STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

STATE OF FLORIDA, )

)

Petitioner, )

)

vs. ) CASE NO. 79-2442

)

TIMOTHY MICHAEL PALETTI, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above captioned matter, after due notice, at Gainesville, Florida, on June 12, 1980, before Thomas C. Oldham, Hearing Officer.

APPEARANCES

For Petitioner: S. Strom Maxwell, Esquire

428-A Larson Building Legal Division

Tallahassee, Florida 32301

For Respondent: Robert J. Costello, Esquire

Bates and DeCarlis

726 Northwest Eighth Avenue, Suite B Gainesville, Florida 32601

ISSUE

Whether Respondent's license as a limited surety agent should be revoked or the licensee otherwise disciplined for alleged violations of Chapter 648, Florida Statutes, and Chapter 4-1, Florida Administrative Code, as set forth in the Administrative Complaint dated October 16, 1979.

In this proceeding, Petitioner seeks to take disciplinary action against Respondent for various alleged violations of Chapter 648, Florida Statutes, and Chapter 4-1, Florida Administrative Code, arising out of alleged irregularities in connection with a bonding transaction in 1978. Two witnesses testified for the Petitioner and the parties stipulated to the admission of seven documentary exhibits. The Respondent testified in his own behalf at the hearing.

FINDINGS OF FACT

1. Respondent Timothy Michael Paletti is currently licensed as a limited surety agent to represent Cotton Belt Insurance Company, Inc., at Orange Lake, Florida, and was so licensed during the periods alleged in the Administrative Complaint. (Petitioner's Exhibit 1, Stipulation)

2. On November 23, 1978, Respondent executed an appearance bond in the Gilchrist County Circuit Court in the sum of $10,000 as agent of the surety, Cotton Belt Insurance Company, in behalf of Rodney D. Lovett, who was charged with robbery. Respondent did not attach either an affidavit or statement, as prescribed in Rule 4-1.14, Florida Administrative Code, to the bail bond at the time it was filed in the office of the Circuit Court clerk. It was not until January 31, 1979, that Respondent filed a statement concerning collateral security for the bond under Rule 4-1.141 in lieu of the affidavit required by Rule 4-1.14, F.A.C. Lovett's wife paid a $1,000 premium for the bond and his sister-in-law, Deborah Johnson, executed a demand note for $10,000, together with a mortgage deed on a dwelling which she owned in Deland, Florida, on November 23, 1978, as collateral security for the bond. During the transaction, Respondent provided Johnson with a business card bearing his Orange Lake telephone number. (Testimony of Johnson, Petitioner's Exhibits 2-4)

   
   

3. On January 8, 1979, a Notice of Sentencing was issued by the Gilchrist County Circuit Court Clerk in Lovett's case for January 22, 1979 at Trenton, Florida. On January 13, Respondent contacted Lovett and Johnson by telephone at their respective homes and advised them of the date of the required court appearance. (Testimony of Respondent, Petitioner's Exhibit 5)

   
   

4. During January 1979, Lovett and his wife talked to Johnson about the possibility of "leaving and not going to court." Johnson became concerned about these disclosures and attempted to reach Respondent at his Orange Lake telephone number. Numerous calls to that number on January 15th were unanswered. After unsuccessful attempts to reach Respondent through the Cotton Belt Insurance Company and at another telephone number provided by Petitioner, Respondent finally called Johnson's house on January 20, at which time Johnson and a friend, Barry S. Beatty, told Respondent about Lovett's statements concerning his intentions and requested that Respondent pick up Lovett and surrender him to court so the collateral security could be released. Respondent told Johnson that he would look into the matter. He then telephoned Lovett's attorney and the Lovett home, and was assured that everything was all right. (Testimony of Johnson, Beatty, Respondent)

   
   

5. On January 22, 1979, Lovett failed to appear at court for sentencing and the bond was therefore declared to be forfeited. Respondent and law enforcement authorities there after made efforts to locate Lovett and he was eventually apprehended and sentenced to confinement. On July 2, 1979, the Gilchrist County Circuit Court ordered that the bond previously estreated be remitted less the cost expended by the State in apprehending the defendant in the amount of $500. The collateral security posted by Johnson is still outstanding due to a dispute over costs sought by Respondent. (Testimony of Johnson, Respondent, Petitioner's Exhibit 6-7)

   
   

6. Respondent testified at the hearing that he felt he had made reasonable efforts to assure that Lovett would appear in court. Although Respondent moved his office in late January 1979, his office phone was in operation and his office was open during the week of January 15-22. (Testimony of Respondent)

   
   

   CONCLUSIONS OF LAW

   
   

7. Petitioner's Administrative Complaint lists four grounds for disciplinary action against Respondent under Section 648.45, Florida Statutes, as follow:

   1. Denial, suspension, refusal to renew, or revocation of license or eligibility to hold same.

      1. The department may deny, suspend, revoke or refuse to renew any license issued under this law, or it may suspend or revoke the eligibility of any person to hold a license under this law, for any

   of the following causes or for any violation of the laws of this state relating to bail:

   (b) Violation of any law relating to the business of bail bond insurance in the course of dealings under the license issued him by the department.

   (g) Willful failure to comply with, or willful violation of any proper order, rule or regulation of the department.

   1. Willful failure to return collateral security to the principal when the principal is entitled thereto.

   2. When, in the judgment of the department, the licensee has, in the conduct of affairs under the license, demonstrated incompetency, or untrust worthiness, or conduct or practices rendering him unfit to carry on the bail bond business, or making his continuance in such business detri mental to the public interests ...

   
   

8. The Administrative Complaint also lists four allegations of violations of departmental rules as contained in Chapter 4-1, Florida Administrative Code. Only one, however, makes reference to a particular statutory ground for disciplinary action. These are discussed individually below with reference to the particular statutory ground to which each allegation may reasonably relate.

   
   

   1. Section 648.45(1)(b) Petitioner has alleged that Respondent violated Sections 648.34(2)(c) and Rule 4-1.04 by "failed to maintain a place of business open and accessible to the public during normal business hours." Section 648.34 deals with qualifications of bail bondsmen and subsection (2)(c) provides that to so qualify, it must affirmatively appear that the place of business of the applicant will be located in this state and that the said applicant will be actively engaged in the bail bond business and maintain a place of business accessible to the public. Such a statutory provision is simply a qualification for licensure and cannot constitute the subject of a violation of law as contemplated under Section 648.45(1)(b). Accordingly, no ground for action exists under the cited statutory provision.

      
      

   2. Section 648.45(1)(g) Willful failure to comply with, or willful violation of any proper order, rule or regulation of the department. Allegations of departmental rule violations are as follows:

      
      

      1. Rule 4-1.04 "Failed to maintain a place of business open and accessible to the public to render service during normal business hours." The rule requires that "a place of business suitably advertised as determined by the Commissioner must be maintained open and accessible to the public to render service during normal business hours." The evidence shows that Deborah Johnson was unable to locate Respondent by telephone during a several-day period during 1979. Respondent was unable to provide an explanation for his unavailability

         during this period. Johnson made no attempt, however, to visit Respondent's office in Orange Lake and no showing was made at the hearing that his place of business was not open and accessible to the public at any time. Although Respondent may have been somewhat derelict in not insuring that his business telephone was properly monitored during normal hours, it is considered that such a failure does not constitute a willful violation of the cited rule.

         
         

      2. Rule 4-1.09 "Failed to surrender the defendant upon request of the Indemnitor of the bond, and failed to return the premium and collateral on the bond as a result thereof." The rule makes no mention of collateral security nor does it impose a requirement upon a bondsman to surrender a defendant upon request of the Indemnitor. It simply provides that a defendant is entitled to return of the bond premium when he is returned by the surety at any time prior to the final termination of the surety's liability on the bond, if he has not violated his contract with the surety. The rule is not applicable to the set of facts under consideration.

         
         

      3. Rule 4-1.14 "Failed to attach the prescribed affidavit to the bail bond for Rodney D. Lovett"; Rule 4-1.14(1) "Failed to attach to and file with the bail bond for Rodney D. Lovett statement prescribed by Rule 4-1.14(1)." Rule 4-1.14 requires that a bail bondsman who accepts collateral security for a bond shall make and attach to the bond an affidavit on a form prescribed in the rule. Rule 4-1.14(1) provides that a bail bondsman may attach and file with any bail bond a prescribed statement in lieu of the affidavit. The evidence establishes that Respondent did not attach either the affidavit or the state ment to the bond and file the same with the court until several months after filing of the bond. This constitutes a violation of the rule under the authority of United Bonding Insurance Company v. Tuggle, 216 So. 2d 80 (Fla. 2 DCA 1968), wherein it was held that the required affidavit must be filed simultaneously with the filing of the bail undertaking and, when not filed until after forfeiture of the appearance bond, any indemnity agreement between the surety and third persons is unenforceable. Although Respondent failed in this respect, there was no showing, nor can it be reasonably inferred, that his failure was willful in nature. Thus, it is determined that the ground of willful failure to comply with a departmental rule has not been established.

      
      

9. Section 648.45(i) "Willful failure to return collateral security to the principal when the principal is entitled thereto." The evidence discloses that the question of releasing the collateral security to Deborah Johnson is in dispute over the subject of costs encountered by Respondent. Insufficient evidence was presented to determine the merits of the dispute and there has been no showing that, in any event, Respondent's failure to return the security has been willful.

   
   

10. Section 648.45(j) "When, in the judgment of the department, the licensee has, in the conduct of affairs under the license, demonstrated incompetency or untrustworthiness, or conduct or practices rendering him unfit to carry on the bail bond business or making his continuance in such business detrimental to the public interest." It is not considered that Respondent's negligence in not manning his telephone properly, in failing to attach an affidavit or statement to the bond in question, or not having resolved the disputed question concerning return of collateral security collectively indicate that Respondent is either incompetent, untrustworthy, or unfit to continue in business, or that such continuance would be detrimental to the public interest. There has been no showing of fraud or deceit on his part, nor have any of the other allegations of the complaint been established. Respondent has been a bail bondsman since 1973 with no prior complaints against his record. It is

concluded that those shortcomings which he demonstrated in the particular transaction which was the subject of this hearing do not rise to the serious nature required by the stated statutory provision.

RECOMMENDATION

That the charges against Respondent Timothy Michael Paletti be DISMISSED. DONE and ORDERED this 9th day of July, 1980, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings

101 Collins Building Tallahassee, Florida 32301 (904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1980.

COPIES FURNISHED:

S. Strom Maxwell, Esquire Department of Insurance 428-A Larson Building Legal Division

Tallahassee Florida 32301

Robert J. Costello, Esquire Bates and DeCarlis - Suite B 726 Northwest Eighth Avenue Gainesville, Florida 32601

Docket for Case No: 79-002442

Orders for Case No: 79-002442