Opinion
[Case No. 94-13602], [Adversary No. 98-1325], [Adversary No. 96-1410], CIVIL NO. 98-3617 (JBS).
Filed: March 2, 1999
Samuel Mandel, Esq., Moorestown, N.J., and Michael A. Zindler, Esq., Markowitz Zindler, PC, Lawrenceville, N.J., Attorneys for Plaintiff/Appellee Professional Insurance Management.
James S. Rothschild, Jr., Esq., Richard S. Kohn, Esq., Riker, Danzig, Scherer, Hyland Perretti, LLP, Morristown, N.J., Attorneys for Defendant/Appellant The Harleysville Insurance Companies.
Charles X. Gormally, Esq., Carl J. Soranno, Esq., Brach, Eichler, Rosenberg, Silver, Bernstein, Hammer, Gladstone, P.C.. Roseland, N.J., Attorneys for Defendant/Appellant Ohio Casualty Group of Insurance Companies.
OPINION
This matter comes before the Court upon appeals brought by Ohio Casualty Group of Insurance Companies, et al. ("Ohio Casualty"), and Harleysville Mutual Insurance Company, et al. ("Harleysville"), defendants in the underlying action by plaintiffs-appellees Professional Insurance Management ("PIM") and Joseph Schipsi, Sr. before the United States Bankruptcy Court for the District of New Jersey, the Honorable Judith H. Wizmur presiding. PIM, the debtor, is an insurance broker and former agent of Ohio Casualty and Harleysville which filed this adversary action seeking relief for breach of contract and breach of the covenant of good faith and fair dealing by defendants/appellants arising from defendants' termination of PIM as their insurance agent. PIM's two causes of action against each defendant are based on alleged violations of provisions of the Fair Automobile Insurance Reform Act of 1990 ("FAIRA"), N.J.S.A. 17:33B-1, et seq. According to the plaintiff, these violations evidence defendants' bad faith, and that bad faith is the basis of the breach of contract and breach of the covenant of good faith and fair dealing claims.
Defendants/appellants appeal an Order entered on June 22, 1998 in which the Bankruptcy Court denied Harleysville's and Ohio's motion to dismiss the Amended Complaint of July 18, 1996. Appellants argue that the Bankruptcy Court erred in not dismissing the case so that it could be tried first before the New Jersey Commissioner of Banking and Insurance ("Commissioner"), in accordance with a March 11, 1998 ruling in Arthur Degen v. Harleysville Mut. Ins. Co., Superior Ct. of N.J., A.D. Docket No. A-4001-96T2 (March 11, 1998), which purportedly established that the Commissioner has exclusive jurisdiction over common law claims based on alleged violations of FAIRA.
The principal issue presented by this appeal is whether the Bankruptcy Court must abstain from deciding the issue of whether defendants' actions constituted "withdrawals" and violations of the "take all comers" provisions of FAIRA, and instead defer to the Commissioner's eventual ruling on that issue, rather than trying all of the issues in these two causes of action itself. For the reasons stated herein, I affirm the Bankruptcy Court's rulings that Degen did not establish exclusive jurisdiction with the Commissioner and that plaintiffs here were not required to exhaust administrative remedies, but I reverse its determination that plaintiffs are not first required to present the issue of defendants' alleged FAIRA violations to the Commissioner before the Bankruptcy Court rules on plaintiffs' claims if plaintiffs wish to make alleged violations a basis of their common law claims. Accordingly, I affirm the June 22, 1998 Order denying dismissal of the case, and I remand for further consideration in light of this Opinion.
I. BACKGROUND
This case has a long history, and the facts of that history are set out in length in the Bankruptcy Court's May 28, 1998 oral Opinion. In light of the fact that no party challenges that statement, it is not necessary to repeat those facts and procedural history here. Following briefing and oral argument by the parties, the Bankruptcy Court issued an Oral Opinion in this matter on May 28, 1998 and entered an Order denying the motion to dismiss on June 22, 1998.
Pursuant to 28 U.S.C. § 158(a), this Court has jurisdiction to hear appeals from interlocutory orders on the Bankruptcy Court, even without certification from the Bankruptcy Court. 28 U.S.C. § 158(c). Ohio Casualty and Harleysville sought leave to appeal the June 22 Order. Finding that the June 22, 1998 Order "involves a controlling question of law as to which there is a substantial ground for difference of opinion and that immediate appeal from the order may materially advance the ultimate termination of the litigation," 28 U.S.C. § 1292(b), on September 30, 1998, I granted leave to appeal. This Opinion follows from the submissions of the parties as well as oral argument held before me on February 26, 1999.
II. DISCUSSION
A. Arguments Before the Bankruptcy Court and the Opinion
Plaintiffs' Amended Complaint alleges causes of action for breach of contract and breach of the covenant of good faith and fair dealing. While plaintiffs do not seek relief under FAIRA itself, its claims are based on Harleysville's and Ohio Casualty's alleged violations of the "take all comers" provisions of FAIRA, N.J.S.A. 17:33B-15b 17:33B-25, which require insurance companies writing automobile policies in New Jersey to provide insurance to any qualified applicant, without exception. In short, plaintiffs argue that defendants instructed PIM to not submit personal automobile insurance applications to them, in violation of the "take all comers" provisions, and that when PIM continued to submit personal automobile insurance applications, both defendants engaged in a course of action designed to bully PIM into violating FAIRA or risk losing its commissions and contract, ultimately issuing Notices of Termination. (Pls.'-Appellees' Br. at 9-10.) This, plaintiffs argue, was in retaliation for PIM's refusal to violate FAIRA, and it constitutes breach of contract and breach of the covenant of good faith and fair dealing. (Id. at 11.) Thus, while the claims here are couched as common-law ones, a substantial issue in ruling on those claims will be whether Ohio Casualty's and Harleysville's actions violated FAIRA, an issue which requires an interpretation of the "take all comers provisions."
Appellants argued before the Bankruptcy Court that the Amended Complaint should be dismissed because the Appellate Division decision inArthur Degen v. Harleysville Mut. Ins. Co., No. A-4001-96T2 (N.J.Super.Ct. A.D. March 11, 1998), established that the Commissioner has exclusive jurisdiction over claims involving interpretation of FAIRA; in the alternative, appellants argued that the Commissioner at least had primary jurisdiction such that the Bankruptcy Court should abstain from deciding plaintiffs' claims for breach of contract and breach of the covenant of good faith and fair dealing until the Commissioner had an opportunity to decide the statutory interpretation issues upon which the common law claims rest.
The New Jersey Supreme Court denied the Degen plaintiffs' petition for certification. Arthur Degen Ins. Agency, Inc. v. Harleysville Mutual Ins. Co . , 156 N.J. 384 (1998).
The Bankruptcy Court rejected the contention that Degen established exclusive jurisdiction with the Commissioner, and, in a manner tempered by some reservations, declined to abstain in order to let the Commissioner first decide the statutory issues concerning the alleged misconduct of Ohio Casualty and Harleysville under FAIRA. Specifically, the Bankruptcy Court noted that were it a Superior Court which had not yet begun plenary consideration, it would follow Degan's instruction of deference to agency expertise. (Tr. of 5/28/98 at 41:17-23.) However, the Bankruptcy Court determined that because at least a portion of trial had begun as to Ohio Casualty, and because Ohio Casualty and Harleysville could not effectively be severed, it denied the defendants/appellants' motion to dismiss, choosing to retain jurisdiction and interpret FAIRA itself. (Id. at 43:7 — 45:11.)
B. Analysis
Because plaintiffs' case is rooted in New Jersey law, any analysis of the Bankruptcy Court's jurisdiction to entertain these claims must begin with New Jersey law. I must therefore determine whether the New Jersey Supreme Court would allow insurance agents to pursue their common law claims based on FAIRA violations before a court without the Commissioner first determining the issue of FAIRA violations. See Greate Bay Hotel Casino v. Tose, 34 F.3d 1227, 1230 (3d Cir. 1994).
The New Jersey Supreme Court has set up a three-step analysis in making determinations of court jurisdiction in light of agency involvement. First, "[i]f the Legislature vests an administrative agency with exclusive primary jurisdiction, that agency may be the only forum in which a party initially may seek relief." Campione v. Adamar of New Jersey, Inc., 155 N.J. 245, 306-307 (1998) (citing Tose, 24 F.3d at 1230). If such "exclusive primary" jurisdiction, as the New Jersey Supreme Court used that term in Abbott v. Burke, 100 N.J. 269 (1985), has not been vested in an agency, plaintiffs are free to seek relief in the courts. Id. Nonetheless, even if the agency does not have exclusive primary jurisdiction, courts will generally decline to exercise jurisdiction and grant relief where an adequate administrative remedy is available to the parties. Thus, the second step of analysis is whether plaintiffs have exhausted administrative remedies available to them. If such a remedy is available, the parties must exhaust it before seeking relief in the courts. Campione, 155 N.J. at 307. If, however, such a remedy is unavailable, the court must determine, third, whether the agency has primary jurisdiction over an issue involved in the claims, such that even though the court does not lack jurisdiction over theclaim, it should postpone reaching a decision on the claim until the agency has spoken on the issue. Tose, 34 F.3d 1230 n. 5; Campione, 155 N.J. at 308.
The Bankruptcy Court decided that the Commissioner did not have exclusive jurisdiction, that the Bankruptcy Court retained jurisdiction because there were no administrative remedies which plaintiffs were required to exhaust, and that, under the circumstances before the Bankruptcy Court, deference to the agency's primary jurisdiction would be inappropriate. As the following analysis will show, this Court agrees with the first two determinations, but New Jersey law requires a different result on step three.
1. Exclusive Jurisdiction
Defendants/appellants' argument that the Commissioner has exclusive jurisdiction over this claim is based on the decision handed down by the Appellate Division last year in Arthur Degen v. Harleysville Mut. Ins. Co., No. A-4001-96T2 (N.J.Super.Ct. A.D. March 11, 1998), certif. denied, 156 N.J. 384 (1998). This Court and the Bankruptcy Court are bound, absent Supreme Court guidance, to regard Appellate Division opinions as the authoritative statement of New Jersey law. (Harleysville Br. at 7 (citing National-Standard v. Clifton Ave. Corp., 775 F. Supp. 151, 158 (D.N.J. 1991)). An unpublished decision of the Appellate Division, as in the Degen case, does not offer strong precedent. The Bankruptcy Court correctly determined that the Appellate Division's decision in Degen did not establish that the Commissioner has exclusive jurisdiction over claims which involve an interpretation of FAIRA. In fact, Degen established no law at all, but rather deferred to the expertise of the Commissioner under the circumstances of that case.
The facts of Degen are very similar to those presented in the case sub judice. The Degen plaintiffs, insurance agents that produced and serviced automobile insurance policies written by Harleysville, sued Harleysville for an alleged common law wrongful termination based on FAIRA. Degen, No. A-4001-96T2, slip op. at 2 (N.J.Super.Ct. A.D. March 11, 1998). Because of the financial condition of Harleysville-Garden State Insurance Company ("HGS"), the Commissioner, in a confidential order, allowed HGS to "non-renew" the policies that the plaintiffs serviced.Id. Plaintiffs had filed suit in the Chancery Division, which transferred the portion of the complaint relating to the "non-renewals" of policies in light of the Commissioner's order to the Appellate Division. In a separate appeal, the Appellate Division remanded the non-renewal issue to the Commissioner for a statement of reason for the issuance of her confidential order. Id. at 2-3. The Chancery Division transferred the balance of the complaint to the Law Division, which proceeded to dismiss that portion of the case because it believed that only the Commissioner could enforce FAIRA, and not a private party suing in the civil courts.Id. at 3. That ruling led to the appellate decision upon which Ohio Casualty and Harleysville rely in the instant appeal.
In Degen, the Appellate Division noted that only one of the eight plaintiffs in that case had questioned Harleysville's action at the time of termination by complaining to the Department of Insurance. Id. at 4-5. The Department requested information from Harleysville, which responded by giving reasons for terminating the agents. Id. at 5. Apparently, the Department found no violations of FAIRA, as it took no action against Harleysville. The one plaintiff who had questioned Harleysville's actions (Maneely) filed no appeal and, in fact, did nothing further until the Commissioner, three years later, confidentially directed HGS to non-renew policies, including those serviced by plaintiffs. Id. at 6.
The Appellate Division further noted that the Commissioner clearly had treated the earlier complaint as within her jurisdiction and believed that the agency terminations were both justified and possibly approved "as a part of the Commissioner's ongoing supervision of HGS' operation."Id. at 9. The Appellate Division questioned whether plaintiffs could properly pursue a private cause of action, "for a private cause of action can be barred when the Legislature has provided for relief exclusively before an administrative body." Id. at 9-10 (citing Parks v. Pep Boys, 282 N.J. Super. 1, 14-15 (App.Div. 1995). The Court noted that while it ultimately must be the one to determine that issue of law,
we usually defer to the expertise of the agency which administers the legislation in question. In these circumstances, involving ongoing supervision of Harleysville under the FAIR Act, the related question of "nonrenewals" remanded for consideration by the Commissioner, and the Commissioner's prior review of Maneely's complaint, we believe that this case should also be transferred to her for initial review and disposition.Id. at 10 (emphasis added). The Appellate Division further noted that it was not reaching a decision on whether "a civil action can be precluded [by FAIRA's regulatory scheme] even if the Commissioner finds a violation and imposes a sanction. We conclude only that the Commissioner should have been asked to address the issue first in these circumstances." Id. (emphasis added). Accordingly, the matter was transferred to the Commissioner.
It is most clear that the decision in Degen did not establish that the Commissioner has exclusive jurisdiction over any case which would involve an interpretation of FAIRA. The very language of the Appellate Division's opinion emphasizes that it is a general policy to defer to agency expertise and that, because of the particular facts present in that case, deference would be appropriate. Though the appellate court raised the question of whether there was exclusive jurisdiction, it never answered its own question.
Indeed, any determination in Degen that the Commissioner did have exclusive jurisdiction would have been at odds with another Appellate Division decision which was handed down just one month before Degen:Auto-Matic Insurance Agency, Inc. v. Liberty Mutual Ins. Co., Sup. Ct. of N.J., A.D. Docket No. A-3602-96T2 (February 10, 1998). In this unreported case, plaintiffs argued that "defendant's efforts requiring plaintiff to limit its growth, and defendant's ultimate decision to terminate the agreement because of growth, were in violation of the law, specifically . . . FAIRA." Id., slip op. at 11. The Appellate Division itself interpreted the "take all comers" provisions of FAIRA and determined that the Law Division had improperly granted summary judgment to the defendant on the basis of termination at-will provisions in the contract. Id. at 13. Finding that "a rational factfinder could find that a material motivating factor in terminating plaintiff's agreement was that plaintiff did not channel eligible persons away from an insurer or insurance coverage," id., the Appellate Division remanded the case to the Law Division for further proceedings. Id. The importance of this Opinion is that nowhere in it did the Appellate Division indicate that it was uncomfortable interpreting FAIRA's "take all comers" provisions or that the decision was not properly before the law courts because it should instead be before the Commissioner. The Appellate Division simply returned the case to the Law Division for consideration.
The Bankruptcy Court explicitly noted that it was not addressing the Auto-Matic decision because Degen itself did not establish exclusive jurisdiction. (Opinion, Tr. of 3/28/98 at 45.) The impact of that decision, the Court said, would be addressed at trial. ( Id . )
The Court rejects defendants' strained interpretation that the fact that the Appellate Division said "a reasonable factfinder" could decide in plaintiff's favor says nothing about who that factfinder should be, and that that factfinder may well be the Commissioner. (Harleysville Br. at 14.) Given that the Appellate Division returned the case to the Law Division instead of transferring it to the Commissioner, it is clear that the Law Division, and not the Commissioner, was the factfinder which the Appellate Division had in mind.
The Degen case makes no mention of the Auto-Matic decision; it does not overrule it. Read in pari materia, the two cases indicate that while it might, under certain circumstances, be proper to remand a case to the Commissioner, it is not necessary because the Commissioner does not have exclusive jurisdiction. The Bankruptcy Court recognized that when it exercised concurrent jurisdiction, and its decision that Degen did not establish new law that the Commissioner has exclusive jurisdiction over these claims is affirmed.
2. Exhaustion of Administrative Remedies
The Bankruptcy Court likewise correctly determined that plaintiffs here did not enjoy an adequate administrative remedy to satisfy their common law claims against Ohio Casualty and Harleysville. As the Bankruptcy Court said,
I reject as well the argument of the defendant that the principle of an exhaustion of administrative remedies should preclude our consideration here. That principal requires a plaintiff to follow established procedures mandated by statute or regulation prior to resort to the Courts to assert a cause of action. And here, although there is intense regulatory framework for the governing of the conduct of insurance companies, there is no administrative scheme to follow for agents who seek personal redress, damages for harm alleged to be caused by a contracting party, the insurance company. This is not about an attempt to impose regulatory consequences for alleged FAIR violations.
(Tr. of 3/28/98 at 40:7-18.)
The Bankruptcy Court is correct that plaintiffs' only recourse for damages was in the courts. Exhaustion is not required when there are questions of law which need to be resolved when the issue is not one involving administrative expertise or discretion; when the administrative remedies would be futile; when the jurisdiction of the agency is doubtful; when irreparable harm would result; or when and overriding public interest calls for a prompt judicial decision. Garrow v. Elizabeth General Hospital and Dispensary, 79 N.J. 549, 561 (1979). Here, as plaintiffs' claim is solely for money damages, and as the Commissioner does not have the power to award money damages to the plaintiffs, any administrative remedy would be futile as to plaintiffs' claims. Thus, the Bankruptcy Court's ruling that failure to exhaust administrative remedies did not mandate dismissal of the case is affirmed.
3. Primary Jurisdiction
The fact, however, that resort to administrative remedies would be futile as to plaintiffs' claims for money damages does not mean that the Commissioner lacks an important role in the resolution of issues within these claims. These claims turn upon violations of FAIRA as a predicate for breach of contract and breach of the duty of good faith and fair dealing. Interpreting FAIRA's "take all comers" provisions and definition of "withdrawal" is within the Commissioner's expertise, and, under the circumstances presented here, the Bankruptcy Court should defer to the Commissioner on the resolution of those issues as a matter of primary jurisdiction.
For other cases deferring to agency determinations as a matter of primary jurisdiction, see, e.g.: Pierzga v. Ohio Casualty Group of Ins. Cos . , 208 N.J. Super. 40, 47 (App.Div.), certif. denied , 104 N.J. 399 (1986); Boss v. Rockland Elec. Co . , 95 N.J. 33, 42 (1983) (court should defer to agency's expertise where matters require factual determinations and interpretations unique to that expertise); Paterson Redevelopment Agency v. Schulman , 78 N.J. 378, 387 (same, especially where interpretations of agency regulations are concerned), cert. denied , 444 U.S. 900 (1979); Daaleman v. Elizabethtown Gas Company , 150 N.J. Super. 78 (App.Div. 1977) (there was concurrent jurisdiction but primary jurisdiction should have been invoked because matters were within agency's special expertise); Mayflower Sec. v. Bureau of Sec . , 64 N.J. 85, 92-93 (1973) (holding that appellate courts will generally defer to state agencies on questions pertaining to the agencies' area of expertise); R.J. Gaydos Ins. Agency, Inc. v. National Consumers Ins. Co . , UNN-C-85-97, slip op. at 16-17 (N.J.Super.Ct. Ch. Div. Apr. 20, 1998) (the Court was "uncomfortable" making FAIRA determinations in the Commissioner's place).
As defendants correctly explain, primary jurisdiction "applies where a claim is originally cognizable in the courts, and comes into play whenever enforcement of the claim requires resolution of issues which, under a regulatory scheme, have been placed within the special competence of an administrative body." Tose, 34 F.3d at 1230 (citing United States v. West Pacific Railroad Co., 352 U.S. 59, 63 (1956)). It is different than "exclusive primary jurisdiction." "Exclusive primary jurisdiction" in an agency deprives the court of original jurisdiction altogether. "Primary jurisdiction," on the other hand, does not limit the court's jurisdiction but rather counsels the court to defer ultimate resolution of claims until underlying issues within those claims within the special knowledge of the administrative body have been resolved.
The New Jersey Supreme Court recently discussed the doctrine of primary jurisdiction in Campione, 155 N.J. 245. In Campione, plaintiff was a blackjack player whose success at the game was based upon "card counting." Id. at 248-249. He brought a common-law action against the owners of the TropWorld Casino, alleging discrimination, breach of contract, and malicious prosecution, on the grounds that the casino had selectively enforced gaming regulations against him. Id. The relevant statute and gaming regulations permit casinos to undertake "countermeasures" to card counting, such as lowering bet limits and preventing card counters from playing two hands simultaneously. Id. at 250. On two separate occasions, these countermeasures were undertaken to prevent Campione from cleaning up on a favorable count, while other patrons at the same tables were permitted to play under the usual rules.Id. A jury found for Campione and returned a $1.5 million verdict against TropWorld. The Appellate Division reversed, holding that the Casino Control Commission ("CCC") had exclusive jurisdiction to decide claims arising under the gaming regulations. Id. at 255.
Campione was decided by the New Jersey Supreme Court after the Appellate Division's decisions in both Degen and Auto-Matic , as well as after the Bankruptcy Court's June 22, 1998 Order, but it simply applies principles already well rooted in New Jersey law rather than creating new law.
The Supreme Court modified the Appellate Division's holding but affirmed the Order, finding that the CCC had primary jurisdiction over the regulatory issues behind the common-law claims, and thus that the Law Division should have deferred to the CCC. Id. at 263, 260. Specifically, the Supreme Court stated:
The doctrine of primary jurisdiction, like that requiring exhaustion of administrative remedies, promotes proper relationships between courts and regulatory agencies. . . .
Under the doctrine of primary jurisdiction, when enforcement of a claim requires resolution of an issue within the special competence of an administrative agency, a court may defer to a decision of that agency. . . . Although the court may retain jurisdiction over the dispute, it defers action until receipt of the agency's views.
The pervasiveness of the regulatory scheme controlling the casino industry indicates that the Legislature intended to invest the CCC with primary jurisdiction to regulate the casino industry. To the extent that the resolution of a plaintiff's claim depends on an interpretation of the Act or administrative regulations, the CCC should have the first opportunity to provide that interpretation. A referral to the CCC should assure the resolution of the controversy consistent with the views of the entity best positioned to consider the matter. Retaining primary jurisdiction in the courts could dislocate the intricate regulatory structure governing a sensitive industry. Permitting courts and juries across the State to interpret statutory and administrative regulations could introduce confusion where uniformity is needed. The lack of uniform interpretations, in turn could effect the stability of the industry.Id. at 263-264. Thus, the Supreme Court's decision turned on several factors: the elaborate regulatory system, the need to promote proper relationships between courts and agencies, the presence of an issue within a claim which is within an administrative agency's special expertise, and the need to preserve uniformity in interpretation of regulations and administrative rules. Id.
In the instant case, the Bankruptcy Court recognized that the Commissioner's expertise in this area was "far superior" to the Court's expertise, and noted that if the Court were sitting for the first time, before plenary consideration of the matter, deference to the Commissioner would be appropriate. (Tr. of 3/28/98 at 43:7-10.) However, the Bankruptcy Court noted that "the primary jurisdiction argument is a discretionary one." (Id. at 43:18-19.) The Court agreed that it might be appropriate to have the Commissioner first review issues related to Harleysville because, as noted in Degen, Harleysville-Garden State Insurance was already before the Commissioner. (Id. at 44:1-9.) However, the Court also noted that Ohio Casualty was not before the Commissioner, that some plenary hearings had begun in the Bankruptcy Court with respect to Ohio Casualty, and that Harleysville and Ohio Casualty could not effectively be severed from one another. (Id. at 44:10 — 45:11.) As a result, the Bankruptcy Court denied the motion to dismiss.
In light of the Campione decision and important factual developments since the Bankruptcy Court's decision was issued, however, the Bankruptcy Court's ruling that it need not defer to the Commissioner under these circumstances is in error. All of the factors present in Campione are present here:
• FAIRA established a pervasive regulatory scheme to govern the automobile insurance industry, pursuant to which the Commissioner has exclusive jurisdiction to "investigate, adjudicate and punish" FAIRA violations. See In re Professional Ins. Mgmt., 130 F.3d 1122, 1127 (3d Cir. 1997).
• There is a need to preserve the proper relationship between the courts and the Commissioner, who is currently investigating not only Harleysville, but PIM and Ohio Casualty as well. At the time that the Bankruptcy Court made its ruling, the only party before the Commissioner was Harleysville-Garden State Insurance. Since that time, however, the Commissioner has also considered PIM and Ohio Casualty. On January 19, 1999, the Commissioner issued a Final Decision and Order modifying a prior Order of the ALJ entered on September 11, 1998, which revoked the producer licenses of Schipsi and PIM for failure to remit insurance premium payments from insureds to Ohio. Department of Banking and Insurance v. Professional Ins. Mgmt., OAL DKT. No. BKI 4153-97, Agency Reference No. E97-27 (attached to Ohio Casualty's Reply Ltr. Br.). On February 1, 1999, PIM sought a stay of that Final Decision and Order pending appeal of the order to the Appellate Division. A temporary stay was granted and further briefing was permitted in support of a continued stay and the merits of PIM's request for leave to appeal. In its brief appealing the Final Decision and Order, PIM argues that there should be a separate hearing held to consider Ohio's alleged violations of FAIRA as mitigating circumstances to the penalty of revocation for failing to remit premiums due. (See Appellant's Brief, attached to Ohio Casualty's Reply Ltr. Br.) Thus all of the parties are before the Commissioner presently, making this situation highly analogous to Degen, where the Appellate Division transferred the case to the Commissioner for first review.
• The issues underlying plaintiffs' claims — whether defendants/appellants violated the "take all comers" provisions and whether they withdrew from the market — are uniquely within the expertise of the Commissioner of Banking and Insurance, whose job it is to enforce those regulations under the complex and comprehensive regulatory scheme of New Jersey's no-fault automobile liability insurance environment.
• There is a risk of inconsistent rulings. This risk is actual, not theoretical. PIM is already trying to get the Appellate Division to overturn the Commissioner's Final Decision and Order revoking PIM's license, arguing that the Commissioner must look at Ohio Casualty's alleged FAIRA violations. The Commissioner is already also reviewing letters which Harleysville sent to the Degen plaintiffs which are almost identical to those sent to PIM. There is a risk that the Bankruptcy Court could read the "take all comers" provisions in manner different than that exercised by the Commissioner and thus create inconsistent interpretations of the self-same regulations and facts. The Commissioner's primary jurisdiction was designed to do away with just that.
Thus, the situation present here is really no different than inCampione. Moreover, while the principles of primary jurisdiction are ostensibly, as the Bankruptcy Court said, discretionary, in practice the New Jersey Supreme Court has indicated that primary jurisdiction is a strong force. Special factors counseling deferral to the primary jurisdiction of the Commissioner under New Jersey law are present here, especially due to the fact that PIM, Harleysville, and Ohio Casualty are already before the Commissioner on matters closely related to this one, as noted above.
The Bankruptcy Court's reasoning for not deferring to the Commissioner's primary jurisdiction here, that this case is too far along to effectively separate the parties or return to the Commissioner, seems to hold little weight in light of the fact that the Supreme Court inCampione remanded the case to the Law Division, who was to remand the case to the CCC for interpretation of the regulations, notwithstanding the fact that the Law Division itself had earlier interpreted those regulations and allowed a jury to return a verdict on the basis of that interpretation. Under the Campione analysis, judicial determinations of efficiency play little role in the face of an issue that falls squarely within a complex regulatory scheme.
For that reason, the Bankruptcy Court's determination that it need not postpone its own consideration of the regulations in order to defer to the Commissioner must be overruled. The Bankruptcy Court was correct not to dismiss the case, for "[d]ismissal of the action by the court is . . . only appropriate if all of the issues are `agency' issues. If they are not, the court should simply withhold its further action until the agency has made those designated determinations which are the predicates for judicial disposition of the controversy as initially raised before it."Daaleman, 150 N.J. Super. at 84. Simply inviting the Commissioner to intervene, as the Bankruptcy Court has apparently done, is not enough. If plaintiff PIM wishes to pursue claims which have at their root alleged violations of FAIRA, the Bankruptcy Court must not itself interpret those regulations but rather defer to the agency before which these parties already have appeared, and which has closely related matters pending before it. Whether this means staying the case before the Bankruptcy Court and instructing the plaintiff to file before the Commissioner or choosing some other method of deferring is up to the Bankruptcy Court to decide.
This Court relies upon the representations of counsel for Ohio Casualty and Harleysville that they will cooperate with PIM in facilitating the Commissioner's factfinding upon this FAIRA issue, so as to not unduly delay the determination of plaintiff's causes of action in the Bankruptcy Court.
III. CONCLUSION
For the foregoing reasons, I am affirming the Bankruptcy Court's Order that denied the defendants' motion to dismiss because the Bankruptcy Court does indeed have jurisdiction over plaintiffs' claims, despite defendants' arguments concerning Degen and exhaustion of administrative remedies. However, I am remanding this case to the Bankruptcy Court, which has exclusive jurisdiction over the contract and covenant of good faith and fair dealing claims, with instructions to defer to the Commissioner on the determination of the issue of fact of whether the insurers, Ohio Casualty and Harleysville, violated FAIRA's "take all comers" requirement in their dealings with PIM. Upon this remand, the Bankruptcy Court shall have discretion to fashion an appropriate order carving out this issue of fact and memorializing the procedures to be employed by these parties in effecting a prompt presentation of the issue to the Commissioner. The accompanying Order is entered.
ORDER
This matter having come before the Court upon the appeal of defendants/appellants, Ohio Casualty Group of Insurance Companies, et al. ("Ohio Casualty") and Harleysville Mutual Insurance Company, et al. ("Harleysville"), from May 28, 1998 oral Opinion and June 22, 1998 Order, by the Honorable Judith H. Wizmur, United States Bankruptcy Judge for the District of New Jersey; and the Court having considered the written submissions of the parties as well as oral arguments held before the Court on February 26, 1999; and for the reasons set forth in the Opinion of today's date;
IT IS this day of March, 1999, hereby
ORDERED that the May 28, 1998 oral Opinion be, and hereby is, AFFIRMED in as far as it holds that the New Jersey Commissioner of Banking and Insurance does not have exclusive jurisdiction over contract disputes between insurance companies and insurance agencies, and in as far as it holds that plaintiff Professional Insurance Management ("PIM") was not required to exhaust administrative remedies before filing breach of contract and breach of the covenant of good faith and fair dealing claims in the Bankruptcy Court; and it is
FURTHER ORDERED that the oral Opinion of May 28, 1998 be, and hereby is, REVERSED, in as far as it holds that the Commissioner of Banking and Insurance does not have primary jurisdiction over the issue of whether defendants/appellants violated provisions of the Fair Automobile Insurance Reform Act of 1990 ("FAIRA"), N.J.S.A. 17:33B-1, et seq.; and it is
FURTHER ORDERED that the June 22, 1998 Order denying defendants/appellants' motion to dismiss be, and hereby is, AFFIRMED; and it is
FURTHER ORDERED that this matter is remanded to the Bankruptcy Court for the District of New Jersey for further proceedings consistent with the Opinion of today's date.