Purnell v. Department of Insurance, N16A-10-001 JRJ

Background

John Purnell, a Delaware-licensed bail agent, was accused by the Delaware Department of Insurance of violating advertising and licensing provisions after maintaining www.delawarebailbonds.com and as general agent for sub-agents that caused insurer Bankers Insurance Company significant losses.
Department filed an administrative Complaint alleging: unregistered trade name and missing license info on the website (18 Del. C. § 4350(e)), misleading advertising (18 Del. C. § 2304(2)), and that Purnell no longer met licensure criteria for incompetence/untrustworthiness/financial irresponsibility (18 Del. C. § 4333(c)(3)h).
A Hearing Officer held a February 17, 2016 hearing; evidence included screenshots of the website and Bankers’ documentation of over $300,000 in losses and a Florida judgment against Purnell. Purnell appeared pro se and did not raise timely transcript or evidentiary objections.
Hearing Officer recommended license revocation (but no fine). The Commissioner remanded on limited issues, then adopted the findings, revoked Purnell’s license, and imposed a $4,000 joint-and-several fine (three $500 fines for advertising violations and a $2,500 fine tied to § 4333).
On review, the Superior Court affirmed the findings and license revocation but reversed the $2,500 fine tied to § 4333 as beyond the Commissioner’s statutory authority, leaving the three $500 advertising fines intact.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Sufficiency of record / missing audio/transcript accuracy	Transcript incomplete; lack of audio spoliation prevents proper review	Court reporter produced certified stenographic transcript; no timely objections below; APA does not require retained audio	Record sufficient; appellate review permitted; transcript certified and adequate
Due process: alleged misrepresentation about hearing formality	DAG Willey told Purnell’s assistant the hearing was "informal," so Purnell was misled and deprived of rights	Notice of Hearing and affidavit from Department paralegal show hearing was described as formal; Purnell had full notice and opportunity	No due process violation; substantial evidence supports finding DAG Willey did not mislead Purnell
Due process: failure to provide evidence pre-hearing / denied recess	Department should have produced exhibits before hearing; refusal to grant recess prejudiced Purnell	APA does not guarantee formal discovery in administrative hearings; notice was sufficient; Hearing Officer offered time to review exhibit and Purnell declined	No violation; denial of continuance/recess was not an abuse of discretion
Evidentiary rulings: website screenshots & Bankers losses	Screenshots were incomplete/misleading; Bankers litigation in Florida bars use of its loss evidence (res judicata/privity)	Market conduct examiner personally retrieved screenshots and tied site to Purnell; Bankers action does not preclude administrative consideration of conduct	Admission of screenshots and Bankers documentation proper; res judicata inapplicable; substantial evidence supports findings
Penalty authority: $2,500 fine tied to § 4333	Commissioner lacked statutory authority to fine for failure to meet licensing-eligibility criteria	General penalty authority § 329(a) permits fines for Insurance Code violations (Department conceded it did not seek fine under § 4333)	$2,500 fine reversed as beyond statutory authority; license revocation affirmed; three $500 advertising fines upheld

Key Cases Cited

Richardson v. Bd. of Cosmetology & Barbering, 69 A.3d 353 (Del. 2013) (administrative proceedings require a record from which a verbatim transcript can be prepared)
Olney v. Cooch, 425 A.2d 610 (Del. 1981) (standard for appellate review of administrative fact-finding)
Oceanport Indus., Inc. v. Wilmington Stevedores, Inc., 636 A.2d 892 (Del. 1994) (definition of substantial evidence)
Betts v. Townsends, Inc., 765 A.2d 531 (Del. 2000) (doctrine of res judicata described)