Atwater v. Dept. of Consumer & Reg. Aff.

• Decision Date: 24 October 1989
• Docket Number: No. 88-220.,88-220.
• Citation: 566 A.2d 462
• Court: D.C. Court of Appeals
• Parties: Larry O. ATWATER, Petitioner, v. DISTRICT OF COLUMBIA DEPARTMENT OF CONSUMER & REGULATORY AFFAIRS, Respondent. USAA Casualty Insurance Company, Intervenor.

Page 462

566 A.2d 462

Larry O. ATWATER, Petitioner, v. DISTRICT OF COLUMBIA DEPARTMENT OF CONSUMER & REGULATORY AFFAIRS, Respondent.

USAA Casualty Insurance Company, Intervenor.

No. 88-220.

District of Columbia Court of Appeals.

Submitted February 28, 1989.

Decided October 24, 1989.

Philip G. Schrag was on the brief, for petitioner.

Lutz Alexander Prager, Asst. Deputy Corp. Counsel, with whom Frederick D. Cooke, Jr., Corp. Counsel at the time the response was filed, and Charles L. Reischel, Deputy Corp. Counsel, Washington, D.C., filed a response to Order to Show Cause.

David F. Grimaldi, Washington, D.C., was on the brief, for intervenor.

Before FERREN and SCHWELB, Associate Judges, and PRYOR, Senior Judge.

SCHWELB, Associate Judge:

This case presents two difficult issues arising from the cancellation of petitioner Larry 0. Atwater's automobile liability insurance policy. On the merits, the question is whether an insurer is relieved from the requirement that it provide the insured with thirty days notice of the cancellation of a policy, see D.C.Code § 35-2109 (1988), when the insurance is financed by a premium finance company. Before reaching this issue, however, we must determine whether a District of Columbia Department of Consumer and Regulatory Affairs (DCRA) administrative law judge, Honorable Sharon Nelson, exceeded her jurisdiction in deciding it. We conclude that Judge Nelson properly exercised jurisdiction. On the merits, we affirm her decision.

I THE FACTS

Our story, as told by Judge Nelson in her comprehensive findings, begins a few days before Christmas in 1984, when Mr. Atwater came to Metro Motors, a dealership in Washington, D.C. operated by Cole Brothers Enterprises, to purchase a car. He spoke with Mr. Joe E. Cole, the manager, who assisted him with the purchase of a used Ford Grenada. Mr. Cole explained that, in order to drive the vehicle off the lot, Mr. Atwater would have to purchase liability insurance, as required by District of Columbia law.

To assist Mr. Atwater in obtaining insurance, Mr. Cole called National Fidelity Insurance, Inc. (National Fidelity), an insurance broker. He arranged with National Fidelity that Mr. Atwater would receive liability and collision coverage, for which he would have to pay an initial premium of $188.00. Mr. Cole assured National Fidelity that he would collect the premium from Mr. Atwater, and the broker's representative gave him a binder number over the telephone, thus providing immediate coverage. Mr. Atwater, who was to receive financing through Mid-Atlantic Finance Corporation (Mid-Atlantic), a premium finance company, paid Mr. Cole $115.00 in cash and a negotiable promissory note for the balance of $73.00.¹ The binder number was duly recorded on the bill of sale. Mr. Cole also told Mr. Atwater that the full cost of the insurance would be $600.00, and that he could pay that amount in eight equal installments. Mr. Atwater, who had already made a down payment on the Grenada earlier in the day, drove it away.

On New Year's eve, Mr. Atwater, having determined that his Christmas Grenada was, in second-hand car lingo, a "lemon," returned it to the dealership. Mr. Cole arranged for the insurance to be transferred to a Ford Pinto, which Mr. Atwater accepted in exchange. Mr. Atwater contacted the offices of National Fidelity and Mid-Atlantic to try to complete the necessary paperwork. He testified that he made inquiries, but that he never received a payment book or other insurance documents. An officer of National Fidelity told Mr. Atwater that he was insured and that a power of attorney had been "signed on his behalf" to execute any application or finance agreement for his car insurance.

In early January 1985, Mr. Atwater's liability insurance coverage was placed with United States Services Automobile Association (USAA) through the District of Columbia "assigned risk" program. Mr. Atwater only made the initial down payment of $115.00 for his policy. He never paid Metro Motors the $73.00 due on the promissory note, nor did he pay any further premiums. He likewise made only three payments of $50.00 each on the car itself. Mr. Atwater testified that on the basis of his past experience with insurance policies, he believed that $188.00 would be sufficient to insure him for more than one month but for less than three months.

After being assigned Mr. Atwater's account, USAA mailed him a copy of his policy, the term of which was twelve months. In February 1985, Mid-Atlantic, not having received the premiums that had become due, and acting pursuant to its power of attorney, gave notice to USAA that Mr. Atwater's policy should be cancelled.² In conformity with this communication, USAA cancelled the policy effective February 20, 1985, without sending any notice of its action to Mr. Atwater. USAA did send a confirmatory letter to Mid-Atlantic, together with a refund of a pro-rated portion of the financed amount.

On or about May 6, 1985, Mr. Atwater was in an automobile accident which destroyed the Pinto and damaged two other automobiles. He has acknowledged his fault, and his responsibility for the accident is undisputed. The owners of the other two vehicles were compensated by their own insurers, who now seek recovery against Mr. Atwater on a subrogation theory.³ Mr. Atwater notified National Fidelity of the claims, but he was advised that his policy had been cancelled in February 1985 for non-payment of his premiums.

On May 20, 1985, Mr. Atwater and the director of the DCRA filed with that agency's Insurance Administration a petition pursuant to the Consumer Protection Procedures Act (CPPA), D.C.Code §§ 28-3901 to 28-3908 (1981 & 1989 Supp.), against Cole Brothers, National Fidelity, Mid-Atlantic and USAA. They claimed that the respondents had violated provisions of various statutes relating to insurance and consumer protection, and sought extensive relief, including a requirement that USAA and others pay any claims arising out of Mr. Atwater's accident, as well as compensatory and punitive damages, civil penalties, fines, and the initiation of license revocation proceedings. Not all of the claims involved insurance matters, and the petition was transferred within the agency from the Insurance Administration to the Office of Adjudication. The case was assigned to Judge Nelson for resolution.

Judge Nelson granted motions to dismiss by National Fidelity, Mid-Atlantic and USAA before hearing any testimony. She concluded that no claims had been stated against these respondents upon which the petitioners would be entitled to any relief. She subsequently heard evidence on the claims against Mr. Cole and Cole Brothers, but granted Mr. Atwater only a small portion of the relief he had requested, primarily because USAA's cancellation of Mr. Atwater's policy could not be causally related to these respondents' violations of the law.

Mr. Atwater has appealed to this court⁴ only the dismissal of his eighth and twelfth causes of action against USAA. In his eighth cause of action, he alleges that USAA failed to provide him with thirty days notice of the cancellation of his policy, as allegedly required by D.C.Code § 35-2109(b). In his twelfth cause of action, he contends that USAA never provided him with a copy of the provisions of D.C.Code § 35-2109, which he claims it was required to do by § 35-2109(m).

II THE AGENCY'S JURISDICTION

Both of the causes of action which remain in the case, and with respect to which Mr. Atwater is appealing, are based on D.C.Code § 35-2109. Although that statute is entitled "Consumer Protection," it is a part of the District's Compulsory No-Fault Motor Vehicle Insurance statute, D.C.Code § 35-2101 et seq. (1988) (hereinafter the No-Fault Act). The proceeding before Judge Nelson was, however, instituted pursuant to the Consumer Protection Procedures Act. The "unlawful trade practices" enumerated in that Act, see § 28-3904, do not include violations of § 35-2109. Concerned that under these circumstances, the administrative law judge may have been without jurisdiction to entertain the claims, we issued an order on March 10, 1989 directing Mr. Atwater to show cause why the proceeding and the appeal should not be dismissed. In response to the Order to Show Cause, briefs were filed by Mr. Atwater and by the District of Columbia but not by USAA.

Mr. Atwater and the District agree that the DCRA had jurisdiction over the matter and that the proceeding should not be dismissed. The District proposes, however, that the case be remanded to the agency for administrative resolution by the Superintendent of Insurance⁵ rather than by the administrative law judge. We conclude that Judge Nelson properly exercised jurisdiction over the case.

A. The statutory scheme.

The Consumer Protection Procedures Act is a comprehensive statute designed to provide procedures and remedies for a broad spectrum of practices which injure consumers. This court has called it "ambitious legislation." Howard v. Riggs Nat'l Bank, 432 A.2d 701, 708 (D.C. 1981). Among its purposes is to "assure that a just mechanism exists to remedy all improper trade practices." § 28-3901(b)(1)⁶

The Act contemplates that its procedures will be invoked, not simply to enforce its own substantive provisions, but also those of other consumer protection laws. The Act gives the Office of Consumer Protection authority, after investigation, to "determine whether a person has executed a trade practice in violation of any law of the District of Columbia." § 28-3903(a)(1), (13). The Office is empowered to investigate "what trade practice actually occurred" and whether the trade practice violates "any statute, . . . rule of common law, or other law, of the District of Columbia." § 28-3905(b). If the Office finds that the trade practice violates a law "within the jurisdiction of the Office," § 28-3905(d)(1), (g), it must initiate an administrative proceeding with an autonomous Office of...