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Trujillo v. Colo. Division of Insurance

Supreme Court of Colorado, En Banc

March 17, 2014

Milton Michael Trujillo, Insurance Producer with Bail Bond Authority, License No. 60267, Petitioner
v.
Colorado Division of Insurance, Respondent

Certiorari to the Colorado Court of Appeals. Court of Appeals Case Number 11CA622.

Judgment Reversed.

SYLLABUS

The supreme court holds that the court of appeals erred in interpreting section 10-2-704(1)(a) to create a fiduciary relationship between a bail bonding and a person who was not an insured. Because the Commissioner of Insurance has authority to sanction the bail bonding agent based on the unappealed findings in this case, the supreme court remands to the court of appeals and orders it returned to the Commissioner for redetermination of the sanction. The supreme court remands this case because it is unclear whether the Commissioner would have exercised his authority to impose the same sanction on the bail bonding agent absent his erroneous interpretation of section 10-2-704(1)(a).

Attorneys for Petitioner: Lee N. Sternal PC, Lee N. Sternal, Pueblo, Colorado.

Attorneys for Respondent: John W. Suthers, Attorney General, Todd S. Larson, First Assistant Attorney General, Denver, Colorado.

OPINION

Page 1209

HOBBS, JUSTICE.

[¶1] We granted certiorari to review the court of appeals' judgment in Colorado Division of Insurance v. Trujillo, 2012 COA 54.[1] The court of appeals upheld an order of the Interim Insurance Commissioner (" Commissioner" ) revoking Milton Trujillo's (" Trujillo" ) insurance producer license with bail bond authority and denying Trujillo's application to renew the license.

[¶2] In 2008, the Division of Insurance (" Division" ) initiated an investigation into Trujillo based on a complaint it received in 2005 from Connie Espinoza (" Espinoza" ). According to Espinoza, Trujillo accepted $3,500 from her to bail her son, Ted Espinoza, out of jail and wrongfully failed to return the money to her. Trujillo later admitted that he put some of the money toward another defendant's bond and gave the remainder to Ted Espinoza's acquaintance, Connie Cordova (" Cordova" ), after it became apparent that the $3,500 was insufficient for Ted Espinoza's bond. Trujillo asserted that he handled the money at Cordova's direction because the money belonged to her and not Espinoza.

[¶3] The Division charged Trujillo with twelve counts of violating the insurance code, the professions and occupations code, and Division regulations. Following a hearing, an Administrative Law Judge (" ALJ" ) found that the Division had established sufficient basis for sanctioning Trujillo on nine counts, including the allegation that Trujillo breached a fiduciary duty under section 10-2-704(1)(a). The ALJ's initial decision revoked Trujillo's license and denied his renewal application. The Commissioner adopted the ALJ's decision.

[¶4] The court of appeals affirmed the Commissioner's action, determining that Trujillo had violated a fiduciary duty prescribed by

Page 1210

section 10-2-704(1)(a). We reverse the court of appeals' judgment upholding the Commissioners' action because the ALJ, the Commissioner, and the court of appeals erred in applying section 10-2-704(1)(a) to this case. While there are unappealed findings of fact upon which the Commissioner on remand could uphold the sanction it ordered, it is not clear to us whether, absent the agency's construction of section 10-2-704(1)(a), the Commissioner would have exercised his authority to revoke Trujillo's license and deny his renewal application.[2] Thus, we remand this case to the court of appeals and order it returned to the Commissioner for redetermination of the sanction for Trujillo's conduct.

I.

[¶5] Since 1994, Trujillo had been licensed as an insurance producer and bail bonding agent. Trujillo's license expired on January 1, 2009. In March 2009, the Division sent Trujillo notice of charges relating to Trujillo's transaction with Espinoza, described below. The Division charged Trujillo with twelve counts of violating the insurance code, the professions and occupations code, and Division regulations. The Division sought revocation of Trujillo's license, a refund of $3,500 to Espinoza, and civil penalties. The Division denied Trujillo's application to renew his license in April 2009 and subsequently amended the charging document to request that the ALJ affirm the Division's denial of the license application. In fall 2010, an ALJ held a two-day hearing in this case.

[¶6] The ALJ found the following facts, among others. In December 2004, Espinoza gave Trujillo $3,500 in cash to bond her son, Ted Espinoza, out of jail. As a receipt, Trujillo gave Espinoza one of his business cards with the following handwritten on the back: " I received $3500 from Connie Espinoza on 12/21/04 for Ted Espinoza's bond. M. Trujillo." However, the $3,500 was insufficient to cover Ted Espinoza's bond and no bond or indemnification agreement was ever executed. Trujillo did not return the $3,500 to Espinoza. Instead, he used a portion of the money to offset an amount owed to him by Cordova for a different defendant's bond and gave the remainder to Cordova.

[¶7] In his defense, Trujillo argued that he properly handled the $3,500 at Cordova's direction because Ted Espinoza's attorney said the money belonged to her. The ALJ did not make any factual findings about who owned the money. Regardless, the ALJ found:

A bail bonding agent must be scrupulous in handling the money entrusted to him. Here the Respondent cavalierly decided that he could judge who the money belonged to, and use it accordingly. In the process he managed to reduce exposure on [another] bond. This was not merely poor judgment, but a violation of the legal requirements to be a bail bonding agent.

[¶8] The ALJ found that the Division had established a basis for sanctioning Trujillo on nine counts. First, the ALJ found and concluded that the Division had established a basis for sanctioning Trujillo for the following violations, assuming that Trujillo breached a statutorily prescribed fiduciary duty:

o Violating a fiduciary duty to Espinoza under section 10-2-704(1)(a) and Division of Insurance Regulation 1-2-1, 3 Code of ...

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