Brent Allen Morgan and Summit Development & Lending Group Inc., Petitioners,
Department of Commerce, Division of Securities, Respondent.
Proceeding in this Court
Stephen K. Christiansen, Attorney for Petitioners.
D. Reyes, Thomas M. Melton, and Stanford E. Purser, Attorneys
David N. Mortensen authored this Opinion, in which Judges
Kate A. Toomey and Jill M. Pohlman concurred.
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. 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.
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."
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.
Morgan now seeks judicial review of the Department's
order. 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
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.
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).
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 ...