Ricchio v. Colo. Sec. Comm'r

• Citation: 512 P.3d 1058,2022 COA 35
• Decision Date: 24 March 2022
• Docket Number: Court of Appeals No. 20CA0791
• Parties: Geoffrey K. RICCHIO, Appellant, v. COLORADO SECURITIES COMMISSIONER, Appellee.
• Court: Colorado Court of Appeals

512 P.3d 1058

2022 COA 35

Geoffrey K. RICCHIO, Appellant,

v.COLORADO SECURITIES COMMISSIONER, Appellee.

Court of Appeals No. 20CA0791

Colorado Court of Appeals, Division III.

Announced March 24, 2022

Jones & Keller, P.C., Paul L. Vorndran, Denver, Colorado, for Appellant

Philip J. Weiser, Attorney General, Robert W. Finke, First Assistant Attorney General, Jodanna L. Haskins, Denver, Colorado, for Appellee

Opinion by JUDGE LIPINSKY

¶ 1 The Colorado General Assembly has adopted numerous statutes specifying the procedures that must be followed in state administrative proceedings. It has enacted a general State Administrative Procedure Act (the APA), §§ 24-4-101 to - 109, C.R.S. 2021, as well as more specific statutes setting forth the procedures for proceedings in particular state agencies.

¶ 2 But some of the latter statutes do not provide every procedural step for proceedings before the agency. The APA can fill in these gaps. The provisions of the APA "apply to agency actions unless they conflict with a specific provision of the agency's statute or another statutory provision preempts the provisions of the APA." V Bar Ranch LLC v. Cotten , 233 P.3d 1200, 1205 (Colo. 2010) (quoting Well Augmentation Subdist. of Cent. Colo. Water Conservancy Dist. v. City of Aurora , 221 P.3d 399, 417 (Colo. 2009) ).

¶ 3 In this case, we consider, as a matter of first impression, whether the language of the APA providing that a party may appeal an initial decision regarding an agency action by filing exceptions, § 24-4-105(14)(a)(II), C.R.S. 2021, applies to the initial decision of an administrative law judge (ALJ) recommending that the Colorado Securities Commissioner order an individual to cease selling unregistered securities in this state.

¶ 4 We hold that the exception provision of the APA does not apply to this type of proceeding. Because we disagree with Geoffrey K. Ricchio's remaining contentions, we affirm.

I. Background Facts and Procedural History

¶ 5 Ricchio appeals the Commissioner's issuance of a Final Cease and Desist Order (the final order) directing him to immediately cease selling unregistered securities in the state of Colorado and to not otherwise violate any provisions of the Colorado Securities Act (the Securities Act), §§ 11-51-101 to - 1008, C.R.S. 2021.

¶ 6 Staff at the Colorado Division of Securities petitioned the Commissioner to order Ricchio to show cause why the Commissioner should not enter a final cease-and-desist order against him based on reports that Ricchio had offered and sold unregistered securities in Colorado and had failed to disclose material facts about those securities to investors. The Commissioner issued an order to show cause to Ricchio based on the staff's allegations.

¶ 7 In the order to show cause, the Commissioner referred the matter for a hearing before an ALJ. The parties submitted written closing arguments on December 23, 2019, following the hearing.

¶ 8 On January 23, 2020, the ALJ issued an initial decision in which the ALJ found that Ricchio

• offered and sold securities in the form of three promissory notes;

• sold the promissory notes to Colorado chiropractors who had attended his educational seminars;

• failed to register the promissory notes with the Division of Securities, even though he was neither eligible for nor entitled to an exemption from registration; and

• committed fraud in connection with the sale of the notes by failing to disclose material facts to the investors.

(Ricchio does not argue on appeal that the promissory notes were not securities.)

¶ 9 Based on these findings, the ALJ recommended that the Commissioner issue an order "directing [Ricchio] to cease and desist from offering and selling securities and violating the anti-fraud provisions" of the Securities Act.

¶ 10 For reasons unclear from the record, the Commissioner did not receive the initial decision until February 25, 2020. Six days later, the Commissioner issued the final order, in which he adopted the ALJ's findings of fact, conclusions of law, and recommendations. The record does not indicate when Ricchio received the initial decision.

¶ 11 Ricchio appeals the final order.

II. Analysis

¶ 12 Ricchio contends that (1) the Commissioner violated his right to due process by issuing the final order before he had an opportunity to submit exceptions to the ALJ's initial decision and (2) the final order was not supported by sufficient evidence establishing that it was necessary in the public interest. We are not persuaded by either contention.

A. Did Ricchio Have a Statutory Right to File Exceptions to the ALJ's Initial Decision

¶ 13 We first consider whether Ricchio had a statutory right to file exceptions to the ALJ's initial decision. This analysis involves an examination of the exceptions procedure set forth in the APA and the relevant portions of the Securities Act.

¶ 14 Ricchio asserts that the Commissioner violated his right to due process by failing to comply with the exceptions procedure set forth in the APA. He specifically contends that he had the right to submit exceptions to the ALJ's initial decision within thirty days of service of the decision pursuant to section 24-4-105(14)(a)(II) of the APA ("An appeal to the agency must be made as follows: ... [w]ith regard to initial decisions regarding agency action ..., by filing exceptions within thirty days after service of the initial decision upon the parties ...."). Because the Commissioner issued the final order only six days after receiving the initial decision, Ricchio contends that he was deprived of a meaningful opportunity to file exceptions to the initial order and, for that reason, we must set aside the final order pursuant to section 24-4-106(7)(b)(V), C.R.S. 2021 ("The court shall hold unlawful and set aside the agency action ... if the court finds that the agency action is[ ] ... [n]ot in accord with the procedures or procedural limitations of [the APA] or as otherwise required by law ....").

¶ 15 The Commissioner responds that, because the ten-calendar-day deadline set forth in section 11-51-606(1.5)(d)(V), C.R.S. 2021, of the Securities Act irreconcilably conflicts with the thirty-day exceptions deadline set forth in section 24-4-105(14)(a)(II), the former — the more specific statute — applies. And, because the Commissioner complied with the procedures described in section 11-51-606(1.5), the Commissioner asserts that we must affirm the final order.

1. Standard of Review

¶ 16 The resolution of this issue hinges on whether the exceptions procedure in the APA irreconcilably conflicts with the procedures in the Securities Act governing administrative proceedings to address violations of section 11-51-606(1.5)(b) and, specifically, the ten-calendar-day deadline for the Commission to provide notice of a final order in section 11-51-606(1.5)(d)(V). To make this determination, we must interpret the relevant provisions of the APA and the Securities Act. "We review questions of statutory interpretation de novo." Elder v. Williams , 2020 CO 88, ¶ 17, 477 P.3d 694, 698.

2. Rules of Statutory Interpretation

¶ 17 When interpreting a statute, our primary objective is to ascertain and give effect to the General Assembly's intent in drafting it. Jefferson Cnty. Bd. of Equalization v. Gerganoff , 241 P.3d 932, 935 (Colo. 2010). "We begin by looking to the express language of the statute, construing words and phrases according to grammar and common usage." Id. ; see Elder , ¶ 18, 477 P.3d at 698 ("[W]e apply words and phrases in accord with their plain and ordinary meanings."). If the statute is unambiguous, our analysis is complete, and we apply the statute as it is written. Elder , ¶ 18, 477 P.3d at 698. "A statute is ambiguous when it is reasonably susceptible of multiple interpretations." Id.

¶ 18 If two statutes irreconcilably conflict, "the specific provision prevails over the general provision." Jenkins v. Pan. Canal Ry. Co. , 208 P.3d 238, 241 (Colo. 2009) ; see § 2-4-205, C.R.S. 2021 ("If the conflict between the provisions is irreconcilable, the special or local provision prevails as an exception to the general provision ...."). "A general provision, by definition, covers a larger area of the law." Martin v. People , 27 P.3d 846, 852 (Colo. 2001). "A specific provision, on the other hand, acts as an exception to that general provision, carving out a special niche from the general rules to accommodate a specific circumstance." Id .

3. The Detailed Procedures Set Forth in Section 11-51-606(1.5)

¶ 19 Section 11-51-606(1.5) contains a comprehensive set of procedures, including specific deadlines, that apply when "it appears to the securities commissioner ... that a person has committed or may commit any of the acts or practices" set forth in section 11-51-606(1.5)(b).

¶ 20 After the Commissioner issues an order to show cause why the Commissioner "should not enter a final order directing such person to cease and desist" from violating section 11-51-606(1.5)(b), the Commissioner "shall, within two calendar days, notify the chairperson of the securities board or an ALJ that an order to show cause has been issued." § 11-51-606(1.5)(a). "The hearing on an order to show cause shall be commenced no sooner than ten nor later than twenty-one calendar days following the date of transmission or service of the notification by the securities division ...." § 11-51-606(1.5)(d)(I). While the hearing date may be continued, the hearing must commence no later than "thirty-five calendar days following the date of transmission or service of the notification." Id.

¶ 21 If the matter proceeds to a hearing, "within ten days after the conclusion of the hearing," the securities board or the ALJ shall issue an "initial decision recommending to the securities commissioner that a final order be entered affirming, denying, vacating, or otherwise modifying the order to show cause." § 11-51-606(1.5)(d)(III). If the Commissioner issues a cease-and-desist order, he or she "shall provide notice...