because relator
was a bona-fide employee exempt from the stat utory-licensing requirements. But, as
relator conceded at oral argument, the first three elements of collateral estoppel are met
here, and he challenges only the fourth, ar guing that he was not given a full and fair
opportunity to be heard on the bona-fide -employee issue during the district court
proceedings. We disagree.
The commissioner applied collateral estoppe l and granted summary disposition in
favor of the department. Summary dispositi on, the administrative-law equivalent of
summary judgment, is granted only when there are no genuine issues of material fact, and
the moving party is entitled to ju dgment as a matter of law. Pietsch v. Minn. Bd. of
Chiropractic Exam’rs, 683 N.W.2d 303, 306 (Minn. 2004); see Minn. R. 1400.5500(K)
(2017). “Where the doctrine of collateral estoppel precludes relitigation of an issue, there
is no issue of material fact, and summary judgment is proper.” Barth v. Stenwick , 761
N.W.2d 502, 508 (Minn. App. 2009).
“Whether collateral estoppel precludes litigation of an issue is a mixed question of
law and fact that we review de novo.” Hauschildt v. Beckingham, 686 N.W.2d 829, 837
(Minn. 2004) (citation omitted). Collateral estoppel has four requirements:
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1) [T]he issue must be identical to one in a prior adjudication;
2) there was a final judgment on the merits; 3) the estopped
party was a party or was in privity with a party to the prior
adjudication; and 4) the estopp ed party was given a full and
fair opportunity to be heard on the adjudicated issue.

Id. (quoting Care Inst., Inc.-Roseville v. County of Ramsey, 612 N.W.2d 443, 448 (Minn.
2000)).
The district court gave relator ample notic e that his violation of the consent order
needed to be litigated at tria l. When it denied D.M.’s summary-judgment motion, the
district court specifically stated:
Whether [relator] was employed as a construction worker or as
a contractor is a fact question. If he was acting as a
construction worker, he did not violate the Consent Order. If
he acted or held himself out as a residential building contractor,
remodeler or roofer, he did violate the Consent Order.

This fact issue was critical to the district court’s final decision because relator’s mechanic’s
lien against D.M.’s property was void if relator had violated the consent order. Minn. Stat.
§ 326B.845 (“An unlicensed person who know ingly violates sections 326B.802 to
326B.885 has no right to claim a lien under section 514.01 and the lien is void.”).
The district court also prov ided relator ample opportunity to be heard on the issue
of his violation of the consent order. The di strict court conducted a two-day bench trial,
heard testimony from five people, including relator, who was represented by counsel
during the entire proceeding.
Thereafter, the district court issued its fi ndings of fact, conclusions of law, and
order. It noted that relator “testified that he completed spray-foam insulation, roof repairs,
and electrical on his own and outs ide the scope of R.H.H.’s cont racting license.” It also
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found that relator “was clearl y the person providing the contro l over the direction of the
project, including making repair suggestions , and was acting as the contractor.” It
concluded that “[o]n the [D.M.] project, [rela tor] provided two or more specialized skills
of his own and outside the scope of R.H.H. In c. in violation of the Consent Order.” The
commissioner did not err in applying collatera l estoppel to the issue of whether relator
acted as a residential-building contractor, rather than an employee, and granting summary
disposition in favor of the department.
II. The commissioner did not abuse its discretion in declining to consider materials
outside of the evidentiary record.

Relator also argues that the commissioner abused his discretion when he declined
to consider material outside of the evidentiary record. We disagree.
“An appellate court may reverse or modify an administrative decision if substantial
rights of the petitioners have been prejudi ced by administrative findings, inferences,
conclusions or decisions that are unsupported by substantial evidence in view of the entire
record, or arbitrary and capricious . . . .” In re Excess Surplus Status of Blue Cross & Blue
Shield of Minn., 624 N.W.2d 264, 277 (Minn. 2001) (citation omitted).
Relator submitted to the commissioner a 20 13 W-4 dated in 2017, as well as two
checks issued in satisfaction of the district court’s judgment, to demonstrate that he was a
bona-fide employee. It is unclear whether th e commissioner considered this evidence in
making his decision because his order does not address it.
Had the commissioner specifically declined to consider such evidence, it would not
have been an abuse of his discretion. The plain language of Minn. Stat. § 14.61 states that
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“the officials of the agency who are to render the final decision shall not be made
until . . . an opportunity has been afforded to each part adversely affected to file exceptions
and present argument” to the officials who are to render the decision. Minn. Stat. § 14.61,
subd. 1 (2016). An exception is a “formal objection to a court’s ruling by a party who
wants to preserve an overruled objecti on or rejected proffer for appeal.” Black’s Law
Dictionary 644 (9th ed. 2009). And an argument is a “statement that attempts to persuade;
esp., the remarks of counse l in analyzing and pointing out or repudiating a desired
inference, for the assistance of the decision-maker.” Id. at 121. It is clear that the additional
evidence proffered by relator is neither an exception nor an argument.
In addition, as the department correctly points out, relator relies on this same
evidence on appeal. In an informal letter, relator asked this court to supplement the record
pursuant to Minn. Stat. § 14.67 (2016). This court rejected his request and directed him to
file a formal motion in compliance with Minn. R. Civ. App. P. 127. Relator failed to do
so, and we therefore do not consider such evidence.
Affirmed.