STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KIMBERLEE M. FIEBER, )

)

Petitioner, )

)

vs. ) CASE NO. 86-4963F

) STATE OF FLORIDA, DEPARTMENT OF ) BANKING AND FINANCE, )

)

Respondent. )

)

FINAL ORDER

This order is based upon the parties' Stipulation Agreement filed on February 17, 1986, waiving rights to an evidentiary hearing and on their submission of a thorough and well-organized record in lieu of a hearing in this proceeding.

APPEARANCES

The parties were represented as follows:

For Petitioner: Kenneth M. Meer, Esquire

Infantino and Berman Post Office Drawer 30

Winter Park, Florida 32790

For Respondent: Elise M. Greenbaum, Esquire

Office of the Comptroller

400 West Robinson Street, Suite 501 Orlando, Florida 32801

BACKGROUND

Petitioner's Motion for Award of Attorney's Fees was filed in the Division of Administrative Hearings (DOAH) on December 29, 1986. Attached to the motion, as required by subsection 57.111(4) Florida Statutes, was an itemized affidavit revealing the nature and extent of fees and costs incurred in DOAH case #86- 1761, State of Florida, Department of Banking and Finance v. Kimberlee M. Fieber.

The Department responded to Petitioner's motion with its Motion to Dismiss Petitioner's Motion for Award of Attorney's Fees. Shortly thereafter the parties agreed to submit the case for disposition on the record and waived an evidentiary hearing. The record prepared by the parties, bound and indexed, consists of pertinent pleadings and documents and three depositions: Anthony Bernardo, Kimberlee Fieber and John Willard.

Both parties submitted proposed orders including findings of fact and conclusions of law. These have been considered, along with the record, and specific rulings on the proposed findings of fact are reflected in the attached appendix.

ISSUE

The issue proposed in the Department's "Recommended Order" is:

Whether the Department was substantially justified in bringing this action, or that special circumstances exist which would make an award of attorney's fees unjust, pursuant to Section 57.111, Florida Statutes (1983).

As Respondent, the Department has not contested Ms. Fieber's allegations of standing as a "prevailing small business party" nor the reasonableness of the fees and costs claimed by Ms. Fieber.

FINDINGS OF FACT

1. Kimberlee M. Fieber is a licensed mortgage solicitor, having been issued license number HK 0008319 by the Department of Banking and Finance ("Department"). Ms. Fieber was employed by State Capital Corporation in the capacity of a mortgage solicitor commencing in 1983 and ending in August 1984. (Stipulation Agreement filed February 17, 1987; R 53, 132.)

   
   

2. The Department began investigating State Capital Corporation in 1982, and in July of that year filed suit against the corporation, its directors, officers and certain named employees (not Kimberlee Fieber), charging eleven counts of securities and mortgage brokerage act offenses. (R 1-24, 160-161) The parties executed stipulations for final judgment, and judgment was entered on April 11, 1983, restraining the defendants from making certain representations to investors and from other specific violations of Chapters 494 and 517 F.S..

   25-28)

   
   

3. Anthony Bernardo lives in Ft. Myers, Florida. Sometime in early 1983 he saw a State Capital Corporation advertisement regarding investment opportunities. He contacted the company and on June 27, 1983, Kimberlee Fieber came to his house to answer his questions. After about one hour Mr. Bernardo gave Ms. Fieber a check for $5,000.00 to invest as a loan yielding 18 percent interest, secured by a mortgage on commercial property. (R 30-32, 68-80) This was the first and only contact he had with Ms. Fieber. (R 74) Approximately two weeks later, the Bernardos received the papers related to their investment, including a Mortgage Deed, described in boldfaced print on the first page as a first mortgage of equal dignity with other first mortgages to be given in the total amount of $260,000.00, on a motel in Ft. Lauderdale. (R 32, 73) The Bernardos began receiving their $75.00 per month interest payments; in November 1983, they exercised an option to continue the investment for an additional twelve months at the same interest rate. (R 38)

   
   

4. After reading some adverse articles about State Capital Corporation in the newspaper, Anthony Bernardo decided not to continue his loan beyond the term ending December 31, 1984. He informed the company in writing. (R 50, 83-85) When he did not receive his $5,000.00, he began calling the company on January 7, 1985. (R 84) He sent a letter dated January 16, 1985, to Gary Allen at State

   Capital Corporation demanding the return of his $5,000.00 with interest from January 1, 1985. He sent a copy of that letter to Gerald Lewis, State Comptroller. (R 50)

   
   

5. On January 31, 1985, John Willard, an investigator for the Office of the Comptroller, interviewed Anthony Bernardo by telephone. The investigator's notes of that interview reflect the facts described in paragraphs 3 and 4, above, but also note that during Ms. Fieber's explanation of the investment, she did not explain to the Bernardos what equal dignity mortgages were, nor did she disclose that the Comptroller's Office had taken action against State Capital Corporation. The investigator noted that Bernardo told him that Ms. Fieber suggested he call the Comptroller's Office as a reference. (R 51-52)

   
   

6. On February 14, 1985, Anthony Bernardo received his $5,000.00 from State Capital Corporation along with full interest. (R 85-86)

   
   

7. John Willard never interviewed nor contacted Anthony Bernardo again, nor did he ever interview Ms. Fieber or anyone else regarding the Fieber case. He conducted interviews with other investors. He had some general discussion with an attorney in the Comptroller's Office about solicitors who had been employed by State Capital Corporation who may have committed misrepresentations regarding the sale of equal dignity mortgages. (R 170-173) He told the attorney, John Root, that the only thing they had in the file on Ms. Fieber was the memorandum of his interview with Anthony Bernardo. (R 174)

   
   

8. Nothing in the record suggests that any other investigation of Ms. Fieber was done.

   
   

9. On April 2, 1986, the Department served Kimberlee M. Fieber, as individual Respondent, a Notice of Intention to Suspend and Administrative Charges and Complaint which provided, in pertinent part:

   * * * STATEMENT OF FACTS

   1. Under the Provisions of Chapter 494, Florida Statutes (1983), the Department is charged with the responsibility and duty of administering and enforcing the provisions of the ACT, which includes the duty to suspend the licenses of those persons registered under the ACT for violations of the terms therein, as set forth in Section 494.05, Florida Statutes (1983).

      
      

   2. Kimberlee M. Fieber is a mortgage solicitor, who has been issued license number HK 0008319 by the DEPARTMENT. Formerly, Respondent was a mortgage solicitor for State Capital Corporation.

      
      

   3. As authorized by Section 494.071(1), Florida Statutes (1983), the DEPARTMENT conducted an investigation of the affairs of State Capital Corporation under the ACT. During that investigation, the DEPARTMENT took a statement from A. G. Bernardo.

   4. Mr. Bernardo stated that he had first heard of State Capital Corporation through

      its advertisements in the newspaper, to which he responded.

      
      

   5. After Mr. Bernardo contacted State Capital in answer to the advertisements, Respondent went to his home to attempt to persuade him to invest.

      
      

   6. During her sales talk, Respondent failed and neglected to explain the concept of equal dignity mortgages to Mr. Bernardo.

      
      

   7. Respondent also failed and neglected to disclose to Mr. Bernardo that the DEPARTMENT had taken legal action against State Capital and, in fact, suggested that Mr. Bernardo call the Department as a reference.

      
      

   8. Based on Respondent's representations, Mr. Bernardo invested $5,000.00 with State Capital Corporation.

      
      

   9. In return for his investment, Mr. Bernardo received an equal dignity first mortgage on a small motel.

      
      

   10. Mr. Bernardo's note became due after six months, and he renewed his investment for another period, this time of a year.

       
       

   11. When the one year renewal period had expired, Mr. Bernardo had decided not to renew his investment because of newspaper articles telling of State Capital's financial difficulties, and he notified State Capital of his decision and made demand on it for the return of his investment.

       
       

   12. Said mortgage note was due to be paid in December, 1984. However, payment was not made to Mr. Bernardo at that time, nor within a reasonable time thereafter.

       
       

       CONCLUSIONS OF LAW

       
       

   13. Section 494.05(1), Florida Statutes (1983), provides that the license of a licensee may be suspended for a period not exceeding 2 years upon a finding of facts showing that the licensee has been guilty of:

       
       

       1. Making any false promise likely to influence, persuade, or

          induce; or pursuing a course of misrepresentation or false promise through agents or solicitors, or advertising or otherwise.

          
          

       2. Misrepresentation, circumvention, or concealment by the licensee through whatever subterfuge or device of any of the material particulars or the nature thereof, regarding a transaction to which he is a party, and of injury to another party thereto.

          
          

       3. Failure to disburse funds in accordance with his agreements.

       
       

       (e) Failure to account or deliver to any person any personal property such as money, fund, deposit, check, draft, mortgage, or other document, or thing of value, which has come into his hands, and which is not his property, or which he is not in law or equity entitled to retain, under the circumstances, and at the time which has been agreed upon, or is required by law, or in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery.

       
       

   14. As a result of the investigation conducted by the DEPARTMENT, the DEPARTMENT concludes as a matter of law that Kimberlee

       M. Fieber, acting for herself and State Capital Corporation, has violated the provision of Section 494.05(1)(a)(b)(c) and (e), Florida Statutes (1983), for which any and all licenses issued by the DEPARTMENT to the Respondent should be suspended for two

       (2) years under the provisions of Section 494.05(1), Florida Statutes (1983).

       
       

10. Ms. Fieber retained counsel, exercised her option to request a formal hearing, and the case was forwarded to DOAH and assigned #86-1761.

    
    

11. On July 29, 1986, Anthony Bernardo was deposed, pursuant to notice by counsel for Respondent, Ms. Fieber. (R 58) He could not remember at the time of deposition whether Ms. Fieber mentioned the term equal dignity mortgage but he admitted that he received documents indicating his security was an "equal dignity mortgage". He never asked what the term meant and he did not care . (R 15, 86-87) He could not remember discussing "equal dignity mortgages" with the investigator. (R 24) He did not consider anything Ms. Fieber told him to be a misrepresentation. (R 29-31) He never spoke to Ms. Fieber or tried to contact her regarding getting his money back. (R 83-86)

12. The deposition was transcribed on September 11, 1986. (R 91) Shortly thereafter the Department dismissed its prosecution of the case against Kimberlee M. Fieber. A Final Order dismissing the administrative charges and complaint was entered by Gerald Lewis, Comptroller, on October 28, 1986. (R-92)

    
    

13. Kimberlee Fieber's testimony in this proceeding is presented through her deposition taken on February 12, 1987. (R 129, et seq.) She started with State Capital Corporation as a secretary, answering the phone. (R 24) She then became a mortgage solicitor and representative of the company. At that point she received compensation as an independent contractor. (R 96, 103) Her duties at State Capital as a mortgage solicitor included answering questions and personally visiting potential investors. She explained the minimum amounts to be invested, the types of property and what equal dignity mortgages were. After Mr. Bernardo called the branch office to have someone come talk to him, Ms. Fieber was sent out by the Naples office Branch Manager. She provided the same information to Mr. Bernardo as to other potential investors, including the fact that there would be more than one mortgage on the property and they would have equal rights. (R 132-133, 135, 137)

    
    

14. The only training she received was from the Branch Manager. She had no authority beyond explaining the program and attempting to interest potential investors. She did not make investments for the client, nor did she have knowledge of the exact property that would be involved. Those details were handled by the home office in Boca Raton and the home office sent the paperwork evidencing the investments to the client. She had no authority to disburse funds from any accounts at State Capital. (R-133-137, 144-146)

    
    

15. During the time that she worked for State Capital Ms. Fieber was unaware that the company was under investigation. She suggested that the potential investors call the Department for a reference as part of her standard presentation as she had called herself and felt they would be a good reference. (R 153)

    
    

16. Ms. Fieber left State Capital in August 1984 because she was not comfortable with what she was doing. She felt she could not advance and was not learning anything. She wanted to get into the first mortgage industry and actually go through the loan processing. (R 143, 149-150)

    
    

17. Kimberlee Fieber incurred attorneys fees and costs in the amount of

    $2,866.85, including billing by Kenneth Meer at $95.00 per hour, an attorney bill of $343.75 from Thomas Chase for handling the Bernardo deposition in Ft. Myers, the deposition transcript, and a subpoena service charge of $10.00.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding. Sections 57.111 and 120.57(1) F.S.

    
    

19. This case arises under the Florida Equal Access to Justice Act, section 57.111 F.S., which provides, in pertinent part:

    
    

    (4)(a) Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding

    pursuant to chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.

    
    

20. A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency.

    
    

21. The Department has the authority and duty to investigate the actions of persons engaged in the capacity of a licensee under the "Mortgage Brokerage Act", Chapter 494 F.S. Section 494.05(1) F.S. It further has the authority to suspend a license upon finding of guilt of any of a series of specified violations, including those violations with which Ms. Fieber was charged. (See Findings of Fact, paragraph 7.)

    
    

22. The disciplinary action against Kimberlee Fieber was initiated in April 1986, when the Notice was served. The only basis revealed in the record for proceeding against Ms. Fieber was the one telephone interview with Anthony Bernardo some fourteen months earlier.

    
    

23. A modicum of diligence would have disclosed Ms. Fieber's lack of involvement in the alleged illegal practices of State Capital Corporation. The fact, reflected in the investigator's notes and in the Complaint against Ms. Fieber, that she suggested the investor call the Comptroller's Office, should have piqued some further inquiry into this person's role. At the time the proceeding was initiated, there was no reasonable basis in law or fact for the allegations made against Ms. Fieber.

    
    

24. This case is distinguished from Gentele v. Department of Professional Regulation, 9 FALR 3712 (1st DCA opinion filed July 10, 1987); affirming sub nom, 9 FALR 310, (DOAH #85-3857F, Final Order issued June 26, 1986).

    
    

25. In Gentele it was held that the determination to prosecute essentially turned on a credibility assessment of the investigator's testimony and, as such, had a reasonable basis in law and fact. The proceeding commenced on the recommendation of a probable cause panel only after that panel conducted a meaningful inquiry, questioning and confirming the findings of a trained investigator who herself underwent what was alleged to be a deficient eye examination by the respondent licensee.

    
    

26. Here, the Department relied on a telephone interview conducted over a year before the administrative complaint was filed. The one witness was not contacted again, nor was the Respondent given an opportunity to explain her role in the process.

    
    

27. Citing Gentele, supra, and analogous federal cases relied on in that opinion, the Department argues that the statements made by Mr. Bernardo to the Department provided evidence which would constitute a prima facie case of unlawful conduct by Ms. Fieber if the evidence was credited at final hearing. This is simply not true.

    
    

28. Based on the administrative complaint, it is apparent that the Department deemed material these statements allegedly made by Mr. Bernardo to the investigator: a) Ms. Fieber did not explain "equal dignity mortgage"; b) Ms. Fieber did not disclose that State Capital Corporation had been sued by the Department; and c) He did not get his money back. The complaint and the record

    in this proceeding do not reveal how Ms. Fieber was responsible for the month and a half delay in returning Mr. Bernardo's money, in violation of subsection 494.05(1)(c) and (e), nor is it specified what misrepresentations were made or material particulars were concealed by Ms. Fieber in her dealings with Mr.

    Bernardo, in violation of subsections 494.05(1)(a) and (b) F.S.

    
    

29. It is apparent that in its zeal to bring to justice the various individuals responsible for State Capital's misdeeds, the Department cast its net of enforcement far and wide, ensnaring the innocent, as well as the guilty. It is precisely this type of overreaching by a governmental agency that the "Florida Equal Access to Justice Act" was intended to remedy. See Section 57.111(s) F.S.

    
    

30. Kimberlee Fieber is a "prevailing small business party" as defined in subsections 57.111(3)(c) and (d). On their face, and in the absence of any evidence to the contrary, the fees and costs claimed by Ms. Fieber are "reasonable" and "necessary".

    
    

31. The Department has failed to prove that its disciplinary proceeding against Ms. Fieber's mortgage solicitor's license was substantially justified or that special circumstances exist which would make an award unjust.

Based upon the foregoing it is hereby:

ORDERED:

That the Department pay attorney's fees and costs to Petitioner in the amount of $2.866.85.

DONE and ORDERED this 31st day of August, 1987 in Tallahassee, Florida.

MARY CLARK

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 31st day of August, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-4963F

The following constitute my specific rulings on the findings of fact proposed by the parties.

Petitioners Proposed Findings of Fact:

1. Adopted in paragraph 7.

2. Adopted in paragraph 10.

3. Incorporated in Background.

4. Adapted in substance in paragraph 11, and in Conclusions

   of Law, paragraph 6.

5. Adopted in Conclusion of Law, paragraph 6.

6. Adopted in substance in paragraph 9.

7. Adopted in paragraph 9.

8-9. Rejected as cumulative and unnecessary.

1. Adopted in paragraphs 9 and 11.

2. Adopted in paragraph 6.

3. Adopted in paragraph 11.

4. Adopted in paragraph 6.

5. Adopted in paragraph 9.

6. Adopted in paragraph 12.

Respondent's Proposed Findings of Fact

1. Adopted in paragraph 1.

2. Adopted in Conclusions of Law, paragraph 3.

3. Adopted in paragraphs 2 and 3.

4. Adopted in paragraph 3.

5. Adopted in substance in paragraph 5. Mr. Bernardo claimed that he received documentation approximately two weeks later.

6. Rejected as immaterial.

7. Adopted in paragraph 11.

8. Adopted in paragraph 3 and 4.

9. Adopted in paragraph 4.

10. Adopted in paragraphs 4 and 5.

11. Adopted in paragraph 5.

12. Adopted in substance in paragraphs 5 and 6.

13. Adopted in paragraph 9.

14. Adopted in paragraph 10.

15. Rejected as immaterial.

COPIES FURNISHED:

Honorable Gerald Lewis Comptroller, State of Florida The Capitol

Tallahassee, Florida 32399-0305

Charles Stutts, Esquire General Counsel Department of Banking and

Finance

Plaza Level, The Capitol Tallahassee, Florida 32399

Kenneth M. Meer, Esquire Infantino and Berman Post Office Drawer 30

Winter Park, Florida 32790

Elise M. Greenbaum, Esquire Office of the Comptroller Suite 501

400 West Robinson Street Orlando, Florida 32801

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Docket for Case No: 86-004963F

Orders for Case No: 86-004963F