Justin Zimmerman, Acting Commissioner, Etc. v. Michael Patrick Diviney

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3422-21

A-3664-21

JUSTIN ZIMMERMAN,

ACTING COMMISSIONER,

APPROVED FOR PUBLICATION

NEW JERSEY DEPARTMENT

OF BANKING AND INSURANCE, 1 September 26, 2023

APPELLATE DIVISION

Petitioner-Respondent,

v.

MICHAEL PATRICK DIVINEY

and PROPERTY DAMAGE

ADJUSTERS, INC.,

Respondents-Appellants.

______________________________

JUSTIN ZIMMERMAN,

ACTING COMMISSIONER,

NEW JERSEY DEPARTMENT

OF BANKING AND INSURANCE,

Petitioner-Respondent,

v.

DIVERSIFIED PUBLIC

ADJUSTERS, LLC and

1

The caption has been updated in accordance with Rule 4:34-4 to reflect the

current commissioner of the New Jersey Department of Banking and

Insurance.

JOSEPH VULPIS,

Respondents-Appellants.

______________________________

Argued September 11, 2023 — Decided September 26, 2023

Before Judges Mawla, Marczyk, and Chase.

On appeal from the New Jersey Department of

Banking and Insurance.

Thomas E. Maloney, Jr., argued the cause for

appellants.

Nicholas Kant, Deputy Attorney General, argued the

cause for respondent (Matthew J. Platkin, Attorney

General, attorney; Donna Arons, Assistant Attorney

General, of counsel; Nicholas Kant, and Dakar Ross,

Deputy Attorney General, on the briefs).

Dennis Patterson, attorney for amicus curiae American

Association of Public Insurance Adjusters in Docket

No. A-3422-21.

The opinion of the court was delivered by

MAWLA, J.A.D.

In A-3422-21, defendants Michael Patrick Diviney and Property Damage

Adjusters, Inc. (PDA) appeal from a June 8, 2022 final agency decision by the

New Jersey Department of Banking and Insurance (DOBI), finding defendants

violated the New Jersey Public Adjuster's Licensing Act (PALA), N.J.S.A.

17:22B-1 to -20. In A-3664-21, defendants Joseph Vulpis and Diversified

Public Adjusters LLC (DPA) appeal from a June 20, 2022 final decision by

A-3422-21

2

DOBI, finding defendants in violation of PALA. The two appeals raise

overlapping issues and therefore were argued together. We affirm in part, and

reverse and remand in part for the reasons expressed in this opinion.

I.

The Legislature passed PALA to regulate public adjusters, or "any

individual, firm, association or corporation who, or which, for money . . . aids

in any manner on behalf of an insured in negotiating for . . . the settlement of

claims for loss of damage . . . ." N.J.S.A. 17:22B-2. Licenses are granted to

those who are "trustworthy and competent to act as an adjuster in a manner as

to safeguard the interests of the people . . . ." N.J.S.A. 17:22B-5.

PALA proscribes the conduct of licensees as follows:

No individual, firm, association or corporation

licensed under this act shall:

a. solicit the adjustment of a loss or damage

occurring in this State from an insured . . .

between the hours of six p.m. and eight a.m.

during the [twenty-four] hours after the loss has

occurred;

b. enter into any agreement, oral or written,

with an insured to negotiate or settle claims for

loss or damage occurring in this State

between the hours of six p.m. and eight

a.m. during the [twenty- four] hours after the

loss has occurred;

c. have any right to compensation from any

insured for or on account of services rendered to

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an insured as a public adjuster unless the right to

compensation is based upon a written

memorandum, signed by the party to be charged

and by the adjuster, and specifying or clearly

defining the services to be rendered and the

amount or extent of the compensation on a form

and with such language as the [DOBI]

commissioner may prescribe . . . .

[N.J.S.A. 17:22B-13.]

N.J.S.A. 17:22B-20 authorizes the commissioner to "promulgate any

rules and regulations as may be necessary to effectuate the purposes of

[PALA] pursuant to the 'Administrative Procedure Act[ (APA), N.J.S.A.

52:14B-1 to -15] . . . .'" Pursuant to this authority, the commissioner enacted

N.J.A.C. 11:1-37.1 to -37.19 to "establish procedures for the examination,

licensing, continuing education, and conduct of persons acting as public

adjusters in this State." N.J.A.C. 11:1-37.1.

The regulations delineate the required content of public adjuster

contracts. N.J.A.C. 11:1-37.13. Pertaining to these appeals, the regulations

state each contract:

3. Shall contain the following:

i. The signatures of the insured and the public

adjuster;

ii. A list of services to be rendered and the

maximum fees to be charged, which fees shall

be reasonably related to services rendered; and

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iii. The time and date of execution of the

contract (day, month, year) by each party;

....

5. Shall prominently include a section which

specifies:

i. The procedures to be followed by the insured

if [they] seek[] to cancel the contract, including

any requirement for a written notice;

ii. The rights and obligations of the parties if

the contract is cancelled at any time; and

iii. The costs to the insured or the formula for

the calculation of costs to the insured for

services rendered in whole or in part.

[N.J.A.C. 11:1-37.13(b)(3), (5).]

N.J.A.C. 11:1-37.14 governs violations and penalties and states:

(a) The Commissioner may deny, suspend, revoke, or

refuse to renew a public adjuster's license based on

any violation of [PALA] or this subchapter, or for the

commission or omission of any act by a public

adjuster which demonstrates that the applicant or

licensee is not competent or trustworthy to act as a

public adjuster, or where the person has:

1. Violated any provision of this State's

insurance laws, including any rules promulgated

thereunder;

....

4. Demonstrated the applicant's or licensee's

lack of integrity, incompetency, bad faith,

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5

dishonesty, financial irresponsibility, or

untrustworthiness to act as a public adjuster;

....

(b) Any person which violates any provision of this

subchapter shall, in addition to any other penalties

provided by law, be liable for a civil penalty of not

more than $2,500 for a first offense and not more than

$5,000 for the second and each subsequent offense.

Each transaction or statutory violation shall constitute

a separate offense.

[N.J.A.C. 11:1-37.14(a) to (b).]

II.

Diviney has been a licensed public adjuster since 2011. He is the sole

owner, officer, and public adjuster for PDA, which was licensed as a business

entity public adjuster in 2013.

In 2017, DOBI opened an investigation of Diviney and PDA in response

to a complaint and requested "all of the public adjusting contracts [Diviney]

had from the start of [his] business until the date of [the] request." Diviney

complied and provided DOBI eighty identical contracts he entered with clients.

The contracts contained the following language:

[PDA], or their representative is hereby retained

to advise and assist in the adjustment of the insurance

claim arising from loss by [CAUSE] which occurred

on [DATE] . . . . The insured agrees to pay [PDA] for

such services a contingent fee of [X]% of the amount

paid by the insurance companies in settlement of this

loss or a contingent fee of $[X] hereby assigning to

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the Public Adjuster all monies due or to become due

from the insurance companies. The fee shall be due

after proofs of loss are sworn to and/or first proceeds

issued. The fee of [PDA] shall be due after each draft

collected and in the percentage listed in the contract.

....

Notice of Right to Cancel

You, the insured, may cancel this contract at any

time prior to midnight on the fourth calendar day after

the execution date of this contract. If you exercise

your right to cancel this contract, you will be liable to

[PDA] for reasonable and necessary emergency out-

of-pocket expenses or services which were paid for or

incurred by [PDA] to protect the interests of the

insured during the preceding cancellation.

If you cancel this contract, anything of value

given by you under the contract will be returned to

you within [fifteen] business days following the

receipt by [PDA] of your cancellation notice, and any

security interest arising out of the contract will be

cancelled.

To cancel this contract, mail, fax or deliver in

person, a signed and dated copy of this notice or any

other written notice indicating your intent to cancel

and date thereof to [PDA] . . . not later than midnight

of [DATE].

I hereby cancel this contract.

DOBI filed an order to show cause against Diviney and PDA, alleging

violations of PALA and its related regulations. Count one alleged Diviney

"entered into at least [eighty] . . . contracts . . . that did not speci fically or

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7

clearly define the services to be rendered and did not indicate the time the

contracts were executed," violating N.J.S.A. 17:22B-13(c) and N.J.A.C. 11:1-

37.13(b)(3)(ii) and (iii). Count two alleged the contracts did not

specif[y] the procedures to be followed by the

insureds if they sought to cancel the contract,

including any requirement for a written notice and the

rights and obligations of the parties if the contract

were cancelled at any time, and the costs to the

insured or the formula for the calculation of the costs

of the insured for services rendered in whole or in

part, in violation of [N.J.S.A. 17:22B-14(a)(1) and (4),

N.J.A.C. 11:1-37.13(b)(5)(i), (ii), and (iii), and

N.J.A.C. 11:1-37.14(a)(1) and (4)] . . . .

Count three alleged Diviney entered fifteen contracts with insureds "in which

the maximum fees to be charged were not reasonably related to the services

rendered," in violation of N.J.S.A. 17:22B-14(a)(1) and (4), N.J.A.C. 11:1-

37.13(b)(3)(ii), and N.J.A.C. 11:1-37.14(a)(1) and (4).

The matter was transferred to the Office of Administrative Law (OAL)

for a hearing before an administrative law judge (ALJ). DOBI moved for

summary decision on counts one and two, indicating it would dismiss count

three if its motion was granted. Diviney filed a cross-motion for summary

decision to dismiss all three counts. The ALJ granted DOBI's motion and

denied Diviney's.

Under count one, the ALJ found Diviney violated N.J.S.A. 17:22B-13(c)

and N.J.A.C. 11:1-37.13(b)(3)(ii) because Diviney and PDA entered eighty

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contracts, "which failed to provide language related to services rendered

beyond 'advise and assist in the adjustment of the insurance claim.'" Diviney

also failed to include the time and date of the execution of the contracts in

violation of N.J.A.C. 11:1-37.13(b)(3)(iii).

The ALJ found DOBI proved count two because the contracts failed to

include the cancellation language required by N.J.A.C. 11:1-37.13(b)(5)(i),

(ii), and (iii). The lack of cancellation language also violated N.J.S.A. 17:22B-

14(a)(1) and (4) and N.J.A.C. 11:1-37.14(a)(1) and (4).

The ALJ reviewed the factors under Kimmelman v. Henkels & McCoy,

Inc., 108 N.J. 123, 137-39 (1987), and recommended Diviney and PDA be held

jointly and severally liable for $80,000 ($1,000 for each contract) and

$1,237.50 for investigation costs.

Diviney filed exceptions arguing: (1) the technical deficiency in the

contract language did not cause "any injury to any insured"; (2) the ALJ erred

in not relying on unpublished precedent from this court; (3) the contracts

adequately described the services and "were not required to provide a detailed

list of some or all of the services to be provided"; (4) the failure to note the

time of day each contract was signed was "irrelevant because [DOBI] did not

prove that any contract was signed between the hours of 6:00 p.m. to 8:00 a.m.

during the [twenty-four] hours following the loss"; (5) DOBI did not prove the

A-3422-21

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Legislature required public adjuster contracts be cancellable at any time; (6)

there was no evidence an insured attempted to cancel a contract or suffered any

damage from the inability to cancel a contract after the rescission period; (7)

there was no evidence of harm to a consumer by the absence of a cost

calculation formula in the contracts; (8) Diviney acted competently and in

good faith; and (9) because DOBI did not prove a violation, no penalty could

be assessed.

The commissioner upheld the ALJ's initial decision. She found "the

'advise and assist' language in the contracts [was] insufficient to comply with

the statute and regulation" because N.J.A.C. 11:1-37.13(b)(3)(ii) "requires that

a contract . . . contain '[a] list of services to be rendered . . . ." Diviney's

contracts were "too vague to comply with th[e] regulation."

The commissioner found DOBI did "not have to show that [Diviney and

PDA] entered into a contract . . . between 6:00 p.m. and 8:00 a.m. following a

loss to prove a violation of N.J.A.C. 11:1-37.13(b)(3)(iii)" because they were

not charged with soliciting under N.J.A.C. 11:1-37.13(c). DOBI did not have

to show a harm to consumers because the deficient contracts were "enough to

constitute a violation."

The commissioner found the eighty contracts violated N.J.A.C. 11:1-

37.13(b)(5)(i), (ii), and (iii) for not containing cancellation provisions despite

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the lack of a statutory provision requiring it. She reasoned the regulations

were a part of the authority granted by the Legislature to the commissioner "to

promulgate any regulations that may have been necessary to effectuate the

purposes of [PALA], which undoubtedly includes the protections of consumers

from unfair practices by public adjusters. See N.J.S.A. 17:22B-20, . . . B-3,

. . . B-12, and . . . B-13."

The commissioner adopted the fines and investigation expenses imposed

by the ALJ. Applying the Kimmelman factors, she found: (1) Diviney "acted

in bad faith in failing to provide the insureds with their 'mandated rights and

disclosures' including the right to cancel the contract at any time"; (2) Diviney

offered no evidence of an inability to pay the penalty; (3) the third factor was

neutral because DOBI did not present evidence of how much Diviney or PDA

profited from the eighty contracts; (4) Diviney's "conduct harmed the public by

disregarding important safeguards and protections for consumers"; (5) the

period of illegal activity was significant; (6) no criminal charges were brought

against Diviney, so a greater civil penalty 2 was warranted; and (7) there was no

evidence of prior violations.

III.

2

Kimmelman, 108 N.J. at 139.

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Vulpis and DPA were licensed in 2017 and 2018, respectively. In 2018,

a DOBI investigator received a complaint stating, "unlicensed representatives

[were] solicit[ing] business for [DPA] . . . us[ing] prefilled contracts [bearing

Vulpis's] signature . . . ." Defense counsel disproved the complaint, providing

DOBI with seven contracts showing Vulpis's wet signatures. The contracts

were identical one-page documents, which contained the following language:

I/We hereby retain [DPA] . . . to advise and assist in

the adjustment of a . . . loss which occurred on or

about [DATE] at [ADDRESS]. I/We agree to pay

DPA for such services a fee of [X]% of the total

insurance proceeds payable and do hereby assign to

DPA said percentage of the insurance recovery. In

consideration of the fee, DPA will undertake all

actions necessary to secure payment of the insurance

proceeds, including, as required, review of the

insurance coverage, assistance in complying with

policy terms and conditions, preparation and

submission of claim documents, negotiation with

insurance company representatives, preparation and

submission of any documents required to obtain

payment. . . . .

If you cancel this contract within the three[-]day

rescission period, you will be responsible to reimburse

DPA for all out-of-pocket costs incurred or paid on

your behalf. Thereafter[,] if you cancel this contract

and DPA has undertaken any services on your behalf,

you are responsible to pay DPA the percentage of

recovery set forth above, unless otherwise agreed.

NOTICE OF RIGHT TO CANCEL

YOU HAVE THE RIGHT TO CANCEL THIS

CONTRACT AND ASSIGNMENT AT ANY TIME

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BEFORE MIDNIGHT OF THE THIRD BUSINESS

DAY AFTER RECEIVING A COPY OF THIS

CONTRACT. IF YOU WISH TO CANCEL THIS

CONTRACT, YOU MUST EITHER (1) SEND A

SIGNED AND DATED WRITTEN NOTICE OF

CANCELLATION BY MAIL OR FAX OR (2)

PERSONALLY DELIVER A SIGNED AND DATED

WRITTEN NOTICE OF CANCELLATION TO DPA

AT THE ADDRESS STATED ABOVE. IF YOU

CANCEL THIS CONTRACT, ANYTHING OF

VALUE THAT YOU HAVE GIVEN TO DPA WILL

BE RETURNED TO YOU OR MADE AVAILABLE

TO YOU WITHIN TEN BUSINESS DAYS

FOLLOWING RECEIPT OF YOUR NOTICE OF

CANCELLATION.

THIS RIGHT TO CANCEL TERMINATES AT

MIDNIGHT ON __/__/__

DOBI filed an order to show cause alleging the contracts

failed to include: (i) the procedures to be followed by

the insured if [they] seek[] to cancel the contract,

including any requirement for a written notice; (ii) the

rights and obligations of the parties if the contract is

cancelled at any time; and (iii) the costs to the insured

or the formula for the calculation of costs to the

insured for services rendered in whole or in part, as

required by N.J.A.C. 11:1-37.13(b)(5)(i) to (iii) . . . .

The matter was transferred to the OAL and each party moved for

summary decision. The ALJ granted DOBI's motion, denied Vulpis's motion,

and concluded Vulpis and DPA violated N.J.A.C. 11:1-37.13(b)(5)(i), (ii), and

(iii). The ALJ ordered Vulpis to reimburse DOBI $1,025 for investigation

costs and ordered a hearing to address the penalties. Following the hearing,

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the ALJ ordered Vulpis to pay a civil penalty of $1,000 for each of the six 3

contracts presented by DOBI.

Vulpis filed exceptions and argued: (1) the ALJ erred in finding a

violation of N.J.A.C. 11:1-37.13(b)(5)(i) because the regulation does not

specify that contracts contain a time period for cancellation; (2) the rights and

obligations upon termination were featured prominently in the contract and

there was no required format to prominently display this language; (3) the ALJ

mistakenly concluded there must be different fees depending on the work

performed by the adjuster and these fees were not explained in the contract; (4)

he should not be responsible for DOBI's investigative costs because it did not

relate to the contracts at issue; (5) DOBI offered no evidence of excess profits

generated by Vulpis, which would give weight to the third Kimmelman factor;

and (6) the seventh Kimmelman factor favored Vulpis.

The commissioner adopted the ALJ's findings regarding the violations.

She agreed the contracts violated N.J.A.C. 11:1-37.13(b)(5)(i), (ii), and (iii)

because they did not: provide procedures for cancellation at any time;

prominently display the rights and obligations of rescission after the rescission

period; and provide the formula for costs rendered in whole or in part. The

3

The ALJ declined to consider the seventh contract because it was terminated

within the three-day rescission period.

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commissioner modified the initial decision to include violations of N.J.S.A.

17:22B-14(a)(1) and N.J.A.C. 11:1-37.14(a)(1) (violating any provision of

insurance laws, including any rules promulgated thereunder); and N.J.S.A.

17:22B-14(a)(4) and N.J.A.C. 11:1-37.14(a)(4) (conduct demonstrating

incompetency).

The commissioner adopted the fines and costs imposed by the ALJ on

Vulpis but modified the ALJ's finding regarding the seventh contract because

whether the contract was cancelled did "not change the fact that [it] was

deficient." Therefore, the commissioner imposed an additional $1,000 penalty.

The commissioner analyzed the Kimmelman factors and found they

favored the imposition of the fines and penalties. She concluded: (1) there

was no bad faith by Vulpis or DPA; (2) there was no evidence of an inability

to pay the imposed fine; (3) Vulpis realized profits from this illegal conduct;

(4) Vulpis "undermined the public's confidence in the [insurance] industry

. . . , causing harm to the public"; (5) the time period of the illegal activity was

relatively short; (6) the lack of a criminal liability for these violations favored

imposition of a monetary penalty; and (7) there was a prior violation by Vulpis

and DPA.

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IV.

In A-3422-21, Diviney argues his contracts complied with N.J.A.C.

11:1-37.13(b)(3)(ii) and described the services to be rendered. He challenges

the finding that he violated N.J.A.C. 11:1-37.13(b)(3)(iii) by not including the

time each contract was signed on grounds the regulation is overly broad and

ultra vires. He claims N.J.A.C. 11:1-37.13(b)(5)(i), (ii), and (iii) are ultra vires

and violate due process because the Legislature never intended to mandate that

public adjuster contracts be cancelable at any time.

Vulpis raises in A-3664-21 the same challenges to N.J.A.C. 11:1-

37.13(b)(5)(i), (ii), and (iii) as Diviney. He asserts the commissioner should

be estopped from finding any violation of these regulations because DOBI

failed to promulgate form contracts as required by PALA.

Appellate review of an administrative agency's decision is limited.

Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9

(2009). "Ordinarily, an appellate court will reverse the decision of the

administrative agency only if it is arbitrary, capricious or unreasonable or it is

not supported by substantial credible evidence in the record as a whole."

Mejia v. N.J. Dep't of Corr., 446 N.J. Super. 369, 376 (App. Div. 2016)

(quoting Henry v. Rahway State Prison, 81 N.J. 571, 579-80 (1980)). We

"do[] not substitute [our] judgment of the facts for that of an administrative

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agency." Campbell v. N.J. Racing Comm'n, 169 N.J. 579, 587 (2001) (citation

omitted). We "defer to matters that lie within the special competence" of the

administrative agency. Balagun v. N.J. Dep't of Corr., 361 N.J. Super. 199,

202 (App. Div. 2003). Our task is limited to deciding:

(1) whether the agency's decision offends the State or

Federal Constitution; (2) whether the agency's action

violates express or implied legislative policies; (3)

whether the record contains substantial evidence to

support the findings on which the agency based its

action; and (4) whether in applying the legislative

policies to the facts, the agency clearly erred in

reaching a conclusion that could not reasonably have

been made on a showing of the relevant factors.

[A.B. v. Div. of Med. Assistance & Health Servs., 407

N.J. Super. 330, 339 (App. Div. 2009) (quoting

George Harms Constr. Co. v. N.J. Tpk. Auth., 137

N.J. 8, 27 (1994)).]

"However, a reviewing court is 'in no way bound by [an] agency's

interpretation of a statute or its determination of a strictly legal issue.'"

Allstars Auto Grp., Inc. v. N.J. Motor Vehicle Comm'n, 234 N.J. 150, 158

(2018) (alteration in original) (quoting Dep't of Child. & Fams., Div. of Youth

& Fam. Servs. v. T.B., 207 N.J. 294, 302 (2011)). "[If] an agency's

determination . . . is a legal determination, our review is de novo." L.A. v. Bd.

of Educ. of Trenton, Mercer Cty., 221 N.J. 192, 204 (2015) (citation omitted).

When an agency interprets its own regulation, we give substantial

deference to the agency unless its interpretation is inconsistent with the

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governing legislation. DiMaria v. Bd. of Trs. of Pub. Emps.' Ret. Sys., 225

N.J. Super. 341, 351 (App. Div. 1988); see also In re Freshwater Wetlands

Prot. Act Rules, 180 N.J. 415, 441 (2004) (stating an "agency's interpretation

of the operative law is entitled to prevail, so long as it is not plainly

unreasonable" (quoting Metromedia, Inc. v. Dir., Div. of Tax'n, 97 N.J. 313,

327 (1984))). This is because regulations are presumed "both valid and

reasonable[.]" G.C. v. Div. of Med. Assistance & Health Servs., 463 N.J.

Super. 79, 93 (App. Div. 2020) (alteration in original) (quoting Hackensack

Riverkeeper, Inc. v. N.J. Dep't of Envtl. Prot., 443 N.J. Super. 293, 302 (App.

Div. 2015)). As such, our courts disfavor a finding that "an agency acted in an

ultra vires fashion in adopting regulations . . . ." In re Adoption of 2003 Low

Income Hous. Tax Credit Qualified Allocation Plan, 369 N.J. Super. 2, 18

(App. Div. 2004) (quoting N.J. Coal. of Health Care Pros., Inc. v. N.J. Dep't of

Banking & Ins., Div. of Ins., 323 N.J. Super. 207, 229 (App. Div. 1999)).

A.

With these principles in mind, we address Diviney and Vulpis's

challenges to the commissioner's findings their contracts violated PALA.

PALA's provisions, namely: licensing, N.J.S.A. 17:22B-3, and bonding,

N.J.S.A. 17:22B-12, requirements; and the statute's description of prohibited

practices, N.J.S.A. 17:22B-13, are clearly designed to protect the consumer

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from unfair practices. N.J.S.A. 17:22B-13(c) requires licensed public adjusters

to enter into "a written memorandum" with an insured, which "specif[ies] or

clearly defin[es] the services to be rendered and the amount or extent of the

compensation on a form and with such language as the [C]ommissioner may

prescribe . . . ." Further, the Legislature expressly authorized the

commissioner to "promulgate any rules and regulations as may be necessary to

effectuate the purposes of [the] act pursuant to the [APA] . . . ." N.J.S.A.

17:22B-20.

"[A]n administrative agency only has the powers that have been

'expressly granted' by the Legislature and such 'incidental powers [as] are

reasonably necessary or appropriate to effectuate' those expressly granted

powers." In re Centex Homes, LLC, 411 N.J. Super. 244, 251 (App. Div.

2009) (second alteration in original) (quoting Avalon v. N.J. Dep't of Envtl.

Prot., 403 N.J. Super. 590, 607 (App. Div. 2008)). Pursuant to this authority,

the commissioner promulgated N.J.A.C. 11:1-37.13(b)(3)(ii) to address the

requirements of N.J.S.A. 17:22B-13(c). The regulation requires every written

memorandum between an adjuster and an insured to contain "[a] list of

services to be rendered and the maximum fees to be charged, which fees shall

be reasonably related to services rendered . . . ." N.J.A.C. 11:1-37.13(b)(3)(ii).

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During the rulemaking process, DOBI received comments on the rule's

requirement that contracts include a list of services. 26 N.J.R. 1711, 1711

(Apr. 18, 1994). One commenter "suggested that N.J.A.C. 11:1-

37.13(b)[(3)(ii)] should be revised to eliminate the requirement that public

adjusters provide, in the contract, a list of the services to be rendered a nd the

maximum fees to be charged for those services." Id. at 1713. The commenter

instead "suggested that an explanation of the services to be rendered should be

provided, for example 'advise and assist in the preparation and presentation of

a claim of insurance.'" Ibid. DOBI responded the "advise and assist" language

does not contain a list of services and fees. Rather, it

contains a broad statement that the public adjuster will

"advise and assist in the adjustment of the claim." As

is evident from the language in the commenter's

contract, an insured cannot ascertain which services

will actually be performed. An insured has the right

to be informed, in advance of the services to be

performed by the public adjuster and the charges for

those services. Notwithstanding that an insured may

agree to a contingency fee or percentage fee

arrangement, the fees must be reasonably related to

the services performed. An insured cannot evaluate

whether the terms of the contract are fair or reasonable

unless [they] know[] exactly which services will be

performed by the adjuster and what will be charged

for those services.

[Ibid.]

N.J.A.C. 11:1-37.13(b)(3)(ii)'s mandate that all contracts contain a list of

services to be rendered was deliberated by DOBI prior to adoption. Requiring

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a list is protective of consumers and consistent with PALA. The regulation

represents a proper exercise of the legislative mandate to inform consumers of

the services provided by a public adjuster. Therefore, the finding that

Diviney's contracts violated the regulation was neither arbitrary nor capricious

and was not reversible error.

B.

We reach the same conclusion regarding Diviney's challenge to the

finding of a violation for not including the time a contract was signed. PALA

prohibits public adjusters from "solicit[ing] . . . between the hours of six p.m.

and eight a.m. during the [twenty-four] hours after the loss has occurred"; and

"enter[ing] into any agreement . . . with an insured to negotiate or settle claims

for loss or damage occurring in this State" during the quiet period. N.J.S.A.

17:22B-13(a) and (b). Therefore, N.J.A.C. 11:1-37.13(b)(3)(iii)'s requirement

that each insurance adjustment contract contain "[t]he time and date of

execution of the contract (day, month, year) by each party" is neither contrary

to nor an unreasonable interpretation of the statute's purpose. Indeed, the time

requirement appropriately forces adjusters to show proof of compliance with

the prohibition on solicitation contained in the statute.

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C.

PALA states a public adjuster's right to compensation under a contract is

contingent on "specifying or clearly defining the services to be rendered and

the amount or extent of the compensation on a form and with such language as

the commissioner may prescribe[.]" N.J.S.A. 17:22B-13(c). Pursuant to the

statute, the commissioner adopted rules requiring each contract include:

(i) [t]he procedures to be followed by the insured if

[they] seek[] to cancel the contract, including any

requirement for a written notice;

(ii) [t]he rights and obligations of the parties if the

contract is cancelled at any time; and

(iii) [t]he costs to the insured or the formula for the

calculation of costs to the insured for services

rendered in whole or in part.

[N.J.A.C. 11:1-37.13(b)(5).]

"It has been a longstanding principle that 'the grant of authority to an

administrative agency is to be liberally construed . . . to enable the agency to

accomplish its statutory responsibilities.'" In re Adoption of N.J.A.C. 17:1-

6.4, 17:1-7.5 & 17:1-7.10, 454 N.J. Super. 386, 395 (App. Div. 2018) (quoting

N.J. Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 562 (1978)). "[A]

challenger must 'demonstrat[e] an inconsistency between the regulation and the

statute it implements, a violation of policy expressed or implied by the

Legislature, an extension of the statute beyond what the Legislature intended,

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or a conflict between the enabling act and other statutory law that cannot be

harmonized.'" G.C., 463 N.J. Super. at 94 (alterations in original) (quoting

Hackensack Riverkeeper, 443 N.J. Super. at 302).

"[A]ny regulation exceeding the agency's grant of authority from the

Legislature is considered ultra vires, [but] such a finding 'is strongly

disfavored, and is made only in exceptional circumstances.'" Gonzalez v. N.J.

Prop. Liab. Ins. Guar. Ass'n, 412 N.J. Super. 406, 417 (App. Div. 2010)

(quoting In re Route 206 at New Amwell Rd., 322 N.J. Super. 345, 352 (App.

Div. 1999)). Although such findings are disfavored, the court's "role is to

enforce the will of the Legislature because [s]tatutes cannot be amended by

administrative fiat." G.C., 463 N.J. Super. at 94 (internal quotations omitted)

(alteration in original).

PALA's legislative history does not convince us the Legislature intended

public adjuster contracts must contain provisions for cancellation at any time.

Indeed, the legislative history shows the Legislature deleted a provision

permitting insureds to unilaterally cancel a contract with a public adjuster

within three days of entering the contract. A. 1548 (1992) (third reprint)

(deleting previously proposed § 14). However, there is no evidence this

translated into legislative authorization for promulgation of a regulation

permitting cancellation at any time.

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The plain language of N.J.A.C. 11:1-37.13(b)(5)(i) and (ii) requires

public adjuster contracts set forth the procedures to be followed in the event of

a cancellation and advise the consumer of their rights in the event of

cancellation, respectively. The regulations do not codify a right of the

consumer to cancel a contract with a public adjuster at any time.

The commissioner misinterpreted N.J.A.C. 11:1-37.13(b)(5)(ii) when she

found in Diviney's case that DOBI "was well within its authority under

[PALA] to promulgate regulations that require that insureds be permitted to

cancel their contracts at any time." Likewise, she misinterpreted N.J.A.C.

11:1-37.13(b)(5)(i) in Vulpis's case when she concluded that regulation

contemplates the ability to cancel a contract with a public adjuster at any time.

These findings were ultra vires of the commissioner's authority and can be

found nowhere in PALA or its legislative record. For these reasons, we

reverse the findings Diviney's contracts violated N.J.A.C. 11:1-37.13(b)(5)(ii)

and Vulpis's violated N.J.A.C. 11:1-37.13(b)(5)(i).

D.

The remaining arguments raised on appeal regarding the violations,

which we have not addressed, including the estoppel argument and due process

challenges to the regulations, lack sufficient merit to warrant discussion in a

written opinion. R. 2:11-3(e)(1)(E). Except for the commissioner's

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misinterpretation of N.J.A.C. 11:1-37.13(b)(5)(i) and (ii), DOBI's regulations

at issue here regarding public adjuster contracts otherwise flow logically from

the legislative authority granted to the commissioner to protect consumers.

V.

Finally, Diviney argues the penalties and costs were arbitrary and

capricious because the commissioner misinterpreted the Kimmelman factors,

ignored the fact the DOBI investigation found no violation of any statute or

regulation, and no consumer was harmed. Vulpis raises similar challenges to

penalties and costs imposed by the commissioner.

An appellate court "owes substantial deference to [an] agency's expertise

and superior knowledge of a particular field." In re Herrmann, 192 N.J. 19, 28

(2007). "That deferential standard applies to the review of disciplinary

sanctions as well." Ibid. (citing Knoble v. Waterfront Comm'n of N.Y. Harbor,

67 N.J. 427, 431-32 (1975)). Accordingly, we undertake a limited "review of

an agency's choice of sanction." In re License Issued to Zahl, 186 N.J. 341,

353 (2006).

"Courts generally afford substantial deference to the actions of

administrative agencies . . . because of the expertise and superior knowledge of

agencies in their specialized fields, and because agencies are executive

actors[.]" Div. of Alcoholic Beverage Control v. Maynards, Inc., 192 N.J. 158,

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183 (second alteration in original) (quoting Zahl, 186 N.J. at 353). Thus, an

agency decision will be upheld so long as it is supported by substantial

credible evidence and is not erroneous as a matter of law. See Henry, 81 N.J.

at 579-80; In re Aetna Cas. & Sur. Co., 248 N.J. Super. 367, 376 (App. Div.

1991). Regarding the

authority to alter a sanction imposed by an

administrative agency, [an appellate c]ourt can do so

only when necessary to bring the agency's action into

conformity with its delegated authority. [A c]ourt has

no power to act independently as an administrative

tribunal or to substitute its judgment for that of the

agency. It can interpose its views only where it is

satisfied that the agency has mistakenly exercised its

discretion or misperceived its own statutory authority.

[In re Polk, 90 N.J. 550, 578 (1982).]

"[T]he test in reviewing administrative sanctions is whether such punishment

is so disproportionate to the offense, in the light of all the circumstances, as to

be shocking to one's sense of fairness." Ibid. (internal quotations and citations

omitted).

Having thoroughly reviewed the record and the commissioner's detailed

findings in both matters, we decline to second-guess the fines and penalties

justifiably imposed in either matter. However, because we have reversed the

findings related to the violation of N.J.A.C. 11:1-37.13(b)(5)(i) and (ii), we

remand both cases for a reassessment of the Kimmelman factors, and

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recalculation of the resulting penalties and costs imposed on Diviney and

Vulpis.

Affirmed in part, and reversed and remanded in part in A-3422-21 and

A-3664-21. We do not retain jurisdiction.

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