vs.
Respondent.
) Case No. 11-2214PL
vs.
SURF TITLE, INC.
Respondent.
) Case No. 11-2248
Pursuant to notice, a formal hearing was held in this case on August 17, 2011, by video teleconference, with the parties appearing in Lauderdale Lakes, Florida, before June C. McKinney, a duly-designated Administrative Law Judge of the Division of Administrative Hearings, who presided in Tallahassee, Florida.
For Petitioner: James B. Bossart, Esquire
For Respondent: James S. Strouss, III, Esquire
2758 E. Atlantic Boulevard Pompano Beach, Florida 33062
1451 W. Cypress Creek Boulevard, Suite 300 Ft. Lauderdale, Florida 33309
The issue in this matter is whether Respondents committed the violations alleged in the Administrative Complaints, and, if so, what penalties should be imposed.
On March 31, 2011, the Department of Financial Services ("Petitioner" or "Department"), issued two identical Administrative Complaints against Tim Vincent Milianta and a Surf Title, Inc. ("Respondents"), wherein it was alleged that Respondents had violated various provisions of chapter 626, Florida Statutes. Respondents timely requested a formal hearing to contest these allegations, and the matter was referred to the Division of Administrative Hearings on May 2, 2011.
The presiding administrative law judge consolidated the cases for hearing, and the final hearing was set for August 17, 2011. Both parties appeared at the appointed place and time.
At hearing, Petitioner presented the testimony of six witnesses: Ama V. Sauceda; Rudolph Sauceda; Courtney Sullivan; Sharon Dawes; Alina Gromnicka; and Charlie Mae Wilder (by
deposition). Petitioner also offered Exhibits numbered 1 through 11 that were admitted into evidence. Respondent Milianta testified on his own behalf, and Respondents presented the testimony of Terry Lee Letterman ("Letterman"). Respondents offered Exhibits numbered 1 through 16, all of which were received in evidence.
The proceeding was recorded and transcribed, and the transcript was filed at the Division of Administrative Hearings on September 8, 2011. The parties filed timely Proposed Recommended Orders, which have been considered in the preparation of this Recommended Order.
Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:
Respondent, Tim Vincent Milianta ("Milianta"), at all times material to this matter, was a licensed title insurance agent subject to the regulatory jurisdiction of Petitioner. Petitioner issued Milianta license number E083154.
Milianta is the owner and President of Surf Title ("Surf"), a closing and escrow company. Petitioner issued Surf license number E109661. Surf handles closings all over the State of Florida. Surf has been in business for eight years.
Prior to Surf opening, Milianta was a title agent for three years.
In October 2008, Charlie Mae Wilder ("Wilder") received a promotional advertisement regarding refinancing her property.
Wilder responded to the advertisement and subsequently met Letterman, Manager of Southeast Equity and Lending ("Southeast"), to conduct the refinance.
Wilder applied for refinancing of her residence and also requested that the loan be used to pay off some creditors.
Letterman helped Wilder with her application. He initiated contact with SEAL Credit1 and had Wilder contract with SEAL Credit to reduce her debt.
Wilder provided Letterman a list of creditors she wanted paid off through the refinance.
On or about January 9, 2009, Milianta attended Wilder's closing as the settlement agent. The loan number 525210 was processed through First Continental Mortgage. Assurity Financial Services underwrote the loan and provided the closing instructions.
Wilder's closing instructions provided that "a condition to the funding of this loan that the following payoffs be made through this closing. Indicate payoffs on the HUD-1 Settlement Statement or provide other satisfactory evidence of payoff."
The HUD listed each of Wilder's creditors under the section "additional settlement charges." Each creditor's payoff was also listed as going to SEAL Credit.
Wilder signed an acknowledgement at closing that a third party was going to handle her lender required payoffs.2 In addition to the HUD-1 Settlement Statement, Wilder and Milianta also signed a General Acknowledgment document which provided:
The undersigned Borrower understands that the Lender has required the payment of specific credit accounts at the time of funding as listed on the HUD. The borrower has contracted with an outside agency for the payment of said accounts and agrees to Hold Harmless Surf Title for disbursal of funds to that agency. Borrower further understands that Surf Title has no affiliation with said contracted agency.
The lender approved the HUD with SEAL Credit as the payee. Surf handled the refinancing transaction for loan number 525210 and properly disbursed the actual loan proceeds to the list on the HUD.
On January 14, 2009, Surf Title transferred $29,928.00 to SEAL Credit per the HUD.
Later, Wilder began to get late fees from creditors who were not paid off.
In mid-April or May 2009, Letterman contacted Fragemeno because when he was processing Wilder's second
re-finance Letterman discovered that Wilder's credit report
still listed two items from the January 9, 2009, closing that were unpaid. Fragameno assured Letterman that the items would show up on Wilder's credit report at any time paid.
In 2008, Ama and Rudolph Sauceda ("Saucedas") received a Southeast flyer about refinancing. They responded to the flyer and met with Letterman regarding refinancing their home.
After the meeting, the Saucedas decided to refinance their mortgage on their residence and take cash out to consolidate and pay off debts. Mrs. Sauceda met with Letterman several times during the application process.
Letterman contacted debt holders on behalf of the Saudedas to negotiate items that had been required by the lender for pay off. Letterman even initiated a contract with SEAL Credit prior to closing to negotiate debts for a lesser amount and help get the Saucedas a higher amount of money in their pocket.
On or about September 17, 2008, before closing, Letterman, as a credit counselor, signed a confirmation of settlement on SEAL Credit and Consolidating Services, Inc., stationary for the outstanding balance on Mr. Sauceda's Autobank account in the amount of $2,000, for full payment and to close the account on behalf of the Saucedas.3 SEAL Credit also negotiated and lowered amounts for some of the Saucedas' creditor pay offs.
While preparing for the closing, Milianta as the Saucedas' settlement agent relayed any changes from SEAL Credit reductions to the lender by teleconference meetings. During the calls, the lender instructed Milianta to send the changes over with the closing statement, which was ultimately approved.
On or about September 18, 2008, Southeast closed on the mortgage for the Saucedas.
At the closing, the Saucedas signed the buyer and seller statement listing the creditors that the Saucedas wanted paid off.4
Surf Title served as the title company to disburse the actual loan proceeds for the refinance of the Saucedas' mortgage loan and the pay offs for creditors.
Milianta sent out all the payments according to the HUD, which the lender approved. Surf Title cut a check for every creditor that was listed on the HUD. Some of the creditors were obscure and Milianta obtained the mailing addresses for the creditors from the Saucedas' credit report to send the payoffs.
Some checks Surf sent to creditors were returned as undeliverable. Milianta placed the returned checks into the file until he could figure out what to do with them.
None of the checks returned as undeliverable were items on the title commitment. Milianta double-checked to make
sure that there would not be a lien or judgment against the property and that there was clear title after the checks were returned.
Milianta contacted both the lender and Mrs. Sauceda5 to inquire what to do about the returned checks. The lender informed Milianta that the returned checks were the borrower's monies since the closing had already taken place.
When Milianta asked Mrs. Sauceda what to do with the returned checks, she contacted Letterman about the returned checks and worked out a second contract with SEAL Credit to negotiate the debt for a lesser amount. Ultimately, she directed Milianta to send the money from the returned checks to SEAL Credit.
On October 15, 2008, the Saucedas provided Milianta a letter to transfer the returned funds to SEAL Credit for payoff that stated:
Thank you for calling me yesterday. Per our conversation, I realize that some creditors were not found or that some of the checks were returned from our refinance closing in September, but instead of returning the money directly to me, please forward the money to SEAL Credit and Consolidation Services. I have contracted SEAL Credit to negotiate the debt listed on my credit report and settle those accounts for minimal amounts.[6]
On or about October 16, 2008, Surf followed the Saucedas' instructions and transferred the total returned check
amount of $14,621.00 by wire to SEAL Credit to pay the outstanding creditors.
On or about November 18, 2008, SEAL Credit confirmed with the Saucedas that the company had successfully negotiated the 15 outstanding creditors down to a payoff settlement that totaled $13,313.00. SEAL Credit then disbursed $1,275.00 to the Saucedas to which they signed a receipt for the monies.7
Months later, Mrs. Sauceda was checking her credit scores and discovered that approximately $14,000.00 had not been paid to her creditors as promised and indicated by SEAL Credit.
Mrs. Sauceda contacted Letterman to inquire about the unpaid debt to creditors. Letterman followed up with Fragameno, who assured him that each debt would show up paid on the credit report anytime.
Neither the Saucedas' nor Wilder's creditor payoffs were satisfied as promised and agreed to by SEAL Credit. At some point prior to hearing, SEAL Credit closed and discontinued doing business.
Both Wilder and the Saucedas suffered financial losses due to the nonpayment of their creditors by SEAL Credit. Letterman tried to help and assist them repeatedly. He ultimately instructed them to file a complaint with the state.
After an investigation, Petitioner charged Respondents with numerous violations by separate Administrative Complaints dated March 31, 2011.
The Charges:
In Count I of the Administrative Complaint filed against Milianta, Petitioner charges Respondents with violations of sections 626.8437(4),(6), and (9); 626.844(2) and (5); 626.9521(1); 626.9541(1)(e)1, Florida Statutes, and rule 69O-
186.008 for the refinancing transaction on behalf of Wilder.
In Count II, Petitioner charges Respondents with violations of sections 626.8437(4),(6), and (9); 626.844(2) and (5); 626.9521(1); 626.9541(1)(e)1, Florida Statutes, and rule 69O-186.008 for the refinancing transaction on behalf of the
Saucedas.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to sections 120.569 and 120.57(1), Florida Statutes.
Chapter 626, Florida Statutes, under which Respondents have been charged, sets forth the acts for which the Petitioner may impose discipline.
A proceeding, such as this one, to suspend, revoke, or impose other discipline upon a professional license is penal in
nature. State ex rel. Vining v. Fla. Real Estate Comm'n, 281 So. 2d 487, 491 (Fla. 1973). Being penal in nature, Chapter 626, Florida Statutes, "must be construed strictly, in favor of the one against whom the penalty would be imposed." Munch v.
Dep't of Prof'l Reg., Div. of Real Estate, 592 So. 2d 1136, 1143 (Fla. 1st DCA 1992).
Here, the Petitioner seeks to discipline Respondents' licenses and/or to impose an administrative fine. Accordingly, the Petitioner has the burden of proving the allegations charged in the Administrative Complaints against the Respondents by clear and convincing evidence. Dep't of Banking and Fin., Div. of Sec. and Investor Prot. v. Osborne Stern and Co., 670 So. 2d 932, 933-34 (Fla. 1996) (citing Ferris v. Turlington, 510 So. 2d 292, 294-95 (Fla. 1987)); Nair v. Dep't of Bus. & Prof'l Reg., 654 So. 2d 205, 207 (Fla. 1st DCA 1995).
Regarding the standard of proof, in Slomowitz v.
Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983), the Court of Appeal, Fourth District, canvassed the cases to develop a "workable definition of clear and convincing evidence" and found that of necessity such a definition would need to contain "both qualitative and quantitative standards." The court held 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 confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established. Id.
A licensee is charged with knowing the practice act that governs his/her license. Wallen v. Fla. Dep't of Prof'l
Reg., Div. of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990).
Section 626.8437(4) provides that it is a violation to demonstrate lack of fitness and trustworthiness to engage in the business of insurance.
Section 626.8437(6) provides that it is a violation to utilize fraudulent or dishonest practices in the conduct of business under the license or appointment.
Section 626.8437(9) provides that it is a violation to willfully fail to comply with, or willfully violate, any proper order or rule of the Department or willfully violate any provision of this act.
Section 626.844(2) provides that it is a violation to willfully violate any provision of this act in the course of dealing under the license or appointment.
Section 626.844(5) provides that it is a violation to willfully engage in unfair methods of competition or in unfair or deceptive acts or practices in the conduct of business, as prohibited under part IX of this chapter, or having otherwise
shown himself or herself to be a source of injury or loss to the public or to be detrimental to the public interest.
Section 626.9521(1) provides that no person shall engage in this state in any trade practice which is defined in this part as, or determined pursuant to section 626.951 or 626.9561 to be, an unfair method of competition or an unfair or deceptive act or practice involving the business of insurance.
Section 626.9541(1)(e)1 provides that it is a violation to knowingly: file with any supervisory or other public official, make, publish, disseminate, or circulate; deliver to any person; place before the public; cause, directly or indirectly, to be made, published, disseminated, circulated, delivered to any person, or placed before the public, any false material statement.
Rule 69O-186.008, provides that a title insurance agent or title insurer may not use, endanger, or encumber money held in trust without the permission of the owner of such money, given after full disclosure of the circumstances.
This case represents an unfortunate set of circumstances for both Wilder and the Saucedas who refinanced thinking that their creditors would be paid as part of the loan. Unfortunately, neither all of Wilder's nor the Saucedas' creditors were paid after monies were disbursed to SEAL Credit, which is now a closed business.
However, in this matter, the record demonstrates that Respondent disbursed both Wilder's and the Saucedas' funds to SEAL Credit with the borrowers' and lenders' knowledge and authorization. Respondents' disbursement of Wilder's monies was approved by Wilder in the acknowledgment document confirming her use of an outside agency for payment of specific credit accounts listed on the HUD. Further, Respondents also followed the HUD in the Saucedas' closing by mailing the checks to the creditors. And, when the undeliverable checks were returned Milianta, he followed the instructions of the lender and the Saucedas. Ultimately, the Saucedas instructed Surf to send the returned monies to SEAL Credit after having Letterman to arrange a second contract with SEAL Credit.
Respondents' actions of distributing the escrow funds to SEAL Credit were authorized each time with the permission of both Wilder and the Saucedas. And, even though both borrowers ended up with a financial loss, Petitioner failed to meet its burden by clear and convincing evidence and show that Respondents endangered or encumbered monies held in trust in violation of section 626.8437(9), and rule 69O-186.008.
Further, by following both the Saucedas' and Wilder's instructions, no violation of Respondent's fiduciary duties was shown pursuant to section 626.8473(2), and as a result,
Petitioner failed to demonstrate Respondents violated section 626.844(2).
In this matter, Respondents' Exhibit 5 was found to be credible. Hence, the record is void of any false material statements. Therefore, Petitioner fails to show Respondents in violation of sections 626.9521(1) and 626.9541(1)(e)1.
Moreover, no sufficient competent evidence was presented to demonstrate any fraudulent, deceitful or dishonest behavior in this case. Therefore, the record lacks any evidence to prove that any of Respondents' actions demonstrated a lack of fitness or trustworthiness to engage in the business of insurance in violations of sections 626.8437(4) and 626.8437(6).
As to Petitioner's allegation that Respondents violated section 626.844(5), the record is also void of any evidence to demonstrate such a violation.
Finally, because the Department did not prove by clear and convincing evidence that Respondents committed any of the substantive violations alleged in the Administrative Complaints, Respondents are not guilty of Counts I and II.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order dismissing the Administrative Complaints against Respondents.
DONE AND ENTERED this 31st day of October, 2011, in Tallahassee, Leon County, Florida.
JUNE C. MCKINNEY
Filed with the Clerk of the Division of Administrative Hearings this 31st day of October, 2011.
1 Seal Credit is a third-party business that does credit repair. It negotiates reduced settlement amounts with creditors on behalf of borrowers and allows the borrowers to get more cash back during refinancing. SEAL Credit is owned by Lee Fragemono, the same owner of Southeast Equity and Lending.
2 Respondent's Exhibit 10.
3 Respondent's Exhibit 2.
4 Petitioner's Exhibit 6 page 77.
5 There was conflicting testimony as to whether Mrs. Sauceda ever had any contact with Milianta. Milianta's testimony is found to be more credible than Mrs. Sauceda since Letterman's testimony substantiated Milianta's testimony that Mrs. Sauceda contacted him about a second contract with Seal Credit to negotiate a lower amount for the returned checks.
6 The Saucedas denied signing the letter. However, the undersigned finds Milianta's testimony more credible since
Letterman testified credibly that the Saucedas contacted him about the returned checks Milianta had.
7 Respondent's Exhibit 7.
James A. Bossart, Esquire Department of Financial Services 612 Larson Building
Tim Vincent Milianta Surf Title, Inc.
James S. Strouss, Esquire 2758 East Atlantic Boulevard Pompano Beach, Florida 33062
Julie Jones, Agency Clerk Department of Financial Services Division of Legal Services
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.
