Cornelius v. Connecticut Dept. of Banking, No. CV04-4000627 (CT 6/14/2005)
| Decision Date | 14 June 2005 |
| Docket Number | No. CV04-4000627,CV04-4000627 |
| Court | Connecticut Supreme Court |
| Parties | Frederick Cornelius dba Focus Mortgage v. Connecticut Department of Banking Opinion No.: 89197 |
This is an appeal from the decision of the defendant Connecticut Department of Banking (a) ordering that the license of the plaintiff to do business as a "first mortgage broker" and a "first mortgage lender" pursuant to General Statutes §36a-485 et seq. shall be revoked and (b) ordering that the license of the plaintiff to do business as a "secondary mortgage broker" pursuant to General Statutes §36a-510 not be renewed.
On January 5, 2004, the Commissioner of the Connecticut Department of Banking issued an Order of Summary Suspension, Notice of Intent to Revoke First Mortgage Lender/Broker License and Notice of Right to Hearing against the plaintiff. On January 5, 2004, the Commissioner also issued a Notice of Intent to Refuse to Renew Secondary Mortgage Broker License and Notice of Right to Hearing against the plaintiff. In regard to both notices of proposed administrative action, the plaintiff demanded an evidentiary hearing. After the hearings in regard to both licensing matters were consolidated, the matter proceeded to an administrative hearing before a Department of Banking hearing officer. That hearing was held on March 18, 2004, and the transcript of that hearing appears in the record as item 1.
On July 25, 2001, the plaintiff was licensed by the Connecticut Department of Banking to engage in the business of making first mortgage loans and the business of acting as a first mortgage broker in Connecticut pursuant to General Statutes §36a-489. That "first mortgage" license was subsequently renewed. On June 24, 2003, the plaintiff filed a renewal application for a license as a secondary mortgage broker.
The plaintiff's first and secondary loan brokerage activities are carried out under the trade name of Focus Mortgage, a sole proprietorship, which at all times relevant to these proceedings employed three registered loan originators.
Prior to June 2003, Brian Camilleri, a licensed real estate appraiser of Camilleri Appraisal Company, performed approximately 100 real estate appraisals for the plaintiff's loan brokerage business. Both Camilleri and his partner last performed an appraisal for the plaintiff's loan brokerage business in May 2003.
The files of Focus Mortgage were found to contain copies of 14 Appraisal Reports and/or Inspection Reports that purport to be authored by Camilleri, but which Camilleri did not prepare or sign. They contained forged signatures. The commissioner found that Focus Mortgage had submitted forged Camilleri appraisal/inspection reports to a lender (Provident Funding Associates, L.P.) in regard to six of its loan transactions. Those forged Camilleri appraisal/inspection reports relied on by the commissioner are found in the record.
While the evidence showed that the forged appraisals were "submitted" to Provident by Focus Mortgage, nothing in the administrative record shows that those documents were created by anyone at Focus Mortgage, and there was no evidence that it was the plaintiff, Frederick Cornelius, who personally created or transmitted any of the forged appraisals. Thus, while the name "Focus Mortgage" appears on certain of the loan documentation connected with the subject appraisal reports, the name of Frederick Cornelius does not. The commissioner's decision concludes that Focus Mortgage submitted the forged appraisals in connection with loans that it had brokered, the decision expressly states that "the record did not establish whether respondent personally forged the appraisals or whether the forgery was done by an employee."
The scope of the Superior Court's review of administrative decisions is well-established. "Judicial Review of [an administrative agency's] action is governed by the [UAPA] . . . and the scope of that review is very restricted." (Internal quotation marks omitted.) Cadlerock Properties Joint Venture, L.P. v. Commissioner of Environmental Protection, 253 Conn. 661, 668, 757 A.2d 1, cert. denied, 121 S.Ct. 1089, 148 L.Ed.2d 963 (2001).
The court shall affirm the decision of the agency unless the court finds that substantial rights of the person appealing have been prejudiced because the administrative findings, inferences, conclusions, or decision are: (1) In violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law; (5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
General Statutes §4-183(j).
Our State Supreme Court has provided guidance for a trial court's review of an administrative agency's findings of fact.
Judicial review of an administrative agency decision requires a court to determine whether there is substantial evidence in the administrative record to support the agency's findings of basic fact and whether the conclusions drawn from those facts are reasonable . . . [T]he trial court may [not] retry the case or substitute its own judgment for that of the administrative agency on the weight of the evidence or questions of fact . . . Our ultimate duty is to determine, in view of all of the evidence, whether the agency, in issuing its order, acted unreasonably, arbitrarily, illegally or in abuse of its discretion. (Citations omitted; internal quotation marks omitted.)
The requirement in C.G.S. §4-183(j) that an agency decision must be supported by "substantial evidence on the whole record" has been interpreted as follows:
The substantial evidence rule governs judicial review of administrative fact-finding under the UAPA . . . An administrative finding supported by substantial evidence if the record affords a substantial basis of fact from which the fact in issue can be reasonably inferred . . . The substantial evidence rule imposes an important limitation on the power of the courts to overturn a decision of an administrative agency . . . and to provide a more restrictive standard of review than standards embodying review of weight of the evidence or clearly erroneous action . . . [S]ubstantial evidence . . . is something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence. (Citations omitted; internal quotation marks omitted.)
"The determination of whether substantial evidence exists is subject to de novo review by [the] court." Labenski v. Goldberg, 33 Conn.App. 727, 733, 638 A.2d 614 (1994). Further, the court must search the entire record to determine whether substantial evidence exists to support the agency's findings of fact and whether the conclusions drawn from those facts are reasonable. See Dolgner v. Alander, 237 Conn. 272, 283, 676 A.2d 865 (1996). Most importantly, "[i]n determining whether an administrative finding is supported by substantial evidence, a court must defer to the agency's assessment of the credibility of the witnesses and to the agency's right to believe or disbelieve the evidence presented by any witness, even an expert, in whole or in part." (Internal quotation marks omitted.) Bancroft v. Commissioner of Motor Vehicles, 48 Conn.App. 391, 400, 710 A.2d 807 (1998).
Judicial review of the conclusions of law reached administratively is also limited. The court's ultimate duty is only to decide whether, in light of the evidence, the [agency] has acted unreasonably, arbitrarily, illegally, or in abuse of its discretion . . . Although the interpretation of statutes is ultimately a question of law . . . it is the well established practice of this court to accord great deference to the construction given [a] statute by the agency charged with its enforcement . . . Conclusions of law reached by the administrative agency must stand if the court determines that they resulted from a correct application of the law to the facts found and could reasonably and logically follow from such facts. (Citations omitted; internal quotation marks omitted.)
The rules of statutory construction apply to administrative agencies. See Preston v. DEP, 218 Conn. 821, 829, n.9 591 A.2d 421 (1991). One such rule provides, "that when a state agency's determination of a question of law has not previously been subject to judicial scrutiny . . . the agency is not entitled to special deference . . ." (Internal quotation marks omitted.) Dortenzio v. Freedom of Information Commission, 48 Conn.App. 424, 430-31, 710 A.2d 801 (1998). A presumption of validity attaches to the actions of an administrative official. Huckv. Inland Wetlands & Watercourses Agency, 203 Conn. 525, 537, 525 A.2d 940 (1987). The burden, therefore, is on the plaintiff to establish his claim that the commissioner's decision was arbitrary, illegal or an abuse of discretion; see Griffin v. Muzio, 10 Conn.App. 90, 94, 521 A.2d 607, cert. denied, 203 Conn. 805 (1987); and that the decision was not based on reliable, probative and substantial evidence in the record. See General Statutes §4-183(j)(5).
After conducting a public hearing, the Commissioner revoked the plaintiff's first mortgage lender/broker license and refused to renew the...
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