RICHARD J. BADOLATO, ETC. VS. PAUL J. VINCI (NEW JERSEY DEPARTMENT OF BANKING AND INSURANCE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0354-17T2
RICHARD J. BADOLATO,
COMMISSIONER, NEW
JERSEY DEPARTMENT
OF BANKING AND
INSURANCE,
Petitioner-Respondent,
v.
PAUL J. VINCI,
Respondent-Appellant.
___________________________
Argued January 22, 2019 – Decided March 1, 2019
Before Judges Sumners and Mitterhoff.
On appeal from the New Jersey Department of Banking
and Insurance.
Thomas H. Prol argued the cause for appellant (Laddey,
Clark & Ryan, LLP attorney; Thomas H. Prol, on the
briefs).
Carl M. Bornmann, Deputy Attorney General, argued
the cause for respondent (Gurbir S. Grewal, Attorney
General, attorneys; Melissa H. Raksa, Assistant
Attorney General, of counsel; Carl M. Bornmann, on
the brief).
PER CURIAM
Respondent Paul J. Vinci appeals a final agency decision of the
Department of Banking and Insurance (the "Department") revoking his
insurance producer license 1 and ordering that he pay fines totaling $7,500. The
Commissioner of the Department found that respondent violated N.J.A.C.
11:17D-2.5(e) by working for a licensed insurance producer while his license
was voluntarily suspended. On appeal, respondent contends that the orders of
the Commissioner should be reversed because his employment during his license
suspension did not violate the regulation. We disagree and affirm the
Department's final decision for the reasons that follow.
Respondent was licensed as an insurance producer from May 2, 1990 until
his license expired on April 30, 2006 in the State of New Jersey.2 He has also
been licensed to produce insurance in New York as a resident producer since
August 2005. Prior to respondent's license expiring, he was convicted of cocaine
1
0A license is required before one can sell, solicit or negotiate insurance in this
State. N.J.S.A. 17:22A-29.
2
An insurance producer is a "person required to be licensed under the laws of
this State to sell, solicit or negotiate insurance." N.J.S.A. 17:22A-28.
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possession in 1999. He failed to disclose this conviction to the Department when
it occurred and when he re-applied for his license in July 2007, after its
expiration.
Respondent was hired as an insurance producer by Otterstedt Insurance
Agency ("OIA") on September 2, 2008. OIA has been licensed as a resident
business entity insurance producer in New Jersey with a business and mailing
address in Englewood Cliffs since June 11, 1975.
From June 2006 through February 2007, while respondent's license was
expired, he continued to sell, solicit, and negotiate New Jersey insurance
policies, and received commissions for these activities. On March 29, 2012,
respondent signed and entered into a consent order with the Department,
admitting and accepting responsibility for violations of the New Jersey
Insurance Producer Licensing Act, N.J.S.A. 17:22A-26 to -57. Respondent
admitted that he continued engaging in insurance producer activities in New
Jersey after his license expired, failed to notify the Commissioner within thirty
days of a criminal conviction, and failed to report on a licensing application that
he had been convicted of a crime. He agreed to pay a $15,000 fine and to have
his New Jersey insurance producer license suspended for two-and-one-half years
beginning on March 29, 2012.
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On May 1, 2014, prior to the conclusion of respondent's suspension,
respondent submitted an application for a nonresident insurance producer
license that identified OIA as his employer. The Department rejected the
application.
Thereafter, the Department began investigating respondent's employment.
Lydia Barbara Bashwiner, Esq., OIA's counsel, stated in a letter to the
Department that respondent's employment as an insurance producer with OIA
began on September 2, 2008, and was terminated effective June 20, 2014.
Bashwiner's letter also stated that respondent "did not conduct any New Jersey
insurance business while employed at OIA," that "OIA did not maintain any
offices outside of New Jersey" and that respondent "attended sales meetings,
marketing meetings and other company functions at our New Jersey office."
Respondent also "had access to OIA's computer network and insurance carrier
interface systems."
After investigating respondent's employment, the Department issued a
two-count order to show cause on July 1, 2015. The first count alleged that
respondent continued to work at OIA despite having a suspended insurance
producer license. The second count alleged that respondent continued to work
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for an insurance producer despite having agreed to a thirty-month suspension of
his insurance producer license pursuant to a consent order with the Department.
After hearing oral argument on the Department's motion for summary
decision and respondent's cross-motion for summary decision, the Honorable
Jeff S. Masin, A.L.J., issued an initial decision granting the Department's motion
as to both counts and denying respondent's cross-motion. Judge Masin
recommended a $5,000 penalty on the first count, a $10,000 penalty on the
second count, and revocation of respondent's insurance producer license.
On August 11, 2017, the Commissioner issued a final decision and order,
which adopted Judge Masin's initial decision with modifications. The
Commissioner concluded that Vinci's employment with OIA during the term of
his license suspension violated N.J.A.C. 11:17D-2.5(e), and N.J.S.A. 17:22A-
40(a)(2) and (8). The Commissioner also adopted Judge Masin's
recommendation to revoke respondent's insurance producer license, reduced the
total recommended penalty to $7,500, and imposed costs of $637.50.
The Commissioner noted that respondent admitted to maintaining
employment with OIA, a licensed resident insurance producer in New Jersey,
during the time his producer license was suspended. The Commissioner found
that, while respondent's employment was limited to New York insurance
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matters, he was required to attend meetings at the New Jersey office and had
access to OIA's computer network, which contained New Jersey insurance
business.
The Commissioner rejected respondent's contention that the Department
was overstepping its regulatory authority because respondent's employment with
OIA involved New York insurance matters only. The Commissioner found that,
under N.J.A.C. 11:17D-2.5(e), respondent was not allowed to be employed by
an insurance producer licensed in New Jersey in any capacity, including any
employment roles that are not related to the sale, solicitation, and negotiation of
insurance, during the period of his suspension. Respondent was not prohibited
from engaging in insurance business under his New York resident insurance
producer license. During the suspension of his New Jersey license, respondent
was free to maintain employment with an insurance producer in New York, or
any other state where he may have been licensed, so long as the insurance
producer was not also licensed in New Jersey. The Commissioner concluded
that revocation of Vinci's insurance producer license was warranted for his
repeated failure to abide by New Jersey insurance laws, which showed a
purposeful disregard for these laws and the Department.
This appeal followed.
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On appeal, respondent contends that the Commissioner erred by granting
summary decision to the Department. Summary decision should be granted
where
the pleadings, discovery and affidavits "show that there
is no genuine issue as to any material fact challenged
and that the moving party is entitled to prevail as a
matter of law." Once the moving party presents
sufficient evidence in support of the motion, the
opposing party must proffer affidavits setting "forth
specific facts showing that there is a genuine issue
which can only be determined in an evidentiary
proceeding." This standard is substantially the same as
that governing a motion under Rule 4:46–2 for
summary judgment in civil litigation.
[Contini v. Bd. of Educ. of Newark, 286 N.J. Super.
106, 121-22 (App. Div. 1995) (citations omitted).]
We review motions for summary decision "in accordance with the principles set
forth by the Supreme Court in Brill v. Guardian Life Ins. Co. of Am., 142 N.J.
520, 540 (1995)." Nat'l Transfer, Inc. v. N.J. Dep't of Envtl. Prot., 347 N.J.
Super. 401, 408 (App. Div. 2002). In Brill, the Court explained that
a determination whether there exists a "genuine issue"
of material fact that precludes summary judgment
requires the motion judge to consider whether the
competent evidential materials presented, when viewed
in the light most favorable to the non-moving party, are
sufficient to permit a rational factfinder to resolve the
alleged disputed issue in favor of the non-moving party
. . . . The import of our holding is that when the
evidence "is so one-sided that one party must prevail as
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a matter of law," the trial court should not hesitate to
grant summary judgment.
[142 N.J. at 540 (citations omitted).]
Respondent make two principal arguments regarding the Commissioner's
grant of summary decision. First, respondent argues that the Commissioner's
interpretation of N.J.A.C. 11:17D-2.5(e) was incorrect and leads to the absurd
result "that one cannot even be a janitor at the regulated entity" while his
insurance producer license is suspended. Second, respondent argues that
Mayflower Sec. Co., Inc. v. Bureau of Sec. in Div. of Consumer Aff. of Dep't
of L. and Pub. Safety, 64 N.J. 85 (1973) is analogous to the instant case and
should act as controlling authority. We disagree with both arguments.
The Commissioner's power to revoke an insurance producer license comes
from N.J.S.A. 17:22A-40, which provides, in relevant part:
The commissioner may . . . revoke . . . an insurance
producer's license or may levy a civil penalty . . . for
any one or more of the following causes: . . .
(2) Violating any insurance laws, or violating any
regulation, subpoena or order of the commissioner or of
another state's insurance regulator; . . .
(8) Using fraudulent, coercive or dishonest practices, or
demonstrating incompetence, untrustworthiness or
financial irresponsibility in the conduct of insurance
business in this State or elsewhere . . . .
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[N.J.S.A. 17:22A-40(a)(2), (8).]
Additionally, "[n]o person whose license has been suspended or revoked may
be a partner, officer, director or owner of a licensed business entity, or otherwise
be employed in any capacity by an insurance producer." N.J.A.C. 11:17D-2.5(e)
(emphasis added).
"The interpretation of regulations follows the principles of statutory
interpretation." Campo Jersey, Inc. v. Dir., Div. of Taxation, 390 N.J. Super.
366, 381 (App. Div. 2007) (citing State v. Hessen, 145 N.J. 441, 456 (1996)).
The first step in interpreting the statute is to look "to the plain language of the
statute," and "ascribe to the statutory language its ordinary meaning."
D'Annunzio v. Prudential Ins. Co. of Am., 192 N.J. 110, 119-20 (2007) (citations
omitted). Our "goal in the interpretation of a statute is always to determine the
Legislature's intent." Id. at 119 (citing Wollen v. Borough of Fort Lee, 27 N.J.
408, 418 (1958)). "Where a statute is clear and unambiguous on its face and
admits of only one interpretation, a court must infer the Legislature's intent from
the statute's plain meaning." O'Connell v. State, 171 N.J. 484, 488 (2002) (citing
V.C. v. M.J.B., 163 N.J. 200, 217, cert. denied, 531 U.S. 926 (2000)).
The plain language of both N.J.S.A. 17:22A-40(a) and N.J.A.C. 11:17D-
2.5(e) are clear and unambiguous. See D'Annunzio, 192 N.J. at 119-20;
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O'Connell, 171 N.J. at 488. The Commissioner may revoke an insurance
producer's license if he or she finds that the producer has violated an insurance
law, regulation, or order of the Commissioner. N.J.S.A. 17:22A-40(a)(2). A
person whose insurance producer's license has been suspended may not "be
employed in any capacity by an insurance producer." N.J.A.C. 11:17D-2.5(e)
(emphasis added). Here, respondent concedes that his license was suspended
while he worked at OIA and that OIA is a resident business entity insurance
producer in New Jersey. We find no merit in respondent's argument that his
employment did not violate the regulation because it was limited to New York
insurance matters. Under N.J.A.C. 11:17D-2.5(e), it makes no difference that
respondent did not handle New Jersey insurance matters during his employment
with OIA. The regulation is concerned only with whether respondent worked
for an insurance producer registered in New Jersey during his suspension.
Furthermore, respondent's argument that Mayflower Securities should act
as controlling authority in the instant matter is meritless. In Mayflower
Securities, the Court vacated a twenty-day suspension imposed by the Bureau of
Securities on Mayflower Securities' registration as a securities broker-dealer. 64
N.J. at 87, 99. The Bureau's suspension was based on findings that Mayflower
Securities violated provisions of the Uniform Securities Law (1967), N.J.S.A.
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49:3-47 to -83, by employing an unregistered agent. Id. at 87-88. Under the
Uniform Securities Law, suspension or revocation required a finding that the
broker-dealer "has willfully violated or willfully failed to comply with any
provision of this act or any rule or order authorized by this act[.]" Id. at 90(quoting N.J.S.A. 49:3-58(a)(2)(ii)).
The unregistered agent in Mayflower Securities, Alan Levine, completed
his registration application and submitted it to a Mayflower Securities manager.
Id. at 94. However, "[n]o one is certain what happened to Levine's application
after he returned it . . . following completion." Id. at 95. The Court concluded
that it was "clear that [Levine] thought he was registered and did business
accordingly and that Mayflower thought he was registered and employed him
accordingly." Ibid. Thus, the Court held that Mayflower's violation was
technical, not willful, and vacated the twenty-day suspension. Id. at 99.
Mayflower Securities is factually distinct from the instant matter. The
Uniform Securities Law in Mayflower Securities required a willful violation of
law or regulation before one's securities broker license could be suspended. See
id. at 90. There is no such requirement before one's insurance producer license
can be suspended or revoked in the instant matter. See N.J.S.A. 17:22A-
40(a)(2). Thus, unlike the Bureau of Securities in Mayflower Securities, the
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Commissioner here was not required to find a willful violation of N.J.A.C.
11:17D-2.5(e) before revoking respondent's insurance producer license. See 64
N.J. at 90. Thus, we conclude that the Commissioner correctly interpreted
N.J.A.C. 11:17D-2.5(e) and properly granted summary decision to the
Department.
The remaining arguments raised by respondent are without sufficient
merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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