STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MONTGOMERY BLAIR SIBLEY, )

)

Petitioner, )

)

vs. ) CASE NO. 96-2549RU

) DEPARTMENT OF BANKING AND ) FINANCE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Administrative Law Judge of the Division of Administrative Hearings. The parties have agreed to waive an evidentiary hearing.

APPEARANCES

For Petitioner: Montgomery Blair Sibley, Esquire

337 Palermo Avenue

Coral Gables, Florida 33134

For Respondent: Margaret S. Karniewicz, Esquire

Department of Banking and Finance Suite 526, The Fletcher Building

101 East Gaines Street Tallahassee, Florida 32399-0350

STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern whether the application form for authority to register as a money transmitter used by the Respondent and other alleged statements asserted by the Petitioner violates Section 120.535(1), Florida Statutes.

PRELIMINARY STATEMENT

This cause arose upon the filing of a Petition seeking a determination that the application for authority to register as a money transmitter (Application), pursuant to Chapter 560, Florida Statutes, and the procedural rules for processing such applications, violates Section 120.535, Florida Statutes. The Petition was filed by the Petitioner on May 28, 1996. Chapter 560, Florida Statutes, and related rules, as administered by the Respondent (Department).

The Petition was assigned to the undersigned, and by a Notice of Hearing dated June 7, 1996, a final hearing was scheduled for June 20, 1996. The hearing was rescheduled for August 27, 1996 by an Order granting an unopposed Motion for Continuance. By Order of July 24, 1996, a Motion to Dismiss by the Department was granted, giving the Petitioner ten days to file an Amended Petition. That Amended Petition was filed on July 29, 1996. A telephone conference call was

conducted between the undersigned and the parties on August 22, 1996, at which point the parties agreed that no significant factual matters were in dispute and that an evidentiary hearing was unnecessary. Accordingly, by agreement of the parties and by Order of the undersigned, the Petitioner was directed to submit his evidence, legal argument, and legal authority relied upon by August 27, 1996. The Respondent was then required to submit its case in documentary form within seven days thereafter, and the Petitioner was given seven days thereafter to submit any rebuttal.

The Petitioner, in its submittal, presented the following evidence, as well as a Memorandum of Law, and proposed findings of fact. The exhibits, which were admitted into evidence, were as follows: (1) Memorandum dated September 1, 1995 from the Division of Banking to the Petitioner, attached to which were the Application and a biographical report; (2) Index of Money Transmitter Registrations Issued dated May 17, 1996; (3) letter dated October 18, 1995 from the Department addressed to the "Lazzara Family Check Cashing" denying their application; (4) Notice of Proposed Rulemaking for Rule 3C-560.122; and (5) unsigned letter dated May 21, 1996 from the Petitioner to the Director of the Division of Banking.

The Respondent presented a Proposed Final Order and four exhibits, which were admitted into evidence, as follows: (1) Notice of Proposed Rulemaking for Rule 3C-560.122; (2) Pages 3826 and 3827 of the Florida Administrative Weekly, dated June 28, 1996, Volume 22, Number 26; (3) Certification of the Department of Banking and Finance Administrative Rules Filed with the Department of State for Rule 3C-560.122; and (4) Certification of Form Incorporated by Reference in Rule 3C-560.122, F.A.C.

The proposed findings of fact submitted by the parties have been addressed to the extent relevant and material in this Final Order.

FINDINGS OF FACT

1. The Petitioner is an attorney, who represents clients who seek to engage in the business of funds transmitter, payment instrument issuer, foreign currency exchanger or check casher. The Petitioner is the attorney who represents such clients, rather than being one who seeks to become registered as a funds transmitter, etc. The clients of the Petitioner, who seek registration, are not parties to the Amended Petition.

   
   

2. The Department is an agency of the State of Florida charged with the regulation of the money-transmitting industry, pursuant to the provisions of Sections 560.102 and 560.105, Florida Statutes. The provisions of Chapter 560, Florida Statutes, known as the "Money Transmitters Code", took effect on July 1, 1994.

   
   

3. Section 560.204, Florida Statutes, provides, in part:

   
   

   1. No person shall engage for consideration, nor in any manner advertise that they engage, in the selling or issuing of payment instru- ments or in the activity of a funds trans- mitter, without first obtaining registration under the provisions of this part.

      * * *

4. Section 560.303, Florida Statutes, provides, in part:

   
   

   1. No person shall engage in, or in any manner advertise engagement in, the business of cashing payment instruments or the exchanging of foreign currency without first registering under the provisions of this part.

      * * *

      
      

5. On or about May 28, 1996, the Petitioner filed his Petition with the Division of Administrative Hearings alleging that certain "statements" of the Department violated Section 120.535, Florida Statutes. On June 12, 1996, the Department submitted for publication, in the June 28, 1996 issue of the Florida Administrative Weekly, a Notice of Proposed Rulemaking for the following rule:

   
   

   3C-560.122 Application Procedure for Registration as a Funds Transmitter, Payment Instrument Issuer, Foreign Currency Exchanger, or Check Casher.

   1. Each person who seeks to obtain registration as a money transmitter, payment instrument issuer, foreign currency exchanger, or check casher, shall apply to the Depart- ment by submitting the following:

      1. a completed Application for Authority to Register as a Money Transmitter, Form

         DBF-C-94, effective , which is hereby incorporated by reference and avail- able by mail from the Department of Banking and Finance, Division of Banking, Room LL-22, The Capitol, Tallahassee, Florida 32399-0350; and

      2. a non-refundable application fee of

         $500 in the case of a funds transmitter or payment instrument issuer registration, or a non-refundable application fee of $250 in the case of a foreign currency exchanger or check casher.

   2. Request for Additional Information. Any request for additional information will be made by the Department within thirty (30) days after receipt of the application by the Department. The additional information must be received by the Department within forty- five (45) days from the date of the request. Failure to respond to the request within forty-five (45) days from the date of request shall be construed by the Department as grounds for denial for failure to complete the application, and the application shall be denied pursuant to s. 120.60(2), F.S.

   3. Amendment of Application.

      (a) An applicant may amend the application as to those factors generally within the control or selection of the applicant once, as a matter of course, at any time within thirty (30) days from the Department's

      receipt for filing. Otherwise, the appli- cation may be amended only with prior written permission from the Department. Requests to make changes which are material to the appli- cation or to the Department's evaluation of the application filed at any time after the application has been received may be deemed by the Department to be grounds for denial, and a new application, accompanied by the appropriate filing fee, may be required.

   4. Withdrawal of Application. An appli- cant may request withdrawal of an application prior to a determination of the application being made by the Department by submitting a written request that the application be withdrawn.

   5. Refunds. If the application is with- drawn or denied, the application fee is non- refundable.

   6. Upon approval of an application, a registration will be sent by the Department to the applicant's mailing address as indicated on the application.

      Specific Authority 560.105(3), 120.53(1)(b) FS. Law Implemented 560.204, 560.205, 560.206,

      560.303, 560.306 FS. History - New .

      
      

6. On July 29, 1996, the Department filed the above rule and Application form for adoption with the Department for State and it took effect on August 18, 1996. The Department, accordingly, has used the rule-making procedure expeditiously and in good faith to adopt a rule which addresses the statements with which the Petitioner is concerned.

   
   

7. The Petitioner has asserted in his Amended Petition that he is "substantially affected by the statement as [he has] clients who are threatened with criminal prosecution pursuant to 18 U.S.C. Section 1960 for not having a license required by Chapter 560." The Petitioner additionally claims that "as legal counsel to these clients, [he is] unable to provide competent legal advice regarding the application of Chapter 560."

   
   

8. The Petitioner, however, has provided no evidence that he, as opposed to his unidentified clients, will suffer any injury as a result of the alleged statement or rule. The "immediate" injury allegedly amounts to the threat of criminal prosecution of the Petitioner's unidentified clients under 18 U.S.C. Section 1960 for not having a license required by the above-referenced Florida Statutes and not by the alleged generally-applicable statement or "rule". The Petitioner has not presented any evidence that any alleged injury on the part of either his unidentified clients or himself is within the zone of interest protected by Chapter 560, Florida Statutes. The zone of interest, which could be discerned from that statute's provisions, does not provide for protection of a lawyer's ability to provide competent legal advice to clients concerning such a statute's applicability to their interests. If a statute is unclear or policies or rules practiced or promulgated in furtherance of that statutory charge by an agency are unclear, a lawyer, in advising and litigating on behalf of his clients, has recourse to the courts or to the administrative adjudicatory process. However, it is their interests he would seek to protect in such situations and not his own as a lawyer. The Petitioner, the attorney for

   unidentified clients allegedly affected, has not, in his Amended Petition, identified those clients, as parties or otherwise, nor the immediate injury they will allegedly suffer nor asserted or established with proof how they are "substantially affected". It is necessary that that be done to enable such clients to bring this challenge as petitioners in their own right. In any event, the Petitioner, as counsel for those clients, has no standing since he is not a substantially-affected person who is in danger of suffering an "immediate injury" in his own right, which would arise within the ambit of the "zone of interest" protected by Chapter 560, Florida Statutes. The Petitioner is simply not the proper "substantially-affected person" to bring this challenge.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties hereto pursuant to Section 120.57(1), Florida Statutes.

   
   

10. In a Section 120.535, Florida Statutes, unpromulgated rule challenge proceeding, the burden is on the Petitioner to establish the allegations of his Petition by a preponderance of the evidence. See, Adam Smith Enterprises v. Department of Environmental Regulation, 553 So.2d 1260 (Fla. 1st DCA 1990).

    
    

11. Section 120.535(2)(a), Florida Statutes, provides, in part:

    
    

    Any person substantially affected by an agency statement may seek an administrative determination that the statement violates subsection (1).

    
    

12. The term "substantially affected" person has been judicially interpreted as requiring: (1) proof that he will suffer a real and sufficiently-immediate injury-in-fact to entitle him to a hearing to contest whatever agency action is at issue and (2) that the alleged substantial injury is of a type or nature that the proceeding the Petitioner seeks to bring is designed to protect, or in other words, that it is within the "zone of interest", that the relevant statute giving rise to the substantive rights and proceeding at issue, is designed to protect. Florida Society of Ophthalmology

    v. Board of Optometry, 532 So.2d 1279, 1285 (Fla. 1st DCA 1988), rev. denied,

    542 So.2d 1333 (1989); All Risk Corporation of Florida v. State, Department of Labor & Employment Security, 413 So.2d 1200 (Fla. 1st DCA 1982); Agrico Chemical Company v. Department of Environmental Regulation, 406 So.2d 478 (Fla. 2d DCA 1981).

    
    

13. The Petitioner asserts in his Amended Petition that he is substantially affected by the statement inasmuch as he has clients threatened with criminal prosecution, pursuant to 18 U.S.C. Section 1960, for not having the license required by Chapter 560, Florida Statutes, concerning money transmitters, etc. The Petitioner also claims that as legal counsel for those clients, who he has not identified, he is unable to provide competent legal advice regarding the application of Chapter 560, Florida Statutes, because of the feared import of the purported agency statement.

    
    

14. The Petitioner has provided no evidence, however, that he, as opposed to his unidentified clients, will suffer any injury as a result of the alleged statement or rule. The immediate injury alleged is the threat of criminal prosecution under the above Federal statute for not having a license required by Chapter 560, Florida Statutes, as opposed to any threat directly caused by the

    alleged statement or rule. Be that as it may, it is not a threat posed to the Petitioner's interest himself as stated in the above Findings of Fact. The Petitioner has presented no evidence that any alleged injury on the part of either his unidentified clients or himself comes within the zone of interest protected by Chapter 560, Florida Statutes. He has not identified his clients and has not delineated precisely what their interest is that the alleged agency statement would purportedly violate. He has thus not shown that either he or his unidentified clients are the proper "substantially affected" persons to bring such a challenge. Rather, the Petitioner seems to seek an advisory opinion from the Division of Administrative Hearings and the undersigned, which is the not the proper purpose of a Section 120.535, Florida Statutes, challenge. In consideration of the preponderant evidence in this proceeding, the Petitioner has failed to establish that he is a "substantially affected" person.

    
    

15. Section 120.535(1), Florida Statutes, provides, in part:

    
    

    1. Rulemaking is not a matter of agency discretion. Each agency statement defined

       as a rule under s.120.52(16) shall be adopted by the rulemaking procedure provided by s.

       1. as soon as feasible and practicable. Rulemaking shall be presumed feasible and practicable to the extent provided by this subsection unless one of the factors provided by this subsection is applicable.

          1. Rulemaking shall be presumed feasible unless the agency proves that:

       * * *

       3. The agency is currently using the rulemaking procedure expeditiously and in good faith to adopt rules which address the statement.

       
       

       The Department has used the rule-making procedure expeditiously in these circumstances and in good faith in seeking to adopt a rule and Application form which addresses the statements which concern the Petitioner. The rule was noticed in the June 28, 1996 issue of the Florida Administrative Weekly and submitted to the Joint Administrative Procedures Committee, as required by Section 120.54(1), Florida Statutes. The rule and Application form were filed for adoption on July 29, 1996, as required by Section 120.54(11)(b), Florida Statutes, and took effect on August 18, 1996. The Department has conceded that the Application form is required to be adopted as a rule and it has done so.

       
       

16. The Department's decisions to grant or deny registrations are individual case decisions and are not considered "statements of general applicability", as each denial or approval of such applications for registration is directed to that applicant alone and that applicant's individual circumstances. See, Citifirst Mortgage Corporation v. Department of Banking and Finance, 15 FALR 1735 (DOAH Case No. 92-7496RU April 1, 1993). Additionally, the approval or denial of an application, by its own effect, does not create rights as it merely describes actions which the Department proposes to take, which the applicant would then have an opportunity to challenge, pursuant to Section 120.57, Florida Statutes. The Petitioner has not provided any evidence that a letter directed to the Lazzara Family Check Cashing business, denying their application for registration as a check casher is a "statement of general applicability" so as to constitute a "rule." Since the approval or denial of such a money transmitter application has not been shown to be an agency

    "statement of general applicability" and is instead an individual circumstance- driven-agency decision, made with regard to a single applicant for registration, it is not subject to challenge, pursuant to Section 120.535, Florida Statutes.

    Rather, if it is to be challenged, the filing of a Section 120.57(1), Florida Statutes, challenge to an intended agency action purportedly affecting such an individual applicant's substantial interest would be required.

    
    

17. The instructions accompanying the Application form have also been adopted in Rule 3C-560.122, Florida Administrative Code. The Petitioner's argument that the form and/or the accompanying instructions are "void" because they have been adopted without benefit of any rule-making procedures is without merit. The Legislature clearly provided an exception to Section 120.535(1), Florida Statutes, by allowing agencies to use a rule-making procedure in good faith to adopt rules which address a statement of general applicability, as provided in Section 120.535(1)(a)3., Florida Statutes. The consequences of an agency's failure to address such a statement by the rule-making procedures is set forth in Subsection (4) and would ultimately preclude the agency from relying on the statement as a basis for agency action. Here, the Department promptly engaged in rule-making, after receipt of the Petition filed herein, to adopt a rule and form which addressed the issues raised by the Petitioner, in accordance with Section 120.535(1)(a)3., Florida Statutes.

    
    

18. The Department has adopted an application form in Rule 3C-560.122, Florida Administrative Code. It has not been shown that the adoption was not expeditious and in good faith, and it is also noted that the Application form attached by the Petitioner as Exhibit 1 to his submissions is not the same form which was actually filed for adoption by the Department, as shown in the Department's Exhibit 4; however, the question has been adequately addressed by the Department by the filing and adoption.

    
    

19. The Department has used the rule-making procedures expeditiously and in good faith to adopt Rule 3C-560.122, Florida Administrative Code, which adopts the application forms and sets forth the application procedure for funds transmitters, payment instrument issuers, foreign currency exchangers, and check cashers. The Department's actions in this matter clearly fall within the exception to "feasibility" presumption provided by Section 120.535(1)(a)3., Florida Statutes. The Petitioner has admitted that the registration requirements for money transmitters took effect on July 1, 1994, regardless of whether the Department had adopted an application form by rule. The other alleged statements (the approval or denial of an application) have not been shown to be statements of general applicability, which are subject to challenge, pursuant to Section 120.535, Florida Statutes. The approval or denial of any application is based upon individual facts and circumstances concerning that individual applicant and to which the exception provided in Section 120.535(1)(b)2., Florida Statutes, applies.

    
    

20. Rule 3C-560.122, Florida Administrative Code, was published in the June 28, 1996 issue of the Florida Administrative Weekly. The Petitioner received a copy of the notice of the proposed rule-making, pursuant to his public records request. Thus, the Petitioner had actual notice.

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the pleadings, arguments and submissions of the parties, it is

ORDERED that the Amended Petition filed in this case be dismissed in its entirety.

DONE AND ORDERED this 14th day of November, 1996, in Tallahassee, Florida.

P. MICHAEL RUFF Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 14th day of November, 1996.

COPIES FURNISHED:

Montgomery Blair Sibley, Esquire

337 Palermo Avenue

Coral Gables, Florida 33134

Margaret S. Karniewicz, Esquire Department of Banking and Finance Suite 526, The Fletcher Building

101 East Gaines Street Tallahassee, Florida 32399-0350

Honorable Robert F. Milligan Comptroller, State of Florida Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350

Harry Hooper, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350

Booter Imhof

Committee on Streamlining Government

324 House Office Building Tallahassee, Florida 32399-1300

James Rhea, Esquire Legislative Analyst

Committee on Governmental Reform and Oversight

420 Senate Office Building Tallahassee, Florida 32399-1100

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 Clerk of the Division of Administrative Hearings 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: 96-002549RU

Orders for Case No: 96-002549RU