Vavla v. State

• Decision Date: 18 December 2013
• Docket Number: No. 60623,60623
• Parties: BOBBY VAVLA; BV NV HOLDINGS D/B/A NATIONWIDE DISCOUNT MORTGAGE, Appellants, v. THE STATE OF NEVADA, DEPARTMENT OF BUSINESS AND INDUSTRY, DIVISION OF MORTGAGE LENDING, Respondent.
• Court: Nevada Supreme Court

BOBBY VAVLA; BV NV HOLDINGS D/B/A NATIONWIDEDISCOUNT MORTGAGE, Appellants, v. THE STATE OF NEVADA, DEPARTMENT OF BUSINESS ANDINDUSTRY, DIVISION OF MORTGAGE LENDING, Respondent.

No. 60623

SUPREME COURT OF THE STATE OF NEVADA

Filed: December 18, 2013

An unpublished order shall not be regarded as precedent and shall not be cited as legal authority. SCR 123.

ORDER OF AFFIRMANCE

This is an appeal from a district court order denying a petition for judicial review regarding an administrative revocation of a mortgage broker license and a mortgage agent license. Eighth Judicial District Court, Clark County; Rob Bare, Judge.

BV Nevada Holdings, Inc., d.b.a. Nationwide Discount Mortgage, was a licensed Nevada mortgage broker. Bobby Vavla was a licensed mortgage agent and was Nationwide's president, secretary, treasurer, director, and employee. After receiving complaints about Vavla's conduct, the State of Nevada, Department of Business and Industry, Division of Mortgage Lending instituted administrative proceedings against Vavla and Nationwide. The appeals officer determined that Vavla made material misrepresentations in violation ofNRS 645B.670(1)(c)(2),¹ and engaged in deceitful, fraudulent, or dishonest business practices in violation of NRS 645B.670(1)(c)(8). The appeals officer revoked Vavla's and Nationwide's licenses and imposed a $10,000 fine. The district court denied Vavla's and Nationwide's petition for judicial review. This appeal followed. As the parties are familiar with the facts, we do not recount them further except as necessary for our disposition.

We conclude that (1) the appeals officer applied the proper standard of proof, (2) use of the substantial evidence standard of proof does not violate Vavla's rights to due process or equal protection (3) the appeals officer did not rely on improper evidence, (4) there was substantial evidence to support the appeals officer's determinations, and (5) the fines imposed by the appeals officer were not disproportionate to Vavla's misconduct.

Standard of review

We review an agency's decision for an abuse of discretion, and we will affirm the decision if there is substantial evidence to support it. Oilman v. State Bd. of Veterinary Med. Exam'rs, 120 Nev. 263, 267-68, 89 P.3d 1000, 1003 (2004). However, we review issues of law de novo. Accordingly, we "review[ ] de novo an administrative law judge's interpretation of the law." Nellis Motors v. State, Dep't of Motor Vehicles, 124 Nev. 1263, 1266, 197 P.3d 1061, 1064 (2008).The appeals officer applied the proper standard of proof in this matter

Vavla contends that because the Legislature failed to provide a standard of proof, we must determine the appropriate standard of proof. NAC 645B.555 provides for a substantial evidence standard of proof for a hearing before an appeals officer. This standard of proof was adopted by the Division's Commissioner pursuant to his legislative power to enact regulations necessary to carry out the provisions of NRS Chapter 645B. NRS 645B.060(2)(b); see also NRS 223B.040(1). Because "[w]e 'will not readily disturb an administrative construction that is within the language of the statute,'" we find that the substantial evidence standard of proof was properly adopted and, thus, is applicable. Meridian Gold Co. v. State ex. rel. Dep't of Taxation, 119 Nev. 630, 636, 81 P.3d 516, 520 (2003) (quoting State ex rel. Tax Comm'n v. Saueway Super Serv. Stations, Inc., 99 Nev. 626, 630, 668 P.2d 291, 294 (1983)). Therefore, we conclude that the appeals officer did not err in applying a substantial evidence standard of proof.

The substantial evidence standard of proof does not violate Vavla's due process rights

Vavla contends that his rights to procedural due process were violated by the use of the substantial evidence standard of proof. Sufficient process must be accorded when a person's life, liberty, or property is being taken by the state. Nellis Motors, 124 Nev. at 1268, 197 P.3d at 1065. There is not a rigid standard for due process in an administrative hearing because '"the legal process due in an administrative forum is flexible and calls for such procedural protections as the particular situation demands.'" Id. (quoting Minton v. Bd. of Med. Exam'rs, 110 Nev. 1060, 1082, 881 P.2d 1339, 1354 (1994)). Due processrequires a meaningful opportunity for a party to be heard. We weigh three distinct factors in evaluating whether due process was provided:

First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.

Mathews v. Eldridge, 424 U.S. 319, 335 (1976).

None of the three Mathews factors favors a heightened standard of proof in this case. First, this court has not previously found that mortgage broker and mortgage agent licenses are "significant private interests]. Although the revenue [earned from them] may be substantial, the loss of revenue alone does not weigh towards a heightened evidentiary standard." Nellis Motors, 124 Nev. at 1268, 197 P.3d at 1065. Second, a heightened evidentiary standard would not reduce the risk that Vavla and Nationwide might be erroneously deprived of their licenses. Third, the Division has a significant interest in protecting consumers by regulating the conduct of individuals involved in the creation and sale of mortgage loans. Taken together, these factors do not favor an increased standard of proof. As a result, the substantial evidence standard does not violate Vavla's due process rights.

The substantial evidence standard of proof does not violate Vavla's right to equal protection

Vavla argues that the imposition of the substantial evidence standard of proof is a violation of equal protection because Nevada applies a different evidentiary standard to mortgage agents than it does to other professional licensees. Both the United States Constitution and theNevada Constitution require equal protection under the law. In re Candelaria, 126 Nev. _, _, 245 P.3d 518, 523 (2010). "Equal protection allows different classifications of treatment, but the classifications must be reasonable." Flamingo Paradise Gaming, LLC v. Chanos, 125 Nev. 502, 520, 217 P.3d 546, 558 (2009).

Equal protection only applies if the government treats similarly situated persons differently under the law. In re Candelaria, 126 Nev. at _, 245 P.3d at 523. If the parties are not similarly situated, then, then equal protection does not apply. See Reel v. Harrison, 118 Nev. 881, 886, 60 P.3d 480, 483 (2002). Individuals are similarly situated when their job functions are similar. Edwards v. City of Reno, 103 Nev. 347, 351, 742 P.2d 486, 488-89 (1987) (concluding that door-to-door solicitors and door-to-door peddlers are similarly situated). Individuals with the same job title or statutory definition are similarly situated. Starlets Int'l, Inc. v. Christensen, 106 Nev. 732, 735-36, 801 P.2d 1343, 1344-45 (1990) (recognizing that "outcall promoters" called to hotels and "outcall promoters" called to other locations are similarly situated). However, when one class of individuals is granted a power that is not granted to another class, the two classes are not similarly situated with regard to that power. Zaragoza v. Bennett-Haron, 828 F. Supp. 2d 1195, 1209-10 (D. Nev. 2011) (concluding that police officers and private individuals are not similarly situated with regard to the lawful use of force).

Applying these standards, mortgage agents are not similarly situated to other professionals such as doctors or lawyers. A mortgage agent is a professional whose statutory definition differs significantly from that of a doctor or a lawyer. See NRS 49.065 (defining lawyer); NRS 49.215(2) (defining doctor); NRS 645B.0125 (defining mortgage agent).Each profession has a different function, requires a different level and type of education, employs vastly different skill sets, and causes varying degrees and types of consequences if performed negligently. Because of these differences, we find that a mortgage broker is not similarly situated to other professionals. Therefore, we decline to analyze the differences in treatment between different types of professionals. We conclude that the use of a substantial evidence burden does not violate Vavla's equal protection rights.

The appeals officer did not rely on improper evidence

Vavla argues that the appeals officer improperly relied on the fake letter on Evergreen Home Loan's letterhead for which a chain of custody was not established. NRS 233B. 123(1) authorizes the admission of evidence when "it is of a type commonly relied upon by reasonable and prudent persons in the conduct of their affairs." An appeals officer "is not bound by the technical rules of evidence" and may relax them if it "will aid in determining the facts." NAC 645B.560. Authentication is a condition precedent for the admissibility of a document, NRS 52,015, and can be established by testimony of a witness with knowledge that the document "is what it is claimed to be." NRS 52.025. Though it is styled as a challenge to authenticity, Vavla's argument about deficiencies in the Evergreen letter's chain of custody is primarily an argument about weight and credibility. See United States v. Lampson, 627 F.2d 62, 65 (7th Cir. 1980) (holding that "an adequate chain of custody goes to the weight of the evidence, rather than admissibility").

Because we do not evaluate the credibility or weight of evidence, we only consider whether the Evergreen letter was authenticated when reviewing the propriety of this piece of evidence.Minton, 110 Nev. at 1079, 881 P.2d at 1352. Here, an Evergreen employee authenticated the letter because she testified that the...