Diamond v. State
926 N.W.2d 71
Neb.2019Background
- In 2012 the U.S. and Colorado sued Bella Homes and individuals including Mark Diamond alleging a nationwide foreclosure-rescue scheme that took over $3 million from >450 homeowners in violation of MARS rules; Diamond was CEO of Bella Homes.
- In March 2012 Diamond entered a stipulated consent judgment and permanent injunction confessing liability to two counts that incorporated paragraphs 1–184 of the complaint (which described fraudulent conduct) and specific violations of MARS §§ 1015.3(c) and 1015.5(a).
- Diamond did not report the Colorado civil action/consent judgment to the Nebraska Director of Insurance within 30 days.
- In 2016 the Nebraska Department of Insurance charged Diamond under the Insurance Producers Licensing Act for failing to report (§ 44-4065(1)) and for misconduct including fraud and irresponsibility in business (§ 44-4059(1)(g) & (h)); the Director imposed a $2,500 fine.
- The Lancaster County District Court affirmed the Department’s order; Diamond appealed to the Nebraska Supreme Court, arguing only that his consent judgment confession did not constitute an admission of "fraud" under § 44-4059(1)(g).
Issues
| Issue | Plaintiff's Argument (Diamond) | Defendant's Argument (State / DOI) | Held |
|---|---|---|---|
| Whether Diamond's confession in the Colorado consent judgment admitted to "fraud" under Neb. Rev. Stat. § 44-4059(1)(g) | The consent judgment did not expressly use the word "fraud" or admit to fraud under MARS § 1015.3(c), so it cannot be treated as an admission of fraud triggering § 44-4059(1)(g) | The statutory term "fraud" is broad; Diamond’s confession (including incorporation of complaint paragraphs alleging a scheme to defraud and admission to violations of MARS § 1015.3(c)) constitutes an admission of fraud under the Act | The court held Diamond’s confession admitted to fraud within § 44-4059(1)(g) and affirmed the disciplinary action |
| Whether Diamond violated the reporting requirement of § 44-4065(1) by failing to report the out-of-state civil action within 30 days | Diamond did not dispute on appeal the failure-to-report finding (conceded at oral argument) | DOI: § 44-4065(1) requires reporting of administrative or civil actions in another jurisdiction within 30 days of final disposition | Held: Diamond violated § 44-4065(1) by failing to report the consent judgment within 30 days |
Key Cases Cited
- Pan v. IOC Realty Specialist, 301 Neb. 256, 918 N.W.2d 273 (2018) (statutory interpretation—plain-meaning rule)
- Gillan v. Equitable Life Assurance Society, 143 Neb. 647, 10 N.W.2d 693 (1943) (historical definitions of "fraud" used in Nebraska insurance law)
- Chafin v. Wisconsin Province Society of Jesus, 301 Neb. 94, 917 N.W.2d 821 (2018) (appellate preservation requirement for assignments of error)
- Leon V. v. Nebraska Dept. of Health & Human Servs., ? Neb. ? , 921 N.W.2d ? (2019) (standards cited for APA review)
- Patterson v. Metropolitan Util. Dist., ? Neb. ? , 923 N.W.2d ? (2019) (statutory-interpretation and APA principles)
Note: The court defined "fraud" under § 44-4059(1)(g) broadly as any act, omission, or concealment involving breach of duty, trust, or confidence that injures another or secures an unconscientious advantage, and applied that definition to Diamond's confessed liability under the consent judgment, affirming the Department's fine.