Blinder, Robinson & Co. v. State Corp. Commission

313 S.E.2d 652, 227 Va. 24, 1984 Va. LEXIS 263
CourtSupreme Court of Virginia
DecidedMarch 9, 1984
DocketRecords Nos. 831429, 831430, 831431, 831432 and 831433
StatusPublished
Cited by16 cases

This text of 313 S.E.2d 652 (Blinder, Robinson & Co. v. State Corp. Commission) is published on Counsel Stack Legal Research, covering Supreme Court of Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Blinder, Robinson & Co. v. State Corp. Commission, 313 S.E.2d 652, 227 Va. 24, 1984 Va. LEXIS 263 (Va. 1984).

Opinion

CARRICO, C.J.,

delivered the opinion of the Court.

[26]*26These five appeals of right involve findings made and sanctions imposed by the State Corporation Commission in the nature of judgments by default. The dispositive question is whether the Commission erred in refusing to reopen the matter after the default had been declared.

On October 15, 1982, the Commission ordered Blinder, Robinson & Company, Inc., a Denver-based securities dealer, and four of its employees (collectively, the defendants)1 to appear before the Commission and show cause why they should not be penalized for, and enjoined from, violating the Virginia Securities Act, Code §§ 13.1-501 to -527.01. The orders fixed January 20, 1983, as the date for hearing.

On the scheduled date, neither the defendants nor their counsel appeared. After noting of record this lack of appearance, the Commission proceeded to hear the testimony of Paul Spacek, a broker-dealer examiner for the Commission’s Division of Securities and Retail Franchising (Securities Division). Spacek testified that Blinder, Robinson and its agents had failed to register with the Commission and had made eighty-six sales involving forty unregistered securities to fifty-six Virginia customers. This information, Spacek stated, came from “evidence . . . obtained from Blinder, Robinson.” Following Spacek’s testimony, the Commission declared the defendants “in default by not appearing or responding in any way.” The Commission then took the matter under advisement.

On March 1, 1983, the defendants filed a “Petition to Reopen Hearing and to Schedule a Date.” The petition alleged that the defendants’ Colorado counsel had “understood . . . that the Hearing [scheduled for January 20, 1983] would be continued to a later date” and that, “accordingly, the non-appearance by [the defendants] at the hearing was no fault of the [defendants].” The petition prayed that the matter be reopened and a new date scheduled for the presentation of evidence.

Attached to the defendants’ petition was an affidavit signed by Philip E. Lowery, a Colorado attorney who, the affidavit stated, had been engaged to represent Blinder, Robinson “in matters pending before state securities divisions.” The affidavit stated further that on December 20, 1982, Lowery “spoke with Taylor Nel[27]*27son, Broker/Dealer Examination Coordinator” for the Commission’s Securities Division and that he, Lowery, had made notes of the telephone conversation. These notes, the affidavit continued, indicated Lowery’s “understanding that Joe Peck, Associate General Counsel for the . . . Commission . . . would extend the Order to Show Cause which had been issued to Blinder, Robinson & Co., Inc. and set for hearing on January 20, 1983.”

The Securities Division filed a response to the defendants’ petition to reopen. In the response, the Division denied Taylor Nelson had told Lowery that the show-cause hearing would be continued. The defendants then filed an answer to the Division’s response. Noting the conflict concerning what was said in the December 20, 1982 telephone conversation between Nelson and Lowery, the defendants asked both that the “Hearing be reopened” and that “Lowery be given the opportunity to testify with regard to whether or not he was advised that the Hearing would be continued.”

On May 3, 1983, the Commission entered an order denying the defendants’ petition to reopen and their request that Lowery be permitted to testify concerning his telephone conversation with Nelson. On the same day, the Commission also entered orders finding the defendants in violation of the Virginia Securities Act. These orders imposed fines of $25,000 upon Blinder, Robinson and $1,000 upon each of the individual defendants and, in addition, enjoined all the defendants from violating the Act in the future.

On appeal, the defendants contend that U.S. Const, amend. XIV, § 1, Va. Const, art. I, § H, and Va. Code § 12.1-28 require a hearing before sanctions may be imposed upon a party. The defendants then argue that the refusal of their petition to reopen and of their request to permit Lowery to testify constituted a denial of due process of law. The requirement of due process, the defendants maintain, “outweighs any possible administrative inconvenience placed upon the Commission, especially where there can be no showing that the Commission would be harmed by reopening the hearing.”

The defendants argue further that the “Commission’s failure to set aside the default judgment was an abuse of discretion.” Generally, the defendants maintain, “a reasonable misunderstanding will relieve a party from a default judgment if that misunderstanding is caused by ‘excusable neglect.’ ” They “honestly and [28]*28reasonably believed that a continuance had been granted in this case,” the defendants submit; hence, their failure to appear was excusable, and the Commission should have given them “the opportunity to present [their] case once the misunderstanding was revealed.” At “the very least,” the defendants conclude, “the Commission should have heard evidence to substantiate the reasonableness of that misunderstanding.”

The defendants state correctly that “ ‘within the limits of practicability’ ... a State must afford to all individuals a meaningful opportunity to be heard if it is to fulfill the promise of the Due Process Clause.” Boddie v. Connecticut, 401 U.S. 371, 379 (1971). And, as the defendants point out, this due process right includes “an effective opportunity to defend by confronting any adverse witnesses and by presenting . . . arguments and evidence orally.” Goldberg v. Kelly, 397 U.S. 254, 268 (1970); VEPCO v. Corp. Comm., 226 Va. 541, 312 S.E.2d 25 (1984).

It is clear, however, that in the foregoing statement of principles, the key word is “opportunity.” In the context of the type of case now under consideration, due process requires only that, before sanctions may be imposed upon a party, the opportunity for a hearing must be provided, not that the party must “actually have a hearing on the merits.” Boddie, 401 U.S. at 378. The failure to appear after due notice, or the unjustifiable violation of some procedural rule affecting the orderly adjudication of cases, may result in a waiver of the hearing required by due process and an entry of judgment by default. Id. at 378-79; Central Operating Co. v. Utility Workers of America, 491 F.2d 245, 251-52 (4th Cir. 1974).

Whether relief from a default should be granted is a question resting in the sound discretion of the trial tribunal. Morriss v. White, 146 Va. 553, 568-69, 131 S.E. 835, 839 (1926). And where, as here, the basis of the requested relief is excusable neglect, the pivotal question, quoted from the defendants’ reply brief, is “the sufficiency of the [defendants’] excuse for failing to appear at the hearing.”

In resolving this question, we need not go beyond the affidavit of Philip E. Lowery, attached to the defendants’ petition to reopen.

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Bluebook (online)
313 S.E.2d 652, 227 Va. 24, 1984 Va. LEXIS 263, Counsel Stack Legal Research, https://law.counselstack.com/opinion/blinder-robinson-co-v-state-corp-commission-va-1984.