South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOI vs. John D. Branham

AGENCY:
South Carolina Department of Insurance

PARTIES:
Petitioners:
South Carolina Department of Insurance

Respondents:
John D. Branham
 
DOCKET NUMBER:
01-ALJ-09-0410-CC

APPEARANCES:
n/a
 

ORDERS:

ORDER OF DISMISSAL

This matter is before the Administrative Law Judge Division ("Division") pursuant to a motion raised by the undersigned judge.

In April 1997, the South Carolina Department of Insurance ("Department") issued Notice of Investigation letters regarding the Fidelity Optima Plan. The Department took depositions of several agents and began extensive investigations into the plan and the agents who sold the plan in South Carolina. On or about June 4, 1999, the Department issued a Notice of Determination and Notice of Opportunity for a Hearing to many agents, including Respondent. On or about June 9, 1999, the Department mailed a Letter of Allegation and Notice of Opportunity to be Heard to many agents, including Respondent. On June 15, 1999, the Department received Respondent's request for a contested case hearing. Sometime in June or July 1999, the Department met with the attorneys of some of the agents involved and, according to the Department, reached an "informal agreement" to hold the Agency Transmittal Forms "to afford the parties to a related class action litigation an opportunity to attempt to resolve the issues raised in this matter." As a result, the Department did not file the Agency Transmittal Form in this matter with the Division until September 26, 2001, more than two years later. According to the Agency Transmittal Form, the Department now seeks to revoke Respondent's license for engaging in the unauthorized transaction of insurance business by selling and/or marketing life, accident, and health insurance related products with organizations unlicensed and unauthorized to transact insurance business in this state.

The undersigned judge, on his own motion, raised the issue of whether the defense of laches applied to the facts of this case. See Wallace v. Timmons, 232 S.C. 311, 101 S.E.2d 844 (1958); Cook v. Knight, 106 S.C. 310, 91 S.E. 312 (1917). A hearing on the issue of laches was held on October 22, 2001. Gwendolyn Fuller appeared on behalf of the Department and Respondent appeared pro se. Ms. Fuller indicated that she never had a conversation with Respondent about the case but she discussed the case with Don Ries, who was representing Respondent at the time. Respondent testified at the hearing that he did not have an agreement with the Department about delaying the contested case hearing in this matter. He further testified that the first time he knew about any "informal agreement" to delay the filing of the Agency Transmittal Form was in September 2001. On October 25, 2001, Mr. Ries submitted a letter to the office of the undersigned indicating he had no communication with the Department after 1997 and had not represented Respondent since March 1999.

Laches is an equitable doctrine consisting of the elements of (1) a delay (2) that is unreasonable and (3) that causes prejudice. Terry v. Lee, 314 S.C. 420, 445 S.E.2d 435 (1994).

Clearly there was a delay in this case. According to ALJD Rule 12, the Department should have filed the Agency Transmittal Form with the Division within five working days of receiving the request for a contested case hearing. The Department, however, did not file the form until two years and three months later.

This delay was unreasonable. The Agency Transmittal Form consists of basic information including a list of the statutory provisions giving rise to the controversy, a brief explanation of the nature of the request for hearing, and names, addresses, and telephone numbers for the parties of the case. No reasonable explanation can be given for waiting more than two years to submit this information to the Division. At the hearing, the Department argued that it waited to file the Agency Transmittal Form because a related case was pending in federal court. This argument, however, has no merit. Cases are routinely filed with the Division in compliance with the ALJD Rules and later stayed by the assigned judge pending the hearing and resolution of a related case in another court. Under those circumstances, the assigned judge would have had the opportunity to address a formal motion for stay while also giving the pro se litigant the opportunity to respond to the motion. If the judge then granted the motion, the judge could ensure the pro se litigant was notified of an official delay in the processing of the case.

Furthermore, Respondent was prejudiced by the delay. Based on the evidence submitted and testimony offered, Respondent was not consulted about the Department's decision to hold the Agency Transmittal Form. Respondent testified that he has suffered a financial loss. He has not sold insurance since Spring 1997 out of fear he would lose his insurance license and as a result the commissions on any policies sold during that time. Respondent also testified that he believes he would be at an extreme disadvantage because the witnesses he would have to rely on to defend himself would have a difficult time remembering the events that happened nearly five years ago.

The Department also argued that because Respondent did not make a motion before the Division for an order directing the Department to file the Agency Transmittal Form, the defense of laches should not preclude the hearing of this case. See ALJD Rule 12 ("If the agency fails to file the requested materials with the Division within five working days, the party requesting the hearing may move before the [Division] for an order directing the agency to respond forthwith."). This argument lacks merit as well. Although ALJD Rule 12 provides an avenue of relief for instances when the Department fails to file the Agency Transmittal Form with the Division, that avenue of relief does not negate the duty of the Department to transmit the case. The Department, therefore, cannot use Respondent's inaction as a defense for failing to comply with the filing requirement of ALJD Rule 12.

Taking into consideration all circumstances surrounding this case, I conclude that the defense of laches precludes the hearing of this case. See Ramantanin v. Poulos, 240 S.C. 13, 124 S.E.2d 611 (1962).

IT IS HEREBY ORDERED that the relief requested by the South Carolina Department of Insurance is denied.

IT IS FURTHER ORDERED that this case is dismissed with prejudice in favor of Respondent.

AND IT IS SO ORDERED.





__________________________________

MARVIN F. KITTRELL

Chief Administrative Law Judge



January 24, 2002

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

Copyright © 2022 South Carolina Administrative Law Court