State v. Superior Mfg., WD 74370.

• Court: Court of Appeal of Missouri (US)
• Writing for the Court: Division Three: THOMAS H. NEWTON
• Citation: 373 S.W.3d 507
• Parties: STATE of Missouri, Appellant, v. SUPERIOR MANUFACTURING, et al., Respondents.
• Docket Number: No. WD 74370.,WD 74370.
• Decision Date: 21 August 2012

373 S.W.3d 507

STATE of Missouri, Appellant,
v.
SUPERIOR MANUFACTURING, et al., Respondents.

No. WD 74370.

Missouri Court of Appeals,
Western District.

Aug. 21, 2012.

[373 S.W.3d 508]

Laura E. Elsbury, Jefferson City, MO, for appellant.

David Gregory Brown, Columbia, MO, for respondents.

Division Three: THOMAS H. NEWTON, P.J., JAMES M. SMART, JR., and VICTOR C. HOWARD, JJ.

JAMES M. SMART, JR., Judge.

The Secretary of State challenges the trial court's order vacating the Commissioner of Securities' final order to cease and desist and imposing civil penalties and costs upon Superior Manufacturing, Inc., and Kevin W. and Wendy D. Gross, and quashing the garnishment. Because the trial court failed to receive and review the Commissioner's record as required by Chapter 536, RSMo,¹ we reverse.

Statement of Facts

Superior Manufacturing, Inc. (“SMI”) is a Missouri corporation formed September 1, 2006, by Kevin W. Gross and Wendy D. Gross. According to SMI's filings with the Missouri Secretary of State's Corporations Division, the company was formed for the purpose of manufacturing custom “living quarters for horse trailers.”

On January 23, 2008, after the receipt of complaints and after a preliminary investigation, the enforcement section of the Securities Division of the Office of the Secretary of State submitted a petition for an order to cease and desist and an order to show cause why civil penalties and costs for securities violations should not be imposed against SMI and Kevin and Wendy Gross. The Grosses were properly served by certified mail, return receipt, on January 28, 2008.

On February 1, 2008, after review of the petition, the Commissioner of Securities (“Commissioner”) issued an order to cease and desist and to show cause why civil penalties and costs should not be imposed, which was sent to the Grosses by certified mail.² On February 25, 2008, notices and copies of the cease and desist order were returned “unclaimed” to the Commissioner. That same day, the Commissioner was served with substitute process pursuant to section 409.6–611(b), RSMo (cum.supp.2007), and notices of the service and copies of the process were sent to the Grosses at their last known address. On February 29, 2008, the notices of service sent to the Grosses were returned “refused” to the Commissioner. On March 18, 2008, the enforcement section was contacted by an attorney, Thomas W. Millington of Springfield, representing the respondents, who asked that the Commissioner withhold a final order until April 15, 2008, to allow the parties to reach a settlement. On April 1st, Kevin Gross received certified letters from the post office and signed the return receipts in his own behalf and on behalf of Wendy Gross.

Presumably the settlement talks were unfruitful. On April 11, 2008, respondents' counsel wrote the chief enforcement counsel indicating that his clients Kevin and Wendy Gross “would not be defending” against the complaints against them. Counsel's letter said they had “authorized [him] to inform [the chief enforcement counsel] of this.”

[373 S.W.3d 509]

Several days later, on April 24, 2008, the Commissioner issued a final order to cease and desist and an order imposing civil penalties and costs (“final order”). The final order imposed civil penalties against the respondents. Each respondent was to pay five thousand dollars ($5,000) as civil penalties, and the respondents were to pay an additional sum of seven thousand three-hundred thirty dollars ($7,330) as reimbursement for the costs of the investigation and administration of the matter. The Commissioner sent a copy of the order to Kevin and Wendy Gross, certified mail, return receipt requested.

Thereafter, the Secretary of State filed the final order with the Cole County Circuit Court pursuant to section 409.6–604(f). On July 9, 2010, the Secretary of State sought a garnishment in execution of the judgment. The garnishments/executions were issued on July 13th and served on July 16th. On August 18, 2010, the Grosses filed a motion to quash the garnishment and vacate the underlying judgment. After the parties filed suggestions, the court set the matter for oral argument.

On November 19, 2010, the parties appeared by counsel for a hearing on the motion to quash. The Grosses were not represented by Mr. Millington but, instead, had retained new counsel. The Secretary of State proffered a certified copy of the Commissioner's record, which the court refused to receive. The Grosses presented no evidence but argued that their rights had been violated because they had no notice and no opportunity to defend against the assessments. The court took the matter under advisement. On February 4, 2011, the court entered an order vacating the judgment and quashing the garnishment. The Secretary appeals.

Discussion

In point one, the Secretary contends that the court erred in granting the motion to vacate the Commissioner's final order. The Secretary contends that the court had no authority to vacate the order because the Grosses did not timely seek judicial review. In point two, the Secretary contends that the trial court erred in granting the motion to vacate the Secretary's judgment because the Grosses failed to present any evidence in support of their collateral attack on the Commissioner's final order....