Appeal by Petitioner from an order entered 4 October 2004 by
Judge Donald W. Stephens, in Superior Court, Wake County. Heard in
the Court of Appeals 15 November 2005.
Robinson Law Office, by Charles Everett Robinson, for
Attorney General Roy Cooper, by Special Deputy Attorney
General L. McNeil Chestnut and Assistant Attorney General Anne
J. Brown, for respondent-appellee.
Petitioner appeals from the trial court's affirmance of the
North Carolina State Banking Commission's decision to revoke
Petitioner's loan officer's license. Petitioner contends the
Banking Commission's decision is not supported by substantial
evidence and is arbitrary and capricious. After a careful review
of the record as a whole, we affirm the trial court's order
affirming the decision of the Banking Commission.
On 13 August 2002, Petitioner applied for a loan officer's
license with the North Carolina Commissioner of Banks under the
grandfather provision of the Mortgage Lending Act. Thereafter,Petitioner requested and was granted a hearing which was held
before the Commissioner . In a decision issued on 15 May 2003, the
Commissioner denied Petitioner's application for a loan officer's
license based upon Petitioner's failure to disclose outstanding tax
liens and judgments and based upon Petitioner's filing for
bankruptcy five times within the past ten years of his application.
Petitioner did not appeal the Commissioner's 15 May 2003 Decision
and Final Order.
On 28 July 2003, Petitioner re-applied for a loan officer's
license and filed a de novo application with supplemental materials
for licensure, including evidence of release of a tax lien,
certification that he completed the Overview of Lending and
Application Process course, certification that he took and passed
the exam for North Carolina Loan Officers, and a statement of
explanation. At the time of his re-application, Petitioner had
also improved his credit score and was employed by a mortgage
On 22 September 2003, the Commissioner issued a Final Order
and Decision (1) vacating for cause the prior 15 May 2003 denial of
Petitioner's application for a loan officer's license; and (2)
granting a loan officer's license to Petitioner upon stated terms
and conditions, including that he not have any meritorious
complaints filed against him for five years, that he comply with
any Office of the Commissioner of Bank's request for assistance in
resolving a complaint, and that he only act in the capacity of a
loan officer, and that he may not be designated or act in thecapacity of a branch manner without prior approval from the
Commissioner for five years. Petitioner appealed the terms and
conditions of his licensure to the North Carolina State Banking
Commission on 10 October 2003. Petitioner stated in his request
for review to the Banking Commission that he was only appealing the
terms and conditions of his licensure, and that he was not
challenging the Commissioner's order and decision to the extent it
granted him a loan officer's license.
On 17 March 2004, the Banking Commission vacated and reversed
the Commissioner's Final Order and Decision of 22 September 2003,
and revoked Petitioner's loan officer's license based upon the
recommendation and proposed resolution of the appellate panel. The
appellate panel, which was appointed to review Petitioner's appeal
to the Banking Commission, concluded that the Commissioner erred
as a matter of law in concluding on these facts that character and
financial responsibility on the part of the applicant had been
proven[,] and therefore Petitioner [did] not meet the financial
responsibility, character, or general fitness requirements under
N.C. Gen Stat. § 53-243.05.
Petitioner filed his Written Notice of Appeal, Or,
Alternatively, Petition for Judicial Review from the Banking
Commission's final agency decision in Superior Court on 6 April
2004. On 4 October 2004, the trial court entered an order (1)
dismissing Petitioner's Petition for Judicial Review as to the
Commissioner's 15 May 2003 Decision and Order; and (2) affirming
the Banking Commission's Final Agency Decision to revokePetitioner's loan officer's license. Petitioner appeals to this
Before addressing the merits of Petitioner's appeal, we first
note the applicable standard of review. The proper manner of
review of a final agency decision depends upon the particular
issues presented on appeal. Amanini v. N.C. Dept. of Human Res.
114 N.C. App. 668, 674, 443 S.E.2d 114, 118 (1994). Our statutes
provide that a reviewing trial court
may also reverse or modify the agency's
decision, or adopt the administrative law
judge's decision if the substantial rights of
the petitioners may have been prejudiced
because the agency's findings, inferences,
conclusions, or decisions are:
(1) In violation of constitutional
(2) In excess of the statutory authority or
jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Unsupported by substantial evidence
admissible under G.S. 150B-29(a),
150B-30, or 150B-31 in view of the entire
record as submitted; or
(6) Arbitrary, capricious, or an abuse of
N.C. Gen. Stat. § 150B-51(b) (2004).
review is proper when the issue raised is whether an
agency decision was based on an error of law. Beneficial North
Carolina, Inc. v. State ex rel. N.C. State Banking Comm'n
, 126 N.C.
App. 117, 122, 484 S.E.2d 808, 811 (1997). Under de novo
review,the court considers the question anew, as if the agency has not
addressed it. Blalock v. N. C. Dep't of Health and Human Servs.,
143 N.C. App. 470, 476, 546 S.E.2d 177, 182 (2001).
However, when the appellant challenges (1) whether the
agency's decision was supported by the evidence or (2) whether the
decision was arbitrary or capricious, then the reviewing court must
apply the 'whole record' test. In re Appeal by McCrary
, 112 N.C.
App. 161, 165, 435 S.E.2d 359, 363 (1993). The 'whole record'
test requires the reviewing court to examine all competent evidence
. . . in order to determine whether the agency decision is
supported by 'substantial evidence.' Beneficial
, 126 N.C. App. at
122, 484 S.E.2d at 811 (citation omitted). Substantial evidence
is such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion. Lackey v. N.C. Dep't of Human
306 N.C. 231, 238, 293 S.E.2d 171, 176 (1982) (citation
In applying the whole record test, our Supreme Court has held:
[I]t is for the administrative agency to
determine the weight and sufficiency of the
evidence and the credibility of the witnesses,
to draw inferences from the facts, and to
appraise conflicting and circumstantial
evidence. It is not our function to
substitute our judgment for that of the
Commissioner when the evidence is
conflicting. . . . As Justice Exum stated in
In re Rodgers:
'The 'whole record' test is
not a tool of judicial intrusion; instead, it
merely gives a reviewing court the capability
to determine whether an administrative
decision has a rational basis in the
State ex rel. Comm'r of Ins. v. N.C. Rate Bureau,
300 N.C. 381,
430, 269 S.E.2d 547, 578 (1980) (citations omitted).
The standard of review for an appellate court when reviewing
a superior court order affirming or reversing a decision of an
administrative agency requires the appellate court to examine 'the
trial court's order for error of law' just as in any other civil
, 126 N.C. App. at 123, 484 S.E.2d at 811
(citation omitted). The process has been described as a twofold
task: (1) determining whether the trial court exercised the
appropriate scope of review and, if appropriate, (2) deciding
whether the court did so properly. Amanini
, 114 N.C. App. at 675,
443 S.E.2d at 118-19.
In this case,
Petitioner contends that the Banking
Commission's decision to revoke his loan officer's license is not
supported by substantial evidence in the record and is arbitrary
and capricious. Thus, the appropriate standard of review is the
whole record test. The record on appeal indicates that the trial
court employed the correct standard of review since the trial
court's order affirming the Banking Commission's final agency
decision states that the final agency decision was fully supported
by the record as a whole, [and] has a rational basis in the
Thus, we now determine whether the trial court
applied the whole record standard of review properly.
North Carolina General Statute Section 53-92(d) vests full
power and authority in the Banking Commission to supervise,direct and review the powers exercised by the Commissioner. See
N.C. Gen. Stat. § 53-92(d) (2004). Further,
Upon an appeal to the Banking Commission by
any party from an order entered by the
Commissioner of Banks following an
administrative hearing . . . the chairman of
the Commission may appoint an appellate review
panel of not less than five members to review
the record on appeal, hear oral arguments, and
make a recommended decision to the Commission.
N.C. Gen. Stat. § 53-92(d).
Here, Petitioner appealed the specific terms and conditions of
the Commissioner's Decision and Final Order granting him a loan
officer's license to the North Carolina State Banking Commission.
The Banking Commission appointed an appellate panel to review
Petitioner's appeal under North Carolina General Statute Section
53-92(d). Upon its review of the record on appeal and the briefs
submitted by both parties, the appellate panel concluded that the
Commissioner erred as a matter of law in concluding on these facts
that character and financial responsibility on the part of the
applicant had been proven[,] and that Petitioner [did] not meet
the financial responsibility, character, or general fitness
requirements under N.C. Gen Stat. § 53-243.05. See
Stat. § 53-243.05(i) (2004) (stating that an applicant for a loan
officer's license is required to possess character, fitness and
The record undisputably shows that Petitioner filed for
bankruptcy five times within the past ten years of filing for his
loan officer's license.
Although the appellate panel acknowledged
in its report that a mere filing for bankruptcy would beinsufficient evidence to justify the denial of a loan officer's
license, the appellate panel distinguished this case stating:
However, in a case like this one where a
pattern or practice of frequent filings
suggests a misuse of the bankruptcy laws, with
the likely prejudice and harm to creditors
that that involves, denial would be
appropriate because the requisite character
and financial responsibility is not
established by the applicant. We so conclude.
The Banking Commission accepted the appellate panel's
recommendation and proposed resolution to reverse the
Commissioner's 22 September 2003 Decision and Final Order granting
Petitioner a loan officer's license. Because there was sufficient
evidence in the record to support the appellate panel's findings,
and the Banking Commission is authorized to review and reverse an
order of the Commissioner, we affirm the trial court's holding on
In his final assignment of error, Petitioner contends that the
Banking Commission's Decision and Order revoking his loan officer's
license was arbitrary and capricious. Administrative agency
decisions may be reversed as arbitrary or capricious if they are
patently in bad faith, or whimsical in the sense that they
indicate a lack of fair and careful consideration[.] State ex
rel. Comm'r of Ins.,
300 N.C. at 420, 269 S.E.2d at 573.
reviewing the whole record and finding substantial evidence to
support the Banking Commission's order, we hold the Banking
Commission did not act in an arbitrary and capricious manner in
revoking Petitioner's loan officer's license.
assignment of error is also overruled. Affirmed.
Judges STEELMAN and JOHN concur.
Report per Rule 30(e).
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