Morgan v. Department of Commerce , 414 P.3d 501 ( 2017 )

2017 UT App 225THE UTAH COURT OF APPEALS
BRENT ALLEN MORGAN AND SUMMIT
DEVELOPMENT & LENDING GROUP INC.,
Petitioners,
v.
DEPARTMENT OF COMMERCE, DIVISION OF SECURITIES,
Respondent.
Opinion
No. 20160091-CA
Filed December 7, 2017
Original Proceeding in this Court
Stephen K. Christiansen, Attorney for Petitioners
Sean D. Reyes, Thomas M. Melton, and Stanford E.
Purser, Attorneys for Respondent
JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES KATE A. TOOMEY and JILL M. POHLMAN concurred.
MORTENSEN, Judge:
¶1 Brent Allen Morgan asks us to conclude that because he is
a private individual, unlicensed to sell securities in the state of
Utah, the Utah Division of Securities should not have been able
to wait as long as it did before bringing an administrative
proceeding against him for allegedly violating the Utah Uniform
Securities Act. 1 Because the statutes of limitations Morgan
1. The Division brought the proceeding against Morgan and
Summit Development and Lending Group Inc., Morgan’s “sole
corporation.” The parties do not distinguish between Morgan
and his corporation in their arguments on appeal, and we do not
see a need to do so for purposes of our analysis. We therefore
(continued…)
Morgan v. Department of Commerce
identified do not apply, we decline to disturb the Department of
Commerce’s order, which allowed the proceeding to go forward.
¶2 In August 2014, the Division filed a notice of agency
action and order to show cause, alleging that Morgan had made
material misstatements and omissions in connection with the
offer and sale of securities to at least three investors. All of the
acts alleged in the notice occurred between June 2007 and July
2008. Morgan moved to dismiss the proceeding, arguing it was
time-barred. The Utah Securities Commission denied the
motion, reasoning that “there is no statute of limitations
applicable to administrative actions filed by the Division of
Securities under the Uniform Securities Act where no civil
complaint is filed.”
¶3 Morgan thereafter sought Department review of the
Commission’s denial of his motion to dismiss. The Department
concluded that this court’s decision in Rogers v. Division of Real
Estate, 790 P.2d 102 (Utah Ct. App. 1990), controlled the question
of which statute of limitations applied, if any. “Applying the
rationale in Rogers,” the Department determined that “none of
the statutes upon which Petitioners rely apply in this case. Those
statutes limit the time in which the state may bring criminal or
civil actions; they do not specifically reference any
administrative action by a government agency.” The Department
accordingly affirmed the Commission’s order.
¶4 Morgan now seeks judicial review of the Department’s
order. 2 He argues that Rogers is inapplicable where, as here, an
(…continued)
use “Morgan” to refer both to him individually and Morgan and
his corporation collectively.
2. Because this case presents only questions of law, we review
the Department’s order for correctness. See Evolocity, Inc. v.
(continued…)
20160091-CA 2 2017 UT App 225Morgan v. Department of Commerce
agency brings an administrative proceeding “against a non-
member of the profession who is a member of the public at
large.” In such a case, Morgan contends, the proceeding is
limited by one of three statutes of limitations, any one of which
would render the notice filed in this case untimely. The three
statutes relied on by Morgan are Utah Code section 61-1-21.1,
which requires that any “indictment or information” or “civil
complaint” for violations of the Act be filed no “more than five
years after the alleged violations”; section 78B-2-307, which sets
forth a four-year catch-all statute of limitations “for relief not
otherwise provided for by law”; and section 78B-2-302(3), which
requires any action “for a forfeiture or penalty to the state” to
“be brought within one year.” Morgan provides detailed
analyses as to why each of these statutes might apply to this case
and concludes,
Some statute of limitations therefore applies to the
Division’s claims. It is either the one-year statute
for a penalty to the state; the five-year specific
statute for securities claims that supersedes the
one-year general statute; or, if neither of these
applies, the four-year “catch-all” statute of
limitations that applies to all “causes of action.”
(Emphasis in original.) We disagree and hold that none of the
three statutes of limitations apply. 3
(…continued)
Department of Workforce Services, 2015 UT App 61, ¶ 7, 347 P.3d
406.
3. As noted in Phillips v. Department of Commerce, 2017 UT App
84, 397 P.3d 863, the legislature recently provided for a ten-year
statute of limitations applicable to such proceedings. See id. ¶ 15
n.4; Utah Code Ann. § 61-1-21.1(2) (LexisNexis Supp. 2017).
(continued…)
20160091-CA 3 2017 UT App 225Morgan v. Department of Commerce
§ 61-1-21.1
¶5 Morgan first contends that under section 61-1-21.1 of the
Utah Code, the Division was required to file its notice of agency
action within five years of the complained-of conduct. Since
briefing in this case, we issued our decision in Phillips v.
Department of Commerce, 2017 UT App 84, 397 P.3d 863, which
directly addressed the question of “whether the Act’s limitation
period [found in section 61-1-21.1] applied to the Division’s
enforcement action.” Id. ¶ 12; see generally Utah Code Ann. § 61-
1-21.1 (LexisNexis 2011). We determined that it did not and that
the Division’s action, for a violation that occurred five years and
six months prior to the commencement of the enforcement
proceeding, was timely. Phillips, 2017 UT App 84, ¶¶ 12, 15. In so
determining, we relied on our reasoning in Rogers. Id. ¶ 15.
Whether the person accused was a member of a certain
profession or not was irrelevant to that reasoning; rather, we
found it persuasive that “‘an administrative disciplinary hearing
is not a civil proceeding,’ and an order to show cause is different
in kind from a civil complaint.” Id. (quoting Rogers, 790 P.2d at
105).
¶6 Because the decision in Phillips directly addressed section
61-1-21.1 and determined that it did not apply, Morgan’s
argument on this point fails. There is no factual or legal basis to
distinguish the present case from Phillips; Phillips decided that
administrative proceedings like the one brought by the Division
in this case were not subject to that statute of limitations. We
therefore conclude that the Department did not err in finding
that section 61-1-21.1 did not bar the agency action against
Morgan.
(…continued)
Because that statute did not take effect until after the Division
filed its notice of agency action, it does not affect our analysis.
20160091-CA 4 2017 UT App 225Morgan v. Department of Commerce
§ 78B-2-307
¶7 Morgan next contends that the catch-all statute of
limitations, Utah Code section 78B-2-307(3), applies. 4 However,
this court has previously held that this statute of limitations has
no application to administrative proceedings. See Rogers v.
Division of Real Estate, 790 P.2d 102, 105 (Utah Ct. App. 1990). 5
¶8 Section 78B-2-102 of the Utah Code provides:
Civil actions may be commenced only within the
periods prescribed in this chapter, after the cause
of action has accrued, except in specific cases
where a different limitation is prescribed by
statute.
Utah Code Ann. § 78B-2-102 (LexisNexis 2012). In Rogers, we
considered the operation of this statute. There, the petitioner
argued that the administrative proceeding was a civil
proceeding; that Utah Code section 78B-2-102 made the panoply
of statutes of limitations found in Title 78, now located in Title
78B, applicable to administrative proceedings; and that therefore
the catch-all statute, section 78B-2-307(3), applied. Rogers, 790
P.2d at 105. We disagreed, noting that civil actions are
commenced by filing a complaint or by the service of a
4. Section 78B-2-307(3) provides, “An action may be brought
within four years . . . for relief not otherwise provided for by
law.” Utah Code Ann. § 78B-2-307(3) (LexisNexis 2012).
5. Rogers analyzed sections 78-12-1 and 78-12-25(2) of the Utah
Code. We refer to the substance of these statutes by citing their
renumbered counterparts, sections 78B-2-102 and 78B-2-307(3),
respectively.
20160091-CA 5 2017 UT App 225Morgan v. Department of Commerce
summons. Id. at 105–06 (citing Utah R. Civ. P. 3(a)). 6 But the
administrative enforcement proceeding at issue in Rogers was
commenced when the agency filed a petition with the
administrative tribunal. Id. at 104; see also Phillips, 2017 UT App
84, ¶ 14 (reiterating the conclusion from Rogers that an
administrative proceeding is not a civil action). We therefore
determined that an administrative proceeding is not a civil
action and that in the absence of specific legislative authority, the
civil statutes of limitations in Title 78 are inapplicable to
administrative proceedings. 7 Rogers, 790 P.2d at 105–06.
¶9 As in Rogers, the case before us is an administrative
proceeding rather than a civil action. Accordingly, because
section 78B-2-307(3) applies only to civil actions, and because
Rogers previously decided that civil statutes of limitations—and
6. The term “action” is a defined term. “The word ‘action’ as
used in this chapter includes counterclaims and cross-complaints
and all other civil actions in which affirmative relief is sought.”
Utah Code Ann. § 78B-2-101(1) (LexisNexis 2012) (emphasis
added).
7. An example of such legislative authority is highlighted in
Lorenzo v. Workforce Appeals Board, 2002 UT App 371, 58 P.3d 873,
where we held that a civil statute of limitations from Title 78 did
apply to an administrative proceeding. Id. ¶ 9. However, in
Lorenzo, we were reviewing the Employment Security Act, which
expressly provides: “Action required for the collection of sums
due under this chapter is subject to the applicable limitations of
actions under Title 78, Chapter 12, Limitation of Actions.” See id.
¶ 14 n.2 (quoting an earlier version of Utah Code Ann. § 35A-4-
305 (LexisNexis 2015)). No such provision is found in the Utah
Uniform Securities Act, which only underscores that, had the
Utah Legislature wanted the statutes of limitations in Title 78B to
apply, the legislature could have so provided.
20160091-CA 6 2017 UT App 225Morgan v. Department of Commerce
section 78B-2-307(3) in particular—do not apply to
administrative proceedings, section 78B-2-307(3) does not apply
in this case. Morgan’s argument that “the Department
erroneously stretched Rogers to apply here” is not well taken.
§ 78B-2-302(3)
¶10 Finally, Morgan argues that the administrative
proceeding is barred by the one-year statute of limitations that
applies to “[a]n action” brought “upon a statute, or upon an
undertaking in a criminal action, for a forfeiture or penalty to the
state.” See Utah Code Ann. § 78B-2-302(3) (LexisNexis Supp.
2017). While this court has not previously addressed the
applicability of section 78B-2-302(3) to administrative
proceedings, the reasoning of Rogers and Phillips applies. That
section appears in the same chapter of our code as does section
78B-2-307(3), and its use of the word “action” thus means civil
proceedings. See id. § 78B-2-101(1) (2012); Rogers, 790 P.2d at105–06. As we have already explained, civil statutes of
limitations find no application in this case. We therefore cannot
agree that section 78B-2-302(3) operates to bar these proceedings.
CONCLUSION
¶11 Because none of the suggested statutes of limitations
apply in this case, the Department did not err by determining
that the administrative proceeding was not time-barred. We
therefore decline to disturb the Department’s order.
20160091-CA 7 2017 UT App 225