Opinion ID: 2318562
Heading Depth: 2
Heading Rank: 2

Heading: Enter the Zappone Factors

Text: The Insurance Article is composed of nearly thirty diverse titles, ranging from Health Insurance to the Slavery Era Insurance Policy Reporting. There are a vast amount of provisions, spread over multiple titles, that apply just to title insurers, like Huntington. No doubt the General Assembly created a comprehensive, if not complex, regulatory and remedial scheme (though, some may find the word labyrinthine a fairer description). See Zappone, 349 Md. at 64, 706 A.2d at 1070 (A very comprehensive administrative remedial scheme is some indication that the Legislature intended the administrative remedy to be primary....). The question, however, is whether that scheme is sufficiently comprehensive, such that the Legislature displayed an intent for claims, like Carter's (which allege violation of Title 27) to proceed first through the MIA. In Zappone, we discussed the regulatory and remedial provisions of [Title 27]. Zappone, 349 Md. at 67, 706 A.2d at 1071. Although we described them as somewhat comprehensive, we found that they were not so all-encompassing as to preclude resort to a fully independent common law remedy.... Id. (emphasis added). As explained above, we saw § 27-103(e) as an escape valve for some claimants, who, under an all-inclusive and comprehensive statutory scheme, otherwise may have to forsake or abate their common law claims and pursue relief through the statute. Thus, in Zappone, we considered whether the comprehensiveness of the administrative remedy forced a consumer with a recognized independent tort remedy into an administrative adjudication, via application of the doctrine of primary jurisdiction. See Zappone, 349 Md. at 50, 706 A.2d at 1062-63. In the present case, however, the question is quite distinctwhether the comprehensiveness of the statute allows a consumer, with a claimed statutory violation, to pursue directly a judicial remedy in a court of law merely by characterizing or recasting the regulatory violation as a common law claim. As elucidated further infra, we find that the Legislature evinced an intentin the sophistication of the framework of prohibited acts and remedial salves that is the Insurance Article (and in the other Zappone factors)that claims dependent on the Article, in that they allege and depend on a statutory benchmark violation, should be considered first by the administering agency. Thus, while the Insurance Article may suggest that the administrative remedy is merely concurrent for truly and fully independent common law claims, it suggests a primary jurisdictional grant for claims alleging what amounts to purely statutory violations. The does not relieve language in § 27-103(e) does not compel a different conclusion. In the current context, it puts violators on notice that he/she/it may be responsible for additional sanctions, despite the receipt of a cease and desist order. By implication, it recognizes also that there may be proceedings leading up to those additional sanctions. It does not resolve, however, whether the proceedings, in the first instance, should be administrative or judicial in nature, depending on the nature of the claim as explicated in a complaint. [12]
Carter impresses upon us that the MIA construed in Zappone its legislative grant of jurisdiction as concurrent. Reviewing the MIA's Zappone amicus brief, however, we found no instance where the MIA addressed the controversy before this Court. As noted above, the issue in Zappone was whether the Commissioner and the court have concurrent jurisdiction to hear a claim, arising out of conduct which is both prohibited by the Insurance [Article] and... [the] common law.... Brief for Maryland Insurance Administration, Zappone, at 10. More illuminating is a relatively recent amicus brief (brought to our attention by Huntington) where the MIA addressed whether an individual must first exhaust available administrative remedies before seeking injunctive relief in court, for a claim arising solely from Maryland's comprehensive statutory scheme for the regulation of insurance.... Brief for Maryland Insurance Administration, as Amicus Curiae Supporting Appellee, Med. Protective Co. v. Bottiglieri, No. 1826 (Md.App. Jan. 14, 2008), at 1. The MIA concluded that [w]hen an administrative process is available to a litigant for the violation of a statutory obligation, that process must be pursued and exhausted before judicial relief may be sought. Brief for Maryland Insurance Administration, Bottiglieri, at 15. The agency quoted from Muhl, 313 Md. at 480-81, 545 A.2d at 1330: Where the General Assembly has provided a special form of remedy and has established a statutory procedure before an administrative agency for a special kind of case, a litigant must ordinarily pursue that form of remedy and not bypass the administrative official. So strong is this public policy that this Court will, sua sponte, vacate judgment and order an action dismissed where the litigants have not followed the special statutory procedure. (Citations omitted.) Once we explain, in greater detail infra, why we find that Carter alleges in his complaint a violation of a statutory obligation, as opposed to a truly and fully independent common law claim, we will be able to say fairly that, for such violations, the General Assembly has provided a special form of remedy.... Therefore, the longstanding and commonsensical principle of first pursuing that form of remedy should be applied in this case.
We consider next the dependence of Carter's claims, as framed by him, upon the Insurance Article. Although Carter says that he is pursuing simply his common law right to retrieve money that was paid improperly, he justifies the basis for recovery by alleging a violation of a statute. The causes of action in Zappone and Mardirossian were treated as common law in nature because they existed without an essential underpinning found in the Insurance Article. See Zappone (stating that the Insurance [Article violation] was not the only recognizable cause of action; [i]nstead ... the plaintiff[ ] set forth recognized common law causes of action sounding in deceit and negligence); Mardirossian, 376 Md. at 648, 831 A.2d at 65 (establishing, as a necessary predicate in the analysis, that an oral contract to provide insurance was enforceable by specific performance under Maryland common law )(emphasis added). In its substantive entirety, Carter's complaint alleged that: 49. As set forth above, [Huntington] assessed and collected premiums for title insurance in amounts exceeding the rates that the principal of Huntington ... [( i.e., Stewart)] had filed with the [MIA]. 47. By doing so, [Huntington] violated Maryland Insurance [Article] § 27-216 and has come into the possession of money in the form of premium payments for title insurance that it had, and has[,] no right to at law or in equity. 48. It would be inequitable for [Huntington] to retain any such monies that it had no legal right to charge and [Carter] seeks to recover that portion of the excessive premium that [Huntington] retained for itself in its contract with Stewart. 49. As a consequence, [Carter] and the members of the [c]lass have been damaged. In its purest form, Carter's cause of action alleges a statutory violation, not a fully independent common law claim. Nonetheless, Carter avers that his cause of action is independent of the statute, based on a legal fiction recognized in Dua (2002), Williar v. Baltimore Butchers' Loan & Annuity Ass'n, 45 Md. 546 (1877), and Scott v. Leary, 34 Md. 389 (1871). In Dua, we stated, in a footnote, that: Our cases have made it clear that an action to recover excess interest, even when the applicable legal interest rate is set by statute, is a common law action. Williar [45 Md. at 559] ([A] suit ... to recover money which had been paid by the plaintiff upon a usurious contract, in excess of the legal rate of interest .... was not conferred by the Code, ... but existed at common law); Scott [34 Md. at 394] (It is undeniable that at common law a party who has paid excessive interest may recover it back in an action for money had and received[.]). In addition, the proper legal rate of interest [in the present case] was not set by statute but was set by Article III, § 57, of the Maryland Constitution[, which states that [t]he Legal Rate of Interest shall be Six per cent per annum, unless otherwise provided by the General Assembly.]. In Maryland, an action to enforce state constitutional rights is a recognized common law cause of action. Widgeon v. Eastern Shore Hosp. [ Ctr. ], 300 Md. 520, 479 A.2d 921 (1984). 370 Md. at 632 n. 11, 805 A.2d at 1077 n. 11 (emphasis added). Read in context, it is evident that the Dua footnote is dicta. At the time, we were responding to the suggestion that a certain cause of action was statutory and, therefore, unprotected by the Maryland Constitution as a vested right. We dispatched this argument with a clear statement that a vested rights analysis applies to both common law and statutory causes of action. Dua, 370 Md. at 632, 805 A.2d at 1077. We then addressed in the footnote, and superfluously at that, whether the plaintiff's cause of action was statutory actually. There are multiple reasons why this footnote's persuasive value, for present purposes, is doubtful. First, the cases cited there, Williar and Leary, concerned statutory rates of interest for purposes of commercial law, not premiums and jurisdictional issues in the context of insurance law, like the present case. Second, Williar and Leary both involved a six percent interest rate that was set by statute and Article III, § 57 of the Maryland Constitution. Thus, our conclusion that a claim to recover excess statutory interest existed at common law was unnecessary. Finally, in Dua, we did not hang our hat actually on the hundred-year-old opinions in Williar and Leary. Rather, we underscored that the proper legal rate of interest, in fact, was established by the Maryland Constitution, and an independent action to enforce a constitutional right was recognized at common law. Dua, 370 Md. at 632 n. 11, 805 A.2d at 1077 n. 11. Aside from these cases, there is little support for the general, unnuanced proposition that allegations based solely on a statutory violation are separate, distinct, and fully independent of the assertedly violated statute. More consistent over time has been our oft-repeated sentiment that, for certain kinds of wrongs, the Legislature established a statutory procedure and remedy, through which claimants ordinarily must seek to redress the wrong.... Agrarian, Inc. v. Zoning Inspector of Harford County, 262 Md. 329, 332, 277 A.2d 591, 592 (1971). Such is the case here. Carter points to our overruling in Zappone of Vicente v. Prudential Insurance Co. of America, 105 Md.App. 13, 658 A.2d 1106 (1995), to support his position that claims reliant upon a statute may co-exist independently at common law. In Vicente, the agent of a health insurer told a potential customer that the health-insurer principal was licensed to sell insurance in Maryland and ... met [certain statutory] capitalization requirements.... Zappone, 349 Md. at 57, 706 A.2d at 1066. After realizing that these were not accurate representations, the customer sued the health insurer agent for fraud and negligent misrepresentation. See Vicente, 105 Md.App. at 15, 658 A.2d at 1107. The Court of Special Appeals held that the customer had to proceed initially through the MIA. See id. After conducting our analysis in Zappone and articulating the distinction among exclusive, primary, and concurrent jurisdiction, we stated, without further discussion, that the above-summarized principles .... [make] it ... clear that the Court of Special Appeals erred in Vicente ..., and that case is overruled. Zappone, 349 Md. at 66, 706 A.2d at 1070-71. By overruling Vicente, we did not mean to suggest that claims based on the violation of a statute somehow may thrive outside the statute in all instances. Indeed, in Vicente, the customer was concerned not that the Insurance Article required the health insurer to be licensed and capitalized, but that the agent lied to the customer about these details. The Insurance Article, in other words, was not the grounding of the customer's grievances. The same cannot be said in the present case. Carter does not allege that Huntington promised (in either an oral or written contract) to charge a specified amount, but failed to do so. Rather, he complains, clearly and solely, that Huntington charged a rate in excess of the MIA-approved schedule, irrespective of whether that schedule became part of some unspecified oral or written contract. This is a statutory, not contractual, claim. See Arthur, 569 F.3d at 161 ([P]laintiffs have suggested no reason other than a violation of the Insurance [Article] that [the insurer] would be liable to them under a claim for money had and received.)
Lastly, we face conflicting arguments over the dependence of a merits analysis of Carter's claim upon the exercise of the MIA's expertise. Carter argues that the Manual of Charges describes a simple test for whether a homeowner qualifies for the mortgagee reissue chargethe homeowner must have had the title to the property insured as owner, within the prior ten (10) years.... Huntington cautions, however, that there is more to the analysis than meets the eye. At oral argument, Huntington claimed that the statute plays some part in this calculus, arguing [i]f one starts with the statute, it says if you qualify for this reduced rate, then you get it. The word `qualification' is a matter within the ken of the [MIA].... After a thorough review of the Insurance Article, we found no support for this averment. In hopes of illuminating its point, Huntington described a hypothetical example, where a couple is divorced five years after purchasing title insurance, and the husband remarries five years later and decides to refinance with his new spouse. According to Huntington, the husband and new mate may not qualify automatically for the reissue rate. We look somewhat wryly at Huntington's unsupported, but strenuously-made avouchments. Nonetheless, standing in the lengthy shadow of the multi-volume Insurance Article, we are reluctant to say confidently that, in practice, unique situations will not arise, requiring agency expertise to help determine whether a homeowner/borrower qualifies for the reissue rate. Moreover, we appreciate that agency expertise could play a role in other areasmost notably, in deciding whether [a] person [or insurer] ... willfully collect[ed] a premium or charge for insurance in violation of § 27-216(b). [13] In addition, presumably, the General Assembly would not have begun many of the penalty provisions with the phrase [i]f the Commissioner finds unless it intended the Commissioner to exercise his or her institutional expertise in fashioning an appropriate remedy in certain casesone which not only makes the consumer whole, but also advances the cause of insurance regulation in this State. Lending further support to the notion that the Legislature wanted the Commissioner to exercise his or her expertise in such cases is the fact that many of the remedies under the statute are unavailable traditionally in law or equity. Indeed, while the Insurance Article authorizes the Commissioner to revoke a license to sell insurance, for example, there is no evidence that such a remedy would exist in a court of this State. The General Assembly appears to have enacted the Insurance Article not only to create such remedies (which were necessary assumedly for a healthy insurance environment), but also to place their judicious allotment in the hands of the Commissioner. Converge Servs. Group, LLC v. Curran, 383 Md. 462, 485, 860 A.2d 871, 884 (2004) (There is little doubt that a reviewing court would be in a better position to render global and appropriate relief in this dispute were it to have the benefit of the Division's final view on the panoply of claims.). In these circumstances, i.e., for this type of statutory violation claim, the Zappone factors augur for the primary jurisdiction presumption. Indeed, they reveal an affirmative legislative grant to the MIA of such jurisdiction in such cases.