229 Conn.App. 664
Conn. App. Ct.2024Background
- 1st Alliance Lending, LLC (1st Alliance), a licensed Connecticut mortgage lender, operated with two classes of employees: licensed Mortgage Loan Originators (MLOs) and unlicensed Home Loan Consultants (HLCs), who allegedly took part in activities requiring an MLO license.
- An internal compliance audit in 2018 found systemic violations of state and federal law, including the Connecticut SAFE Act, ECOA, TILA, and TRID.
- Department of Banking conducted an examination, issued a notice of intent to revoke 1st Alliance's license, cease and desist order, and proposed a civil penalty.
- Separately, 1st Alliance’s surety bond was cancelled; upon attempted surrender of its license, the department suspended and later revoked the license due to bond issues.
- 1st Alliance appealed the revocation (on compliance grounds), the Surety Bond-related suspension, and other penalties through the administrative process, Superior Court, and to this appellate court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Revocation Authority After Prior Revocation | Commissioner had no authority to revoke a license already revoked in bond case | Commissioner had authority because the compliance revocation was based on different grounds/consequences | Commissioner had authority; trial court did not err. |
| Statutory Interpretation: Definition of MLO | Dept. expanded MLO definition improperly (HLCs did not take "applications") | Dept. properly interpreted and determined HLCs’ activities fit the MLO definition under Connecticut law | Court found substantial evidence for agency's interpretation; no improper deference. |
| Retroactive Application of § 36a-498e(b) | Dept. retroactively applied post-2018 AFC to conduct before effective date | Sufficient evidence showed violations continued after the law's effective date | No retroactive application; substantial evidence supported post-July 1, 2018 violations. |
| Failure to Cooperate with Subpoena/Investigation | Dept. cannot find non-cooperation without judicial subpoena enforcement | Full compliance with subpoena required regardless of judicial enforcement | Substantial evidence of non-cooperation; enforcement motion not required for this finding. |
| Due Process Violation | Lack of neutral hearing officer and insufficient trial court review | No evidence of bias; UAPA procedures exceed constitutional minimum; meaningful judicial review occurred | No due process violation found. |
| Excessive Penalty | Penalties are unconstitutionally excessive | Claim inadequately briefed; not specifically opposed on the merits | Issue not reviewed due to inadequate briefing. |
| Need for Remand if Any Finding in Error | New penalty hearing required if any violations overturned | All findings supported by evidence | No remand needed as all findings were affirmed. |
Key Cases Cited
- 1st Alliance Lending, LLC v. Dept. of Banking, 342 Conn. 273 (2022) (addressed statutory requirements for license surrender, the process and consequences of mortgage lender license suspension/revocation)
- Stern v. Medical Examining Board, 208 Conn. 492 (1988) (board jurisdiction and relevance of license status at time of disciplinary proceedings)
- Goldstar Medical Services, Inc. v. Dept. of Social Services, 288 Conn. 790 (2008) (review standards for administrative agency decisions)
- Pet v. Dept. of Health Services, 228 Conn. 651 (1994) (due process in administrative proceedings under the UAPA)
- Moraski v. Board of Examiners of Embalmers & Funeral Directors, 291 Conn. 242 (2009) (administrative bias and burden of proof for due process claims)