Romo v. Payne

• Decision Date: 09 February 2011
• Docket Number: No. 08–08–00043–CV.,08–08–00043–CV.
• Citation: 334 S.W.3d 364
• Parties: Edward Alexander ROMO, Appellant,v.Danny PAYNE, Commissioner of the Texas Department of Savings and Mortgage Lending, and the State of Texas, Appellees.
• Court: Texas Court of Appeals

334 S.W.3d 364

Edward Alexander ROMO, Appellant,

v.Danny PAYNE, Commissioner of the Texas Department of Savings and Mortgage Lending, and the State of Texas, Appellees.

No. 08–08–00043–CV.

Court of Appeals of Texas, El Paso.

Feb. 9, 2011.

David R. Pierce, The Law Office of David Pierce, El Paso, TX, for Appellant.James A. Daross, Assistant Attorney General, Consumer Protection and Public Health Div., El Paso, TX, for Appellees.Before CHEW, C.J., McCLURE, and GARCIA, Judge.

OPINION

DAVID WELLINGTON CHEW, Chief Justice.

Edward Alexander Romo (“Romo”) appeals from a judgment enjoining certain conduct and requiring him to pay restitution, civil penalties, and attorney's fees for violating the Texas Mortgage Broker License Act (the “Broker Act”) and the Texas Deceptive Trade Practices Act (“DTPA”). We reverse in part and affirm in part.

Romo is a licensed mortgage broker who operated several businesses in El Paso. Romo's businesses focused on obtaining refinancing for homeowners facing foreclosure. In May 2004, the State of Texas and the Commissioner of the Texas Department of Savings and Mortgage Lending (collectively “the State”) sued Romo, alleging that he violated the Broker Act and the DTPA.

The State moved for summary judgment. Among other things, the State asserted that Romo employed Melisa Simpson as an unlicensed loan officer from September 2002 to May 2004 and that he employed Alin Blanchet as an unlicensed loan officer in 2004. As a result of his employing Simpson, Romo received $82,785.28 in profits from January 2004 to April 2004. The State sought a judgment of up to three times this amount. The State also asserted that Romo failed to notify the Commissioner of all of the business names and addresses that he used and that he charged fees that were unreasonable in relation to the services he performed. Specifically, the State contended that it was unreasonable for Romo to charge more than three-to-five percent of the loan amount. The State sought a judgment for the amount of fees Romo charged in excess of three percent, or alternatively five percent, of the loans he brokered from May 2002 through June 2005. In addition, the State sought to enjoin Romo from employing unlicensed loan officers, from operating under assumed names or at addresses not disclosed to the Commissioner, and other injunctive relief. Finally, the State requested up to $20,000 for each DTPA violation and an award of attorney's fees.

In his response to the State's motion, Romo challenged the State's summary judgment evidence regarding the amount of his profits and he argued that his fees were reasonable. He admitted that he was “delayed” in notifying the Commissioner of two of his business names, but offered reasons to justify the delays. Romo further admitted that Simpson worked for him as an unlicensed loan officer, but he asserted that she was not required to have a license. He claimed that Blanchet was only a loan processor, not a loan officer. Romo also filed a summary judgment motion, asserting, among other things, that the State had no evidence to support its claims that Simpson was required to have a license or that he charged unreasonable fees.

Ruling on the competing motions, the trial court determined that: (1) Romo violated the Broker Act by failing to notify the Commissioner of the names and addresses of his businesses; (2) Romo violated both the Broker Act and the DTPA by employing Simpson and Blanchet as unlicensed loan officers; and (3) Romo earned $82,785 through his employment of Simpson. The court rejected the State's other claims, including its claim that Romo charged unreasonable fees. The court permanently enjoined Romo from: (1) conducting business as a mortgage broker under any assumed name without first notifying the Commissioner of the name; (2) failing to notify the Commissioner of any new business address; and (3) failing to obtain a license certificate for any new address. The court ordered Romo to pay the following amounts: (1) $82,785 as restitution to consumers who paid him fees as a result of his employment of Simpson; (2) $7,500 as a civil penalty for violating the DTPA; and (3) $5,000 as attorney's fees.

Romo raises seven issues on appeal. In his first issue, he argues that the State relied on inadmissible hearsay to establish that he earned $82,785 by employing Simpson. In his second issue, he argues that Simpson was not required to be licensed as a loan officer under the Broker Act. In his third issue, he argues that the State failed to establish the requirements for permanent injunctive relief. In his fourth issue, he argues that employing Simpson as an unlicensed loan officer was not a DTPA violation because she was not required to be licensed under the Broker Act. In his fifth issue, he argues that the State failed to establish the requirements for a civil penalty under the DTPA. In his sixth issue, he argues that Blanchet was a loan processor, rather than a loan officer. And in his seventh issue, he argues that the State was not entitled to recover attorney's fees.

We review a summary judgment de novo to determine whether the movant carried the burden of showing that there is no genuine issue of material fact and that judgment should be granted as a matter of law. New Wave Techs., Inc. v. Legacy Bank of Texas, 281 S.W.3d 99, 100 (Tex.App.-El Paso 2008, pet. denied). We must accept as true all evidence favorable to the nonmovant, indulging every reasonable inference and resolving all doubts in the nonmovant's favor. W.L. Pickens Grandchildren's Joint Venture v. DOH Oil Co., 281 S.W.3d 116, 119 (Tex.App.-El Paso 2008, pet. denied). When both parties move for summary judgment and the trial court grants one motion and denies the other, we consider the summary judgment evidence presented by both sides and determine all the questions presented. Id.

The central issue in this case is whether the Broker Act required loan officers to be licensed between the years of 2002 and 2004, which is when Romo employed Simpson and Blanchet. If licenses were not required, Romo could not have violated the Broker Act by allowing Simpson to work as a loan officer and there would be no basis for requiring him to disgorge the $82,785 that he earned by reason of her employment, irrespective of whether the State's evidence was inadmissible. Likewise, if licenses were not required, it does not matter whether Blanchet acted as a loan processor or a loan officer. And if Romo did not violate the Broker Act by employing unlicensed loan officers, he also did not violate the DTPA, since the DTPA violation was premised on the conclusion that the Broker Act required licensing. Without the DTPA violation, the $7,500 civil penalty cannot stand, regardless of whether the requirements for imposing a civil penalty were satisfied. Accordingly, rather than consider the issues in the format that they were briefed by Romo, we will first address whether the Broker Act required loan officers to be licensed.

The Broker Act is part of the Texas Finance Code. See Tex.Fin.Code Ann. §§ 156.001–.508 (West 2006 & Supp.2010). It was enacted in 1999 and has been amended several times. There are no cases construing its scope. Our analysis will therefore center on the statutory language and the canons of construction.

When construing statutes, our main goal is to give effect to the Legislature's intent. In re S.S.A., 319 S.W.3d 796, 798 (Tex.App.-El Paso 2010, no pet.). We may consider the object sought to be attained, the circumstances under which the statute was enacted, the legislative history, and the administrative construction of the statute. Tex.Gov't Code Ann. § 311.023 (West 2005). The public interest is favored over private interests. Id. at § 311.021(5). But our polestar is the statutory language itself. “Where text is clear, text is determinative of [legislative] intent.” Entergy Gulf States, Inc. v. Summers, 282 S.W.3d 433, 437 (Tex.2009)(op. on reh'g). We read the language in context, not in isolation, and we presume that the entire statute is intended to be effective and that every word, phrase, and expression was deliberately chosen. In re S.S.A., 319 S.W.3d at 798–99; see also Tex.Gov't Code Ann. § 311.021(2). We will not depart from the plain meaning unless enforcing the statute as written would produce absurd results. See In re S.S.A., 319 S.W.3d at 798.

Romo cites two of the Broker Act's provisions—Section 156.201(b) and Section 156.204(c) of the Finance Code—to establish that licenses were not required. Between the years 2002 and 2004, Section 156.201(b) stated:

An individual may not act or attempt to act as a loan officer unless the individual at the time is:

(1)licensed under this chapter;

(2)sponsored by a licensed mortgage broker and acting for the mortgage broker; or

(3)exempt under Section 156.202.

Mortgage Broker License Act, 76th Leg., R.S., ch. 1254, § 2, 1999 Tex.Gen.Laws 4334, 4337. By its plain terms, this statute allowed an unlicensed person to act as a loan officer as long as she was sponsored by, and acting for, a licensed mortgage broker.

Section 156.204 sets out the qualifications for mortgage brokers and loan officers. Between 2002 and 2004, Subsection (c)(4) required a person to satisfy one of the following criteria to be licensed as a loan officer:

(A) the person meets one of the requirements described by Subsection (a)(4) [which pertained to the licensing of mortgage brokers];

(B) the person has successfully completed 15 hours of education courses approved by the commissioner under this section;

(C) the person has 18 months of experience as a loan officer as evidenced by documentary proof of full-time employment as a loan officer with a mortgage broker or a person exempt under Section 156.202; or

(D) for applications received prior to January 1, 2000, the mortgage broker that will sponsor the applicant provides a certification under oath that the applicant has been provided necessary...