vs. ) Case No. 00-3472PL
JOHN L. VATH, )
Respondent. )
Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing in Tampa, Florida, on January 18, 2001.
For Petitioner: Anoush A. Arakalian
For Respondent: Joseph P. Fritz
Joseph P. Fritz, P.A.
The issue is whether Respondent is guilty of unlawfully employing a felon in the conduct of the bail bond business, in violation of Sections 648.44(8)(b) and 648.45(3), Florida
Statutes, and Rule 4-221.001, Florida Administrative Code. If so, an additional issue is what penalty should be imposed.
By Administrative Complaint dated July 25, 2000, Petitioner alleged that Respondent was licensed as a limited surety agent and was the chief executive officer of Big John’s Bail Bonds, Inc. With the leave of the Administrative Law Judge, Petitioner filed a First Amended Administrative Complaint on January 11, 2001.
The First Amended Administrative Complaint alleges that Respondent wrote a $50,000 bond for Hector Lopez on May 8, 1999. The First Amended Administrative Complaint alleges that, on October 12, 1999, Mr. Lopez failed to appear in court, and the judge ordered the forfeiture of the bond. The First Amended Administrative Complaint alleges that Respondent paid Donald Raymond Davis certain monies to pay expenses in the pursuit and apprehension of Mr. Lopez in New York on January 19, 2000.
The First Amended Administrative Complaint alleges that Respondent knew or should have known that Mr. Davis was a felon and that Respondent nonetheless employed Mr. Davis in Respondent’s bail bond business. The First Amended Administrative Complaint alleges that Respondent knew or should have known that Mr. Davis was not licensed by
Petitioner to engage in the bail bond business and that Respondent nonetheless employed Mr. Davis in Respondent’s bail bond business.
The First Amended Administrative Complaint alleges that Respondent thus violated various statutes and one rule governing the bail bond business.
At the hearing, Petitioner called two witnesses and offered into evidence 14 exhibits: Petitioner Exhibits 2-15. Respondent called no witnesses and offered into evidence no exhibits. All exhibits were admitted except Petitioner Exhibit 2, which Petitioner elected not to file as a late- filed exhibit, and Petitioner Exhibit 8, which was excluded and proffered.
The court reporter filed the transcript on February 26, 2001.
At all material times, Respondent has been licensed as a limited surety agent, and he has been the chief executive officer of Big John’s Bail Bonds, Inc., which is located in Tampa (Big John’s).
Donald Raymond Davis has known Respondent for ten years. From time to time, Mr. Davis has done bail bond pick- ups in which he, serving as a bounty hunter, locates and
apprehends a person whose failure to appear in court has resulted in a bond forfeiture.
Mr. Davis is a felon. His last conviction was in 1989 for a second-degree felony of threatening to discharge a destructive device, in violation of Section 790.162, Florida Statutes. The court sentenced him to 18 months in prison followed by one year of probation.
Mr. Davis has been convicted of one or more other felonies. At all material times, Respondent was aware that Mr. Davis was a felon and was not licensed by Petitioner to engage in the bail bond business.
In December 1999, Respondent asked Mr. Davis to locate and cause the apprehension of Hector Lopez, who had failed to appear in court concerning a drug charge. Due to his failure to appear, the court had ordered the forfeiture of a bond that Respondent had written. Upon the apprehension of Mr. Lopez, Respondent would pay Mr. Davis a ten percent commission (presumably calculated with reference to the bail amount or bail premium), less certain debts that Mr. Davis owed Respondent. Respondent also agreed to pay certain expenses of Mr. Davis in pursuing Mr. Lopez.
After being retained, Mr. Davis examined the file, but found nothing that would help him find Mr. Lopez.
Mr. Davis checked prior bookings and found a couple of co-
defendants. By this means, Mr. Davis tracked down Mr. Lopez’s girlfriend, who resided in the Tampa Bay area. Visiting the girlfriend and claiming to be a bail bondsman, Mr. Davis learned that Mr. Lopez was enroute to the New Jersey/New York area.
Mr. Davis departed for Fayetteville, North Carolina, where he contacted the girlfriend’s sister and mother. There, he learned that Mr. Lopez had been in Fayetteville, but had already left town on his way to New Jersey.
Mr. Davis arrived in New Jersey near Christmas. He investigated the case until Christmas Eve, when he drove back to Florida. However, on January 2, 2000, Mr. Davis drove back to Patterson, New Jersey, to continue his search for
Mr. Lopez. Arriving in northern New Jersey, Mr. Davis rented a motel room, from which he resumed his search for Mr. Lopez.
By this time, Mr. Davis was out of money, so Respondent used his credit card to pay for the motel room and paid for other expenses, including an informant.
Never more than one day behind Mr. Lopez, Mr. Davis beat the street in search of the bond principal. About to apprehend him in New Jersey, Mr. Davis retained the assistance of a New Jersey bondsman who provided four men, with whom
Mr. Davis rushed Mr. Lopez’s New Jersey apartment--only to find it recently vacated. Searching the apartment, Mr. Davis
found a telephone number for Mr. Lopez’s pager, and, by this means, located Mr. Lopez in the Bronx, New York.
At 1:30 a.m. on January 19, 2000, Mr. Davis and now eight New Jersey men apprehended Mr. Lopez and took him to the Elmhurst Park Police Department in New Jersey. Mr. Davis had originally intended to bring Mr. Lopez back to Florida, but did not want to do so for fear that he would get into trouble for engaging in the bail bond business in Florida without a license. While communicating with the New Jersey police,
Mr. Davis produced a false identification that he had purchased in North Carolina.
After the New Jersey police confirmed the pending charges against Mr. Lopez and agreed to keep him in custody, Mr. Davis negotiated with the New Jersey bail bondsman a price of $2000 for the assistance that he had provided in the apprehension of Mr. Lopez. Respondent transferred this money to New Jersey for payment to the New Jersey bail bondsman.
Mr. Lopez was eventually returned to Florida.
Upon his return to Florida, Mr. Davis received from Respondent the sum of about $700 for his services in finding and apprehending Mr. Lopez. Respondent paid this sum even though, after the payment, Mr. Davis still owed Respondent some money.
At all material times, Respondent employed Mr. Davis as an independent contractor, not an employee. All major factors support this finding. Mr. Davis controlled the means by which he performed the search and apprehension of
Mr. Lopez. Payment of Mr. Davis was contingent upon the apprehension of Mr. Lopez. Respondent did not take withholding taxes or social security contributions out of any payments to Mr. Davis. At no time was Mr. Davis ever an employee, officer, director, or shareholder--directly or indirectly--of Big John’s.
Mr. Davis was arrested in 2000 for the unlawful practice of the bail bond business. He pleaded guilty to this charge. The court sentenced him to 22 months in prison, but suspended the sentence, subject to successful completion of five years of probation.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)
Section 648.45(2) provides in relevant part:
(2) The department shall deny, suspend, revoke, or refuse to renew any license or appointment issued under this chapter or the insurance code, and it shall suspend or
revoke the eligibility of any person to hold a license or appointment 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:
Willful use, or intended use, of the license or appointment 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.
(j) Willful 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.
Section 648.45(3)(c) provides:
The department may deny, suspend, revoke, or refuse to renew any license or appointment issued under this chapter or the insurance code, or it may suspend or revoke the eligibility of any person to hold a license or appointment 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:
(c) Violation of any law relating to the business of bail bond insurance or violation of any provision of the insurance code.
Section 648.30 provides:
A person may not act in the capacity of a bail bond agent, temporary bail bond agent, or runner or perform any of the functions, duties, or powers prescribed for
bail bond agents or runners under this chapter unless that person is qualified, licensed, and appointed as provided in this chapter.
No person shall represent himself or herself to be a bail enforcement agent, bounty hunter, or other similar title in this state.
No person, other than a certified law enforcement officer, shall be authorized to apprehend, detain, or arrest a principal on a bond, wherever issued, unless that person is qualified, licensed, and appointed as provided in this chapter or licensed as a bail bond agent by the state where the bond was written.
Any person who violates any provision of this section commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
Section 648.44(8) provides in relevant part:
(8)(a) A person who has been convicted of or who has pleaded guilty or no contest to a felony or a crime involving moral turpitude or a crime punishable by imprisonment of 1 year or more under the law of any state, territory, or country, regardless of whether adjudication of guilt was withheld, may not participate as a director, officer, manager, or employee of any bail bond agency or office thereof or exercise direct or indirect control in any manner in such agency or office or own shares in any closely held corporation which has any interest in any bail bond business. Such restrictions on engaging in the bail bond business shall continue to apply during a pending appeal.
Any person who violates the provisions of paragraph (a) or any person who knowingly permits a person who has been convicted of or who has pleaded guilty or
no contest to a crime as described in paragraph (a) to engage in the bail bond business as prohibited in paragraph (a) commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.
Any law enforcement agency, state attorney's office, court clerk, or insurer that is aware that a bail bond agent, temporary bail bond agent, or runner has been convicted of or who has pleaded guilty or no contest to a crime as described in paragraph (a) shall notify the department of this fact.
Upon the filing of an information or indictment against a bail bond agent, temporary bail bond agent, or runner, the state attorney or clerk of the circuit court shall immediately furnish the department a certified copy of the information or indictment.
Rule 4-221.001 provides:
Any licensed bail bond agent, temporary bail bond agent, or managing general agent engaged in the bail bond business, who permits any person not licensed, as required under Chapter 648, Florida Statutes, to solicit or engage in the bail bond business in his behalf shall be deemed in violation of Section 648.30, Florida Statutes. A bail bond agent or duly licensed person from another state may apprehend, detain, or arrest a principal on a bond, as provided by law.
Petitioner must prove the material allegations by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Company, Inc., 670 So. 2d 932 (Fla. 1996) and Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Sections 648.45(2) and (3) identify the acts and omissions for which Petitioner may impose discipline. Sections 648.45(2)(j) and (3)(c) authorize discipline for a violation of any relevant statute or rule.
As pleaded in this case, the activities of an unlicensed person, in furtherance of a licensee’s bail bond business, may violate one statute and one rule incorporated into Sections 648.45(2)(j) and (3)(c). Under Section 648.44(8), a licensee violates the relevant law if he knowingly permits a felon to engage in the bail bond business. Under Rule 4-221.001, a licensee violates Section 648.30 if he permits an unlicensed person to solicit or engage in the bail bond business.
As pleaded in this case, the activities of an unlicensed person, in furtherance of a licensee’s bail bond business, may violate Sections 648.45(d) and (e), which authorize discipline for a willful use of a license to circumvent the licensing law and a demonstrated lack of fitness.
Nothing suggests that Mr. Davis solicited any bail bond business, so the common issue to Section 648.44(8) and Rule 4-221.001 is whether he engaged in the bail bond business. The statutes and rules do not explicitly define what is meant by engaging in the bail bond business. However,
Section 648.44(8)(b) refers to engaging in the bail bond business, as prohibited in Section 648.44(8)(a). Section 648.44(8)(a) prohibits unlicensed participation as a director, officer, manager, or employee of any bail bond agency; a person exercising direct or indirect control in any manner in such agency; or a shareholder in any closely held corporation which has any interest in any bail bond agency.
The only question in this case concerning
Mr. Davis’s participation with Big John’s is whether Mr. Davis was an employee of Big John’s. The evidence clearly establishes that Mr. Davis was an independent contractor, not an employee. Thus, Mr. Davis did not engage in the bail bond business, within the meaning of Section 648.44(8) and Rule 4- 221.001.
The remaining question is whether Respondent has willfully used his license to circumvent the licensing laws or demonstrated a lack of fitness.
Conceivably, a licensee might subject himself to discipline, even though he carefully restricts his relationship with a bounty hunter so as not to make the bounty hunter an employee of the bail bond agency. However, the record is not especially well-developed concerning the nature of Mr. Davis’s activities in Florida and the extent of Respondent’s involvement as to such activities.
Not all activities of all employees of a bail bond business constitute engaging in a bail bond business. Obviously, the customary tasks of a secretary, receptionist, and janitor do not rise to the level of engaging in the bail bond business. Examining Mr. Lopez’s files in the office or the courthouse may not constitute engaging in the bail bond business, although interviewing a girlfriend presents a closer question.
However, the pleadings identify only Mr. Davis’s out-of-state activities as grounds for discipline of Respondent. Thus, this case does not raise the issue whether Respondent is guilty of willfully using his license to circumvent licensing laws or demonstrating a lack of fitness by authorizing Mr. Davis to engage in the bail bond business in Florida.
Mr. Davis’s out-of-state activities raise separate issues. The record does not establish that Mr. Davis’s activities were illegal under the laws of the states in which they occurred. If they were not, the record does not establish the grounds for disciplining Respondent for his lawful use of Mr. Davis in other states. Thus, this case does not raise the issue whether Respondent is guilty of willfully using his license to circumvent licensing laws or demonstrating a lack of fitness by using Mr. Davis’s services
in a manner illegal in the states in which Mr. Davis provided those services.
Respondent has requested attorneys’ fees and costs as a prevailing party under Section 57.111. Section 57.111(4)(a) precludes an award of fees and costs if an agency action was "substantially justified." Section 57.111(3)(e) defines "substantially justified" as having a "reasonable basis in law and fact." Raising several close issues of fact and law, this case does not merit an award of attorneys' fees and costs to Respondent. Petitioner clearly had substantial justification, under the law and facts, to bring this case against Respondent. The Administrative Law Judge therefore dismisses Respondent's claim for attorneys' fees and costs.
RECOMMENDED that the Department of Insurance dismiss the First Amended Administrative Complaint against Respondent.
DONE AND ENTERED this 23rd day of April, 2001, in Tallahassee, Leon County, Florida.
___________________________________ ROBERT E. MEALE
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of April, 2001.
Anoush A. Arakalian Division of Legal Services Department of Insurance 612 Larson Building
Joseph R. Fritz Joseph R. Fritz, P.A.
15 days from the date of this recommended order. Any exceptions to this recommended order must be filed with the agency that will issue the final order in this case.
