STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF INSURANCE )
AND TREASURER, )
)
Petitioner, )
)
vs. ) CASE NO. 92-2825
)
RUSSELL LYNN TULL, )
)
Respondent. )
)
RECOMMENDED ORDER
This case was heard pursuant to Notice by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings, on October 27, 1992, in Jacksonville, Florida.
APPEARANCES
For Petitioner: William C. Childers, Esquire
Department of Insurance and Treasurer
412 Larson Building Tallahassee, Florida 32399-0300
For Respondent: Russell Lynn Tull, pro se
6303 Simca Drive
Jacksonville, Florida 32211 STATEMENT OF THE ISSUE
Whether the Respondent committed the acts alleged in the Administrative Complaint and should be disciplined for violation of the Insurance Code.
PRELIMINARY STATEMENT
The Department of Insurance (Department) charged the Respondent with various violations of Chapter 426, Florida Statutes, and sought to discipline the Respondent for these violations. The essence of the charges against the Respondent was that he willfully and fraudulently failed to secure a performance bond on a construction project from an authorized surety insurer, and willfully and fraudulently represented to the owners, who were the beneficiaries of the bond, that Transamerica Insurance Company was surety on the surety bond.
Upon receipt of the administrative complaint, the Respondent made a timely request for a formal administrative hearing pursuant to Section 120.57, Florida Statutes. The Department of Insurance referred the matter to the Division of Administrative Hearings which conducted the formal hearing.
At the final hearing, Petitioner presented the testimony of five witnesses and presented six exhibits which were received into evidence. (Petitioner's
Exhibits 1-5, and Petitioner's Exhibit 8) Respondent offered two exhibits which were received by stipulation into evidence. (Respondent's Exhibits 1 and 2).
Both parties submitted posthearing pleadings. The Petitioner filed a proposed recommended order which was read and considered and appendix 1 to this order states which of the Petitioner's proposed findings were adopted and which were rejected and why. The Respondent's letter was read and considered primarily as argument on the case.
FINDINGS OF FACT
The Respondent, Russell Lynn Tull, became licensed in this state as a general lines agent on January 21, 1989.
At the time of the events which gave rise to the Administrative Complaint, the Respondent was not licensed as an insurance agent. At all times pertinent to the Administrative Complaint, the Respondent was employed by Cecil Powell and Company of Jacksonville, Florida, in its surety bond department.
Cecil Powell and Company was authorized to underwrite performance surety bonds on behalf of Transamerica Insurance Company.
On or about September 20, 1988, Embry/Burney, Inc. (hereafter E/B) of Fernandina Beach, Florida, entered into a construction contract with C and W Systems of Jacksonville, (hereinafter C and W), pursuant to which C and W agreed to build certain improvements for E/B within a development located in Nassau County, Florida.
The construction contract provided that E/B, as owner, would pay C and W, as contractor, the sum of $765,668 upon completion of the project, and further that C and W would provide a performance bond in the amount of the contract.
On or about September 20, 1988 and pursuant to contract, E/B provided a check in the amount of $15,232 payable to C and W as full payment on the premium for the performance bond on the construction project.
On or about October 20, 1988, E/B received a performance bond from C and W in the amount of $765,668 to ensure completion of the construction contract.
The performance bond was received by W. H. Burney, Jr., in behalf of E/B. The performance bond listed William Whiddon, Paul Chauncey, and the Respondent as personal sureties on the performance bond. Whiddon and Chauncey were the principals in C and W Contracting. When W. H. Burney, Jr. received the personal surety bond he asked Chauncey and Whiddon where they had obtained it.
Burney was told by Chauncey that it was obtained through Cecil Powell and Company. Chauncey also told Burney that the Respondent was a Vice-President with Cecil Powell and Company. (The preceding is a hearsay statement included in these findings to explain the state of mind of W. H. Burney, Jr. as stated below.)
C and W gave the check provided by E/B for the performance bond to the Respondent who deposited the $15,232 to his personal account. C and W presented the personal surety bond to the local government to meet its requirements for participation.
W. H. Burney, Jr. knew that the surety bond which he received was a personal surety bond from Whiddon, Chauncey, and the Respondent; however, Burney thought that their personal obligations had been re-insured by Transamerica based upon statements he received from Chauncey. W. H. Burney, Jr., never spoke to the Respondent in person. All of his conversations with the Respondent were by telephone.
Burney testified that the Respondent told him that the re-insurance was through Transamerica Insurance Company; however, his testimony on this point was not deemed to be credible. (Not accepted as Finding of Fact.) 1/
Subsequently, W. H. Burney, Jr. received a letter on the stationery of Cecil Powell and Company, Petitioner's Exhibit No. 5, which reinforced Burney's misconception that Chauncey, Whiddon, and Tull had re-insured the project through Transamerica Premier Insurance Company. Neither Transamerica nor any other company wrote any insurance guarantying the performance of the contract by C and W.
On or about April 13, 1988, C and W failed to complete the work as required by the contract, and the contract was declared in default.
After the default on the contract, Joel E. Embry contacted the Respondent at Cecil Powell and Company and discussed with him the default, the need to activate the bond, and the need to hire a new contractor to complete the work. Embry suggested two contractors to the Respondent which the Respondent indicated were acceptable. Embry hired a contractor to complete the work, and provided a copy of the new contract to Cecil Powell and Company. When the new contractor submitted a bill for completion of a portion of the work, he submitted these bills to Cecil Powell. When the bills were not paid, Embry made arrangements to meet with the Respondent and with Fitzhugh Powell.
Embry met with Fitzhugh Powell at Cecil Powell and Company to discuss the nonpayment of the bills. At that meeting, Embry presented Fitzhugh Powell a copy of the letter from Cecil Powell and Company referencing Transamerica's insurance of the project (Petitioner's Exhibit 5). Fitzhugh Powell investigated internally and determined that neither Cecil Powell and Company nor Transamerica had provided any surety on the contract.
Fitzhugh Powell's investigation revealed that the Respondent had received the monies paid for the surety bond, and had, with Chauncey and Whiddon, become a personal surety upon the contract. It was the opinion of Fitzhugh Powell, a licensee with over 30 years of experience in the insurance business and principal officer of a major insurance agency, that the Respondent had not insured the contract by agreeing to act as personal surety on the contract. However, Powell discharged the Respondent for acting as personal surety on the C and W contract.
When Tull, Whiddon, and Chauncey were unable to cover the losses on the contract, E/B suffered significant financial losses which resulted in a loss of business reputation.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties pursuant to Section 120.57(1), Florida Statutes.
The Department must prove the allegations against the Respondent by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). The Petitioner charges that the Respondent violated Sections 626.611(5)(7)(8)(9)(13); 626.621(1)(2)(6); and various provisions of Section 626.9541, Florida Statutes.
As the Petitioner acknowledges, the Respondent was not licensed at the time of the events which form the basis for the allegations of the Administrative Complaint. Consequently, only those provisions which would form a basis for denying licensure can be prosecuted. This eliminates all the allegations rising pursuant to Section 626.9541, Florida Statutes. However, the provisions of Section 626.611 and 626.621, supra, both may form a basis for denying a license. Therefore, Petitioner can discipline the Respondent for violation of these sections.
The key factual determination or issue with regard to the alleged violations of Section 626.611 and 626.621, supra, is whether the Respondent represented to Burney and Embry that the surety bond was placed with Transamerica Company. There is no evidence that the Respondent represented to Mr. Embry that the insurance was with Transamerica Company. All of the representations and activities between the Respondent and Embry, as testified to by Embry, were consistent with the Respondent's obligations as a personal surety on the performance bond.
Although a transcript was not ordered in this case, the Hearing Officer's notes reflect that William H. Burney, Jr. testified in summary that he:
Never talked to Tull except on the phone,
The successful bidder was required to provide a performance bond and C and W presented a bond shortly after the contract was awarded,
Burney was aware that the performance bond was a personal surety bond,
Burney questioned Chauncey about the bond and Chauncey told him that the bond was through Cecil Powell and Company, (hearsay),
Burney called Cecil Powell and Company and spoke with Tull in an effort to determine if it was secure,
Burney stated that the personal surety was reinsured, (not accepted as credible 2/) and
Subsequently Burney received a copy of a letter,
Petitioner's Exhibit 5, which appeared to
indicate that Transamerica insured the performance on the contract; however, Transamerica never insured the project.
The evidence presented shows that E/B, knowing that it was a personal surety bond, accepted the personal surety because of time constraints in presenting their development package to the local political subdivision. Both Burney's and Embry's contacts with the Respondent were after the presentation and acceptance of the personal surety bond by E/B and E/B's utilization of that bond in their presentation to the political subdivision.
Based upon the foregoing facts there was no misrepresentation by the Respondent of the bond and the nature of the bond was not material to the acceptance of the bond by Burney. There was no violation of Section 626.611 or 626.621, Florida Statutes, based upon misrepresentation of the facts.
In addition, the Petitioner asserts posthearing that the facts presented at hearing show that the Respondent violated Section 624.02, Florida Statutes, by acting as an insurer; and violated Section 624.11, Florida Statutes, by acting as an agent. The Petitioner's posthearing assertion that these violations by the Respondent were proven raises questions of whether the Respondent had proper notice that the Department alleged these violations; and, therefore, was prepared to address them. In the absence of proper notice, the Respondent was not afforded procedural due process.
The factual allegations in the Administrative Complaint are that the Respondent received monies to purchase a surety bond from Transamerica, did not do so, and represented to Mr. Embry and Mr. Burney that he had. The Department did not prove those allegations. The Department did not factually allege in the Administrative Complaint that the Respondent acted as an insurer or as an insurance agent while unlicensed; therefore, any evidence presented on said allegations is a nullity.
Section 120.57, supra, and the rules adopted pursuant to that Section establish a system to provide individuals with a due process hearing. Inseparable from the process is the requirement that the individual be advised of the allegations, both legal and factual, against him or her. In this instance, the Respondent was not apprised of the factual allegations that he acted as an insurer or agent without a license. Therefore, the Department cannot penalize the Respondent for that conduct. To do so would deny the Respondent procedural due process.
Based upon the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED:
That the Department take no action against the Respondent's license.
DONE and ENTERED this 14th day of December, 1992, in Tallahassee, Florida.
STEPHEN F. DEAN
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 14th day of December, 1992.
ENDNOTES
1/ Although there was no testimony to the contrary, the factual circumstances do not support the testimony that the Respondent told Burney he had reinsured the bond. It is illogical for Respondent to make a false representation about reinsurance when he already had the money and E/B had already accepted the bond.
2/ Burney's testimony that Respondent told him the bond was reinsured is rejected. Burney may have had the impression that it was properly insured by virtue of Respondent's position that Powell and receiving the letter, Petitioner's Exhibit 5; however, it is not credible that the Respondent would make such a representation after he had paid and after E/B had accepted the personal surety bond.
APPENDIX CASE NO. 92-2825
The Petitioner's proposed findings were read and considered. The following states which of the Petitioner's proposed findings were accepted and which were rejected and why:
Para 1-11 Adopted with minor changes.
Para 12 Rejected as contrary to most credible evidence.
Para 13 Rejected as lacking credibility.
Para 14-16 Adopted
Para 17 Rejected as contrary to most credible evidence.
Para 18,19 Subsumed by findings that Tull did not re-insure the project, but that Tull did not represent to E/B that the project was re-insured, and that any representation was not material because E/B knew they received a personal surety bond and accepted that bond as a personal surety bond.
Para 20-24 Adopted with minor changes.
COPIES FURNISHED:
William C. Childers, Esquire Department of Insurance and Treasurer
412 Larson Building Tallahassee, Florida 32399-0300
Russell Lynn Tull 6303 Simca Drive
Jacksonville, Florida 32211
Tom Gallagher, State Treasurer and Insurance Commissioner
The Capitol, Plaza Level Tallahassee, FL 32399-0300
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.
=================================================================
AGENCY FINAL ORDER
=================================================================
OFFICE OF THE TREASURER DEPARTMENT OF INSURANCE
IN THE MATTER OF:
DOAH CASE NO.: 92-2825
RUSSELL LYNN TULL CASE NO.: 92-L-129WCC
/
FINAL ORDER
THIS CAUSE came on before the Treasurer and Insurance Commissioner for the State of Florida, Department of Insurance and Treasurer (hereinafter referred to as the "DEPARTMENT"), for consideration and final agency action. On April 3, 1992, the DEPARTMENT issued an Administrative Complaint, charging RUSSELL LYNN TULL (hereinafter referred to as the "RESPONDENT") with violations of various provisions of the Florida Insurance Code. The RESPONDENT timely filed a request for a formal hearing, pursuant to 120.57(1), Florida Statutes. The matter was heard before Stephen F. Dean, Hearing Officer, Division of Administrative Hearings (hereinafter referred to as the "Hearing Officer) on October 27, 1992 in Jacksonville, Florida.
After consideration of the evidence, the argument and testimony at hearing, the Hearing Officer issued his Recommended Order on December 15, 1992 to the Treasurer and Insurance Commissioner. (Exhibit "A", attached.) The Hearing Officer recommended that no action be taken against the RESPONDENT'S license.
On December 24, 1992, the DEPARTMENT filed Exceptions to the Recommended Order. (Exhibit "B", attached.)
Ruling on DEPARTMENT'S exceptions to Recommended Order
The DEPARTMENT excepts to the Hearing Officer's Finding of Fact #2, which states in pertinent part "At the time of the events which gave rise to the Administrative Complaint, the RESPONDENT was not licensed as an insurance agent". The DEPARTMENT complains that various acts alleged in the Administrative Complaint to violate the Florida Insurance Code occurred after January 21, 1989 when the RESPONDENT became a licensed insurance agent in this state.
The DEPARTMENT may be misreading the Hearing Officer's statement; the phrase "gave rise to" may refer to the formation of the performance bond, without which, none of the ensuing events alleged or found would have occurred. In light of this interpretation and due to the legal certainty of the date the RESPONDENT first became licensed in this state, the DEPARTMENT'S exception to Finding of Fact #2 is REJECTED.
The DEPARTMENT excepts to Finding of Fact #11, which states in pertinent part: "W.H. Burney, Jr. knew that the surety bond which he received was a personal surety bond from Whiddon, Chauncey and the RESPONDENT; however, Burney thought that their personal obligations had been reinsured by Transamerica based upon statements he received from Chauncey".
The DEPARTMENT contends that the Hearing Officer erred in finding that Burney knew the bond was only a personal obligation of the three individuals and that, because Burney lacked insurance expertise and received various written and spoken assurances that Transamerica had reinsured the bond, the Hearing Officer was compelled to find that Burney believed he was insured by Transamerica in one form or other.
Pursuant to 120.57(1)(b)10, Florida Statutes, an agency may not reject a finding of fact unless it determines, from a review of the complete record that the findings were not supported by competent and substantial evidence. Freeze
v. Department of Business Relation, 556 So.2d 1204, 1205-1206 (Fla. 5th DCA 1990). The exact nature of Burney's knowledge at the inception of this contract for performance bond and his belief regarding any condition subsequent of reinsurance was a litigable issue which the Hearing Officer, as the trier of fact, was entitled and obligated to decide.
The Hearing Officer did not find Burney's testimony on this point to be credible. The record in this case includes Petitioner's Exhibit 4, "Affidavit by Individual Sureties and Performance Bond", from which a reasonably prudent businessman could be expected to deduce that three individuals, and not an insurance company, had agreed to become sureties for a fee. The record also contains evidence to support Conclusion of Law #25, which states in pertinent part: "The evidence presented shows that E/B, knowing it was a personal surety bond, accepted the personal surety because of time constraints in presenting their development package to the local political subdivision." 1/ The Hearing Officer's Finding of Fact #11 is supported by competent, substantial evidence and the DEPARTMENT'S exception thereto is REJECTED.
The DEPARTMENT excepts to the Hearing Officer's Finding of Fact #12, in which the Hearing Officer rejects Burney's assertion that RESPONDENT told him the performance bond had been reinsured by Transamerica. Again, the DEPARTMENT argues that the Hearing Officer was compelled to accept Burney's testimony on this point as there was no testimony to the contrary.
As discussed in paragraph #2, above, the Hearing Officer is not limited to live testimony is rendering findings of fact, but rather may review all evidence in the record. Further, the matter was a litigable issue upon which the Hearing Officer was required to enter a determination. Evaluating the credibility of witnesses is a matter uniquely within the scope of the duties of the trier of fact, and a finding may not be rejected by an agency simply because the agency, weighing all the same evidence, would have come to a different conclusion.
Instead, the test is whether the finding is supported by competent and substantial evidence. As discussed in paragraph #2, this finding is adequately
supported in the record, and the DEPARTMENT'S exception to Finding of Fact #12 is therefore REJECTED.
The DEPARTMENT excepts to the footnote to Finding of Fact #12, which states in pertinent part: "It is illogical for the RESPONDENT to make a false representation about reinsurance when he already had the money and E/B had already accepted the bond." The DEPARTMENT argues that, in truth, it is not illogical. This argument is rejected as no more than an assertion that another trier of fact might have reached a different conclusion. The DEPARTMENT further argues that this footnote will shift the burden of assuring that policies are issued by an acceptable and authorized insurer from the agent to the consumer.
In truth, this footnote contains no such implied conclusion of law. Had the DEPARTMENT established that Burney's company actually directed the RESPONDENT to obtain a performance bond from Transamerica, the Hearing Officer presumably would have ruled differently. The DEPARTMENT'S exception to footnote #1 is REJECTED.
The DEPARTMENT excepts to Conclusion of `Jaw #22, which states in pertinent part: "As the DEPARTMENT acknowledges, the RESPONDENT was not licensed at the time of the events which form the basis for the allegations in the Administrative Complaint. Consequently, only those provisions which would form a basis for denying licensure can be prosecuted. This eliminates all the allegations arising pursuant to 626.9541, Florida Statutes".
The DEPARTMENT argues that the RESPONDENT engaged in various acts which constituted "transacting insurance" within the meaning of 624.10, Florida Statutes. The DEPARTMENT further argues that, in view of the definition of "person" in 626.9511(1), Florida Statutes, Chapter 626, Part X, Florida Statutes applies to any person involved in the business of insurance whose activities constitute a prohibited action thereunder. In this regard, the DEPARTMENT'S exception is ACCEPTED. It is error to assert that all persons not now licensed by the DEPARTMENT are immune from administrative action charging a violation of Chapter 626, Part X, Florida Statutes.
The DEPARTMENT further argues that the RESPONDENT violated the provisions of Chapter 626, Part X, Florida Statutes. However, the DEPARTMENT argues the violation occurred because the RESPONDENT misrepresented to Burney and others at E/B that Transamerica was the insurer or reinsurer on the performance bond.
Since there is no finding of fact to support this conclusion, the DEPARTMENT'S exception to Conclusion of Law #22 is REJECTED in this regard.
The DEPARTMENT excepts to Conclusion of Law #23, which states in pertinent part: "There is no evidence the RESPONDENT represented to Mr. Embry that the insurance was with Transamerica Company" Here the DEPARTMENT argues that, due to Petitioner's Exhibit #5, a letter from Adele Turknett to E/B, such evidence was present. The actions of Ms. Turknett are not attributed to the RESPONDENT'S direction or control in any finding; therefore, the DEPARTMENT'S exception to Conclusion of Law #23 is REJECTED.
The DEPARTMENT excepts to Conclusion of Law #24, which states in pertinent part that "Burney was aware that the performance bond was a personal surety bond". The exception is consistent with, and reargues, the DEPARTMENT'S exceptions to Findings of Fact #11 and 12, and for the reasons stated in paragraphs #2 & 3, above, the DEPARTMENT'S exception to Conclusion of Law #24 is REJECTED.
The DEPARTMENT excepts to Conclusion of Law #24, which states in pertinent part: "[The RESPONDENT] stated [to Burney] that the personal surety bond was reinsured (not accepted as credible)..." 2/ The exception is consistent with, and reargues, the DEPARTMENT'S exceptions to Findings of Fact #11 and 12, and for the reasons stated in paragraphs #2 & 3, above, the DEPARTMENT'S exception to Conclusion of Law #24 is REJECTED.
The DEPARTMENT excepts to footnote 2 to Conclusion of Law #24, which states in pertinent part: "...[I]t is not credible that [Burney would represent that Transamerica was the reinsurer] after he had been paid and after E/B had accepted the personal surety bond". The exception is consistent with, and reargues, the DEPARTMENT'S exceptions to footnote #1, and for the reasons stated in paragraph #4, above, the DEPARTMENT'S exception to footnote #2 is REJECTED.
The DEPARTMENT excepts to Conclusion of Law #29, which states in pertinent part: "Although Powell's assessment of the RESPONDENT'S actions is contrary to that of the DEPARTMENT and is inconsistent with the statute, it shows that the RESPONDENT'S acts are in a grey area and do not constitute a willful violation of the statute contrary to 626.611, Florida Statutes". 3/
To the extent that an individual who cosigns a note is not considered to be acting as an insurer, this results from the fact that a person who undertakes such an obligation is not "engaged in the business" of doing so, within the meaning of 624.03, Florida Statutes. Based upon the business relationship between the complainant and the licensee, the fact that the complainant initially sought a bond issued by a licensed insurer, the fact that a $15,232 premium was paid, and all the other facts in the record, the DEPARTMENT concludes that the RESPONDENT was engaged in the business of insurance, and acted as an insurer as that term is defined in 624.03, Florida Statutes.
In Conclusion of Law #28, the Hearing Officer found that the RESPONDENT had violated 624.401(1), Florida Statutes. Conclusion of Law #29 simply indicates that the violation of 624.401(1), Florida Statutes, was not willful, within the contemplation of 626.611(13), Florida Statutes. Based on the paucity of the Record as to the RESPONDENT'S motivation, the DEPARTMENT'S exception is REJECTED.
The DEPARTMENT excepts to Conclusion of `Jaw #30, which states in pertinent part: "The factual allegations contained in the Administrative Complaint are based upon the erroneous premise that the RESPONDENT received monies to purchase a surety bond from Transamerica and did not do so. The DEPARTMENT did not prove those allegations which it alleged. Although the DEPARTMENT proved a violation of 624.401(1), Florida Statutes, the DEPARTMENT did not factually allege in the Administrative Complaint that the RESPONDENT acted as an insurer or as an insurance agent while unlicensed".
The DEPARTMENT argues that, because the evidence was sufficient to support the conclusion that the RESPONDENT had accepted monies from E/B to obtain a performance bond from an authorized insurer, the RESPONDENT acted as an insurance agent prior to becoming licensed by the DEPARTMENT. This argument cannot stand in view of the earlier rulings on DEPARTMENT'S exceptions to Findings of Fact #11 and 12, discussed in paragraphs 2 and 3, above. Therefore, the DEPARTMENT'S exception to Conclusion of Law #30 is REJECTED.
Finally, the DEPARTMENT excepts to the Hearing Officer's Recommendation; to wit, that no action be taken against the RESPONDENT'S license. However, the DEPARTMENT argues that revocation is the appropriate
penalty because the DEPARTMENT has proven that the RESPONDENT violated various provisions of Chapter 626, Florida Statutes. To the extent that the DEPARTMENT relies solely upon the arguments made in its exceptions to Findings of Fact #11 and 12, discussed in paragraphs 2 and 3, above, the DEPARTMENT'S exception to the Recommendation is REJECTED.
Upon careful consideration of the record, the submission of the parties, and being otherwise fully advised in the premises, it is hereby ORDERED:
That the Hearing Officer's Findings of Fact are adopted in full as the DEPARTMENT'S Findings of Fact.
That the Hearing Officer's Conclusions of Law are adopted in part as the DEPARTMENT'S Conclusions of Law; to wit:
The Division of Administrative Hearings had jurisdiction to enter a Recommended Order in this matter, pursuant to 120.57(1), Florida Statutes.
The DEPARTMENT must prove an alleged violation of Chapter 626, Florida Statutes, by clear and convincing evidence.
The RESPONDENT was not licensed when the performance bond in this matter was issued.
Based upon the evidence as the Hearing Officer found it, the RESPONDENT did not misrepresent to E/B, at any time, that Transamerica was or would become the insurer or reinsurer on this bond.
That the DEPARTMENT hereby renders these additional conclusions of law. To the extent that the Hearing Officer's conclusions of law cannot be read as consistent with these additional conclusions, the Hearing Officer's conclusions of law are hereby REJECTED in pertinent part:
The DEPARTMENT has jurisdiction over persons other than its licensees. (See, e.g., 624.401(1); 624.310; 626.112; 626.901; 628.461 & 628.4615, Florida Statutes.) The provisions of Chapter 626, Part X, Florida Statutes, are applicable to any person who engages in any prohibited conduct without regard to licensure by the DEPARTMENT. (See 626.9521; 626.9511(1) & 626.9561, Florida Statutes.)
The Hearing Officer failed to render a specific conclusion of law regarding the allegation in the administrative complaint that the RESPONDENT had demonstrated a lack of fitness or trustworthiness to engage in the business of insurance, within the meaning of 626.611(7), Florida Statutes.
The DEPARTMENT alleged, and the Hearing Officer found, that the RESPONDENT accepted a substantial sum of money to issue his personal surety (or performance bond) to E/B, and that the RESPONDENT subsequently defaulted on all or part of this obligation. These actions constitute a clear violation of 626.611(7), Florida Statutes: "The DEPARTMENT shall...deny...the license...of any agent...if it finds that as to the...licensee...any one or more of the following grounds exist:...demonstrated lack of fitness or trustworthiness to engage in the business of insurance."
Furthermore, as part of the inducement to enter into the performance bond contract, the RESPONDENT furnished to E/B an "Affidavit by Individual Sureties", in which RESPONDENT swore that he and his co-sureties had sufficient assets,
subject to the claims of general creditors, to meet the obligation or face amount of the bond. Since the RESPONDENT defaulted on the bond, this sworn statement was either not true when made or assets upon which E/B relied were dissipated after the formation of the bond. Uttering a false affidavit to induce another to rely to his detriment (or dissipating assets pledged to the trust of another) demonstrates a lack of fitness or trustworthiness to engage in the business of insurance, within the meaning of 626.611(7), Florida Statutes.
Further, the RESPONDENT violated 624.401(1), Florida Statutes, by acting as an insurer without a Certificate of Authority to do so, and such violation resulted in substantial harm to the complaining party.
In these ways, the RESPONDENT demonstrated such a clear lack of fitness or trustworthiness to engage in the business of insurance as to compel the DEPARTMENT to revoke this license under 626.611(7), Florida Statutes.
b) The Hearing Officer here ruled that the DEPARTMENT could have no remedy based upon any fact not alleged or legal premise not pled in the Administrative Complaint. 4/ This conclusion is erroneous. A state agency in an administrative proceeding is not required to plead with the specificity required of civil litigants; procedural due process is satisfied where notice is adequate to bring the affected person into the hearing, prepared to defend his rights. State ex rel. Munch v. Davis, 196 So.2d 491 (Fla. 1940); Hadley v. Department of Administration, 411 So.2d 184 (Fla. 1982); Hickey v. Wells, 91 So.2d 206 (Fla. 1956). The administrative complaint in this proceeding was adequate to inform the RESPONDENT that he was charged with a lack of fitness or trustworthiness arising from the bond transaction, and there is no indication in the record that the RESPONDENT was denied any opportunity to defend himself.
The Recommended Order here finds, as a fact, that the RESPONDENT caused E/B financial harm and loss of business reputation when the bond was not fully performed. (Finding of Fact #19.) The Recommended Order also concludes that the RESPONDENT engaged in the unlicensed transaction of insurance in this state when he issued a performance bond. 5/ The DEPARTMENT did allege that the RESPONDENT violated 626.611(7), Florida Statutes, in his conduct concerning the performance bond. The requisite notice and opportunity to be heard was provided and the RESPONDENT was found to have acted in a manner which demonstrates a lack of fitness or trustworthiness to engage in the business of insurance.
That the Hearing Officer's Recommendation is hereby rejected by the DEPARTMENT, and the following action is hereby ORDERED:
That the RESPONDENT'S license(s) to engage in the business of insurance be and hereby are REVOKED.
NOTICE OF RIGHTS
Any party to these proceedings adversely affected by this order is entitled to seek review of this order pursuant to 120.68, Florida Statutes, and Florida Rules of Appellate Procedure Rule 9.110. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, acting as the agency clerk, at 612 Larson Building, Tallahassee, Florida, 32399-0300, and a copy of same with the appropriate District Court of Appeal, within thirty (30) days of the rendition of this order.
DONE AND ORDERED this day of 12th day of March, 1993
Treasurer and Insurance Commissioner
ENDNOTES
1/ Although the DEPARTMENT excepts to this Conclusion of Law, it does not argue that E/B was not under the time constraint described; rather, the DEPARTMENT argues that this time constraint was not sufficient evidence to support the Finding of Fact that Burney knew of the personal nature of the performance bond.
2/ The DEPARTMENT'S interpretation of the Hearing Officer's language in this portion of the Recommended Order appears to be correct.
3/ Powell had testified that the issuance of a personal performance bond was not clearly the transaction of insurance, but rather, was more analogous to cosigning a loan.
4/ See Hearing Officer's Conclusions of Law #30 and 31.
5/ The bond was apparently formed on October 20, 1988, whereas the RESPONDENT was not licensed as an agent until January 21, 1989.
The Hearing Officer concluded that: "The evidence does show that the RESPONDENT acted as a surety and received compensation for doing so. This constitutes acting as an insurer, and the RESPONDENT was not licensed as an insurer when he agreed to act as personal surety on the performance bond for compensation. This would constitute a violation of 624.401(1), Florida Statutes."
Copies furnished to:
STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
RUSSELL LYNN TULL, Respondent 6303 Simca Drive
Jacksonville, Florida 32211
WILLIAM C. CHILDERS, Esquire
Department of Insurance and Treasurer Division of Legal Services
612 Larson Building
200 East Gaines Street Tallahassee, Florida 32399-0300
| Issue Date | Proceedings |
|---|---|
| Jun. 29, 1994 | Letter to SFD from R. Tull (appeal of final order) filed. |
| Apr. 08, 1993 | Letter to R.L. Tull from S. Dean (RE: response to Mr. Tull of April 5, 1993, requesting continuance filed. |
| Apr. 07, 1993 | Letter to SFD from Russell Lynn Tull (re: Agency's Final Order revoking license) filed. |
| Mar. 15, 1993 | Final Order filed. |
| Dec. 24, 1992 | Petitioner`s Exceptions to Recommended Order filed. |
| Dec. 14, 1992 | Recommended Order sent out. CASE CLOSED. Hearing held 10/27/92. |
| Nov. 16, 1992 | Letter to SFD from Russell Lynn Tull (re: Proposed Findings) filed. |
| Nov. 16, 1992 | Proposed Recommended Order filed. (From William C. Childers) |
| Aug. 31, 1992 | Order Granting Continuance and Amended Notice sent out. (hearing rescheduled for 10-27-92; 10:00am; Jacksonville) |
| Aug. 18, 1992 | Joint Motion for Continuance filed. |
| Jun. 16, 1992 | Notice of Hearing and Order sent out. (hearing set for 9/17/92; at 10:00am; Jacksonville. |
| Jun. 12, 1992 | CC Letter to Bill Childers from Russell Lynn Tull (re: Initial Order)filed. |
| Jun. 03, 1992 | (Petitioner) Response to Initial Order filed. |
| May 11, 1992 | Initial Order issued. |
| May 07, 1992 | Agency referral letter; Letter to Fla. Dept. of Ins. from Russell Lynn Tull disputing allegations; Administrative Complaint; Election of Rights filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Mar. 12, 1993 | Agency Final Order | |
| Dec. 14, 1992 | Recommended Order | Resp found not to have made misrepresentations. Although Resp acted as in- surer, the Dept did not allege this violation. RO rejected. |
