vs. ) CASE NO. 88-2588
Respondent. )
S. Marc Herskovitz, Esquire, of Tallahassee, for Petitioner. James N. Casesa, Esquire, of St. Petersburg, for Respondent. Before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.
A formal administrative hearing was held in this case in Tampa, on December 20, 1988, on charges that the Respondent, Adriana Winkelmann, collected monies in her capacity as a Limited Surety Agent that she was not entitled to collect and, in the process, violated various provisions of Chapter 648, Florida Statutes.
The parties ordered the preparation of a transcript of the final hearing.
The transcript was filed on January 17, 1989. Both parties filed a proposed recommended order, but only the Petitioner's contained proposed findings of fact. Explicit rulings on the Petitioner's proposed findings of fact may be found in the attached Appendix To Recommended Order, Case No. 88-2588.
The Respondent, Adriana Winkelmann, d/b/a Adriana's Bail Bonds, Tampa, currently is licensed and eligible for licensure in this State as a Limited Surety Agent. On or about October 31, 1986, William L. Counts and his wife, Madie Counts, a/k/a Madie G. Clark, went to see the Respondent about getting Mr. Counts' first cousin, Clayton D. Counts, bailed out of jail. Cousin Clayton was charged with second degree murder, and bail was set on the second degree murder charge at $5000.
Clayton Counts also had been charged with eight other counts involving sexual battery on a child and sexual activity with a child under his custodial authority. On October 2, 1986, Clayton Counts had posted $14,000 of bonds that had been set on the eight charges and had been released from jail. Adriana's Bail Bonds, acting as bail bondsman and as attorney-in-fact for the surety company, Accredited Surety And Casualty Company, Inc. (Accredited or the surety), was the surety on the $14,000 of bonds, and Scott Erickson, a friend of Clayton Counts, indemnified Accredited and put up collateral to secure the indemnification agreement. All but $150 of the premium on the $14,000 of bonds had been paid to Adriana's Bail Bonds; Clayton Counts' wife promised to pay the additional $150 at a later date.
When Clayton Counts was re-arrested and charged with second degree murder and just an additional $5000 bond was set on the new charge, Erickson became fearful that Clayton Counts might skip the bonds, jeopardizing Erickson's collateral. He told the Respondent that he wanted to be taken off the bonds.
At about this same time, on or about October 31, 1986, Mr. and Mrs. William L. Counts came in to Adriana's Bail Bonds, at Clayton Counts' request, to see about bailing out Clayton for the second time.
Mr. and Mrs. Counts agreed with the Respondent to indemnify the surety on the total amount of all of the bonds, $19,000. They agreed to pay the $150 balance of the premium on the bonds put up on or about October 2, 1986, on the first set of charges, plus a $500 premium on the bond put up on or about October 31, 1986, on the second degree murder charge. The indemnity agreement was to indemnify the surety company for the entire $19,000 amount of the bonds in the event of a forfeiture, plus "all claim, demand, liability, cost, charge, counsel fee, expense, suit order, judgment, or adjudication" sustained or incurred by the surety company. As collateral to secure their indemnity agreement, Mr. and Mrs. Counts put up their mobile home, to which they gave the Respondent a power of attorney dated October 31, 1986, and an $8,000 mortgage on a lot worth approximately $8000. They also gave Adriana's Bail Bonds a $19,000 promissory note as collateral. On October 31, 1986, an employee of Adriana's Bail Bonds gave Mr. Counts a collateral receipt, signed by Mr. Counts and the employee, for the $19,000 promissory note, the indemnity agreement, the mortgage on the lot and the mobile home. The original was given to Mr. Counts and Adriana's Bail Bonds kept a copy. There was no evidence that the collateral receipt, or any other statement or affidavit, for this or any other collateral (other than Erickson's original collateral on the $14,000 of bonds on the first set of charges) ever was filed anywhere. Mr. Counts paid $500 by check dated November 14, 1986, for the premium on the $5000 second degree murder bond.
In December 1986, Clayton Counts left the state and missed a court appearance on December 19, 1986. The $19,000 of bonds was estreated.
In about January 1987, Mrs. Counts went to see the Respondent about substituting some other collateral for the mobile home. She was concerned about where she and her husband would live if the bonds were estreated and forfeited and the mobile home had to be sold to perform the indemnity agreement. She wanted to be able to move the mobile home somewhere else even in that event. After some discussion, it was agreed that the Respondent would accept $6000 cash as substitute collateral in place of the mobile home. Mrs. Counts promised to pay the $6000 in installments of approximately $500 a month.
The Respondent repeatedly was able to have the court delay forfeiture of the bonds because she was able to demonstrate that she was trying to locate and return the defendant to the court. In her efforts, the Respondent incurred expenses for hiring private investigators, for a six- day trip to Missouri, for long distance telephone charges, for attorneys' fees for getting postponements of the forfeiture of the bonds and for other miscellaneous expenses.
The Respondent collected portions of the promised cash collateral substitution in the following installments, some of which were picked up at the Counts' home by the Respondent:
April 21, 1987 | $2,000 |
July 17, 1987 | $ 300 |
August 10, 1987 | $ 500 |
August 20, 1987 $ 800
January 6, 1988 $ 500
On each occasion, the Respondent gave Mrs. Counts a collateral receipt signed by the Respondent and by Mrs. Counts. Each receipt noted the amount received, the balance due on the cash collateral substitution promise, and the $150 balance on the premium on the October 2, 1986 bonds on the first set of charges. Again, there was no evidence that any of these collateral receipts were "filed" anywhere.
On January 6, 1988, Mrs. Counts asked the Respondent for a summary of the amounts of collateral paid to that date. The Respondent wrote on a piece of paper, incorrectly dated January 6, 1987, that $4100 had been received to date. Mrs. Counts also was confused what the money would be used for. The Respondent answered her question, saying that the money, together with the lot, would go towards indemnifying the surety for the $19,000 amount of the bonds if they were forfeited and, under the indemnity agreement, could be used to indemnity Adriana's Bail Bonds for expenses caused by the estreature. The Respondent listed these items on a piece of paper, too:
Attorney fees to continue case 4 times over one year.
Long distance calls for one year.
Gas, stamps, & miscellaneous.
One trip to Missouri, gas, motel, meals.
Investigators services in Missouri and Florida.
Later in January 1988, Clayton Counts was arrested and returned to Florida. The bonds, however, were not discharged at that time.
Later in 1988, the Respondent made demand on Mrs. and Mrs. Counts for payment of an additional $2,150. This was supposed to represent $2000 due on the cash collateral substitution promise, plus the $150 balance on the premium on the October 2, 1986 bonds on the first set of charges. In fact, only $1900 was due and owning on the cash collateral substitution agreement.
In March and April 1988, the Respondent collected from Mrs. Counts two additional $350 installments of the cash collateral substitution promise. Only one receipt was given for both installments, once again signed by both the Respondent and Mrs. Counts, reducing the balance to $1200, plus the $150 premium owing.
In June and July 1988, Mrs. Counts was hospitalized. On June 13, 1988, the Respondent went to the hospital to have Mrs. Counts sign a receipt for the return of the original collateral for the $19,000 of bonds--i.e., the
$19,000 promissory note and indemnity agreement, the mortgage on the lot and the mobile home. The Respondent did not return the cash collateral.
On July 14, 1988, the court entered an order releasing the surety and Adriana's Bail Bonds from the bonds. The Respondent did not return the cash collateral because Mrs. Counts died in July 1988, and the Respondent was unsure to whom the money should be paid.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. Section 120.57(1), Florida Statutes (1987).
The Administrative Complaints alleges that the Respondent violated six
(6) provisions of the Insurance Code: Sections 648.44(1)(g), 648.45(2)(d), 648.45(2)(e) 648.45(2)(f), 648.45(2)(j), and 648.45(3)(b), Florida Statutes (1987). Also alleged is a violation of Rule 4-1.005, Florida Administrative Code, the Rules of the State Treasurer and Insurance Commissioner. The statutory provisions provide:
Prohibitions; penalty.
No bail bondsman or runner shall:
(g) Accept anything of value from a principal for a bail bond except the premium and transfer fee authorized by the department, except that the bondsman shall be permitted to accept collateral security or other indemnity from the principal or another person in accordance with the provisions of s.648.442.
Actions against a licensee or eligibility to hold a license.--
* * *
The department shall deny, suspend, revoke, or refuse to renew any license issued under this chapter or the insurance code, and it shall suspend or revoke the eligibility of any person
to hold a license under this chapter or the insurance code, for any violation of the laws of this state relating to bail or any violation of the insurance
code or for any of the following causes:
* * *
Wilful use, or intended use, of
the license or permit to circumvent any of the requirements or prohibitions of this chapter or the insurance code.
Demonstrated lack of fitness or trustworthiness to engage in the bail bond business.
Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.
* * *
(j) Wilful failure to comply with
or willful violation of any proper order or rule of the department or willful
violation of any provision of this chapter or the insurance code.
* * *
The department may deny, suspend, revoke or refuse to renew any license
issued under this chapter or the insurance code or it may suspend or revoke the eligibility of any person to hold a license under this chapter
or the insurance code, for any violation of the laws of this state relating to bail or any violation of the insurance code or for any of the following causes:
* * *
(b) Violation of any law relating to the business of bail bond insurance or violation of any provision of the insurance code.
Rule 4-1.005, F. A. C., the Rules of the State Treasurer and Insurance Commissioner, provides:
No surety, bail bondsman or general lines agent engaged in the bail bond business shall make any charge, collect, or receive any fee or consideration other than the premium based on rates in current use, provided, however, that nothing in this section shall prohibit collateral security or co-indemnity agreements, and provided further that in instances where an additional surety, bail bondsman or general lines agent located in the county or state different from the originating agent or bail bondsman executes the bond the premium may additionally include as part thereof an execution and transfer fee, not to exceed a total of fifty ($50.00) dollars for any one defendant.
The monies the Respondent collected from Madie G. Counts were intended by the parties to be substitution of collateral, not a charge over and above the premium and collateral security. This was not a violation of Sections 648.44(1)(g), 648.45(2)(d), 648.45(2)(e), 648.45(2)(f), 648.45(2)(j), or 648.45(3)(b), Florida Statutes (1987) , or of Rule 4-1.005, F.A.C., the Rules of State Treasurer and Insurance Commissioner.
The evidence did not prove that the Respondent's business dealings with William L. and Madie G. Counts were - coercive in nature or constitute a violation of Sections 648.45(2)(e) or 648.45(2)(j), Florida Statutes.
Section 903.14, Florida Statutes, provides:
A surety shall file with the bond an affidavit stating the amount and source of any security or consideration which he or anyone for his use received or been promised for the bond.
A surety may maintain an action against the indemnitor only on agreements set forth in the affidavit. In an action by the indemnitor to recover security or collateral,
the surety shall have the right to retain only the security or collateral stated in the affidavit.
A limited surety or licensed bondsman
may file a statement in lieu of the affidavit required in subsection (1). Such statement must be filed within 30 days from the execution of the undertaking.
The Respondent failed to adhere to this statute in regard to the $5000 bond on Clayton D. Counts dated October 31, 1986. This, in turn, constitutes a violation of Sections 648.45(2)(f) and (3)(b), Florida Statutes (1987)
Where the surety is indemnified by a third party, as in this case, the risk of forfeiture is shifted to the indemnitor and thereby the indemnitor becomes the true bondsman. United Bonding Insurance Company v. Tuggle, 216 So.2d 80 (Fla. 2d DCA 1968). The filing of an affidavit or statement is especially important in a situation, as the one here, where the risk of forfeiture is evident. As the court explained in Allied Fidelity Insurance Company, Inc. v. Green, 511 So.2d 439, 440 (Fla. 1st DCA 1987):
The filing of the affidavit appears to serve several purposes. First, it limits the types of security or consideration which a surety may seek to recover from an indemnitor in the event of forfeiture of the bond. It also forces the surety to insure that indemnification agreements are reduced to writing or are otherwise memorialized. This same purpose also
protects the indemnitor from any liability beyond that contained in the agreements set out in the affidavit.
In not filing an affidavit or statement, the Respondent technically had no statutory authority to "substitute collateral." Under Section 903.14, the Respondent technically had no collateral against which the surety could proceed to enforce performance of the indemnification agreement even though the evidence is clear that the parties concerned intended for the agreement to be secured initially by collateral listed in the October 31, 1986, collateral receipt, and later by the cash collateral, and collateral receipts were given for all the collateral.
When Clayton D. Counts was bonded out, both William L. Counts and Madie G. Counts jointly obligated themselves as indemnitors. But there was no legal impediment to the Respondent taking substitute collateral from one party without the knowledge of the other. This arrangement does not reflect a lack of fitness or trustworthiness or a lack of reasonably adequate knowledge and technical competence to engage in the bail bond business and does not constitute violations of Sections 648.45(2)(e) or 648.45(2)(f), Florida Statutes (1987).
The evidence did not prove that the Respondent held collateral security "hostage" in order to pay for charges over and above the premium and collateral security. Sections 648.44(1)(g) and 648.442, Florida Statutes (1987), authorize indemnification agreements and except them from the prohibition against accepting anything of value other than the premium and transfer fee. However, Section 648.442(4) provides:
When the obligation of the surety on the bond or bonds has been released in writing by the court, the collateral shall be returned to the rightful owner as agreed in the indemnity agreement unless another disposition is provided for by legal assignment of the right to receive the collateral to another person.
Under subsection (4), the Respondent was required to return the cash collateral when the surety's obligations under the bond were released by the court on July 14, 1988. Technically, there was no excuse for failure to return the cash to the "rightful owner" even though Mrs. Counts had died and the Respondent was unsure who the "rightful owner" was. But this did not constitute a violation of Sections 648.45(2)(e) or 648.45(2)(f), Florida Statutes.
The above-referenced violations violate Section 648.45(3)(b), but not Sections 648.45(2)(d) or 648.45(2)(j), Florida Statutes (1987)
The Insurance Commissioner did not prove that the Respondent has demonstrated a lack of fitness or trustworthiness in violation of Section 648.45(2)(e), but has proved that the Respondent has demonstrated a lack of reasonably adequate knowledge and technical competence to engage in the bail bond business in violation of Section 648.45(2)(f), Florida Statutes (1987). Section 648.49, Florida Statutes (1987), authorizes requiring a suspended licensee to successfully complete a basic certification course in the criminal justice system or a correspondence course for bail bondsmen approved by the Bail Bond Regulatory Board.
Section 648.52, Florida Statutes (1987), authorizes the imposition of an administrative fine in an amount up to $1000 on a first offense in lieu of (or in addition to) revocation or suspension.
Section 648.53, Florida Statutes (1987), authorizes placing a licensee on probation on terms and conditions determined by the Department of Insurance for a period of up to two years in lieu of or in addition to revocation, suspension or imposition of a fine.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent be found guilty of the violations set forth
and eligibility for licensure be suspended for a period of thirty (30) days, that she be required to pay an administrative fine in the amount of $250, and that she be placed on probation for nine months after expiration of the suspension period, conditioned on : (1) successful completion of either a basic certification course or a correspondence course approved by the Bail Bond Regulatory Board; and (2) payment of the cash collateral to the rightful owner, or in the alternative, if the Respondent is in doubt as to the rightful owner, into a court registry in conjunction with an interpleader action, within 30 days of entry of final order.
DONE and ENTERED this 24th day of February, 1989, in Tallahassee, Leon County, Florida.
J. LAWRENCE JOHNSTON Hearing Office
Filed with the Clerk of the Division of Administrative Hearings this 24th day of February, 1989.
APPENDIX TO RECOMMENDED ORDER CASE NO. 88-2588
To comply with Section 120.59(2), Florida statutes (1987), the following rulings are made on the Petitioner'S proposed findings of fact:
1-9. Accepted and, along with other facts, incorporated.
10. Rejected in part and accepted in part. The note was a receipt of sorts, but it was not the only receipt. The incorrect date on the "receipt" was January 6, 1987; the actual date the "receipt" was given was January 6, 1988. 11.-16. Accepted and incorporated.
S. Marc Herskovitz, Esquire Office of Legal Services Department of Insurance
James N. Casesa, Esquire 3845 Fifth Avenue North
St. Petersburg, Florida 33713
