This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
In the Matter of the
Business Relocation Claims by Walser Auto Sales, Inc.,
d/b/a Walser Buick/Isuzu, et al.
City of Richfield Housing and Redevelopment Authority
File No. 1-6040-15503-3
Kirk Schnitker, Jon W. Morphew, Schnitker & Associates, P.A., 2300 Central Avenue Northeast, Minneapolis MN 55418 (for relator)
James J. Thomson, Robert J.V. Vose, Kennedy & Graven, Chartered, 470 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402 (for respondent)
Considered and decided by Randall, Presiding Judge; Minge, Judge; and Wright, Judge.
Appellants Walser Auto Sales, Inc., d/b/a Walser Buick/Isuzu (WBI) and Motorwerks, Inc. d/b/a Motorwerks BMW (BMW) challenge the denial by an administrative law judge (ALJ) of certain claims for reimbursement of relocation expenses and other decisions. Because the architectural fees associated with WBI’s construction and design of its new dealership involved physical changes to the new facility, the ALJ properly determined that the fees were reestablishment costs. Because the ALJ did not act arbitrarily or unreasonably in determining that internal employees’ pre-move planning did not constitute professional planning services, that employee work is not a reimbursable relocation expense. The ALJ did not abuse his discretion in refusing to admit interrogatories into evidence and did not act arbitrarily or capriciously by closing the record. We affirm.
In August 2000, the City of Richfield Housing and Redevelopment Authority (HRA) petitioned to acquire approximately seven acres of property along I-494, east of Penn Avenue in Richfield. The property had been leased to WBI and BMW and each operated car dealerships on the properties.
WBI and BMW were forced to relocate, and pursuant to Minnesota’s relocation assistance statute, Minn. Stat. § 117.52 (2004), HRA was required to compensate the dealerships for defined relocation costs. HRA retained Conworth, Inc. to provide relocation assistance and services to WBI and BMW. WBI and BMW submitted claims for expenses to Conworth. Conworth organized the claims, attached necessary documentation, and submitted the claims to the assistant director of HRA, who made the ultimate determinations of whether to accept or deny the claims and arranged for payment.
As part of Conworth’s relocation assistance, its representative met with WBI and BMW on March 23, 2001, to discuss the move. At this meeting, the Conworth representative stated that because WBI and BMW’s staff apparently were not professionals and because coverage of this planning expense was limited to professional assistance, the staff time spent planning the move would not be reimbursed. The Conworth representative also stated that for a final determination, WBI and BMW would have to submit a written request and HRA’s attorney would decide the issue. Appellants’ attorney followed up the conversation with a letter, which stated appellants believed that the time spent by their employees planning the move should be reimbursed and that the employees would keep logs of their time.
WBI hired an architectural firm to design and help construct its new automobile dealership facility. The architects designed the shell of the building, the parking lot, lighting, and also planned the layout of the dealership, which included space utilization and displays of the dealership vehicles and other merchandise.
On June 19, 2001, WBI and BMW vacated their sites and moved to their replacement sites. WBI and BMW each filed three sets of relocation expense claims; $424,156 has been paid to WBI and $277,509 to BMW.
In their third set of claims WBI and BMW submitted requests for reimbursement of their employees’ planning expenses totaling more than $200,000. But WBI and BMW did not keep actual records of the time spent by their employees planning the move and based the claims on a report prepared by a professional moving consultant. This report did not reconstruct the actual planning activities but estimated the number of hours that the professional moving consultant would have spent planning the move. WBI and BMW used this time estimate and the salaries paid to their employees to project their costs for planning the move. Also in the third set of claims, WBI submitted a request to be reimbursed for a portion of certain architectural fees. In April 2002, HRA rejected the claims for time spent by their employees planning the move and the architectural fees.
Appellants appealed HRA’s denial of its claims, and HRA arranged for an administrative hearing to review the denied claims. The ALJ found that the architectural costs in dispute involved physical changes to the real property at WBI’s new facility, concluded that the costs were not reimbursable move costs but were “reestablishment” costs, and awarded WBI $10,000, the maximum allowed by law for such costs. The ALJ further determined (1) that the time spent by WBI and BMW employees planning the move would not be reimbursed because the employees were not performing “professional services” as required by the regulation; (2) that even if such planning expenses could be reimbursed, WBI and BMW did not submit sufficient evidence of actual time spent to support reimbursement; and (3) that WBI and BMW could not be reimbursed for such planning on the basis of an estimate of what a professional moving planner would charge for such work.
Appellants and the HRA both petitioned the ALJ for reconsideration of the order and on March 18, 2004, the ALJ reopened the hearing record to permit testimony from an additional witness from the Federal Highway Administration regarding federal policy concerning payment for in-house costs incurred in planning a move. Difficulties were encountered in obtaining testimony from the federal employee. On April 13, 2004, HRA requested that the ALJ close the record, after appellants were unable to produce the federal employee as a witness. On April 16, 2004, appellants appealed to this court by writ of certiorari. On April 21, 2004, the ALJ issued an order closing the record. On May 18, 2004, appellants filed an appeal from the April 21 order along with a motion to consolidate both appeals. This court granted appellant’s motion and the instant proceeding is the result of the consolidated appeals.
A reviewing court may reverse or modify an administrative agency’s decision if the decision is arbitrary and capricious or unsupported by substantial evidence in view of the entire record. In Re Excess Surplus Status of Blue Cross & Blue Shield of Minn., 624 N.W.2d 264, 277 (Minn. 2001). When reviewing agency actions, the court must exercise judicial restraint to avoid substituting its judgment for that of the agency. In re Denial of Eller Media Co. Applications for Outdoor Adver. Device Permits, 664 N.W.2d 1, 7 (Minn. 2003). This court defers “to [the] agency’s conclusions regarding conflicts in testimony, the weight given to expert testimony and the inferences to be drawn from testimony.” Blue Cross & Blue Shield, 624 N.W.2d at 278. But this court reviews independently an agency’s decisions on questions of law. St. Otto’s Home v. Minn. Dep’t of Human Servs., 437 N.W.2d 35, 39-40 (Minn. 1989).
The first issue is whether the ALJ erred in determining that WBI’s claim for architectural expenses was a reestablishment cost and therefore capped at $10,000.
Payment of relocation expenses is provided for by a combination of state and federal statutes and regulations. Minnesota’s relocation assistance statute makes public funds available to reimburse relocation costs incurred by households and businesses displaced by public acquisitions of property where there is no federal financial participation. Minn. Stat. § 117.52 (2004). This statute requires the acquiring authority to provide relocation assistance in accordance with federal regulations promulgated to provide similar relief. Id. The federal legislation enabling such regulations is codified as 42 U.S.C. §§ 4621, 4622 (2000). Section 4622 provides that a displacing agency shall provide for the payment to the displaced person of: “1) actual reasonable expenses in moving himself, his family, business, farm operation, or other personal property; . . . and 4) actual reasonable expenses necessary to reestablish a displaced farm, nonprofit organization, or small business at its new site, but not to exceed $10,000.” The federal regulations implementing this statute are found at 49 C.F.R. §§ 24.1 to .603 (2005).
Subject to two exceptions, the regulations state that “[a] displaced person is not entitled to payment for: . . . [p]hysical changes to the real property at the replacement location.” 49 C.F.R. § 24.301(h)(10) (formerly 49 C.F.R. § 24.305(j)). The two exceptions are for (1) modifications necessary for the reinstallation of machinery; and (2) “[m]odifications to the replacement property to accommodate the business operation or make replacement structures suitable for conducting the business.” 49 C.F.R. §§ 24.301(g)(3) (formerly 49 C.F.R. § 24.303(a)(3)), .304(a)(2) (unchanged). If the claim is determined to fall into the first category relating to the reinstallation of machinery, then the cost of the related architectural services is fully recoverable as a moving expense. But if the claim is for architectural services for designing a modification to the replacement property, then the architectural expense is considered a reestablishment cost and reimbursement is limited to $10,000. 49 C.F.R. §24.304 (unchanged).
WBI sought reimbursement of $70,000 of architectural services based on an invoice from the firm which it hired to help design the structure and layout of its new dealership. In its invoice, the architectural firm attempted to separate the fees relating to the installation and display of its personal property from costs associated with general design of the new facility. Also, the president of the architectural firm testified that the invoice was based on planning and designs for incorporating WBI’s personal property in the new building. The ALJ found that this was actually the second invoice prepared by the firm and that the initial invoice did not break out fees in this manner. In testimony the president of the architectural firm acknowledged that all of the services covered by the invoice were for real estate improvements. The ALJ found that the invoice was for modifications of the new facility including the design of the parking lot, lighting, and display layout. The ALJ concluded that these services were “modifications to the replacement property,” not for installing relocated property and awarded $10,000.
WBI also argues that it should be fully reimbursed because the architectural fees were reasonable and necessary moving expenses. This court defers “to [the] agency’s conclusions regarding conflicts in testimony, the weight given to expert testimony and the inferences to be drawn from testimony.” Blue Cross & Blue Shield, 624 N.W.2d at 278. While WBI is correct that the specifically identified moving expenses listed in the regulations are not exclusive, nonetheless the federal regulations, which are a guide in interpretation of the Minnesota law, specifically exclude certain moving expenses, including those involving physical changes to the real property at the replacement location. See 49 C.F.R. § 24.301(g), (h) (providing list of reimbursable moving expenses, catchall provisions, and ineligible moving expenses) (formerly 49 C.F.R. § 24.303(a), .305). The language of the regulation excluding expenses related to changes in the real property replacement location is clear and unambiguous and WBI does not address the fact that the ALJ based his decision on this regulation. The conclusion of the ALJ that the architectural work was for modification of the new facility is supported by substantial evidence and is not arbitrary and capricious. Therefore, we affirm the ALJ’s determination that the architectural services are reestablishment costs and reimbursement to WBI is limited to the $10,000 already paid.
The second issue is whether the ALJ erred in determining that the time spent by WBI and BMW’s internal employees planning the move did not constitute professional services and therefore could not be reimbursed. Statutory construction is a question of law that we review de novo. See A.J. Chromy Constr. Co. v. Commercial Mech. Servs., Inc., 260 N.W.2d 579, 582 (Minn. 1977). An appellate court need not defer to an administrative decision on a question of law. St. Otto’s Home, 437 N.W.2d at 39-40.
WBI and BMW recognize that none of their internal employees are independent consultants who are professional move-planners. But WBI and BMW argue that the definition of professional move-planners should include in-house professionals and that their employees should be so viewed. The pertinent part of the regulation states:
(a) General. (1) Any owner-occupant or tenant who qualifies as a displaced person . . . who moves from a business, farm or nonprofit organization is entitled to payment of his or her actual moving and related expenses, as the Agency determines to be reasonable and necessary.
. . . .
(g) Eligible actual moving expenses.
. . . .
(12) Professional services as the Agency determines to be actual, reasonable and necessary for:
(i) Planning the move of the personal property
49 C.F.R. § 24.301(a), (g) (formerly 49 C.F.R. § 24.303(a)). The regulations do not define professional. The hearing officer referred to The American Heritage College Dictionary, which defines professional as “2. Engaging in a given activity as a source of livelihood or as a career. 3. Performed by persons receiving pay. 4. Having or showing great skill; expert.” 1112 (4th ed. 2002); see Brandt v. Hallwood Mgmt. Co., 560 N.W.2d 396, 400 (Minn. App. 1997) (using dictionary to interpret statutory term “construction”).
WBI and BMW argue by analogy that because the section of the regulation authorizing payment for the cost of transporting personal property does not require the hiring of outside movers, they are not required to hire outside professional help to plan the move. See 49 C.F.R. 24.301(g)(1) (formerly 49 C.F.R. 24.303(a)(1)). This analogy fails to consider the fact that “professional services” is not mentioned in the transportation section but is used explicitly in the section dealing with planning of the move. Also WBI and BMW argue that the Federal Highway Administration (FHWA) follows a different interpretation and that this FHWA policy should be followed. There is no published federal regulation or determination of what constitutes reimbursement professional planning services. In an attempt to prove the existence of a FHWA policy, WBI and BMW unsuccessfully sought testimony from a federal employee. The HRA contested the claimed policy and WBI and BMW failed to obtain any testimony or otherwise establish the existence of such a policy. Since it does not appear that the ALJ’s interpretation of 49 C.F.R. § 24.301(g)(12) (formerly 49 C.F.R. § 24.303(a)(8)) is inconsistent with that of the FHWA, we conclude that the ALJ’s determination that WBI and BMW’s employees’ pre-move planning did not constitute professional services, was not arbitrary or capricious, and we affirm.
The last issue is whether the ALJ erred in closing the record and refusing to permit the parties to submit interrogatories regarding disputed testimony from a FHWA official. “Evidentiary rulings in administrative proceedings are subject to an abuse-of-discretion standard.” CUP Foods, Inc. v. City of Minneapolis, 633 N.W.2d 557, 566 (Minn. App. 2001). An administrative agency’s decision will be sustained on appeal “unless it ‘reflects an error of law, the determinations are arbitrary and capricious, or the findings are unsupported by the evidence.’” Glazier v. Indep. Sch. Dist. No. 876, 558 N.W.2d 763, 766 (Minn. App. 1997) (quoting County of Scott v. Public Employment Relations Bd., 461 N.W.2d 503, 504 (Minn. App. 1990), review denied (Minn. Dec. 20, 1990)). Without citing any authority, WBI and BMW argue that the abuse of discretion standard is much lower for an administrative proceeding than it is in review of a district court decision. We conclude that there is no merit to this claim and that abuse of discretion means the same in an administrative hearing as in district court.
The ALJ initially granted WBI and BMW’s petition to reopen the record and admit telephone testimony of Ron Fannin, an employee of the FHWA. The ALJ granted the request because of conflicting testimony regarding Mr. Fannin’s understanding of the FHWA regulations regarding reimbursement for pre-move planning by employees and because of appellants’ affidavit stating that Mr. Fannin was available to testify by telephone. However, because WBI and BMW were unable to arrange for such telephone testimony, they requested that the parties submit interrogatories to Mr. Fannin and that the interrogatories and responses be included in the record. The HRA objected to this arrangement, and the ALJ closed the record because the interpretation of the federal regulations was disputed and the interrogatory format would prevent HRA from effectively cross-examining Mr. Fannin.
Appellants argue that because the ALJ accepted other hearsay evidence, mainly affidavits and testimony regarding conversations with Mr. Fannin, the ALJ was required to keep the record open to admit answers to interrogatories submitted to Mr. Fannin. Also WBI and BMW argue that Mr. Fannin’s testimony was not expert testimony involving interpretation of the federal regulations but merely factual evidence discussing whether the FHWA reimbursed displaced businesses for the time that their regular employees spent planning the relocation. The matter is not that simple. The evidence is on a central and disputed issue in the proceeding. Trying to sort out the federal regulatory position with a set of written questions may be challenging. The ALJ’s decision not to permit the use of interrogatories to present evidence was part of managing the nature of the proceeding. Like an evidentiary ruling, decisions on such matters are largely within the discretion of the presiding officer. We conclude that the ALJ did not abuse his discretion in refusing to admit interrogatories and did not act arbitrarily or capriciously by closing the record.
 The Federal Highway Administration revised, reorganized and renumbered these regulations, which took effect February 3, 2005. Uniform Relocation Assistance and Real Property Acquisition for Federal and Federally-Assisted Programs, 70 Fed. Reg. 590, 603-04 (Jan. 4, 2005) (codified at 49 C.F.R. pt. 24). We note that although the version of these regulations in effect at the time of the claims for relocation expenses was amended, the changes do not affect the substance of this opinion.
 BMW did not submit a claim for similar services and did not participate in this portion of the appeal.
 The comments to the new regulations explicitly exclude regular employees of the business from the definition of “professional services” in the section dealing with the purchase or lease of a replacement site. 70 Fed. Reg. at 604-05. Although it is not clear that this same policy applies to planning the move, the comment does not support reimbursement for expenses like those at issue in this appeal. It does not appear that these comments were incident to any change in the underlying federal statutes. See 42 U.S.C. § 4621, 4622.