STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BENJAMIN SCHIFF, )
)
Petitioner, )
)
vs. ) Case No. 02-1067
)
DEPARTMENT OF INSURANCE, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a hearing was held in this case in accordance with Section 120.57(1), Florida Statutes, on May 10, 2002, by video teleconference at sites in Fort
Lauderdale and Tallahassee, Florida, before Stuart M. Lerner, a duly-designated Administrative Law Judge of the Division of
Administrative Hearings.
APPEARANCES
For Petitioner: Benjamin Schiff, pro se
490 Southwest 101st Terrace Plantation, Florida 33324
For Respondent: Dean Andrews, Esquire
Department of Insurance Division of Legal Services
200 East Gaines Street Tallahassee, Florida 32399-0333
STATEMENT OF THE ISSUE
Whether Petitioner's application for licensure as a life, variable annuity, and health agent should be approved.
PRELIMINARY STATEMENT
By letter dated December 20, 2001, the Department of Insurance (Department) notified Petitioner of the denial of Petitioner's application for licensure as a life, variable annuity, and health agent. The letter indicated that the denial of Petitioner's application was "for the following reasons":
In a Final Order, dated August 13, 1997, the Florida Department of [Business and] Professional Regulation[] in Case No[s]. 95- 83999, 95-84000, 95-84002 and DOAH Case
No[s] 96-2705, 96-3002 revoked your real estate license based upon your failure to place trust funds in an insured escrow account, fraud, misrepresentation, concealment, false promises, false pretense, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust.
The following statutory cites apply: Section 626.611, Florida Statutes states:
"The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, solicitor, adjuster, customer representative, service representative, or managing general agent, and it shall suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:
(1) Lack of one or more of the qualifications for the license or appointment as specified in this code. . . . .
(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Section 626.785(1), Florida Statutes states:
"The department shall not grant or issue a license as life agent to any individual found by it to be untrustworthy or incompetent, or who does not meet the following qualifications: "
Section 626.831(1), states:
"The department shall not grant or issue a license as health agent as to any individual found by it to be untrustworthy or incompetent, or who does not meet the following qualifications: "
By letter dated January 10, 2002, Petitioner requested a "formal hearing to be held before the Division of Administrative Hearings." In his letter, Petitioner stated the following, among other things:
Petitioner disputes the one material fact in the FDI [Florida Department of Insurance] notice that was the basis for the denial of Petitioner's application for an insurance license. The FDI stated that "In a Final Order, dated August 13, 1997, the Florida Department of [Business and] Professional Regulation[] in Case No[s]. 95-83999, 95-
84000, 95-84002 and DOAH Case No[s] 96-2705,
96-3002 revoked your real estate license based upon your failure to place trust funds in an insured escrow account, fraud, misrepresentation, concealment, false promises, false pretense, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust." As a result of this fact, the FDI has concluded that Petitioner has "Demonstrated lack of
fitness or untrustworthiness to engage in the business of insurance."
(e)(1) Petitioner alleges that the revocation of the real estate license described in paragraph (d) was not the result of fraud, misrepresentation, concealment, false promises, false pretense, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust. Petitioner will present witnesses and evidence at hearing that the violation resulting in the license revocation was due to any affirmative act of dishonesty by Petitioner but rather result[ed] from the interpretation of conflicting Florida statutes.
Furthermore, Petitioner will present evidence of other hearings before [T]he Florida Bar and the Florida Department of [Business and] Professional Regulation- Division of Certified Public Accounting on this very issue to demonstrate Petitioner's fitness and trustworthiness to engage in the business of insurance.
(2) Petitioner will also present evidence at hearing that the FDI has violated Section 120.60(1), Florida Statutes, (the "90 day rule") in denying Petitioner's application for an insurance license. Section 120.60(1), F. S. states in part "Every application for a license shall be approved or denied within 90 days after receipt of a completed application unless a shorter period of time for agency action is provided by law."
Petitioner submitted a completed application with the FDI that was received on September 4, 2001. The FDI sent Petitioner a "Notice of Denial" of insurance license dated December 20, 2001. The FDI notice was over the statutory 90 day period for agency action and FDI should therefore be compelled to issue an insurance license to Petitioner.
On March 14, 2002, the matter was referred to the Division of Administrative Hearings for the assignment of an Administrative Law Judge to conduct the hearing Petitioner had requested.
As noted above, the final hearing in this case was held on May 10, 2002. Three witnesses (all employees in the Department's Bureau of Agent and Agency Licensing) testified at the final hearing: Sue Carter, Hazel Muhammad, and Audrey Huggins. In addition to the testimony of these three witnesses,
20 exhibits (Petitioner's Exhibits 1 through 4 and 6 through 16, and Respondent's Exhibits 1 and 3 through 6) were offered and received into evidence.
At the close of the evidentiary portion of the hearing, the undersigned established a deadline (30 days from the date of the filing of the hearing transcript with the Division of Administrative Hearings) for the filing of proposed recommended orders. A Transcript of the final hearing (consisting of one volume) was filed with the Division of Administrative Hearings on May 20, 2002. On June 17, 2002, and June 19, 2002, respectively, Petitioner and the Department filed their Proposed Recommended Orders. These Proposed Recommended Orders have been carefully considered by the undersigned.
FINDINGS OF FACT
Based upon the evidence adduced at the final hearing and the record as a whole, the following findings of fact are made:
Petitioner was formerly a Florida-licensed real estate broker.
On September 20, 1995, the Florida Department of Business and Professional Regulation issued an Administrative Complaint against Petitioner and others, including Ian Law and Florida Home Finders Realty, Inc.
Petitioner, Mr. Law, and Florida Home Finders Realty, Inc., disputed the charges against them and requested an evidentiary hearing. The matter was referred to the Division of Administrative Hearings and assigned to Judge Michael Parrish, who, on October 22, 1996, conducted the hearing Petitioner, Mr. Law, and Florida Home Finders Realty, Inc., had requested.
Prior to the hearing, the parties filed a prehearing stipulation, in which they stipulated to the following facts:
Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto.
Respondent Robert Ian Law is and was at all times material hereto a licensed real estate broker pursuant to Chapter 475, Florida Statutes, having been issued license
number 3000835. The last license issued was as a broker in care of Law Property Services, Inc., t/a Century 21 Law Realty,
190 Malabar Road Southwest 120, Melbourne, Florida 32907.
Respondent Benjamin Schiff is and was at all times material hereto a licensed real estate broker pursuant to Chapter 475, Florida Statutes, having been issued license number 0449353. The last license issued was as a broker at 9771 Northwest 41st Street, Miami, Florida 33178.
Respondent Florida Home Finders Realty, Inc., is and was at all times material hereto a licensed real estate brokerage corporation pursuant to Chapter 475, Florida Statutes, having been issued license number 1003632. The last license issued was at 1648 Southeast Port St. Lucie Boulevard, Port St. Lucie, Florida 34952.
At all times material hereto, Selma Del Carmen Schevers, Cheryl Ann Atwood, Lynn Marie Lake, Barbara Kay Davidson, Carol Ann Chandler, and Beverly J. Klemzak were licensed and operating as qualifying brokers and officers of Respondent Florida Home Finders Realty, Inc.
On or about April 18, 1995, the real estate brokerage corporate license (former license number 0027454) of Florida Home Finders, Inc., was voluntarily dropped by Florida Home Finders, Inc. Simultaneously, Florida Home Finders Realty, Inc., submitted documents for and received a real estate brokerage corporate license effective April 18, 1995, from the Florida Division of Real Estate.
Benjamin Schiff and Ian R. Law are directors of both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc.
Benjamin Schiff is the Chief Financial Officer for both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc.
Ian R. Law is the Chief Executive Officer for both Florida Home Finders, Inc., and Florida Home Finders Realty, Inc.
On or about May 5, 1995, Selma Schevers and Cheryl Atwood notified various banking institutions of the authorized officers/directors and account signatories for Florida Home Finders, Inc., and Florida Home Finders Realty, Inc.
On or about June 14, 1995, at the request of Benjamin Schiff, Selma Schevers and Cheryl Atwood authorized various banking institutions to transfer $2,492,000.00 in security deposits and rental trust funds to an account entitled "Florida Home Finders, Inc.," account number 3603969464 at NationsBank of Florida. At no time material did the Respondents obtain the authorization or permission of the owners of the trust funds to transfer the funds.
Subsequent to the transfer referenced in paragraph 10 herein, the funds were used to purchase a certificate of deposit (No. 012897).
After the purchase of the certificate of deposit, Cheryl Atwood, at the request of Ian Law, signed a document which placed the certificate of deposit as collateral for a commercial loan (No. 018002410263) from loan officer F. Larry Robinette of County National Bank of South Florida. The terms of the loan were: $2,000,000 principal; Benjamin Schiff and Ian Law as borrowers; proceeds payable to Atlantic Gulf Communities, Corp., as partial payment for the stock of Florida Home Finders, Inc., and two related companies.
On or about August 21, 1995, Respondent Law instructed Barnett Bank to transfer
$65,000.00 from Florida Home Finders, Inc., Rental Receipts Account No. 2274002335 to Florida Home Finders, Inc., Operating Account No. 2274027149.[1] After this transfer Respondent Law instructed the bank to transfer the $65,000.00 from the operating account to Atlantic Gulf Communities Corporation, the former owner of Florida Home Finders, Inc., a formerly licensed real estate brokerage company and predecessor to Respondent Florida Home Finders Realty, Inc.
On or about June 14, 1995, the following bank funds transfers were requested to be made to Florida Home Finders, Inc., (FHFI) account No. 3603969464 at NationsBank of Florida from the following accounts:
Barnett Bank Acct Name- FHFI Rental Receipts Escrow Acct; Acct No.- 1700027712; Date- 6/22; Amt.- 138,000
Barnett Bank Acct Name- Rental Security Deposit Acct; Acct No.- 1700027810; Date- 6/22; Amt.- 398,000
Barnett Bank Acct Name- FHFI Rent Receipts Acct; Acct No.- 3388072440; Date- 6/21; Amt.- 38,000
Barnett Bank Acct Name- FHFI Security Deposit Acct; Acct No.- 3388072558; Date- 6/21; Amt.- 158,000
Barnett Bank Acct Name- FHFI Rent Receipts Escrow Acct; Acct No.- 2274002335; Date- 6/15; Amt.- 179,000
Barnett Bank Acct Name- FHFI Rental Security Escrow; Acct No.- 2274002343; Date- 6/15; Amt. 609,000
SunBank Acct Name- FHFI Escrow-Rental Receipts; Acct No.- 0809000005795; Date- 6/16; Amt.- 87,000
SunBank Acct Name- FHFI Escrow-Rental Security; Acct No.- 0809000005806; Date- 6/16; Amt.- 285,000
1st Union Nat. Bank Acct Name- FHFI Rental Receipts-Escrow Acct; Acct No.- 2161006787374; Date- 6/14; Amt.- 152,000
1st Union Nat. Bank Acct Name- FHFI Rental Security Escrow Acct; Acct No.- 2161006724586; Date- 6/14; Amt.- 406,000
1st Bank Acct Name- FHFI Rental Receipts- Escrow Acct; Acct No. 20-116845-06; Date- 6/15; Amt.- 8,000
1st Bank Acct Name- FHFI Rental Security Escrow; Acct No. 20-116888-06; Date- 6/15; Amt.- 34,000
Following the hearing, on April 22, 1997, Judge Parrish issued his Recommended Order.
In his Recommended Order Judge Parrish made the following findings of facts to supplement the parties' factual stipulations:
Prior to April of 1995, Florida Home Finders, Inc., then a licensed real estate brokerage corporation, engaged in soliciting, obtaining, and leasing to tenants the real property of others, pursuant to contracts between Florida Home Finders, Inc., and the property owners.
A substantial majority of the money, probably more than 75 percent of the money, contained in the security deposit accounts and rental receipts accounts that was transferred in mid-June of 1995 was money collected from tenants on behalf of property owners while Florida Home Finders, Inc., was
a licensed real estate brokerage corporation.[2]
Subsequent to the transfers of funds in mid-June of 1995, there was on at least one occasion insufficient funds in some of the security deposit and rental receipts trust accounts to meet disbursement demands. On that occasion the bank paid a number of checks for which Florida Home Finders, Inc., did not have sufficient funds on deposit and requested that Florida Home Finders, Inc., make an immediate transfer of funds to cover the insufficiencies. Shortly thereafter a transfer was made to cover the insufficiencies.
Subsequent to the transfers of funds in mid-June of 1995, on some occasions funds that had been collected from new clients after those transfers took place were paid out to meet the demands of clients who were owed money that had been paid to Florida Home Finders, Inc., prior to the mid-June transfers.
At the end of March of 1995, Respondents Schiff and Law purchased Florida Home Finders, Inc., a real estate brokerage corporation licensed pursuant to Chapter 475, Florida Statutes, (license number 0027464) from Atlantic Gulf Communities Corporation. The purchase price was three and a half million dollars, with the Respondents to pay $500,000.00 down and the three million dollar balance within three months.
One aspect of the business plan of the Respondent's Schiff and Law was to create a separate company to conduct real estate brokerage activities and to continue to engage in property management activities with the existing corporation, Florida Home Finders, Inc. Respondents Schiff and Law met with all managers and employees of Florida Home Finders, Inc., during the first
week of April of 1995 to explain the business plan to them. At that time they also explained that they intended to utilize the provisions of Section 83.49(1), Florida Statutes, to hold security deposits in a manner which would allow them to pay interest to tenants.
Respondents Schiff and Law were not involved in the day to day operations of either Florida Home Finders, Inc., or Florida Home Finders Realty, Inc.
At the time the Respondents Schiff and Law purchased Florida Home Finders, Inc., the corporation maintained at least three types of accounts for deposits received from its operations: sales escrow accounts, rental receipts accounts, and security deposit accounts. Each of the seven offices of Florida Home Finders, Inc., maintained its own separate set of accounts.
The sales escrow accounts maintained by Florida Home Finders, Inc., contained money derived from purchasing and leasing transactions.
The rental receipts accounts maintained by Florida Home Finders, Inc., contained money received from tenants for the payment of rent. The use of these funds was governed by the property management agreements with the landlords. Typically, the funds in these accounts would be used to pay for such things as maintenance and repairs to the rental properties, mortgage payments due on the rental properties, and/or property management fees, with any excess funds being periodically paid to the respective landlords.
The security deposit accounts maintained by Florida Home Finders, Inc., contained money received from tenants for security deposits to be held to guarantee
the tenants' performance under their respective rental agreements.
Shortly after the formation of Florida Home Finders Realty, Inc., and its licensure as a real estate brokerage corporation, the sales escrow accounts of Florida Home Finders, Inc., were transferred to Florida Home Finders Realty, Inc. There were no irregularities in any of the sales escrow accounts while they were under the control of either of these two corporations.
Following the creation of Florida Home Finders Realty, Inc., Florida Home Finders, Inc., did not engage in any licensed real estate brokerage activities. All such activities were conducted by Florida Home Finders Realty, Inc., after it was licensed as a brokerage corporation.
On or about June 27, 1995, Florida Home Finders, Inc., posted a security deposit bond in the amount of $250,000.00 with the Florida Secretary of State in an effort to comply with Section 83.49(1)(c), Florida Statutes.
None of the landlords and none of the tenants were ever provided with notice that money had been transferred from the security deposit accounts and from the rental receipts accounts. None of the landlords and none of the tenants were ever provided with notice that Florida Home Finders, Inc., had posted a bond with the Florida Secretary of State and intended to rely on the provisions of Section 83.49(1)(c), Florida Statutes.
Subsequent to the transfer of the
$2,492,000.00 to the NationsBank account, the funds were used to purchase three separate certificates of deposit. One certificate of deposit in the amount of
$242,000.00 was purchased from NationsBank and secured a loan of the same amount. The
second certificate of deposit in the amount of two million dollars was purchased from County National Bank in Miami in the name of Florida Home Finders, Inc., and was used to secure a personal loan to Respondents Schiff and Law in the amount of two million dollars. The third certificate of deposit in the amount of $250,000.00 was purchased from NationsBank in the name of Florida Home Finders, Inc., and was used as security for the bond posted with the Florida Secretary of State.
The loan proceeds secured by two of the certificates of deposit described above, plus $100,000.00 from the operating account of Florida Home Finders, Inc., at Barnett Bank, were used to pay Atlantic Gulf Communities Corporation against the balance of the purchase price of Florida Home Finders, Inc.
Between the time of the mid-June transfer of funds from the accounts of Florida Home Finders, Inc., and the freezing of the assets of Florida Home Finders, Inc., in September of 1995, Florida Home Finders, Inc., was able to pay all current demands for funds from tenants and landlords.
As of September 21, 1995, all funds transferred from the various security deposit and rental receipt accounts of Florida Home Finders, Inc., remained in accounts and financial instruments in the name of Florida Home Finders, Inc. However,
$2,242,000.00 of those financial instruments in the name of Florida Home Finders, Inc., were pledged as security for personal loans of the Respondents Schiff and Law and were not available to Florida Home Finders, Inc., while those personal debts remained unpaid.
Judge Parrish's Recommended Order contained the following conclusions of law, among others:
Petitioner seeks to impose discipline which includes the possibility of suspension or revocation of Respondents' licenses to practice real estate brokerage. Therefore, Petitioner must prove its allegations by clear and convincing evidence. See, Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); Nair v. Department of Business and Professional Regulation, 654 So. 2d 205 (Fla. 1st DCA 1995). Recent amendments to the Administrative Procedures Act have codified the burden of proof set forth in Ferris v. Turlington and its progeny. Section 120.57(1)(h), Florida Statutes (1996 Supp.), now provides that: "Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute, and shall be based exclusively on the evidence of record, and on matters officially recognized." [Emphasis added.]
The nature of clear and convincing evidence has been described as follows in Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983):
"We therefore hold that clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of facts a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established."
See also, Smith v. Department of Health and Rehabilitative Service, 522 So. 2d 956 (Fla. 1st DCA 1988), which, at page 958 quotes with approval the above-quoted language from
Slomowitz. The Smith case also includes the following at page 958:
"'Clear and convincing evidence' is an intermediate standard of proof, more than the 'preponderance of evidence' standard used in most civil cases, and less than the 'beyond a reasonable doubt' standard used in criminal cases. See State v. Graham, 240 So. 2d 486 (Fla. 2nd DCA 1970).
Pursuant to Section 475.25(1), Florida Statutes (1994 Supplement), the Florida Real Estate Commission is empowered to revoke or suspend real estate brokerage licenses or otherwise discipline real estate brokerage licensees upon a determination that any of the acts set forth in that Section were committed, which include a determination that the licensees:
"(b) Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public.
* * *
(k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, credit union, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank, credit union, or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized; or has failed, if a salesperson, to immediately place with his registered employer any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as agent of his registered employer. The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made." [Emphasis added.]
Section 475.01(1)(c), Florida Statutes, defines the term "broker" as follows, in pertinent part:
". . . a person who, for another, and for a compensation or valuable consideration directly or indirectly paid or promised, expressly or impliedly, or with an intent to collect or receive a compensation or valuable consideration therefor, appraises, auctions, sells, exchanges, buys, rents, or offers, attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same, including mineral rights or leases, or who advertises or holds out to the public by any oral or printed solicitation or representation that he is
engaged in the business of appraising, auctioning, buying, selling, exchanging, leasing, or renting business enterprises or business opportunities or real property of others or interests therein, including mineral rights, or who takes any part in the procuring of sellers, purchasers, lessors, or lessees of business enterprises or business opportunities or the real property of another, or leases, or interest therein, including mineral rights, or who directs or assists in the procuring of prospects or in the negotiation or closing of any transaction which does, or is calculated to, result in a sale, exchange, or leasing thereof, and who receives, expects, or is promised any compensation or valuable consideration, directly or indirectly therefor; and all persons who advertise rental property information or lists."
Florida law imposes a high standard of ethical conduct upon real estate brokers. In Zichlin v. Dill, 25 So. 2d 4 (Fla. 1946), for example, the Florida Supreme Court stated:
"The broker in Florida occupies a status under the law with recognized privileges and responsibilities. The broker in this state belongs to a privileged class and enjoys a monopoly to engage in lucrative
business . . . The state, therefore, has prescribed a high standard of qualifications and by the same law granted a form of monopoly and in doing so the old rule of caveat emptor is cast aside. Those dealing with a licensed broker may naturally assume that he possesses the requisites of an honest, ethical man."
In a similar vein, the Florida Supreme court, in Ahern v. Florida Real Estate Commission, 6 So. 2d 857 (Fla. 1942), stated that "the real estate broker is now the confidant of the public in much the same manner as the lawyer or the banker. His
relation to the public exacts the highest degree of trust and confidence. "
Any person or entity engaging in activity set out in Section 475.01(1)(c), Florida Statutes, must be licensed by the State of Florida as a real estate salesperson, broker, or brokerage corporation and must comply with Chapter 475 of the Florida Statutes and rules enacted pursuant thereto. Sections 475.15 and 475.42(1)(a), Florida Statutes.
Florida Administrative Code Rule 61J2- 14.008(1)(a) defines a "deposit" as "a sum of money, or its equivalent, delivered to a real estate licensee, as . . . a payment, or a part payment, in connection with any real estate transaction . . . or such sum delivered in escrow, trust or on condition, in connection with any transaction conducted, or being conducted, by such licensee within the scope of Chapter 475, Florida Statutes."
Florida Administrative Code Rule 61J2- 14.010(1) provides that "every broker who receives from . . . persons interested in any real estate transaction, any
deposit . . . shall immediately place the same in a bank, savings and loan association, trust company, credit union or title company having trust powers, in an insured escrow or trust account. "
Florida Administrative Code Rule 61J2-
14.011 provides that a broker who receives a deposit "shall not have any right to or lien upon said deposit, except upon the written agreement or order of the depositor so long as the depositor has sole control of said deposit, until the transaction involved has been closed. "
Prior to April 1995, Florida Home Finders, Inc., was leasing property to tenants, and thereby brokering pursuant to
Section 475.01(1)(c), Florida Statutes. Florida Home Finders, Inc., collected security deposits and rental payments in conjunction with that brokering activity. Therefore, Florida Home Finders, Inc., and those acting on its behalf, were required to comply with Chapter 475 of the Florida Statutes and the rules enacted pursuant thereto.
Florida Home Finders, Inc., and those acting on its behalf, were required to maintain the security deposits and rental receipts collected prior to April of 1995 in an escrow or trust account until disbursement of those funds was properly authorized by the parties to the leasing transactions.
Turning first to the charges against the individual Respondents, in Counts VII and VIII (7 and 8) of the Administrative Complaint, Respondents Law and Schiff are each charged with having violated Section 475.25(l)(b), Florida Statutes. Both of these individual Respondents violated Section 475.25(l)(b), Florida Statutes, by reason of the following conduct.[3] They caused the transfer of $2,492,000.00 of security deposits and rental receipts from various separate bank accounts into a single Florida Home Finders, Inc., account at NationsBank, the vast majority of which funds had been collected while Florida Home Finders, Inc., was a licensed real estate brokerage corporation engaging in brokerage activities. They then caused that money to be used to purchase certificates of deposit. Thereafter, they caused $2,242,000.00 of that money in the form of two certificates of deposit to be pledged as collateral for personal loans to the two individual Respondents. Additionally, on or about August 21, 1995, the Respondent Law caused a series of transfers to take place by means of which $65,000.00 of money from the rental receipts account of Florida Home Finders,
Inc., was paid to Atlantic Gulf Communities Corporation. Neither of the individual Respondents, nor anyone else on their behalf or on behalf of Florida Home Finders, Inc., obtained authorization or permission of the tenants or the property owners to transfer the funds, purchase the certificates of deposit, pledge the funds as collateral for personal loans to Respondents Law and Schiff, or disburse some of the funds to Atlantic Gulf Communities Corporation.
Respondents' pledging of the security deposits and rental receipts funds of others to secure their personal loans was inconsistent with the trust which had been placed in them,[4] particularly since the Respondents are licensed real estate brokers governed by the high ethical standards of Florida law. Such failure breached the Respondents' agreements to hold those funds in escrow and subjected the tenants and property owners involved, undoubtedly without their knowledge, to the risk that the Respondents may not have been able to timely disburse the security deposits and rental trust funds to the appropriate parties, due to some unforeseen contingency rendering the Respondents unable to fulfill their obligation to the lenders holding the trust funds as collateral.[5]
In Counts XVII and XVIII (17 and 18) of the Administrative Complaint, Respondents Law and Schiff are each charged with having violated Section 475.25(l)(k), Florida Statutes. Both of these individual Respondents violated Section 475.25(l)(k), Florida Statutes, in that they caused the removal of $2,492,000.00 in security deposits and rental receipts funds from the escrow and trust accounts of Florida Home Finders, Inc., and ultimately used those funds to purchase certificates of deposit which they then caused to be pledged as collateral to secure their own personal loans.
The vast majority of the $2,492,000.00 in security deposits and rental receipts were "deposits" within the meaning of Florida Administrative Code Rule 61J2- 14.008(l)(a), which had been collected by Florida Home Finders, Inc., from or on behalf of tenants and property owners while Florida Home Finders, Inc., was a licensed real estate brokerage corporation engaged in real estate brokering, as defined in Section 475.01(l)(c), Florida Statutes. Therefore, the individual Respondents and Florida Home Finders, Inc., had an obligation to maintain those funds in an escrow or trust account, unencumbered and available for immediate disbursement.
In reaching the foregoing conclusions regarding the violations of Sections 475.25(l)(b) and 475.25(l)(k), Florida Statutes, I have not overlooked the Respondents' arguments to the effect that, by operation of Section 83.49, Florida Statutes, they were excused from compliance with various requirements of Chapter 475, Florida Statutes, and, therefore, were not in violation of any provision of Chapter 475, Florida Statutes. At the time of the various transfers of funds in 1995, Section 83.49, Florida Statutes, read as follows in pertinent part:
"(1) Whenever money is deposited or advanced by a tenant on a rental agreement as security for performance of the rental agreement or as advance rent for other than the next immediate rental period, the landlord or the landlord's agent shall either:
"(a) Hold the total amount of such money in a separate non-interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate,
pledge, or in any other way make use of such moneys until such moneys are actually due the landlord;
Hold the total amount of such money in a separate interest-bearing account in a Florida banking institution for the benefit of the tenant or tenants, in which case the tenant shall receive and collect interest in an amount of at least 75 percent of the annualized average interest rate payable on such account or interest at the rate of 5 percent per year, simple interest, whichever the landlord elects. The landlord shall not commingle such moneys with any other funds of the landlord or hypothecate, pledge, or in any other way make use of such moneys until such moneys are actually due the landlord; or
Post a surety bond, executed by the landlord as principal and a surety company authorized and licensed to do business in the state as surety, with the clerk of the circuit court in the county in which the dwelling unit is located in the total amount of the security deposits and advance rent he or she holds on behalf of the tenants or
$50,000, whichever is less. The bond shall be conditioned upon the faithful compliance of the landlord with the provisions of this section and shall run to the Governor for the benefit of any tenant injured by the landlord's violation of the provisions of this section. In addition to posting the surety bond, the landlord shall pay to the tenant interest at the rate of 5 percent per year, simple interest. A landlord, or the landlord's agent, engaged in the renting of dwelling units in five or more counties, who holds deposit moneys or advance rent and who is otherwise subject to the provisions of this section, may, in lieu of posting a surety bond in each county, elect to post a surety bond in the form and manner provided in this paragraph with the office of the Secretary of State. The bond shall be in
the total amount of the security deposit or advance rent held on behalf of tenants or in the amount of $250,000, whichever is less.
The bond shall be conditioned upon the faithful compliance of the landlord with the provisions of this section and shall run to the Governor for the benefit of any tenant injured by the landlord's violation of this section. In addition to posting a surety bond, the landlord shall pay to the tenant interest on the security deposit or advance rent held on behalf of that tenant at the rate of 5 percent per year simple interest.
The landlord shall, within 30 days of receipt of advance rent or a security deposit, notify the tenant in writing of the manner in which the landlord is holding the advance rent or security deposit and the rate of interest, if any, which the tenant is to receive and the time of interest payments to the tenant. Such written notice shall:
Be given in person or by mail to the tenant.
State the name and address of the depository where the advance rent or security deposit is being held, whether the advance rent or security deposit is being held in a separate account for the benefit of the tenant or is commingled with other funds of the landlord, and, if commingled, whether such funds are deposited in an interest-bearing account in a Florida banking institution.
Include a copy of the provisions of subsection (3).
Subsequent to providing such notice, if the landlord changes the manner or location in which he or she is holding the advance rent or security deposit, he or she shall notify the tenant within 30 days of the change according to the provisions herein set
forth. This subsection does not apply to any landlord who rents fewer than five individual dwelling units. Failure to provide this notice shall not be a defense to the payment of rent when due.
(3)(a) Upon the vacating of the premises for termination of the lease, the landlord shall have 15 days to return the security deposit together with interest if otherwise required, or in which to give the tenant written notice by certified mail to the tenant's last known mailing address of his or her intention to impose a claim on the deposit and the reason for imposing the claim. The notice shall contain a statement in substantially the following form:
This is a notice of my intention to impose a claim for damages in the amount of upon your security deposit, due to . It is sent to you as required by s.
83.49(3), Florida Statutes. You are hereby notified that you must object in writing to this deduction from your security deposit within 15 days from the time you receive this notice or I will be authorized to deduct my claim from your security deposit. Your objection must be sent to
(landlord's address)____.
If the landlord fails to give the required notice within the 15-day period, he or she forfeits the right to impose a claim upon the security deposit.
(b) Unless the tenant objects to the imposition of the landlord's claim or the amount thereof within 15 days after receipt of the landlord's notice of intention to impose a claim, the landlord may then deduct the amount of his or her claim and shall remit the balance of the deposit to the tenant within 30 days after the date of the notice of intention to impose a claim for damages.
* * *
(d) Compliance with this subsection by an individual or business entity authorized to conduct business in this state, including Florida-licensed real estate brokers and salespersons, shall constitute compliance with all other relevant Florida Statutes pertaining to security deposits held pursuant to a rental agreement or other landlord-tenant relationship. Enforcement personnel shall look solely to this section to determine compliance. This section prevails over any conflicting provisions in chapter 475 and in other sections of the Florida Statutes." [Emphasis added.]
In 1996, several months after the actions which led to the charges in these consolidated cases, the Florida Legislature enacted an amendment to paragraph 3(d) of Section 83.49, Florida Statutes. As amended in 1996, paragraph 3(d) of Section 83.49, Florida Statutes, reads as follows:
"(d) Compliance with this section by an individual or business entity authorized to conduct business in this state, including Florida-licensed real estate brokers and salespersons, shall constitute compliance with all other relevant Florida Statutes pertaining to security deposits held pursuant to a rental agreement or other landlord-tenant relationship. Enforcement personnel shall look solely to this section to determine compliance. This section prevails over any conflicting provisions in chapter 475 and in other sections of the Florida Statutes and shall operate to permit licensed real estate brokers to disburse security deposits and deposit money without having to comply with the notice and settlement procedures contained in s.
475.25(1)(d)."
The Respondents' argument to the effect that their reliance on Section 83.49,
Florida Statutes, insulates them from liability under Chapter 475, Florida Statutes, fails for several reasons. In this regard it is first noted that the language of paragraph (3)(d) of Section 83.49, Florida Statutes, as of the date of the 1995 conduct at issue in these consolidated cases referred to "compliance with this subsection," which was a reference to subsection (3) of Section 83.49, Florida Statutes. The plain and ordinary meaning of that statutory language as it existed in 1995 was that real estate brokers who made refunds of security deposits in the manner described in subsection (3) of the statute were excused from compliance with any conflicting provisions in Chapter 475 regarding the procedure for making refunds of security deposits. The terms of the statute limiting its scope to "compliance with this subsection" could not be logically read as authorizing a real estate broker to take advantage of any of the three alternatives in subsection (1) of the statute and thereby be excused from compliance with any conflicting provisions in Chapter 475 regarding the manner in which deposits received by licensed real estate brokers must be held.
Under the 1996 amendments to paragraph (3)(d) of Section 83.49, Florida Statutes, (which included substituting the term "this section" in place of the earlier term "this subsection") it now seems clear that a real estate broker is authorized to take advantage of any of the three alternatives in subsection (1) of the statute and thereby achieve exemption from compliance with any conflicting provisions of Chapter 475, Florida Statutes, with respect to the manner in which security deposits and advance rental payments must be held. The Respondents argue that the 1996 amendments were intended by the Florida Legislature to be retrospective. The Legislative intent in that regard is far from clear. But even
assuming that retrospective effect was intended, for the reasons set forth below, the Respondents' arguments still fail.
If retrospective effect is given to the 1996 amendments to paragraph (3)(d) of Section 83.49, Florida Statutes, in order to be eligible for the benefits of paragraph (3)(d), as amended, the Respondents must be in compliance with the requirements of Section 83.49, Florida Statutes. They failed to comply in several ways; the most obvious failure being their failure to give the notice required by subsection (2) of the statute. That subsection requires the landlord to advise the tenant of various specified details regarding the manner in which any security deposit and advance rent is being held, including the name and address of the depository where the funds are being held. That subsection also states: "[I]f the landlord changes the manner or location in which he or she is holding the advance rent or security deposit, he or she shall notify the tenant within 30 days of the change according to the provisions herein set forth." No such notice was ever provided to any tenant following the transfer of the security deposit money.
The Respondents also appear to have failed to comply with the requirements of Section 83.49(1)(c), by filing a bond of doubtful efficacy, inasmuch as the status of Florida Home Finders, Inc., is incorrectly described in the bond filed with the Florida Secretary of State. In the second paragraph of the bond document Florida Home Finders, Inc., described itself as a "Landlord" in several specified counties in Florida. Florida Home Finders is not a landlord in those counties, or in any other counties; it is the agent for numerous landlords in several counties. This misdescription of the status of Florida Home Finders, Inc.,
casts serious doubts as to the extent to which the bond could be enforced.
Finally, the Respondents appear to have failed to comply with the requirements of Section 83.49(1)(c), Florida Statutes, because the statute does not appear to be susceptible to an interpretation which would allow one agent to file one bond as security for the obligations of numerous landlords. Throughout paragraph (1)(c) of the statute, as well as throughout all other paragraphs of the statute, all references to "landlord" are in the singular; the references are all in terms of "the landlord" or "a landlord." There is nothing in paragraph (1)(c) or anywhere else in Section 83.49, Florida Statutes, that purports to authorize a group of landlords, either on their own behalf or through an agent, to post a single bond covering the liabilities of numerous landlords. In sum: Inasmuch as the Respondents failed to comply with Section 83.49, Florida Statutes, when they transferred the $2,492,000.00 out of the several trust and escrow accounts, the Respondents fail to come within the scope of the provisions of paragraph (3)(d) of Section 83.49, Florida Statutes, as amended.
Based upon the foregoing, Judge Parrish recommended that the Florida Real Estate Commission "[c]onclud[e] that the Respondent Schiff is guilty of violations of Sections 475.25(1)(b) and 475.25(1)(k), Florida Statutes, as charged in Counts VIII and XVIII (8 and 18)" of the Administrative Complaint and "[i]mpos[e] a penalty against the Respondent Schiff consisting of the revocation of his real estate broker license and an administrative fine in the amount of two thousand dollars."
Exceptions were filed to Judge Parrish's Recommended Order. In a Final Order issued July 16, 1997, the Florida Real Estate Commission rejected these exception and adopted Judge Parrish's findings of fact, conclusions of law, and recommended penalty.
As of October 23, 2001, Petitioner was a certified public accountant holding license number AC-0015803 issued by the Florida Department of Business and Professional Regulation.
By letter dated November 17, 1998, the Florida Department of Business and Professional Regulation notified Petitioner's attorney of the following:
The above-stated case [Benjamin Schiff, Case No. 98-06763] has been reviewed by the Probable Cause Panel of the Board of Accountancy and closed without a finding of probable cause to believe your client violated the provisions of Chapter 473, Florida Statutes, and/or Rule 61-H1, Florida Administrative Code. Accordingly, all materials will remain confidential.[6]
Petitioner was admitted to The Florida Bar in 1981.
On November 29, 1999, The Florida Bar sent Petitioner the following letter regarding a complaint (The Florida Bar File No. 98-51,683(17D)) that had been considered by the Seventeenth Judicial Circuit Grievance Committee "G":7
Please be advised that Seventeenth Judicial Circuit Grievance Committee "G" (which is composed of lawyer and non-lawyer members) considered the above-referenced complaint during its November 10, 1999, meeting and
entered a finding of no probable cause with letter of advice. The grievance committee's finding is reflected on your copy of the enclosed notice. The original notice will be maintained in The Florida Bar's file.
Predicated upon the grievance committee's no probable cause finding, The Florida Bar's file has been closed.
On July 31, 2001, Petitioner filed with the Department his application for licensure as a life, variable annuity, and health agent.
By letter dated August 22, 2001, the Department requested additional "information" from Petitioner. The letter read as follows:
This is in reference[] to your pending application for licensure as a life, health and variable annuity agent. The following information is needed.
Certified copies of the Administrative Complaint.
A written statement from you indicating whether or not you have had any civil and or administrative action taken against you relative to insurance. If so, we will need certified copies of appropriate documentation.
A written statement from you indicating whether or not you are the owner, partner or employee of any insurance agency. If so, we will need the name and location of the agency.
You have (60) days to either furnish the information and documents or show cause in writing why the information cannot be supplied within (60) days.
Please send all correspondence [to] the undersigned at the Bureau of Agent and Agency Licensing, 200 East Gaines Street, Larson Building, Tallahassee, Florida 32399-0319.
Petitioner sent the requested "information" to the Department by United State Priority Mail on September 4, 2001.
The Department received the requested "information" on September 6, 2001.
Thereafter, Petitioner sent the following letter, dated November 19, 2001, to the Department:
I have not yet received a response regarding my application for a Life Insurance License.
I successfully completed the life insurance examination on July 30, 2001 (copy attached). You had requested additional information on August 22, 2001, which was forwarded to your office and received in your office on September 6, 2001. We spoke on November 7, 2001 and you advised me that my paperwork was "in review." I have heard nothing since that time.
Please advise me as to the current status of my application. Thank you in advance for your assistance.
Please call me if you should require any further information.
Petitioner sent a second letter, dated December 14, 2001, to the Department inquiring about his application. The letter read as follows:
I have not received a response to my letter of November 19, 2001 regarding the status of my license application.
It has been over 90 days since your last information request. Pursuant to Regulation 4-211.0035(10),[8] I am entitled to a response within ninety days of receipt of the information which makes my application complete.
Please advise as to the current status of my application. Thank you in advance for your assistance.
The Department denied Petitioner's application on
December 20, 2001.
CONCLUSIONS OF LAW
Petitioner is seeking to be licensed by the Department as a life, variable annuity, and health agent.
Upon receiving such an application for licensure, the Department must act in accordance with the requirements of Section 120.60, Florida Statutes, Subsections (1) and (3) of which provide as follows:
(1) Upon receipt of an application for a license, an agency shall examine the application and, within 30 days after such receipt, notify the applicant of any apparent errors or omissions and request any additional information the agency is permitted by law to require. An agency shall not deny a license for failure to correct an error or omission or to supply additional information unless the agency timely notified the applicant within this 30-day period. An application shall be considered complete upon receipt of all requested information and correction of any error or omission for which the applicant was timely notified or when the time for such notification has expired. Every application for a license shall be approved
or denied within 90 days after receipt of a completed application unless a shorter period of time for agency action is provided by law. The 90-day time period shall be tolled by the initiation of a proceeding under ss. 120.569 and 120.57. An application for a license must be approved or denied within the 90-day or shorter time period, within 15 days after the conclusion of a public hearing held on the application, or within 45 days after a recommended order is submitted to the agency and the parties, whichever is later. The agency must approve any application for a license or for an examination required for licensure if the agency has not approved or denied the application within the time periods prescribed by this subsection.
(3) Each applicant shall be given written notice either personally or by mail that the agency intends to grant or deny, or has granted or denied, the application for license. The notice must state with particularity the grounds or basis for the issuance or denial of the license, except when issuance is a ministerial act. Unless waived, a copy of the notice shall be delivered or mailed to each party's attorney of record and to each person who has requested notice of agency action. Each notice shall inform the recipient of the basis for the agency decision, shall inform the recipient of any administrative hearing pursuant to ss. 120.569 and 120.57 or judicial review pursuant to s. 120.68 which may be available, shall indicate the procedure which must be followed, and shall state the applicable time limits. The issuing agency shall certify the date the notice was mailed or delivered, and the notice and the certification shall be filed with the agency clerk.
An applicant for licensure whose application is denied bears the ultimate burden (in a Section 120.57(1) hearing on
such action) of demonstrating, by a preponderance of the evidence, entitlement to such licensure. See Department of
Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932, 934 (Fla. 1996); Espinoza v. Department of Business and Professional Regulation, 739 So. 2d 1250, 1251 (Fla. 3d DCA 1999); Pershing
Industries, Inc., v. Department of Banking and Finance, 591 So. 2d 991, 994 (Fla. 1st DCA 1991); and Section 120.57(1)(j), Florida Statutes ("Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute. . . ."). The applicant, however, need address only those entitlement issues raised in the Department's notice of denial. See Woodholly Associates v. Department of Natural
Resources, 451 So. 2d 1002, 1004 (Fla. 1st DCA 1984).
In the Notice of Denial it issued in the instant case, the Department indicated that it was denying Petitioner's application for licensure because his real estate license had been revoked by a Final Order issued by the Florida Real Estate Commission on August 13, 1997, "based upon [his] failure to place trust funds in an insured escrow account, fraud, misrepresentation, concealment, false promises, false pretense, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust." According to the Notice,
denial of Petitioner's application was authorized by Subsections
and (7) of Section 626.611, Florida Statutes, Subsection (1) of Section 626.785, Florida Statutes, and Subsection (1) of Section 626.831, Florida Statutes, which provide, in pertinent part, as follows:
Section 626.611, Florida Statutes,
The department shall deny an application for
. . . license . . . of any . . .
applicant . . ., if it finds that as to the applicant . . . any one or more of the following applicable grounds exist:
Lack of one or more of the qualifications for the license or appointment as specified in this code.
(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
Section 626.785, Florida Statutes,
(1) The department shall not grant or issue a license as life agent to any individual found by it to be untrustworthy or incompetent . . . .
Section 626.831, Florida Statutes,
(1) The department shall not grant or issue a license as health agent as to any individual found by it to be untrustworthy or incompetent [9]
Petitioner challenged this agency action, arguing that the revocation of his real estate license did not provide a basis for the Department to deny his application for licensure and, further arguing, that the Department was "compelled to
issue an insurance license to [him]" because it did not act on his application within the 90-day period set forth in Subsection
(1) of Section 120.60, Florida Statutes.
Pursuant to Subsection (1) Section 120.60, Florida Statutes, an applicant for licensure has a right to have his or her application approved or denied within 90 days of the date that it is deemed "complete." An application is considered "complete," under the statute, "upon receipt [by the agency] of all requested information and correction of any error or omission for which the applicant was timely notified or when the time for such notification [30 days from the date the application was initially received by the agency] has expired."
In the instant case, Petitioner's application became "complete," within the meaning of Subsection (1) of Section 120.60, Florida Statutes, on September 6, 2001, when the Department received from Petitioner the additional "information" the Department had requested Petitioner send in support of his application.
The Department had 90 days from this date within which to approve or deny the application.
The Department failed to act on Petitioner's application within this 90-day period.
Accordingly, pursuant to the last sentence of Subsection (1) of Section 120.60, Florida Statutes, the
Department has no alternative but to approve Petitioner's application, it having divested itself of its authority to rule on the merits of the application by failing to do so within 90 days of the date that the application became "complete." See Tuten v. State, 2002 WL 985488 *2 (Fla. 4th DCA 2002); South Broward Hospital District v. Brooks, 799 So. 2d 280 (Fla. 1st DCA 2001); Florida Academy of Cosmetic Surgery, Inc. v. State, Department of Health, Board of Medicine, 771 So. 2d 602 (Fla.
1st DCA 2000); Johnson v. Board of Architecture and Interior Design, Department of Business and Professional Regulation, 634 So. 2d 666, 667 (Fla. 2d DCA 1994); and Krakow v. Department of Professional Regulation, Board of Chiropractic, 586 So. 2d 1271, 1273 (Fla. 1st DCA 1991).10
Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby
RECOMMENDED that the Department issue a final order approving Petitioner's application for licensure.
DONE AND ENTERED this 25th day of June, 2002, in Tallahassee, Leon County, Florida.
STUART M. LERNER
Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 25th day of June, 2002.
ENDNOTES
1/ In an endnote in his Recommended Order, Judge Parrish observed:
In their Prehearing Stipulation in the first sentence of paragraph 13, the parties inadvertently referred to Florida Home Finders, Inc., as a "Respondent." Florida Home Finders, Inc. is not a Respondent in these proceedings. And it is clear from other evidence that the $65,000.00 transferred in August of 1995 was transferred from accounts controlled by Florida Home Finders, Inc., not from accounts controlled by the Respondent Florida Home Finders Realty, Inc.
2/ In an endnote, Judge Parrish added the following:
With regard to the security deposit and rental receipts trust funds that were eventually used to buy the three certificates of deposit, the evidence in the record of these proceedings does not directly show how much of that money was received while Florida Home Finders, Inc.,
held a brokerage license and how much was received after Florida Home Finders, Inc., relinquished its brokerage license.
However, other evidence in the record reveals that each year approximately 20 percent of such funds were paid out to landlords who discontinued their relationships with Florida Home Finders, Inc. As of the time of the transfer of the subject funds, Florida Home Finders, Inc., had been operating without a brokerage license for approximately two months; from mid-April to mid-June of 1995. It follows logically that the vast majority of the security deposit and rental receipts funds in the possession of Florida Home Finders, Inc., in mid-June were funds that had been received while Florida Home Finders, Inc., held a brokerage license. The exact amount received while it was licensed as a broker is irrelevant to the disposition of these proceedings because, under any view of the matter, at the time of the mid-June transfers a very large amount of the transferred money was money Florida Home Finders, Inc., had received while it held a brokerage license.
3/ "[A]n intentional act [must] be proved before a violation of Subsection (1)(b) of Section 475.25, Florida Statutes [such as the one found by Judge Parrish] may be found." Munch v.
Department of Professional Regulation, Division of Real Estate, 592 So. 2d 1136, 1143 (Fla. 1st DCA 1992).
4/ In other words, Judge Parrish determined that these were acts of untrustworthiness and Petitioner was acting in an untrustworthy manner when he engaged in such conduct.
5/ As noted above, had Judge Parrish not determined that Petitioner's breach was intentional, he could not have concluded that it constituted a violation of Subsection (1)(b) of Section 475.25, Florida Statutes. See Munch v. Department of Professional Regulation, Division of Real Estate, 592 So. 2d at 1143.
6/ The record evidence does not reflect what allegations the Probable Cause Panel of the Board of Accountancy considered in Case No. 98-06763.
7/ There is no competent substantial record evidence indicating the nature of this complaint.
8/ Subsection (10) of Rule 4-211.0035, Florida Administrative Code, provides that "[i]f all requested information is timely filed, the application [for licensure] shall be approved or denied within ninety days of receipt of the information which makes the application complete."
9/ None of these statutory provisions relied upon by the Department mandates that the Department deny an application for licensure if the applicant has previously been disciplined by another regulatory agency for engaging in conduct evincing a lack of trustworthiness. Compare with Castleman v. Office of Comptroller, Department of Banking and Finance, Division of Securities and Investor Protection, 538 So. 2d 1365, 1367-68 (Fla. 1st DCA 1989)("[W]e hold that the hearing officer erred in excluding evidence offered by Castleman regarding the facts underlying the Tennessee and Arkansas disciplinary orders. We do so on the rationale that the applicable provisions in chapter
517 do not direct denial of the application merely upon proof that such disciplinary adjudications have occurred. Rather, those provisions require the Department to make a discretionary determination that the applicant is not of good repute and has demonstrated his unworthiness to transact the business of an associated person in order to deny the application. The applicable statutes and rules contemplate that an applicant previously disciplined pursuant to administrative orders may explain and mitigate the circumstances of those transactions in an effort to demonstrate that he is not now a person of bad business repute and unworthy to transact securities
business. . . . The instant case is materially different from the McGraw decision. . . . [T]he statute in McGraw specifically authorized the disciplinary action solely upon proof that the licensee had been found guilty of the commission of a crime directly relating to his business. The statute in the instant case allows denial of the application if the applicant has 'demonstrated his unworthiness to transact the business' of an associated person in the securities business, and the Department's rule provides that an adjudication in other proceedings is merely prima facie evidence of such unworthiness.").
10/ It is unnecessary to, and therefore the undersigned will not, determine whether the Department could have denied Petitioner's application for the reasons set forth in the Notice of Denial had it done so within 90 days of the date that the application became "complete." Compare with Johnson v. Board of Architecture and Interior Design, Department of Business and Professional Regulation, 634 So. 2d 666, 667 (Fla. 2d DCA 1994)("Johnson also contends that the appeals referee erred in finding that she did not have the necessary interior design experience to qualify for the grandfather license. We need not reach this issue since we have determined that the Board failed to comply with section 120.60(2) [the predecessor of Subsection
(1) of Section 120.60, Florida Statutes]."
COPIES FURNISHED:
Benjamin Schiff
490 Southwest 101st Terrace Plantation, Florida 33324
Dean Andrews, Esquire Department of Insurance Division of Legal Services
200 East Gaines Street Tallahassee, Florida 32399-0333
Honorable Tom Gallagher
State Treasurer/Insurance Commissioner The Capitol, Plaza Level 02 Tallahassee, Florida 32399-0300
Mark Casteel, General Counsel Department of Insurance
The Capitol, Lower Level 26 Tallahassee, Florida 32399-0307
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
1 In an endnote in his Recommended Order, Judge Parrish observed:
In their Prehearing Stipulation in the first sentence of paragraph 13, the parties inadvertently referred to Florida Home Finders, Inc., as a "Respondent." Florida Home Finders, Inc. is not a Respondent in these proceedings. And it is clear from other evidence that the $65,000.00 transferred in August of 1995 was transferred from accounts controlled by Florida Home Finders, Inc., not from accounts controlled by the Respondent Florida Home Finders Realty, Inc.
2 In an endnote, Judge Parrish added the following:
With regard to the security deposit and rental receipts trust funds that were eventually used to buy the three certificates of deposit, the evidence in the record of these proceedings does not directly show how much of that money was received while Florida Home Finders, Inc., held a brokerage license and how much was received after Florida Home Finders, Inc., relinquished its brokerage license.
However, other evidence in the record reveals that each year approximately 20 percent of such funds were paid out to landlords who discontinued their relationships with Florida Home Finders, Inc. As of the time of the transfer of the subject funds, Florida Home Finders, Inc., had been operating without a brokerage license for approximately two months; from mid-April to mid-June of 1995. It follows logically that the vast majority of the security deposit and rental receipts funds in the possession of Florida Home Finders, Inc., in mid-June were funds that had been received while Florida Home Finders, Inc., held a brokerage license. The exact amount received while it was licensed as a broker is irrelevant to the disposition of these proceedings because, under any view of the matter, at the time of the mid-June
transfers a very large amount of the transferred money was money Florida Home Finders, Inc., had received while it held a brokerage license.
3 "[A]n intentional act [must] be proved before a violation of Subsection (1)(b) of Section 475.25, Florida Statutes [such as the one found by Judge Parrish] may be found." Munch v. Department of Professional Regulation, Division of Real Estate, 592 So. 2d 1136, 1143 (Fla. 1st DCA 1992).
4 In other words, Judge Parrish determined that these were acts of untrustworthiness and Petitioner was acting in an untrustworthy manner when he engaged in such conduct.
5 As noted above, had Judge Parrish not determined that Petitioner's breach was intentional, he could not have concluded that it constituted a violation of Subsection (1)(b) of Section 475.25, Florida Statutes. See Munch v. Department of Professional Regulation, Division of Real Estate, 592 So. 2d at 1143.
6 The record evidence does not reflect what allegations the Probable Cause Panel of the Board of Accountancy considered in Case No. 98-06763.
7 There is no competent substantial record evidence indicating the nature of this complaint.
8 Subsection (10) of Rule 4-211.0035, Florida Administrative Code, provides that "[i]f all requested information is timely filed, the application [for licensure] shall be approved or denied within ninety days of receipt of the information which makes the application complete."
9 None of these statutory provisions relied upon by the Department mandates that the Department deny an application for licensure if the applicant has previously been disciplined by another regulatory agency for engaging in conduct evincing a lack of trustworthiness. Compare with Castleman v. Office of Comptroller, Department of Banking and Finance, Division of Securities and Investor Protection, 538 So. 2d 1365, 1367-68 (Fla. 1st DCA 1989)("[W]e hold that the hearing officer erred in excluding evidence offered by Castleman regarding the facts underlying the Tennessee and Arkansas disciplinary orders. We do so on the rationale that the applicable provisions in chapter
517 do not direct denial of the application merely upon proof that such disciplinary adjudications have occurred. Rather, those provisions require the Department to make a discretionary determination that the applicant is not of good repute and has demonstrated his unworthiness to transact the business of an associated person in order to deny the application. The applicable statutes and rules contemplate that an applicant previously disciplined pursuant to administrative orders may explain and mitigate the circumstances of those transactions in an effort to demonstrate that he is not now a person of bad business repute and unworthy to transact securities
business. . . . The instant case is materially different from the McGraw decision. . . . [T]he statute in McGraw specifically authorized the disciplinary action solely upon proof that the licensee had been found guilty of the commission of a crime directly relating to his business. The statute in the instant case allows denial of the application if the applicant has 'demonstrated his unworthiness to transact the business' of an associated person in the securities business, and the Department's rule provides that an adjudication in other proceedings is merely prima facie evidence of such unworthiness.").
10 It is unnecessary to, and therefore the undersigned will not, determine whether the Department could have denied Petitioner's application for the reasons set forth in the Notice of Denial had it done so within 90 days of the date that the application became "complete." Compare with Johnson v. Board of Architecture and Interior Design, Department of Business and Professional Regulation, 634 So. 2d 666, 667 (Fla. 2d DCA 1994)("Johnson also contends that the appeals referee erred in finding that she did not have the necessary interior design experience to qualify for the grandfather license. We need not reach this issue since we have determined that the Board failed to comply with section 120.60(2) [the predecessor of Subsection
(1) of Section 120.60, Florida Statutes]."
| Issue Date | Document | Summary |
|---|---|---|
| Jul. 30, 2002 | Agency Final Order | |
| Jun. 25, 2002 | Recommended Order | Department of Insurance must approve applicant`s application for licensure inasmuch as it failed to act on application within 90 days after application became complete. |
