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Diamond v. State

Supreme Court of Nebraska

April 19, 2019

Mark Diamond, appellant,
State of Nebraska, Department of Insurance, appellee.

         1. Administrative Law: Judgments: Appeal and Error. A judgment or final order rendered by a district court in a judicial review pursuant to the Administrative Procedure Act may be reversed, vacated, or modified by an appellate court for errors appearing on the record.

         2.___::___ . When reviewing an order of a district court under the Administrative Procedure Act for errors appearing on the record, the inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable.

         3. Judgments: Appeal and Error. An appellate court, in reviewing a district court's judgment for errors appearing on the record, will not substitute its factual findings for those of the district court where competent evidence supports those findings.

         4. Statutes: Appeal and Error. Statutory interpretation presents a question of law, for which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.

         5. Insurance: Sales. The Insurance Producers Licensing Act, Neb. Rev. Stat. §§ 44-4047 to 44-4069 (Reissue 2010 & Cum. Supp. 2018), authorizes disciplinary actions against licensed insurance producers.

         6. Actions: Jurisdiction: Insurance: Sales: Time. Under Neb. Rev. Stat. § 44-4065 (Reissue 2010), if an insurance producer fails to report a civil action taken against the producer in another jurisdiction, within 30 days of the final disposition of the civil action, the producer violates the reporting requirement of § 44-4065(1).

         7. Statutes: Appeal and Error. When statutory interpretation is one of first impression, the statutory language is to be given its plain and ordinary meaning, and an appellate court will not resort to interpretation [302 Neb. 893] to ascertain the meaning of statutory words which are plain, direct, and unambiguous.

         8. Insurance: Sales: Fraud: Words and Phrases. Under Neb. Rev. Stat. § 44-4059(1)(g) (Cum. Supp. 2018), "fraud" of an insurance producer means any act, omission, or concealment which involves a breach of legal or equitable duty, trust, or confidence justly reposed, and injurious to another or by which an undue and unconscientious advantage is taken of another.

         9. Appeal and Error. To be considered by an appellate court, an alleged error must be both specifically assigned and specifically argued in the brief of the party asserting the error.

          Appeal from the District Court for Lancaster County: Susan I. Strong, Judge.

          Timothy P. Sullivan, of Sullivan Law, and Arthur W. Leach, of Law Office of Arthur W. Leach, for appellant.

          Douglas J. Peterson, Attorney General, and John L. Jelkin for appellee.

          Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

          CASSEL, J.


         This appeal presents our first opportunity to consider the Insurance Producers Licensing Act.[1] Addressing the regulatory effect of a consent judgment previously entered against Mark Diamond, a licensed insurance producer, the Nebraska Department of Insurance determined that he had violated three provisions of the act and imposed an administrative fine. On review, [2] the district court upheld the department's order. On appeal to this court, he contests only one violation-arguing [302 Neb. 894] that his confession of liability in the consent judgment did not "admit[]" to "fraud" within the meaning of § 44-4059(1)(g). Applying settled rules of statutory interpretation, we reject Diamond's argument. Accordingly, we affirm the district court's judgment.


         Colorado Litigation

         In February 2012, the United States of America and the State of Colorado filed a civil action in the U.S. District Court for the District of Colorado against Bella Homes, LLC, and individuals within the company, including Diamond. The complaint alleged violations of Mortgage Assistance Relief Services (MARS)[3] rules and related claims.

         According to the complaint, Bella Homes intended to buy homes from individuals who were struggling to make their mortgage payments and provide a 3- to 7-year repayment plan. Essentially, it was expected to purchase the homeowner's mortgage from the existing lender and enter into a lease with the homeowner, where the homeowner would pay 40 to 60 percent of their mortgage payment in "rent" to Bella Homes. It never purchased a home loan from a mortgage lender. Nor did it stop any foreclosure against a homeowner. It did take over $3 million in "rent" from more than 450 customers nationwide.

         Diamond was the chief executive officer and president of Bella Homes. He formed Bella Homes at the request of Daniel Delpiano, who developed the idea for that enterprise. Because Delpiano had twice been convicted of fraud, he was prohibited from being a fiduciary or handling another's finances.

         In March 2012, Diamond entered into a stipulated consent judgment and permanent injunction, wherein he "confess[ed] liability" to counts 6 and 7 of the complaint. Each of these two counts consisted of two numbered paragraphs. The first [302 Neb. 895] paragraph under each count incorporated the allegations in paragraphs 1 through 184 of the complaint. Those paragraphs described an "ongoing foreclosure-rescue scheme to defraud distressed homeowners nationwide," "fraudulently obtain[ing] approximately $3, 000, 000 from over 450 homeowners," "numerous material misrepresentations to convey the false and fraudulent impression that homeowners will be able to remain in their home," and "misrepresentations to convey the false impression that Bella Homes will stop any foreclosure on the home." The second paragraph under each count alleged that "[b]y virtue of the foregoing [allegations in paragraphs 1 through 184]," Diamond and others were violating a particular rule in a specified manner.

         Thus, the second paragraph of count 6 asserted that Diamond was "violating [§ 1015.3(c)] of the MARS Rule" and that he did so "by making a representation, expressly or by implication, about the benefits, performance, or efficacy of any mortgage assistance relief service without competent and reliable evidence that substantiate[d] that the representation [was] true." The second paragraph of count 7 asserted that Diamond was "violating [§ 1015.5(a)] of the MARS Rule," which makes it a violation to '"Request or receive payment of any fee or other consideration until the consumer has executed a written agreement between the consumer and the consumer's dwelling loan holder or servicer incorporating the offer of mortgage assistance relief the provider obtained from the ...

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