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Commissioner New Jersey Dep't of Banking and Insurance v. Budge

July 29, 2009


On appeal from the New Jersey Department of Banking and Insurance, Agency Ref. No. E04-131.

Per curiam.


Telephonically argued May 27, 2009

Before Judges Carchman, Sabatino and Simonelli.

Steven Budge, pro se, appeals a final agency decision of the Commissioner of the Department of Banking and Insurance ("the Department") revoking Budge's license as a public adjuster and imposing various fines and penalties. We affirm.

The Commissioner's action against Budge stemmed from allegations that he violated the New Jersey Insurance Fraud Protection Act ("the IFPA"), N.J.S.A. 17:33A-1 to -30, in connection with insurance claims submitted for damage to the roof of a home owned by Budge's aunt and uncle, Frank and Rose Land. The Lands hired Budge to represent their interests in presenting their insurance claims for the roof damage to their homeowners' carrier, Liberty Mutual Insurance Company ("Liberty Mutual").

We need not elaborate upon the underlying facts, as they already have been set forth in the related litigation with Liberty Mutual, in an opinion of the Supreme Court, see Liberty Mut. Ins. Co. v. Land, 186 N.J. 163 (2006), and in two opinions of this court, see Liberty Mut. Fire Ins. Co. v. Land, Docket No. A-5337/5690-02 (February 23, 2005) and Liberty Mut. Fire Ins. Co. v. Land, Docket No. A-5703-06T2 (March 27, 2009). It will suffice to state the following details about the insurance claims and the related proceedings involving Liberty Mutual.

In December 2000, a neighbor's tree fell on the roof of the Lands' cabin in Highland Lake. The Lands, through Budge, presented claims for property damage to Liberty Mutual totaling $69,338. In investigating the claims, Liberty Mutual discovered that Budge, Mr. Land, and another man had apparently gone on the roof after the tree fell and had attempted to increase the physical damage to the cabin. The neighbor who owned the tree, Joseph Rizzo, observed the men slamming a portion of the fallen tree repeatedly on the roof, causing additional damage to the structure. They also shattered a skylight and bent a television antennae. Rizzo videotaped these activities and supplied a copy of the videotape to Liberty Mutual.

Concluding that the claims of loss had been fraudulently inflated, Liberty Mutual denied coverage and withheld the payment of benefits. It then brought an action against Budge and the Lands in the Law Division, alleging breach of contract and numerous violations of the IFPA. The matter was first tried before a jury in the fall of 2002. That trial resulted in a jury verdict in Liberty Mutual's favor against all three defendants. In the ensuing appeal, we set aside the initial judgment because of various trial errors, including the jury charge on the burden of proof, and remanded the case for a new trial.

Thereafter, the Supreme Court reversed our opinion as to the burden-of-proof issue, and remanded Liberty Mutual's action to the Law Division for the new trial that we had previously directed on other grounds. 186 N.J. at 180-81.

The Liberty Mutual case was tried a second time before a jury in November and December 2006. The second jury also returned a verdict in Liberty Mutual's favor, finding that Budge and the Lands each violated the IFPA. The trial court issued a corresponding final judgment awarding the insurer the sum of $175,302.88, inclusive of attorneys fees, investigative expenses, and treble damages. We affirmed that second judgment against Budge*fn1 in our opinion dated March 27, 2009.

As another consequence of these occurrences, Budge was indicted by a grand jury in February 2003, (Sussex County Indictment No. 03-02-00033) and charged with theft by deception, N.J.S.A. 2C:20-4. On June 6, 2006, Budge was admitted into the Pre-Trial Intervention ("PTI") program under Rule 3:28(c)(2). Budge fulfilled the conditions of PTI and was released from supervision on September 4, 2007. Consequently, the criminal indictment against him was dismissed.

The Department's administrative case against Budge has the following pertinent chronology. On October 19, 2004, the Commissioner issued an Order to Show Cause, No. E04-131, against Budge, alleging that Budge knowingly misrepresented, concealed or failed to disclose any material fact concerning a property damage loss that occurred on December 12, 2000, and that he had intentionally caused or contributed to that loss, in violation of N.J.S.A. 17:22B-14(a)(1), (3), (4), and (5), and N.J.A.C. 11:1-37.14(a)(1)-(5), (13), and (16) (count one). The administrative complaint also alleged that Budge had prepared and submitted a fraudulent insurance claim estimate, knowing that he had intentionally inflicted greater damage to the Lands' property than that which actually existed (count two). Finally, the complaint alleged that Budge had failed to notify the Department about the indictment filed against him, in violation of his reporting obligations under N.J.A.C. 11:1-37.14(a)(10) (count three).

In response, Budge submitted a letter, dated October 28, 2004, denying the allegations set forth in the Order to Show Cause. The Department consequently transmitted the matter to the Office of Administrative Law ("OAL") as a contested case on November 22, 2004. The case was assigned to an Administrative Law Judge, James Faison ("the ALJ").

Budge filed a motion to dismiss the administrative action and various other applications. The parties were to appear before ALJ Faison on May 27, 2005, at which time it was anticipated that the ALJ would issue an order containing his dispositions of Budge's motions, but Budge failed to appear on that date. Thereafter, on June 16, 2005, the ALJ issued Case Management Order #1, which addressed a variety of discovery matters and which also indicated that the pending dispositive motions would be deferred until a later time.*fn2

Subsequently, the ALJ filed Case Management Order #2 on September 15, 2005, "to address certain discovery deficiencies on the part of Respondent [Budge]." The order compelled Budge to furnish certain items within specified time frames, and also scheduled a pre-hearing status conference for January 23, 2006. A computer-generated notice of the conference was transmitted to Budge. Budge failed to appear on January 23, 2006, and the ALJ rescheduled the status conference for February 16, 2006. Budge failed to appear on that rescheduled date as well. As a result, the ALJ returned the case to the Department on February 24, 2006, pursuant to N.J.A.C. 1:1-14.4(a), for "appropriate disposition" in light of Budge's failures to appear.

Budge then wrote a letter to the Department on or about March 2, 2006, stating that he "was not at the [February 16, 2006] hearing . . . due to a court appearance on the same matter in criminal court." Budge added that he was "unaware of the hearing" and claimed that he never received written notice to appear. The address listed on the top of Budge's letter was the same address listed on the computer-generated notice for the February 16, 2006 status conference.

The Deputy Attorney General prosecuting the administrative action responded with a letter to the Commissioner dated June 15, 2006, requesting that the "Commissioner issue an Order remanding this matter to the Office of Administrative Law . . . for the imposition of sanctions and further proceedings." Consequently, the Commissioner issued an order on June 23, 2006, remanding the matter to the OAL and directing that the ALJ "assess the merits of [Budge's] explanation for his non-appearance and to order any action he deems appropriate."

The ALJ scheduled oral argument in the matter for November 15, 2006, and a computer-generated notice of that proceeding was issued to Budge on July 26, 2006. Evidently, Budge failed to appear in the OAL on November 15, causing the ALJ to again issue a notice on November 22, 2006, returning the case to the Commissioner.

As a further response, Budge sent a letter to the Department, the ALJ, and the Deputy Attorney General dated December 10, 2006, with the subject heading "Notice of Reason for Failure[] to Appear." The letter stated, in relevant part, that "[t]he reason that I was not at the hearing on the adjourned date [was] due to a court appearance on the same matter in civil court date of [sic] February 16, 2006 because I was unaware of the hearing [and] I never received written NOTICE to appear, or I would have been the[re]." The letter does not explicitly address the OAL proceeding scheduled for November 15, 2006.*fn3

The Deputy Attorney General sent a letter to the Commissioner on December 22, 2006, requesting that a final decision be rendered and "that the allegations against [Budge] in the Order to Show Cause be deemed admitted."

After various other correspondence was exchanged, the Commissioner sent a letter to the parties on February 9, 2007, requesting that they brief him regarding the application of the so-called "Kimmelman" factors concerning the calculation of an appropriate administrative penalty. See Kimmelman v. Henkels & McCoy, Inc., 108 N.J. 123 (1987). Budge addressed those penalty issues and other subjects relating to the merits of the case in an ensuing responsive letter to the Commissioner, to which the Deputy General replied in his own letter submission.

On June 28, 2007, the Commissioner issued his final decision and order in this case. The Commissioner found that Budge had violated the Public Adjuster's Licensing Act, N.J.S.A. 17:22B-1 to -20, based upon the allegations that "[w]hile licensed and engaged in the business of a public adjuster in this State," Budge "filed a deceptive and misleading property damage loss claim with an insurer on behalf of an insured couple and [also] failed to notify the Commissioner within 30 days of having been indicted on a charge of [t]heft by [d]eception."

The Commissioner's final decision alluded to Budge's repeated failures to appear at several of the dates scheduled for proceedings in the OAL. It also noted the second jury's adverse verdict against Budge in the remanded trial of the Liberty Mutual case, noting that the verdict was "based upon the same incidents and facts alleged in OTSC E04-131 and at issue in this administrative action." Applying principles of collateral estoppel, the Commissioner adopted the jury's determination in the civil action that Budge "knowingly misrepresented, concealed, or failed to disclose material facts regarding a property damage loss that occurred on December 12, 2000 and that Budge knew he had intentionally inflicted greater damage to the property than that which actually existed." Consequently, the Commissioner adopted the complaint's averments that Budge committed violations of the insurance laws, contrary to N.J.S.A. 17:22B-14(a)(1); committed a fraudulent or dishonest act, contrary to N.J.S.A. 17:22B-14(a)(3); and demonstrated incompetency, lack of integrity, bad faith, dishonesty and untrustworthiness to act as an adjuster, ...

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