A Preliminary Decision from the Maryland Insurance Administration Does Not Constitute A “Final Decision” For the Purposes of Collateral Estoppel

 David Boyd, et ux. v. The Goodman-Gable-Gould Company, No. 2139, September Term 2019. Opinion by Eyler, James R., J.

    After a fire destroyed the home of David Boyd and Penny Coco-Boyd (collectively “the Boyds”) in 2016, they gave notice of their loss to their homeowners’ insurer, State Farm Fire and Casualty Company (“State Farm”). The Boyds subsequently engaged the services of Goodman-Gable-Gould Co. (“GGG”), a public adjuster, to adjust their claim with State Farm. A public adjuster is an independent insurance professional that a policyholder may hire to help settle an insurance claim in exchange for a percentage of any proceeds collected on the policyholder’s behalf.

    The Boyds eventually became dissatisfied with GGG’s services and filed a complaint against GGG with the Maryland Insurance Administration (“MIA”), alleging that GGG engaged in fraudulent and dishonest practices, displayed incompetence, and wrongfully withheld monies. The MIA ultimately issued a preliminary decision in favor of GGG. Although the Boyds were entitled to challenge the Commissioner’s preliminary decision under Maryland Code Ann., Insurance § 2-210, the Boyds elected not to request an administrative hearing to contest that determination.

    While the MIA complaint was pending, the Boyds initiated a declaratory judgment action in the Circuit Court for Montgomery County, seeking a declaration that they had a right to terminate their contract. In response, GGG moved for summary judgment on the basis that, since the Boyds did not file an administrative appeal within thirty (30) days, the preliminary decision issued by the MIA became a “final decision.” According to GGG, the Boyds were collaterally estopped from pursuing their claims in the circuit court since they pursued claims premised on the same core facts before the MIA. The court agreed with GGG and held that, since the Boyds chose not to contest the MIA’s preliminary decision in favor of GGG, the Boyds had been afforded “every opportunity to pursue their claims” administratively and were estopped from doing so in the circuit court.

    In reviewing the circuit court’s ruling on appeal, the Court of Special Appeals cited to Baston v. Shiflett, 325 Md. 684, 705 (1992), which held that “the decision of an administrative agency may have preclusive effect if the agency decision was the product of a quasi-judicial proceeding.” In making that determination, the Court employed a three-part test for deciding the preclusive effect of agency decisions. An agency decision can have preclusive effect if: (1) the agency acted in a judicial capacity; (2) the issue presented to the fact finder in the second proceeding was fully litigated before the agency; and (3) resolution of the issue was necessary for the agency’s decision. Exxon Corp. v. Fischer, 807 F.2d 842, 845-46 (9th Cir. 1987) (citing Batson, 325 Md. at 701).

    The Court next looked to Md. Code Ann., Ins. § 2-214(a), which provides that the MIA Commissioner acts in a quasi-judicial manner when holding a hearing on a challenge to its preliminary decision. In this case, since the Boyds never requested a hearing pursuant to Md. Code Ann., Ins. § 2-210, the Boyds action before the MIA never amounted to a quasi-judicial proceeding.

    Since the MIA Commissioner’s preliminary determination in favor of GGG was not deemed to be a “judicial proceeding,” the three-part Baston test was not satisfied, and the Court held that the Boyds were not collaterally estopped from pursuing concurrent relief in the circuit court.

-John Thompson, Associate Attorney