Payton v. Ohio Dept. of Ins.

2012 Ohio 4826

• Court: Ohio Court of Appeals
• Decided: October 18, 2012
• Docket: 98330
• Status: Published

Opinion

[Cite as Payton v. Ohio Dept. of Ins., 2012-Ohio-4826.]

Court of Appeals of Ohio EIGHTH APPELLATE DISTRICT COUNTY OF CUYAHOGA

JOURNAL ENTRY AND OPINION No. 98330

ALBERTA PAYTON

PLAINTIFF-APPELLANT

vs.

OHIO DEPARTMENT OF INSURANCE

DEFENDANT-APPELLEE

JUDGMENT: AFFIRMED

Civil Appeal from the Cuyahoga County Common Pleas Court Case No. CV-765879

BEFORE: Boyle, P.J., Sweeney, J., and Rocco, J. RELEASED AND JOURNALIZED: October 18, 2012 ATTORNEY FOR APPELLANT

Loren Gordon 850 Euclid Avenue Suite 1013 Cleveland, Ohio 44113

ATTORNEYS FOR APPELLEE

Michael DeWine Attorney General of Ohio Scott Myers Assistant Attorney General Health & Human Services Section 30 East Broad Street, 26th Floor Columbus, Ohio 43215 MARY J. BOYLE, P.J.:

{¶1} Plaintiff-appellant, Alberta Payton, appeals a common pleas court judgment

affirming an order of defendant-appellee, Ohio Department of Insurance (“Department”),

denying her application to be licensed as an insurance agent in the state of Ohio. Finding no

merit to her appeal, we affirm.

Procedural History

{¶2} In March 2011, Payton applied for a license with the Department to sell

insurance. In her application, she stated that she had been convicted of a felony offense.

As required, she attached certified copies of her conviction to her application, showing that

she had been convicted in 2004 of four counts of complicity in the commission of attempted

felonious assault.

{¶3} In a “Notice of Opportunity for Hearing,” the Department denied Payton’s

application, informing her that it had conducted an investigation and determined that she was

“not suitable to be a licensed insurance agent.” It notified Payton that it intended to “refuse

to issue her any license and/or take any other action * * * authorized pursuant to R.C.

3905.14(D) including civil penalties and/or administrative costs.” It further notified Payton

that the grounds for such action were: COUNT ONE

On or about April 1, 2004, in the Cuyahoga County Court of Common Pleas, Payton was convicted of four counts of Complicity in Commission of Attempt [sic] Felonious Assault, each count being a felony of the third degree. Pursuant to section 3905.14(B)(6) of the Revised Code, the Superintendent may refuse to issue a license to a person convicted of a felony.

{¶4} Payton requested a hearing. Subsequent to the hearing, the hearing officer

issued his report and recommendation, finding (1) that Payton had “committed violations of

the laws and regulations” of the state of Ohio, and (2) that she was “not suitable to be

licensed as an insurance agent.”

{¶5} In his findings of fact, the hearing officer found that Payton had been

convicted in 2004 of four counts of complicity in the commission of attempted felonious

assault. She was sentenced to three years in prison. She appealed her sentence to this

court. See State v. Payton, 8th Dist. No. 84562, 2005-Ohio-3572. The Department

submitted several exhibits into the record, including certified copies of Payton’s conviction,

as well as this court’s decision of her appeal.

{¶6} In Payton, this court explained that Payton’s charges arose “in connection with

allegations that she had hired a hit man to harm various family members and others.” Id. at

¶ 2. A summary of the case follows.

[Payton] pled not guilty and was referred to the Court Psychiatric Clinic for competency and sanity reports. In the July 29, 2003, Competency Report, Dr. Otto Kausch informed the court that defendant was not capable of assisting in her defense because she was suffering from paranoid schizophrenia. By September 2003, Dr. Jonathan Sirkin informed the court that defendant was suffering from paranoid schizophrenia, was preoccupied with paranoid delusion, was noncompliant in taking her medication, but her symptoms improved when she took prescribed medication. In October 2003, the court was notified that defendant was restored to competency.

In a competency evaluation dated December 11, 2003, Dr. Michael Arnoff of the Court Psychiatric Clinic advised the court that defendant had a history of traits and behavior characteristic of a diagnosis of paranoid personality disorder, and that it was possible that defendant’s problems with the victims identified in the indictment were the result of her delusional beliefs. He also opined that defendant could understand the court proceedings and assist in her defense, however.

In a sanity report from the same week, Dr. Arnoff indicated that “the core issue related to defendant’s mental state at the time of the acts involves the determination of whether, due to a delusional process, Ms. Payton believed that her life was endangered by the targeted victims and hired an individual to harm them for purposes of self-protection, secondary to this potentially delusional misperception.” Dr. Arnoff noted that defendant suffers from a paranoid personality disorder, but it was “unclear as to whether these rise to a psychotic level.” He concluded, however, that in connection with the alleged offenses, but nonetheless knew the wrongfulness of her actions.

In a mitigation of penalty report, Dr. Arnoff stated:

“Given that she is diagnosed with a psychotic-spectrum mental illness, Delusional Disorder, and is being treated with antipsychotic medication, if granted probation by the Court, Ms. Payton would be appropriate for supervision through the Mentally Disordered Offenders (MDO) Program.”

Finally, in January 2004, Dr. John Fabian opined that defendant suffers from a delusional disorder, persecutory type, but knew the wrongfulness of her actions. He also advised the court that the court’s Mentally Disordered Offenders Program may be appropriate for her.

Id. at ¶ 2-7. {¶7} This court explained that after Payton was restored to competency, she entered

her guilty plea. The trial court sentenced Payton to three years in prison, stating that it had

two options: “community control supervision by the court, or incarceration.” Id. at ¶ 21.

This court reversed Payton’s sentence, however, because we determined that the record was

“unclear” as to “whether the trial court considered other options [such as residential sanctions

set forth in R.C. 2929.16] for dealing with [a] defendant whose offenses appear to be the

result of her mental illness, and her failure to take her prescribed medication.” Id. at ¶ 27.

{¶8} Upon remand, the trial court sentenced Payton to three years of community

control sanctions. The hearing officer found that Payton violated the terms of her

community control four times, which extended the length of her supervision by ten months.

{ ¶ 9} The hearing officer noted that before the hearing, Payton had sent the

Department 31 pages of correspondence in “longhand” regarding her “contentions as to why

the Department should disregard her previous felony conviction in considering whether she

should be granted an Ohio insurance license.” The correspondence was entered into

evidence.

{¶10} The hearing officer found that Payton testified at length concerning her

criminal conviction. The hearing officer quoted several portions of the transcript where

Payton claimed that she was innocent of the 2004 charges. When asked why she pleaded

guilty, she blamed her brother, her mother, the system, the trial court judge, and her public “pretender.” She testified that she pleaded guilty under duress. She further denied that she

had any mental health issues, claiming that she was only diagnosed with mental illness

because her brother told her psychologist that she was mentally ill so that he would not go to

prison. With regard to her appeal, Payton testified that “basically [she] was wrongfully

accused so they worked up an appeal and I was released.” When asked “so you were guilty

of the offense; you didn’t just go to jail, you served probation,” Payton replied, “[n]o, I was

not guilty and I was given probation.”

{¶11} The hearing officer noted that Payton had a bachelor’s degree in interior design

from Mount St. Joseph College in Cincinnati and was working toward a master’s degree in

social work during the time leading up to her conviction.

{¶12} Payton introduced a copy of a petition for a civil protection order that she filed

against her brother in 2001, where she alleged that her brother assaulted her by hitting her on

the head and pushing her. An attached police report indicated that Payton and her brother

got into another altercation that same year.

{¶13} The hearing officer concluded his findings of fact, stating “the evidence does

not support that [Payton] is of good reputation and character, is honest and trustworthy, and is

otherwise suitable to be licensed as an insurance agent in the State of Ohio.”

{¶14} In his conclusions of law, the hearing officer concluded that in March 2004,

Payton was convicted of four counts of complicity in the commission of attempted felonious assault. The hearing officer concluded that under R.C. 3905.14(B)(6), the superintendent

“may refuse to issue a license to a person convicted of a felony.” The hearing officer

further concluded that based on R.C. 3905.06(A)(1)(h), an applicant for an Ohio insurance

license must “be of good character, [be] honest and trustworthy and otherwise suitable to be

licensed.” The hearing officer concluded that the evidence did not support that Payton met

the criteria under R.C. 3905.06(A)(1)(h). The hearing officer recommended that Payton’s

application be denied.

{¶15} Payton appealed the hearing officer’s report and recommendation to the

superintendent of insurance. The superintendent accepted the recommendation of the

hearing officer and ordered that Payton’s application to become a licensed insurance agent

be denied. Payton appealed the superintendent’s order to the common pleas court.

{¶16} The common pleas court found that the superintendent’s order was supported

by reliable, probative, and substantial evidence, and was in accordance with law. It is from

this judgment that Payton appeals, raising a sole assignment of error for our review, namely,

that “[t]he trial court erred when it affirmed the order of the Ohio Department of

Insurance[.]”

Standard of Review

{¶17} A common pleas court, in reviewing an order of an administrative agency

under R.C. 119.12, must consider the entire record to determine whether reliable, probative, and substantial evidence supports the agency’s order and the order is in accordance with law.

Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108, 110-111, 407 N.E.2d 1265 (1980). The

common pleas court’s “review of the administrative record is neither a trial de novo nor an

appeal on questions of law only, but a hybrid review in which the court ‘must appraise all the

evidence as to the credibility of the witnesses, the probative character of the evidence, and the

weight thereof.’” Lies v. Veterinary Med. Bd., 2 Ohio App.3d 204, 207, 441 N.E.2d 584

(1st Dist.1981), quoting Andrews v. Bd. of Liquor Control, 164 Ohio St. 275, 280, 131

N.E.2d 390 (1955). The common pleas court must give due deference to the administrative

agency’s resolution of evidentiary conflicts, but “the findings of the agency are by no means

conclusive.” Conrad at 111. The common pleas court conducts a de novo review of

questions of law, exercising its independent judgment in determining whether the

administrative order is “in accordance with law.” Ohio Historical Soc. v. State Emp.

Relations Bd., 66 Ohio St.3d 466, 471, 613 N.E.2d 591 (1993).

{¶18} An appellate court’s review of an administrative decision is more limited than

that of a common pleas court. Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621, 614

N.E.2d 748 (1993). The appellate court is to determine only whether the common pleas

court abused its discretion. Id. Absent an abuse of discretion, a court of appeals may not

substitute its judgment for that of an administrative agency or the common pleas court. Pons

at 621. It is axiomatic, however, that an appellate court reviews purely legal questions de novo. Big Bob’s, Inc. v. Ohio Liquor Control Comm., 151 Ohio App.3d 498, 2003-

Ohio-418, 784 N.E.2d 753, ¶ 15 (10th Dist.).

{¶19} Payton asserts that this appeal presents only questions of law. We disagree.

Accordingly, we review the trial court’s decision for abuse of discretion.

Due Process

{¶20} The only issue Payton raises in this appeal is whether the trial court abused its

discretion in affirming the Department’s denial of her insurance license “even though the

Department’s notice of a right to a hearing did not fully inform [her] of all the charges against

her, thereby depriving her of fair opportunity to defend herself at the hearing.” She claims

that the Department “based its decision on charges that it did not identify in the statutory

notice.”

{¶21} R.C. 119.07 provides that when an administrative agency takes action against a

party, it must give notice to the party. The rule prescribes how the notice must be given,

and states that it “shall include the charges or other reasons for the proposed action, the law

or rule directly involved, and a statement informing the party that the party is entitled to a

hearing if the party requests it within thirty days of the time of mailing the notice.” Id.

{¶22} Payton cites to Pruneau v. Ohio Dept. of Commerce, 191 Ohio App.3d 588,

2010-Ohio-6043, 947 N.E.2d 900 (10th Dist.), in support of her argument. In Pruneau at ¶

31, the court explained: “The fundamental requirement of procedural due process is notice and hearing, that is, an opportunity to be heard.” Korn v. Ohio State Med. Bd., 61 Ohio App.3d 677, 684, 573 N.E.2d 1100 (1988), citing Luff v. State, 117 Ohio St. 102, 157 N.E. 388 (1927). “An elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Althof v. Ohio State Bd. of Psychology, 10th Dist. No. 05AP-1169, 2007-Ohio-1010, ¶ 19, quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L. Ed. 865 (1950) (internal quotation marks omitted). “‘The right to a hearing embraces not only the right to present evidence, but also a reasonable opportunity to know the claims of the opposing party and to meet them.’” Id., quoting Gonzales v. United States, 348 U.S. 407, 414, fn. 5, 75 S.Ct. 409, 413, 99 L. Ed. 467 (1955), quoting Morgan v. United States, 304 U.S. 1, 18, 58 S.Ct. 773, 776, 82 L. Ed. 1129 (1938).

{¶23} In Pruneau, the Ohio Department of Commerce (“Commerce Department”)

sent notice to American Glass Services, Inc. and Dorsey Construction Company (“Dorsey”)

informing them they were in violation of the Ohio’s Prevailing Wage Law, specifically R.C.

4115.13(H)(1). After a hearing, the hearing examiner issued a report finding that the

Commerce Department did not prove that Dorsey violated R.C. 4115.13(H)(1). But the

hearing examiner did find that the Department presented sufficient evidence to establish that

Dorsey violated R.C. 4115.13(H)(4).

{¶24} Dorsey appealed the decision, arguing that its due process rights were violated

because it was not given sufficient notice that it had violated R.C. 4115.13(H)(4). The trial

court affirmed the Commerce Department’s final orders against Dorsey because Dorsey’s “notice letter included a general reference to R.C. Chapter 4115,” and thus, was not

prejudicial. Id. at ¶ 32.

{¶25} The Tenth District reversed the decision of the trial court. Id. at ¶ 43. It

pointed out that the Department’s notice letter did not allege a general violation of R.C.

Chapter 4115; it alleged a very specific violation of R.C. 4115.13(H)(1) and failed to

reference R.C. 4115.13(H)(4). Id. at ¶ 36. The Tenth District also noted that at the

beginning of the hearing, the parties stipulated that “the only charges” they were addressing

“was what [the Commerce Department] listed in [the notice] letter.” Id. at ¶ 37. The

court reasoned that

the parties’ stipulation confirms Dorsey’s expectation that it needed to defend

against only the specific allegation of an intentional violation under R.C.

4115.13(H)(1). Given the specificity of the notice letter and the stipulation

before the hearing examiner, Dorsey did not receive adequate notice that it

faced a potential violation of R.C. 4115.13(H)(4).

Id.

{¶26} The Tenth District concluded that Dorsey was prejudiced by the Commerce

Department’s failure to provide adequate notice. Id. at ¶ 41. The court explained that it

could not “ignore that had Dorsey known other potential charges were at issue, it may have

presented additional or different evidence, or even used a different defense strategy, in light of the additional charge.” Id. at ¶ 40. Further, “[b]ecause of the undisputed assurance

given to Dorsey that only a violation of R.C. 4115.13(H)(1) was at issue,” the court was

“compelled to conclude [that] the notice to Dorsey was insufficient to alert Dorsey that

charges under R.C. 4115.13(H)(4) were at issue.” Id.

{¶27} We find Pruneau to be distinguishable on its facts. In Pruneau, 191 Ohio

App.3d 588, 2010-Ohio-6043, 947 N.E.2d 900, the hearing examiner found that the

Commerce Department did not prove that Dorsey had violated R.C. 4115.13(H)(1) — the

only subsection listed in the notice. Instead, the hearing examiner found that based upon the

evidence, Dorsey actually violated a separate subsection of Ohio’s Prevailing Wage Law,

namely, R.C. 4115.13(H)(4).

{¶28} In the present case, however, the hearing examiner found that Payton was

convicted of a felony. In Payton’s notice from the Department, this was the only allegation.

Thus, the Department proved its allegation at the hearing. Had the Department not proven

this fact, and the hearing examiner still recommended denying Payton’s license for a separate

reason, we would reach a different conclusion.

{¶29} Payton argues that under R.C. 3905.14(D)(8) and 3905.14(E), the Department

could have ordered corrective action “in lieu of” denying her a license, and could have

considered various mitigating factors rather than deny her a license. We agree that it could have. But it is fully within the Department’s discretion not to do so. See R.C.

3905.14(D)(8) and 3905.14(E).

{¶30} Payton further argues that she was materially prejudiced because if she had

known that she was facing allegations that her reputation and character were at issue, she

could have presented more evidence that may have led to a different outcome. Although

that may be true in some cases, we disagree under the facts of this case. The hearing officer

found that Payton was not truthful because she would not acknowledge she was guilty of the

crimes that she pled to in 2004, nor would she acknowledge that she ever had any mental

health issues. She adamantly testified that she was the victim — over and over — and

claimed that she was innocent. She sent a 31-page correspondence to the Commerce

Department declaring that same thing. It is highly doubtful that had Payton been on notice

that her character might be at issue, she would have acknowledged her prior guilt and mental

illness.

{¶31} Accordingly, we conclude that the trial court did not abuse its discretion when

it affirmed the Commerce Department’s order denying Payton a license to sell insurance in

the state of Ohio. Payton’s sole assignment of error is overruled.

{¶32} Judgment affirmed.

It is ordered that appellee recover from appellant costs herein taxed.

The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate be sent to said court to carry this judgment into

execution.

A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the

Rules of Appellate Procedure.

MARY J. BOYLE, PRESIDING JUDGE

JAMES J. SWEENEY, J., and KENNETH A. ROCCO, J., CONCUR