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Morgan v. Department of Commerce

Court of Appeals of Utah

December 7, 2017

Brent Allen Morgan and Summit Development & Lending Group Inc., Petitioners,
Department of Commerce, Division of Securities, Respondent.

         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 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 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]

         § 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 ...

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