Fin. Consulting, LLC v. Comm'r of Ins.
| Decision Date | 30 December 2014 |
| Docket Number | No. 19070.,19070. |
| Citation | 315 Conn. 196,105 A.3d 210 |
| Court | Connecticut Supreme Court |
| Parties | FINANCIAL CONSULTING, LLC, et al. v. COMMISSIONER OF INSURANCE. |
315 Conn. 196
105 A.3d 210
FINANCIAL CONSULTING, LLC, et al.
v.
COMMISSIONER OF INSURANCE.
No. 19070.
Supreme Court of Connecticut.
Argued Jan. 10, 2014.
Decided Dec. 30, 2014.
Andrew J. O'Keefe, Hartford, with whom, on the brief, was Joseph M. Busher, Jr., Wethersfield, for the appellants (plaintiffs).
Patrick T. Ring, assistant attorney general, with whom, on the brief, was
George Jepsen, attorney general, for the appellee (defendant).
ROGERS, C.J., and PALMER, ZARELLA, EVELEIGH, McDONALD, ESPINOSA and ROBINSON, Js.
Opinion
ROBINSON, J.
The principal issue in this appeal is whether the exhaustion doctrine precludes a party from bringing a declaratory judgment action pursuant to the Uniform Administrative Procedure Act (UAPA); see General Statutes § 4–175 ;1 addressing matters that are the subject of an administrative agency's pending investigation of that party, prior to the commencement of a contested case hearing in accordance with General Statutes § 4–177.2 The plaintiffs, Financial Consulting, LLC (Financial), Carl Reidemeister, Thomas M. Bonelli,
Thomas Moore, Jr., and Sean Wallace,3 appeal4 from the judgment of the trial court dismissing their declaratory judgment action against the defendant, Thomas Leonardi, the Commissioner of Insurance (commissioner). On appeal, the plaintiffs claim that the trial court improperly concluded that: (1) they failed to exhaust their administrative remedies before bringing this declaratory judgment action pursuant to § 4–175, despite the fact that they had complied with that statute's precondition of requesting a declaratory ruling from the commissioner in accordance with General Statutes § 4–176 ;5 and (2)
they failed to establish their
standing to bring this declaratory judgment action. We conclude that the trial court had subject matter jurisdiction over this declaratory judgment action because the plaintiffs complied with the precondition to § 4–175 set forth in § 4–176, and that the issuance of “second chance notices” to the plaintiffs by the Department of Insurance (department) pursuant to General Statutes (Supp.2014) § 4–182(c)6 did not, in the absence of a contested case hearing instituted under § 4–177, operate to commence agency proceedings under which they would have administrative remedies to exhaust. We further agree with the plaintiffs' argument that the trial court improperly determined that they were not aggrieved parties with standing to bring this declaratory judgment action.7 Accordingly, we reverse the judgment of the trial court.
The record reveals the following undisputed facts and procedural history.8 The plaintiffs are insurance
producers who conduct business within the state of Connecticut and are licensees of the department. In September, 2009, the Illinois Mutual Life Insurance Company (Illinois Mutual) notified the department that it was terminating the appointment of the plaintiffs as its agents, for cause arising from the plaintiffs' alleged misconduct while selling life insurance policies to military personnel. After reviewing information submitted by Illinois Mutual, the department, pursuant to its authority under
General Statutes § 38a–16 (a), began to investigate the plaintiffs to determine whether they had violated any of Connecticut's insurance laws in connection with those sales. During the course of the investigation, from January, 2011, through June, 2011, the department issued “second chance” notices, pursuant to § 4–182(c), to each of the plaintiffs, informing them of the allegations and offering them an opportunity to show their compliance with the law in order to retain their licenses.9 Subsequently, on September 12, 2011, Reidemeister attended a conference with the department at which he attempted to show compliance with the insurance statutes and regulations. The department's investigation remains ongoing and it continues to collect information in order to determine whether it will bring administrative charges against the plaintiffs.10
After the department's issuance of the § 4–182(c) notices to the plaintiffs, but before its conference with Reidemeister, the plaintiffs petitioned the commissioner on or about July 1, 2011, pursuant to § 4–176,
seeking declaratory rulings with respect to seven questions concerning the legality of their conduct in the sale of life insurance policies.11 The plaintiffs averred that
these seven questions pertained to a “determination of regulations or applicability of statutes or regulations which threatened application interferes with, or
impairs, or threatens to interfere with or impair the legal rights or privileges of the plaintiffs.” The department received the petition by certified mail on July 5, 2011. The commissioner subsequently took no action on the petition.
After sixty days elapsed, the plaintiffs brought this action pursuant to § 4–175, seeking a declaratory judgment resolving seven questions similar to those posed to the department in their request for a declaratory ruling.12 The plaintiffs also sought injunctive relief
should the trial court, “determine that the [department's] proposed or threatened application or interpretation of [§§ 38a–819–70 through 38a–819–75 of the Regulations of Connecticut State Agencies ] and [General Statutes] § 38a–816 (8) exceeds the department's jurisdiction or authority....” Subsequently, the commissioner moved to dismiss this declaratory judgment action, claiming that the trial court lacked subject matter jurisdiction because the plaintiffs had failed to:
(1) exhaust their administrative remedies prior to bringing this action; and (2) plead facts sufficient to establish their standing.
The trial court granted the commissioner's motion to dismiss. With respect to exhaustion, the trial court relied on Tele Tech of Connecticut Corp. v. Dept. of Public Utility Control, 270 Conn. 778, 855 A.2d 174 (2004), and concluded that the department's investigation of the plaintiffs constituted an “agency proceeding” under the UAPA, and that the plaintiffs had available to them administrative remedies should the department ultimately take adverse action against their insurance licenses. The trial court then relied on River Bend Associates, Inc. v. Water Pollution Control Authority, 262 Conn. 84, 809 A.2d 492 (2002), and rejected the plaintiffs' claim that §§ 4–175 and 4–176 authorized them to use the declaratory judgment procedure to bypass the department's pending administrative process. Accordingly, the trial court concluded that it lacked subject
matter jurisdiction because the plaintiffs had failed to exhaust their administrative remedies. After agreeing with the commissioner's additional jurisdictional argument that the plaintiffs lacked standing to maintain this declaratory judgment action,13 the trial court granted the motion to dismiss and rendered judgment accordingly. This appeal followed.
On appeal, the plaintiffs contend that the trial court improperly concluded that: (1) they had failed to exhaust their administrative remedies; and (2) they lacked standing to bring this declaratory judgment action. We address each claim in turn.
I
We begin with the plaintiffs' claim that the trial court improperly concluded that they had failed to exhaust their administrative remedies prior to filing this declaratory judgment action pursuant to § 4–175. Relying on Republican Party of Connecticut v. Merrill, 307 Conn. 470, 55 A.3d 251 (2012), the plaintiffs argue that the plain language of § 4–175 does not impose any exhaustion requirement beyond first seeking a declaratory ruling
from the administrative agency pursuant to § 4–176, a requirement with which they had complied. The plaintiffs argue that the trial court improperly imported a nonexistent exhaustion requirement into the text of § 4175, which contravened the purpose of that statute by requiring them to risk their licenses by “proceed[ing] in their business without knowing the answer to ... vitally important questions” about the application of the governing statutes and regulations to their factual circumstances.
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