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Gitto v. Bureau of Regulatory Affairs

A-4277-01T3 (N.J. Super. App. Div. 2003) (Unpublished)

UNIFORM CONSTRUCTION CODE; CONFLICTS OF INTEREST—A building code official has a conflict of interest if she or he receives periodic payments from a contractor who took over the inspector’s business in the municipality, even though the payments may be denominated as rent or lease payments.

Under the Uniform Construction Code (UCC), “[n]o person employed by an enforcing agency as construction or subcode official or as an inspector shall carry out any inspection or enforcement procedure with respect to any property or business in which he or she ... has an economic interest.” An electrical contractor was appointed as an electrical subcode official for a municipality. “At the time of his appointment, he entered into a verbal arrangement with his foreman, ..., to take over the business.” The foreman operated out of the same business premises under a different business name. He paid the subcode official “$1,000 per week, purportedly for the lease of the building, trucks and equipment.” The subcode official notified his customers that he would no longer be permitted to work in several municipalities and recommended that his former foreman do the work based upon their long-time prior relationship. After an investigation, the Department of Community Affairs (DCA) filed a complaint alleging that the subcode official was in violation of the conflict of interest provisions of the UCC. The Administrative Law Judge found that there was, in fact, a conflict, and the Commissioner of the DCA permanently revoked the electrician’s license. On appeal, the subcode official denied that he held an “economic interest” in the foreman’s new business, insisting that his continuing business and the foreman’s new business were “separate and distinct entities.” He argued that there was no definition in the UCC for the term “economic interest.” He also argued that the definition of “economic interest” found in some other statutes should have been used. Those definitions required ownership or control of a minimum interest in a business organization. The Appellate Division would not upset the final determination of the DCA because it was neither arbitrary, capricious or unreasonable. It felt that the findings of the Commissioner were supported by the evidence. Further, “[i]n the absence of a particular definition in the UCC or its regulations, the term ‘economic interest’ should be accorded its common meaning.” According to the Court, the subcode official “clearly had an interest in assuring that [the foreman’s] business would prosper so that [the subcode official’s] weekly payments would continue.”

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