Opinion

Seguro Medico, LLC & A.W. Walsh v. M. Humphreys

Court: Commonwealth Court of Pennsylvania
Filed: Jan 3, 2024
Status: Unpublished
On the bench: Cohn Jubelirer, President Judge
Cited by: 0 cases
Authority: More cited than 14.7%

“[I]n the absence of fraud, accident or mistake, a court has neither the power nor the authority to vary or modify the terms of a consent decree.”

How later courts described this case

“[I]n the absence of fraud, accident or mistake, a court has neither the power nor the authority to vary or modify the terms of a consent decree.”
“Extrinsic evidence may be employed to ascertain the meaning of contractual terms only when they are ambiguous.”

Written by the judges who cited it.

The opinion

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Seguro Medico, LLC and Arthur :

Wayne Walsh, :

Petitioners :

v. : No. 293 M.D. 2023

: Argued: December 4, 2023

Michael Humphreys, in his official :

capacity as Acting Commissioner of :

the Pennsylvania Department of :

Insurance, David Buono, in his :

official capacity as Acting Deputy :

Insurance Commissioner, Michael :

Fissel, in his official capacity as the :

Chief of the Department of Insurance :

Field Investigations/Enforcement :

Bureau, and the Commonwealth of :

Pennsylvania Department of :

Insurance, :

Respondents :

BEFORE: HONORABLE RENÉE COHN JUBELIRER, President Judge

HONORABLE CHRISTINE FIZZANO CANNON, Judge

HONORABLE ELLEN CEISLER, Judge

OPINION NOT REPORTED

MEMORANDUM OPINION BY

PRESIDENT JUDGE COHN JUBELIRER FILED: January 3, 2024

Presently before this Court in our original jurisdiction are the preliminary

objections (POs) of Michael Humphreys, in his official capacity as Acting

Commissioner of the Pennsylvania Insurance Department (Department),1 David

Humphreys was confirmed as Insurance Commissioner on June 27, 2023.

Buono, in his official capacity as Acting Deputy Insurance Commissioner, Michael

Fissel (Fissel), in his official capacity as the Chief of the Department’s Field

Investigations/Enforcement Bureau, and the Department (collectively, Respondents)

to Seguro Medico, LLC (Seguro) and Arthur Walsh’s (Walsh) (collectively,

Petitioners) petition for review (Petition) seeking a writ of mandamus and

declaratory relief.

This case centers on whether Respondents acted unlawfully and fraudulently

in their negotiations surrounding two consent orders (the Orders), one between the

Department and Walsh, and the other between the Department and Seguro, which

resulted in their insurance licenses being surrendered, as well as the later alleged

breach of agreements made during the negotiations. The parties having briefed their

respective positions, the POs are ripe for our disposition.2

I. BACKGROUND

The Petition, filed June 26, 2023, alleges as follows.3 Seguro is an insurance

brokerage company. (Petition ¶ 27.) Walsh is licensed to sell insurance in various

states and is part-owner of Seguro. (Id. ¶ 28.) On October 3, 2022, Fissell personally

served three proposed consent orders, one concerning Seguro, one concerning

Walsh, and one concerning Seguro employee Jesus Barrera (Barrera). (Id. ¶ 26.)

This Court held a hearing on Petitioners’ request for emergency relief on August 29, 2023,

and denied a preliminary injunction by memorandum opinion and order dated October 2, 2023.

Seguro Medico, LLC v. Humphreys (Pa. Cmwlth., No. 293 M.D. 2023, filed October 2, 2023).

When ruling on a demurrer, this Court must accept as true all well-pleaded allegations in

the petition for review, including any inferences we can deduce from those allegations, but we

need not accept any legal conclusions, unwarranted inferences, argumentative allegations, or

opinions. Giordano v. Ridge, 737 A.2d 350, 352 (Pa. Cmwlth. 1999). Where documents or

exhibits are attached to a petition for review, we may consider them; we need not accept as true

any allegations in the petition for review which conflict with the documents or exhibits. Allen v.

Dep’t of Corr., 103 A.3d 365, 369 (Pa. Cmwlth. 2014). If there is any doubt as to whether the law

permits recovery, we resolve it in favor of overruling the demurrer. Id.

The Seguro Order begins with an acknowledgment of its rights under the

Administrative Agency Law4 and its waiver of the right to a hearing. (Petition at

Pennsylvania Order Seguro Medico.) The Order contains a Findings of Fact Section,

in which the Department found, inter alia, that Seguro provided its employees with

sales scripts containing false information. (Id. ¶ 3(d)-(i).) The Department found

that Seguro had used those scripts to sell to customers and that Seguro employees

identified themselves as an entity other than Seguro when answering calls. (Id. ¶

3(j)-(k).) Moreover, it found that Seguro had allowed more than 5,000 applications

for insurance to be submitted under Walsh’s name when he was not licensed by the

Department, along with several other misrepresentations regarding the identity of

the employee submitting other applications. (Id. ¶ 3(l)-(o).) Finally, it found that

the Nevada Department of Insurance had investigated Seguro, and in the course of

that investigation, Seguro provided a false statement and forged a signature. (Id. ¶

3(p).) Based on those facts, the Department concluded that Seguro had violated

several provisions of The Insurance Department Act of 19215 related to licensing6

and provisions of the Unfair Insurance Practices Act7 prohibiting unfair and

deceptive acts.8 The Order contained language that it was to be “the entire agreement

of the parties” and that it could not be “amended or modified except by an amended

2 Pa.C.S. §§ 501-508, 701-704.

Act of May 17, 1921, P.L. 789, as amended, 40 P.S. §§ 22-326.7.

Specifically, the Order found Seguro in violation of Section 611-A(2), (6), (7), (11), (17),

and (20) of the Insurance Department Act of 1921, 40 P.S. § 310.11(2), (6), (7), (11), (17), (20).

Section 611-A was added by Section 2 of the Act of December 6, 2002, P.L. 1183.

Act of July 22, 1974, P.L. 589, as amended, 40 P.S. §§ 1171.1-1171.15.

Both Orders found violations of Sections 4 and 5 of the Unfair Insurance Practices Act,

40 P.S. §§ 1171.4-1171.5.

order signed by all the parties [].” (Id. ¶ 10.)9 The Order required Seguro, inter alia,

to surrender its licenses to do business in the Commonwealth. (Id. ¶ 5(b).) The

Walsh Order, which was almost identical to the Seguro order, except not finding

Walsh in violation of Section 611-A(17) of the Insurance Department Act of 1921,

40 P.S. § 310.11(17), indicated that “[a]ll licenses . . . to do the business of insurance

are hereby surrendered.” (Id. ¶ 5(b).)

Petitioners, through their former counsel Eric Reed, contested the proposed

findings of fact appearing in the Orders. (Id. ¶ 32.) Moreover, Reed specifically

challenged the appropriateness of Barrera entering a consent order and contested

identifying Barrera as a “Qualifying Active Officer.” (Id. ¶ 33.) Petitioners allege

Fissell and Reed arrived at an express agreement that (i) the Department would not

pursue a consent order against Barrera, and (ii) the Department would issue a

clearance letter to Barrera, allowing him to pursue licensure in another state. (Id. ¶¶

6, 30, 32, 34.)10 This express agreement, according to Petitioners, further provided

that Barrera would voluntarily surrender his Pennsylvania license after he received

a clearance letter and out-of-state licensure. (Id.) These negotiations are purportedly

memorialized in an email from Fissell to Reed, which states that Fissell had

“spoke[n] to the individuals on [his] end and it appears they would be ok [sic] with

allowing [] Barrera to simply surrender his PA license via our license surrender

process and not have a [consent order] issued. The other two [Orders] would remain

but can be adjusted to Surrenders.” (Id. ¶ 35; Ex. 3 (Reed Affidavit (Aff.)) Ex. A.)

Fissell testified against Petitioners as a part of a Delaware insurance proceeding and did

not mention the underlying Barrera agreement and indicated that the Orders “accurately reflect[ed]

the agreement between the parties.” (Petition ¶¶ 57-58.)

To the extent this allegation is a legal conclusion, we need not accept it as true.

Giordano, 737 A.2d at 352.

After negotiating away the proposed consent order against Barrera, the parties

worked on the Walsh and Seguro Orders. (Id. ¶ 38.) On October 31, 2022, Reed

emailed the executed Walsh and Seguro Orders to Fissell and explained that

“Barrera will submit a voluntary surrender once he has been licensed in another

state. I will calendar 30 days (Nov. 30) for that follow up.” (Id. ¶ 39, (Reed Aff.

Ex. B.) (emphasis in original).) Petitioners aver that Fissel did not dispute this. (Id.

¶ 40.) On November 22, 2022, Barrera mailed a Letter of Clearance Request Form

along with the $25 fee to initiate the voluntary surrender process. (Id. ¶ 42.)

The Department did not issue a clearance letter to Barrera, he has been unable

to obtain an out-of-state license, and the Department has issued a proposed consent

order against him. (Id. ¶¶ 7, 55-56.)11 Nothing happened with respect to the

clearance request between November 22 and November 28, 2022. Fissell followed

up with Reed on November 28, reminding him that the due date for Barrera’s

surrender was to be Wednesday of that week. (Id. ¶ 45.) Reed replied the next

morning and explained his understanding that Barrera was waiting for

documentation from the Department, to which Fissell replied, explaining that the

licensing department had received nothing from Barrera. (Id. ¶¶ 46-47.) The two

exchanged another two emails, which confirmed that Reed could send the

documentation to Fissell via email. (Id. ¶ 50.) Reed received no further response

from Fissell. (Id. ¶ 50.)

Two days after the final email exchange on December 2, 2022, Fissell and a

colleague went to Seguro’s offices in Sinking Spring, Pennsylvania, with armed

The Petition also alleges that “[t]he agreement concerning Barrera’s license was a

material part of the consideration whereby Seguro and Walsh entered consent orders . . . .”

(Petition ¶ 8.) However, we consider that a legal conclusion which we need not accept as true at

this stage. Giordano, 737 A.2d at 352.

federal agents and state law enforcement to execute a federal search warrant. (Id.

¶ 51.) Petitioners allege that Fissell had been working with federal law enforcement

while he was negotiating the Orders. (Id. ¶ 52.) Fissell and his colleague served a

new proposed Order on Barrera. (Id. ¶ 53.) After the execution of the federal search

warrant and service of the new proposed Order to Barrera, Reed sent Fissell a letter

to remind Fissell that “part of the consideration” for the Orders was that “Barrera

[could] surrender his Pennsylvania license while he sought licensure in another state.

Seguro [] and [] Walsh would not have agreed to [the Orders] absent that agreement.”

(Id. ¶ 54; Reed Aff. Ex. E.)

Moreover, Walsh’s Pennsylvania license, issued October 18, 2010, had

expired on March 31, 2021, and Walsh changed his resident license to the state of

Delaware. (Id. ¶¶ 59-60.)12 When he agreed in the Order to “surrender” his license,

he believed he had no license to surrender, and that “species of relief” in the Order,

“from Walsh’s perspective had no real meaning or effect” given his decision to let

his license expire two years prior, and that accordingly, there was no reason to

contest the allegations contained in the Order. (Id. ¶¶ 10-11, 29, 63, 77.) Until

October 18, 2022, Walsh’s National Insurance Producer Registry (NIPR) report

listed his expiration date as March 31, 2021, and showed a status of inactive due to

failure to renew. (Id. ¶ 61.) However, the status of Walsh’s expired Pennsylvania

license changed in the NIPR from “expired” to “surrender,” with a notation that such

change was “[b]y Commissioner” after he signed the Order on November 1, 2022.

(Id. ¶¶ 14, 64-65.)13 Petitioners assert the change in status has caused regulatory

The Petition characterizes this as “fundamental” to the agreement. (Petition ¶ 9.)

The Petition further alleges the “only way these changes could have occurred is by the

Department’s activity, and the only way Walsh’s lapsed ‘license’ could be ‘surrendered’ would be

the Department reactivating the license by way of a renewal.” (Id. ¶ 66.) “The problem . . . is that

(Footnote continued on next page…)

proceedings in other states, jeopardizing Petitioners’ licensure in those states, in

addition to causing damage to Petitioners’ reputation and business affairs. (Id. ¶ 15.)

On December 19, 2022, Reed advised the Department that it had breached the

underlying agreement leading to the Orders by refusing to issue a clearance letter to

Barrera. (Id. ¶ 81; Reed Aff. Ex. E.) On June 16, 2023, Petitioners once again

advised the Department that it was in breach and requested that the Department

vacate the Orders. (Id. ¶¶ 82-83.) However, on June 26, 2023, the Department

replied and declined to do so. (Id. ¶ 84.)

Thereafter, Petitioners filed the Petition. Count I of the Petition seeks a writ

of mandamus directing Respondents to vacate the Consent Orders. (Petition at 24,

Wherefore Clause.) Count II seeks declaratory relief, specifically a declaration that

Respondents breached the agreement forming the basis of Petitioners’ decision to

enter into the Orders, that Respondents breached that agreement by renewing

Walsh’s license without authority, that the conduct amounted to a violation of the

Pennsylvania and United States Constitutions, and that the consent orders are

“vacated and are no longer of any force or effect in the Commonwealth or in any

other State.” (Id. at 25-26, Wherefore Clause.)

In response, Respondents have filed four POs. The first PO demurs to Count I

of the Petition under Pennsylvania Rule of Civil Procedure 1028(a)(4),

Pa.R.Civ.P. 1028(a)(4), specifically arguing that Petitioners have not stated a

cognizable mandamus claim. (POs ¶¶ 14-22.) The second PO demurs to Count II,

the [] Order is silent as to the Department renewing [] Walsh’s license. Further, there was never

any notice or disclosure to Walsh or his counsel that the Department would renew [his] inactive

license.” (Id. ¶ 67.) The Petition outlines the process to effect a license renewal, which requires

the filing of a form and payment of a fee which Walsh never did. (Id. ¶¶ 69-71.) The Department’s

policies do not allow for license renewal more than a year after a license lapses, but Walsh’s license

had expired 19 months prior to the “renewal.” (Id. ¶¶ 72-73.)

arguing that no actual controversy exists, that the Petition pleads insufficient facts

to support an express agreement with respect to Barrera, and that the Orders were

negotiated separately, so accordingly Petitioners’ request for declaratory relief must

fail. (Id. ¶¶ 23-29.) Its third PO again demurs to Count I but alleges it should be

dismissed due to insufficient specificity under Pennsylvania Rule of Civil Procedure

1028(a)(3), Pa.R.Civ.P. 1028(a)(3), because it did not sufficiently plead the

existence of a condition precedent to the other agreements with respect to Barrera.

(Id. ¶¶ 30-40.) The fourth PO demurs to both counts, suggesting that the Petition is

an attempt to unilaterally amend the terms of duly entered contracts. (Id. ¶¶ 41-47.)

II. DISCUSSION

A. Mandamus

1. Parties’ Arguments

Respondents argue that Petitioners’ claim is legally insufficient because there

is no allegation Respondents did not issue the Orders and that Petitioners have not

shown Respondents have a mandatory or ministerial duty to vacate the Orders.

Respondents reject any suggestion the Orders were “inextricably related” as they

were drafted and delivered separately to Walsh, Seguro, and Barrera. (Respondents’

Brief (Br.) at 12.) Respondents point to language in the Orders that they represent

“the entire agreement of the parties[,] . . . and[they] may not be amended or modified

except by an amended order signed by all the parties hereto.” (Id. (quoting Orders

¶ 10).) They note that the Orders were entered as of November 1, 2022, but that no

“contingency [was] ever expressly discussed” prior to the December 19, 2022 email

from Reed. (Id.) Moreover, because mandamus cannot be used to direct an agency

to exercise its discretion in a particular way, in Respondents’ view, this Court could

only direct Respondents to issue—not vacate—the Orders. They argue that, in

substance, Petitioners are asking to unilaterally amend the Orders. With respect to

the allegation that Respondents effected a “renewal” of Walsh’s license in order to

surrender it, Respondents assert that there is no requirement that a license be

reactivated to be converted to surrender status and explain that “Petitioners’ failure

to recognize that entering into a consent order with the Department may have

implications in other jurisdictions does not excuse Petitioners from their legally

binding agreement with the Department.” (Id. at 14.)

Petitioners respond that the Pennsylvania and United States Constitutions

prohibit Respondents’ conduct. Petitioners emphasize that “all interactions between

the government and the individual [must be] conducted in accordance with the

protections of due process.” (Petitioners’ Br. at 9-10 (quoting Commonwealth v.

Cosby, 252 A.3d 1092, 1135 (Pa. 2021)) (emphasis added by Petitioners).)

Petitioners also cite Santobello v. New York, 404 U.S. 257, 262 (1971), for the

proposition that “[w]here the government makes a promise or agreement, ‘so that it

can be said to be part of the inducement or consideration, such promise must be

fulfilled.’” (Petitioners’ Br. at 10 (emphasis added by Petitioners).) Petitioners

assert that vacatur of consent orders is appropriate where they are in violation of a

party’s rights, citing A.J.B. v. A.G.B., 180 A.3d 1263, 1274 (Pa. Super. 2018), in

support.14

Petitioners point out that while generally mandamus will not lie to compel

discretionary action, mandamus can compel performance of discretionary action

where the failure to do so on the part of the government actor is “arbitrary,

Decisions of the Superior Court are not binding authority on this Court but may be cited

for their persuasive value. Lerch v. Unemployment Comp. Bd. of Rev., 180 A.3d 545, 550 (Pa.

Cmwlth. 2018).

fraudulent or based on an erroneous view of the [l]aw.” (Petitioners’ Br. at 11

(quoting Carino v. Bd. of Comm’rs of Armstrong Cnty., 468 A.2d 1201, 1203 (Pa.

Cmwlth. 1983)) (emphasis added in original).) Further, they assert that promissory

estoppel “can be asserted simultaneously in a mandamus action.” (Petitioners’ Br.

at 11.) They emphasize that at this stage, we must accept as true that the parties’

agreement related to Barrera was a material aspect of the overall agreement. They

reiterate that “[a]s Walsh had no license as of March 31, 2021, there is simply no

way for such license to be inactivated or updated in November 2022 without first

being reactivated,” suggesting that we can reasonably deduce that inference from

Exhibit H of the Petition. (Id. at 13 emphasis in original).). They summarize that

Petitioners relied on the Barrera contingency to their detriment. They argue that the

Orders are the product of “deceptive and misleading conduct” and accordingly, must

be vacated, asserting that they have no adequate remedy at law. (Id. at 14.)

2. Legal Principles

Meaning “we command” in Latin, Black’s Law Dictionary 1046-47 (9th ed.

2009), mandamus is an extraordinary writ. Arroyo v. Pappert, 876 A.2d 1073, 1075

n.4 (Pa. Cmwlth. 2005). “The purpose of mandamus is not to establish legal rights,

but to enforce those rights which are already established.” Id. Our Supreme Court

has said that petitioners must satisfy three elements for mandamus to be appropriate:

“(1) a clear legal right in the petitioner, (2) a corresponding duty in the respondent,

and (3) an absence of any other appropriate or adequate remedy.” Equitable Gas

Co. v. City of Pittsburgh, 488 A.2d 270, 272 (Pa. 1985). Mandamus relief “can never

be invoked in a doubtful case[,]” so “[w]here doubt as to the [petitioner]’s right or

[respondent]’s duty exists, the remedy is neither appropriate nor available.” Id.

at 273 (internal citation and quotation marks omitted) (emphasis added). Finally,

“[t]he burden of proof falls upon the party seeking this extraordinary remedy to

establish [its] legal right to such relief.” Sinkiewicz v. Susquehanna Cnty. Bd. of

Comm’rs, 131 A.3d 541, 546 (Pa. Cmwlth. 2015) (quoting Werner v. Zazyczny, 681

A.2d 1331, 1335 (Pa. 1996)). At the preliminary objections stage, we will sustain a

demurrer to a petition for review requesting mandamus where a party “has failed to

establish a clear right to relief in mandamus.” Raleigh v. Pa. Hum. Rels. Comm’n,

660 A.2d 177, 180 (Pa. Cmwlth. 1995).

3. Analysis

We first turn to the legal basis Petitioners assert establishes the legal right of

Petitioners to have the Orders vacated and the duty of Respondents to do so.

Petitioners correctly state that professional licenses are property interests.

(Petition ¶¶ 87-88 (citing Telang v. Bureau of Pro. & Occupational Affs., 751 A.2d

1147, 1151 (Pa. 2000)).) It follows, then, and is well established that, the

Commonwealth may not deprive a licensee of a license—their property—without

due process. Shah v. State Bd. of Med., 589 A.2d 783, 787 (Pa. Cmwlth. 1991). See

U.S. CONST. amend. XIV, § 1 (“[N]or shall any State deprive any person of life,

liberty, or property, without due process of law.”). To comport with due process,

when the Commonwealth deprives a person of property, the process due is notice

and an opportunity to be heard. Tsolo v. Foster, 561 A.2d 861, 863 (Pa. Cmwlth.

1989).15

Here, instead of citing to cases involving the level of process due with respect

to deprivations of property, Petitioners look to cases implicating deprivation of

The General Assembly has codified that right in the administrative context in Section

504 of the Administrative Agency Law. 2 Pa.C.S. § 504 (“No adjudication of a Commonwealth

agency shall be valid as to any party unless he shall have been afforded reasonable notice of a

hearing and an opportunity to be heard.”).

liberty in the criminal context. In Cosby, our Supreme Court vacated the conviction

of a criminal defendant whom a prosecutor had promised he would not prosecute

criminally in exchange for the defendant’s testimony in a civil case. 252 A.3d at

1100, 1147. The Court further chronicled cases involving “prosecutorial

inducements made during the guilty plea process.” Id. at 1132. It specifically

applied “contract law principles to criminal negotiations.” Id. at 1133.

Santobello, also a criminal case, emphasized the importance of “fairness in

securing agreement between an accused and a prosecutor.” 404 U.S. at 261

(emphasis added). There, a criminal defendant accepted a plea deal on the condition

that the prosecutor would not recommend a sentence. Id. at 263. The prosecutor

breached that agreement, and the Court vacated the judgment. Id. at 263.

These cases, of course, emphasize the due process protections which exist to

ensure that where a criminal defendant’s liberty is at stake, prosecutors keep their

promises. However, Petitioners, in this litigation, are not the accused in a criminal

case, and Respondents are not criminal prosecutors. Accordingly, Cosby and

Santobello are inapposite here, and in only relying on those cases and their

underlying principles, Petitioners have not carried their weighty burden of

establishing a clear right to relief in mandamus.

Moreover, in a case where the petitioner was requesting issuance of license

via mandamus, we explained:

[M]andamus to compel the issuance of licenses is not the proper

remedy. Just because there is a due process violation does not mean

that the person whose rights were violated is entitled to a license as

a remedy, only an order requiring that he or she receive the

process which is due.

Stone and Edwards Ins. Agency, Inc. v. Dep’t of Ins., 636 A.2d 293, 303 (Pa.

Cmwlth. 1994) (emphasis added). Thus, if Petitioners could successfully make out

a procedural due process violation, they would not necessarily be entitled to

mandamus requiring vacatur of the Orders, but rather “the process which is due”—

in this context, an opportunity to be heard.

B. Declaratory Relief

1. Parties’ Arguments

Respondents contend that Petitioners’ Count II seeking relief under the

Declaratory Judgments Act16 (DJA) is legally insufficient because “state officials

cannot be compelled to perform their duties in a particular way.” (Respondents’ Br.

at 15 (citing Finn v. Rendell, 990 A.2d 100 (Pa. Cmwlth. 2010)).) Respondents then

assert that Petitioners have not pled sufficient facts to show that any agreement

regarding Barrera existed before the Orders. They focus on the fact that the three

agreements had been separately executed, and that they each contained language

explicitly indicating each Order is the entire agreement of the respective party

thereto. In the alternative, they argue that even if the Barrera agreement did exist, it

implicates a non-existent controversy with Barrera, not with Petitioners. They

emphasize that the Court should “decline to rewrite a negotiated agreement when

performance of the alleged inaction can be ordered.” (Respondents’ Br. at 16.)

After generally explaining the requirements for relief under the DJA,

Petitioners explain that the fundamental right to one’s reputation “cannot be

abridged without compliance with state constitutional standards of due process and

equal protection.” (Petitioners’ Br. at 16 (quoting Hatchard v. Westinghouse Broad.

Co., 532 A.2d 346, 350 (Pa. 1987)).) Petitioners then assert that, contrary to

42 Pa.C.S. §§ 7531-7541.

Respondents’ perspective, the actions against Petitioners and Barrera were not

separate because the same counsel represented all three parties leading to virtually

identical Orders. Moreover, they argue granting of declaratory relief would resolve

an actual dispute between the parties. They note that, specific to Walsh, the Order

has caused other jurisdictions to scrutinize Walsh, and the change of his licensure

status from expired to inactivated is creating difficulty—and “had [Walsh] known

that Respondents planned to [reactivate his license], he would have contested the

inaccurate facts contained in the [] Order.” (Petitioners’ Br. at 17.) Seguro’s facing

more regulatory scrutiny is also, in Petitioners’ view, due in part to the Department’s

failure to issue a clearance letter to Barrera.

2. Legal Principles

The DJA provides that “[c]ourts . . . shall have power to declare rights, status,

and other legal relations. . . .” Section 7532 of the DJA, 42 Pa.C.S. § 7532. Such

declarations “may be either affirmative or negative . . . and . . . shall have the force

and effect of a final judgment or decree.” Id. Section 7533 of the DJA authorizes

courts to “determine[] any question of construction or validity” concerning, inter

alia, a contract. 42 Pa.C.S. § 7533. Moreover, courts may interpret a contract before

or after breach. Section 7534 of the DJA, 42 Pa.C.S. § 7534. Courts have the

discretion to deny declaratory relief where it “would not terminate the uncertainty

or controversy giving rise to the proceeding. . . .” Section 7537 of the DJA, 42

Pa.C.S. § 7537. Finally, courts may resolve factual disputes necessary to determine

whether it should grant the requested declaratory relief. Section 7539 of the DJA,

42 Pa.C.S. § 7539.

We have explained that, to obtain declaratory relief, there must be “an ‘actual

controversy’ indicating imminent and inevitable litigation and a direct, substantial,

and present interest.” Cnty. Comm’rs Assoc. of Pa. v. Dinges, 935 A.2d 926, 931

(Pa. Cmwlth. 2007) (en banc). “A substantial interest is an interest exceeding the

interest of all citizens in procuring obedience to the law; an interest is direct if there

is a causal connection between the asserted violation and the harm complained of;

an interest is immediate if the causal connection is neither remote nor speculative.”

Finn, 990 A.2d at 103.

We must also look to the legal rules around consent decrees to determine

whether declaratory judgment might lie here. “As a general rule, orders entered by

consent of the parties are not appealable.” Game Comm’n v. Kapec, 303 A.3d 866,

870 (Pa. Cmwlth. 2023). Our Supreme Court has explained,

[a]lthough a consent decree does not represent a legal determination by

a court or administrative tribunal of the matters in controversy, it

nevertheless has important consequences. A consent decree has a [r]es

judicata effect, binding the parties with the same force and effect as a

final decree rendered after a full hearing upon the merits. In the absence

of fraud, accident or mistake, a court has neither the power nor the

authority to modify or vary the terms of a consent decree. Nor is such

a decree subject to a collateral attack.

Pa. Hum. Rels. Comm’n v. Ammon K. Graybill, Jr., Inc., 393 A.2d 420, 422-23 (Pa.

1978) (internal citations omitted). See also Dravosburg Hous. Ass’n v. Borough of

Dravosburg, 454 A.2d 1158, 1161 (Pa. Cmwlth. 1983) (“[I]n the absence of fraud,

accident or mistake, a court has neither the power nor the authority to vary or modify

the terms of a consent decree.”). Moreover, in interpreting a consent order, courts

must examine them “in accordance with the principles governing all contracts”

because they are, in essence “judicially sanctioned contract[s.]” Commonwealth by

Shapiro v. UPMC, 188 A.3d 1122, 1131 (Pa. 2018).

A basic principle in contract law is that “[a]n integration clause which states

that a writing is meant to represent the parties’ entire agreement is . . . a clear sign

that the writing is meant to be just that . . . .” Yocca v. Pittsburgh Steelers Sports,

Inc., 854 A.2d 425, 436 (Pa. 2004). An integration clause usually signifies that the

contract “expresses all of the parties’ negotiations, conversations, and agreements

made prior to its execution.” Id. (emphasis added). Relatedly, the parol evidence

rule requires that, where the contract is the entire agreement, “evidence of any

previous oral or written negotiations or agreements involving the same subject

matter . . . is almost always inadmissible to explain or vary the terms of the

contract.” Id. at 436-37. (emphasis added).

3. Analysis

First, we agree with Respondents that the facts alleged in the Petition do not

show that Seguro and Walsh’s agreement to the Orders was conditioned on any

agreement related to Barrera. On October 25, Fissel emailed Reed and said “I spoke

to the individuals on my end and it appears they would be ok [sic] with allowing []

Barrera to simply surrender his PA license . . . and not have a [consent order issued].”

(Petition ¶ 35; Reed Aff. Ex. A.) Those emails are silent as to Walsh and Seguro

except to indicate that their Orders “would remain but can be adjusted to

Surrenders.” (Id.) After determining that, Reed and Fissel proceeded to separately

negotiate the Walsh and Seguro Orders. (Id.) On October 26, Reed sent an email

asking for specific language to be added and stricken in the Walsh and Seguro

Orders, with no mention of Barrera. (Id.) Between October 26 and 28, the two

exchanged several emails going back and forth about whether amendments to the

Orders’ language would be acceptable. Petitioners had an opportunity, as evidenced

by Reed’s negotiations with Fissel, to add language to the Orders to make clear that

their agreement to the Orders was conditional on Respondents’ alleged promises to

Barrera. But no such negotiation occurred, and it was not until December 19, 2022—

more than a month after the Orders had been executed and delivered to

Respondents—that Reed stated plainly that Petitioners “would not have agreed to a

consent order absent that agreement.” (Id. Ex. E.)

Next, we address the issue of the alleged reactivation of Walsh’s license—for

which he seeks a declaration that “Respondents’ [sic] further breached the agreement

that lead [sic] to Petitioners’ signing and agreeing to the [] Orders by renewing the

expired Pennsylvania license of Walsh without consent or authority.” (Petition at

25, Wherefore Clause, ¶ (b).) The plain terms of the Order specifically state that

“[a]ll licenses of [Walsh] to do the business of insurance are hereby surrendered.”

(Petition, Pennsylvania Order Walsh, ¶ 5(b) (emphasis added).) The NIPR report,

after entry of the Walsh Order, then said “Inactive By Commissioner.” (Petition at

Ex. 6.) Further down, it specifies as “Date of Action” November 1, 2022, which

says “License, Surrendered” due to “Fraudulent/Dishonest Practices.” (Id.)

Contract law, as discussed above, relevant to consent order construction, requires us

to look at the plain language of the Order to determine the parties’ intent. UPMC,

188 A.3d at 1132 (“Extrinsic evidence may be employed to ascertain the meaning

of contractual terms only when they are ambiguous.”) (emphasis added).

Here, the Order unambiguously stated that Walsh was surrendering his

license, and so it follows that his NIPR report reflects a surrender. We need not

accept as true any allegations which conflict with the documents appended to the

Petition, nor must we accept the legal conclusions contained therein. Allen v. Dep’t

of Corr., 103 A.3d 365, 369 (Pa. Cmwlth. 2014). Petitioners allege that Walsh

thought the surrender language of the Order was “meaningless.” (Petition ¶ 63.)

The plain language of the Order to which Walsh agreed clearly supports the

Department’s action as reflected in the NIPR report. We need not, consistent with

our standard of review, accept as true Petitioners’ conclusion of law as to the

meaning and effect of that contractual language. Allen, 103 A.3d at 369.

Accordingly, we can say with certainty the law will not permit us to declare that

Respondents renewed Walsh’s license without authority. (Petition at 25, Wherefore

Clause, ¶ (b).)

We must next consider whether, as Respondents contend, Petitioners are

simply trying to have this Court reform duly entered consent orders. As discussed

above, absent, inter alia, fraud, a court may not reform the terms of a consent order.

Ammon K. Graybill, Inc., 393 A.2d at 422. We have already rejected Petitioners’

arguments about the fraud the Petition alleges—specifically the Barrera agreement

and alleged reactivation of Walsh’s license. Accordingly, we agree with

Respondents that we may not reform or vacate the Orders.

Moreover, to the extent the Petition attempts to state a fraudulent inducement

claim within Count II, (“Respondents[] made misrepresentations of facts to

Petitioners and their counsel which induced Petitioners to enter the [Orders],”

(Petition, Wherefore Clause, ¶ (c)) that claim must also fail. To state a claim for

fraudulent inducement under Pennsylvania law, it is necessary to plead sufficient

facts to satisfy six elements:

(1) a representation; (2) which is material to the transaction at hand;

(3) made falsely, with knowledge of its falsity or recklessness as to

whether it is true or false; (4) with the intent of misleading another

into relying on it; (5) justifiable reliance on the misrepresentation;

and (6) the resulting injury was proximately caused by the reliance.

Eigen v. Textron Lycoming Reciprocating Engine Div., 874 A.2d 1179 (Pa. Super.

2005). See also SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 206 (3d Cir.

2022) (“The six elements of fraud apply . . . to fraudulent inducement . . . .”)

(applying Pennsylvania law).17

Beyond baldly asserting that misrepresentations induced Petitioners to enter

into the Orders, Petitioners do not develop this claim by citing any relevant authority

in their Petition or in their brief. (See, e.g., Petitioners’ Br. at 15-18.)18 Petitioners

suggest the Barrera agreement “was a material term of the overall agreement.” (Id.

at 12 (emphasis in original).) But absent from the Petition are specific facts that

demonstrate why that agreement would have been material, and as discussed above,

the negotiations themselves also belie the materiality of that agreement. Further, the

exhibits attached to the Petition run counter to the existence of the requisite causal

relationship between the alleged misrepresentations and the injury of which

Petitioners complain, namely, regulatory scrutiny in other jurisdictions. (Petition

¶ 15.) (See, e.g. Petition, Ex. 2, Louisiana Fine (“Seguro [] consented to the

imposition of a $300[] fine imposed against the agency’s license by the Kansas

Insurance Department . . . . This administrative action was not reported to the

[Louisiana Insurance Department] within 30 days.”); Id. at Washington Order (“On

November 30, 2021, the Insurance Commissioner received notification . . . that the

State of Indiana imposed an administrative action against [Walsh] on November 2,

2021.”) (emphasis added); Id. at Kansas Order (“On January 28, 2022, [Seguro]

applied for the renewal of their Kansas [license] . . . . [Seguro] did not report [a Utah]

administrative action from the Utah Insurance Commissioner dated December 27,

Though not binding on this Court, we may turn to federal district and circuit court

decisions for their persuasive value on questions of state law. Zablow v. Bd. of Educ. of Sch. Dist.

of Pittsburgh, 729 A.2d 124, 128 (Pa. Cmwlth. 1999).

Pennsylvania law requires a heightened pleading standard for fraud, specifically, “a

pleading of fraud must be done with particularity and requires specific allegations.” Skonieczny v.

Dep’t of Cmty. & Econ. Dev., 853 A.2d 1172, 1181 (Pa. Cmwlth. 2004).

2021.”). In sum, Petitioners have not factually or legally developed a fraudulent

inducement claim, so to the extent we can read the Petition to advance such a claim,

it fails.

In addition, Walsh and Seguro agreed in each Order that it constituted the

entire agreement between Seguro and the Department and Walsh and the

Department. (See POs ¶ 12 (“The [] Orders further state that they are each ‘the entire

agreement of the parties with respect to the matters referred to therein, and . . . may

not be amended or modified except by an amended order signed by all the parties

thereto.’”).) (See also Answer to POs ¶ 12 (“Admitted that this language is contained

in the [] Orders . . . . [T]hese [] Orders were procured unconstitutionally. . . .”).) Of

course, the “entire agreement” language—an integration clause—alone suggests the

Order was meant to include the entire agreement. Yocca, 854 A.2d at 436.

Moreover, a review of the Orders satisfies us that they are “complete within

[themselves], couched in such terms as import a complete legal obligation . . . .” Id.

Petitioners have not alleged that a term was “omitted from the [Orders] because of

fraud, accident, or mistake.” Id. at 437 (emphasis added). The parol evidence rule

bars us, then, from considering competing interpretations about the subject matter of

these agreements, including supposed agreements or preconditions to their effect.

Id. at 436. Interpreting the Orders as contracts, as we must, we can say with certainty

the law will not permit us to declare the Orders “vacated and [] no longer of any

force or effect . . . [,]” (Petition at 26, Wherefore Clause, ¶ (e)),19 or that

Subparagraph (d) requests a declaration that Respondents have violated Petitioners’

constitutional rights. (Petition, Count II at Wherefore Clause, ¶ (d).) As discussed at length with

respect to Count I, Petitioners have erroneously relied on due process arguments rooted in criminal

law. Moreover, in the Orders, Petitioners expressly waived their due process right to an

opportunity to be heard. (Petition, Pennsylvania Order, ¶ 2.) Moreover, to the extent the

constitutional claim is based on the existence of the Barrera agreement as a condition to entering

the Orders, we also reject the due process claim on that basis.

“Respondents’ [sic] made misrepresentations of facts to Petitioners and their counsel

which induced Petitioners to enter the Consent Orders[,]” (Petition at 25-26,

Wherefore Clause, ¶ (c).)

We also address Respondents’ argument that Petitioners have not alleged facts

tending to show an actual controversy as required by the DJA. Petitioners request a

declaration that “Respondents breached the agreement that lead [sic] to Petitioners’

signing and agreeing to the [] Orders.” (Petition at 25, Wherefore Clause, ¶ (a).)

Here, it is clear that Petitioners’ interest in the resolution of this question is

substantial, as it “exceed[s] the interest of all citizens in procuring obedience to the

law. . . .” Finn, 990 A.2d at 103. The allegations that these Orders are impacting

Petitioners specifically satisfies us that they have a “substantial” interest in the

resolution of this dispute.

Petitioners allege that, but for the underlying agreement regarding Barrera,

they would not have entered into the Orders. However, as discussed above, the harm

complained of—mostly actions taken by other jurisdictions as a result of the

admissions in these Orders—would have occurred even if Respondents had upheld

their end of the bargain with respect to Barrera. Therefore, on its face, the Petition

does not allege a direct connection between Respondents’ failure to uphold their

end of the Barrera bargain and the complained-of harm here—namely, all of the

consequences flowing from signing the Orders. Accordingly, the law says with

certainty that no recovery is possible with respect to subparagraph (a) of the

requested declaratory relief.

Finally, we must determine whether the facts as alleged satisfy the immediacy

requirement—namely, that “the causal connection is neither remote nor

speculative.” Id. Here, the connection between Respondents’ failure to uphold the

alleged Barrera agreement and the alleged harm to Petitioners’ reputation, business,

and the regulatory proceedings against them in other jurisdictions is remote. Indeed,

the Petition implies Petitioners would have entered into the same Orders had they

believed Respondents would truly uphold the underlying agreement regarding

Barrera. (See, e.g., Petition, ¶ 79; Reed Aff. Ex. E.) If Respondents had upheld their

end of the bargain, all the same harm would ostensibly have occurred. Moreover,

we agree with Respondents that to the extent Respondents’ failure to uphold its

alleged agreement with Barrera has any separate deleterious effect, it is Barrera who

should seek redress for that breach. We conclude that Petitioners have not alleged a

substantial, immediate, and direct interest with respect to the “underlying

agreement,” and accordingly, we can say with certainty the law will not permit a

declaration as to subparagraph (a) of the requested declaratory relief. (Petition at

25, Wherefore Clause, ¶ (a).) Therefore, we sustain the demurrer to Count II of the

Petition.

III. CONCLUSION

For all the foregoing reasons, the Court sustains Respondents’ first and second

POs and dismisses the Petition in its entirety.20

__________________________________________

RENÉE COHN JUBELIRER, President Judge

Having sustained Respondents’ first two POs, we dismiss the remaining two as moot.