MacDonald, Jose A. Torres, Area Supervisor for the Office of the Comptroller, Division of Finance in Tampa, Florida, Richard A. Jenkins, petitioner's Financial Examiner in Tampa, John T. Lawry, petitioner's Financial Examiner in Tampa, and Joseph Ehrlich, petitioner's Deputy Director of the Division of Finance. The repondents presented the testimony of respondents Joseph Langford
and Ronald Clampitt and the testimony of Cathy Anderson, closing agent for Homeowners Title and Abstract Company of St. Petersburg and D. Tomlinson. Respondents' Exhibits A through G and I through O were received into evidence. The petitioner's objection to respondents' Exhibit J was sustained.
Subsequent to the hearing, the parties submitted proposed findings of fact, proposed conclusions of law and proposed recommendations. To the extent that the parties' proposed findings of fact are not incorporated in this Recommended Order, they are rejected as being either not supported by competent substantial evidence, irrelevant and immaterial to the issues for determination or as constituting conclusions of law as opposed to findings of fact.
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
Respondent Ronald E. Clampitt is the President of Respondent Action Mortgage Corporation and is the person designated to act on behalf of said corporation under the provisions of Chapter 494, Florida Statutes. Action Mortgage Corporation currently holds a mortgage brokerage license. The individual mortgage broker license issued to respondent Clampitt expired on August 31, 1980, and has not been renewed.
Respondent Joseph W. Langford currently holds a license as a mortgage solicitor for and on behalf of Home Mortgage Investment Corporation. His prior individual mortgage broker license expired on August 31, 1980, and has not been renewed.
COUNT I
The respondents were counter codefendants in a civil suit filed in the Circuit Court of Sixth Judicial Circuit of the State of the Florida in and for Pinellas County, which case was numbered 78-12033-18 and styled Action Mortgage Corporation, etc., et al., Plaintiffs, vs. Denture Services, Inc., etc., et al., Defendants.
On February 8, 1980, a Final Judgment was entered in that proceeding by Circuit Court Judge David Seth Walker. Judge Walker found, as a matter of fact, that a limited confidential/fiduciary relationship existed between Langford and the counter-plaintiffs, and opined that certain activities on the part of the individual counter-defendants were "bedecked with the badge of fraud." The Court, inter alis, awarded the counter-plaintiffs Final Judgment in the nominal sum of $1.00, plus costs. It was noted that the claim of the counter-plaintiffs for punitive damages had previously been denied.
Subsequent to the Final Judgment enteed in Case No. 78-12033-18, the counter-plaintiffs filed a Motion for Rehearing on the matter of punitive damages, since the Court had noted in its Final Judgment that the activities of the counter-defendants were "bedecked with the badge of fraud." The counter- defendants (respondents herein) also moved the Court to alter or amend its Final Judgment so as to remove the fraud language quoted above. By Order filed on March 10, 1980, both motions were denied by Judge Walker.
Judge Walker's deposition was taken on August 22, 1980, and was received into evidence in this proceeding as petitioner's Exhibit 9. Referring to the language in the Final Judgment "bedecked with the badge of fraud," Judge Walker makes the following comments:
"I do not interpret that as a finding of fraud absolute, but just that there were indicia of fraud." (p.4)
"But I did not consider this to be an absolute finding of fraud. I think I mentioned that
on one of the motions that the counter-plaintiffs made to reconsider the judgment of $1.00 or the refusal to grant punitive damages.
I reiterated at that hearing that I found that it was an indicia, but I did not go so far in my own mind as to specifically find fraud." (p. 4)
"If I had wanted to find specifically that they were in fact guilty of fraud, I would have said as much. The phrase, in my mind, 'bedecked with a badge of fraud,' is meant to suggest the indicia of fraud. Fraud is a legal conclusion that must be based upon several legally accepted circumstances. And in law school we learned the term, 'badges of fraud.' But a badge of fraud does not per se constitute fraud. I didn't feel
that I needed to go too deeply in the questions, because of my finding that the counter-plaintiffs had not in fact suffered any real damage." (pp. 7 and 8)
"I listed a certain series of circmustances and activities which had taken place, rather
specifically. And I found that these activities and circumstances were bedecked by the badge of fraud which is admittedly a little bit flowery for normal language, but that's what I said. I did not specifically find fraud. Fraud always carries with it the badges of fraud in and of it- self does not collaterally, and on the other
hand mean that fraud exists. I did not go that far in this particular judgment. I did not feel I had to." (pp. 18 and 19)
"I did not feel that it was necessary for the Court to delve into the ultimate determination of fraud." (p. 20)
"I do not perceive that my final judgment made an absolute finding of fraud. Again, the phrase, 'badge of fraud,' simply menas to me an indicia of fraud, and I'm confortable with the finding that that indicia is there. But as far as a
finding of fraud is concerned, I did not proceed to that point, and it's not there." (pp. 20 and 21)
COUNT II
In 1978, Dorothy L. Jones and Byron A. Jones were the owners of real property located at 2656 Granada Circle East in St. Petersburg, Florida. The first mortgage on that property held by Molten, Allen and Williams, Inc. or the Mortgage Corporation of the South, was in default and a foreclosure action, and is pendens against the property had been filed. The monthly mortgage payments were approximately $225. At that time, Dorothy Jones was separated from her husband, lived in the home with her five minor children and was having financial difficulties.
Having seen a newspaper advertisement, Dorothy Jones contacted the Respondents in an effort to obtain a second mortgage or additional funds with which to pay her debts and preserve her homestead. Neither of the Respondents agreed to make a second mortgage loan to Mrs. Jones. Instead, they agreed to make an outright purchase of the Jones's residence and lease the property back to Dorothy Jones at a monthly payment which approximated her prior monthly mortgage payment. The lease payments were later increased to $275 per month due to the loss of homestead exemption on the property. It was Mrs. Jones' understanding that she would be given the opportunity to repurchase the home at less than fair market value though she may have to pay a down payment and higher monthly payments. No appraisal was performed on the property.
The closing of the transaction took place at a title company, independent of the Respondents. Mrs. Jones understood that she was signing a deed to the property and other documents transferring title to Respondents. The property was purchased by the Respondents in February of 1978 for $23,656.54 and the transfer was made subject to the mortgage to Molten, Allen and Williams, Inc., in the amount of $21,848.44. No funds were paid to Mr. or Mrs. Jones at the time of closing.
During the months which followed, Dorothy Jones fell far behind in her lease payments to the Respondents. In May of 1979, Respondent Langford notified Mrs. Jones that the property owners had elected to sell the property in the near future, and advised her to contact his office if she was still interested in purchasing the property.
In July of 1979, Dorothy Jones filed a Complaint against the Respondents in the Circuit Court in and for Pinellas County seeking a declaratory decree as to her rights under the aforementioned deed, lease and oral agreement to repurchase the property. (Civil No. 79-7307-17). Mrs. Jones was represented by an attorney in that action. By Order filed on July 29, 1980, the Circuit Court approved the terms and conditions of a Stipulation entered into by the Respondents and Mrs. Jones whereby Mrs. Jones was given the opportunity to purchase the subject property from the Respondents for $32,000 within 90 days, and was also required to pay back rental payments to the Respondents. For some reason not clear from the evidence adduced in the proceeding, Mrs. Jones did not repurchase the property from the Respondents. By Final Judgment filed on October 15, 1980, Mrs. Jones' claim against the Respondents was dismissed with prejudice and Respondents were awarded a judgment against Mrs. Jones in the amount of $2,887.50. Apparently, an eviction action in the County Court for Pinellas County resulted in the award of possession of
the home to the Respondents. Mrs. Jones vacated the subject property in October of 1980.
In April of 1981, Respondents sold the subject property to Harold and Peralita Odlam for a purchase price of $41,7000.
COUNT III
Respondent Clampitt was licensed as an individual mortgage broker for the years 1978 and 1979. His 1979 license expired on August 31, 1979, as did the license of Action Mortgage Corporation. Mr. Clampitt made an attempt to renew his individual mortgage broker license on October 16, 1979. The renewal license for Action Mortgage Corporation also bears the date of October 16, 1979.
During the period of time between August 31, 1979 (the date upon which his individual mortgage broker license expired) and October 16, 1979 (the date upon which said renewal license was issued), respondent, Clampitt, as an individual mortgage broker, received at least three mortgage brokerage fees or commissions.
A broker is considered to be licensed by the petitioner when a completed application form accompanied by the correct fee is received by the petitioner. It is the petitioner's practice to mail out renewal application to its approximately 6,500 licensees on July 15 of each year with the request that they be returned by August 15. All licenses expire on August 31 and are reissued for the following year to be effective from September 1 to August 31. Those applications which are received by the petitioner after August 31 bear a different license date.
The correct amount to be remitted for the renewal of respondent Clampitt's individual license was $125-- a $75 license fee and a $50 guaranty fund fee. The $190 check received by the petitioner from the respondent on or before August 31, 1979, was accompanied by three renewal application cards. The petitioner did not apply $125 of the $190 to the renewal of respondent Clampitt's individual license because petitioner could not ascertain how the respondent desired to have the funds applied. Although a small minority of licensees do not renew their licenses in a timely fashion, it is not the practice of the petitioner to directly notify a licensee that his license has expired.
Respondent Clampitt did hold a license with an effective date of September 13, 1979, as an additional broker for Fickling and Walker, Inc. in Winter Park, Florida. Under this license, respondent Clampitt would have no authority to act individually or on behalf of anyone other than Fickling and Walker, Inc.
COUNT IV
Respondent Clampitt arranged for a loan to a Mr. and Mrs. Fink. When examining the respondent's books, petitioner's financial examiner was unable to account for an apparent overcharge of $13.80 for credit life insurance on the loan. The examiner did not examine the loan closing documents with regard to this transaction.
The evidence establishes that there had been a clerical error in the respondent's office concerning this transaction, that the cost of the credit life insurance had been miscalculated and that respondent Clampitt was entitled to the $13.80.
COUNT V
It is the practice of the respondent Clampitt to interview his clients over the telephone, look at the involved property and then, if he agrees to make a loan, send the client to a title insurance company to sign the necessary papers. These papers include a loan closing statement, the required RESPA statement and a recision notice which allows the customer to cancel the transaction within 72 hours without cost or obligation. Thereafter, generally five to seven days later, the customer returns to the title company to receive the loan proceeds.
Respondent Clampitt does not take deposits and most often does not even meet this clients on a face-to-face basis. All borrower disclosures and rights required by law are provided respondent's clients by the title insurance company.
CONCLUSIONS OF LAW
The petitioner is seeking the suspension of the licenses of respondents Clampitt, Action Mortgage Corporation and Langford for the reasons set forth in the Counts summarized in the introductory section of this Recommended Order. In disciplinary actions, the burden is upon the agency to fully establish by competent substantial evidence the allegations of its complaint. As stated in Bowling vs. Department of Insurance, 394 So.2d 165, at
171 (Fla. 1st DCA 1981):
"In a proceeding under a penal statute for suspension or revocation of a valuable business or professional license, the term 'substantial competent evidence' takes on vigorous implications that are not so clearly present on other occasions for agency action under Chapter 120."
The penalty of suspension of a professional license should be sparingly and cautiously utilized and directed at the dishonest or unscrupulous broker, i.e., one who cheats, swindles or defrauds the general public. Pauline vs. Borer, 274 So.2d 1 (Fla. 1973). Applying these principles to the evidence adduced in this proceeding, it is concluded that there is not basis for the two year suspension sought to be imposed in these proceedings.
COUNT I
Count I of the Complaints against both individual respondents charges a violation of Section 494.05(1)(d), Florida Statutes, which permits suspension of a license "if a final judgment has been entered against him in a civil action upon grounds of fraud, misrepresentation or deceit."
It is clear from the Final Judgment and deposition of Judge Walker, as partially quoted in paragraph 6 of the Findings of Fact, that the trial court in the case of Action Mortgage Corporation, etc., et al., Plantiffs, vs. Denture Services, Inc., etc., et al., Defendants, did not find that the respondents were
guilty of fraud. Thus, it cannot be found that a final judgment had been entered against respondents in an action upon grounds of fraud.
COUNT II
With regard to the Jones transaction, the petitioner alleges that respondents engaged in a scheme or device to defraud the Jones of the equity in their homestead in violation of Sections 494.05(1)(b) and 494.093(1), Florida Statutes. It is argued by the petitioner that the transaction between the respondents and Mrs. Jones was in fact a mortgage and that the respondents failed to properly notify Mrs. Jones of this fact, and, indeed, concealed this fact to prevent Mrs. Jones from exercising her right of redemption.
The evidence adduced at the hearing simply does not support the petitioner's arguments and contentions with regard to Count II. Instead, the evidence illustrates an arms-length transaction between the respondents and Mrs. Jones whereby Mrs. Jones was permitted to remain in the residence for over two years (sometimes rent free), was fully informed of the nature and effect of the purchase/sale transaction and was provided at least two separate opportunities to repurchase the home from the respondents. No competent evidence was adduced at the hearing as to the actual fair market value of the property at the time that respondents purchased it. Petitioner failed to present any competent substantial evidence that the conduct of the respondents with regard to the Jones transaction was in any way fraudulent.
COUNT III
Sections 494.04(1) and 494.08(4), Florida Statutes, make it unlawful for one to act as a mortgage broker without a license and for an unlicensed person to charge or receive any commission or fee in connection with a mortgage loan. The petitioner alleges in its Complaint that respondent Clampitt wilfully and intentionally violated these statutory provisions.
The evidence in this case does illustrate that the individual mortgage broker license of respondent Clampitt was in a state of expiration between September 1 and October 16, 1979, and that at least three fees or commissions were received by respondent in connection with a mortgage loan during this period of time. However, the evidence also demonstrates that respondent did attempt to timely renew his individual license and that the was licensed as an additional broker for another firm after September 12, 1979, when the above three transactions occurred. The statutes and rules of the Department of Banking and Finance are not absolutely clear as to what transactions may be accomplished under the various licenses held by an individual broker. Petitioner's Deputy Director of the Division of Finance testified that respondent could only act on behalf of the firm under the license which was in effect from September 12, 1979. Assuming the correctness of that testimony, it still cannot be concluded that respondent Clampitt wilfully and intentionally violated the statutory provisions relating to licensing. Mr. Clampitt was licensed during the period in question and did attempt to renew his individual license. He failed to timely remit the appropriate amount of license fees, but this is not the type of offense for which suspension is warranted.
COUNT IV
With regard to the Fink transaction, the petitioner has clearly failed to establish that respondent Clampitt received unauthorized commissions in the amount of $13.80.
COUNT V
Count V of the Complaint charges the respondent Clampitt with failing to deliver to his clients a written statement setting forth total maximum costs to be charged, incurred or disbursed in connection with processing and closing a mortgage loan, in violation of Section 494.08(5), Florida Statutes, and Rule 3D- 40.09, Florida Administrative Code.
The statutory requirements of Section 494.08(5), Florida Statutes, are applicable when a licensee accepts a deposit or an application for a mortgage loan. Here, the evidence is clear that respondent Clampitt does not accept or request deposits and the applications for loans are accepted and executed at a separate title company where all required documents are given and explained to the client. The client is also provided a reasonable period of time within which to rescind the transaction, if he so desires. This constitutes substantial compliance with the provisions contained in petitioner's rules and statutes regarding disclosure.
