2013 I LApp (1st) 122449 FI RST DI VI SI ON FI L ED: September 30, 2013 No. 1-12-2449

I N THE APPEL L ATE COURT OF I L L I NOI S FI RST J UDI CI AL

DI STRI CT

J OHN T. B URNS, I I I , Plaintiff-Appellant,

v. THE DEPARTMENT OF I NSURANCE and ANDREW BORON, A cting Direc tor of The Depa rtment of I nsuranc e, Def endants-A

ppellees. ) ) ) ) ) ) ) ) ) ) ) Appea l from the Circuit Court of Cook County

.
No. 12-CH-5077

Honora ble L eRoy K. Martin, Jr., J udg e Presiding

. J USTI CE HOFF MAN deliver ed the judg ment of the c ourt, with opinion. Presiding Justice Connors and Jus tice De lort concur red in the judg ment and opinion. OP INION ¶ 1 The plaintiff, J ohn T. Bur ns, I I I , appea ls the circ uit court order which, pursuant to section 2- 619 o f the Code of Civil Procedur e (Code) (735 I L CS 5/2-619 (West 2012)), dismiss ed his complaint for administrative revie w of the decision of the defe ndants, The Depa rtment of I nsuranc e

an d Andre w Bor on, Acting Direc tor of The Depa rtment of I nsuranc e (De partment), to revoke his insurance produce r license and impose a c ivil penalty of $10,000. F or the rea sons that f ollow, we aff irm the judg ment of the c ircuit court. ¶ 2 T h e p l aint iff filed a complaint for administ rative review, alleg ing the following fac ts. On Marc h 1, 2011, the Depa

rtment revoke d the plaintiff' s insurance produce r license. On Marc h 25, heNo. 1-12-2449

reque sted a hear ing to deter mine whether his license should be reinstated. The hear ing was held on Aug ust 25, with hear ing office r Helen Kim presiding over the proce eding s. After hear ing testimony from various individuals, Kim issued an opinion on November 10, 2011, rec o m m en d i n g that the
p l aint iff' s license be revoke d and that he be fined. On J anuar y 10, 2012, the Departmen t ad o p t ed Kim's opinion and r ecommenda tions, re voked the plaintiff' s insurance produce r license , and fine d him $10,000. The plaintiff reque sted that the Depa rtment' s order be reve rsed and that his license be reinstated. ¶ 3 T h e p laintiff attache d Kim's November 10, 2011, opinion. Acc ording to the opinion, t h e plaintiff proce eded pro se at the hear ing at which sever al witnesses testified. Whil e the transcr ipts of the administrative hear i n g ar e not part of the appellate rec ord, we use Kim's summary of the
proce eding s to provide fa ctual conte x t. ¶ 4 Mary L opez, an enfor ceme nt attorney for the I llinois Securities Depa rtment, testified that her depar tment rec eived sever al complaints from investors about the plaintiff' s conduct while working for USA Retire ment. The customer complaints identified t he plainti ff as the one who le d them to invest in fra

ud u l ent products. Specifica lly , L opez knew of at least four investors that named the plaintiff, but she could not disclose their names beca use such i n fo rm at i on is confide ntial. The
customers told L opez that, while they lost their life saving s, the plaintiff appea red to be doing very well, having purcha sed a big home and nice car while working at USA Retirement. Ac cording to L opez, the customers, who lost about $1 milli on combined, wer e told about the fra udulent investment products when they initially soug h t es t at e p l anning or tax advice

. I n J une 2010, the Securities Depa

rtment iss ued a temporar y order prohibiting the plaintiff from selling or offe ring

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secur ities. After the plaintiff failed to contest the temporar y order , the order beca

me final. After the Securities De partment issued its order , the Depa rtment opene d its investigation. ¶ 5 The plaintiff tes t i fi ed t h at h e wa s em ploy ed by USA Retirement from November 2008 throug h Marc h 2010. He obtained his insurance produce r license in Marc h 2009, but he denied that he ever sold any insurance products. He further denied that he ever offe red or sold secur ities to any
customer. The plaintiff was employ ed to hold seminars on est at e p l an ning issues and meet with
customers reg arding estate planning issues. I n Marc h 2010, USA Retirement was tak en into

rec eiver ship afte r the fede ral S ecurities and Ex chang e Commi ssion filed a complaint ag ainst the
manag ing partne rs o f t h e company . The plaintiff denied knowledg e of the "f our consumers" that L opez r efe rre d to in her testimony and denied pur chasing a new home or a

new c ar while working
at USA Retirement. He also admit t ed t h at h e d i d not reque st a hear ing to contest the Securities Depa rtment' s prohibition order. ¶ 6 Kim de termined that, beca use the plaintiff was found by the Securities Depa rtment to ha

ve committed fra

ud and other violations of the Securities Act (815 I L CS 5 / 1 2 (W es t 2010)), it was within the Direc t o r's d iscretion to revoke his insurance produce r license pursuant to section 500- 70(a) (8) of the Insuranc e Code (215 I L C S 5 / 5 0 0 -70(a)(8) (West 2012)). Additionally , she

rec ommended that the plai ntiff be assessed a civil penalty of $10,000, noting that since L opez testified reg arding four investors, he could be asses s ed u p to $40,000. Howeve r, Kim considere d that the plaintiff was still owed a sal ar y an d h ad incurre d financ ial hardship as a result of his employ ment at USA R et i reme nt. She also found no evidenc e substantiating the claims that the plaintiff purc hased a

larg er home and nice r vehic le during his e mploy ment. On J anuar

y 10, 2012,

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the Depa rtment adopted K im's fa ctual finding s, conclusions of law, a nd rec ommendations. ¶ 7 On Februa

ry 14, 2012, the plaintiff filed the instant action for a dminist rative r eview in the circ uit court. On April 17, 201 2 , t h e d efendants filed a section 2-619 motion to dismiss the plaintiff' s complaint, arguing that he failed to petition for a re h ea ri n g o r to reope n the hear ing pursuant to section 2402.280 of the Administrative Code (50 I ll. Adm. Code 2402.280 (West 2012)) and, there fore , failed to exhaust his administrative reme dies as require d by the Depa rtment' s rules. ¶ 8 On J uly

16, 2012, afte r hear ing the matter, the c ircuit court g rante d the def endants' section 2-619 motion, ag ree ing with them that the plaintiff failed to exhaust his administrative reme dies by failing to file a motion for a rehe aring . This appea l followed. ¶ 9 A sec tion 2-619 motion t o dismiss admits the leg al suffic iency of t he complaint and r aises defe cts, defe nses, or other aff irmative matters that appea r on the fac e o f t he complaint or are established by external submissi ons that act to defe at the claim. Krili ch v. American National Bank & Trust Co. of Chicago , 334 I ll. App. 3d 563, 570, 778 N.E.2d 1153 (2002). Section 2-619(a )(9) , specific ally , allows d i s m i s sal when the claim asser ted is barr ed by an aff

irmative matter which avoids the leg al ef

fec t of or def

eats the c laim. 735 I L CS 5/2-619(a) (9) (West 2012); Id. I n ruling

on a motion to dismiss under section 2-619, the trial court may consider pleading s, depositions, and aff idavits. Id. The que stion on appeal is whethe r the e x istence of a g enuine issue of m ater ial fac t should have prec luded the dismiss al or, absent such an issue of fac t, whether dismiss al is proper as

a matter of law. Id. Our standard of revie w of a dismiss al under section 2-6 1 9 o f the Code is de

novo . Id. at 569. ¶ 10 Reg arding administrative proce eding s conducte d by the Depa rtment, section 2402.280(c) of

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the Administrative Code provides:

"A mot i o n fo r a re h earing or a motion for the reope ning of a hearing shall be filed within 10 day s of the date of m ailing of the Director' s Orde r. A rehea ring shall be noticed and conducte d in the same m an n er as an orig inal hear ing. The evidenc e rec eived at the

re h ea ri ng shall be included in the rec ord for Direc tor' s rec onsideration and for judici al revie w. A decision or order may be amende d or vacated afte r rehe aring

. " 50 I ll. Adm. Code 2402.280(c) (West 2012). ¶ 11 Fur

ther, section 3-102 of the Administrative Review L aw (735 I L CS 5/3-102 (West 2012) ), provid es t h at "[ u ]nl ess revie w is soug ht of an administrative decision within the time and in the

manner here in provided, the p arties to the proce eding befor e the administrative ag ency shall be barr ed from obtaining judicial revie w of such administrative decision." Section 3-102 further states:

"I f un der the terms of the Act g overning the proce dure befor e an administrative
ag ency [,] an administrative decision has become final beca use of the fa i lure to file any document in the nature of objections, protests, petition for rehe aring or ap p l i cation for administrative revie w within the time allowed by such Act, such decision shall not be subject
to judicial revie w hereunder excepting only for the purpose of questioning the jur isdiction of the administrative ag ency over the person o r subject matter." 735 I L CS 5/3-102 (West 2012). ¶ 12 Acc ording ly , the g ener al rul e i s t h at p ar t ies ag g rieve d by the action of an administrative
ag ency cannot seek review in the courts without first exhausting all administrative reme dies available to them. Cas t a n ed a v. Human Rights Comm'n , 132 I ll. 2d 304, 308, 547 N.E.2d 437

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(1989). Requiring the exhaustion of reme dies allows the administrative ag ency to fully develop and consider the cause befor e it, use its expertise to resolve matters, corr ect its own err ors, and conser ve judicial time by avoiding unnece ssary or piece meal appea ls. Id. W h er e t h e admi nistrative rules allow for applications for rehe aring, a party must do so in order to exhaust his administrative

reme dies and prese rve his rig ht to seek judicial revie w. Id. at 321-23. Howeve r, sever al exceptions have been rec og nized by our courts which allow a party to seek judicial revie w of an administrative decision without exhausting all administrative rem ed i es available to him, including: (1) wher e a statute, ordinanc e or rule is attacke d as fac ially unconstitutional; (2) wher e multipl e administrative

reme dies exis t and at least one is exhausted; (3) wher e t h e agenc y cannot provide an adequate

reme dy or wher e it is patently futile to seek relief befor e the ag ency ; (4) wher e no issues of fac t are prese nted or ag ency expertise is not involved; (5) wh er e irrepa rable harm will result from further pursuit of administrative reme dies; or (6) wher e the ag ency ' s jurisdiction is attacke d beca use it is not authorized by

statute. Id. at 309. ¶ 13 I n this case, the pla intiff admits that he never filed an application for r ehea ringpursuant to section 2402.280 of the Administrative Code, but he argues that the ex ce p tion allowing judicial revie w wher e no issues of fac t are prese nted or ag ency expertise is involved applies to his case . He
argues that the Depa

rtment based its revoc ation on hear say statements that wer e improperly admitted throug h L opez's te stimony and whe ther e vidence constitutes hear say is a leg al issue, not requiring the Depa rtment' s expertise or fac t-finding duties. See Halleck v. Coastal Building Maintenance Co. , 269 I ll. App. 3d 887, 891, 647 N.E.2d 618 (1995) (stating "[a]lthough the admission of evidenc e is ordinarily wi t h i n t he sound discretion of the trial court, the initial deter mination that a particula

r

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statement constitutes hear say is a leg al issue which does not require any exercise of discretion, fac t finding , or eva luation of cre dibilit y ")

. ¶ 14 Her e, howeve r, the transcr ipt of the administrative hear ing containing th e all eg ed hea rsay
statements was n o t made part of the appellate rec ord. The Depa rtment attache d a copy of the
transcr ipt to its appendix and reque sted that we take jud i cial notice of it. Whil e I llinois Supreme Court Rule 329 (ef

f. J an. 1, 2006) permits materia l omissions from and improper authentication of the rec ord on appea l to be reme died by stipulation of the parties afte r the transmission of the rec ord
to this court (see also, Chicago Titl e & Trust Co. v. Brooklyn Bagel Boys, Inc. , 222 I ll. App. 3d 413, 417, 584 N.E.2d 142 (1991)) , the plaintiff objects in his reply brief to the inclusion of the transcr ipt. Thus, beca

use the parties have not stipulated to the inclusion of the transcr ipt, we consider only the documents in the ce rtified re cord. ¶ 15 I t is the appellant' s burden to prese nt a sufficie ntly complete rec ord of the proce eding s at trial to support a claim of error , and in t he abse nce of such a r ecor d on appea l, it will be pre sumed that the order enter ed by t h e De partment was in confor mity with the law and had a sufficie nt fac tual basis

. Foutch v. O'Bryant , 99 I ll.2d 389, 391-92, 459 N.E.2d 958 (1984); In re Marriage of Baniak , 2011 I L App (1st) 092017, ¶ 30, 957 N.E.2d 469. Any doubts which may arise from the incompleteness of

the re cord w ill be resolved a g ainst the appellant. Id. Wit hout any transcr ipt of the administrative hear ing, under Foutch , we must presume that the Depa rtment' s e v ide ntiary ruling s confor m with the law and had a s u ff i ci en t fac tual basis. There fore , we reje ct the plaintiff' s contention that the exception to the exhaustion doctrine applies. ¶ 16 Moreove r, even if we wer e to c onsider the merits of the plaintiff' s argument, we would not

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find that evidentiar

y issues fall under the exception that plaintiff raise s . T h e ca ses cited in Castaneda for this exception do not rela te to evidentiar y issues arising during the ad m i n i strative hear ing; rathe r, they involved novel statutory construction issues. See, Castaneda , 132 I ll. 2d at 309 (citing Illinois Bell Telephone Co. v. All phin , 60 I ll. 2d 350, 359, 326 N.E.2d 737 (1975) (finding

an exception to the exhaustion doctrine, which antedated the Administrative Review L aw, no longe r applied but applied to the plaintiff' s case as it arose befor e the enac tme n t of the new law); and McKenna v. Board of Trustees of the University of Illinois , 90 I ll. App. 3d 992, 998-99, 414 N.E.2d 1 2 3 (1980) (finding that the pl aintiff' s claim t hat t he university ' s merit board applied wrong wa ge
statute was a leg al issue which involved no fac tual questions, no ag ency expertise, and wher e further pursuit befor e the board would have been futile)). Unlike in All p h i n an d McKenna , evidentiar y issues are not novel and allowing the Depa rtment to rec onsider such issue s al l ows it to use its expertise and corr ect its own err ors. Thus, the purposes of the exhaustion doctrine seem best serve d by requiringthat the pl aintiff ex haust all administrative re medies, including filing f or a r ehea ring , befor e see king judicia l reviewof the e videntiary issue he ra ises here

. ¶ 17 For

the fore g oing r easons, we aff irm the judg ment of the c ircuit court of Cook County

. ¶ 18 Affir

med.

8