SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This is a contested case brought by Petitioner James W. Barber 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 South Carolina Law Enforcement Division’s (“SLED”) criminal records check. A hearing was scheduled on May 11, 2006, but the Petitioner was mistaken as to the time of the hearing. The Respondent appeared and the Court dismissed the action due to the failure of the Petitioner to appear. The Petitioner appeared shortly threreafter and filed a Motion for Reconsideration. This motion was granted on June 21, 2006 and a hearing on the merits was held before me on Thursday, July 13, 2006 at the offices of the Administrative Law Court (“ALC” or “Court”) in Columbia, South Carolina. Based on the evidence before me, I find and order that the Petitioner be granted his license.

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. When the Petitioner completed his application, Supplemental Form O for an originator’s license, he submitted a sworn statement that all information contained in the application was true, current and correct. Petitioner answered “No” to the question on the form, “Have you ever been convicted of a felony or an offense involving breach of trust, moral turpitude or dishonest dealings within the last ten years?”

3. Petitioner’s arrest record, Respondent’s Exhibit #2, shows a conviction for Fraudulent Checks in 1996. The Petitioner had been paid with a bad check by his employer which caused his personal checks to bounce. The Petitioner paid full restitution and did not realize that these fraudulent check charges were consider “convictions” as asked on the mortgage loan originator’s application.

4. The Court found the Petitioner to be a credible witness. He testified that he paid restitution on all of the checks. Counsel for the Respondent stated that as of August 9, 2006, the ten year look back period for the question on the application will run and the Petitioner’s fraudulent check issue will be moot.

6. The Petitioner testified that since he had paid full restitution plus the court fees on the bad check, he was not aware that these convictions would appear on his record. He would like to be able to return to work.

CONCLUSIONS OF LAW

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

1. S.C. Code Ann. 37-6-414 (2005), S. C. Code Ann. §§ 1-23-600, et seq. (2005) and S.C. Code Ann. § 1-23-380 (2005) grant jurisdiction to the Administrative Law Court to hear this contested case.

2. S.C. Code Ann. § 40-58-50(C) (2005) sets forth:

The application for an originator license must designate the employing mortgage broker and must include descriptions of the business activities, educational background, and general character and fitness of the applicant as required by this chapter, including consent to a criminal records check…

3. S.C. Code Ann. § 40-58-55 (2005) sets forth:

(A) The department may refuse to license an applicant or refuse to renew a license if it finds, after notice and a hearing pursuant to the Administrative Procedures Act, that the applicant or his agent has:

(1) violated a provision of this chapter or an order of the department;

(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;

(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.

(B) A person who was in business as a mortgage broker or is an agent of a broker before October 1, 1998, and who has been convicted of a felony or an offense involving breach of trust, moral turpitude, fraud, or dishonest dealing within the past ten years may continue in business as a mortgage broker or agent, but if a mortgage broker or an agent of a broker is convicted of an offense enumerated in item (3) of subsection (A) on or after October 1, 1998, that person is subject to the provisions of this chapter. (Emphasis added.)

4. The record shows Petitioner’s arrest record has the fraudulent check charges in 1996, which is an offense specifically included in S.C. Code Ann. § 40-58-55(A)(3) (2005). Although the Petitioner’s conviction was within the last ten years, pursuant to S.C. Code Ann. § 40-58-55 (2005), I conclude that the Department’s refusal to license Petitioner was not proper. The Respondent even admitted that the issue will be moot on August 9, 2006. In addition, S.C. Code Ann. § 40-58-55 is a permissive, not mandatory, statute in that the Department “may refuse to license an applicant.”

"The cardinal rule of statutory construction is to ascertain and effectuate the legislative intent whenever possible." Strother v. Lexington County Recreation Comm'n, 332 S.C. 54, 62, 504 S.E.2d 117, 121 (1998). "All rules of statutory construction are subservient to the one that the legislative intent must prevail if it can be reasonably discovered in the language used, and that language must be construed in the light of the intended purpose of the statute." Kiriakides v. United Artists Communications, Inc., 312 S.C. 271, 275, 440 S.E.2d 364, 366 (1994). The words of the statute must be given their plain and ordinary meaning without resorting to subtle or forced construction to limit or expand the statute's operation. Hitatchi Data Sys. Corp. v. Leatherman, 309 S.C. 174, 178, 420 S.E.2d 843, 846 (1992). Marlboro Park Hospital v. SCDHEC, 257 S.C. ____, 595 S.E. 2d 851 (SC Ct. App. 2004). Here the use of the permissive “may” versus the mandatory “shall” indicates that the Legislature intended that the application of this statute is discretionary.

In this matter, I find that the statute should not be strictly construed against the Petitioner.

ORDER

Based upon the above Findings of Fact and Conclusions of Law, it is hereby ORDERED that Petitioner James W. Barber is entitled to an Originator License for Mortgage Broker Company Originators.

AND IT IS SO ORDERED.

_________________________________

Carolyn C. Matthews

SC Administrative Law Judge

August 8, 2006

Columbia, South Carolina