Woodford, M., Aplts. v. PA Insurance Dept. ( 2020 )


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  •                             [J-12-2020] [MO: Dougherty, J.]
    IN THE SUPREME COURT OF PENNSYLVANIA
    MIDDLE DISTRICT
    MICHAEL WILLIAM WOODFORD AND                       :   No. 65 MAP 2019
    OPTIONS INSURANCE AGENCY,                          :
    :   Appeal from the Order of the
    Appellants                   :   Commonwealth Court at No. 1005
    :   CD 2018 dated January 4, 2019,
    :   reconsideration denied February 15,
    v.                                  :   2019, affirming in part and reversing
    :   in part the decision of the PA
    :   Insurance Department at No. SC16-
    COMMONWEALTH OF PENNSYLVANIA                       :   11-001 dated June 21, 2018.
    INSURANCE DEPARTMENT,                              :
    :   ARGUED: March 11, 2020
    Appellee                     :
    CONCURRING AND DISSENTING OPINION
    JUSTICE TODD                                                DECIDED: December 22, 2020
    I join Parts I and II.A of the Majority Opinion, as I agree we should reject the
    Commonwealth Court’s categorical conclusion that the Nanty-Glo rule, established by our
    decision in Borough of Nanty-Glo v. American Surety, 
    163 A. 523
     (Pa. 1932) (holding that
    it was improper for a court to direct a verdict in favor of a party at a civil trial based solely
    on the uncontradicted testimony of that party’s witnesses, as it deprived the jury, as finder
    of fact, from assessing the credibility of those witnesses), has no application in
    administrative proceedings.         As the majority highlights, our Court subsequently
    recognized the Nanty-Glo rule’s broader applicability to summary judgment proceedings
    in civil cases in Penn Center House v. Hoffman, 
    553 A.2d 900
     (Pa. 1989), wherein we
    ruled that “[t]estimonial affidavits of the moving party or his witnesses . . . even if
    uncontradicted, will not afford sufficient basis for the entry of summary judgment, since
    the credibility of the testimony is still a matter for the jury.” Id. at 903. Consequently, as
    the Nanty-Glo rule applies whenever a finder of fact is called upon to resolve a credibility
    issue in a civil proceeding, it should be followed whenever an administrative agency or
    tribunal acts as the finder of fact in issuing an adjudication. Inasmuch as the Insurance
    Commissioner, in ruling on Appellants’ motion for summary judgment, was acting as the
    finder of fact, and because she recognized that genuine issues of material fact were
    raised by Appellants’ affidavit regarding the propriety of the challenged fees, which could
    only be resolved through an evidentiary hearing at which the credibility of the affiant could
    be assessed, the Commissioner properly followed the Nanty-Glo rule in deciding
    Appellants’ motion for summary judgment.
    With respect to Part II.B of the Majority Opinion, I also agree that 40 P.S. §
    310.74(a) of the Insurance Department Act (“Act”) – which the Commissioner found
    Appellants to have violated, and, as a result, required, inter alia, that they pay a fine of
    $5,000 – is ambiguous. See Majority Opinion at 21. As the majority develops, the
    competing legal interpretations of the text of Section 310.74(a) advanced by the
    Insurance Department and Appellants are both reasonable with regard to the question of
    whether Section 310.74(a) permitted Appellants to charge additional fees beyond
    commissions in personal insurance transactions, given that it does not explicitly prohibit
    them from doing so. See JP Morgan Chase Bank N.A. v. Taggart, 
    203 A.3d 187
    , 194
    (Pa. 2019) (“A statute is ambiguous when there are at least two reasonable interpretations
    of the text.”).1 However, for the following reasons, I must respectfully dissent from the
    1 In this regard, I am unpersuaded by the assertion in Justice Wecht’s Concurring Opinion
    that, because the Act is part of a comprehensive regulatory scheme, this fact counsels
    against a finding of ambiguity as to this particular portion of the Act. See Concurring
    Opinion, Wecht J. at 3 (“[T]he Act is a comprehensive regulatory scheme that clearly
    begins with the assumption that insurance producers can do nothing, and then proceeds
    to authorize only certain activities. Given this structure, we should assume that any
    practices the General Assembly did not explicitly authorize were intentionally disallowed.
    To hold otherwise would needlessly inject ambiguity throughout the Act.”). A judicial
    [J-12-2020] [MO: Dougherty, J.] - 2
    majority’s ultimate conclusion that Section 310.74(a) was not penal in nature and,
    therefore, not subject to the rule of strict construction. Accordingly, I would construe that
    section in favor of Appellants.
    The Act was intended to provide a comprehensive regulatory framework governing
    the “transacting [of] any class of insurance business,” 40 P.S. § 23, and it makes it
    unlawful for individuals to engage in “the transaction of the business of insurance, without
    fully complying with the provisions of [the Act],” 40 P.S. § 26. Thus, with respect to the
    conduct of insurance producers such as Appellants, Subarticle B of the Act, entitled
    assessment of a particular statute’s ambiguity by necessity is confined to an examination
    of the actual statutory language at issue in the case under review, and evaluation of the
    reasonableness of the parties’ competing suggested interpretations thereof. Merely
    because our Court, or any court, determines that one portion of a comprehensive
    statutory scheme is ambiguous does not, ipso facto, inject ambiguity into other portions
    of the overall statutory scheme that statute is part of, as the concurrence suggests.
    Compare, e.g., Chamberlain v. Unemployment Compensation Board of Review, 
    114 A.3d 385
    , 394–95 (Pa. 2015) (engaging in statutory construction to discern the meaning of the
    term “incarceration” as used in the Unemployment Compensation Law because it was
    reasonably susceptible of two different meanings) with A Special Touch v. Department of
    Labor and Industry, 
    228 A.3d 489
     (Pa. 2020) (finding that the phrase “customarily
    engaged,” as used in the Unemployment Compensation Law was unambiguous and
    defining the phrase in accordance with its plain meaning). Thus, each provision of the Act
    ought to be evaluated according to its own terms.
    Moreover, when a statute is silent as to its application to particular factual
    circumstances and does not directly address whether it can be applied to legal questions
    arising from such situations, as Section 310.74 is with respect to the question of whether
    licensed insurance producers can charge fees in addition to commissions for non-
    commercial insurance transactions, our Court has heretofore regarded such silence as a
    form of ambiguity requiring resort to the tools of statutory construction, which included
    consideration of the reasonableness of the interpretation of the statute by the
    administrative agency tasked with effectuating and enforcing that law. See, e.g., Powell
    v. Housing Authority of City of Pittsburgh, 
    812 A.2d 1201
     (Pa. 2002) (because Congress,
    in enacting Section 8 of the United States Housing Act, did not speak to the question of
    whether a public housing authority may lawfully terminate the lease of a public housing
    tenant if a member of the tenant’s household or guest engages in drug related activity
    without the tenant’s actual or reasonable knowledge, examination of other factors to
    discern Congress’s intent, including the interpretation of the agency responsible for
    implementing the Housing Act, was warranted). I therefore find the majority’s conclusion
    that Section 310.74 is ambiguous to be amply supported.
    [J-12-2020] [MO: Dougherty, J.] - 3
    “Regulation of Insurance Producers,” enumerates certain specific “prohibited” activities
    which insurance producers are wholly forbidden from engaging in, 40 P.S. §§ 310.41-
    310.51, and other activities in which their conduct is “regulated,” i.e., subjected to
    statutorily specified restrictions, 40 P.S. §§ 310.71-310.79. The Act further provides that,
    upon a determination that an insurance producer has violated any of these prohibitions
    or regulations, the Insurance Commissioner may impose, inter alia, a “[d]enial,
    suspension, refusal to renew or revocation of the license” of the producer; and “[a] civil
    penalty not to exceed $5,000” for each violation. 40 P.S. § 310.91. From my perspective,
    the Act establishes the fundamental rules governing the business of insurance in this
    Commonwealth, which the legislature, in its policy judgment, sought to regulate, and
    those activities which are not barred or restricted by its provisions are presumptively
    permissible.
    As the majority recognizes, and the parties agree, Section 310.74(a) does not
    expressly prohibit the charging of a fee in addition to a commission for the sale,
    solicitation, or negotiation of a contract of insurance for non-commercial insurance; rather,
    it merely states that “[a] licensee may charge a fee in addition to a commission to a person
    for the sale, solicitation or negotiation of a contract of insurance for commercial business.”
    40 P.S. § 310.74(a) (emphasis added). Nevertheless, the majority applies the rule of
    expressio unius est exclusion alterius to find this provision, by implication, prohibits a
    producer from charging such fees in all non-commercial transactions. I find this
    “prohibition by implication” construction to be legally unsupported and wholly inapt, given
    that, in my view, Section 310.74(a) is penal in nature and, accordingly, must be strictly
    construed. See 1 Pa.C.S. § 1928(b)(1) (requiring penal provisions in all statutes to be
    strictly construed).
    [J-12-2020] [MO: Dougherty, J.] - 4
    As a general matter, our Court long ago recognized that “[a] penal statute is one
    which imposes a penalty or forfeiture for transgressing its provisions, or for doing a thing
    prohibited, and it is none the less (sic) a penal statute [even though] it is also remedial.”
    Nesbit v. Clark, 
    116 A. 404
    , 406 (Pa. 1922). Thus, in considering whether a particular
    statutory provision is penal in nature, and therefore subject to strict construction, we must
    consider the primary purpose of the specific provision in question, when read in
    conjunction with other portions of the statutory framework in which it appears. Snyder
    Brothers v. PUC, 
    198 A.3d 1058
    , 1075 n.21 (Pa. 2018). Hence, a statutory provision may
    be construed as penal in nature even if it appears within an overall statutory scheme that
    is remedial. See Verona v. Schenley Farms Co., 
    167 A. 317
    , 320 (Pa. 1933) (“’[T]here is
    no impropriety in putting a literal construction on a penal clause, and a liberal construction
    on a remedial clause’ in the same statute.”); see also 3 Sutherland Statutory Construction
    § 60:4 (8th ed.) (approving of judicial practice of separately construing the penal and
    remedial provisions of a statutory scheme by strictly construing the penal ones, while
    liberally construing the remedial provisions, noting that this approach “serves the
    disparate interests of the persons the law penalizes on the one hand and benefits on the
    other”).
    Consistent with this principle, our Court has regarded portions of a comprehensive
    statute which restricted real estate professionals’ conduct for the remedial purpose of
    protecting the public, but which correspondingly imposed penalties such as loss of
    licensure and civil fines for violating its provisions, as penal in nature; accordingly, we
    strictly construed those provisions in favor of the licensee. See Pa. State Real Estate
    Commission v. Keller, 
    165 A.2d 79
    , 80 (Pa. 1960) (the Real Estate Broker's Law, which
    authorized the suspension of a broker's license for violating its provisions, was penal and
    subject to strict construction); cf. Commonwealth v. Mason, 
    112 A.2d 174
     (Pa. 1955)
    [J-12-2020] [MO: Dougherty, J.] - 5
    (Securities Act which required the registration of, and regulation of the conduct of,
    individuals engaged in the buying, selling, and disposition of securities, was a penal
    statute subject to strict construction). Moreover, our Court has expressly refused to read
    an implied compliance requirement into a statute we considered penal in nature,
    whenever the legislature did not include such a requirement, because we deemed this as
    violative of this principle of strict construction. See Smith v. Messner, 
    92 A.2d 417
    , 419
    (Pa. 1952) (where Realty Transfer Tax Act did not provide that an agreement of sale was
    a taxable document, our Court would not conclude such a document was taxable “by
    implication” given that the statute was penal in nature).
    Consequently, while I agree with the majority’s assertion that the Act serves the
    salutary remedial purposes of “protecting both buyers and sellers of insurance through a
    comprehensive scheme that includes protections for insurance consumers as well as
    clear guidelines for entities that sell insurance,” Majority Opinion at 22, unlike the majority,
    I regard the primary purpose of Section 310.74, along with its companion statutes in
    Subarticle B, to be proscriptive in nature and intended to prohibit or limit particular
    insurance sales practices by setting parameters on whether and how they may be
    conducted; hence, I deem the penalty provisions of Section 310.91(a) to be the
    enforcement means to accomplish this primary purpose. Thus, in my view, Section
    310.74(a) should be considered a penal statute subject to strict construction.2
    2 This statutory provision stands in marked contrast to the provisions at issue in Snyder
    Brothers which our Court determined had, as their primary objective, a remedial purpose
    — compensating municipalities for the deleterious impacts of oil and gas drilling activities.
    See 198 A.3d at 1075 n.21 (“Inasmuch as the chief purpose of the impact fee provisions
    of Chapter 23 is to help municipalities offset the adverse effects of the production of
    natural gas from unconventional wells within their borders, these provisions are remedial
    in nature. Because the separate penalty provisions are merely the means by which these
    remedial measures are enforced, strict construction of the impact fee provisions is not
    [J-12-2020] [MO: Dougherty, J.] - 6
    The rule of strict construction of penal statutes is “’not merely a convenient maxim
    of statutory construction,’ but, rather, ‘is rooted in fundamental principles of due process
    which mandate that no individual be forced to speculate, at peril of [legal sanction],
    whether his conduct is prohibited.’” Commonwealth v. Smith, 
    221 A.3d 631
    , 639 (Pa.
    2019) (internal citation and quotation marks omitted). Thus, inasmuch as Section
    310.74(a) does not, by its plain terms, provide fair warning to insurance producers that
    charging a fee beyond a commission for the sale, solicitation, or negotiation of a contract
    of insurance for non-commercial business is prohibited, I would find that it must be strictly
    construed in favor of Appellants.
    Therefore, I would vacate the order of the Insurance Commissioner imposing a
    fine and other sanctions on Appellants for violating Section 310.74(a). On this basis, I
    respectfully dissent.
    required.”). Hence, unlike in the case at bar, the penalties for violations of the impact fee
    provisions in Snyder Brothers served only to further that primary remedial purpose.
    [J-12-2020] [MO: Dougherty, J.] - 7
    

Document Info

Docket Number: 65 MAP 2019

Filed Date: 12/22/2020

Precedential Status: Precedential

Modified Date: 12/22/2020