Charles E. Cunningham v. Tennessee Department of Commerce And Insurance, Insurance Division
M2016-02231-COA-R3-CV
| Tenn. Ct. App. | Sep 11, 2017Background
- Charles E. Cunningham was a Tennessee-licensed insurance producer who operated Cunningham Insurance, LLC; his license was revoked after administrative proceedings.
- In Dec. 2009 Cunningham received two checks from ABC Services (total ≈ $14,000) made payable to Travelers for workers’ compensation and general liability coverage but deposited them into his business account and failed to remit premiums to Travelers.
- Travelers issued policies that were later canceled for nonpayment in Feb. 2010; Cunningham provided ABC fraudulent documentation and told ABC the policies remained in effect.
- Travelers reinstated coverage and reimbursed ABC after learning of the mispayment, sought repayment from Cunningham, and terminated his appointment when he failed to remit (including issuing a check that bounced).
- The Department of Commerce and Insurance (Division) charged Cunningham with six statutory violations; an ALJ found violations, the Commissioner adopted the findings, revoked Cunningham’s license, and imposed an $18,000 civil penalty; the Chancery Court affirmed and this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Commissioner erred in finding Cunningham committed six statutory violations | Cunningham contended the Division failed to prove misappropriation, intentional misrepresentation, unfair trade practice, dishonest/fraudulent practices, or breach of fiduciary duty | Division argued documentary and testimonial evidence (deposited checks, canceled policies, fraudulent declarations, bounced repayment check, Travelers’ notices) established the violations | Affirmed: substantial and material evidence supported the ALJ/Commissioner findings of six violations |
| Whether the penalty (license revocation and $18,000 fine) was proper | Cunningham argued penalties were excessive or unsupported | Division argued willfulness and pattern of misconduct justified revocation and civil penalties under Tenn. Code provisions | Affirmed: sanction within statutory authority and not arbitrary or capricious; $18,000 penalty and revocation upheld |
Key Cases Cited
- Parker v. Shelby Cty. Gov’t Civ. Serv. Merit Bd., 392 S.W.3d 603 (Tenn. Ct. App. 2013) (review of administrative contested-case decisions under Tenn. Code Ann. § 4-5-322)
- Gluck v. Civ. Serv. Comm’n, 15 S.W.3d 486 (Tenn. Ct. App. 2000) (standards for limited judicial review of administrative findings)
- City of Memphis v. Civ. Serv. Comm’n of City of Memphis, 216 S.W.3d 311 (Tenn. 2007) (noting which § 4-5-322(h) grounds relate to evidentiary sufficiency)
- Mosley v. Tenn. Dep’t of Commerce & Ins., 167 S.W.3d 308 (Tenn. 2004) (definition and application of "substantial and material" evidence standard)
- Jackson Mobilphone Co. v. Tenn. Pub. Serv. Comm’n, 876 S.W.2d 106 (Tenn. Ct. App. 1993) (guidance on reviewing administrative decisions as arbitrary, capricious, or unsupported)
- McClellan v. Bd. of Regents of State Univ., 921 S.W.2d 684 (Tenn. 1996) (deference to administrative sanctions when supported by findings)