IN THE COURT OF APPEALS OF TENNESSEE

AT NASHVILLE

September 9, 2008 Session

JOYCE TRAIL v. STATE OF TENNESSEE, DEPARTMENT OF

COMMERCE AND INSURANCE, (Insurance Division)

Direct Appeal from the Chancery Court for Davidson County

No. 06-1146-IV Hon. Richard H. Dinkins, Chancellor

No. M2008-00062-COA-R3-CV - Filed November 5, 2008

The Commissioner revoked appellant’s license to sell insurance and fined her $7,000.00. Appellant

petitioned for review by the Trial Court, who affirmed the determination made by the Commissioner.

On appeal, we affirm the Judgment of the Trial Court.

Tenn. R. App. P.3 Appeal as of Right; Judgment of the Chancery Court Affirmed and

Remanded.

HERSCHEL PICKENS FRANKS, P.J., delivered the opinion ofthe Court, in whichD.MICHAEL SWINEY,

J., and SHARON G. LEE, SP.J., joined.

Robert L. Huskey, Manchester, Tennessee, for appellant, Joyce Trail.

Robert E. Cooper, Jr., Attorney General and Reporter, Michael E. Moore, Solicitor General, Laura

T. Kidwell, Assistant Attorney General, and Sarah A. Hiestand, Senior Counsel, Nashville,

Tennessee, for appellee, State of Tennessee, Department of Commerce and Insurance.

OPINION 

Appellant brought this action to review the Final Decision of a State Administrative

Agency, revoking her insurance license, and fining her $7,000.00. 

The administrative record was filed with the Trial Court, and a hearing was held

wherein the attorneys argued their positions. 
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The administrative record sets forth the Administrative Law Judge’s decision and

findings. James Dunlap had testified before the ALJ that he and his mother went to appellant’s

office to obtain insurance, and he wrote a check for the down payment in the amount of $316.75, on

November 15, 2001. He testified that he did not receive an insurance policy, and that the check did

not clear his bank account until February 8, 2002. He did not remember receiving any bills from the

insurance company, but he wrote a check to the insurance agency on April 5 for $233.99, and wrote

checks for the same amount in May and June of that year. 

Dunlap identified an insurance card that he was given by appellant, and testified that

it stated the effective date was 12/15/01, and expired 12/15/02, and listed the insurance company as

Tennessee Insurance Company. He testified that he was involved in an accident in February 2002,

and reported it to appellant.

The record reveals that after the accident State Farm Insurance Company was seeking

to recover $5,000.00 from Dunlap as a result of the accident, and that Dunlap hired an attorney and

filed a lawsuit against appellant and PGA Insurance Company, and as a result, appellant settled with

him for $7,000.00 which covered the claim by State Farm and attorney’s fees. Also appellant

eventually sent two checks to Dunlap to refund his premiums, but he did not cash them on the advice

of counsel.

The ALJ found that, pursuant to Tenn. Code Ann. §56-6-112, the Commissioner

could suspend, revoke, or refuse to reissue an agent’s license for improperly taking or

misappropriating an insured’s money, for using fraudulent, coercive, or dishonest practices in the

conduct of business, or for demonstrating incompetence, untrustworthiness, or financial

irresponsibility in the conduct of business. The ALJ found the State had met its burden of proof in

showing that appellant improperly withheld or misappropriated Dunlap’s funds on eight separate

occasions, which was to his detriment because the money was not passed to the insurance company,

PGA, which resulted in Dunlap not having insurance. Further, that while accepting payments from

Dunlap for insurance coverage she never procured, she issued a fraudulent insurance card to Dunlap.

The ALJ found appellant’s dishonesty was also shown by the fact she never disclosed the lack of

policy even after Dunlap had experienced an accident. The ALJ revoked appellant’s license, and

assessed the fine of $7,000.00. 

Following arguments before the Trial Court, the Trial Court filed a Memorandum

Opinion and Order, and noted that pursuant to Tenn. Code Ann. §4-5-322, his review was confined

to the administrative record, and that the Court could only reverse or modify the agency’s decision

if the decision was in violation of constitutional/statutory provisions, in excess of the agency’s

authority, made upon unlawful procedure, arbitrary or capricious, or unsupported by substantial and

material evidence. 

The Court found there was substantial and material evidence to support the ALJ’s

finding that appellant improperly withheld or misappropriated money to the detriment of Dunlap

from November 2001 through October 2002, which resulted in Dunlap having no coverage when he
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reasonably expected to have coverage. The Court also found there was substantial and material

evidence to support the ALJ’s finding that appellant was fraudulent, dishonest and untrustworthy in

her conduct by accepting paymentsfrom Dunlap for an insurance policy she never procured for him

and by issuing him a fraudulent proof of insurance card. The Court affirmed the finding that

appellant violated Tenn. Code Ann. §56-6-112 (a)(4) & (8). 

The Trial Court noted that it could only examine the sanction to determine if it was

unwarranted in law or without justification in fact, and he determined that the sanctions imposed in

this case were warranted and justified. Appellant on appeal, raises these issues:

1. Was the Commission’s decision characterized by abuse of discretion or

clearly unwarranted exercise of discretion, and further was the decision and

degree of punishment rendered commensurate with the evidence?

2. Did the Trial Court err in upholding the Commissioner’s decision?

As we have previously explained:

Tenn.Code Ann. § 4-5-322(h) addresses the narrow scope of judicial review of an

administrative agency decision as follows:

The court may affirm the decision of the agency or remand the case for

further proceedings. The court may reverse or modify the decision if the

rights of the petitioner have been prejudiced because the administrative

findings, inferences, conclusions or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Arbitrary or capricious or characterized by abuse of discretion or clearly

unwarranted exercise of discretion; or

(5) Unsupported by evidence which is both substantial and material in the

light of the entire record.

In determining the substantiality of evidence, the court shall take into account

whatever in the record fairly detracts from its weight, but the court shall not

substitute its judgment for that of the agency as to the weight of the evidence on

questions of fact.
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The term “substantial and material evidence” has been defined as “ ‘such relevant

evidence as a reasonable mind might accept to support a rational conclusion and such

as to furnish a reasonably sound basis for the action under consideration.’” This

Court has also described it as requiring “ ‘something less than a preponderance of the

evidence . . . but more than a scintilla or glimmer.’” Judicial review of an

administrative agency's decision under the “substantial and material evidence”

standard, however, subjects the agency's decision to close scrutiny.

When reviewing a trial court's review of an administrative agency's decision, this

Court essentially is to determine “whether or not the trial court properly applied the

... standard of review” found at Tenn. Code Ann. § 4-5-322(h). This Court addressed

its judicial review of evidence contained in the administrative record as follows:

While this Court may consider evidence in the record that detracts from its

weight, [this] [C]ourt is not allowed to substitute its judgment for that of the

agency concerning the weight of the evidence....

Judicial review of an agency's construction of a statute and its application of the

statute to the facts of the case is a determination involving a question of law.

Accordingly, this Court's review of such matters is de novo without any presumption

of correctness. With respect to an agency's interpretation of its own rules and

regulations, courts afford deference and controlling weight to such determinations

unless plainly erroneous or inconsistent with the regulation.

Jones v. Bureau of TennCare, 94 S.W.3d 495 (Tenn. Ct. App. 2002)(citations omitted). 

In this case, the Court found there was substantial and material evidence to support

the ALJ’s finding that appellant improperly withheld or misappropriated money to the detriment of

Dunlap from November 2001 through October 2002, which resulted in Dunlap having no coverage

when he reasonably expected to have coverage. The Court also found there was substantial and

material evidence to support the ALJ’s finding that appellant was fraudulent, dishonest and

untrustworthy in her conduct by accepting payments from Dunlap for an insurance policy she never

procured for him and by issuing him a fraudulent proof of insurance card. The Trial Court affirmed

the finding that appellant violated Tenn. Code Ann. §56-6-112 (a)(4) & (8). 

The evidence in the record supports these findings. There was substantial proof that

appellant had numerous opportunities to discover and disclose the lack of coverage to Dunlap, but

failed to do so, but instead, kept representing that he had coverage and accepting payments for the

same, when she had reason to know that no coverage existed. She supplied him with an insurance

card with a fictitious policy number on it, and failed to follow up on numerous inquiries about the

lack of a policy being issued. Appellant was unable to support any of her excuses for her behavior

with valid documentation, and the ALJ found her testimony to be lacking in credibility. For all of

the foregoing reasons, the ALJ’s findings are supported by substantial and material evidence, and
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in affirming the ALJ’s Judgment, the Trial Court applied the proper standard of review in this case.

We affirm the Judgment of the Trial Court and remand, with the cost of the appeal

assessed to Joyce Trail. 

_________________________

HERSCHEL PICKENS FRANKS, P.J.