[J-12-2020] [MO: Dougherty, J.]
IN THE SUPREME COURT OF PENNSYLVANIA
MIDDLE DISTRICT
MICHAEL WILLIAM WOODFORD AND : No. 65 MAP 2019
OPTIONS INSURANCE AGENCY, :
: Appeal from the Order of the
Appellants : Commonwealth Court at No. 1005
: CD 2018 dated January 4, 2019,
: reconsideration denied February 15,
v. : 2019, affirming in part and reversing
: in part the decision of the PA
: Insurance Department at No. SC16-
COMMONWEALTH OF PENNSYLVANIA : 11-001 dated June 21, 2018.
INSURANCE DEPARTMENT, :
: ARGUED: March 11, 2020
Appellee :
CONCURRING AND DISSENTING OPINION
JUSTICE TODD DECIDED: December 22, 2020
I join Parts I and II.A of the Majority Opinion, as I agree we should reject the
Commonwealth Court’s categorical conclusion that the Nanty-Glo rule, established by our
decision in Borough of Nanty-Glo v. American Surety, 163 A. 523 (Pa. 1932) (holding that
it was improper for a court to direct a verdict in favor of a party at a civil trial based solely
on the uncontradicted testimony of that party’s witnesses, as it deprived the jury, as finder
of fact, from assessing the credibility of those witnesses), has no application in
administrative proceedings. As the majority highlights, our Court subsequently
recognized the Nanty-Glo rule’s broader applicability to summary judgment proceedings
in civil cases in Penn Center House v. Hoffman, 553 A.2d 900 (Pa. 1989), wherein we
ruled that “[t]estimonial affidavits of the moving party or his witnesses . . . even if
uncontradicted, will not afford sufficient basis for the entry of summary judgment, since
the credibility of the testimony is still a matter for the jury.” Id. at 903. Consequently, as
the Nanty-Glo rule applies whenever a finder of fact is called upon to resolve a credibility
issue in a civil proceeding, it should be followed whenever an administrative agency or
tribunal acts as the finder of fact in issuing an adjudication. Inasmuch as the Insurance
Commissioner, in ruling on Appellants’ motion for summary judgment, was acting as the
finder of fact, and because she recognized that genuine issues of material fact were
raised by Appellants’ affidavit regarding the propriety of the challenged fees, which could
only be resolved through an evidentiary hearing at which the credibility of the affiant could
be assessed, the Commissioner properly followed the Nanty-Glo rule in deciding
Appellants’ motion for summary judgment.
With respect to Part II.B of the Majority Opinion, I also agree that 40 P.S. §
310.74(a) of the Insurance Department Act (“Act”) – which the Commissioner found
Appellants to have violated, and, as a result, required, inter alia, that they pay a fine of
$5,000 – is ambiguous. See Majority Opinion at 21. As the majority develops, the
competing legal interpretations of the text of Section 310.74(a) advanced by the
Insurance Department and Appellants are both reasonable with regard to the question of
whether Section 310.74(a) permitted Appellants to charge additional fees beyond
commissions in personal insurance transactions, given that it does not explicitly prohibit
them from doing so. See JP Morgan Chase Bank N.A. v. Taggart, 203 A.3d 187, 194
(Pa. 2019) (“A statute is ambiguous when there are at least two reasonable interpretations
of the text.”).1 However, for the following reasons, I must respectfully dissent from the
1 In this regard, I am unpersuaded by the assertion in Justice Wecht’s Concurring Opinion
that, because the Act is part of a comprehensive regulatory scheme, this fact counsels
against a finding of ambiguity as to this particular portion of the Act. See Concurring
Opinion, Wecht J. at 3 (“[T]he Act is a comprehensive regulatory scheme that clearly
begins with the assumption that insurance producers can do nothing, and then proceeds
to authorize only certain activities. Given this structure, we should assume that any
practices the General Assembly did not explicitly authorize were intentionally disallowed.
To hold otherwise would needlessly inject ambiguity throughout the Act.”). A judicial
[J-12-2020] [MO: Dougherty, J.] - 2
majority’s ultimate conclusion that Section 310.74(a) was not penal in nature and,
therefore, not subject to the rule of strict construction. Accordingly, I would construe that
section in favor of Appellants.
The Act was intended to provide a comprehensive regulatory framework governing
the “transacting [of] any class of insurance business,” 40 P.S. § 23, and it makes it
unlawful for individuals to engage in “the transaction of the business of insurance, without
fully complying with the provisions of [the Act],” 40 P.S. § 26. Thus, with respect to the
conduct of insurance producers such as Appellants, Subarticle B of the Act, entitled
assessment of a particular statute’s ambiguity by necessity is confined to an examination
of the actual statutory language at issue in the case under review, and evaluation of the
reasonableness of the parties’ competing suggested interpretations thereof. Merely
because our Court, or any court, determines that one portion of a comprehensive
statutory scheme is ambiguous does not, ipso facto, inject ambiguity into other portions
of the overall statutory scheme that statute is part of, as the concurrence suggests.
Compare, e.g., Chamberlain v. Unemployment Compensation Board of Review, 114 A.3d
385, 394–95 (Pa. 2015) (engaging in statutory construction to discern the meaning of the
term “incarceration” as used in the Unemployment Compensation Law because it was
reasonably susceptible of two different meanings) with A Special Touch v. Department of
Labor and Industry, 228 A.3d 489 (Pa. 2020) (finding that the phrase “customarily
engaged,” as used in the Unemployment Compensation Law was unambiguous and
defining the phrase in accordance with its plain meaning). Thus, each provision of the Act
ought to be evaluated according to its own terms.
Moreover, when a statute is silent as to its application to particular factual
circumstances and does not directly address whether it can be applied to legal questions
arising from such situations, as Section 310.74 is with respect to the question of whether
licensed insurance producers can charge fees in addition to commissions for non-
commercial insurance transactions, our Court has heretofore regarded such silence as a
form of ambiguity requiring resort to the tools of statutory construction, which included
consideration of the reasonableness of the interpretation of the statute by the
administrative agency tasked with effectuating and enforcing that law. See, e.g., Powell
v. Housing Authority of City of Pittsburgh, 812 A.2d 1201 (Pa. 2002) (because Congress,
in enacting Section 8 of the United States Housing Act, did not speak to the question of
whether a public housing authority may lawfully terminate the lease of a public housing
tenant if a member of the tenant’s household or guest engages in drug related activity
without the tenant’s actual or reasonable knowledge, examination of other factors to
discern Congress’s intent, including the interpretation of the agency responsible for
implementing the Housing Act, was warranted). I therefore find the majority’s conclusion
that Section 310.74 is ambiguous to be amply supported.
[J-12-2020] [MO: Dougherty, J.] - 3
“Regulation of Insurance Producers,” enumerates certain specific “prohibited” activities
which insurance producers are wholly forbidden from engaging in, 40 P.S. §§ 310.41-
310.51, and other activities in which their conduct is “regulated,” i.e., subjected to
statutorily specified restrictions, 40 P.S. §§ 310.71-310.79. The Act further provides that,
upon a determination that an insurance producer has violated any of these prohibitions
or regulations, the Insurance Commissioner may impose, inter alia, a “[d]enial,
suspension, refusal to renew or revocation of the license” of the producer; and “[a] civil
penalty not to exceed $5,000” for each violation. 40 P.S. § 310.91. From my perspective,
the Act establishes the fundamental rules governing the business of insurance in this
Commonwealth, which the legislature, in its policy judgment, sought to regulate, and
those activities which are not barred or restricted by its provisions are presumptively
permissible.
As the majority recognizes, and the parties agree, Section 310.74(a) does not
expressly prohibit the charging of a fee in addition to a commission for the sale,
solicitation, or negotiation of a contract of insurance for non-commercial insurance; rather,
it merely states that “[a] licensee may charge a fee in addition to a commission to a person
for the sale, solicitation or negotiation of a contract of insurance for commercial business.”
40 P.S. § 310.74(a) (emphasis added). Nevertheless, the majority applies the rule of
expressio unius est exclusion alterius to find this provision, by implication, prohibits a
producer from charging such fees in all non-commercial transactions. I find this
“prohibition by implication” construction to be legally unsupported and wholly inapt, given
that, in my view, Section 310.74(a) is penal in nature and, accordingly, must be strictly
construed. See 1 Pa.C.S. § 1928(b)(1) (requiring penal provisions in all statutes to be
strictly construed).
[J-12-2020] [MO: Dougherty, J.] - 4
As a general matter, our Court long ago recognized that “[a] penal statute is one
which imposes a penalty or forfeiture for transgressing its provisions, or for doing a thing
prohibited, and it is none the less (sic) a penal statute [even though] it is also remedial.”
Nesbit v. Clark, 116 A. 404, 406 (Pa. 1922). Thus, in considering whether a particular
statutory provision is penal in nature, and therefore subject to strict construction, we must
consider the primary purpose of the specific provision in question, when read in
conjunction with other portions of the statutory framework in which it appears. Snyder
Brothers v. PUC, 198 A.3d 1058, 1075 n.21 (Pa. 2018). Hence, a statutory provision may
be construed as penal in nature even if it appears within an overall statutory scheme that
is remedial. See Verona v. Schenley Farms Co., 167 A. 317, 320 (Pa. 1933) (“’[T]here is
no impropriety in putting a literal construction on a penal clause, and a liberal construction
on a remedial clause’ in the same statute.”); see also 3 Sutherland Statutory Construction
§ 60:4 (8th ed.) (approving of judicial practice of separately construing the penal and
remedial provisions of a statutory scheme by strictly construing the penal ones, while
liberally construing the remedial provisions, noting that this approach “serves the
disparate interests of the persons the law penalizes on the one hand and benefits on the
other”).
Consistent with this principle, our Court has regarded portions of a comprehensive
statute which restricted real estate professionals’ conduct for the remedial purpose of
protecting the public, but which correspondingly imposed penalties such as loss of
licensure and civil fines for violating its provisions, as penal in nature; accordingly, we
strictly construed those provisions in favor of the licensee. See Pa. State Real Estate
Commission v. Keller, 165 A.2d 79, 80 (Pa. 1960) (the Real Estate Broker's Law, which
authorized the suspension of a broker's license for violating its provisions, was penal and
subject to strict construction); cf. Commonwealth v. Mason, 112 A.2d 174 (Pa. 1955)
[J-12-2020] [MO: Dougherty, J.] - 5
(Securities Act which required the registration of, and regulation of the conduct of,
individuals engaged in the buying, selling, and disposition of securities, was a penal
statute subject to strict construction). Moreover, our Court has expressly refused to read
an implied compliance requirement into a statute we considered penal in nature,
whenever the legislature did not include such a requirement, because we deemed this as
violative of this principle of strict construction. See Smith v. Messner, 92 A.2d 417, 419
(Pa. 1952) (where Realty Transfer Tax Act did not provide that an agreement of sale was
a taxable document, our Court would not conclude such a document was taxable “by
implication” given that the statute was penal in nature).
Consequently, while I agree with the majority’s assertion that the Act serves the
salutary remedial purposes of “protecting both buyers and sellers of insurance through a
comprehensive scheme that includes protections for insurance consumers as well as
clear guidelines for entities that sell insurance,” Majority Opinion at 22, unlike the majority,
I regard the primary purpose of Section 310.74, along with its companion statutes in
Subarticle B, to be proscriptive in nature and intended to prohibit or limit particular
insurance sales practices by setting parameters on whether and how they may be
conducted; hence, I deem the penalty provisions of Section 310.91(a) to be the
enforcement means to accomplish this primary purpose. Thus, in my view, Section
310.74(a) should be considered a penal statute subject to strict construction.2
2 This statutory provision stands in marked contrast to the provisions at issue in Snyder
Brothers which our Court determined had, as their primary objective, a remedial purpose
— compensating municipalities for the deleterious impacts of oil and gas drilling activities.
See 198 A.3d at 1075 n.21 (“Inasmuch as the chief purpose of the impact fee provisions
of Chapter 23 is to help municipalities offset the adverse effects of the production of
natural gas from unconventional wells within their borders, these provisions are remedial
in nature. Because the separate penalty provisions are merely the means by which these
remedial measures are enforced, strict construction of the impact fee provisions is not
[J-12-2020] [MO: Dougherty, J.] - 6
The rule of strict construction of penal statutes is “’not merely a convenient maxim
of statutory construction,’ but, rather, ‘is rooted in fundamental principles of due process
which mandate that no individual be forced to speculate, at peril of [legal sanction],
whether his conduct is prohibited.’” Commonwealth v. Smith, 221 A.3d 631, 639 (Pa.
2019) (internal citation and quotation marks omitted). Thus, inasmuch as Section
310.74(a) does not, by its plain terms, provide fair warning to insurance producers that
charging a fee beyond a commission for the sale, solicitation, or negotiation of a contract
of insurance for non-commercial business is prohibited, I would find that it must be strictly
construed in favor of Appellants.
Therefore, I would vacate the order of the Insurance Commissioner imposing a
fine and other sanctions on Appellants for violating Section 310.74(a). On this basis, I
respectfully dissent.
required.”). Hence, unlike in the case at bar, the penalties for violations of the impact fee
provisions in Snyder Brothers served only to further that primary remedial purpose.
[J-12-2020] [MO: Dougherty, J.] - 7
Woodford, M., Aplts. v. PA Insurance Dept.
Combined Opinion