### TEXA S COU RT O F AP PEAL S, THIR D DISTRIC T, AT AU STIN
NO. 03-00-00116-CV
Jimm y Gayle Lock lear , Appellant
v. Texa s De pa rtme nt of In sura nce an d J ose Mo nt ema yor, Commiss ioner of I nsurance, Appell ees

FROM THE DISTRICT CO URT OF TRAVIS COUNTY, 200T H JUDICIAL DIST RICT NO. 98- 13333, H ONORABLE SU ZANN E COVIN GTON, JUD GE PR ESIDING
Appel la n t Ji m m y Loc kl ea r a pp ea l s th e d i str i ct c our t’s f i n al j udgm en t af f i rm i n g th e Commi ssioner’s order t hat deni ed hi s 1997 appl

ic ation f or a Gro up I, Legal

Re se rv e L ife Insuranc e A gen t Li cen se (Grou p ILi cen se ). W

e w i l l af f i rm th e d i str i ct c our t’s j udgm en t. Backgr ound In Decem ber 1994, whi

le appella nt was a l ic ensed i nsuran ce agent, he pl

eaded gui l ty to the fede

ral f el ony of fen ses of cons

piracy to comm it m ai l f raud and wire f

raud. Appel

la nt admi tt ed that he rece i ve d i n e xc ess of $ 800,00 0 i

n b ri be s an d ki ckb acks whi l e em pl oye d at J.C . Pen

ney . In August 1995, appell

ant was convi

cted for the federal

fel ony of fen ses an d sentence d to ei ghteen mont hs i n pri son followed b

y three y ears of superv

is ed rele ase, and f

in ed $50,000. On Jan

uary 16, 1996, beca use of his fed er al felony convicti ons, the C omm

i ssi oner re voke d hi s GroupI Li

cense. See Tex . Ins . Code A

nn . art. 21.07 -1, § 12 (a)(9) (W est Sup p. 2000 ).2 On A ugust 4, 1997, dur

i ng hi s s upe rvi se d re l ea se

f rom prison , ap

pe l l an t ap pl i ed f or a Group I Lice nse. The Dep ar t ment r efuse d ap pellant ’s ap plicat ion bas ed o n five gro unds including al l eg ati on s th at a pp el l an t: (1) fai le d to show goo d cause why the revocation of hi s previous li cense sho uld not be deem ed a bar to the issua

nce of a new l ic ense; (2) has be en co nvicte d o f a felony; and (3) is gui lty of fraudulen

t o r dishonest pract ices. The Departmen

t sent a notice of h

earin g to appella

nt that i nf orm ed hi m of t he alle ga t io ns a nd o f his right to appear and b e represented by counsel at a he ari

ng. On Ma

rch 17, 1998, a heari

ng was conven ed bef ore an adm

in is trat iv e l awjudg e at which t he De par t ment a nd appella nt both appeared represented

by counsel . The adm

in is trat iv e l aw j udge ma

de the fol lowi ng f in din gs, among others, that
were adopted by the Com

mi ssioner: (1) that appell

ant ple aded

gui l ty to f ed era l f el ony of f en se s of
c onspi racy t o co mmit ma il fra ud and wir e fr au d a nd w as co nvict ed ; ( 2) as a r es ult o f hi s f edera l
con vi cti on he wa s sent ence d t o e ight een mo nt hs impriso nment followed b y three y ears supervi

sed releaseand fined $5 0, 00 0; (3 ) b ec au se t he fe de ra l felo nies invo lved lar ge su ms o f mo n ey and a f i duci ary duty , the n

ature of the cri me di rectl y re l ate s to appell ant’s f

itnes s to hold an i

nsuran ce agent ’s l i cense; (4) on J

an uary 16, 1 996 , ap pe llant ’s Gr o up I Lic en se wa s r ev o ke d b as ed o n his federal con vi cti ons ; ( 5) a ppe l l an t did n ot of f er s ub sta nti al ev i de nc e that the l

i cens e re voc ati on sho uld not be deem ed a bar to the issua

nce of a new l ic ense; and (6) appel

la nt had been released f rom prison o nly fif t een mo nt hs ea rlier. On S ept ember 1 7, t he Co mmi ssio ner denied app ellant’ s ap plicat ion. The Comm is si oner determi ned that appella

nt was guilty

of f raudulen t o r di sh ones t pra ct ices, t hat t he3

rev oca ti on of his previ

ous li cense b arred the is suance of a new li cense, a

nd th e Com m i ssi oner, therefore, was j ustif

ie d in deny in g appella nt a Group I License. Appel la nt fi le d a mot ion fo r r ehea ring r equ est ingt hat t he Co mmi ssio ner re scind t he order deny

in g hi s lic ense an

d c omp laini

ng o f sever al of t he Co mmi ssio ner ’s findings o f fact and
co nclusio ns of law. A

ppe l l an t’s moti on wasove

rrul ed by ope rati on of law
. Ap pe llant t he n file d t his pr oc eed ingfor j udic ia

l rev ie w of the Comm

is si oner’s order deny

in g hi s 1997 appl ic ation f

or a Gro up I Li cense. The dist rict co ur t det er mined t hat t he Comm is si oner’s order was supported by sub stantial evi dence, denied t he reli

ef reques ted by appella nt and af fi rmed the C omm

i ssi oner’ s order. See Te x. Ins. Code An

n. § 36.203 (West Su pp. 2000); Tex. Gov’t Code An n. § 2001.174 (West 2000) (judi ci al revi ew of

Com m i ssi oner’ s order i

s con ducted pursuan t to subs tantial

evi den ce rul e). A pp el l an t ti mel y f i l ed a n oti ce of appe al com pl ai n i n g of th e d i str i ct c our t’s f i n al j udgm en t. Discussion Thi s Court reviews the C omm is si oner’s order usin

g the standards of

the substan

tial evi dence sco pe o f review defined by t he Administr at ive Procedu re Act. SeeTe x. G ov’ t Co de Ann. § 2001 .174. In conductin g a substantial

evidence revi ew, we review the Commi ssioner’s f

in din gs, in ferences, co nclusio ns, a nd fi nal deci si on to determi

ne wh ether a rational

basis exists for the di sputed act ion. See Mireles v. Texas Dep’t of Public S afety , 9 S .W.3 d 12 8, 1 31 ( Tex. 199 9); Texas H ealth Facilities Comm’n v. Charter Medical-Dallas , Inc. , 665 S. W.2d 446 , 45 2 (T ex. 1 984 ); Ramirez v. Texas State Bd . of

Med. E xam’rs , 995 S.W.2d 915, 919 (T ex. App. —Aus t in 199 9, pet . d enied) . T he pa rty challenging t he ag ency de cision be ar s t he bu r de n o f es t ab lishin g t ha t no r ea so na ble ba sis ex i sts in t he r eco rd for t he ag ency’s d ecisio n. Ramirez , 995 S.W.2d at 919 (c iting Charter Medical-Dallas ,1 SeeAct of May 19 , 19 81 , 67 t h Le g. , R. S. , ch
. 26 7, § 1 , 19 81 T ex . Ge n. La ws 69 4, 69 4. T his statut e was codif

ie d by Act of May 13, 1999, 76t h Leg., R.S., ch. 388, § 1, 1999 Tex. Gen. Laws 1431, 1 447. F or conv

en i ence we wil l ci te to the curr

en t Occup ati ons C ode se cti ons. 4 665 S.W.2d at 452). We may not substitute our judg ment fo r t hat of t he ag ency’s a s t o t he we ight of t he evi den

ce. See Mireles , 9 S.W.3d at 131; Publ ic Ut il. Co mm’n v. Gulf States Util. Co. , 809 S .W.2d 20 1, 21 1 ( Te x. 19 91 ). Fina lly, t he d ec isio n o f t he a ge ncy s ho uld be r eve rs ed o nly if t h e challe n ging pa

rty de mon strate s th

at th e a b se n ce of su b sta n ti al ev i den ce h as pr ej udi ce d th

e p ar ty ’ s sub stan tia l ri ghts
. See Charter Medical-Dallas , 665 S.W.2d at 452. Wh en a previ ously li censed individual has ha d a licens e r evo ked and, aft er one ye ar of the rev ocati on, ap

pli es f or anew l ic ense, the Com

mi ssioner may deny the app licatio n unless t he app licant shows good cause why the revocation of the previousl i cen se sh al l n ot b e deemed

a b ar to t he i ssu ance of a n ew l i cense. SeeTe x. Ins. Code Ann
. ar t . 21
. 07
- 1, § 1 2( c) ( We st 20 00 ) ( emp ha sis adde d). The Comm is si oner revoked appel la

nt’s previ ous Group I Licen se by

off ic ia l order of Jan uary 6, 1 99 6, d

ue to his feder al felony

co nvic t io ns f

o rt he o ffen se s o f co nsp ira cy t o co mmit mail fraud and wi re f raud. SeeTe x. I ns. C od e Ann. ar t . 2 1. 07- 1, § 12 (a )( 9) (Wes t Su pp. 200 0) . T he Com m i ssi oner, therefore, cou l d de ny ap pe l l an t’s 199 7 a ppl i ca ti on u nl es s a ppe l l an t sh owe d good
cause wh y the pri orre v oca ti on of h i s G rou p I Li cen se sh oul d n ot b e deemed

a b ar to t his app licatio n. See id. Appe llantar gue s t hat t he Occ upa t ions C od e limi t s t he Co mmi

ssio ner ’s ability t o d eny him a license be cau se o f his past cr imi nal co nvictio n. SeeTex. Occ. Code Ann . §§ 53.021-.025 (West Supp. 2000)
. 1 A

l i cens i ng au thor i ty may di sq ua l i f y a p ers on f

rom rec ei vi ng a l i cens e on the grounds5

tha t the pe rs on has b een convi cted of a fel

ony tha t directly relates to the duties an

d responsi

bi li ties of the l i censed occupa tion
. See id. at § 53 .0 21( a) . C hapt er 53 a lso s et s o ut fact or s t hat t he licensing
au th ori ty ma y c onsi der in

determi ni ng whether

the c onv i cti on rel ates to the

occupa tion
. Seeid. at § 53.022. These fa

ctor s i ncl ude: (1) the nature and seri

ousness of

the crim e; (2) t he re latio nship o f the cr ime to t he pu rp os es fo r r equ iring a l i cen se to en ga ge in t he o ccu pat ion; (3) t he extent to which

a l ic ense m

igh t o ff er an opport uni

ty to engage i

n f urther crim in al ac ti vi ty of t he sa me t ype as t ha t in

whi ch the person prev

iousl y h ad been in volv ed; an d (4) t he re l ati

on sh i p of th e cri me to the abil

ity, capaci ty, or fi tness requi

red to perf

orm t he du t ies and discha rg e t he r esp ons ibil ities o f the licensed oc cup at ion. Id. Chapter 53 also l i sts othe r f actors for t he licensing au t hor ity t o c ons ider when d et er mini ng t he pr ese nt f i tne ss of a pers on wh

o has be en conv i cted of a cri me. See id. at § 53.0 23. These addi tional factors in cl ude: (1) T he ex t en t an d n at ur e o f t he pe r so n’ s p as t cr imina l ac t ivit y; (2) the age of the person wh en the cri me was comm

itted; (3) t he amo un t o f t ime t ha t ha s e lap se d s inc e t he pe r so n’ s la st cr imina l ac t ivit y; (4) t he co nd uc t an d w o r k a ct ivit y o f t he pe r so n be fo r e a nd af t er t he cr imina l ac t ivit y; (5) evi dence of the person’s

rehabi li tation or rehabili

tative ef fort whi le in carcerated or after release;and (6) ot her evi dence of the pe rs on’ s f

i tne ss , i nc l udi ng l ette rs of rec om men da ti on f rom va ri ous person s i

n c ontact wi

th the conv i cted pe rson .6

Id. Additi onall

y, each l icensin g autho rity sh

all issue gui deli nes relati ng to its practices. Seeid. at § 53.025. The Departmen t has i ssued gui

del in es rel ated t o d et er mini

ng t he co nse qu enc es o f a crim in al conv i cti on wh en i t consi ders gran tin g a l i cense to se l l

i ns uran ce. See28 T ex. Admin. Code §§ 1.501-.502 (2000). These gui del in es i ncl ude t he recognition that t he rel ationsh ip b etween in surance agents and the publi

c requires tru st i n an d r el i an ce up on ag en ts beca use of t he co mplex and
va ri ed n ature of i ns uran ce a nd i ns uran ce-re l ated produ

cts. See i d. at § 1.502 (a)(1). In light of t he special relationshi

p, the matters speci fi

ed i n the Occupations Code sections 53.022 and 53.023 are considered

by the Dep ar t ment w hen de t er mini ng whe t her t o d eny any

li cense under the De part ment’s jurisd ictio n. See id. Accordin g to the guide li

nes, the Departm

ent considers i

t very i mportant that li censee s and li cense a

ppl i can ts be honest, trustworth

y , and rel

i ab l e. See id. a t § 1.502(a)
. Ac co r di ng ly, cr imes involving mor al tu rp itu de, including bu t not lim ited t o fr aud , d ishone st y, and t he mishandling

of funds are general

ly of prim e im por tance in determi

ni ng fi tness for an i

nsuran ce li cense. See id. The Comm is si oner found t

hat app ellant w as c onvict ed o f felony frau d. The Dep ar t ment and the Com mi ssioner have

det erm ined t hat t he se rio us na t ur e o f felony co nvictio ns involvingcrim

es of m oral turpitude bear such

a st ro ng r elat ionship t o t he o ccu pat ions license d by t he Dep ar t ment that sp eci

al rul es a ppl y to li censi ng p erson s con

vi cted of such cri mes. See id. at § 1.502( a)(3). The Depart men t o r Commissioner cann

ot issue a l icense to any

appli cant for any l

icense regulated by the Departmen

t if the applic ant has b een

convi cted of a fel

ony i nvol vi ng m oral turpitude unl ess the Comm

is si oner fi nds that other matters, such as those speci fi ed in se ct ions 5 3. 022 and2 A s a

n a ddi ti ona l ba sis f ordenying ap pellant ’s 19 97 a pplicat ion, the Comm is si oner found that app ellant mad e a

mate ri al m i sr ep res en tati on on hi s p rev i ousap pl i ca ti on f ora Group I Lice nse a nd r en ew al. Be ca us e w e a ffir m t he Co mmiss io ne r ’s de nia l o f ap pe lla nt ’s 199 7 a ppl i ca ti on b as ed

on appellant’s f

ail ure to show good cause why the revocation of h

is previous Group I Li cense b ased on feder al felony co nvictio ns sho uld no t be a bar t o t his appli cat ion, we de cli

ne to addr ess appellant’s co nt ent ions compl

ai ni ng ab out any

additional bases the Co mm issi oner found for d enyi

ng appellant’s 1997 appli

cation as those co nt ent ions a re not nece ssar y to t he di sposi tion of the app eal
. SeeTex. R. App. P. 47.1
. 7 53.023 of the Occupati ons Code, out wei gh the s erious nature of a f

el ony c onviction i

nvol vi ng m oral turpi tude wh en vi ewed i n l i ght of the occ upati on b ei ng l i censed
. See id. at § 1.50 2(a)(3 )(C). Appellant’s federal

fel ony c onvict io ns wa rr ant ed s er iou s co nsider at ion by t he Comm is si oner of his su itability for an insur ance age nt ’s license. The Comm is si oner determi

ned that appe ll ant’s f elony conv i cti ons i nc l uded a b reach of

a f i duci ary relati onsh

i p. Moreover, t h e co nvictio ns in

volv ed the fraudul

ent takin g of $800,000. The Departmen t recognized that an in surance agent is placed in a posi tion of tru st and ha s po wer ove r lar ge s ums o f money. T he Comm is si oner co nsider ed t he st at ut or y facto rs a nd determi ned that appella

nt shoul d not be granted
a lice nse t o se ll insu r an ce . We ho ld t ha t ap pe lla nt faile d t o es t ab lish t ha t t he r e w as no r ea so na ble b as i s i n th e r ec ord

f or th e C om m i ss i on er ’s de ci si on to deny hi s appl ic ation f or a Gro up I Li cense. 2 The di strict court ’s j udgme nt is aff irm ed.

Lee Yeakel, Justice Be f ore J us ti ce s Jone s, Y ea

ke l an d Pa tters on8

Af fi rmed File d: October 5, 2000 Publish