first-american-title-insurance-company-v-stephen-w-robertson-insurance ( 2014 )

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Thomas E. Wheeler Gregory F. Zoeller
Sarah Steele Riordan Attorney General of Indiana
Maggie L. Smith
Frost Brown Todd LLC Thomas M. Fisher
Indianapolis, Indiana Solicitor General
David L. Steiner
Deputy Attorney General
Heather Hagan McVeigh
Deputy Attorney General
Indianapolis, Indiana
ATTORNEYS FOR AMICUS CURIAE
INDIANAPOLIS BAR ASSOCIATION
APPELLATE PRACTICE SECTION
Stephen J. Peters
Plunkett Cooney, P.C.
Indianapolis, Indiana
Josh S. Tatum
Plews Shadley Racher & Braun LLP
Indianapolis, Indiana
______________________________________________________________________________
In the Nov 13 2014, 11:18 am
Indiana Supreme Court
_________________________________
No. 49S04-1311-PL-732
FIRST AMERICAN TITLE INSURANCE
COMPANY,
Appellant and Cross-Appellee
(Petitioner below),
v.
STEPHEN W. ROBERTSON, INSURANCE
COMMISSIONER OF THE STATE OF INDIANA,
IN HIS OFFICIAL CAPACITY, ON BEHALF OF THE
INDIANA DEPARTMENT OF INSURANCE,
Appellee and Cross-Appellant
(Respondent below).
_________________________________
Appeal from the Marion Superior Court No. 7, No. 49D07-1105-PL-019374
The Honorable Michael D. Keele, Judge
_________________________________
On Petition To Transfer from the Indiana Court of Appeals, No. 49A04-1206-PL-326
_________________________________
November 13, 2014
Rucker, Justice.
In another opinion decided today we held that a petitioner seeking judicial review of an
agency decision must file the agency record as defined by the Administrative Orders and
Procedures Act and that the failure to do so results in dismissal of the petition. See Teaching
Our Posterity Success, Inc., v. Ind. Dept. of Educ., ___ N.E.3d ___, No. 49S05-1411-PL-0700
(Ind. Nov. 13, 2014). We apply that holding here.
Facts and Procedural History
First American Title Insurance Company is an insurer licensed to do business in the State
of Indiana. As such it is subject to the administrative and regulatory authority of the Indiana
Department of Insurance through its Commissioner. Under provisions of the Insurance
Examination Act—Indiana Code sections 27-1-3.1-1 to 27-1-3.1-18—the Commissioner is
authorized to “conduct an examination of every insurer licensed in Indiana . . . once every five
(5) years.” Ind. Code § 27-1-3.1-8(a)(2). In consequence on March 31, 2009 the Department
issued First American a Market Conduct Examination warrant1 to review its practices relating to
premium charges to customers, collections of premiums from its appointed agents, consumer
disclosures, and collection and remittance of certain fees. App. at 18. The examination covered
the period between January 1, 2005 and December 31, 2008. For such purposes the
Commissioner retained the services of a third party examiner who, after conducting its
1
“A market conduct examination is a statutorily provided tool by which the insurance commissioner can
review a particular aspect of the interaction between an insurance carrier and the general public. A target
examination is limited to a specific issue which the market behavior of the company has precipitated, and
is usually conducted on an immediate basis and sometimes with no notice to the company.” State Farm
Mut. Auto Ins. Co., v. Mortell, 667 N.E.2d 192, 194 (Ind. Ct. App. 1996).
2
examination, submitted a report to the Department on September 30, 2010. In turn the
Commissioner forwarded the report to First American. Thereafter, on December 10, 2010, First
American submitted a rebuttal to the report’s findings. The Commissioner was then required to
take certain action within thirty days, namely: “enter an order” (1) adopting the report with or
without modification; (2) rejecting the report and instructing the examiners to obtain more
information and refile the report; or (3) calling for an investigatory hearing to obtain more
documentation, data, information, and testimony. I.C. § 27-1-3.1-11(a). The Commissioner did
not enter an order within thirty days. Instead the Commissioner requested that First American
extend the deadline to permit the parties an opportunity to resolve the issues raised in the report.
First American agreed to this extension. However the parties were unable to reach a resolution
during this period, so the Commissioner requested and First American agreed to further extend
the deadline until February 4, 2011. More than six weeks after that deadline passed, the
Commissioner requested that First American agree to another extension of time through April
15, 2011. This time First American refused to agree. On April 15, 2011, the Commissioner
issued an order ostensibly pursuant to Indiana Code section 27-1-3.1-11(a)(3) calling for a
hearing and appointing an administrative law judge. The hearing was set for July 12, 2011.
Before the date of the hearing, First American filed a petition in the Marion Superior
Court seeking judicial review of the Commissioner’s order, contending the order was void
because it was issued beyond the thirty-day time limit set forth in the Insurance Examination
Act. In support of its petition First American attached a copy of the order and hearing date along
with a letter from the Department addressed to First American’s legal counsel, and a letter from
First American’s legal counsel addressed to the Department. The Commissioner countered with
a motion to dismiss the petition on grounds that First American failed to submit the agency
record as required by the Administrative Orders and Procedures Act (“AOPA”). After a hearing
the trial court denied the Commissioner’s motion to dismiss; and it denied First American’s
petition for judicial review on grounds that First American was required, but failed, to show that
it was prejudiced by the untimely order.2
2
Under AOPA a person is prejudiced by an agency action if it falls within five enumerated categories.
See I.C. § 4-21.5-5-14(d). Here the trial court determined that in addition to the categories dictated by
statute First American was also required to make an additional showing of prejudice. See Appellant’s
App. at 11.
3
Both parties appealed. First American complained the trial court erred in not declaring
the Commissioner’s hearing order void in that Commissioner failed to comply with the statutory
deadline, and the trial court erred in requiring First American to demonstrate a separate showing
of prejudice. On cross-appeal the Commissioner for the first time alleged that First American’s
petition for judicial review should have been dismissed because First American failed to exhaust
its administrative remedies thereby depriving the trial court of jurisdiction. The Commission
also argued the trial court erred in failing to dismiss First American’s petition for judicial review
because First American did not submit an agency record.
The Court of Appeals affirmed the trial court’s judgment in part, reversed it in part, and
remanded the case for further proceedings. In so doing the court held: (1) the Commissioner’s
hearing order was untimely and therefore void; (2) a petitioner seeking judicial review of an
agency decision need not demonstrate a separate showing of prejudice; (3) the exhaustion of
administrative remedies under AOPA is a procedural error and does not implicate the trial
court’s subject matter jurisdiction, and the Commissioner waived this issue by not raising it
timely; and (4) although First American failed to submit a formal agency record, the documents
attached to its petition for judicial review were sufficient to allow the trial court to decide the
issue raised. See First Am. Title Ins. Co. v. Robertson, 990 N.E.2d 9 (Ind. Ct. App. 2013). The
Commissioner sought transfer contending (1) the failure to exhaust administrative remedies
deprives a trial court of subject matter jurisdiction, and (2) AOPA mandates the timely filing of a
certified agency record prior to judicial review of an administrative order. Having previously
granted transfer we now address these claims and reverse the judgment of trial court. Additional
facts are set forth below.
Discussion
I. Exhaustion of Administrative Remedies
We summarily affirm that portion of the Court of Appeals opinion holding that the
exhaustion of administrative remedies under AOPA is a procedural error and does not implicate
4
the trial court’s subject matter jurisdiction.3 And because the Commissioner does not otherwise
challenge the point on transfer, we also agree with our colleagues that by raising this procedural
issue for the first time on appeal, the Commissioner’s exhaustion claim is waived. We hasten to
add however that a finding of waiver may not be appropriate in every instance. The facts of a
particular case may dictate otherwise. As we have previously observed certain benefits accrue in
requiring the exhaustion of administrative remedies.
Premature litigation may be avoided, an adequate record for
judicial review may be compiled, and agencies retain the
opportunity and autonomy to correct their own errors. Even if the
ground of complaint is the unconstitutionality of the statute, which
may be beyond the agency’s power to resolve, exhaustion may still
be required because [“]administrative action may resolve the case
on other grounds without confronting broader legal issues.[“]
[Turner v. City of Evansville,] 740 N.E.2d 860, 862 (Ind. 2001)
(quoting State Bd. of Tax Comm’rs v. Montgomery, 730 N.E.2d
680, 684 (Ind. 2000)). Justice Sullivan noted several additional
benefits of this approach: [“]The exhaustion requirement serves to
avoid collateral, dilatory action of the likes of the instant action
and to ensure the efficient, uninterrupted progression of
administrative proceedings and the effective application of judicial
review. It provides an agency with the opportunity ‘to correct its
own errors, to afford the parties and the courts the benefit of [the
agency’s] experience and expertise, and to compile a [factual]
record which is adequate for review.’[”] Austin Lakes Joint
Venture v. Avon Utils., Inc., 648 N.E.2d 641, 644 (Ind. 1995)
(quoting Uniroyal, Inc. v. Marshall, 579 F.2d 1060, 1064 (7th Cir.
1978)) (alteration in original).
Advantage Home Health Care, Inc. v. Ind. State Dep’t of Health, 829 N.E.2d 499, 503 (Ind.
2005) (some alterations in original). Thus, even where a claim of failure to exhaust
administrative remedies has been raised untimely that fact alone does not necessarily dictate the
court should declare the claim waived. But we repeat that in this case the Commissioner does
not argue the point. And we decline to speculate what if any adverse impact the alleged failure
to exhaust may have had here.
3
We also summarily affirm that portion of the Court of Appeals opinion declaring the Commissioner’s
hearing order untimely and void, as well as that portion of the opinion declaring that a petitioner seeking
judicial review of an agency decision need not demonstrate a separate showing of prejudice.
5
II. Submission of Agency Record
The AOPA governs administrative proceedings and judicial review of decisions of DOE
and certain other State agencies. See I.C. §§ 4-21.5-2-0.1 to 6. For the agencies to which it
applies, AOPA includes extensive procedural requirements for adjudications under the Act. See,
e.g., I.C. § 4-21.5-3-1 (governing notice of agency action); I.C. § 4-21.5-3-13 (governing
qualifications of adjudicators); I.C. § 4-21.5-3-18 (governing notice and conduct of prehearing
conferences); I.C. § 4-21.5-3-22 (governing conduct of discovery); I.C. § 4-21.5-3-25 (governing
conduct of hearings); I.C. § 4-21.5-3-26 (governing presentation of evidence); I.C. § 4-21.5-3-27
(governing contents of orders); I.C. § 4-21.5-3-33 (governing maintenance of records of
proceedings).
In addition to these procedural requirements for agency actions, AOPA includes its own
provisions for judicial review of agency actions. See I.C. §§ 4-21.5-5-1 to 16. A person
aggrieved by an agency action may file a petition for review in the appropriate trial court, and
can show the agency action was invalid by demonstrating the party was prejudiced by an agency
action that was:
(1) arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law;
(2) contrary to constitutional right, power, privilege, or immunity;
(3) in excess of statutory jurisdiction, authority, or limitations, or
short of statutory right;
(4) without observance of procedure required by law; or
(5) unsupported by substantial evidence.
I.C. § 4-21.5-5-14. This section also requires that the reviewing court “shall make findings of
fact on each material issue on which the court’s decision is based.” Id. The court’s review of
disputed issues of fact “must be confined to the agency record for the agency action . . . . The
court may not try the cause de novo or substitute its judgment for that of the agency.” I.C. § 4-
21.5-5-11.
Particularly relevant in the case before us are certain AOPA provisions regarding the
record of proceedings in the agency and the role of that record in facilitating judicial review.
AOPA provides that each “agency shall maintain an official record of each proceeding under this
6
chapter.” I.C. § 4-21.5-3-33. “Upon a written request by the petitioner, the agency taking the
action being reviewed shall prepare the agency record for the petitioner.” I.C. § 4-21.5-5-13(c).
Within thirty days after an aggrieved party files its petition for judicial review “or within further
time allowed by the court or by other law, the petitioner shall transmit to the court the original
or a certified copy of the agency record for judicial review of the agency action . . . .” I.C. § 4-
21.5-5-13(a) (emphasis added). A petitioner’s “[f]ailure to file the record within the time
permitted by this subsection, including any extension period ordered by the court, is cause for
dismissal of the petition for review by the court, on its own motion, or on petition of any party of
record to the proceeding.” I.C. § 4-21.5-5-13(b) (emphasis added).
AOPA more specifically provides that “the original or a certified copy of the agency
record for judicial review . . . consist[s of:]”
(1) any agency documents expressing the agency action;
(2) other documents identified by the agency as having
been considered by it before its action and used as a basis
for its action; and
(3) any other material described in this article as the
agency record for the type of agency action at issue, subject
to this section.
I.C. § 4-21.5-5-13(a) (emphasis added). Elsewhere in Article 21.5 is the following description:
The agency record of the proceeding consists only of the
following:
(1) Notices of all proceedings.
(2) Any prehearing order.
(3) Any motions, pleadings, briefs, petitions, requests, and
intermediate rulings.
(4) Evidence received or considered.
(5) A statement of matters officially noticed.
(6) Proffers of proof and objections and rulings on them.
(7) Proposed findings, requested orders, and exceptions.
(8) The record prepared for the administrative law judge or
for the ultimate authority or its designee under sections 28
through 31 of this chapter, at a hearing, and any transcript
of the record considered before final disposition of the
proceeding.
(9) Any final order, nonfinal order, or order on rehearing.
(10) Staff memoranda or data submitted to the
administrative law judge or a person presiding in a
proceeding under sections 28 through 31 of this chapter.
7
(11) Matters placed on the record after an ex parte
communication.
I.C. § 4-21.5-3-33(b). And with certain exceptions not relevant here, “the agency record
described by subsection (b) constitutes the exclusive basis for agency action in proceedings
under this chapter and for judicial review of a proceeding under this chapter.” I.C. § 4-21.5-3-
33(c).
First American acknowledges that it did not transmit the agency record to the trial court
as anticipated by AOPA. It insists however that the documents presented to the trial court were
sufficient to decide whether the Commissioner’s hearing order was void. According to First
American, “the only documents relevant to judicial review were the April 15, 2012 Order
appointing an ALJ to conduct an investigative hearing and the April 19, 2012 Order setting the
investigative hearing for July 12, 2012.” Reply Br. of Appellant at 24-25. First American
correctly notes these documents were attached to its petition for judicial review. In support of its
contention First American relies heavily on Izaak Walton League of America, Inc. v. Dekalb
County Surveryor’s Office which declared, among other things: “We think the purposes of the
statutes governing what constitutes an adequate agency record . . . are clear. The record must
include all that is necessary . . . to accurately assess the challenged agency action.” 850 N.E.2d
957 at 965 (Ind. Ct. App. 2006).
But in an opinion we decide today we declare a “bright line” rule effectively abrogating
Izaak Walton and similar cases. “[W]e hold a petitioner for review cannot receive consideration
of its petition where the statutorily-defined agency record has not been filed. In our view this
bright-line approach best serves the goals of accuracy, efficiency, and judicial economy.”
Teaching Our Posterity Success, Inc., ___ N.E.3d at ___, No. 49S05-1411-PL-700, slip op. at 9-
10 (footnote omitted). In this case First American did not file the agency record with the trial
court. Therefore its petition for judicial review cannot be considered. The trial court thus erred
in failing to grant the Commissioner’s motion to dismiss the petition.
8
Conclusion
We reverse the judgment of the trial court.
Rush, C.J., and Dickson, David and Massa, JJ., concur.
9