Berenter v. Gallinger

• Decision Date: 22 September 1992
• Docket Number: No. 1,CA-CV,1
• Citation: 173 Ariz. 75,839 P.2d 1120
• Parties: David Alan BERENTER, Plaintiff-Appellant, v. Susan GALLINGER, Director of Insurance of the State of Arizona, Defendant-Appellee. 90-0539.
• Court: Arizona Court of Appeals

Page 1120

839 P.2d 1120

173 Ariz. 75

David Alan BERENTER, Plaintiff-Appellant, v. Susan GALLINGER, Director of Insurance of the State of Arizona, Defendant-Appellee.

No. 1 CA-CV 90-0539.

Court of Appeals of Arizona,

Division 1, Department B.

Sept. 22, 1992.

[173 Ariz. 76] Grant Woods, Atty. Gen. by H. Leslie Hall, Chief Counsel, Financial Fraud Div., and Charles R. Cohen, Asst. Atty. Gen., Phoenix, for defendant-appellee.

Frederick C. Berry Jr., P.C. by Frederick C. Berry Jr., Phoenix, for plaintiff-appellant.

OPINION

GARBARINO, Judge.

An insurance adjuster appeals from a superior court judgment affirming an order of the Arizona Director of Insurance suspending his license and assessing a $2,500 civil penalty against him. The primary issues on appeal are: whether there is substantial evidence to support the order, whether the adjuster violated Ariz.Rev.Stat Ann. (A.R.S.) sections 20-316(A)(4) and (7), whether A.R.S. section 20-316(A)(7) is constitutional, and whether the administrative hearing provided due process of law. We find that the administrative order was properly affirmed by the trial court.

I. FACTS

After their home was damaged by a fire on April 8, 1987, Jack and Marciane Condon (Condons) authorized Arizona Restoration Contractors (ARC) to perform emergency protection and restoration services for their personal property. The Condons, who were insured by Nationwide Mutual Fire Insurance Company (Nationwide), employed David Berenter (Berenter) as an adjuster to represent them in return for a fee of 18 percent of the total insurance proceeds recovered.

On April 17, 1987, ARC submitted an estimate and invoice to Berenter in the amount of $10,046.21. Berenter, doing business as Affiliated Group, submitted ARC's bill to Nationwide requesting immediate payment and received a draft payable jointly to ARC and Affiliated Group for the full amount requested.

On April 30, 1987, Berenter met with representatives of ARC with the Nationwide check in his possession. The parties disagreed whether Berenter was entitled to obtain his fee out of the check proceeds and Berenter left the meeting with the check. No monies were paid to ARC until August, 1987, after ARC filed a complaint with the Department of Insurance.

The Department of Insurance noticed a hearing alleging that Berenter had illegally withheld monies received in the course of his activities as a licensed insurance adjuster. The hearing officer found that on April 30, 1987, ARC was entitled to be paid for the work it had completed and that Berenter wrongfully withheld payment because ARC refused to permit him to deduct his fee from the check. She concluded that Berenter had violated A.R.S. section 20-316(A)(4) and (7) and that the violations were intentional.

Following the administrative proceedings, Berenter filed a complaint in superior court pursuant to the Administrative Review Act, A.R.S. sections 12-901 et seq. After the superior court's affirmance of the order, Berenter filed a notice of appeal in this court.

II. STANDARD OF REVIEW

When an administrative decision is appealed to the superior court, the superior court decides only whether the administrative action was illegal, arbitrary, capricious, or involved an abuse of discretion. Havasu Heights Ranch and Dev. Corp. v. Desert Valley Wood Prod., Inc., 167 Ariz. 383, 386, 807 P.2d 1119, 1122 (App.1990). This court reviews the superior court judgment to determine whether the record contains evidence to support the judgment. Id. Whether substantial evidence supports the decision is a question of law that is reviewed independently by this court. Id. at 387, 807 P.2d at 1123; Sun Power of Arizona v. Arizona State Registrar of Contractors, 166 Ariz. 437, 439, 803 P.2d 430, 432 (App.1990).

In the opening brief, Berenter criticizes all twenty-two findings of fact made by the hearing officer, on the grounds that they do not incorporate all pertinent evidence or because there is contradictory evidence. Neither the superior court nor this court weighs the evidence, but determines only whether there was substantial evidence to support the administrative decision. Havasu Heights Ranch, 167 Ariz. at 387, 807 P.2d at 1123. The purpose of judicial review of an administrative decision is not to decide whether the record supports appellant's version of the facts. We therefore do not address every factual dispute raised by Berenter.

III. SUBSTANTIAL EVIDENCE

The crux of Berenter's argument is that he withheld the Nationwide check on the Condons' instructions because ARC had overcharged, had performed unnecessary cleaning, and had not completed all the required work. He contends that there is no credible evidence to support the finding that he withheld the insurance check to coerce ARC into allowing him to obtain his commission from the check proceeds. We disagree.

Berenter expressed no dissatisfaction with ARC's work in his April 22, 1987 letter to Nationwide. He attached ARC's estimate and invoice to the letter and demanded immediate payment for the entire amount claimed by ARC. Similarly, Berenter did not question the amount of ARC's estimate or performance in his April 28, 1987 letter which reiterated his demand for payment. Both letters claim that Nationwide was obligated to make an immediate $10,046.21 payment on behalf of the Condons for ARC's services. The letters do not suggest any other claim for damages caused by the fire which would require further reimbursement or reduction by Nationwide.

Berenter testified that he was aware of ARC's "unauthorized work" as early as April 12 or 13, 1987. When asked about his failure to inform Nationwide of his concerns, he stated that, "I didn't have any specific objections until my April 30 meeting." When cross-examined about these statements, Berenter stated, "I realized that there were problems with billing, and I spoke with Mr. Frank Hestler about it. He told me not to worry, it was only an estimate." Berenter's alleged reliance on a statement that the invoice was "just an estimate" does not explain why he demanded that Nationwide make immediate payment for the full $10,046.21 which he represented as compensable under the policy.

There was conflicting testimony concerning what occurred on April 30, 1987, when Berenter and Mark Sanders (Sanders), an Affiliated Group employee, met with Ernest Vyrostek (Vyrostek), the owner of ARC, and Frank Hestler (Hestler), an ARC employee.

Hestler testified that the meeting was arranged as the result of a telephone conversation with Berenter during which Berenter informed Hestler that a check had been issued for ARC's restoration work. Hestler stated that during the meeting, Berenter wanted to deduct an 18-percent commission from the money ARC was to receive for work on the Condons' property. Hestler described Vyrostek's anger in response to Berenter's request and Berenter's exit from Vyrostek's office. He testified:

[M]r. Berenter just said, well, looks like we're not going to do business and be damned if you are going to get your money until this job closes down, and it is going to be down the road in four or five months--and he might have said six, but I know it was four or five months down the road when everything closes, and we're going to wait--or we're going to stretch it or wait as long as it takes to settle the account.

Hestler stated that he interpreted this and other comments by Berenter to mean that Berenter had no reason to pay ARC anything if he wasn't going to get anything out of it.

Vyrostek's description of the meeting was similar to Hestler's. He stated that Berenter never suggested that he was displeased with ARC's work on the Condons' property. He also testified that Berenter wanted his commission out of the Nationwide check and that when Vyrostek refused, Berenter left the office with the check.

Sanders' testimony varied somewhat from Hestler's and Vyrostek's. However, his testimony was consistent with Berenter requesting a commission from ARC. When asked whether Berenter wanted his commission from the Nationwide check, Sanders responded, "Mr. Berenter did not say that. That's--you could conclude that or you could not conclude that." He also observed that Vyrostek believed that Berenter wanted 18 percent of the Nationwide check and that after the conversation got heated, "Mr. Berenter told Mr. Vyrostek that if you want to play hardball, that would be fine. Mr. Vyrostek would receive his money when all the work was done."

The first writing indicating dissatisfaction with ARC's work for the Condons was a letter dated May 6, 1987, and delivered May 8, 1987, from Berenter to ARC. It instructed ARC to cease activities and questioned ARC's authority to restore all of the Condons' property. However, on May 8, 1987, Mrs. Condon had inspected some of her personal items stored by ARC and signed a document acknowledging satisfaction with the work and authorizing Nationwide to make direct payment to ARC.

There was conflicting testimony concerning the execution of the Condons' authorization for direct payment to ARC. Mrs. Condon testified that she didn't read the document, made a very limited inspection of her property and did not understand what she was signing. Her testimony was contradicted by two ARC employees who were present during the inspection and execution of the document.

The hearing officer found that Mrs. Condon's age, poor health, admitted poor memory, and the hearing officer's own perception of Mrs. Condon's testimony led her to conclude that Mrs. Condon lacked credibility. Berenter argues that Mrs. Condon was the only unbiased witness and that the hearing officer erred by refusing to give great weight to her testimony.

It is not the prerogative of this court to determine the credibility of witnesses. Van Emden v. Becker, 6 Ariz.App. 274, 275, 431 P.2d 915, 916 (1967). The credibility of witnesses is a matter peculiarly within the province of the trier of fact in an...