STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DENNIS J. SCHMIDT, )

)

Petitioner, )

)

vs. ) CASE NO. 85-0789

) DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held on August 21, 1985, in Tallahassee, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane K. Kiesling.

APPEARANCES

For Petitioner: James C. Massie, Esquire

P. O. Box 10371 Tallahassee, Florida 32301

For Respondent: Richard W. Thornburg, Esquire

Department of Insurance 413-B Larson Building

Tallahassee, Florida 32301

Lealand McCharen, Esquire 413-B Larson Building Tallahassee, Florida 32301

Dennis Silverman, Esquire 413-B Larson Building Tallahassee, Florida 32301

ISSUE

The issue is whether Dennis J. Schmidt meets the qualifications for licensure as a limited surety or bail bondsman.

BACKGROUND

The Petitioner, Dennis J. Schmidt, presented the testimony of Renee Phillips, John Shoemaker, Robert J. Schmidt, E. Jerry Randolph, Steven T. Greene, Onez O'Neal, and John R. Stewart, and had 25 exhibits admitted into evidence: Petitioner's Exhibits 1-10, 12-16, 18-21, 22A-22E, 23-24. Respondent Department of Insurance, called three witnesses, Richard Cataldo, Robert diMarzo, and Timothy Bell, and had two exhibits admitted into evidence, Respondent's Exhibits 2 and 4. There was one joint exhibit: Joint Exhibit 1.

The parties submitted Proposed Findings of Fact and Conclusions of Law. They have been considered and a ruling has been made on each proposed finding of fact in the Appendix to this Recommended Order.

Prior to the formal hearing, Petitioner had filed and argued a Motion to Supress Illegally Obtained Evidence and, in the Alternative, a Motion in Limine Based on Collateral Estoppel grounded on the fact that the courts had previously determined that some of Respondent's evidence and derivative evidence was obtained from an illegal search and illegal electronic surveillance. That motion was denied. Petitioner also filed and argued a Motion to Suppress Certain Testimony and Exhibits based on the fact that the white substance allegedly identified as cocaine had been voluntarily destroyed by the State and, thus, Petitioner was denied his right to independently examine the substance. That motion was also denied.

Petitioner then verbally argued a motion to exclude certain evidence as irrelevant and immaterial on the ground that the substance of the State's case was criminal involvement on the part of Petitioner, but that no court had found that a crime had been committed by Petitioner and a state agency did not have the authority to determine whether a crime had been committed.

Hence, Respondent agency could not now determine that Petitioner had been involved in criminal activity. That motion was also denied.

Respondent filed a Motion in Limine seeking to prevent the admission into evidence of Petitioner's letters of

recommendation. That motion was denied with leave to raise it again at the formal hearing.

FINDINGS OF FACT

1. The Petitioner, Dennis J. Schmidt, filed an application for a Limited Surety's (Bail Bondsman's) License on July 10, 1984. After having requested and having received additional information from Petitioner, the Department of Insurance issued a Letter of Denial on February 4, 1985. That letter denied the application essentially on the ground that at the time of the application it did not affirmatively appear that Petitioner was ". . . a person of high character and approved integrity and (had) not been convicted of or pleaded guilty or no contest to a crime involving moral turpitude or to a felony." An additional basis for denial was that Petitioner had "(d)emonstrated lack of fitness or trustworthiness to engage in the bail bond business."

   
   

2. An Amended Letter of Denial was issued by the Department on June 25, 1985 repeating the grounds listed in the February 4, 1985 letter and adding that Petitioner had made a ".

   . . (m)aterial misstatement, misrepresentation or fraud in . . . attempting to obtain a license or permit." This additional ground was based on the fact that Petitioner had answered "Not Guilty" to a question on the application concerning the outcome of a criminal charge when, in fact, the conviction on that charge had been reversed and remanded on appeal and subsequently dismissed by the trial court.

   
   

3. The Department further explained its denial of Petitioner's application by stating:

   
   

   The Department finds that the evidence of repeated criminal involvement concerning the same offense and the aforementioned false and misleading statement demonstrates lack of high character and approved integrity which qualities are requisite to licensing as a Limited Surety Agent. This conduct demonstrates a lack of fitness or trustworthiness to engage in the bail bond business.

   
   

4. In his application, Petitioner stated that he had been charged with a felony cited charges in Dallas County, Texas, 4/14/80 and stated he was "incarcerated at the time in Texas while awaiting the outcome of the charges." Petitioner entered

   on the application, where it requests "Nature of Charge and Outcome," the entries "Possession of Cocaine" and "Not Guilty."

   
   

5. Petitioner also listed an arrest in Dade County, Florida, and listed as nature of charge and outcome the entry: "Trafficking in Cocaine, Sale and Delivery of Cocaine and Possession with Intent to Distribute: All charges were Nolle Pros."

   
   

6. On August 27, 1980, Petitioner was charged in Dade County, Florida, with "Trafficking in Cocaine, Sale or Delivery of Cocaine, and Possession with Intent to Distribute Cocaine." Prior to trial, the Circuit Court in Dade County ordered the suppression of certain evidence because of illegal electronic surveillance and the Florida Third District Court of Appeal affirmed that order on September 21, 1982. Subsequently, the State Attorney nolle prossed the charges against Petitioner.

   
   

7. The arrest in Dade County arose out of a stop and search which occurred on March 18, 1980. On that date, Richard Cataldo, then a detective with the Dade County Public Safety Department, stopped a vehicle containing two individuals, Glen Harden and Dennis J. Schmidt. The stop was based on information obtained by a wire-tap. In the back seat of the vehicle, Cataldo found a briefcase containing a white powder which was field tested positive for cocaine. Cataldo never saw Schmidt in possession and control of the briefcase or the white powder. No cocaine was directly linked to Schmidt.

   
   

8. Schmidt and Harden were not detained at the time of the stop and search. Approximately five months later Schmidt was arrested. Subsequently, the warrant authorizing the wire-tap was invalidated: and the evidence obtained during the stop and search was excluded as "fruit of the poisoned tree."

   
   

9. A second incident occurred on April 14, 1980 in Dallas County, Texas, where Petitioner was indicted for "Possession of Cocaine." Petitioner was subsequently tried and convicted of that charge and was sentenced to 20 years in prison. The conviction was reversed by the Court of Criminal Appeals of Texas because of the finding that evidence had been obtained through an illegal search pursuant to a defective warrant. The cause was remanded back to the trial court for retrial, but the appeals court explicitly refused to acquit Petitioner. At that point the evidence was destroyed, the Texas District Attorney moved to dismiss the case, and his motion was granted by the trial court.

   
   

10. This arrest arose after Petitioner called for an ambulance in Dalhardt, Texas. Timothy Bell was an Emergency Medical Services supervisor for the City of Dalhardt, and responded with an ambulance to Petitioner's call. The ambulance transported Petitioner to a hospital. In the ambulance Petitioner told Bell he had been using cocaine. Subsequently at the hospital, in the presence of Bell, Petitioner told two nurses and a physician that he had been using cocaine. Based on these statements, a warrant was obtained to search Petitioner's automobile. It was this warrant which was held to be defective.

    
    

11. Petitioner attached three sworn statements by reputable endorsers to his application. According to these three and David Kelley, Renee Phillips, John Shoemaker, Robert J. Schmidt,

    R. Jerry Randolph and Steven T. Green, Petitioner is honest, reliable, dependable, trustworthy, and a man of good character and integrity. He enjoys a good reputation in the community. These witnesses include persons who have known Petitioner for the last several years and are familiar with his work and reputation. Also submitted were three letters of recommendation regarding Petitioner's character and reputation. These opinions were unrebutted and it is found that Petitioner has affirmatively shown that he is of high character and integrity.

    
    

12. The Department does not dispute that Petitioner meets all of the qualifications for licensure except those stated in the denial letters. The Department conducted its own investigation of Petitioner and found nothing derogatory except the two above-mentioned incidents.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Section 120.57(1), Florida Statutes (1983).

    
    

14. The Department of Insurance has jurisdiction over the regulation of Bail Bondsmen pursuant to Chapter 648, Florida Statutes. The qualifications of one aspiring to be a Bail Bondsman are contained in Section 648.34, Florida Statutes, and in pertinent part are:

    
    

    . . . .

    
    

    1. To qualify as a bail bondsman, it must affirmatively appear at the time of application and throughout the period of licensure that:

       
       

       1. The applicant is a bona fide resident of the state.

          
          

       2. The applicant is a bona fide resident of the state.

          
          

       3. The place of business of the applicant will be located in this state and the applicant will be actively engaged in the bail bond business and maintain a place of business accessible to the public which is open for reasonable business hours.

          
          

       4. the applicant has successfully completed a basic certification course in the criminal justice system, consisting of not less than 80 hours, approved by the board and has successfully completed within

          2 years of the date of his application a correspondence course for bail bondsmen approved by the board.

          
          

       5. The applicant is vouched for and recommended upon sworn statements filed with the department by at least three reputable citizens who are residents of the same

          counties in which the applicant proposes to engage in the bail bond business.

          
          

       6. The applicant is a person of high character and approved integrity and has not been convicted of or pleaded guilty or no contest to a felony, a crime involving moral turpitude, or a crime punishable by imprisonment of 1 year or more under the law of any state, territory, or country, whether or not a judgment or conviction has been entered.

          
          

          . . . .

          
          

15. In addition to failure to meet the statutory qualifications, an applicant for a license can be denied approval based upon several provisions in Section 648.45, Florida Statutes. Relying on Section 648.45; the Department deemed that Petitioner's application should be denied because, it was alleged, he demonstrated lack of fitness or trustworthiness to engage in the bail bond business and because of a material misstatement, misrepresentation or fraud in attempting to obtain a license. Section 648.45(2)(b) and (e).

    
    

16. The Department conceded that Petitioner met all of the statutory qualifications cited in Section 648.34, with the exception of the provision that he affirmatively show that he is a person of high character and approved integrity.

    
    

17. Petitioner met his burden of affirmatively showing that he is of high character and approved integrity through the favorable testimony of his character witnesses, the letters of recommendation, and the three sworn statements on his application indicating that Petitioner was of good moral character and had a good business reputation.

    
    

18. At that point the burden shifted to the Department to show that Petitioner did not possess the requisite high character and approved integrity. The Department's own investigation revealed no character flaws or criminal activity on the part of Petitioner prior to 1980 or since 1980.

    
    

19. The only evidence presented by the Department concerned the incidents in Dade County and in Texas. The charges in Dade County were voluntarily dismissed by the State Attorney prior to trial. In Texas, the conviction of Petitioner

    was reversed by the appellate court and the trial court subsequently dismissed the charges.

    
    

20. As legal justification for its denial of Petitioner's license application, the Department may not use the provision in Section 648.34(2) referring to the conviction of a felony or a crime involving moral turpitude. In Dade County there never was a conviction. In Texas there was a conviction but it was reversed on appeal and the case was subsequently dismissed. Although apparently never directly ruled upon in an administrative context, it is clear that in the criminal law a conviction does not become "final" until the judgment of the lower court has been affirmed by the appellate court. Joyner v. State, 30 So. 2d 304, 305 (Fla. 1947).

    
    

21. The effect of a reversal of conviction is to make the original judgment a nullity and the remand for a new trial leaves the case standing as if no judgment had been rendered. Ex parte Livingston; 156 So. 2d 612, 617 (Fla. 1934) State v. Adjmi, 170 So. 2d 340, 342 (Fla. 3d DCA 1964). The word "nullity" means "an act or proceeding in a cause which the opposite party may treat as though it had not taken place, or which has absolutely no legal force or effect." Black's Law Dictionary, (Revised Fourth Edition, 1968). Further, it cannot legally be known that an offense has been committed until there is a conviction. Joyner, supra at 306.

    
    

22. The only remaining theory is that the Department argues that Petitioner's conduct is evidence of his lack of high character and integrity. That conduct must be specifically proven at the administrative hearing and the Department cannot rely on court records, particularly where the court proceedings did not result in a conviction. Even a judgment of conviction in a criminal prosecution cannot be given in evidence in a civil action to establish the truth of the facts on which it is rendered. State v. Dubose, 152 Fla. 304, 11 So .2d 477 (Fla. 1943) see Metropoliton Dade County v. Wilkey, 414 So. 2d 269 (Fla. 3d DCA 1982). Further, the indictments or informations are merely accusatory pleadings and they also are not admissible for the purpose of proving or disproving a fact. Wilkey, supra; see Hines v. Trager Construction Co. 188 So. 2d 826 (Fla. 1st DCA 1966).

    
    

23. At the hearing the only direct evidence of suspect behavior in Florida was the detective's testimony that in 1980 Petitioner was a passenger in an automobile where there was a closed briefcase on the back seat containing a substance alleged

    to be cocaine. The detective also testified that he had not specifically seen Mr. Schmidt in possession or control of any cocaine, and the police officers drove away without making any arrests. That is not sufficient evidence to deny Petitioner a Bail Bondsman's License on the basis of criminal activity or lack of high character.

    
    

24. Concerning the incident in 1980 in Texas, the only direct evidence at the hearing was the statement by the emergency medical technician that he had heard Mr. Schmidt state that he had taken cocaine. No competent evidence was presented at the hearing indicating Petitioner's possession of cocaine or even the existence of cocaine and there was no corroboration of the witness' testimony. Petitioner's statement, if true, does not constitute commission of a crime. Such an admission standing alone, as was the case here, cannot be used by itself to establish that a crime was committed; there must be other evidence to corroborate the statement.

    
    

25. Even if Petitioner had taken cocaine in 1980, the only evidence presented by the Department at the hearing would indicate that it was an isolated incident. Isolated unlawful acts or isolated acts of indiscretion committed several years ago do not necessarily establish bad moral character. Zemour, Inc. v. State of Florida, Division of Beverage 347 So. 2d 1102 (Fla. 1st DCA 1977): Wash & Dry Vending Co. v. State of Florida, Dept. Of Bus. Reg., 429 So. 2d 790 (Fla. 3d DCA 1983); cf., In re Petition of Diez-Arguelles, 401 So. 2d 1347 (Fla. 1981).

    This is particularly so when the Petitioner's witnesses and the Department's own investigation reveal no character flaws or indications of criminal activity within the last five years and when the statute requires the assessment of character traits "at the time of application." See Section 648.34(2).

    
    

26. Thus, there was insufficient evidence to prove the Department's allegations of lack of high character and approved integrity at the time Petitioner filed his application. Further, because the Department failed to prove its allegations of repeated criminal involvement and a continuing involvement with persons identified with drug activity, the Department failed to demonstrate Petitioner's lack of fitness or trustworthiness to engage in the bail bond business.

    
    

27. That leaves the question of whether the "Not Guilty" answer to Question 12 of the application (referring to the nature of any criminal charges and its outcome) constitutes a material misstatement, misrepresentation, or fraud such as to

    allow the Department the ability to deny approval of the application. The charge related to the incident in Texas and, technically, the proper answer would have been "Conviction Reversed," or perhaps more properly since it was the eventual outcome, "Dismissed." The record shows that Petitioner made no attempt whatsoever to hide or disguise the proceedings in Texas and, in fact, he cooperated completely with the Department by promptly obtaining certified records of all of the proceedings. The proper outcome of the proceedings was known to the Department prior to the time its first letter of denial was issued and throughout the Departments evaluation of an investigation of this application. The language "a material misstatement of fact, misrepresentation, or fraud" in Chapter 648 has been directly construed and has been found to require scienter, a knowing intentional act designed to deceive.

    Grantham v. Department of Insurance, 5 FALR 2169-A, delivered May 13, 1983. Because it cannot be shown that Petitioner intended to deceive, good cause does not exist for denial of Petitioner's application on the basis of the "Not Guilty" answer. Further, the distinction between "Not Guilty" and "Charges Dismissed" are technical at best, and are not material in this context. The Department's assertion that In the matter of Kenneth Earl West, 6 FALR 6510, delivered on April 19, 1984, controls the result here is misplaced. West answered in the negative to the question concerning convictions of felonies, when in fact he had been charged with and pleaded guilty to two felonies within the prior two months. It is clear that West's statement were more substantive misstatements or misrepresentations than Petitioner's "Not Guilty" answer, and thus West's statements were more of a material nature.

    
    

28. In proceedings such as these, the applicant must prove entitlement to the license sought or, as here, entitlement to take the licensure examination. It is concluded that Petitioner has proven that he meets the qualifications for the bail bondsman's license as set forth in Section 648.34, Florida Statutes. The Department has not proven that Petitioner behavior and application are inconsistent with Section 648.45(b) or (e). Petitioner has established his entitlement for eligibility and licensing as a limited surety agent.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Insurance enter a Final Order approving the application of Dennis J. Schmidt for examination and licensure as a limited surety agent (bail bondsman) and permitting Dennis J. Schmidt to sit for the examination.

DONE and ORDERED this 23rd day of October, 1985, in Tallahassee, Florida.

DIANE K. KIESLING

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 23rd day of October, 1985.

APPENDIX

1. Petitioner's Proposed Findings of Fact

   
   

   1. Adopted in substance (See Finding of Fact 1)

      
      

   2. Adopted in substance (See Finding of Fact 2)

      
      

   3. Adopted in substance (See Finding of Fact 3)

      
      

   4. Rejected as conclusory and not supported by the evidence.

      
      

   5. Adopted in substance (See Finding of Fact 6)

      
      

   6. Adopted in substance (See Finding of Fact 9)

      
      

   7. Adopted in substance (See Finding of Fact 11)

      
      

   8. Adopted in substance (See Finding of Fact 11)

      
      

   9. Adopted in substance (See Finding of Fact 12)

      
      

   10. Rejected as irrelevant.

       
       

   11. Rejected as irrelevant.

       
       

   12. Rejected as irrelevant.

       
       

   13. Adopted in substance (See Finding of Fact 7)

       
       

   14. Rejected as irrelevant, argumentative, and not supported by the evidence.

       
       

   15. Adopted in substance (See Finding of Fact 10)

       
       

   16. Rejected as conclusory, argumentative, going to the ultimate issues.

       
       

2. Respondent's Proposed Findings of Fact

   
   

   1. Adopted in substance (See Finding of Fact 1)

      
      

   2. Adopted in substance (See Finding of Fact 4)

      
      

   3. Adopted in substance (See Finding of Fact 4)

      
      

   4. Rejected as not supported by the evidence

      
      

   5. Adopted in substance (See Finding of Fact 5)

      
      

   6. Adopted in substance (See Finding of Fact 1)

      
      

   7. Adopted in substance (See Finding of Fact 7)

      
      

   8. Rejected as irrelevant.

      
      

   9. Adopted in substance (See Finding of Fact 7)

1. Adopted in substance (See Finding of Fact 9)

   
   

2. Adopted in substance (See Finding of Fact 9)

   
   

3. Adopted in substance (See Finding of Fact 9)

   
   

4. Adopted in substance (See Finding of Fact 1)

   
   

5. Adopted in substance (See Finding of Fact 2)

COPIES FURNISHED:

James C. Massie, Esquire

P. O. Box 10371 Tallahassee, Florida 32301

Richard W. Thornburg, Esquire Department of Insurance

413-B Larson Building Tallahassee, Florida 32301

Lealand McCharen, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301

Dennis Silverman, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301

Hon. William Gunter

State Treasurer and Insurance Commissioner

The Capitol-Plaza Level Tallahassee, Florida 32301

Docket for Case No: 85-000789

Orders for Case No: 85-000789