Lewis v. Bureau of Real Estate CA3 ( 2015 )

Filed 10/29/15 Lewis v. Bureau of Real Estate CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(San Joaquin)
----
MILO LEWIS, C077787
Plaintiff and Appellant, (Super. Ct. No.
39201400306027CUWMSTK)
v.
BUREAU OF REAL ESTATE,
Defendant and Respondent.
This appeal from the denial of a petition for a writ of administrative mandate
arises from an order of the real estate commissioner revoking all licenses and licensing
rights of plaintiff Milo Lewis under the real estate law, including his broker license, but
allowing him to apply for a restricted real estate salesperson license. On appeal, Lewis
offers numerous challenges to the actions of the administrative agency (defendant Bureau
1
of Real Estate; hereafter, the Bureau)1 and the trial court. Finding no merit in any of
Lewis’s arguments, we will affirm.
FACTUAL AND PROCEDURAL BACKGROUND
On September 14, 2010, the Bureau filed an accusation against Lewis containing
various charges, including that in August, November, and December 2008, he collected
advance fees before he had received a “no objection letter” from the Bureau.2 The
accusation also alleged that, in acting as a real estate broker, Lewis had received funds in
connection with mortgage loan brokerage activities that were required to be held in a trust
fund account, but he had failed to deposit them into such an account.
On the same day the accusation against Lewis was filed, the Bureau issued an
“Order To Desist And Refrain” directed to Cloud 10 Financial Inc. (hereafter, the cease
and desist order) based on the same advance fee transactions described above.
On March 18, 2011, Lewis filed his notice of defense requesting a hearing on the
accusation and stating that he did not intend to be represented by an attorney.
On August 19, 2011, the Bureau notified Lewis that the hearing on the accusation
would be held on January 2, 2012. Four days later, the Bureau notified him that the
hearing would be held on January 5 and 6 instead.
In December 2011, the Bureau requested a continuance because its attorney had
been hospitalized and would not return to work with adequate time to prepare for the
1 At the time, the Bureau was known as the Department of Real Estate. For the sake
of consistency, we will refer to the agency as the Bureau throughout our opinion.
2 Business and Professions Code section 10085 provides that the real estate
commissioner “may require that any or all materials used in obtaining advance fee
agreements, including but not limited to the contract forms . . . be submitted to him or her
at least 10 calendar days before they are used” and that “[a]ny violation of any of the
provisions of this part or of the rules, regulations, orders or requirements of the
commissioner thereunder shall constitute grounds for disciplinary action against a
licensee.”
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hearing. Lewis did not oppose the request, and the hearing was reset for July 9 and 10,
2012.
In May 2012, Lewis requested a continuance because he had been unable to
prepare for the hearing due to his involvement in a family law matter. The Bureau did
not oppose the request, and the hearing was reset for January 9 and 10, 2013.
In December 2012, Lewis requested his second continuance because he needed
time to pay for the costs of discovery and because his family law matter was still not
resolved. Again, the Bureau did not oppose the request, and the hearing was reset for
July 24 and 25, 2013.
In June 2013, Lewis requested his third continuance, this time because of
“unresolved discovery issues and delays in settlement discussions” and because his
family law matter was still not resolved. The Bureau opposed this request, contending it
was untimely and Lewis had failed to show good cause. The ALJ denied Lewis’s request
on the ground that no good cause had been shown, but ordered the Bureau to offer Lewis
another reasonable opportunity to review and copy all discoverable documents before the
hearing. According to Lewis, that review occurred on July 5.
On July 8, 2014, just over two weeks before the scheduled hearing dates, Lewis
requested a continuance for the fourth time. Lewis offered numerous reasons for the
requested continuance, including that he needed time to retain qualified counsel. He
stated that he was “in negotiations” with an attorney and needed at least 30 days to come
up with the funds to retain the attorney’s services. He also argued that a continuance
should be granted so he could file a motion to consolidate the accusation against him with
a challenge to the cease and desist order issued against Cloud 10 Financial Inc.
The Bureau again opposed Lewis’s continuance request. Regarding Lewis’s
retention of counsel, the Bureau asserted that Lewis had had almost two and one-half
years to retain an attorney and his failure to do so in a timely manner was not good cause
for a continuance. On the consolidation issue, the Bureau argued that Lewis, who was
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the sole owner of Cloud 10 Financial Inc., had never requested a hearing on the cease and
desist order against the corporation before now and the time for doing so had long since
passed.
The administrative law judge (ALJ) again denied Lewis’s continuance request,
finding that Lewis had failed to show good cause for all of the reasons set forth in the
Bureau’s opposition.
The matter was heard before an ALJ on July 24 and 25, 2013. In a proposed
decision issued in October 2013, the ALJ found that Lewis was subject to discipline on
five different causes of action alleging audit violations, trust fund mishandling, using an
unlicensed fictitious business name, making substantial misrepresentations, and
negligence or incompetence. As relevant here, the ALJ found that in August, November,
and December 2008, Lewis accepted advance fees to perform loan modification services
before he had received a “no objection” letter from the Bureau for the “Hardship Services
Enrollment Form” he used. The ALJ also found that Lewis failed to deposit advance fees
that he received into a trust fund account.
Based on all of the violations found, the ALJ recommended that all of Lewis’s
licenses under the real estate law be revoked but that he be offered the opportunity to
apply for a restricted real estate salesperson license.
The real estate commissioner adopted the ALJ’s proposed decision in November
2013. In January 2014, Lewis filed a petition for a writ of administrative mandate against
the Bureau to challenge the discipline. He filed an amended petition in February 2014,
and the matter was eventually heard in July 2014.
The trial court initially filed its statement of decision denying Lewis’s writ petition
on August 26, 2014. Lewis filed objections to the statement of decision and a motion for
reconsideration on September 9. On September 17, he filed notice of his intention to
move for a new trial. On October 1, the trial court denied the motion for reconsideration
and overruled the objections to the statement of decision. The formal orders on both of
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those rulings were entered on October 16. On October 22, the Bureau filed notices of
entry of both of those formal orders.
On October 30, the trial court denied Lewis’s new trial motion and stated that it
was going to prepare an amended statement of decision to correct one misstatement.
That same day, Lewis filed a notice of appeal purporting to appeal from a judgment
entered October 22, even though no judgment was entered on that date. Judgment was
eventually entered in January 2015.
DISCUSSION
I
Timeliness Of Appeal
As a threshold matter, the Bureau contends Lewis’s appeal should be dismissed as
premature because when Lewis filed his notice of appeal in October 2014 judgment had
not yet been entered. The Bureau admits, however, that judgment was eventually entered
in January 2015.
Because judgment has been entered in the case (albeit after Lewis filed his notice
of appeal), the sole authority cited by the Bureau in support of its request for dismissal of
the appeal -- Modica v. Merin (1991) 234 Cal. App. 3d 1072 -- is inapposite. In Modica,
there was no judgment, and this court refused to continue indulging in “the fiction that a
nonappealable order [granting summary judgment] incorporated a judgment of
dismissal.” (Id. at p. 1074.) Here, because there is a judgment, and because Lewis filed
his premature notice of appeal after the trial court had announced its intended ruling, rule
8.104(d)(2) of the California Rules of Court grants us the discretion to treat Lewis’s
premature notice of appeal “as filed immediately after entry of judgment.” As the Bureau
offers us no reason why we should not exercise that discretion in favor of Lewis here, we
elect to do so and thus treat the notice of appeal as having been filed immediately after
the entry of judgment in January 2015. Accordingly, Lewis’s appeal is deemed timely
and is not subject to dismissal.
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II
Standard Of Review
“A writ of administrative mandate is available ‘for the purpose of inquiring into
the validity of any final administrative order or decision made as the result of a
proceeding in which by law a hearing is required to be given, evidence is required to be
taken, and discretion in the determination of facts is vested in the inferior tribunal . . . .’
(Code Civ. Proc., § 1094.5, subd. (a).) The trial court’s inquiry in such a case ‘extend[s]
to the questions whether the respondent has proceeded without, or in excess of,
jurisdiction; whether there was a fair trial; and whether there was any prejudicial abuse of
discretion.’ (Code Civ. Proc., § 1094.5, subd. (b).) Abuse of discretion is established if
the respondent has not proceeded in the manner required by law, the order or decision is
not supported by the findings, or the findings are not supported by the evidence. (Code
Civ. Proc., § 1094.5, subd. (b).)
“When it is claimed the findings are not supported by the evidence, and the trial
court, as here, is authorized by law to exercise its independent judgment on the evidence,
‘abuse of discretion is established if the [trial] court determines that the [administrative
agency’s] findings are not supported by the weight of the evidence.’ (Code Civ. Proc.,
§ 1094.5, subd. (c).) In such a case our review on appeal is limited. We will sustain the
trial court’s findings if they are supported by substantial evidence. [Citations.] In
reviewing the evidence, we ‘resolve all conflicts in favor of the party prevailing in the
superior court and must give that party the benefit of every reasonable inference in
support of the judgment.’ [Citation.]
“[¶] . . . [¶]
“[W]e review independently [any] other claims, that the [administrative agency]
exceeded its jurisdiction or failed to afford a fair trial.” (Kifle-Thompson v. State Bd. of
Chiropractic Examiners (2012) 208 Cal. App. 4th 518, 523-524.) In such instances, “[t]he
trial court’s determination of abuse or nonabuse of discretion by the administrative
6
agency is of no concern to the appellate court. The appellate court gives no deference to
the trial court’s determination. It makes its own determination, de novo.” (Cummings v.
Civil Service Com. (1995) 40 Cal. App. 4th 1643, 1652.)
What the foregoing principles mean is that, with one limited exception, the actions
of the trial court here are immaterial to a review because we review, de novo, the actions
of the administrative agency, not the actions of the trial court. The only exception is that,
to the extent Lewis challenges the sufficiency of the evidence, we do not review directly
the findings of the administrative agency but instead review for substantial evidence the
trial court’s determination that the agency’s factual findings were supported by the
weight of the evidence. In this latter review, of course, we grant to the trial court the
deference inherent in the substantial evidence standard of review. Otherwise, however,
we review the actions of the administrative agency independently of the trial court.
With the foregoing principles in mind, we turn to Lewis’s arguments.
III
Applicable Version Of Business And Professions Code Section 10026
Under Business and Professions Code3 sections 10085 and 10085.5 and California
Code of Regulations, title 10, section 2970, a licensee who proposes to collect an advance
fee as defined in section 10026 must first obtain from the Bureau approval of the advance
fee agreement the licensee proposes to use. Here, the ALJ found Lewis violated these
provisions when he collected advance fees in August, November, and December 2008
before he submitted an advance fee agreement for the Bureau’s review.
In finding that Lewis collected advance fees within the meaning of section 10026,
the ALJ quoted the version of that statute that first took effect in January 2011 -- more
3 All further undesignated section references are to the Business and Professions
Code unless otherwise noted.
7
than two years after Lewis collected the fees in question.4 Based on this, Lewis argued to
the trial court in support of his writ petition that the Bureau’s decision was “based on a
clearly erroneous definition of ‘advance fee’ as used in the real estate law relative to the
accusation period in this case.” The trial court rejected that argument, concluding that
“the ALJ understood and was properly relying upon the law in effect at the time of the
actions at issue here.”
On appeal, Lewis contends the trial court committed reversible error by ignoring
the fact that the ALJ specifically quoted the version of section 10026 that did not take
effect until after Lewis collected the fees in question. The heart of Lewis’s argument,
however, is that “the ALJ relied on an inapplicable version of [section] 10026.” We
agree with Lewis that this argument presents a question of law that we must review
independently from the trial court. Accordingly, the trial court’s decision on this point --
and in particular, the court’s failure to note that the ALJ quoted a different version of
section 10026 than the one in effect at the time of the alleged violations -- is immaterial.
Because we review the ALJ’s actions on this point independently of the trial court, the
question for us is whether Lewis has shown any prejudicial error by the ALJ because in
finding that Lewis collected advance fees within the meaning of section 10026 the ALJ
cited -- and presumably applied -- the wrong version of the statute.
We find no such error. It is true that the two versions of the statute -- the one in
effect in 2008, which governed Lewis’s actions, and the one that took effect in 2011,
which the ALJ cited -- are different, but they are not materially different with respect to
what happened here. The version of section 10026 in effect in 2008 provided in relevant
4 Section 10026 was amended twice after December 2008: first in 2009 (Stats.
2009, ch. 630, § 3 [effective October 11, 2009]) and then again in 2010 (Stats. 2010, ch.
85, § 2 [effective January 1, 2011].) It was in the latter amendment that the statute was
first subdivided.
8
part as follows: “The term ‘advance fee’ as used in this part is a fee claimed, demanded,
charged, received, collected or contracted from a principal . . . to negotiate loans on . . .
real estate.” (Former § 10026, as amended by Stats. 1996, ch. 469, § 1, pp. 2832-2833.)
The later version of the statute, which the ALJ quoted, provided in relevant part as
follows: “The term ‘advance fee,’ as used in this part, is a fee, regardless of the form,
that is claimed, demanded, charged, received, or collected by a licensee for services
requiring a license . . . before fully completing the service the licensee contracted to
perform or represented would be performed.”
While the language is different, as relevant here the substance of the two versions
of the statute is the same because the amendment to section 10026 that took effect in
2011 only served to make explicit what was already implicit in the version that was in
effect in 2008 -- namely, that an advance fee is one claimed, demanded, charged,
received, or collected before the service contemplated is fully completed. Certainly this
was the understanding of the term “advance fee” applied in Nelson v. Department of Real
Estate (1984) 161 Cal. App. 3d 939 -- long before the actions of Lewis at issue here --
which involved fees that were collected in advance “to pay for the sole purpose of
soliciting lenders, making loan arrangements, and obtaining . . . loans.” (Id. at p. 945.)
As the ALJ recognized, “[t]he prohibition and restrictions placed on collecting advance
fees have been in place for years to protect consumers from being victimized by real
estate licensees taking upfront money in return for promised services not performed.”
Furthermore, the fact that the former version of section 10026, when read
properly, clearly applied to advance fees collected “to negotiate loans on . . . real estate”
defeats any suggestion by Lewis that it was not unlawful to collect advance fees for loan
modification activities until section 10026 was amended in 2010.
Thus, even though the ALJ erroneously cited the version of section 10026 that was
not in effect until 2011, that error was not prejudicial to Lewis because there was no
material change to the statute between 2008 and 2011 relevant to this case. Because
9
Lewis has not shown any prejudicial abuse of discretion by the ALJ on this point (see
Code Civ. Proc., § 1094.5, subd. (b)), the ALJ’s erroneous reference to the wrong version
of the advance fee statute provides no basis for relief here.
IV
Clear And Convincing Proof And Analytical Gaps
“[T]he suspension or revocation of a professional license must be based on
misconduct proven by clear and convincing evidence.” (The Grubb Co., Inc. v.
Department of Real Estate (2011) 194 Cal. App. 4th 1494, 1502.) Lewis contends that
standard “was not truly met here.” His arguments on the point, however, are
unpersuasive.
To the extent Lewis contends the standard of proof was not met because “[t]he
ALJ ignored . . . Lewis’s relevant evidence,” that argument is misplaced. “After the trial
court has exercised its independent judgment upon the weight of the evidence, an
appellate court’s function ‘is solely to decide whether credible, competent evidence
supports [the trial] court’s judgment.’ ” (Robbins v. Davi (2009) 175 Cal. App. 4th 118,
124.) Thus, on this point, it does not matter whether the ALJ ignored evidence because
when we consider the sufficiency of the evidence, our review is of the trial court’s
judgment, not the ALJ’s decision.
Beyond arguing that the ALJ ignored certain evidence, Lewis’s arguments under
this heading do not relate to the standard of proof. Instead, Lewis contends that in two
instances the trial court failed to “address” or “bridge” an “analytical gap” in the ALJ’s
decision. Again, however, Lewis’s argument are unpersuasive.
The first alleged “analytical gap” relates to the finding by the ALJ that Lewis’s
“Hardship Services Enrollment Form, in all appearances and effects, was a receipt for
fees collected in advance for loan modification services.” In Lewis’s view, there is a
“gap” between this finding and an earlier finding by the ALJ that “[i]n each case
reviewed by Ms. Xue [the Bureau’s auditor], the clients received loan modification
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services.” According to Lewis, this “gap” exists because there is “undisputed record
evidence” that (1) Ms. Xue reviewed a case involving a client named Stickmond;
(2)Lewis provided services to Stickmond using the very same hardship services
enrollment form; (3) Stickmond did not receive loan modification services; and
(4) therefore, in the case of Stickmond, the hardship services enrollment form was not, in
all appearances and effects, a receipt for fees collected in advance for loan modification
services.
This argument gets Lewis nowhere. Even if it is true that Lewis used the same
form to provide services other than loan modification services to Stickmond, that does
not prove anything with regard to whether he used that form to obtain advance fees for
loan modification services from other clients in August, November, and December 2008
-- the conduct for which he was disciplined. Stated a different way, even if we were to
agree with Lewis that the ALJ erroneously found, or at least suggested, that Lewis’s
“Hardship Services Enrollment Form” was only used as a receipt for fees collected in
advance for loan modification services, that would provide no basis for us to grant relief
to Lewis. To justify relief, Lewis had to show that there was no substantial evidence to
support the trial court’s determination upholding the ALJ’s finding that Lewis unlawfully
collected advance fees for loan modification services in August, November, and
December 2008. Lewis’s argument based on the services he provided to Stickmond
using the same form does not constitute such a showing.
The second “gap” Lewis purports to identify in the ALJ’s decision that he
contends the trial court failed to address relates to findings that he “engaged in loan
modification activities through Cloud 10 Financial, Inc.” and that “the fees he collected
. . . are properly considered and characterized as advance fees within the meaning of
Business and Professions Code section 10026, subdivision (a).” Lewis’s argument is
essentially that these findings were not based on the allegations in the accusation because
11
the accusation did not mention loan modifications or section 10026.5 He contends this
“gap” between the allegations in the accusation and the ALJ’s findings violated the law
because “ ‘findings in the Decision must be based upon the allegations in the
Accusation.’ ”
In support of his argument, Lewis cites Wheeler v. State Bd. of Forestry (1983)
144 Cal. App. 3d 522. In Wheeler, a professional forester was charged with deceit,
misrepresentation, or fraud for an error in the estimation of timber available for harvest.
(Id. at pp. 525, 526.) The administrative agency exonerated him of that charge but found
him guilty of gross incompetence for the same error, even though the accusation did not
charge him on that basis. (Ibid.) This court concluded the “charging error [wa]s fatal to
th[e agency’s] finding” because “[d]isciplinary action cannot be founded upon a charge
not made.” (Id. at pp. 526, 527.)
Wheeler is of no assistance to Lewis. As relevant here, the accusation in this case
alleged that Lewis “collected advance fees from at least the following borrowers before
[he] had . . . received a ‘no objection letter’ from the [Bureau] in violation of Section
10085 of the Code and Section 2970 of the Commissioner’s Regulations.” The
accusation then referenced the fees Lewis collected in August, November, and December
2008 and identified the specific clients involved in those incidents. Corresponding to
these allegations, the ALJ found that Lewis “violated . . . section[] . . . 10085 . . . and
California Code of Regulations, title 10, section 2970 when he entered into a ‘Hardship
Services Enrollment’ contract with clients . . . and collected an advance fee prior to the
submission of a form advance fee agreement to the Bureau for review.” In making this
finding, the ALJ referred back to an earlier finding regarding the fees Lewis collected in
August, November, and December 2008. Thus, unlike in Wheeler, the disciplinary action
5 Originally, Lewis also argued that the accusation did not mention Cloud 10
Financial, Inc., but in his reply brief he acknowledges that it did.
12
here was founded on a charge made in the accusation, and Lewis’s complaint to the
contrary is without merit.
V
Penalty
Lewis contends “[t]he Real Estate Commissioner committed prejudicial abuse of
discretion in the decision to revoke Lewis’s real estate broker’s license.” His showing on
this point is deficient.
“ ‘[T]he penalty imposed by an administrative body will not be disturbed in
mandamus proceedings unless an abuse of discretion is demonstrated. [Citations.]
Neither an appellate court nor a trial court is free to substitute its discretion for that of the
administrative agency concerning the degree of punishment imposed.’ ” (Schmitt v. City
of Rialto (1985) 164 Cal. App. 3d 494, 500.) “Thus, as to the discipline imposed the
standard of review on appeal remains the same as it was in the superior court: the
administrative agency’s exercise of discretion as to the discipline to be imposed will not
be disturbed unless a manifest abuse of discretion is shown.” (Id. at p. 501.) “It is only
in the exceptional case, when it is shown that reasonable minds cannot differ on the
propriety of the penalty, that an abuse of discretion is shown.” (Deegan v. City of
Mountain View (1999) 72 Cal. App. 4th 37, 47.)
Here, Lewis contends revocation of his broker’s license was an abuse of discretion
because “the misapplication of [section] 10026 amounts to first-class unfairness” and
because there were “screaming [Government Code section] 11503 accusation failures in
the . . . charging document.” We are not persuaded.
With respect to section 10026, we have concluded already that the ALJ’s citation
of the wrong version of that statute was erroneous but harmless. This harmless error
could not render the revocation of Lewis’s broker’s license an abuse of discretion.
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As for Lewis’s argument that the accusation violated Government Code
section 11503, that is based on his assertion (previously discussed) that the accusation did
not mention loan modifications or section 10026. Government Code section 11503,
subdivision (a) requires that an accusation filed to initiate “[a] hearing to determine
whether a right, authority, license, or privilege should be revoked, suspended, limited, or
conditioned” “shall be a written statement of charges that shall set forth in ordinary and
concise language the acts or omissions with which the respondent is charged, to the end
that the respondent will be able to prepare his or her defense. It shall specify the statutes
and rules that the respondent is alleged to have violated, but shall not consist merely of
charges phrased in the language of those statutes and rules.”
Although it is true the accusation did not mention section 10026 -- the statute that
defines what constitutes an advance fee -- Lewis offers no legitimate reason why it had to
do so under Government Code section 11503. That statute requires the accusation to
“specify the statutes and rules that the respondent is alleged to have violated.” Lewis
contends section “10026 is the requisite statute a licensee must be ‘alleged to have
violated’ for disciplinary action based upon advanced fee charges” (italics omitted), but
he is mistaken. Because section 10026 is merely a definitional statute, the accusation
could not have alleged that he violated it. The provisions the accusation alleged Lewis
violated were “Section 10085 of the Code and Section 2970 of the Commissioner’s
Regulations.” As we have previously noted, these provisions provide that a licensee who
proposes to collect an advance fee must first obtain from the Bureau approval of the
advance fee agreement the licensee proposes to use. Thus, these provisions set forth the
legal requirement with which Lewis failed to comply, and the accusation appropriately
14
specified these provisions as the basis for the charges against him.6 Government Code
section 11503 did not require the Bureau to mention section 10026 as well.
With respect to the accusation’s failure to specifically mention loan modifications,
Lewis fails to show how that failure rendered the accusation defective under Government
Code section 11503; he just says that it did. We disagree. The accusation charged that
he accepted advance fees on three separate occasions from specific clients without having
first obtained approval from the Bureau of the advance fee agreement he used with
respect to those clients. That was sufficient to properly allege a violation of the two
provisions on which the Bureau relied in the accusation. The failure to use the term “loan
modification” did not render the accusation defective under Government Code
section 11503.
Under all of the foregoing circumstances, Lewis has not shown any violation of
Government Code section 11503 and thus cannot rely on any such violation as a basis for
arguing that the Bureau abused its discretion in revoking his broker’s license.
VI
Recovery Of Audit Costs
The ALJ found the Bureau was entitled to recover $4,851 in audit costs from
Lewis under subdivision (b) of section 10148.7 This finding was presumably based on
the ALJ’s determination that Lewis violated California Code of Regulations, title 10,
6 It is worth noting that the regulation identified in the accusation specifically
references the definition of “advance fees” in section 10026. (Cal. Code Regs., tit. 10,
§ 2970.)
7 “The commissioner shall charge a real estate broker for the cost of any audit, if the
commissioner has found, in a final desist and refrain order issued under Section 10086 or
in a final decision following a disciplinary hearing held in accordance with Chapter 5
(commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government
Code that the broker has violated Section 10145 or a regulation or rule of the
commissioner interpreting Section 10145.” (§ 10148, subd. (b).)
15
section 2832 by failing to deposit advance fees that he collected in a trust account on
which he or his fictitious business name was the trustee.
On appeal, Lewis contends the reimbursement order was “excessive and
improper” because it was based on the underlying finding that the money he collected
qualified as advance fees, which in turn was based -- in Lewis’s view -- on the ALJ’s
“misapplication of [section] 10026.”
We have concluded already that Lewis has not shown any misapplication of
section 10026. While the ALJ did erroneously cite an inapplicable version of the statute
in finding that Lewis collected advance fees unlawfully, that error was harmless because
there was no material difference between the version of section 10026 that actually
applied to Lewis’s actions in 2008 and the version of the statute cited by the ALJ, which
took effect in 2011. Since there was no misapplication of section 10026, Lewis has
shown no error in the finding that the money he collected qualified as advance fees, and
thus that finding cannot render the reimbursement order excessive or improper.
VII
Denial Of Final Request For A Continuance
Lewis contends the ALJ committed prejudicial error by denying his final request
for a continuance of the administrative hearing because that ruling deprived Lewis of his
right to counsel. We disagree.
At the outset, we must make two observations. First, to the extent Lewis
complains on appeal about the trial court’s resolution of this issue, those arguments are
misplaced because on this point we independently review whether the ALJ failed to
afford Lewis a fair hearing. (Kifle-Thompson v. State Bd. of Chiropractic Examiners,
supra, 208 Cal.App.4th at p. 524.) How the trial court resolved the issue is of no concern
in that independent review. Second, although Lewis frames the issue in terms of the
denial of his right to counsel, it is important to remember that the ALJ did not rule that
Lewis could not be represented by counsel of his choice at the administrative hearing.
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Rather, the ALJ denied Lewis’s final request for a continuance of the hearing. It is true
that one of the reasons Lewis offered for the continuance was so that he could gather the
money necessary to retain a particular attorney to represent him, but that fact alone is not
sufficient to transform the denial of the continuance into the denial of the right to counsel.
Thus, the question we answer here is not whether the ALJ denied Lewis his right to
counsel but whether the ALJ abused her discretion in denying Lewis’s final request for a
continuance. (See Ring v. Smith (1970) 5 Cal. App. 3d 197, 201 [“there is no absolute
right to a continuance in a proceeding such as this, hence, unless the refusal of the
hearing officer to grant a continuance was an abuse of discretion, there was no denial of
due process”].)
With that in mind, we find no abuse of discretion in the ALJ’s ruling. “[T]here is
no absolute right, even in a criminal trial, to be represented by a particular attorney, when
this is made the basis of a motion for a continuance [citation]; and, of course, the
administrative hearing here was not a criminal proceeding nor governed by criminal legal
precedents. [Citation.] Too, even in a criminal prosecution the right to counsel may be
waived and such waiver may be established if the defendant is unduly dilatory.” (Ring v.
Smith, supra, 5 Cal.App.3d at p. 202.) Here, Lewis sought a fourth continuance of the
hearing date barely two weeks before the scheduled date, which was already a year and
one-half after the original hearing date. As one of numerous reasons for the requested
continuance, he claimed he was “in negotiations” with an attorney and needed at least 30
days to “come up with the funds required to retain his services.” In his motion, he
offered no reason why he had not made an effort to retain an attorney earlier. In an e-
mail reply to the Bureau’s opposition, however, Lewis asserted that “[i]t was not until
July 2013 that [he] confirmed [he] could afford a specific attorney *if* given more time.”
On appeal, Lewis changes tacks and offers a different explanation for his delay.
He contends he “first determined he needed counsel immediately following [the review
of discoverable documents that occurred on July 5, 2013] in light of what was disclosed,
17
exchanged, misrepresented and [perceived as] concealed at that very stage of discovery.”
(Italics omitted.) Unfortunately, Lewis did not make this argument to the ALJ, and we
cannot conclude that the ALJ abused her discretion in denying a continuance based on an
explanation for the delay that Lewis never gave her. The issue here is whether the ALJ
abused her discretion in finding that Lewis did not show good cause for the continuance.
(See Gov. Code, § 11524, subd. (a) [ALJ may grant continuance for “good cause
shown”].) Quite obviously, Lewis cannot claim that he showed good cause based on
information he never brought to the ALJ’s attention.
Lewis also argues that the ALJ “made a mistake by relying on [the Bureau’s] false
representation concerning [his] Notice of Defense.” (Bold text omitted.) Fleshed out,
that argument goes something like this: In its response to Lewis’s request for a
continuance, the Bureau asserted that because Lewis filed a notice of defense requesting a
hearing on the accusation in March 2011, he “has anticipated the need for an attorney in
this administrative matter for almost 2.5 years.” By finding that Lewis had failed to
establish good cause for a continuance “[f]or all of the reasons set forth in [the Bureau’s]
opposition,” the ALJ necessarily adopted the Bureau’s position that Lewis “has known
for two and one-half years of the need to retain counsel if he wanted representation.”
According to Lewis, however, this implies that he “ ‘slept on his rights’ ” when he did no
such thing. According to Lewis, when he stated in his notice of defense that he did not
intend to be represented by an attorney, he made it clear that he did not anticipate needing
an attorney at the outset of the proceeding, and therefore the Bureau’s representation to
the contrary, which the ALJ adopted, constituted “improper influence” on the ALJ.
This argument is without merit, mostly because Lewis misconstrues the actual
meaning of what the Bureau argued to the ALJ and what the ALJ found. By asserting
that Lewis had “anticipated the need for an attorney in this administrative matter for
almost 2.5 years,” the Bureau was not making a representation of fact, true or false,
about what Lewis’s actual mental state was at the time he filed his notice of defense and
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thereafter. Instead, the Bureau was simply asserting that because Lewis had requested a
hearing on the charges against him back in March 2011, Lewis had had from that time
forward to exercise his right to retain an attorney to represent him. The ALJ effectively
agreed with this observation, which was true. Thus, in denying the continuance request
for the reasons stated in the Bureau’s opposition, the ALJ did not rely on “a highly
prejudicial misstatement of fact” made by the Bureau, as Lewis asserts. (Italics omitted.)
Lewis also offers some argument that we cannot decipher based on his assertion
that the Bureau failed to consolidate the accusation against him with the cease and desist
order against Cloud 10 Financial Inc. He claims that a “misrepresentation [by the
Bureau’s attorney] regarding case consolidation further made the administrative hearing
unfair” (bold text omitted) and that “consolidation . . . was necessary for the accusation to
comply with statutory law” (italics and underlining omitted).
While the lack of case consolidation was one of the grounds Lewis offered for his
final continuance request, Lewis does not explain how this request amounted to good
cause for a continuance, nor does he explain how the lack of consolidation made the
hearing unfair, nor does his explain why consolidation was necessary to comply with
statutory law (which he never specifically identifies). Lewis also fails to address the
ALJ’s implicit finding that the time for requesting a hearing on the cease and desist order
had long since run, let alone show any error in that finding.
Finally, Lewis argues that the ALJ demonstrated “constitutionally intolerable bias”
(italics omitted) against him in ruling on his continuance request. His argument on this
point, however, is simply a repackaging of the arguments we have rejected already.
Having found no merit in those arguments, we also find none in them again under the
label of “bias.”
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VIII
Challenges To Trial Court’s Actions
As we have tried to make clear, except with respect to the findings of fact, our
review here is of the ALJ’s actions. Thus, we consider, independent of the trial court,
whether the ALJ prejudicially abused his or her discretion in any way or denied Lewis a
fair hearing. We are concerned with the trial court’s decision only to the extent the trial
court found, in the exercise of its independent judgment, that the ALJ’s factual findings
were supported by the weight of the evidence, and even then all we can do is determine
whether the trial court’s findings are supported by substantial evidence, which requires us
to give proper deference to the trial court. Outside that, however, the trial court’s actions
are essentially immaterial to our review.
It is with these principles in mind that we consider, and reject, Lewis’s remaining
arguments, which can be summarized as follows: (1) the trial court made “various
misstatements” in its statement of decision “as to what the ‘Accusation alleges’ ”; (2) the
trial court “ ‘found’ certain documents were not in the record that actually were”; (3) the
trial court “misunderstood the objective ‘Stickmond’ facts’ ”; and (4) the trial court
“failed to review the entire record prior to the hearing.” Even if Lewis were correct on
these points -- and we are not concluding that he is -- it would make no difference to our
decision. Except with respect to the trial court’s determination that the ALJ’s factual
findings were supported by the weight of the evidence, we are concerned only with what
the ALJ did, not what the trial court did. And on the former point, the only challenge
open to Lewis was to argue that substantial evidence in the administrative record did not
support the trial court’s findings. Lewis failed to offer any such challenge. Accordingly,
Lewis’s arguments that the trial court erred in various ways is of no moment and provides
no basis for relief.
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DISPOSITION
The judgment is affirmed. The Bureau shall recover its costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1).)
/s/
Robie, J.
We concur:
/s/
Blease, Acting P. J.
/s/
Murray, J.
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