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05/17/2019 09:07 AM CDT




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                                  Nebraska Supreme Court A dvance Sheets
                                          302 Nebraska R eports
                                                DIAMOND v. STATE
                                                Cite as 302 Neb. 892




                          M ark Diamond, appellant, v. State of Nebraska,
                                Department of Insurance, appellee.
                                                   ___ N.W.2d ___

                                        Filed April 19, 2019.     No. S-17-1107.

                 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 sup-
                    ported by competent evidence, and is neither arbitrary, capricious, nor
                    unreasonable.
                 3. Judgments: Appeal and Error. An appellate court, in reviewing a dis-
                    trict court’s judgment for errors appearing on the record, will not substi-
                    tute its factual findings for those of the district court where competent
                    evidence supports those findings.
                 4. Statutes: Appeal and Error. Statutory interpretation presents a ques-
                    tion 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), autho-
                    rizes 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 ordi-
                    nary meaning, and an appellate court will not resort to interpretation
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             Nebraska Supreme Court A dvance Sheets
                     302 Nebraska R eports
                            DIAMOND v. STATE
                            Cite as 302 Neb. 892

   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. Affirmed.
   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.
                       INTRODUCTION
   This appeal presents our first opportunity to consider the
Insurance Producers Licensing Act.1 Addressing the regula-
tory 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

1
    Neb. Rev. Stat. §§ 44-4047 to 44-4069 (Reissue 2010 & Cum. Supp.
    2018).
2
    See Neb. Rev. Stat. § 84-917 (Reissue 2014) (judicial review under
    Administrative Procedure Act).
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                      302 Nebraska R eports
                             DIAMOND v. STATE
                             Cite as 302 Neb. 892

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.
                        BACKGROUND
                      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 home-
owner’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 custom-
ers 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

3
    See 12 C.F.R. § 1015 (2018) (previously found at 16 C.F.R. § 322 (2012)).
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                  302 Nebraska R eports
                       DIAMOND v. STATE
                       Cite as 302 Neb. 892

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 representa-
tion [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 consumer’s dwelling loan holder or servicer.’” In
the consent judgment, Bella Homes admitted to the allega-
tions in the complaint and acknowledged its role in defraud-
ing homeowners.

              Nebraska A dministrative Action
   In December 2016, more than 4 years after the entry of
the consent judgment, the Department of Insurance brought
a petition against Diamond for violations of §§ 44-4065(1)
and 44-4059(1)(g) and (h). After a hearing, the director found
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              Nebraska Supreme Court A dvance Sheets
                      302 Nebraska R eports
                             DIAMOND v. STATE
                             Cite as 302 Neb. 892

that because Diamond admitted that he failed to report the
consent order within 30 days of disposition, he violated
§ 44-4065(1). The director reasoned that although Diamond
may not have been complicit in the fraudulent scheme, lend-
ing his reputation and partnering with someone convicted
of fraud showed irresponsibility in business and violated
§ 44-4059(1)(h). The director also determined that because
Diamond admitted to violating MARS rule § 1015.3(c), he
admitted liability to a count that included fraud and therefore,
had violated § 44-4059(1)(g). The director concluded that
because several years had passed and no Nebraska insurance
consumers had been harmed, revocation of Diamond’s license
was not warranted. The director levied an administrative
fine of $2,500.
   Diamond appealed to the district court. In disposing of
the appeal, the court reasoned that Diamond clearly violated
§ 44-4065(1), because he admitted that he did not report his
involvement in the Colorado civil action within 30 days of
the consent judgment. The court found that in the consent
judgment, Diamond admitted to paragraphs 1 through 184 of
the Colorado complaint, to forming Bella Homes, to paying
Delpiano through another company he owned, and to receiving
plane ticket reimbursement. This, the court reasoned, provided
credible evidence of fraud in violation of § 44-4059(1)(g) and
(h). The court explained that it would be an abrogation of the
department’s duty to disregard the substance of the consent
decree and not exercise its disciplinary authority. For these
reasons, the court affirmed the department’s order.
   Diamond filed a timely appeal, which we moved to our
docket.4
                 ASSIGNMENT OF ERROR
   Diamond assigns that the district court erred in affirming
the department’s decision to levy a fine against him, because

4
    See Neb. Rev. Stat. § 24-1106(3) (Reissue 2016).
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                       302 Nebraska R eports
                              DIAMOND v. STATE
                              Cite as 302 Neb. 892

the decision was “predicated on a finding that [Diamond] was
involved in fraud, which [was] incorrect as a matter of law.”

                   STANDARD OF REVIEW
   [1-3] 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.5 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 unreason-
able.6 An appellate court, in reviewing a district court’s judg-
ment for errors appearing on the record, will not substitute its
factual findings for those of the district court where competent
evidence supports those findings.7
   [4] Statutory interpretation presents a question of law, for
which an appellate court has an obligation to reach an inde-
pendent conclusion irrespective of the decision made by the
court below.8

                          ANALYSIS
   [5] The Insurance Producers Licensing Act governs the
qualifications and procedures for the licensing of insurance
producers.9 An insurance producer is defined as “a person
required to be licensed under the laws of this state, including
the Insurance Producers Licensing Act, to sell, solicit, or nego-
tiate insurance.”10 The act is intended to “improve efficiency,

 5
     Leon V. v. Nebraska Dept. of Health & Human Servs., ante p. 81, 921
     N.W.2d 584 (2019).
 6
     Id.
 7
     Id.
 8
     Patterson v. Metropolitan Util. Dist., ante p. 442, 923 N.W.2d 717 (2019).
 9
     § 44-4048(1).
10
     Neb. Rev. Stat. § 44-103(10) (Reissue 2010); § 44-4049(5).
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                               DIAMOND v. STATE
                               Cite as 302 Neb. 892

permit the use of new technology, and reduce costs associated
with issuing and renewing insurance licenses.”11 Diamond does
not dispute that he is an insurance producer subject to the act
or that the act authorizes disciplinary actions against licensed
insurance producers.
    In Diamond’s brief, he contended that the district court inap-
propriately predicated the determination of whether he violated
§ 44-4065 on a finding of fraud. There, he argued that what
both the department’s hearing officer and the district court
“ignored” was that “there was never an admission of ‘fraud’
made by [Diamond] sufficient to find him in violation of
. . . § 44-4065 (1)(g) which would have triggered the reporting
requirements of section 1 of that statute.”12 Because § 44-4065
does not have a subsection (1)(g), Diamond’s argument in his
brief was difficult to follow.
    At oral argument, Diamond conceded that he does not
contest the district court’s determinations that he violated
§§ 44-4065(1) (failing to report) and 44-4059(1)(h) (irrespon-
sibility in business). As clarified at oral argument, his sole
contention on appeal is that the district court erred in finding
that in the consent judgment, he admitted to fraud within the
meaning of § 44-4059(1)(g). We disagree.
    [6] Before turning to that argument, we briefly address
Diamond’s failure to report. Under § 44-4065(1), “An insur-
ance producer shall report to the director any administra-
tive action taken against the producer in another jurisdic-
tion, . . . by another governmental agency within thirty
days of the final disposition of the matter.” For purposes
of § 44-4065(1), an “administrative action” includes, but is
not limited to, “any arbitration or mediation award, discipli­
nary action, civil action, or sanction taken against or involv-
ing an insurance producer.”13 Diamond no longer contends

11
     § 44-4048(1).
12
     Reply brief for appellant at 4.
13
     § 44-4065(4).
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                   302 Nebraska R eports
                        DIAMOND v. STATE
                        Cite as 302 Neb. 892

that in order to v­ iolate § 44-4065(1), the underlying action
must be predicated on fraud. We hold that under § 44-4065,
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 vio-
lates the reporting requirement of § 44-4065(1). It is abun-
dantly clear from the record that Diamond failed to report
the consent judgment within 30 days and therefore violated
§ 44-4065(1). And at oral argument, he conceded that he had
done so.
   Now, we turn to Diamond’s remaining argument: The district
court erred in finding that in the consent judgment, Diamond
admitted to fraud within the meaning of § 44-4059(1)(g).
Diamond contends that because he never specifically admit-
ted to fraud under MARS rule § 1015.3(c), nor was the word
“fraud” used in that count, the court could not find that he
admitted to fraud. We reject this argument.
   We recall the controlling statutory language. Under
§ 44-4059(1):
      The director may suspend, revoke, or refuse to issue or
      renew an insurance producer’s license or may levy an
      administrative fine in accordance with subsection (4) of
      this section, or any combination of actions, for any one or
      more of the following causes:
         ....
         (g) Having admitted or been found to have commit-
      ted any insurance unfair trade practice, any unfair claims
      settlement practice, or fraud.
Here, resolution of Diamond’s argument requires us
to consider two matters: the meaning of “fraud” under
§ 44-4059(1)(g) and the scope of his “admi[ssion]” in the con­
sent judgment.
   The meaning of “fraud” in § 44-4059(1)(g) flows from the
Nebraska act and not from another jurisdiction’s character-
ization of a particular violation of a law or regulation. Thus,
the meaning of “fraud” under § 44-4059(1)(g) is purely a
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               Nebraska Supreme Court A dvance Sheets
                       302 Nebraska R eports
                             DIAMOND v. STATE
                             Cite as 302 Neb. 892

question of statutory interpretation. And settled principles of
law dictate how we interpret this statute.
   [7] 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
to ascertain the meaning of statutory words which are plain,
direct, and unambiguous.14 Here, we consider the meaning of
“fraud” under § 44-4059(1)(g) for the first time. Thus, we look
to the plain and ordinary meaning of the word “fraud” as used
in the context of the act.
   The Legislature adopted the Insurance Producers Licensing
Act in 2001 as a response to the federal Gramm-Leach-
Bliley Financial Services Modernization Act.15 The act was
crafted and promulgated by the National Association of
Insurance Commissioners as the Producer Licensing Model
Act.16 Although neither the model act nor the Nebraska enact-
ment expressly defined “fraud,” the meaning of the word has
long been understood in Nebraska insurance law. Over three-­
quarters of a century ago, we relied upon two definitions of
“fraud” in order to determine the meaning of that word under
another insurance statute.17 In the first definition, fraud con-
sists of some deceitful practice or willful device, resorted to
with intent to deprive another of his or her right, or in some
manner to do him or her an injury, and, as distinguished
from negligence, is always positive, intentional.18 The second
definition noted that fraud, in the sense of a court of equity,
properly includes all acts, omissions, and concealments which
involve a breach of legal or equitable duty, trust, or confidence

14
     Pan v. IOC Realty Specialist, 301 Neb. 256, 918 N.W.2d 273 (2018).
15
     Committee Statement, L.B. 51, Committee on Banking, Commerce and
     Insurance, 97th Leg., 1st Sess. (Jan. 23, 2001).
16
     Floor Debate, 97th Leg., 1st Sess. 449 (Jan. 29, 2001).
17
     See Gillan v. Equitable Life Assurance Society, 143 Neb. 647, 10 N.W.2d
     693 (1943).
18
     See id.
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                       302 Nebraska R eports
                          DIAMOND v. STATE
                          Cite as 302 Neb. 892

justly reposed, and are injurious to another, or by which an
undue and unconscientious advantage is taken of another.19
   In § 44-4059(1)(g), context matters. This subsection groups
the word “fraud” with the phrases “any insurance unfair
trade practice” and “any unfair claims settlement practice.”20
Significantly, the Legislature did not limit “fraud” to insurance
fraud or claims fraud in the way that it did with the other two
phrases. In this context, the word “fraud” works broadly and
not in a narrow technical sense.
   [8] But more important, a broad definition of “fraud”
comports with an obvious goal of the Insurance Producers
Licensing Act: to protect the public from the unscrupulous
behavior of licensees. Thus, we use the broad definition to
fulfill that goal rather than to frustrate it. We hold that under
§ 44-4059(1)(g), “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 inju-
rious to another or by which an undue and unconscientious
advantage is taken of another.
   Having defined “fraud” under § 44-4059(1)(g), we turn to
the scope of the “admi[ssion]” made by Diamond’s confes-
sion of liability in the consent judgment. If the allegations
of paragraphs 1 through 184 of the complaint are included
in the scope of the admission, this is an easy call. Those
paragraphs described an “ongoing foreclosure-rescue scheme
to defraud distressed homeowners nationwide,” “fraudulently
obtain[ing] approximately $3,000,000 from over 450 home-
owners,” “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.” Those paragraphs described a blatantly fraudu-
lent scheme.

19
     Id.
20
     § 44-4059(1)(g).
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                Nebraska Supreme Court A dvance Sheets
                        302 Nebraska R eports
                                  DIAMOND v. STATE
                                  Cite as 302 Neb. 892

   But even without relying on those, Diamond’s confession
of liability in the consent judgment admitted to fraud within
the meaning of § 44-4059(1)(g). Under the consent judgment,
he confessed liability under count 6 in the complaint, which
stated, “Defendants are violating [§ 1015.3(c)] of the MARS
Rule by making a representation, expressly or by implication,
about the benefits, performance, or efficacy of any mort-
gage assistance relief service without competent and reliable
evidence that substantiates that the representation is true.”
Diamond does not dispute that he was one of the “defendants”
described in count 6. We apply the meaning of the word
“fraud” as used in § 44-4059(1)(g) to Diamond’s confession
of liability for a violation of § 1015.3(c) of the MARS rule.
Our conclusion is: Diamond admitted to an omission in viola-
tion of a legal duty by which an undue and unconscientious
advantage was taken of another. Accordingly, the district court
did not err when it determined that Diamond admitted to fraud
in violation of § 44-4059(1)(g).
   Diamond also argues that evidence produced after the con-
sent judgment showed that Diamond was merely a “dupe” of
Delpiano. We do not believe that Diamond may collaterally
attack the substance of his admission in the consent judgment.
Moreover, adopting this argument would effectively permit an
insurance producer to blindly act as a front man for a fraudu-
lent scheme. This calls to mind the maxim of the three wise
monkeys who see no evil, hear no evil, and speak no evil. We
do not believe that when the Legislature regulated insurance
producers, it intended to condone a producer’s blind and deaf
participation in a fraudulent scheme.
   [9] We address one final matter. At least in Diamond’s brief,
he argues that “[b]y making a finding of fraudulent conduct,
the Department acted arbitrarily and capriciously, exceeding
its authority under the Administrative Procedure[] Act.”21 To
be considered by an appellate court, an alleged error must be

21
     Brief for appellant at 17.
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                             DIAMOND v. STATE
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both specifically assigned and specifically argued in the brief
of the party asserting the error.22 As this argument was not
specifically assigned, nor was it specifically argued beyond the
single sentence, we will not address the argument.
                         CONCLUSION
   Because Diamond did not report the consent judgment
taken against him in another jurisdiction within 30 days of the
final disposition of the civil action, he violated § 44-4065(1).
The department had the authority to levy an administrative
fine. And within the meaning of § 44-4059(1)(g), Diamond’s
confession of liability in the consent judgment constituted an
admission of fraud.
   The decision of the district court conformed to the law,
was supported by competent evidence, and was neither arbi-
trary, capricious, nor unreasonable. Accordingly, we affirm the
judgment of the district court.
                                                     A ffirmed.

22
     Chafin v. Wisconsin Province Society of Jesus, 301 Neb. 94, 917 N.W.2d
     821 (2018).
