Opinion
PC-2017-3908
01-10-2018
ALLSTATE INSURANCE COMPANY; AMERICAN COMMERCE INSURANCE COMPANY; AMICA MUTUAL INSURANCE COMPANY; LIBERTY MUTUAL GROUP; METROPOLITAN INSURANCE GROUP; NATIONWIDE CORPORATION GROUP; OHIO MUTUAL GROUP; MEMBERS OF THE PROGRESSIVE GROUP OF COMPANIES DOING BUSINESS IN RHODE ISLAND; PROVIDENCE MUTUAL FIRE INSURANCE COMPANY; SELECTIVE INSURANCE GROUP; THE HARTFORD FINANCIAL SERVICES GROUP; THE TRAVELERS COMPANIES, INC.; UNITED SERVICES AUTOMOBILE ASSOCIATION GROUP (USAA); MAIN STREET AMERICA GROUP, Plaintiffs, v. RHODE ISLAND DEPARTMENT OF BUSINESS REGULATION, Defendant, EAST BAY AUTO, INC.; EURO MOTOR CARS, INC.; CASALE'S AUTOBODY, INC.; HILLVIEW AUTO BODY, INC.; BIGELOW AUTO BODY, INC.; RANDY'S AUTO, LTD; C.L. ENTERPRISES, INC.; SAFE-WAY AUTO SALES, INC.; MIKE'S AUTO BODY, INC.; WEST WARWICK AUTO CITY, INC.; D&H AUTO GROUP; CURRERI COLLISION CENTER, INC.; NEW CENTURY AUTO BODY, INC.; CRANSTON COLLISION CENTER SALE & SERVICE, INC.; MICHAUD AUTO BODY, INC.; CHOICE COLLISION CENTER, INC.; AUTO SERVICE AUTO BODY, INC.; TODISCO ENTERPRISES, INC.; PROVIDENCE AUTO BODY, INC.; PACHECO: AUTOMOTIVE, INC.; REGO'S AUTO BODY, INC.; ANTHONY'S AUTO BODY, INC.; DETROIT COLLISION CENTER, INC.; RICK'S AUTO BODY, INC.; BLACKSTONE AUTO SALES & BODY, INC.; AUTO BODY CONCEPTS, INC.; WARWICK AUTO BODY, INC.; Interested Parties.
For Plaintiff: Jeffrey S. Brenner, Esq.; Stephen D. Zubiago, Esq.; Melissa E. Darigan, Esq.; David J. Pellegrino, Esq.; Bruce A. Leach, Esq.; Faith A. LaSalle, Esq.; C. Russell Bengtson, Esq.; Todd J. Romano, Esq.; R. Kelly Sheridan, Esq.; Elizabeth A. Suever, Esq. For Defendant: Matthew M. Gendron, Esq. Sara K. Tindall-Woodman, Esq. For Interested Peter J. Petrarca, Esq.; Jina N. Petrarca, Esq.
Providence County Superior Court
For Plaintiff: Jeffrey S. Brenner, Esq.; Stephen D. Zubiago, Esq.; Melissa E. Darigan, Esq.; David J. Pellegrino, Esq.; Bruce A. Leach, Esq.; Faith A. LaSalle, Esq.; C. Russell Bengtson, Esq.; Todd J. Romano, Esq.; R. Kelly Sheridan, Esq.; Elizabeth A. Suever, Esq.
For Defendant: Matthew M. Gendron, Esq. Sara K. Tindall-Woodman, Esq.
For Interested Peter J. Petrarca, Esq.; Jina N. Petrarca, Esq.
DECISION
SILVERSTEIN, J.
Before the Court is Plaintiffs' (Plaintiffs or Insurers) motion for a stay of the pending administrative proceeding ordered by the Rhode Island Department of Business Regulation (DBR) pursuant to G.L. 1956 § 42-35-15. Plaintiffs move for a stay to allow the Court an opportunity to determine legal issues previously presented to the appointed Hearing Officer in a motion to dismiss, which was subsequently denied.
I
Facts and Travel
In February 2017, several auto body repair shops (the Shops) filed a series of Complaints (Shops' Complaints) with DBR against Plaintiffs. Pls.' Compl. ¶ 26. In the Shops' Complaints, the Shops allege that the Plaintiffs failed to comply with the labor rate survey requirements set forth in G.L. 1956 § 27-29-4.4 and promulgated by DBR via Insurance Regulation 108. Id. at ¶ 27. Section 27-29-4.4 and Insurance Regulation 108 require Insurers annually to conduct an auto body labor rate survey to determine a prevailing auto body labor rate for each classification of auto body repair facilities. See § 27-29-4.4; DBR Ins. Reg. 108. The Shops' Complaints alleged that the Insurers either failed to adhere to the survey requirements or failed to complete the survey.
After receiving the Shops' Complaints, DBR requested responses from the Insurers. Pls.' Compl. ¶ 28. In April 2017, Plaintiffs responded asserting that the Shops did not have standing under the relevant statutes and regulations and that the requested remedies were not authorized. Id. at ¶ 29. Additionally, Plaintiffs requested that DBR close the Shops' Complaints without further action. Id. DBR subsequently issued seventeen orders appointing a Hearing Officer and holding that the Complainants have the responsibility to present their case to the Hearing Officer. Id. at 33-34. In May 2017, the Hearing Officer conducted a hearing and established a briefing schedule which allowed the Insurers an opportunity to file motions to dismiss. Id. at ¶ 35.
On May 19, 2017, Plaintiffs submitted motions to dismiss with supporting memoranda. Id. at ¶ 36. The motions were opposed by DBR and the Shops. Id. The Hearing Officer heard oral arguments regarding the Plaintiffs' motions on June 20, 2017, and she issued an order denying Plaintiffs' motions on July 28, 2017. Id. at ¶ 41. In her decision, the Hearing Officer further scheduled a status conference to divide Plaintiffs into two categories, one group to analyze "setting a labor rate" and a second to examine "a procedural issue for the survey." Pls.' Compl., Ex. 1 at 12. The Hearing Officer further stated that "[a] briefing schedule will be set for the analysis issue as it is ready to be determined as a matter of law." Pls.' Compl. at ¶ 42. The status conference has been postponed pending the matter currently before the Court.
Plaintiffs filed their Complaint herein on August 21, 2017, alleging that they have been adversely affected by the Hearing Officer's decision and requesting declaratory relief on a number of legal questions they assert must be answered before the administrative process may continue. See Pls.' Compl. Plaintiffs filed a motion to stay the administrative proceeding on August 31, 2017 pending the Court's decision on the legal issues presented in their Complaint. Both DBR, as the Defendant, and the Shops, as interested parties, filed objections to Plaintiffs' motion and supporting memoranda.
II
Discussion
A
Exhaustion of Administrative Remedies
Section 42-35-15(a) provides "[a]ny person, including any small business, who has exhausted all administrative remedies available to him or her within the agency, and who is aggrieved by a final order in a contested case is entitled to judicial review under this chapter." The statute further provides, however, for immediate review of "[a]ny preliminary, procedural, or intermediate agency act or ruling . . . in any case in which review of the final agency order would not provide an adequate remedy." Id. Therefore, our Supreme Court has held that immediate judicial review of an agency action is permitted "as an exception to the general rule . . . when an inadequate remedy would result from requiring a party to exhaust all available administrative remedies . . . ." R.I. Chamber of Commerce v. Hackett, 122 R.I. 686, 688, 411 A.2d 300, 302 (1980).
Here, Plaintiffs contend that allowing the evidentiary hearing to proceed will cause irreparable harm to the Insurers and potentially thousands of insured individuals in Rhode Island. The procedure followed and the final decision by the Hearing Officer in this matter, however, is subject to review by the Director of DBR. The Director may then accept or reject the Hearing Officer's determination. At that point, pursuant to § 42-35-15, DBR's decision will be subject to judicial review. As Plaintiffs will have later opportunities to seek an adequate remedy, this case differs from prior cases where this exception has been found to be applicable. See Hackett, 122 R.I. at 689, 411 A.2d at 302; see also Barrington Sch. Comm. v. R.I. State Labor Relations Bd., 608 A.2d 1126, 1133 (R.I. 1992) (finding that an order by State Labor Relations Board was "ripe" for immediate judicial review because there was no opportunity to moot the order through subsequent election); Champlain's Realty Assocs. v. Tillson, No. CIV.A.01-0330, 2001 WL 770810, at *2 (R.I. Super. July 10, 2001) (concluding that requiring plaintiffs to exhaust administrative remedies through the Zoning Board when plaintiffs specifically argued that the Zoning Board lacked jurisdiction would be futile and not provide an adequate remedy). Immediate judicial review, therefore, is not appropriate in the current matter as Plaintiffs will be presented with opportunities to achieve an adequate remedy.
B
Stay of Administrative Order
Assuming arguendo that the Court found this matter ripe for immediate judicial review, the appropriate test for considering the requested stay would be the federal appellate standard previously cited with approval by our Supreme Court in Narragansett Elec. Co. v. Harsch, 367 A.2d 195, 197 (R.I. 1976). See Morgan v. Kerrigan, 523 F.2d 917 (1st Cir. 1975). Specifically, the Court stated that
"[a] stay will not be issued . . . unless the party seeking the stay makes a 'strong showing' that (1) it will prevail on the merits of its appeal; (2) it will suffer irreparable harm if the stay is not granted; (3) no substantial harm will come to other interested parties; and (4) a stay will not harm the public interest." Harsch, 367 A.2d at 197.Moreover, the Court later contemplated the range of the test outlined in Harsch and explained that "[the Court does] not construe the Harsch case as being applicable in respect to the stay of every agency order that may be subject to review . . . ." State, Dep't of Corrections v. R.I. State Labor Relations Bd., 658 A.2d 509, 510 (R.I. 1995). The Court further found that § 42-35-15(c) does, however, "grant[] to the reviewing court the power to grant a stay of an agency order under circumstances which in the trial justice's sound discretion should require that matters be held in status quo pending review of the agency decision on its merits." Id.
Plaintiffs contend that they have made a strong showing that they will prevail on the merits of their appeal because the Hearing Officer's decision is deficient on several grounds. First, the Hearing Officer did not recognize that DBR reviewed, accepted, and posted the Insurers' labor rate survey filings. Second, they assert that the order allows DBR to effectively ignore the governing statute and insurance regulation. Moreover, Plaintiffs contend that the order allows the possibility of yearly enforcement action by the Shops and allows the Shops to advocate for higher labor rates to the detriment of Rhode Island's consumers. The Insurers further assert that they will suffer irreparable harm if they are compelled to defend themselves in a lengthy enforcement action prosecuted by the Shops. Conversely, they argue that DBR and the Shops will not suffer harm because a stay will simply compel them to adhere to the statutory enforcement process. Finally, Plaintiffs contend that a stay would serve the public interest as it will prevent potential harm to insured drivers in Rhode Island. DBR, however, asserts that the Insurers have failed to identify any irreparable harm nor have they made a strong showing of the merits of their appeal.
In the case at bar, Plaintiffs have not made a "strong showing" of the four Harsch factors. Harsch, 367 A.2d at 197. Specifically, with respect to whether or not Plaintiffs "will suffer irreparable harm if the stay is not granted, " the Insurers have merely argued that they will be forced to defend a possibly lengthy enforcement proceeding in which the Shops are advocating on behalf of their original Complaints. Id. Whatever decision is rendered by the Hearing Officer, however, will be reviewable by the Director of DBR and subsequently subject to further judicial review. Accordingly, the Court is not persuaded that irreparable harm will come to the Insurers if the Hearing Officer is allowed to proceed with an evidentiary hearing.
III
Conclusion
For the reasons stated herein, the Court declines to grant Plaintiffs' request to stay the pending administrative proceedings and review the requested declaratory relief. Accordingly, Plaintiffs' motion is denied. Prevailing counsel shall present an appropriate order consistent herewith which shall be settled after due notice to counsel of record.