STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HARVEY JACOBSON AND )

BARBARA JACOBSON, )

)

Petitioners, )

)

vs. ) CASE No. 87-1237

) DEPARTMENT OF BANKING OF FINANCE, ) DIVISION OF FINANCE, )

)

Respondent, )

and )

) MICHAEL AND IRENE St. LAURENT, )

)

Intervenors. )

)

RECOMMENDED ORDER

The above-styled matter was assigned to Joyous Parrish, a designated Hearing Officer of the Division of Administrative Hearings. The parties were represented in this cause as follows:

APPEARANCES

For Petitioner: Paul A. Zeigler, Esquire

Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A. Suite 1010, Monroe Park Tower

101 North Monroe Street Tallahassee, Florida 32301

For Respondent: Paul C. Stadler, Jr.

Department of Banking and Finance Division of Finance,

The Capitol, Suite 102 Tallahassee, Florida 32399-0350

For Intervenors: Joseph Degance, Esquire

1995 East Oakland Park Boulevard Suite 101

Fort Lauderdale, Florida 33306 BACKGROUND AND PROCEDURAL MATTERS

This cause began on January 23, 1987, when the Department of Banking and Finance, Division of Finance (the "Department") issued a notice which Purported to deny certain claims filed against the Mortgage Brokerage Guaranty Fund.

Thereafter, Petitioners, Harvey Jacobson and Barbara Jacobson, timely filed their petition contesting the denial. The case was forwarded to the Division of

Administrative Hearings for formal Proceedings on March 25, 1987. The Intervenors, Michael and Irene St. Laurent, moved to intervene on August 7, 1987; such motion was granted by Order entered August 10, 1987.

On August 7, 1987, the parties filed a Prehearing statement wherein they agreed that there were no contested issues of fact. Thereafter, the parties filed a second Prehearing statement clarifying the facts not in dispute, agreed to submit the case for resolution without the necessity of formal hearing, and agreed to file briefs in accordance with a schedule.

ISSUE

The central issue in this case is whether Petitioners are entitled to recover against the Mortgage Brokerage Guaranty Fund and, if so, the priority of payment to be applied to their claim. A secondary issue is whether claimants who gave notice prior to Petitioners are entitled to payment or whether they have waived or abandoned their claims.

FINDINGS OF FACT

Based upon the stipulations filed by the parties and the documentary evidence, I make the following findings of fact:

1. The Mortgage Brokerage Guaranty Fund (the "fund") was created in 1977 to provide recovery for any person who meets all of the conditions prescribed in Section 494.043, Florida Statutes. The Department is charged to disburse the fund according to Section 494.044, Florida Statutes.

   
   

2. Section 494.043, Florida Statutes, (Supp.1986) provides:

   
   

   1. Any person who was a party to a mortgage financing transaction shall be eligible to seek recovery from the Mortgage Brokerage Guaranty Fund if:

      1. The person has recorded a final judgment issued by a Florida court of competent jurisdiction in any action wherein the cause of action was based on s. 494.042(2);

      2. The person has caused to be issued a writ of execution upon such judgment and the officer executing the same has made a return showing that no personal or real property of the judgment debtor liable to be levied upon in satisfaction of the judgment can be found or that the amount realized on the sale of the judgment debtor's property pursuant to such execution was insufficient to satisfy the judgment;

         The person has made all reasonable searches and inquiries to ascertain whether the judgment debtor possesses real or personal

         property of other assets subject to being sold or applied in satisfaction of the judgment, and by his search he has discovered no property or assets or he has discovered property and assets and has taken all necessary action and proceedings for the application thereof to the judgment, but the amount thereby realized was insufficient to satisfy the judgment;

         The person has applied any

         amounts recovered from the judgment debtor, or from any other source, to the damages awarded by the court.

         1. The person, at the time the action was instituted, gave notice and provided a copy of the complaint to the division by certified mail; however, the requirement of a timely giving of notice may be waived by the department upon a showing of good cause; and

         2. The act for which recovery is sought occurred on or after September 1, 1977. Recovery of the increased benefits allowable pursuant to the amendments to s.

         494.044 which are effective October 1, 1985, shall be based on a cause of action which arose on or after that date.

   2. The requirements of paragraphs (1)(a),(b),(c),(d), and (e) are not applicable if the licensee or registrant upon which the claim is sought has filed for bankruptcy or has been adjudicated bankruptcy;

      however, in such event the claimant shall file a proof of claim in the bankruptcy proceedings and shall notify the department by certified mail of the claim by enclosing a copy of the proof of claim and all supporting documents.

      
      

3. Pertinent to this case, Section 494.044, Florida Statutes, (Supp. 1986) Provides:

   
   

   1. Any Person who meets all of the conditions Prescribed in s 494.043 may apply to the department for payment to be made to such person from the

      Mortgage Brokerage Guaranty Fund in the amount equal to the unsatisfied portion of that person's judgment or judgments or $20,000, whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages. As to claims against any one licensee or registrant, payments shall be made to all persons meeting the requirements of s. 494.043 upon the expiration of 2 years from the date the first complete and valid notice is received by the department.

      Persons who give notice after

      2 years from the date the first complete and valid notice is received and who otherwise comply with the conditions precedent to recovery may recovery from any remaining portion of the

      $100,000 aggregate, in an amount equal to the unsatisfied portion of that person's judgment or $20,000, whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages, with claims being paid in the order notice is received until the $100,000 aggregate has been fully disbursed.

      * * *

      (3) Payments for claims shall be limited in the aggregate to

      $100,000, regardless of the number of claimants involved, against any one mortgage broker or registrant. If the total claims exceed the aggregate limit of $100,000, the department shall prorate the payment based on the ratio that the person's claim bears to the total claims filed.

      
      

4. The first notice received by the Department alleging a claim against Barry Koltun or Oakland Mortgage Company was filed on August 13, 1984. This notice was filed on behalf of John and Mary Ahern. The Department utilized this notice in computing the two-year period addressed in Section 494.044(1), Florida

   Statutes. For purposes of recovery from the fund, the individual mortgage broker (Koltun) and the company qualified by the broker (Oakland) are treated as one.

   
   

5. Petitioners filed an initial notice of their claim against the fund on October 16, 1985. This claim was asserted against Oakland Mortgage Company, Barry Koltun and Robert Tamarro.

   
   

6. On January 23, 1987, the Department issued a "Notice of Intent to Grant or Deny Payment from the Mortgage Brokerage Guaranty Fund Re Oakland Mortgage Company." This notice outlined the status of some thirteen claims which had given notice of their civil actions against the licensee within the two year period. Two claimants, Kusich and Szafran, had provided all documentation required by Section 494.043, Florida Statutes; consequently, they were approved for payment. The Petitioner's claim was denied because they had allegedly failed to satisfy the statutory requirements of Section 494.043, Florida Statutes and had failed to do so prior to August 12, 1986 (the end of the two year period).

   
   

7. The Petitioners timely filed a petition for formal Chapter 120 proceedings challenging the Department's denial of their claim for payment.

   
   

8. Subsequent to January 23, 1987, Petitioners completed the conditions precedent for recovery and submitted all documentation required to satisfy the requirements of Section 494.043, Florida Statutes.

   
   

9. On July 6, 1987, the Department received notice and a claim from the Intervenors. This claim satisfied the requirements of Section 494.043, Florida Statutes.

   
   

10. Of the thirteen original claims filed, only two claimants (Kusich and Szafran) completed all conditions of Section 494.043, Florida Statutes, on or before August 12, 1986.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

    
    

12. In the case at issue, Petitioners challenge the Department's construction of Chapter 494, Florida Statutes as it relates to the denial of their claim for payment. The first legal question raised by the facts of this case involves the method of payment of eligible claims set out in Section 494.044(1), Florida Statutes. The parties concede that the language of the statute does not make its meaning plain.

    
    

    In one sentence, the statute provides: "As to claims against any one licensee or registrant, payments shall be made to all persons meeting the requirements of Section 494.043 upon the expiration of 2 years from the date the first complete and valid notice is received by the Department." Thus only claimants eligible as of the expiration of the two year period are entitled to be paid. The parties do not dispute this construction, and they calculate the two year waiting period from the same date (August 12, 1984).

    
    

13. The next sentence says: "Persons who give notice after 2 years from the date the first complete and valid notice is received and who otherwise comply with the conditions precedent to recovery may recover from any remaining

    portion of the $100,000 aggregate, in an amount equal to the unsatisfied portion of that person's judgment or $20,000 whichever is less, but only to the extent and amount reflected in the judgment as being actual or compensatory damages, with claims being paid in the order notice is received until the $100,000 aggregate has been fully disbursed." The only logical construction of this sentence is that it creates a second class of claimants in addition to those entitled to payment by virtue of being eligible within the two year period:

    both those who did not even give notice within the two year period and those who gave notice but did not perfect their claim under 494.043 within the two year period.

    
    

14. The fund was created to provide a recovery that was previously unknown. To warrant payment, a claimant must bring its claim within the statutory boundaries. Those boundaries must be given a sensible construction. While all parties concede that the statute is ambiguous, an interpretation must be chosen that renders the provisions meaningful. Johnson v. Feder, 485. So.2d

    409 (Fla. 1986). Moreover, a statute should not be construed in a way that would lead to illogical or absurd results. Wakulla County v. Davis 395 So.2d

    540 (Fla. 1981); State ex vel. Register v. Safer, 368 So.2d 620 (Fla. 1st DCA 1979). That indisputable rule supports the construction recommended in the preceding paragraph.

    
    

15. The statute rewards claimants who complete all conditions precedent within two years from the date the first complete and valid notice is received. This type of recovery, which rewards the claimant who first pursues his claim to completion, has been favored by the legislature. See, e.g., the real estate recovery fund established in Chapter 475, Florida Statutes.

    
    

16. Since Petitioners and Intervenors did not complete all conditions precedent within the two year time frame, their claims must fall within the second class. The interests of second class claimants are prioritized based upon the order notice was received by the Department. Since all claimants in the second class have not completed the conditions precedent for recovery, it is impossible to determine at this time what amount each claimant may receive. The total available for disbursement to the second class is $100,000, less the amounts due Kusich and Szafran.

    
    

17. A second legal question raised by Petitioners is their claim that they are entitled to priority over other second class claimants, if not as a matter of law, then because those claimants who gave notice within the two year period have subsequently waived or abandoned their claim. However, as of this time, the Department has not taken action to deny any claim falling within the second class. The notice issued by the Department on January 23, 1987, concluded only that Petitioners did not fall within the first class for payment. Such conclusion was correct. Because Petitioners and Intervenors are now eligible for payment, having completed all conditions precedent for recovery, it is appropriate for their claims to receive further agency action/review. Since the agency has not made a determination adverse to their interests, it would be inappropriate for this Recommended Order to "prejudge" the prioritization of claims within the second class. Consequently, issues of abandonment or waiver of claims may not be addressed at this time. Any determination of such issues would follow agency action which gave full notice to all affected parties of an intended ruling.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Department of Banking and Finance, Division of Finance, enter a Final Order finding the claims of Rusich and Szafran eligible for payment, and that the claim of Petitioners be evaluated as part of the second class established in Section 494.044(1), Florida Statutes,

DONE and RECOMMENDED this 1st day of December, 1987, in Tallahassee, Florida.

JOYOUS D. PARRISH

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 1st day of December, 1987.

COPIES FURNISHED:

Paul A. Zeigler, Esquire Ruden, Barnett, McClosky,

Smith, Schuster & Russell, P.A. Suite 1010, Monroe Park Tower

101 North Monroe Street Tallahassee, Florida 32301

Paul C. Stadler, Jr., Esquire Department of Banking and Finance Division of Finance

Suite 1302 The Capitol

Tallahassee, Florida 32399-0350

Joseph Degance, Esquire

1995 East Oakland Park Boulevard Suite 101

Fort Lauderdale, Florida 33306

Jack F. Weins, Esquire Boca Bank Building Suite 200

855 South Federal Highway Boca Raton, Florida 33432

Morey Udine, Esquire 3111 University Drive

Suite 425

Coral Springs, Florida 32065-6930

Hon. Gerald Lewis

Department of Banking and Finance Comptroller, State of Florida

The Capitol

Tallahassee, Florida 32399-0350

Charles L. Stutts General Counsel

Department of Banking and Finance The Capitol

Tallahassee, Florida 32399-0350

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

HARVEY JACOBSON and BARBARA JACOBSON,

Petitioners,

Administrative Proceeding No. 719-F-8/86

DOAH Case No. 87-1237

vs.

DEPARTMENT OF BANKING AND FINANCE, DIVISION OF FINANCE,

Respondent,

and

MICHEL V. ST. LAURENT and IRENE ST. LAURENT,

Intervenors.

/

FINAL ORDER GRANTING OR DENYING PAYMENT FROM THE MORTGAGE BROKERAGE GUARANTY FUND RE OAKLAND MORTGAGE COMPANY AND NOTICE OF RIGHTS

The State of Florida Department of Banking and Finance, Division of Finance (hereinafter Department), being authorized and directed to administer the Mortgage Brokerage Guaranty Fund (hereinafter the Fund) codified in Sections 494.042, 494.043, 494.044 and 494.045, Florida Statutes, hereby enters this

Final Order approving or denying the applications for payment from the Fund arising from alleged violations of the provisions of Chapter 494, Florida Statutes, by Oakland Mortgage Company (hereinafter Oakland) and Barry Koltun, as principal mortgage broker of Oakland.

FINDINGS OF FACT

1. Under the provisions of the Mortgage Brokerage Act, Chapter 494, Florida Statutes, the Department is charged with the responsibility and duty of administering the Fund, which includes the duty to approve or deny applications of payment from the Fund, as set forth in Section 494.042(2), Florida Statutes.

   
   

2. On January 23, 1987, the Department issued its Notice of Intent to Grant or Deny Payment from the Mortgage Brokerage Guaranty Fund re Oakland Mortgage Company and Notice of Rights (hereinafter Notice of Intent) in Administrative Proceeding No. 719-F-8/86. A formal hearing pursuant to the provisions of Section 120.57(1), Florida Statutes, was timely requested and the Department granted the Petition and requested DOAH to assign a Hearing Officer for that purpose. Joyous D. Parrish was assigned as the Hearing Officer by DOAH in Case No. 87-1237 to preside over the proceedings. The respective parties waived their right to an oral presentation and duly filed pleadings and exhibits with the Hearing Officer. Said pleadings and exhibits include some of the following: Parties' Joint Prehearing Stipulation and Agreement, joint Prehearing Statement, joint Second Prehearing Statement, Petitioners' Brief and Proposed Recommended Order, Division's Answer to Petitioners' Brief and Proposed Recommended Order, Petitioners' Reply to Respondent's Answer Brief, Master Exhibit List, and Exhibits P-1 through P-37. On December 1, 1987, the Hearing Officer entered a Recommended Order to which were filed Petitioners' Exceptions to Recommended Order and Division's Exceptions to Recommended Order on December

   10 and 11, 1987, respectively.

   
   

3. The Department has reviewed the Hearing Officer's Findings of Fact found in paragraphs 1-10 of the Recommended Order and incorporates them by reference as the Findings of Fact of this Final Order.

   
   

4. The Department further incorporates by reference the Findings of Fact contained in paragraphs 1-16 in the Notice of Intent as modified by paragraph "e" of the joint Prehearing Statement and the joint Second Prehearing Statement, except to the extent that they may be in conflict with the factual findings of the Hearing Officer.

   
   

   CONCLUSIONS OF LAW

   
   

5. The Department has reviewed the Hearing Officer's Conclusions of Law found in paragraph 1-6 of the Recommended Order and incorporates them by reference as the Conclusions of Law of this Final Order with the minor exception that the third sentence of paragraph 6 is amended to substitute "every" for "each," and the last sentence of paragraph 6 is amended to read as follows:

   
   

   The total available for disbursement to the second class is $30,000.

   
   

6. For the reasons stated in paragraph 2-5 of the Recommended Order, paragraph 24 of the Notice of Intent, and Part II of the Division's Answer to Petitioners' Brief and Proposed Recommended Order, the Department rejects Exception 1 of Petitioners' Exceptions to Recommended Order. Although Section 494.044(1), Florida Statutes, is not a model of clarity, it is apparent that

   payment in the order of perfection was not intended. In addition, the discussion infra demonstrates that the Petitioners' fears, that the Hearing Officer's construction of Section 494.044(1), Florida Statutes, "fails to award due diligence," are unfounded.

   
   

7. For the reasons stated in Exception 2 of Petitioners Exceptions to Recommended Order and pages 2-5 of Division's Exceptions to Recommended Order, the Department respectfully declines to follow paragraph 7 of the Hearing Officer's Conclusions of Law. However, based upon the record before the Hearing Officer at the time she entered her Recommended Order, it is decided that it would be inappropriate to conclude that a prima facie case of waiver had been demonstrated with respect to the Sullivan Claim.

   
   

8. Based upon the foregoing, the Kusick, Szafran, Jacobson, and St. Laurent Claims have satisfied Section 494.043, Florida Statutes, and will each be paid $10,000 once the Department has been provided with the duly executed, recorded assignment which is required by Section 494.044(2), Florida Statutes, substantially in the form of Exhibit A attached hereto.

   
   

9. All other claims have failed to satisfy the requirements of Section 494.043, Florida Statutes, and have waived any right for payment, except that the Sullivan Claim has satisfied Section 494.043(1)(e), Florida Statutes, and will be paid up to $10,000 which remains for distribution from the Fund once the remaining requirements of Section 494.043, Florida Statutes, have been satisfied, provided that the Department is supplied with the duly executed, recorded assignment required by Section 494.044(2), Florida Statutes, substantially in the form of Exhibit A attached hereto.

FINAL ORDER

Based on the foregoing Findings of Fact and Conclusions of Law, the Department has determined and it is so

ORDERED:

1. The Department received the first proper notice of an action against Koltun/Oakland Mortgage Company on August 13, 1984. According, the two-year period mandated by Section 494.044(1), Florida Statutes, began to run on said date as against Koltun/Oakland Mortgage Company, and expired on August 12, 1986.

   
   

2. With regard to Oakland Mortgage Company and Barry Koltun, payment from the Mortgage Brokerage Guaranty Fund shall constitute prima facie grounds for the revocation of any license issued pursuant to the Mortgage Brokerage Act as provided for in Section 494.044(6), Florida Statutes, to said persons, and, as stated in Section 494.055(1)(d), Florida Statutes, shall be grounds for disciplinary action as provided in Section 494.052, Florida Statutes, or constitute the basis for denial of any license to be issued to said persons under the Mortgage Brokerage Act pursuant to Sections 494.037(2) and 494.039(2), Florida Statutes.

   
   

3. Payment shall be made to Beverly Kusick, individually and as surviving spouse and sole heir of Robert G. Kusick, Deceased, in the amount of $10,000, provided that said person files with the Department a duly executed, recorded assignment of judgment which should be substantially in the form of Exhibit A and provides the Department with sufficient documentation or other proof that Robert G. Kusick is in fact deceased and that Beverly Kusick is the surviving spouse and sole heir of Robert G. Kusick.

4. Payment shall be made to Frank Szafran and Anna Szafran in the amount of $10,000, provided that said persons file with the Department a duly executed, recorded assignment of judgment which should be substantially in the form of Exhibit A.

   
   

5. Payment shall be made to Harvey Jacobson and Barbara Jacobson in the amount of $10,000 provided that said persons file with the Department a duly executed, recorded assignment of judgment which should be substantially in the form of Exhibit A.

   
   

6. Payment shall be made to Michel V. St. Laurent and Irene St. Laurent in the amount of $10,000 provided that said persons file with the Department a duly executed, recorded assignment of judgment which should be substantially in the form of Exhibit A.

   
   

7. Payment shall be made to Francis Sullivan in the amount of $10,000 once said person satisfies the remaining statutory requirements of Section 494.043, Florida Statutes, provided that Francis Sullivan files with the Department a duly executed, recorded assignment of judgment which should be substantially in the form of Exhibit A.

   
   

8. All remaining claims are denied with prejudice.

DONE and ORDERED in Tallahassee, Florida this 20th day of January 1988.

GERALD LEWIS, as Comptroller of the State of Florida and Head of the Department of Banking and Finance

NOTICE OF RIGHT TO JUDICIAL REVIEW

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 (1) COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DEPARTMENT OF BANKING AND FINANCE 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 THIRTY (30) DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

Copies furnished to:

Joyous D. Parrish, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

Randall A. Holland, Director Division of Finance

The fuller Warren Bldg., 2nd Floor

202 Blount Street Tallahassee, Florida 32399

Walter W. Wood

Deputy General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399

Paul C. Stadler, Jr. Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399

Roy R. Lustig

Attorney for the Merchants Credit Bureau Claim

Feur, Lustig and Schillinger Dade Savings Building

1031 South Dixie Highway Miami, Florida 33156

Kenneth S. Silverstein 2920 N.W 115 Terrace

Coral Springs, Florida 33065

Keijo and Lolan Helotie 1575 N.E. 38th Street

Ft. Lauderdale, Florida 33334

Charles E. Butler, III

Attorney for the Gianmoena Claim

614 South Federal Highway, Suite 200 Ft. Lauderdale, Florida 33301

Hyman and Dorothy Berlin 6528 Coral Lake Drive Margate, Florida 33063

Nicholas J. Ziegler Attorney for the Rader Claim 809 S.E. 8th Street

Palm Beach Center

Deerfield Beach, Florida 33441

Mark D. Gilwit

Attorney for the Zinger Claim Shepherd and Gilwit

2925 Aventura Boulevard

Miami, Florida 33180

Jack F. Weins

Attorney for the Kusick Claim Abrams, Anton, Robbins, Resnick

Schneider & Mager, P.A. Boca Bank Building, Suite 200 855 S. Federal Highway

Boca Raton, Florida 33432

John B. Di Chiara

Attorney for the Sullivan Claim Di Giulian & Di Chiara, P.A.

P. O. Box 14576

Ft. Lauderdale, Florida 33302-4576

Morey Udine

Attorney for the Szafran Claim 3111 University Drive, Suite 425 Coral Springs, Florida 33065

Paul A. Zeigler

Attorney for the Jacobson Claim Suite 1010, Monroe Park Tower

101 N. Monroe Street Tallahassee, Florida 32301

Mary Ahern

P. O. Box 2325

Delray Beach, Florida 33444

Pearl A. Magnus

1691 Northwest 96th Ave. Pembroke Pines, Florida 33024

Joseph DeGance

Attorney for the St. Laurent Claim

1995 East Oakland Park Blvd., Suite 101 Ft. Lauderdale, Florida 33306

Docket for Case No: 87-001237

Orders for Case No: 87-001237