Solutions v. Carnahan, WD 71332.
| Decision Date | 20 July 2010 |
| Docket Number | No. WD 71332.,WD 71332. |
| Parties | FINANCIAL SOLUTIONS AND ASSOCIATES, and Thomas Grimes, Appellants,v.Robin CARNAHAN, Secretary of State and Mathew Kitzi, Commissioner of Securities, Respondents. |
| Court | Missouri Court of Appeals |
COPYRIGHT MATERIAL OMITTED
Steven W. Koslovsky, for Appellants.
Jeremiah Morgan, for Respondent.
Before Division Three: JAMES M. SMART, JR., Presiding Judge, JOSEPH M. ELLIS, Judge and GARY D. WITT, Judge.
Appellants, Financial Solutions & Associates, Inc., (FSI) a St. Louis-based financial planning firm, and Michael Grimes (Grimes), the principle of FSI, (Appellants) appeal from an Order and Judgment of the Circuit Court of Cole County, which upheld the Findings of Fact, Conclusions of Law and Final Order (Final Order) issued by the Missouri Commissioner of Securities (Commissioner) finding that the Appellants engaged in an act, practice, or course of business that operated as fraud or deceit upon persons under § 409.5-502(a).1 The Appellants also appeal from the Commissioner's denial of their motion to disqualify. For the following reasons, we affirm.2
On January 25, 2007, the Securities Division of the Office of Secretary of State (Division) filed a petition for an Order to Cease and Desist with the Commissioner against the Appellants alleging seven violations of law under the Missouri Securities Act of 2003. The Commissioner issued a Cease and Desist Order and sent notice to Grimes, providing him with an opportunity for a hearing. The Appellants requested a hearing and filed a motion to disqualify the Commissioner based on bias.3 The Commissioner denied the Appellants' motion to disqualify because they cited to no authority and because Missouri statutes required the Commissioner to hold a hearing in the Appellants' case.
A hearing regarding the Cease and Desist Order was subsequently held and, after the parties submitted Memorandum of Law, the Commissioner issued his Final Order concluding that Grimes and FSI, among other things and as pertinent to the appeal, engaged in an act, practice, or course of business that operated as fraud or deceit upon persons under § 409.5-502(a). The Commissioner fined the Appellants for violations of the Missouri Securities Act, and the Appellants timely sought judicial review with the Circuit Court of Cole County. The circuit court, after reviewing the record, briefs, and arguments of the parties, affirmed the Commissioner's Final Order.
Our standard of review has been summarized as follows:
This court reviews the decision of the administrative agency, not that of the circuit court. On appeal from an agency decision in a contested case, we consider only whether the agency's findings are supported by competent and substantial evidence on the record as a whole. We may not substitute our judgment on the evidence for that of the agency, and we must defer to the agency's determinations on the weight of the evidence and the credibility of witnesses. If the decision of the agency is supported by substantial and competent evidence on the whole record, it must be affirmed. On the other hand, we must reverse the agency's findings if it is determined the decision is not supported by competent and substantial evidence on the whole record, or if the decision constitutes an abuse of discretion, or is unauthorized by law, or is arbitrary and capricious.
Moses v. Carnahan, 186 S.W.3d 889, 899 (Mo.App. W.D.2006) (internal quotation and brackets omitted).
The Appellants first contend that the Commissioner erred in failing to disqualify himself as requested by their motion. “The procedural due process requirement of fair trials by fair tribunals applies to an administrative agency acting in an adjudicative capacity.” State ex rel. AG Processing Inc. v. Thompson, 100 S.W.3d 915, 919 (Mo.App. W.D.2003). “Officials occupying quasi-judicial positions are held to the same high standard as apply to judicial officers in that they must be free of any interest in the matter to be considered by them.” Id. at 919-20. “A presumption exists that administrative decision-makers act honestly and impartially, and a party challenging the partiality of the decision-maker has the burden to overcome that presumption.” Id. at 920. “A judge or administrative decision-maker is without jurisdiction ... if the judge or decision-maker failed to disqualify himself on proper application.” Id. “[A]ny administrative decision[-]maker who has made an unalterable prejudgment of operative adjudicative facts is considered biased.” Fitzgerald v. City of Maryland Heights, 796 S.W.2d 52, 59 (Mo.App. E.D.1990).
The Appellants contend that the Commissioner was biased and should have disqualified himself because he and the Secretary of State made public pronouncements that indicated he prejudged the case and he oversaw the Assistant Commissioner, who investigated and prosecuted the case. In their motion for disqualification and petition for judicial review, however, the Appellants did not mention any public pronouncements as a basis for disqualification. Rather, the Appellants only alleged that the Commissioner could not be fair and impartial because the Commissioner was in charge of the Assistant Commissioner and the enforcement section of the division.4 Nonetheless, we find that all the bases raised by the Appellants for disqualification fail.
The Appellants contend that the Commissioner's Cease and Desist Order, which found the Appellants guilty of various violations of the Missouri Securities Act, and a press release issued by the Secretary of State describing the findings of the Cease and Desist Order, constituted evidence of bias and prejudgment on the part of the Commissioner. The Appellants cite two cases for support for their contention. First, they cite Texaco, Inc. v. FTC, 336 F.2d 754 (D.C.Cir.1964) vacated on other grounds by FTC v. Texaco, Inc., 381 U.S. 739, 85 S.Ct. 1798, 14 L.Ed.2d 714 (1965).
In Texaco, the Federal Trade Commission filed a complaint that Texaco coerced its dealers, through economic pressure, to distribute Goodrich tires, batteries, and accessories, thereby unfairly and unlawfully preventing Goodrich's competitors from selling tires, batteries, and accessories to Texaco's outlets. Id. at 756. As part of the procedural history of the case, Texaco filed a motion to have the Chairman of the Commission withdraw from participating in the proceeding or to have the Commission determine him to be disqualified. Id. at 759. The motion centered on a speech made by the Chairman before the National Congress of Petroleum Retailers, while the case was pending.5Id. The Chairman refused to withdraw, the Commission declined to find that he was disqualified, and he participated in the order. Id. On appeal, the United States Court of Appeals determined that it was a denial of due process for the Chairman to participate in the hearing and order. Id. at 760.
The Appellant's second case In re 1616 Second Avenue Restaurant v. New York State Liquor Authority, 75 N.Y.2d 158, 551 N.Y.S.2d 461, 550 N.E.2d 910 (N.Y.1990), has facts similar to Texaco. The New York Appeals Court had to determine whether public statements made by the Chairman of the State Liquor Authority, in which the Chairman discussed the charges pending in a case against a licensee, should disqualify the Chairman from participating in the administrative review of the case. Id. at 911. The court held that the Chairman was disqualified because he made statements which, viewed in their entirety, evidenced that the Chairman believed the licensee violated the law. Id. at 913.
The Appellants compare the facts in Texaco and 1616 Second Avenue to the Commissioner issuing a Cease and Desist Order and the Secretary of State's public comments regarding the Cease and Desist Order. First, because of the Appellants' failure to provide us with a complete record on appeal, particularly the statements made by the Secretary of State, we are unable to give meaningful review to the Appellants' claim of error. In re Estate of Abbott, 944 S.W.2d 279, 284 (Mo.App. S.D.1997) ( . Second, the Missouri Securities Act allows the Commissioner to publish any record concerning an action or violation of the Act “if the commissioner determines it is necessary or appropriate in the public interest and for the protection of investors.” § 409.6-602(a)(3). 6 Finally, the Commissioner was performing the duties prescribed by Missouri statute by entering a Cease and Desist Order under § 409.6-604(a)(1) and the fact that the Commissioner issued a Cease and Desist Order that was unfavorable to the Appellants does not show bias. “The mere fact that rulings are made against a party does not show bias or prejudice on the part of the judge.” Robin Farms, Inc. v. Bartholome, 989 S.W.2d 238, 247 (Mo.App. W.D.1999) (internal quotation omitted).
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