[Cite as Diso v. Dept. of Commerce, 2012-Ohio-4672.]

COURT OF APPEALS 

DELAWARE COUNTY, OHIO 

FIFTH APPELLATE DISTRICT 

RICHARD B. DISO 

 Plaintiff-Appellant 

-vsDEPARTMENT OF COMMERCE 

 Defendant-Appellee 

JUDGES: 

: Hon. W. Scott Gwin, P.J. 

: Hon. William B. Hoffman, J. 

: Hon. Sheila G. Farmer, J. 

: 

: 

: Case No. 2012-CA-25 

: 

: 

: O P I N I O N

CHARACTER OF PROCEEDING: Civil appeal from the Delaware County 

Court of Common Pleas, Case No. 10CV-F07-1088 

JUDGMENT: Affirmed 

DATE OF JUDGMENT ENTRY: October 8, 2012 

APPEARANCES: 

For Plaintiff-Appellant For Defendant-Appellee 

GLENN LITTLEJOHN MICHAEL DEWINE 

1500 Detroit Ave. #611 OHIO ATTORNEY GENERAL 

Cleveland, OH 44113 HILARY DAMASER 

 30 East Broad Street, 26th Floor 

RICHARD B. DISCO Columbus, OH 43215-3428 

523 Shanahan Road 

Lewis Center, OH 43035 
[Cite as Diso v. Dept. of Commerce, 2012-Ohio-4672.]

Gwin, P.J. 

{¶1} This case is before the Court on appeal from the March 12, 2012 decision 

of the Delaware County Court of Common Pleas that affirmed the Ohio Department of 

Commerce, Division of Financial Institutions’ [“Division”], July 7, 2010 Order denying 

appellant Richard Diso’s [“Diso”] 2008 loan officer's renewal application upon a finding 

that his character and general fitness did not command the confidence of the public and 

did not warrant the belief that the business will be operated honestly and fairly in 

compliance with the purposes of R.C. 1322.01 through 1322.12. 

Facts and Procedural History

{¶2} Diso held a loan officer license between June 15, 2004 and April 30, 2008. 

(State’s Exhibit 7). 

{¶3} On or about February 26, 2008, Diso sent the Division a “Mortgage 

Broker/ Loan Officer Notice of Judgment,” in compliance with Ohio Adm.Code1301:8-7-

19(C). (See, State’s Exhibit 6). This form, received by the Division on March 12, 2008, 

informed the Division of default judgments entered against Diso for credit card debts on 

October 30, 2007 (“Discover Bank”; $17,539.74 plus interest); December 7, 2008 

(“FIACard Services”; $23,820.14 plus interest); and March 18, 2008 (“Capital One 

Bank”; $12,935.53 plus interest). (T. Apr. 21, 2009 at 26; 34). Attached to the form was 

a letter and documentation from Diso in which Diso explained his frustration with 

recently enacted laws that permitted credit card companies to increase interest rates, 

 At the time this law went into affect [sic.], I just had surgery and 

later complications from the surgery. Making my normal minimum 

payments was not a problem. However, when my rates shot up on all of 
Delaware County, Case No. 2012-CA-25 3 

my accounts, I was forced to use my IRA account funds to keep up with 

the outrageous payments. Eventually I emptied the account and called the 

companies and asked them to lower my payments. They refused and I 

went into default on all credit cards. 

 Enclosed you will find my credit reports showing my perfect 

payment history on all my accounts and when the late payments started in 

2006. I wrote and had conversations with Senator Brown’s staff, {letter 

enclosed} and currently working with Senator Voinovich’s office to rectify 

this matter. 

 I should not have to forfeit my license due to the greed of politicians 

and no fault of my own. The collection agencies will not take reasonable 

payments and I refuse to pay the entire amount with penalties and late 

fees and still have a bad credit rating. That is un American [sic.] and I will 

fight it forever. 

 I am asking you not revoke my licenses. This will further destroy my 

life. I live a cash only life style, which is very difficult and almost impossible 

in a bad market. 

State’s Exhibit 6. (Letter dated Feb. 26, 2008 from Diso to the Division of Finance). 

{¶4} On or about April 24, 2008 the Division received Diso’s 2008 loan officer 

license renewal application. (T. Apr. 21, 2009 at 13; 32; State’s Exhibit 4). 

{¶5} On or about August 7, 2008, the Division sent Diso a “Letter of 

Investigation” requesting Diso provide the Division with the facts surrounding the unpaid 

civil judgments. (T. Apr. 21, 2009 at 28-29; State’s Exhibit 8). 
Delaware County, Case No. 2012-CA-25 4 

{¶6} In response to its request for information, on November 5, 2008 the 

Division received a response from Diso that included a letter, copies of the judgment 

entries, certificates of judgment and three letters of recommendation. (T. Apr. 21, 2009 

at 28; 30; State’s Exhibit 5; State’s Exhibit 9). In the letter, Diso stated, 

 In Spring of 2006, interest rates on all my credit cards soared as 

high as 30%. Up to that point, I had not been late on any cards. I had 

called all the credit card companies to ask them why my rates were raised 

and they responded we are allowed by law to raise them. At the time I just 

had surgery and complications from it. I explained this to the card 

companies and told them I could make the payments at the original 

interest rates, but not at the higher rate. They a [sic.] told me they would 

not lower the rates. I kept making the outrageous payments, taking money 

from my IRA until it was gone. I then defaulted on the credit cards. 

 I called my elected officials, letters enclosed, and asked them under 

what law was this allowed? To this day none of them has helped me or 

knew the laws. Imagine, lawmakers not knowing the law. One reason why 

this country is so screwed up. 

 Currently I am not making any payments and have no plans on 

making payments until I get answers on the law that allows credit card 

companies to raise rates. I am talking with several law firms to represent 

me fighting these judgements. [sic.] 

 I have 18 plus years as a residential loan officer and have never 

been in legal or moral trouble. I plan on doing this years to come.[Sic.] 
Delaware County, Case No. 2012-CA-25 5 

Taking away my licenses will destroy my life. I can give you my resume' 

and you can check my past employment. I will continue to fight this and 

eventually win. 

 Please contact me if further information is needed. I will work with 

the State, but I am pursuing legal action. 

State’s Exhibit 5. 

{¶7} In a "Notice of Intent to Deny Loan Officer License Renewal" dated 

January 9, 2009, the Division informed Diso, of its intent to deny his 2008 loan officer 

license renewal application pursuant to R.C. 119.07. Per R.C. 119.07, the Notice also 

informed Diso that he had a right to request a hearing, which he did. (State’s Exhibit 1). 

{¶8} On February 25, 2009, the parties appeared for the administrative hearing. 

On the record at the hearing, Diso requested a continuance in order to obtain counsel, 

which was granted by the hearing officer. 

{¶9} The administrative hearing reconvened on April 21, 2009, at which time 

the Division presented its case-in-chief. After the Division presented its evidence, Diso 

asked for an additional continuance before presenting his case-in-chief, which the 

hearing officer granted over the Division's objection. 

{¶10} The hearing was scheduled to reconvene for Diso's case-in-chief on June 

30, 2009. However, the day prior, Diso filed for Chapter 7 bankruptcy, and provided 

notice to the Division of the filing. Diso requested that the Division stay its administrative 

proceedings in accordance with 11 U.S.C. 362(a)—the Bankruptcy stay provision. 

Although the Division disputed the application of Section 362(a), the hearing officer 

continued the hearing, and later stayed the matter until resolution of the bankruptcy. 
Delaware County, Case No. 2012-CA-25 6 

{¶11} On October 14, 2009, Diso obtained a bankruptcy discharge. Upon the 

request of the hearing officer, the parties filed formal statements on their respective 

positions on whether the Division could proceed. The Division indicated its intention to 

proceed, and the matter was rescheduled to conclude the hearing on April 28, 2010. A 

hearing was set for April 28, 2010. Counsel for both parties appeared at the hearing. 

Diso did not personally appear on April 28; however, several Exhibits were submitted as 

evidence on his behalf by his counsel. Diso’s counsel also strongly argued that the 

Division could not proceed because of the automatic bankruptcy stay. The Division 

presented additional testimony concerning the effect, or lack thereof, of the bankruptcy 

on this case, since Diso had not filed for bankruptcy or given any indication he was 

insolvent before the hearing began in April 2009. 

{¶12} On May 14, 2010, the hearing officer issued a Report and 

Recommendation concluding, 

 [Diso] accumulated over $100,000.00 in debt, which (was 

discharged in bankruptcy) demonstrates [Diso’s] lack of financial 

responsibility to command the confidence of the public to warrant the 

belief that his business would be conducted honestly and fairly in 

compliance with the purposes of the Ohio Mortgage Broker Act. R.C. 

1322.041(A)(10). 

{¶13} The report concluded that the Division had met its burden of proof, and 

recommended that the Division deny Diso’s 2008 loan officer license renewal 

application. Diso filed objections, again referencing the bankruptcy and arguing the 

effect of the automatic stay. 
Delaware County, Case No. 2012-CA-25 7 

{¶14} On July 7, 2010, the Division issued a final order denying Diso's 2008 loan 

officer renewal application. This order further stated, 

 The Division modifies paragraph 34 of the Report and 

Recommendation to remove the words “financial responsibility” and the 

last sentence, “The superintendent shall not use a credit score as the sole 

basis for a license denial [.]” because those words and the last sentence 

were not included in R.C. 1322.041(A)(6) prior to January 1, 2012 

amendments. The Division also modifies paragraph 37 of the Report and 

Recommendation to substitute the words “lack of character and general 

fitness” for the words “lack of financial responsibility” because the words 

“financial responsibility” were not included in R.C. 1322.041(A)(60 prior to 

the January 1, 2010 amendments. 

{¶15} Diso did not file an application to renew his loan officer license in 2009. 

Diso filed an appeal pursuant to R.C. 119.12. 

{¶16} On March 12, 2012, the Court of Common Pleas affirmed the Division's 

Order. The trial court found, 

 The [bankruptcy] stay was not in effect at the time of the April 28, 

2010 hearing or the July 7, 2010 Division Order. More importantly, the 

automatic stay provision does not prevent an administrative agency from 

taking necessary action pursuant to its regulatory authority. Ohio State Bar 

Association v Dalton, 124 Ohio 3d 154, 2010-Ohio-619. 

{¶17} The trial court further held that the Division Order was supported by 

reliable, probative and substantial evidence. 
Delaware County, Case No. 2012-CA-25 8 

{¶18} This case is before this Court on appeal from the March 12, 2012 decision 

of the Delaware County Court of Common Pleas that affirmed the Division’s July 7, 

2010 Order denying Diso's 2008 loan officer's renewal application upon a finding that 

his character and general fitness did not command the confidence of the public and did 

not warrant the belief that the business will be operated honestly and fairly in 

compliance with the purposes of R.C. 1322.01 through 1322.12. 

Assignments of Error 

{¶19} Diso raises four assignments of error, 

{¶20} “I. THE COMMON PLEAS COURT ERRED IN AFFIRMING THE 

DIVISION'S ORDER AS THE STATE ADMINISTRATIVE PROCESS GIVING RISE TO 

THE ORDER VIOLATED THE AUTOMATIC STAY PROVISIONS OF THE FEDERAL 

BANKRUPTCY ACT CODIFIED AT 11 U.S. 362(A), WHICH BECAME A PERMANENT 

INJUNCTION VIA 11 U.S.C. 524(A). 

{¶21} “II. THE COMMON PLEAS COURT ERRED IN AFFIRMING THE 

DIVISION'S ORDER AS THE ORDER VIOLATES THE PROHIBITIONS SET FORTH 

IN THE FEDERAL BANKRUPTCY ACT AT II U.S.C. 525(A). 

{¶22} “III. THE COMMON PLEAS COURT ERRED IN AFFIRMING THE 

ORDER BECAUSE THE ORDER IS NOT BASED UPON RELIABLE, PROBATIVE, 

AND SUBSTANTIAL EVIDENCE AS REQUIRED BY OHIO REV. CODE 119.12. 

{¶23} “IV. THE COMMON PLEAS COURT ERRED IN AFFIRMING THE 

ORDER AS THE ORDER VIOLATES THE SUBSTANTIVE AND/OR PROCEDURAL 

RIGHTS OF THE APPELLANT UNDER THE OHIO AND/OR UNITED STATES 

CONSTITUTIONS.” 
Delaware County, Case No. 2012-CA-25 9 

Standard of Review. 

{¶24} R.C. 119.12 permits loan officer licensees to appeal decisions of the Ohio 

Department of Commerce's Division of Financial Institutions to the common pleas court. 

{¶25} In an administrative appeal, the court of common pleas reviews an order 

to determine whether it is supported by reliable, probative, and substantial evidence and 

is in accordance with law. R.C. 119.12. The Supreme Court of Ohio has defined 

reliable, probative, and substantial evidence as follows: 

 (1) “Reliable” evidence is dependable; that is, it can be confidently 

trusted. In order to be reliable, there must be a reasonable probability that 

the evidence is true. (2) “Probative” evidence is evidence that tends to 

prove the issue in question; it must be relevant in determining the issue. 

(3) “Substantial” evidence is evidence with some weight; it must have 

importance and value. 

Our Place, Inc. v. Ohio Liquor Control Comm., 63 Ohio St.3d 570, 571, 589 N.E.2d 

1303(1992) (footnotes omitted). 

{¶26} R.C. 119.12 requires a court of common pleas to conduct both “a hybrid 

factual / legal inquiry and a purely legal inquiry.” Bartchy v. State Bd. of Edn., 120 Ohio 

St.3d 205, 2008-Ohio-4826, 897 N.E. 2d 1096, ¶ 37. As to the first inquiry, the court 

“‘must give deference to the agency's resolution of evidentiary conflicts,’” even though 

the agency's findings are not conclusive. Id., quoting Ohio Historical Soc. v. State Emp. 

Relations Bd., 66 Ohio St.3d 466, 470–71, 1993-Ohio-182, 613 N.E.2d 591. In this 

regard, the Supreme Court has explained, as follows: 
Delaware County, Case No. 2012-CA-25 10 

 Where the court, in its appraisal of the evidence, determines that 

there exist legally significant reasons for discrediting certain evidence 

relied upon by the administrative body, and necessary to its determination, the court may reverse, vacate, or modify the administrative 

order. Thus, where a witness' testimony is internally inconsistent, or is 

impeached by evidence of a prior inconsistent statement, the court may 

properly decide that such testimony should be given no weight. Likewise, 

where it appears that the administrative determination rests upon 

inferences improperly drawn from the evidence adduced, the court may 

reverse the administrative order. 

Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108, 111–12, 407 N.E.2d 1265(1980); 

Bartchy at ¶ 37. As to the second inquiry, the court must construe the law on its own. Id. 

at ¶ 38, 897 N.E. 2d 1096, citing Ohio Historical Soc. at 471, 613 N.E.2d 591. 

{¶27} In a plurality opinion, the Ohio Supreme Court delineated the standard of 

review and the role of a court of appeals: 

 The court of appeals is even more limited in its review and can 

overturn findings of fact “‘only if the trial court has abused its discretion.’” 

Rossford Exempted Village School Dist. Bd. of Edn. v. State Bd. of Edn. 

(1992), 63 Ohio St.3d 705, 707, 590 N.E. 2d 1240, quoting Lorain Cty. Bd. 

of Edn. v. State Emp. Relations Bd. (1988), 40 Ohio St.3d 257, 260–261, 

533 N.E.2d 264. A court of appeals has plenary review when deciding 

whether the decision is in accordance with the law. Bartchy, 120 Ohio 

St.3d 205, 2008-Ohio-4826, 897 N.E.2d **1065 1096, at ¶ 43. A majority 
Delaware County, Case No. 2012-CA-25 11 

of justices in Bartchy reinforced this standard of deference. The plurality 

opinion stated that “the standards of review in the common pleas court 

and the court of appeals are meant to ensure proper deference to the 

state board,” Id. at ¶95, while the concurring opinion found error because 

“the court of appeals substituted its judgment for that of the trial court on 

issues of fact.” Id. at ¶98 (Lanzinger, J., concurring in syllabus and 

judgment only). 

Spitznagel v. State Bd. Of Edn., 126 Ohio St.3d 174, 2010-Ohio-2715, 931 N.E.2d 

1061, ¶ 14. Accord, Castle v. Ohio Dept. of Commerce, 168 Ohio App.3d 74, 2006-

Ohio-3702, 858 N.E.2d 843, ¶7 (5th Dist.); Bennett v. St. Medical Bd. Of Ohio, 10th 

Dist. 10AP-833, 2011-Ohio-3158, ¶12. 

{¶28} The term “abuse of discretion” however has been applied in a somewhat 

rote manner by the courts without analysis of the true purpose of the appellate court's 

role in the review of a trial court's discretionary powers. An excellent analysis of the 

misconception surrounding the concept of “abuse of discretion” was set forth by the 

Arizona Supreme Court sitting en banc: 

 The phrase “within the discretion of the trial court” is often used but 

the reason for that phrase being applied to certain issues is seldom 

examined. One of the primary reasons an issue is considered 

discretionary is that its resolution is based on factors which vary from case 

to case and which involve the balance of conflicting facts and equitable 

considerations. Walsh v. Centeio, 692 F.2d 1239, 1242 (9th Cir.1982). 

Thus, the phrase “within the discretion of the trial court” does not mean 
Delaware County, Case No. 2012-CA-25 12 

that the court is free to reach any conclusion it wishes. It does mean that 

where there are opposing equitable or factual considerations, we will not 

substitute our judgment for that of the trial court. 

State v. Chapple, 135 Ariz. 281, 296-97, 660 P.2d 1208, 1223-24(1983). 

{¶29} However, the Court further explained, 

 The term “abuse of discretion” is unfortunate. In ordinary language, 

“abuse” implies some form of corrupt practice, deceit or impropriety. 

Webster's Third New International Dictionary (1976). In this sense, the 

application of the word to the act of a trial judge who ruled in accordance 

with all the decided cases on the issue is inappropriate. However, in the 

legal context, the word “abuse” in the phrase “abuse of discretion” has 

been given a broader meaning. In the few cases that have attempted an 

analysis, the ordinary meaning of the word has been considered 

inappropriate and the phrase as a whole has been interpreted to apply 

where the reasons given by the court for its action are clearly untenable, 

legally incorrect, or amount to a denial of justice. State ex rel. Fletcher v. 

District Court of Jefferson County, 213 Iowa 822, 831, 238 N.W. 290, 294 

(1931). Similarly, a discretionary act which reaches an end or purpose not 

justified by, and clearly against, reason and evidence “is an abuse.” 

Kinnear v. Dennis, 97 Okl. 206, 207, 223 P. 383, 384 (1924). 

 The law would be better served if we were to apply a different term, 

but since most appellate judges suffer from misocainea, we will no doubt 

continue to use the phrase “abuse of discretion.” Therefore, we should 
Delaware County, Case No. 2012-CA-25 13 

keep some operative principles in mind. Something is discretionary 

because it is based on an assessment of conflicting procedural, factual or 

equitable considerations which vary from case to case and which can be 

better determined or resolved by the trial judge, who has a more 

immediate grasp of all the facts of the case, an opportunity to see the 

parties, lawyers and witnesses, and who can better assess the impact of 

what occurs before him. Walsh v. Centeio, supra. Where a decision is 

made on that basis, it is truly discretionary and we will not substitute our 

judgment for that of the trial judge; we will not second-guess. Where, 

however, the facts or inferences from them are not in dispute and where 

there are few or no conflicting procedural, factual or equitable 

considerations, the resolution of the question is one of law or logic. Then it 

is our final responsibility to determine law and policy and it becomes our 

duty to “look over the shoulder” of the trial judge and, if appropriate, 

substitute our judgment for his or hers. This process is sometimes, 

unfortunately, described as a determination that the trial judge has 

“abused his discretion ...” 

State v. Chapple, 135 Ariz. 281, 660 P.2d 1208 at n. 18; State v. Garza, 192 Ariz. 171, 

175-76, 962 P.2d 898, 902(1998). See, State v. Firouzmandi, 5th Dist. No. 2006-CA-41, 

2006-Ohio-5823, ¶¶ 54-55. 
Delaware County, Case No. 2012-CA-25 14 

I. 

{¶30} In his first assignment of error Diso contends that the Division’s order 

violates the automatic bankruptcy stay provision set forth in 11 U.S.C. 362(a). 

Therefore, Diso continues, the trial court erred in affirming the order. 

{¶31} In the case at bar, the trial court found, 

 [Diso] asserts that the Division's order vacates the automatic stay 

provision set forth in 11 U.S.C. § 362 (a). This argument is without merit. 

[Diso’s] bankruptcy was discharged on October 14, 2009 and therefore the 

stay was not in effect at the time of the April 28, 2010 hearing or the July 

7, 2010 Division Order. More importantly, the automatic stay provision 

does not prevent an administrative agency from taking necessary action 

pursuant to its regulatory authority. Ohio State Bar Association v Dalton, 

124 Ohio St.3d 154, 2010-Ohio-619, 924 N.E. 2d 821. 

{¶32} The record in this case supports the trial court’s findings. Diso notified the 

Division of his bankruptcy filing; the hearing officer continued the hearing set for June 

30, 2009 and issued an order staying the proceedings. Report & Recommendation at 2. 

On October 14, 2009, the United States Bankruptcy Court, Southern District of Ohio 

discharged Diso from bankruptcy. (Respondent’s Exhibit A; B) On March 10, 2010, the 

hearing officer issued an order reconvening the hearing on April 28, 2010, more than six 

months after Diso’s bankruptcy discharge. (Report & Recommendation at 9; State’s 

Exhibit 11). 
Delaware County, Case No. 2012-CA-25 15 

{¶33} Even if the automatic stay were still in effect, the stay does not apply to 

this administrative action, which the Division brought pursuant to its regulatory authority. 

Ohio State Bar Ass'n v. Dalton, 124 Ohio St.3d 514, 2010-Ohio-619, 924 N.E.2d 821. 

{¶34} We find Diso’s attempt to distinguish Dalton unpersuasive. The Automatic 

Stay Provision is intended to “preserve what remains of the debtor's insolvent estate 

and ... provide for a systematic equitable liquidation procedure for all creditors, secured 

as well as unsecured, thereby preventing a chaotic and uncontrolled scramble for the 

debtor's assets in a variety of uncoordinated proceedings in different courts.” Chao v. 

BDK Indus., L.L.C., 296 B.R. 165, 167 (C.D.Ill. 2003) (citing Holtkamp v. Littlefield, 669 

F.2d 505, 508 (7th Cir.1982)). 

{¶35} In Solis v. Caro, N.D.Ill. No. 11 C 6884, 2012 WL 1230824(Apr. 12, 2012), 

the Court noted, 

 Exceptions to the Automatic Stay Provision are listed in 11 U.S.C. § 

362(b). One such exception, which the Secretary contends applies in this 

case, is “the commencement or continuation of an action or proceeding by 

a governmental unit ... to enforce such governmental unit's ... police or 

regulatory power.” 11 U.S.C. § 362(b)(4) (the “Government Proceeding 

Exception”). Courts narrowly construe this exception “to apply to the 

enforcement of ... laws affecting health, welfare, morals and safety.” 

Matter of Cash Currency Exch., Inc., 762 F.2d 542, 555 (7th Cir.1985) 

(citation omitted). In determining whether it applies, courts typically apply 

two tests: the “pecuniary purpose” test and the “public policy” test. BDK 
Delaware County, Case No. 2012-CA-25 16 

Indus., 296 B.R. at 167 (citing Chao v. Hospital Staffing Servs., Inc., 270 

F.3d 374, 384 (6th Cir.2001)). 

Id. at *3.

{¶36} Under the pecuniary purpose test, reviewing courts focus on whether the 

governmental proceeding relates primarily to the protection of the government's 

pecuniary interest in the debtor's property, and not to matters of public safety [or public 

policy]. Those proceedings that relate primarily to matters of public safety are exempted 

from the stay. Under the public policy test, reviewing courts must distinguish between 

proceedings that adjudicate private rights and those that effectuate public policy. Those 

proceedings that effectuate public policy are exempted from the stay. Chao v. Hospital 

Staffing Services, Inc., 270 F.3d 374, 385-386 (6th Cir.2001). 

{¶37} In the case at bar, the Division has no pecuniary interest in Diso's 

property, and its action seeks only to effectuate public policy. 

{¶38} Accordingly, the license disciplinary action commenced in this case is not 

subject to the automatic stay, and the Division Order does not violate Section 362(a). 

The Court below did not abuse its discretion. 

{¶39} Diso’s first assignment of error is overruled. 

II. 

{¶40} In his second assignment of error, Diso contends that 11 U.S.C. 525(a) 

prohibits a governmental agency from denying licensure solely because the applicant 

sought bankruptcy protection. Diso argues the Division predicated its action solely on 

his decision to file for Chapter 7 bankruptcy. 
Delaware County, Case No. 2012-CA-25 17 

{¶41} Section 525(a) prohibits a governmental agency from denying licensure 

solely because the applicant sought bankruptcy protection, 

 (a) * * * [A] governmental unit may not * * * refuse to renew a 

license * * * [of] a person that is or has been a debtor under this title or a 

bankrupt or a debtor under the Bankruptcy Act * * * solely because such 

bankrupt or debtor is or has been a debtor under this title or a bankrupt or 

debtor under the Bankruptcy Act, * * * or has not paid a debt that is 

dischargeable in the case under this title or that was discharged under the 

Bankruptcy Act. 

{¶42} The Division argues, 

 The Division's concern in this case is not with the fact that Mr. Diso 

filed bankruptcy to avoid paying civil judgments, or even with the mere fact 

that Mr. Diso has unpaid judgments. See April 28, 2010 Transcript, pp. 22-

23, 26-28. Mr. Diso never indicated that he lacked the financial means to 

pay the judgments. Rather, Mr. Diso's conduct with regard to his creditors 

and his stated basis for refusing to pay his debts were the ultimate factors 

in this case. Mr. Diso refused to pay the credit card companies because 

he disagreed with those companies on their legal right to raise his interest 

rates and fees: "Currently I am not making any payments and have no 

plans on making payments until I get answers on the law that allows credit 

card companies to raise rates." (Emphasis added.) CR, State's Exhibit 5. 

Appellee’ Brief at 14. 
Delaware County, Case No. 2012-CA-25 18 

{¶43} The record reflects that Diso submitted letters of recommendation on his 

own behalf, as well as numerous letters to and from elected state officials. See T. April 

28, 2010 at 29-33. 

{¶44} The common pleas courts and the courts of appeals apply different 

standards of review for administrative appeals. As the court noted in Henley v. 

Youngstown Bd. of Zoning Appeals, 

 This statute grants a more limited power to the court of appeals to 

review the judgment of the common pleas court only on “questions of law,” 

which does not include the same extensive power to weigh “the 

preponderance of substantial, reliable and probative evidence,’ as is 

granted to the common pleas court. * * * It is incumbent on the trial court 

to examine the evidence. Such is not the charge of the appellate court. * * 

* The fact that the court of appeals * * * might have arrived at a different 

conclusion than the administrative agency is immaterial. Appellate courts 

must not substitute their judgment for those of an administrative agency or 

a trial court absent the approved criteria for doing so.” 

90 Ohio St.3d 142, 147, 735 N.E.2d 433, quoting Lorain City School Dist. Bd. of Edn. v. 

State Emp. Relations Bd., 40 Ohio St.3d 257, 261, 533 N.E.2d 264, 267 (1988). Thus, 

unless this court determines that the trial court abused its discretion, we are compelled 

to affirm its decision as the court of appeals may not engage in what amounts to a 

substitution of judgment of the trial court. Graziano v. Amherst Exempted Village Bd. of 

Edn., 32 Ohio St.3d 289, 294, 513 N.E.2d 282(1987). (Douglas, J., concurring). 
Delaware County, Case No. 2012-CA-25 19 

{¶45} Regardless of the position that the Division now asserts, at the time the 

Division sent Diso the Notice of Intent letter and also at the time the Division presented 

its case-in-chief before the hearing officer, R.C. 1322.041(A)(6) and Ohio Adm.Code 

1301:8-7-2(H) allowed the Division to consider the fact that Diso had unpaid civil 

judgments in determining his character and fitness to hold a loan officer license. What 

occurred next is what creates the conundrum in this case. 

{¶46} After the Division informed Diso of its intent to deny the renewal of his 

license Diso sought the protection of the bankruptcy court and on October 14, 2009 

Diso obtained a bankruptcy discharge, which included his unpaid civil judgments. Diso 

now contends that the Division cannot base a decision to deny his license upon the 

unpaid civil judgments. 

{¶47} Section 525 is a codification of the doctrine articulated in Perez v. 

Campbell, 402 U.S. 637, 91 S.Ct. 1704, 29 L.Ed.2d 233 (1971). In essence, Section 

525 provides that no governmental unit may deny or revoke a license solely because a 

person has not paid a debt that was discharged in bankruptcy. Conflicts with Section 

525 have led some courts to either invalidate state statutes under the Supremacy 

Clause of the U.S. Constitution, or enjoin creditors from proceeding with collection 

efforts from third parties. See, Matter of Layfield, 12 B.R. 846 (Bankr.N.D.Ala.1981);

Green v. Yang, 29 B.R. 682 (Bankr.S.D.Ohio 1983). 

{¶48} The legislative history of the Bankruptcy Act indicates that Congress 

intended to bar a per se rule which would make filing in bankruptcy an automatic bar to 

a license or similar grant. Congress did not intend to preclude examination of the 

circumstances surrounding bankruptcy. See, H.R.Rep. No. 95-595, 95th Cong. 1st 
Delaware County, Case No. 2012-CA-25 20 

Session at 164 (1977), reprinted in 5 U.S.Code Cong. & Admin.News, 95th Cong.2d 

Sess. 5787, 5963, 6126 (1978) providing in pertinent part: 

 The prohibition does not extend so far as to prohibit examination of 

the factors surrounding the bankruptcy, the imposition of financial 

responsibility rules if they are not imposed only on former bankrupts, or 

the examination of prospective financial condition or managerial ability. 

The purpose of the section is to prevent automatic reaction against an 

individual for availing himself of the protection of the bankruptcy laws.... 

(I)n those cases where the causes of bankruptcy are intimately connected 

with the license, grant or employment in question, an examination into the 

circumstances surrounding the bankruptcy will permit governmental units 

to pursue appropriate regulatory policies and take appropriate action 

without running afoul of bankruptcy policy. 

In the Matter of Anonymous, 74 N.Y.2d 938, 939 550 N.Y.S.2d 270, 271, 549 N.E.2d 

472, 473 (1989); In re Stewart, 2010 OK 61, 240 P.3d 666, 671(Watt, J. dissenting). 

{¶49} In a case analogous to that at bar, the New York Court of Appeals 

considered a challenge brought by a bar applicant who was denied admission after the 

Character and Fitness Committee concluded that the applicant lacked “the character 

necessary to discipline himself to control his standard of living and the amount of his 

indebtedness, thus showing a lack of financial responsibility necessary for an attorney.” 

In the Matter of Anonymous, supra. The applicant contended that the Character and 

Fitness Committee and the Appellate Division had denied his admission because of his 
Delaware County, Case No. 2012-CA-25 21 

bankruptcy in violation of 11 U.S.C. 525. In analyzing the issue, the Court of Appeals 

wrote, 

 The distinction is subtle because the State's actions may not inhibit 

individuals from taking advantage of the bankruptcy laws to avoid 

jeopardizing a future legal career. Nor can the State use its power to 

examine Bar applicants as a means of coercing them into reaffirming 

debts previously discharged (see, Perez v. Campbell, 402 U.S. 637, 649–

652, 91 S.Ct. 1704, 1711–1713, supra; Note, Evaluation of a Bar 

Applicant's Moral Character: May a State Consider the Circumstances 

Surrounding a Discharge in Bankruptcy?, 56 Ind.L.J. 703, 714). A 

determination of unfitness must rest not on the fact of bankruptcy but on 

conduct reasonably viewed as incompatible with a lawyer's duties and 

responsibilities as a member of the Bar. To successfully establish a claim 

that 11 U.S.C. § 525 has been violated, an applicant must establish that 

insolvency, the filing of bankruptcy or the discharge of debt is the sole

reason for denial of the application (see, 11 U.S.C. § 525[a]; In re 

Hopkins, 66 B.R. 828 [Bank.Ct., W.D.Ark.]; see also, 11 U.S.C.S. § 525, 

History). 

74 N.Y. 2d at 940, 550 N.Y.S. 2d at 271– 72, 549 N.E. 2d at 473-74. See also, Matter of 

the Application of Taylor, 293 Or. 285, 647 P.2d 462 (1982) [Bankruptcy Act did not 

prohibit examination of circumstances surrounding bankruptcy, as these circumstances 

illustrate judgment of the applicant for admission to bar in handling serious financial 

obligations.]; In re Fasse, 40 Bankr. 198(D. Col. 1984)[If factors other than the 
Delaware County, Case No. 2012-CA-25 22 

nonpayment of the debt indicate the judgment debtor is unsuitable to hold a real estate 

license, the state may commence a proceeding to revoke debtor's license. Hinders v. 

Miami Valley Regional Transit Authority, 22 B.R. 810 (Bankr.S.D.Ohio 1982). However, 

if the only reason for suspension or revocation of the license is a debt discharged in 

bankruptcy, such action would be in direct contravention of § 525]. 

{¶50} Courts have also concluded that for police jobs consideration of the fact of 

prior bankruptcy was lawful. See Marshall v. District of Columbia Government, 559 F.2d 

726, 729 (D.C.Cir.1977); Detz v. Hoover, 539 F.Supp. 532 (E.D.Pa. 1982); In re 

Stewart, 240 P.3d at 674 [Perez presents no bar to determinations that circumstances 

surrounding the filing of a bankruptcy petition may be considered in situations where the 

professional licensure of an individual may implicate the duty to manage money 

judiciously or where the filing may reflect character flaws of the applicant.] 

{¶51} In other words, Diso cannot resort to bankruptcy as a short cut to 

obtaining a renewal of his license. More importantly, Diso cannot circumvent the 

consideration of his financial conduct, which the Division is required to investigate 

pursuant to R.C. 1322.041(A)(6) and Ohio Adm.Code 1301:8-7-2(H), by filing for 

bankruptcy. 

{¶52} In the case at bar, the hearing officer considered, among other things, 

evidence of Diso’s debts as submitted in his bankruptcy petition.(T., Apr. 28, 2010 at 5-

7; Respondent’s Exhibit B; Report and Recommendation at 6). The hearing officer 

further considered letters of recommendation submitted on Diso’s behalf. (Report and 

Recommendation at 5; 6). 
Delaware County, Case No. 2012-CA-25 23 

{¶53} The record reflects that the Division presented evidence that it did not 

discriminate against Diso because he had unpaid debts or because he filed for 

bankruptcy. Further, while there is evidence that the Division would consider, along with 

all other evidence, if Diso paid his civil judgments, there is no evidence in the record 

that the Division ever conditioned licensure on Diso’s paying his discharged civil 

judgments. The record reflects that the Division often approves loan officer applicants 

who have unpaid debts and applicants who previously filed for bankruptcy. The 

testimony at Diso's hearing illustrated that as many as sixty percent of the individuals 

who apply for the license Diso seeks are bankruptcy filers, and many of those 

individuals obtain licenses from the Division. See, T. April 28, 2010 at 28-29. 

{¶54} In the case at bar, the Division did not condition the denial of Diso’s 

application to renew his license on his failure to repay the discharged debts or on the 

fact that he had filed for bankruptcy. The denial of his application to renew did not occur 

automatically when the default judgments or the bankruptcy discharge were entered. 

Rather, Diso was afforded a due process hearing in which he was represented by 

counsel and had the opportunity to present evidence before his application was denied. 

We also note that the statute does not preclude Diso from reapplying for a loan officer 

license. (T., Dec. 1, 2010 at 23; 28; 38). At no time did the Division seek to compel 

repayment of the discharged judgments as a condition to granting the license. 

{¶55} The decision in Diso’s case was not based upon the fact that Diso filed 

bankruptcy; rather the decision rests upon conduct reasonably viewed as incompatible 

to a loan officer’s duties. In deciding whether to issue a loan officer license the Division 
Delaware County, Case No. 2012-CA-25 24 

may properly consider, as a factor, the fact that the applicant has been unable to 

manage his financial affairs. 

{¶56} Therefore, the Division’s order denying Diso’s license renewal application 

does not violate the prohibiting contained in 11 U.S.C. 525(a). 

{¶57} Diso’s second assignment of error is overruled in its entirety. 

III. 

{¶58} In his third assignment of error, Diso maintains that the trial court’s 

decision in affirming the Division’s order denying Diso’s license renewal application is in 

error because the order is not base upon reliable, probative and substantial evidence. 

{¶59} The Supreme Court of Ohio has delineated the standard of review and the 

role of a court of appeals in an administrative appeal, 

 If the judgment of the court of common pleas is then appealed to 

the court of appeals, review in the appellate court is strictly limited to a 

determination of whether the common pleas court abused its discretion. 

This scope of review is, of course, extremely narrow. The term ‘abuse of 

discretion’ has been defined as implying ‘“not merely error of judgment, 

but perversity of will, passion, prejudice, partiality, or moral delinquency.”’ 

(Citations omitted.) 

Graziano v. Amherst Exempted Village Bd. of Edn., 32 Ohio St.3d 289, 295, 513 N.E.2d 

282(1987). (Douglas, J., concurring). 

{¶60} In the case at bar, the trial court issued a five page Judgment Entry that 

includes a thorough discussion of the testimony and evidence presented to the hearing 

officer. The record before the hearing officer contained three pages that Diso presented 
Delaware County, Case No. 2012-CA-25 25 

from his bankruptcy petition Schedule F that indicated that Diso accumulated over 

$100,000.00 in debts. (T., Apr. 28, 2010 at 5-7; Respondent’s Exhibit B; Report and

Recommendation at 6). The hearing officer further considered letters of 

recommendation submitted on Diso’s behalf. (Report and Recommendation at 5; 6). 

{¶61} Diso argues in this appeal that because his debts were the result of poor 

economic conditions, the civil judgments against him do not constitute reliable, 

probative, or substantive evidence. 

{¶62} R.C. 1322.041(A)(6) and Ohio Adm.Code 1301:8-7-2(H) allowed the 

Division to consider the fact that Diso had unpaid civil judgments in determining his 

character and fitness to hold a loan officer license. Further, the hearing officer did 

consider Diso’s letters setting forth his economic hardship. 

{¶63} “‘The fact that the court of appeals * * * might have arrived at a different 

conclusion than did the administrative agency is immaterial. Appellate courts must not 

substitute their judgment for those of an administrative agency or a trial court absent the 

approved criteria for doing so.’” Rossford Exempted Village School Dist., 63 Ohio St.3d 

at 707, 590 N.E.2d 1240, quoting Lorain City Bd. of Edn. v. State Emp. Relations Bd.

(1988), 40 Ohio St.3d 257, 260–261, 533 N.E.2d 264. 

{¶64} In the matter sub judice, we do not perceive an “unreasonable, arbitrary or 

unconscionable attitude or one that is “not merely error of judgment, but [one of] 

perversity of will, passion, prejudice, partiality, or moral delinquency. Diso’s arguments 

go to the weight of the evidence, rather than demonstrating an “abuse of discretion.” 
Delaware County, Case No. 2012-CA-25 26 

{¶65} Diso next contends that the hearing officer did not consider his letters of 

recommendation. We reject this argument. The hearing officer did consider letters of 

recommendation submitted on Diso’s behalf. (Report and Recommendation at 5; 6). 

{¶66} Diso next reiterates the argument that we rejected in our discussion of his 

second assignment of error, to wit, 11 U.S.C. 525(a) prohibits a governmental agency 

from denying licensure solely because the applicant obtained a discharge in bankruptcy 

of the underlying civil judgments. However, as we have previously found that in deciding 

whether to issue a loan officer license the Division may properly consider, as a factor, 

the fact that the applicant has been unable to manage his financial affairs. 

{¶67} Upon review, we conclude that the trial court did not abuse its discretion in 

concluding that reliable, probative, and substantial evidence supported the Division’s 

determination. 

{¶68} Diso’s third assignment of error is overruled in its entirety. 

IV. 

{¶69} In his fourth assignment of error, Diso contends that the Division violated 

his due process rights by not proving proper notice of the charges against him. 

{¶70} R.C. 119.07 states in pertinent part, “[n]otice shall be given by registered 

mail, return receipt requested, and 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.” Under R.C. 119.07, the administrative agency is required to give 

Appellants notice of the charges or other reasons for the proposed action. “The purpose 

of such notice is to give the party charged with a violation adequate notice to enable the 
Delaware County, Case No. 2012-CA-25 27 

party to prepare a defense to the charges.” Sohi v. Ohio State Dental Board, 10th Dist. 

No. 96APD05-687, 1997 WL 275495(May 20, 1997), citing Geroc v. Ohio Veterinary 

Medical Bd., 37 Ohio App.3d 192, 199, 525 N.E.2d 501(1987), quoting Keaton v. State, 

2 Ohio App.3d 480, 483, 442 N.E.2d 1315(1981). “In addition, the due process clause of 

the Fourteenth Amendment to the United States Constitution, to some extent, is 

applicable to hearings before administrative agencies, and such procedural due process 

includes reasonable notice of the subject matter of the hearing. State ex rel. LTV Steel 

Co. v. Indus. Comm., 102 Ohio App.3d 100, 103-104, 656 N.E.2d 1016(1995) (citations 

omitted). Hence, if relator was not given proper notice as required under R.C. 119.07 

and as dictated under procedural due process principles, the [trial court] may reverse 

the board's order.” Id. 

{¶71} Diso argues that the Division improperly amended the Notice of Intent sent 

to him on January 1, 2009. (State’s Exhibit 1). Diso contends that he was not informed 

that his conduct in refusing to pay the civil judgments would be considered in deciding 

whether to approve his application for a renewal of his loan officer license. 

{¶72} The Notice of Intent clearly provides that the three default judgments were 

considered as the basis for denying his renewal. However, the notice further provided, 

 G. In March 2008, Respondent submitted to the Division a 

Notification of Judgment form, supporting documentation and a statement 

informing the Division of his refusal to pay the civil judgments entered 

against him. 
Delaware County, Case No. 2012-CA-25 28 

 H. In November 2008, Respondent informed the Division that he 

had not paid and reiterated his refusal to pay the civil judgments entered 

against him. 

State’s Exhibit 1. That Diso’s conduct as expressed in paragraphs G and H were 

considered as a basis for denying the renewal of his license was addressed before the 

hearing officer during the April 21, 2009 hearing. (T. Apr. 21, 2009 at 22-25). If Diso did 

not realize that his conduct was going to be an issue, this discussion obviates that 

concern. After the Division presented its case-in-chief on April 21, 2009, the hearing 

was adjourned and would not recommence until after Diso’s discharge in bankruptcy. 

The hearing recommenced on April 28, 2010 over one year from when the Division 

presented its case-in-chief. If Diso was unaware that the Division was considering his 

conduct in deciding whether to renew his license, he was certainly aware of it before the 

April 28, 2010 hearing. 

{¶73} Given the record, we find that Diso has failed to demonstrate that he was 

prejudiced. He had over one year after the Division presented its case-in-chief in which 

to prepare his defense. 

{¶74} Diso next argues that the Division has punished him for exercising his 

right to free speech. 

{¶75} Diso was given notice and an opportunity to be heard before his 

application was denied. On May 14, 2010, the hearing officer issued a Report and 

Recommendation concluding, 

 [Diso] accumulated over $100,000.00 in debt, which (was 

discharged in bankruptcy) demonstrates [Diso’s] lack of financial 
Delaware County, Case No. 2012-CA-25 29 

responsibility to command the confidence of the public to warrant the 

belief that his business would be conducted honestly and fairly in 

compliance with the purposes of the Ohio Mortgage Broker Act. R.C. 

1322.041(A)(10). 

{¶76} The report concluded that the Division had met its burden of proof, and 

recommended that the Division deny Diso’s 2008 loan officer license renewal 

application. Diso filed objections, again referencing the bankruptcy and arguing the 

effect of the automatic stay. Both the Report and Recommendation and the Division’s 

Final Order base the decision to deny Diso’s 2008 loan officer's renewal application 

upon the fact that Diso has been unable to manage his financial affairs. 

{¶77} Accordingly, there is no evidence in the record that the decision to deny 

Diso’s 2008 loan officer's renewal application was in response to his exercise of 

constitutionally protected First Amendment freedoms. 

{¶78} Diso’s fourth assignment of error is overruled in its entirety. 
Delaware County, Case No. 2012-CA-25 30 

Conclusion 

{¶79} Having overruled each of Diso's assignments of error and having 

concluded that the trial court did not abuse its discretion in affirming the Division's order, 

we affirm the judgment of the Delaware County Court of Common Pleas. 

By Gwin, P.J., 

Hoffman, J., and 

Farmer, J., concur 

 _________________________________ 

 HON. W. SCOTT GWIN 

 _________________________________ 

 HON. WILLIAM B. HOFFMAN 

 _________________________________ 

 HON. SHEILA G. FARMER 

WSG:clw 0914 
[Cite as Diso v. Dept. of Commerce, 2012-Ohio-4672.]

IN THE COURT OF APPEALS FOR DELAWARE COUNTY, OHIO 

FIFTH APPELLATE DISTRICT 

RICHARD B. DISO : 

 : 

 Plaintiff-Appellant : 

 : 

 : 

-vs- : JUDGMENT ENTRY 

 : 

DEPARTMENT OF COMMERCE : 

 : 

 : 

 Defendant-Appellee : CASE NO. 2012-CA-25 

 For the reasons stated in our accompanying Memorandum-Opinion, the judgment of 

the Delaware County Court of Common Pleas, Ohio, is affirmed. Costs to appellant. 

 _________________________________ 

 HON. W. SCOTT GWIN 

 _________________________________ 

 HON. WILLIAM B. HOFFMAN 

 _________________________________ 

 HON. SHEILA G. FARMER