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Holden v. Department of Commerce and Insurance

Court of Appeals of Missouri, Western District, First Division

December 10, 2019

MICHAEL HOLDEN, Respondent,
v.
DEPARTMENT OF COMMERCE AND INSURANCE f/k/a DEPARTMENT OF INSURANCE, FINANCIAL INSTITUTIONS AND PROFESSIONAL REGISTRATION, Appellant.

          Appeal from the Circuit Court of Cole County The Honorable Jon E. Beetem, Judge.

          Before: Thomas H. Newton, P.J. and Alok Ahuja and Thomas N. Chapman, JJ.

          ALOK AHUJA, JUDGE.

         The Director of the Department of Commerce and Insurance (the "Department") issued an order refusing to license Michael Holden as a non-resident title insurance producer.[1] Holden petitioned for review of the Department's decision by the Administrative Hearing Commission (the "AHC" or "Commission"). After the AHC upheld the Department's decision, Holden petitioned the Circuit Court of Cole County for judicial review. His petition alleged that the licensing proceeding constituted a "contested case" which was reviewable under § 536.100.[2] The circuit court reviewed the licensing decision based on the record created before the Commission. Based on that record, and the briefing and oral argument of the parties, the circuit court found the AHC's decision was arbitrary and capricious, unauthorized by law, and violated Holden's due process rights. The circuit court remanded the case to the AHC for further proceedings. The Department appeals.

         We conclude that the licensing proceeding at issue here is properly characterized as a non-contested case; it is not subject to judicial review as a contested case. Because the characterization of the proceeding as contested or non-contested fundamentally alters the procedures for judicial review in the circuit court and on appeal, we vacate the circuit court's judgment, and remand the case to the circuit court with instructions that it grant Holden leave to amend his petition to seek review of a non-contested case pursuant to § 536.150.

         Factual Background

         Michael Holden was a licensed Missouri insurance agent from 1990 to January 1, 2003, when his license was converted to a title insurance producer license. Holden's insurance producer license remained active until he cancelled or surrendered it in 2008.

         On May 4, 2009, Holden submitted an application with the Department for a non-resident title insurance producer license (at that time, Holden was residing in South Dakota). The Department issued an order refusing Holden a license. The Department found that Holden's application had failed to disclose his past employment as President of Guaranty Land Title Insurance, Inc., and had failed to disclose three voluntary forfeiture agreements Guaranty entered into when Holden was employed by Guaranty (two of which he signed as its President). The Department also found that Holden had violated state law by transacting business as an insurance producer without a license in 2008 and 2009.

         Holden appealed the Department's order concerning his 2009 application to the AHC. The Commission found that the Department had cause to deny Holden's 2009 application under § 375.141.1(1) and (2), on the basis that Holden had previously violated state law, and that he had intentionally provided materially incorrect, misleading, incomplete, or untrue information in the application. Holden sought judicial review of the AHC's decision in the Circuit Court of Cole County, which affirmed. Holden then unsuccessfully appealed to this Court. Holden v. Dir. of Dep't of Ins., Fin. Institutions & Prof'l Registration, No. WD77955, 470 S.W.3d 390 (Mo. App. W.D. Sept. 8, 2015) (mem.).

         While Holden's appeal concerning his 2009 application was pending in this Court, he submitted a second application to the Department for the same nonresident title insurance producer license in October 2014. Unlike his 2009 application, Holden's 2014 application disclosed his previous employment as President of Guaranty Land Title Insurance from 1990 to 2008, as well as the three voluntary forfeiture agreements cited by the Department and AHC in denying the 2009 application. The 2014 application also reported information concerning Holden's work in the insurance industry since 2009.

         Notwithstanding the updated information and additional disclosures in the 2014 application, the Department again refused to issue Holden a non-resident title insurance producer license. In denying the 2014 application, the Department relied on the same underlying grounds that supported its earlier license denial: that Holden had intentionally provided materially incorrect, misleading, incomplete, or untrue information in the 2009 application; that he had attempted to obtain a license in 2009 through material misrepresentation or fraud, due to his nondisclosure of his full employment history and the voluntary forfeiture agreements; and that he had violated state insurance law by acting as an insurance producer without a license.

         Holden again sought review by the AHC. The Department filed a motion for summary decision, arguing that the uncontested facts showed that it had cause to deny Holden's 2014 application. Holden responded by arguing that the Department was required to decide whether to grant or deny the 2014 application based on the merits of the 2014 application itself, and that the factual findings supporting the Department's denial of the 2009 application could not provide cause to deny the 2014 application, at least without consideration of intervening events.

         The AHC granted the Department's motion for summary decision, and found that the Department had cause to deny Holden's 2014 application. The AHC concluded that collateral estoppel applied because the issues raised were the same as those litigated in connection with Holden's 2009 application. According to the Commission, the findings from the 2009 proceeding established that: (1) Holden had intentionally provided materially incorrect, misleading, incomplete, or untrue information in his 2009 application by misrepresenting his employment history and by failing to disclose several voluntary forfeiture agreements; and (2) Holden violated state insurance law in 2008 and 2009 by acting as an insurance producer without a license. The AHC concluded that, under these established facts, the Director had cause to refuse Holden a license under § 375.141.1(1) and (2).

         Holden filed a petition for judicial review in the Circuit Court of Cole County. The petition requested review of a contested case pursuant to § 536.100. As is typical in review proceedings involving contested cases, the circuit court considered the case on the record developed before the AHC, and took no additional evidence. The circuit court entered its judgment on December 26, 2018. The judgment found:

The gravamen of [Holden]'s complaint is that the [Department] sought and the AHC sustained a denial of [Holden]'s second application for an Individual Insurance Producer License without consideration of [Holden]'s conduct and potential rehabilitation since the denial of his 2009 application. In that the relevant statutes authorize neither a lifetime ban nor prohibit successive applications, the decision to do so was ...

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