STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MERELE DUNNE, IDA ORLICK, ILENE ) KIRSCHNER, VERA G. MARINO )

et al., DAVID SWID, SAMUEL )

RUDNICK et al., and WILLIAM )

AND OLIVIA PETRUZEL, )

)

Petitioners, )

)

v. ) CASE NO. 86-3575

)

DEPARTMENT OF BANKING AND )

FINANCE, DIVISION OF FINANCE ) and FIDELITY STANDARD MORTGAGE ) CORPORATION, )

)

Respondents. )

) WILLIAM AND OLIVIA PETRUZEL, DAVID ) SWID, HARRY & YETTA NEIDERMAN, ) IRENE MORTON, ESMAIL GHANE, )

HAROLD E & EVA L. ROYS, )

HAROLD S. JOHNSON, and )

VERA G. MARINO et al., )

)

Petitioners, )

)

v. ) CASE NO. 86-3576

)

DEPARTMENT OF BANKING AND )

FINANCE, DIVISION OF FINANCE )

and FIRST FIDELITY FINANCIAL )

SERVICES, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above cases before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on November 18, 1986 at Miami, Florida.

APPEARANCES

For Petitioners: Vera Gretchyn Marino, Esquire Vera G. Marino, One Denton Road

et al. Great Neck, New York 11024 (Both cases)

For Petitioners: Richard J. Stone, Esquire William & Olivia 10671 North Kendall Drive Petruzel Miami, Florida 33176-1510 (Both cases)

For Petitioner: No appearance. Irene Morton

Case No. 86-3576 only

For Petitioner: No appearance. Esmail Ghane

Case No. 86-3576 only

For Petitioners: Kenneth S. Sandler, Esquire Harry & Yetta 4700 Sheridan Street

Neiderman Hollywood, Florida 33021 Case No. 86-3576 only

For Petitioner: Daniel H. Jones, Esquire David Swid Post Office Box 4323

(Both cases) West Palm Beach, Florida 33402

For Petitioners: Mark F. Butler, Esquire Samuel Rudnick Post Office Box 6

et al. Hollywood, Florida 33022 Case No. 86-3575 only

For Petitioners: Ted R. Schwartz, Esquire

Ida Orlick & 801 Northeast 167th Street, Suite 305 Merele Dunne North Miami, Beach, Florida 33162 Case No. 86-3575 only

For Petitioners: No appearance. Harold E. & Eva L.

Roys and Harold S.

Johnson

Case No. 86-3576 only

For Respondent: Paul C. Stadler, Jr., Esquire Agency Suite 1302, The Capitol

(Both cases) Tallahassee, Florida 32301-8054 BACKGROUND

By order dated August 7, 1986, respondent, Department of Banking and Finance, Division of Finance (Division), issued proposed agency action to grant and deny various claims for payment from the mortgage brokerage guaranty fund under Chapter 494, Florida Statutes (1985). These claims arose out of alleged violations of Chapter 494 by Fidelity Standard Mortgage Corporation, a licensed mortgage broker in Hollywood, Florida, which resulted in monetary damages being suffered by various investors in that firm. Thereafter, petitioners William and Olivia Petruzel requested a formal hearing under Subsection 120.57(1), Florida Statutes (1985), to contest the proposed agency action. This matter was assigned Case No. 86-3575. There are also various other claimants who are styled as petitioners who intervened or appeared at final hearing to challenge or support the proposed agency order. On August 7, 1986, the Division issued a second order proposing to grant or deny certain claims for payment from the same

fund for alleged illegal acts committed by First Fidelity Financial Services, Inc., also a licensed mortgage broker. Requests for a 120.57(1) hearing were then filed by petitioners, Harry and Yetta Neiderman, Esmail Ghane, William and Olivia Petruzel, Harold E. and Eva L. Roys, and Harold S. Johnson. Additional claimants appeared at final hearing and are also styled as petitioners. This matter has been assigned Case No. 86-3576.

The two cases were referred to the Division of Administrative Hearings by the Division on September 10, 1986, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated. October 15, 1986, the final hearing was scheduled for November 18, 1986, in Miami, Florida. By agreement of the parties both cases were heard on a consolidated record.

At final hearing, the parties offered petitioners' exhibits 1-8 and respondent's exhibit 1. All were received in evidence. The parties also stipulated to the facts set forth in the Division's proposed orders of August 7, 1986. By agreement of the parties, on December 1, 1986 the Division late-filed supplemental calculations of payments due the various claimants.

The transcripts of hearing were filed on December 11, 1986. There were no proposed findings of fact and conclusions of law filed by any party.

The issue in both cases is whether the Division's proposed amounts and manner of paying claims from the mortgage brokerage guaranty fund are correct.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Introduction

   
   

   1. At all times relevant hereto, Fidelity Standard Mortgage Company (Fidelity Standard) and First Fidelity Financial Services, Inc. (First Fidelity) were mortgage brokers licensed by respondent, Department of Banking and Finance, Division of Finance (Division). In or around early 1983, Fidelity Standard and First Fidelity filed for bankruptcy under Chapter 11, Title 11, United States Code. By virtue of this action, numerous investors lost substantial amounts of money invested with the two brokers.

      
      

   2. In 1977 the legislature established in chapter 494 a mortgage brokerage guaranty fund from which payment is made to persons "adjudged by a court of competent jurisdiction to have suffered monetary damage as a result of any (unlawful) acts by a mortgage broker... who was licensed under, this chapter at the time the act was committed." Certain conditions must be met in order to establish eligibility for payment from the fund, and payments for claims are limited in the aggregate to $50,000 per mortgage broker, regardless of the number of claimants. 1/ Among other things, section 494.043 requires that a claimant must have (a) received a final judgment in a court of competent jurisdiction against the broker, (b) caused to be issued a writ of execution upon the judgment and the return indicates insufficient assets to satisfy the judgment, (c) made a reasonable search to discover assets of the broker, and has found none, (d) applied any amounts recovered from broker to the damages awarded by the court, and (e) given notice to the Division by certified mail at the time the action was instituted. Where as here, the broker has filed for bankruptcy, steps (b) and (c) need not be taken by the claimant, except to file a claim in the bankruptcy proceeding. There is also a two year period in which investors

      may perfect their claims. These persons receive first priority to payment from the fund. In the case of both Fidelity Standard and First Fidelity, this period expired on June 18, 1986. Thus, in order to share in the first distribution of moneys from the fund, a claimant had to satisfy the above criteria by that date. In addition to these criteria, a claimant must assign to the Division any interest in the judgment received once all criteria in section 494.043 have been met. The statute imposing this requirement (s. 494.044) provides that this must be done after the claimant has received payment from the fund.

      
      

   3. In its proposed final order concerning Fidelity Standard entered on August 7, 1986, the Division concluded that the following claimants should receive payment from the fund in the amounts specified below:

      
      

      Claimant		Claim Allowed
      David Swid	$	2,321.00
      William & Olivia Petruzel		2,321.00
      Vera G. Marino		2,321.00
      Benjamin Rosenberg		2,321.00
      Lee Rosenberg		2,321.00
      Shasha Enterprises		2,321.00
      Eli Krause		1,995.00
      Eugene Brooks, M.D., P.C.		2,321.00
      Eugene Brooks		2,321.00
      Steven Jankovich		2,100.50
      Stacy Sher		2,100.50
      Frederick Low		2,321.00
      Patricia Worthley		2,321,00
      Alfred Vanderlaan		2,321.00
      Ben Sakow		2,048.00
      Thomas Shisler		1,229.00
      David Irving		2,321.00
      Betty Burwell		1,662.00
      Alisa Kreimer		2,321.00
      Samuel Rudnick		2,321.00
      Bonnie & Howard Lenkowitz		1,204.00
      Larry & Sally Lenkowitz		525.00
      Stuart & Barbara Schrager		2,321.00
      Helen	& Eugene Loos	2,321.00
      Total	Payments	$50,000.00

      
      

      In a second order entered the same day involving First Fidelity, the Division proposed that the following claimants receive payment from the fund as indicated below:

      
      

      Claimant	Fund Award
      Swid	$ 2,620.00
      Morton	2,620.00
      Ghane	2,620.00
      Petruzel	2,620.00
      Marino	2,620.00
      B. Rosenberg	2,620.00
      L. Rosenberg	2,620.00

      Shasha Enterprises	2,620.00
      Krause	2,254.00
      Brooks, M.D., P.C.	2,620.00
      Brooks	2,620.00
      Jankovich	2,372.00
      Sher	2,372.00
      Low	2,620.00
      Worthley	2,620.00
      Vanderlaan	2,620.00
      Sakow	2,313.00
      Shisler	1,389.00
      Irving	2,620.00
      Loos	2,620.00
      Total Payments	$50,000.00

      
      

   4. After the entry of the proposed final order in Case No. 86-3575, petitioners, David Swid, Vera G. Marino et al., Samuel Rudnick et al., and William and Olivia Petruzel, who are named as recipients from the fund, requested a hearing to either contest or support the proposed payout from the fund. In addition, petitioners, Merele Dunne, Ida Orlick and Ilene Kirshner, whose claims were denied, challenged the proposed action.

      
      

   5. In Case No. 86-3576 involving First Fidelity, petitioners, William and Olivia Petruzel, David Swid, Esmail Ghane and Vera G. Marino et al., who are named as recipients of the fund, have requested a formal hearing to either challenge or support the agency action. Petitioners, Harry and Yetta Neiderman, Harold E. and Eva L. Roys and Harold S. Johnson, whose claims to participate in the initial distribution of the fund were denied, also requested a hearing to contest the action.

      
      

2. The Claimants

   
   

   1. David Swid -- Swid satisfied all statutory criteria in section 494.043 for perfecting his claim against both Fidelity Standard and First Fidelity by June 18, 1986. His partial assignment to the Division of the judgment against the brokers was also filed on June 18, 1986, but was not furnished to the Division until July 9, 1986. Even so, Swid has satisfied all criteria, and is eligible to participate in the initial payout from the fund.

      
      

   2. Marino et al. -- This group of claimants includes fifteen investors. 2/ Marino et al. received two identical judgments against First Fidelity and Fidelity Standard and otherwise satisfied all statutory criteria by June 18, 1986. Because the group is not entitled to a double recovery, the amount awarded by the court has been divided in half. An assignment of the judgments was filed with the Division on June 12, 1986, but did not reflect the page and book number where the judgments were recorded. However, the judgments were filed with the United States Bankruptcy Court for the Southern District of Florida, and records of that court are not kept by book and page number. Therefore, the assignment was in proper form, and all statutory criteria have been met.

   3. William and Olivia Petruzel -- The Petruzels obtained final judgments against First Fidelity and Fidelity Standard on April 11, 1985, in the United States Bankruptcy Court. Partial assignments of the judgments dated April 4, 1986, in favor of the Division were filed with the Division in April 1986. Therefore, all pertinent criteria have been met, and the Petruzels are eligible to share in the initial payout from the fund.

      
      

   4. Harold E. and Eva L. Roys and Harold S. Johnson -- These parties are claimants against First Fidelity. There is no evidence that they perfected their claims prior to June 18, 1986. Therefore, their claim to participate in the first distribution of moneys from the fund should be denied.

      
      

   5. Rudnick et al. -- This group of claimants includes six investors in Fidelity Standard. 3/ They obtained a final judgment against Fidelity Standard on June 10, 1986, in Broward County circuit court. Assignments of this judgment to the Division were executed in August 1986, and later filed with the Division. Therefore, Rudnick et al. have qualified for participation.

      
      

   6. Ida Orlick and Merele Dunne -- These two claimants were investors in Fidelity Standard and First Fidelity. They did not obtain a final judgment against those brokers until June 25, 1986, or after the two-year period to perfect claims had expired. Therefore, they are not entitled to participate in the first distribution of moneys from the fund. 4/

      
      

   7. Harry and Yetta Neiderman -- These claimants were investors in First Fidelity. They obtained a final judgment in bankruptcy court against the broker prior to June 18, 1986. The Division proposed to deny the claim on the ground no documentation was submitted to prove that a claim had been filed with the bankruptcy court. At final hearing, the Neidermans submitted a proof of claim which reflected such a claim was previously filed with the court on July 15, 1982. Therefore, all statutory criteria have been met.

      
      

   8. Irene Morton -- Morton was an investor in First Fidelity who, like the others, lost her investment by virtue of illegal acts of that broker. She has perfected her claim in a timely manner and is entitled to participate in the first distribution of moneys from the fund.

      
      

   9. Esmail Ghane -- This investor lost approximately $30,000 due to the illicit acts of First Fidelity. He has subsequently obtained a judgment against the broker and has satisfied in a timely manner all other statutory criteria. Therefore, he has perfected his claim and is eligible for payment from the fund. At the same time, it is noted that Ghane's cause of action against the broker arose prior to October 1, 1985, and that he must share in the lower aggregate award ($50,000) that applies to claims arising before that date.

      
      

3. Computation of Payments

1. In addition to obtaining judgments for their lost principal, virtually all of the claimants were awarded either prejudgment or post-judgment interest, or both, by the courts adjudicating their claims. Further, some of the claimants have previously received payments from the fund for illegal acts occurring on the part of Franklin Capital Corporation, an affiliated corporation of First Fidelity and Fidelity Standard.

   
   

2. By stipulation of counsel, the following amounts are the correct amounts due the claimants for losses arising from illicit acts by Fidelity Standard and First Fidelity assuming their claims are both timely and valid.

   The amounts are computed after deducting prior payments and by using only the principal amount awarded by the courts, and by including principal and pre- judgment interest.

   
   

   Fidelity Standard (without interest)

   
   

   Fund

   Claimant Award

   
   

   Swid $ 3,021.00

   Petruzel 3,021.00

   Marino 3,021.00

   B. Rosenberg 3,021.00

   L. Rosenberg 3,021.00

   Shasha Enterprises 3,021.00

   Krause 1,435.00

   Brooks, M.D., P.C. 2,870.00

   Brooks 1,888.00

   Jankovich 1,511.00

   Sher 1,511.00

   Low 1,813.00

   Worthley 1,813.00

   Vanderlaan 2,417.00

   Sakow 1,511.00

   Shisler 906.00

   Irving 2,553.00

   Burwell 477.00

   Kreimer 1,081.00

   Rudnick 2,290.00

   B & H Lenkowitz 1,686.00

   L & S Lenkowitz 70.00

   Schrager 3,021.00

   Loos 3,021.00

   
   

   $50,000.00

   
   

   Fidelity Standard (with prejudgment interest)

   
   

   Claimant	Fund Award
   Swid	$ 2,279.50
   Petruzel	2,279.50
   Marino	2,279.50
   B. Rosenberg	2,279.50
   L. Rosenberg	2,279.50
   Shasha Enterprises	2,279.50
   Krause	1,959.50
   Brooks, M.D., P.C.	2,279.50
   Brooks	2,279.50
   Jankovich	2,062.50
   Sher	2,062.50
   Low	2,279.50
   Worthley	2,279.50
   Vanderlaan	2,279.50

   Sakow			2,011.50
   Shisler			1,206.50
   Irving			2,279.50
   Burwell			1,531.50
   Kreimer			2,219.50
   Rudnick			2,279.50
   B & H Lenkowitz			2,279.50
   L & S Lenkowitz			474.50
   Schrager			2,279.50
   Loos			2,279.50
   		$	50,000.00
   Fidelity (without	Standard interest)
   Claimant			Fund Award
   Swid		$	3,021.00
   Petruzel			3,021.00
   Marino			3,021.00
   B. Rosenberg			3,021.00
   L. Rosenberg			3,021.00
   Shasha Enterprises			3,021.00
   Krause			1,435.00
   Brooks, M.D., P.C.			2,870.00
   Brooks			1,888.00
   Jankovich			1,511.00
   Sher			1,511.00
   Low			1,813.00
   Worthley			1,813.00
   Vanderlaan			2,417.00
   Sakow			1,511.00
   Shisler			906.00
   Irving			2,553.00
   Burwell			477.00
   Kreimer			1,081.00
   Rudnick			2,290.00

   B & H Lenkowitz 1,686.00

   L & S Lenkowitz 70.00

   Schrager 3,021.00

   Loos 3,021.00

   
   

   $50,000.00

   
   

   Fidelity Standard

   (with pre-judgement interest)

   
   

   Fund

   Claimant Award

   
   

   Swid $ 2,279.50

   Petruzel 2,279.50

   Marino 2,279.50

   B. Rosenberg 2,279.50

   L. Rosenberg 2,279.50

   Shasha Enterprises	2,279.50
   Krause	1,959.50
   Brooks, M.D., P.C.	2,279.50
   Brooks,	2,279.50
   Jankovich	2,062.50
   Sher	2,062.50
   Low	2,279.50
   Worthley	2,279.50
   Vanderlaan	2,279.50
   Sakow	2,011.50
   Shisler	1,206.50
   Irving	2,279.00
   Burwell	1,531.50
   Kreimer	2,219.50
   Rudnick	2,279.50
   B & H Lenkowitz	2,279.50
   L & S Lenkowitz	474.50
   Schrager	2,279.50
   Loos	2,279.50
   	$50,000.00
   First Fidelity (without interest)
   Claimant	Fund Award
   Neiderman	$ 2,995.00
   Swid	2,995.00
   Morton	2,995.00
   Ghane	2,995.00
   Petruzel	2,995.00
   Marino	2,995.00
   B. Rosenberg	2,995.00
   L. Rosenberg	2,995.00
   Shasha Enterprises	2,995.00
   Krause	1,422.50
   Brooks, M.D., P.C.	2,845.00
   Brooks	1,872.00
   Jankovich	1,497.25
   Sher	1,497.25
   Low	1,797.00
   Worthley	1,797.00
   Vanderlaan	2,396.00
   Sakow	1,497.25
   Shisler	898.25
   Irving	2,530.50
   Loos	2,995.00
   	$50,000.00
   First Fidelity

   (with prejudgment interest)

   
   

   Fund

   Claimant Award

   Neiderman $ 2,489.80

   Swid 2,489.80

   Morton 2,489.80

   Ghane 2,489.80

   Petruzel 2,489.80

   Marino 2,489.80

   B. Rosenberg 2,489.80

   L. Rosenberg 2,489.80

   Shasha Enterprises 2,489.80

   Krause 2,140.44

   Brooks, M.D., P.C. 2,489.80

   Brooks 2,489.80

   Jankovich 2,253.44

   Sher 2,253.44

   Low 2,489.80

   Worthley 2,489.80

   Vanderlaan 2,489.80

   Sakow 2,197.44

   Shisler 1,318.44

   Irving 2,489.80

   Loos 2,489.80

   
   

   $50,000.00

   
   

3. The inclusion of post-judgment interest in the calculation of the awards has an inconsequential effect on the amounts to be paid and accordingly has been disregarded.

   
   

   CONCLUSIONS OF LAW

   
   

4. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1985).

   
   

5. Two legal issues in this proceeding have been raised by petitioners, William and Olivia Petruzel, who are challenging the validity of certain other claims in the initial payout from the fund, and the method of calculating the amounts to be paid. Their contentions will be dealt with separately.

   
   

6. The Petruzels first contend that unless a claimant has satisfied all requirements in section 494.043 and filed his assignment of the judgment with the Division by June 18, 1986, the claimant cannot participate in the first- round payout from the fund. This contention bears directly upon the claims of those petitioners who failed to file a proper assignment of their judgments to the Division until after June 18, 1986, but who timely satisfied all criteria in section 494.043. It is first noted that the initial payouts are to be made to those claimants "meeting the requirements of S. 494.043 upon the expiration of 2 years from the date the first notice is received by the department pursuant to

   S. 494.043(5)." Subsection 494.044(2) then applies and reads as follows:

   
   

   (2) Upon receipt by the claimant of the pay- ment from the Mortgage Brokerage Guaranty Fund, the claimant shall assign any additional right, title, and interest in the judgment, to the extent of such payment, to the department.

   Since the two-year period expired on June 18, 1986, a successful claimant obviously had to comply with the requirements of section 494.043 by that date. But there is nothing in the statute to suggest that the assignment is also subject to the same two-year requirement. Indeed, the law clearly provides that the assignment be made after the amounts to be paid to claimants are calculated. Since this computation cannot be performed until after June 18, 1986, it follows that the assignment may properly be filed after the two-year period has expired. Although the agency may have suggested a different result in an earlier order, 5/ it now concedes this was incorrect, and that the statute should be construed in a manner consistent with the above interpretation. Therefore, it is concluded that those petitioners who satisfied all criteria in section 494.043 by June 18, 1986, and who have subsequently filed appropriate assignments with the Division, are entitled to participate in the initial payout from the fund.

   The Petruzels' motion to exclude said claimants is accordingly denied.

   
   

7. The Petruzels next contend that it is inappropriate to award to claimants interest which may have accrued on their lost investment. This contention arises because various claimants were awarded prejudgment interest when they obtained final judgments against the brokers. The Division has proposed to include this prejudgment interest on the theory that interest is an element of compensatory or actual damages.

   
   

8. It is a well established principle that "(i)nterest is not the mere incident of a debt which attaches only to contracts, express or implied, for the payment of money, but is compensation for the use or detention of money" 17 Fla. Jur.2d, Damages s. 82 at 88-89 (1980). Therefore, interest is a proper element of actual or compensatory damages, and may be included as a component of "monetary damages" under subsection 494.042(2). This view is consistent with the approach taken in Richard L. Murphy et al. V. Department of Banking and Finance, DOAH Case No. 86-1704, Recommended Order dated November 13, 1986, where the identical issue was presented. Accordingly, the computations which include prejudgment interest shall be used in determining the initial payout from the fund.

   
   

9. Petitioners Ida Orlick and Merele Dunne in Case No. 86-3576 have contended they are entitled to first priority on the fund even though they failed to obtain a final judgment until June 25, 1986, or seven days after the two-year period had expired. Because section 494.043(2) requires compliance on or before June 18, their contention must fail. Finally, there was no evidence submitted by petitioners Harold E. and Eva L. Roys and Harold S. Johnson to demonstrate compliance with the statute, and their claim for priority payment must also fail.

   
   

10. It is concluded that payment from the fund to those claimants and in the amounts (including prejudgment interest) set forth in finding of fact 16 should be made. All other requests should be denied.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the initial payment from the mortgage brokerage guaranty

fund for damages arising from illicit acts by Fidelity Standard and First

Fidelity be made in accordance with the schedules set forth in finding of fact 16, said amounts to include prejudgment interest. All other claims for relief should be DENIED.

DONE AND ENTERED this 6th day of January, 1987, at Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of January, 1987.

ENDNOTES

1/ This cap was subsequently raised to $100,000 for all causes of action arising after October 1, 1985. Since all claims herein arose before October 1, 1985, the lower aggregate amount applies.

2/ They include Marino, Benjamin Rosenberg, Lee Rosenberg, Shasha Enterprises, Eli Krause, Eugene Brooks, M.D., P.C., Eugene Brooks, Steven Jankovich, Stacy Sher, Frederick Low, Patricia Worthley, Alfred Vanderlaan, Ben Sakow, Thomas Shisler, and David Irving.

3/ They include Betty Burwell, Alisa Kreimer, Samuel Rudnick, Bonnie and Howard Lenkowitz, Howard and Bonnie Lenkowitz, and Larry and Sally Lenkowitz.

4/ According to counsel for Olick and Dunne, the claim of Ilene Kirschner "is part of the Ida Orlick claim." Therefore, this finding is applicable to Kirschner as well.

5/ In Petruzel et al V. Department of Banking and Finance, Division of Finance, D0AH Case Nos. 85-3305 and 85-3306, Final Order dated March 11, 1986, which is a forerunner to this case, there is language which might be construed to mean the assignment had to be filed by June 18, 1986.

COPIES FURNISHED:

Honorable Gerald A. Lewis Comptroller, State of Florida The Capitol

Tallahassee, Florida 32301-8054

Vera Gretchyn Marino, Esquire One Denton Road

Great Neck, New York 11024

Richard J. Stone, Esquire 10671 North Kendall Drive Miami, Florida 33176-1510

Paul C. Stadler, Esquire Suite 1302, The Capitol

Tallahassee, Florida 32301-8054

Mark F. Butler, Esquire Post Office Box 6 Hollywood, Florida 33022

Daniel J. Jones, Esquire Post Office Box 4323

West Palm Beach, Florida 33402

Ted R. Schwartz, Esquire

801 Northeast 167th Street, Suite 305 North Miami Beach, Florida 33162

Kenneth S. Sandler, Esquire 4700 Sheridan Street

Hollywood, Florida 33021

Thomas B. Mimms, Esquire Post Office Box 1531 Tampa, Florida 33601

Marlene M. Rammert, Esquire

124 Herald Court

Punta Gorda, Florida 33950

Robert S. Korschun, Esquire 8603 S. Dixie Highway Suite 302

Miami, Florida 33143

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

IN RE: FIDELITY STANDARD MORTGAGE CORP.;

David Swid; William and Olivia Petruzel; Vera Gretchyn Marino;

Benjamin Rosenberg and Lee K. ADMINISTRATIVE PROCEEDING Rosenberg; Sasha Enterprises by NUMBER: 85-37-DOF Fenimore Storch; Marcia Krause,

individually, and on behalf of FILE NOS.: 513-F-9/85 Eli Krause; Eugene M. Brooks, 455-F-2/85 individually, and on behalf of

Eugene M. Brooks, M.D., P.C.; DOAH CASE NO. 86-3575

Steven Jankovich; Stacy Sher; Frederick Lowe and So-Yen Lowe;

Patricia Worthley; Alfred P. Vanderlaan and Dora M. Vanderlaan; Ben Sakow and Dorothy Sakow; Thomas D. Shisler and Myra F. Shisler; David Irving; Herbert Schosnig; Samuel Rudnick; Alisa Kreimer; Betty B. Burwell; Howard

1. and Bonnie Lenkowitz; Larry and Sally Lenkowitz; Stuart Z. and Barbara Schrager; Helen and Eugene Loos; Merle Dunne; Ida Orlick and Ilene Kirschner; Raymond J. and Florine Morlock; Patricia P.

   Worthley; George Lentena; John and Ramona Powell; Albert and Joan Davidson;

   
   

   Respondents.

   /

   
   

   FINAL ORDER GRANTING OR DENYING PAYMENT FROM THE MORTGAGE BROKERAGE GUARANTY FUND RE FIDELITY

   STANDARD MORTGAGE CORPORATION AND NOTICE OF RIGHTS

   
   

   The State of Florida Department of Banking and Finance, Division of Finance (hereinafter Department), being authorized and directed to administer the Mortgage Brokerage Guaranty Fund (hereinafter the Fund) codified in Sections 494.042, 494.043, 494.044 and 494.045, Florida Statutes, hereby enters this Final Order approving or denying the following applications for payment from the Fund arising from alleged violations of the provisions of Chapter 494, Florida Statutes, by Fidelity Standard Mortgage Corporation (hereinafter Fidelity Standard).

   
   

   FINDINGS OF FACT

   
   

   1. Under the provisions of the Mortgage Brokerage Act, Chapter 494, Florida Statutes, the Department is charged with the responsibility and duty of administering the Fund, which includes the duty to approve or deny applications for payment from the Fund, as set forth in Section 494.042(2), Florida Statutes.

      
      

   2. On August 7, 1986, the Department entered a Second Notice of Intent to Render a Final Order Granting or Denying Payment from the Mortgage Brokerage Guaranty Fund re Fidelity Standard Mortgage Corporation and Notice of Rights (hereinafter Fidelity Standard Second Notice). A hearing was timely requested and Donald R. Alexander, Hearing Officer, was assigned to preside over these proceedings. On or about November 14, 1986, the Department filed a Memorandum with the Hearing Officer. Thereafter, on November 18, 1986, a hearing was held in this cause in Miami, Florida, in which Petitioners Exhibits 1-8 and Respondent's Exhibit 1 were admitted into evidence. On or about November 25, 1986, the Department filed a Second Memorandum with the Hearing Officer and on January 8, 1987, the Hearing Officer filed his Recommended Order with the Department to which no exceptions have been filed.

      
      

   3. The Department has reviewed the Hearing Officer's Findings of Fact found on pages 3-10 of the Recommended Order and incorporates them by reference

      as the Findings of Fact of this Final Order with the following minor exceptions and additions:

      
      

      1. The second sentence of paragraph 11 is amended to read as follows:

         
         

         They did not obtain a final judgment, but did file a Proof of Claim on or about June 25, 1986, after the two-year period to prefect claims had expired.

      2. The second sentence of paragraph 12 is amended to read as follows: They obtained a final judgment in the cir-

      cuit court against the broker prior to

      June 18, 1986.

      
      

   4. The Department further incorporates by reference the Findings of Fact contained in the Fidelity Standard Second Notice except to the extent that they may be in conflict with the factual findings of the Hearing Officer.

      
      

      CONCLUSIONS OF LAW

      
      

   5. The Department has reviewed the Hearing Officer's Conclusions of Law found on pages 11-13 of the Recommended Order and incorporates them by reference as the Conclusions of Law of this Final Order with the minor exception that the first sentence of paragraph 5 is amended to read as follows:

      
      

      Petitioners Ida Orlick and Merele Dunne in Case No. 86-3576 have contended they are entitled to first priority on the Fund even though they failed to file a Proof of Claim until June 25, 1986, or seven days after the two-year period had expired.

      
      

   6. The Department further incorporates by reference the Conclusions of Law contained in paragraphs 30-33 of the Fidelity Standard Second Notice except to the extent that they may be in conflict with legal conclusions of the Hearing Officer. Additionally, the Department emphasizes the following:

      
      

      1. The Dunne, Orlick and Kirschner Claims argue that they should not be denied recovery from the Fund, because they were unaware of the Fund and because the licensee was in bankruptcy. However, Florida law does not take into account these factors in specifying how payment is to be made from the Fund and, accordingly, as the Hearing Officer concluded, the Department has no alternative but to deny their claims.

         
         

      2. The Petruzel Claim argues that the Final Judgment of the Marino et al. Claim is void. However, absent a judicial decree voiding said Final Judgment, the Department has no authority to do so and the Department cannot disregard it. It is further argued by the Petruzels that Reedy Creek Utilities v. Public Services Commission, 418 So.2d 249 (Fla. 1982), should not be applied in this cause, because to do so would reduce the amount that they would recover. However, this argument must fail, because there has been no showing of detrimental reliance.

   7. Based on the foregoing Findings of Fact the following claimants have satisfied Section 494.043, Florida Statutes and should receive the following amounts from the Fund:

      
      

      Claimant	Amount
      Swid	2,279.50
      Petruzel	2,279.50
      Marino	2,279.50
      B. Rosenberg	2,279.50
      L. Rosenberg	2,279.50
      Shasha Enterprises	2,279.50
      Krause	1,959.50
      Brooks, M.D., P.C.	2,279.50
      Brooks	2,279.50
      Jankovich	2,062.50
      Sher	2,062.50
      Low	2,279.50
      Worthley	2,279.50
      Vanderlaan	2,279.50
      Sakow	2,011.50
      Shisler	1,206.50
      Irving	2,279.50
      Burwell	1,531.50
      Kreimer	2,219.50
      Rudnick	2,279.50
      B & H Lenkowitz	2,279.50
      L & S Lenkowitz	474.50
      Schrager	2,279.50
      Loos	2,7279.50
      	$50,000.00
      ASSIGNMENTS	RECEIVED BY THE DEPARTMENT

      
      

   8. a. The Petruzel, Burwell, Kreimer, Rudnick, B & H Lenkowitz, L & S Lenkowitz and Marino et al. Claims have filed with the Department duly executed recorded assignments and, accordingly, no additional documentation need by filed.

1. The Swid and Schrager Claims have filed with the Department duly executed recorded assignments, but said claimants should provide the Department with the book and page number where their respective judgments are recorded.

   
   

2. The Loos Claim has failed to file any assignment with the Department. Said assignment when recorded and thereafter filed with the Department should be substantially in the form of Exhibit A.

FINAL ORDER

IT IS THEREFORE determined and ordered that payments shall be made to the following claimants in the amounts specified with all other claims denied with prejudice:

provided that said claimants file with the Department duly executed recorded assignments if they have not already done so; however, said assignments need not be provided until all rights to judicial review have been exhausted or waived.

DONE and ORDERED in Tallahassee, Florida this 6th day of April, 1987.

GERALD LEWIS, as Comptroller of the State of Florida and Head of the Department of Banking and Finance

COPIES FURNISHED:

Donald R. Alexander Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Randall A. Holland, Director Division of Finance

Office of the Comptroller Fuller Warren Bldg., 2nd Floor

202 Blount Street Tallahassee, Florida 32399

Mrs. Thomas E. Holloway 4325 Timor Place

Sarasota, Florida 33583

Herbert Greenberg 1905 Keystone Blvd.

N. Miami, Florida 33181-2608

John E. Aurelius James, Bielejeski and Aurelius, P.A.

Attorney for the Marangello Claim Colonial Building

4367 N. Federal Highway

Ft. Lauderdale, Florida 33308

Kenneth S. Sandler

Attorney For the Neiderman Claim 4700 Sheridan Street

Hollywood, Florida 33021

Dave Swid

2435-E Presidential Way

West Palm Beach, Florida 33401

Daniel H. Jones Attorney for Dave Swid 707 N. Flagler Drive

West Palm Beach, Florida 33402

Thomas B. Mimms, Jr. MacFarland, Ferguson, Allison and Kelly

Attorney for the Hamilton, Judd and Morton Claims

2910 First Florida Tower

P.O. Box 1531

Tampa, Florida 33601

Robert S. Korschun

Attorney for the Ghane Claim Commercial Bank of Kendall

8603 South Dixie Highway, Suite 302

Miami, Florida 33143

Paul Richard Bloomquist Attorney for the Wegener Claim 1200 North Federal Highway Suite 200-33

Boca Raton, Florida 33432

George J. Blutstein

Attorney for the First Unknown Claim Suite 112 Interama Professional Building

16666 Northwest 19th Avenue

N. Miami Beach, Florida 33162

Richard J. Stone

Michael J. Getelman, P.A. Attorney for the Petruzel Claim Dadeland West Office Park

1067 North Kendall Drive Miami, Florida 33176

Vera Gretchyn Marino

Attorney for the Marino et al. Claim One Denton Road

Great Neck, New York 11024

Michael W. Ullman Ullman and Ullman, P.A.

Attorney for the Schosnig Claim Capitol Bank Building Penthouse Suite

115 Northwest 167th Street

N. Miami Beach, Florida 33169

Marlene M. Remmert

Attorney for Roys and Johnson Claims

124 Herald Court

Punta Gorda, Florida 33950

Joseph R. Kalish

Attorney for the Loos Claim 3706 Ehrlich Road

Tampa, Florida 33618

Charles W. Battisti Battisti and Battisti, P.A. Attorney for the Jury Claim 2901 Le Jeune Road

Coral Gables, Florida 33134

L. George Scheer

Murray B. Weil, Jr., P.A.

Attorney for the Second Unknown Claim 1666 79th Street Causeway,

Suite 608

Miami Beach, Florida 33141

Sid C. Peterson

DeLoach & Peterson, P.A. Attorney for the Hill Claim

418 Canal Street

P. O. Box 428

New Smyrna Beach, Florida 32070

Gilbert E. Theissen Walsh, Theissen and Boyd

Attorney for the Britwar, Donelan, Burk, and Torin Claim

Suite 402

633 Southeast Third Avenue

Ft. Lauderdale, Florida 33301-3182

Elizabeth C. Busher 1730 N.E. 171 Street

North Miami Beach, Florida 33162

Ted R. Schwartz

Attorney for the Dunne Claim

and the Orlick and Kirschner Claim Suite 305

County National Bank Building 801 Northeast 167th Street

North Miami Beach, Florida 33162

Jonathan E. Hausburg Housburg Jaensch & Ellis

Attorney for the Morlock Claim 2014 Fourth Street

Sarasota, Florida 33577

Ronald G. Neiwirth Ronald G. Neiwirth, P.A.

Attorney for the Worthley, Lentena, Powell and Davidson Claims

825 South Bayshore Drive Tower 3, Mezzanine

Miami, Florida 33131

Mark F. Butler

Ellis, Spencer, Butler and Kisslan Attorney for the Rudnick et al. Claim Hollywood Federal Building

1909 Tyler Street

P. O. Box 6

Hollywood, Florida 33022

Jeanne M. Pena Britton, Schantz, and Schatzman, P.A.

Attorney for the Schrager Claim Southeast Financial Center, Suite 3000 Miami, Florida 33131-2394

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DEPARTMENT OF BANKING AND FINANCE AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 86-003575

Orders for Case No: 86-003575