South Carolina              
Administrative Law Court
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SC Administrative Law Court Decisions

CAPTION:
James Ira Ruff vs. SCDCA

AGENCY:
South Carolina Department of Consumer Affairs

PARTIES:
Petitioners:
James Ira Ruff

Respondents:
South Carolina Department of Consumer Affairs
 
DOCKET NUMBER:
06-ALJ-30-0131-CC

APPEARANCES:
For Petitioner: Philip S. Porter, Esquire

For Respondent: Danny R. Collins, Esquire
Carolyn Grube, Esquire
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF THE CASE

This is a contested case brought by Petitioner James Ira Ruff challenging the decision of the South Carolina Department of Consumer Affairs (Department) which denied Petitioner’s Originator License for Mortgage Broker Company Originators based on Petitioner’s application and the Department’s evaluation of the circumstances surrounding that application. A hearing was held before me on July 25, 2006 at the offices of the Administrative Law Court (“ALC” or “Court”) in Columbia, South Carolina.

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion of parties, I make the following findings of fact by a preponderance of evidence:

1. Notice of the time, date, place and subject matter of the hearing was given to Petitioner and Respondent.

2. Petitioner Ruff, in completing his application, Supplemental Form O for an originator’s license, submitted a sworn statement that all information contained in the application is true, current and correct. Petitioner answered “YES” to the question on the form, “Have you ever surrendered, resigned, cancelled or been denied a professional license or other credential in any jurisdiction?” Petitioner also answered “YES” to the question on the form, “Has any licensing or other credentialing agency ever taken any disciplinary action against you, including but not limited to, any warning, reprimand, suspension, probation, limitation or revocation?”

3. Petitioner was indefinitely suspended from the practice of law in the State of South Carolina in September, 2005. Petitioner surrendered his certificate of admission to practice law in the State of South Carolina pursuant to Opinion No. 26044 issued by the South Carolina Supreme Court.

4. Petitioner Ruff was suspended from the practice of law in the State of South Carolina for conduct involving mismanagement of his trust account, mismanagement of client funds, and improper bookkeeping and recordkeeping procedures.

5. On February 15, 2006, the Department denied Petitioner’s Originator License for Mortgage Broker Company Originators, citing S.C. Code Ann. 40-58-60.

CONCLUSIONS OF LAW

Based upon the above findings of fact, I conclude the following as a matter of law:

1. This Court has jurisdiction over this contested case proceeding pursuant to S.C. Code Ann. § 37-6-414 (Supp. 2005), S.C. Code Ann. § 40-58-55(A) (Supp. 2005), and S.C. Code Ann. § 1-23-600(B) (Supp. 2005).

2. In presiding over this contested case, this Court serves as the finder of fact and makes a de novo determination regarding the licensing matters at issue. See S.C. Code Ann. § 1-23-600(B) (Supp. 2005); Marlboro Park Hosp. v. S.C. Dep’t of Health & Envtl. Control, 358 S.C. 573, 577-79, 595 S.E.2d 851, 853-854 (Ct. App. 2004); Brown v. S.C. Dep’t of Health & Envtl. Control, 348 S.C. 507, 512, 560 S.E.2d 410, 413 (2002).

3. In order to be licensed as a mortgage loan originator, an applicant must be at least eighteen years of age and must have at least six months of experience in residential mortgage lending or complete eight hours of continuing education within ninety days of employment. S.C. Code Ann. § 40-58-50(D) (Supp. 2005). Further, before issuing a license to a mortgage loan originator, the licensing authority must find that the applicant’s “financial responsibility, experience, character, and general fitness…are such as to command the confidence of the community and to warrant belief that the business may be operated honestly, fairly, and efficiently according to the purposes of this chapter [i.e., Chapter 58 of Title 40, which pertains to the licensing of mortgage loan brokers].” S.C. Code Ann. § 40-58-60(A) (Supp. 2005). In determining whether an applicant has the requisite character and fitness to be licensed as a mortgage loan originator, the licensing authority may consider such factors as whether the applicant has “(1) violated a provision of this chapter or an order of the [D]epartment; (2) withheld material information in connection with an application for a license or its renewal, or made a material misstatement in connection with the application; [or] (3) been convicted of a felony or of an offense involving breach of trust, moral turpitude, fraud, or dishonest dealing within the past ten years.” See S.C. Code Ann. § 40-58-55(A) (Supp. 2005).

4. Petitioner argues that when the Department, and therefore the Court, evaluates an application for an Originator License for Mortgage Broker Company Originators, the evaluation is limited to looking at the three criteria listed in S.C. Code Ann. § 40-58-55(A). Petitioner argues that to conclude otherwise would give the Department unfettered discretion to impose character and fitness standards above and beyond what is contemplated in Section 40-58-55(A). Petitioner also argues that S.C. Code Ann. § 40-58-60 (pertaining to character and fitness) is not applicable to applicants for Mortgage Originator Licenses because the intent behind this section is to determine the character and fitness of an entity.

5. I find Petitioner’s arguments to be without merit. At best, if read literally and in a vacuum, S.C. Code Ann. § 40-58-55 would limit only the Administrative Law Court’s review. If read literally and in a vacuum, the ALC could only review a denial of a license if the Department denied it for one or more of the three reasons enumerated in Section 40-58-55. Any denial for any other reason could not be reviewed under this interpretation. However, since this Court makes a de novo determination regarding licensing matters, this Court has jurisdiction over all licensing denials properly before this Court, and this Court makes its own findings of fact and conclusions of law, and does so utilizing all of the statutes available to the Department in making its decisions.

6. As for Petitioner’s argument that S.C. Code Ann. § 40-58-60 applies only to entities, a reading of the section makes it clear that it applies to all applicants. See S.C. Code Ann. § 40-58-60 (Supp. 2005) (stating “…if the department finds that the financial responsibility, experience, character, and general fitness of the applicant, and of the members if the applicant is a copartnership, association, or limited liability company, and of the officers and directors if the applicant is a corporation…”) (Emphasis added.). Therefore, it is proper for the Department, and thus this Court, to consider financial responsibility, experience, character, and general fitness of applicants for Mortgage Originator Licenses when determining whether licensure is proper.

7. Petitioner Ruff was indefinitely suspended from the practice of law in the State of South Carolina in September, 2005 for conduct involving mismanagement of his trust account, mismanagement of client funds, and improper bookkeeping and recordkeeping procedures. This conduct is a direct indicator of Petitioner Ruff’s financial responsibility and general fitness. Since the duties as a mortgage loan originator involve many of the skills that Petitioner Ruff did not competently handle in his law practice, I find that Petitioner Ruff does not possess the financial responsibility and general fitness necessary to secure licensure as a mortgage loan originator.

ORDER

Based upon the above Findings of Fact and Conclusions of Law state above,

IT IS HEREBY ORDERED that Petitioner Ruff’s application for licensure as a mortgage loan originator is DENIED.

AND IT IS SO ORDERED.

_________________________________

John D. McLeod

Administrative Law Judge

August 3, 2006

Columbia, South Carolina


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