STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE AND ) TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 90-0476

)

WALLACE HERMAN KLEIN, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in St. Petersburg, Florida on April 25, 1990, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Willis F. Melvin, Esquire

Division of Legal Services

412 Larson Building Tallahassee, Florida 32399-0300

For the Respondent: James N. Casesa, Esquire

3845 Fifth Avenue North

St. Petersburg, Florida 33713 STATEMENT OF THE ISSUES

The issue for consideration in this case is whether Respondent's license as a general lines agent and limited surety agent and his eligibility for licensure should be disciplined because of the alleged misconduct outlined in the Administrative Complaint filed herein.

PRELIMINARY STATEMENT

On December 27, 1989, Tom Gallagher, Treasurer and Insurance Commissioner for the State of Florida, signed an Administrative Complaint in this case alleging that in April, 1989, the Respondent, Wallace H. Klein, improperly took unpledged property as collateral for placing bond and thereby violated several provisions of Section 648.45, Florida Statutes. By Answer dated January 16, 1990, Respondent, through counsel, denied the allegations of wrongdoing and requested a formal hearing. By letter dated January 19, 1990, the matter was forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer, and on February 6, 1990, after both counsel responded to the Division's Initial Order, the matter was set for hearing on April 25, 1990, at which time it was heard as scheduled.

At the hearing, Petitioner presented the testimony of Robert V. Elias, a Senior Attorney with the Department; Loretta Ann Krause, a bail bondsman in Arcadia, Florida; Barbara Fay Camp, owner of the travel trailer in issue herein; and Myra Joy Carr, her daughter. Petitioner also introduced Petitioner's Exhibits 1 - 3, 5, and 7a - 7f and 7h - 7j. Petitioner's Exhibit 4 was not offered and Petitioner's Exhibit 6 for Identification was admitted as Respondent's Exhibit C. Respondent testified in his own behalf and presented the testimony of his wife, Barbara. Respondent also introduced Respondent's Exhibits A though D. A transcript was provided and both parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the issues herein, Petitioner, Department of Insurance and Treasurer, (Department), was the state agency responsible for monitoring the activities of and licensing insurance agents in Florida. The Respondent, Wallace H. Klein, was licensed, is licensed, and is eligible for licensure as a general lines agent and limited surety agent, (bail bondsman), and operates in Bradenton and Sarasota, Florida.

   
   

2. On or about February 8, 1989, Respondent was contacted by Mrs. Barbara Camp to post bond for her husband who had been arrested for driving under the influence and was being held in the Sarasota County Jail. Respondent agreed to post the $2500.00 bond, and Mrs. Camp agreed to pay the $250.00 fee, sign an indemnity agreement and promissory note for $2500.00, and deliver title to her 1982 Plymouth automobile for which she had paid $800.00, as collateral. Mrs. Camp, along with her daughter, Myra, met with Respondent and his wife at the jail office where Mrs. Klein, who, though not a bail bondsman, prepared the documentation which was signed by Mrs. Camp, and gave her a receipt for the fee and the collateral which was identified on the form only as the title to the Plymouth.

   
   

3. Mr. and Mrs. Klein both allege that Mrs. Camp was also told that since the car was not sufficient collateral for the bond, she would also have to deliver title to the 1975 or 1976 travel trailer in which the Camps lived. Mrs. Camp claims no mention was made of the trailer at that time, but her recollection of the salient facts is noteworthy for its selectiveness and incompleteness.

   
   

4. According to Mrs. Klein, when Mrs. Camp indicated she did not have the trailer title with her, she was told to bring it in to Respondent's office later. On February 13, 1989, Mrs. Camp reportedly came to Respondent's office and reported she could not find the trailer title. Mrs. Klein then offered to prepare, and claims she did prepare, a Power of Attorney form for Mrs. Camp to sign for application to the Department of Highway Safety and Motor Vehicles for a duplicate title. On that same day, Mrs. Klein claims she prepared a collateral receipt for the Power of Attorney which she signed and gave to Mrs. Camp. Mrs. Camp claims she signed documentation for Respondent only one time - when she met him at the jail. She denies having signed a power of attorney; received a second collateral receipt for the power of attorney, or seeing Respondent any time other than at the jail and at the post Office. The receipt purportedly for the power of attorney to get title to the trailer, bears no model year or brand name, while the receipt given by the Respondent on February 8, 1989, admitted by Mrs. Camp, bears both the model year and brand of the

   vehicle for which the title was given as security. A Florida vehicle title for the trailer was issued to Mrs. Camp on February 14, 1989, one day after the purported application for the duplicate title applied for by Mrs. Klein.

   
   

5. No copy of the power of attorney was made for the file or given to Mrs. Camp at the time it was reputedly prepared and signed. This is explained by the Respondent as being due to the fact that only one copy was made. It was sent in, he claims, and he had no copy machine with which to make a copy. All other pertinent forms are packaged NCR forms with carbon capabilities built in. Mr. Klein also indicates that when the duplicate title was issued as a result of the power of attorney and application, it mistakenly bore that name of another company owned by Respondent, which occupied another office in the building. This certificate was allegedly returned and a correct duplicate title, reflecting Respondent as lienholder, issued. No such title was presented at hearing or to the Department's counsel in response to discovery.

   
   

6. Mr. Camp was scheduled to appear in Circuit Court on April 3, 1989 but failed to do so. By Order of the court that date, the bond posted by Respondent was estreated and the money deposited was forfeited. On April 13, 1989, by certified mail, receipted for on April 18, 1989, Respondent notified Mrs. Camp of his intent to convert the collateral, listed as the 1982 automobile and the 1975 trailer, into cash in 10 days. On April 20, 1989, while the Camps were out of town in the 1982 Plymouth, Respondent went to the location of the trailer and confiscated it. At the time Respondent took the trailer, he did not hold title to it either as lienholder or under a security agreement as he claims. His asserted belief that he held a collateral interest in it is without legitimate basis.

   
   

7. Respondent claims he merely hid the trailer some distance away on the same property, an orange grove. Mrs. Camp claims she saw the trailer in the yard of the auto repair company where she was notified it was located. It is found unlikely that Respondent would confiscate the property for the purpose of converting it to cash to satisfy his lien interest and yet leave it, unattended, relatively near its former location.

   
   

8. Considering the evidence presented and the relative probabilities and improbabilities thereof, and drawing all permissible inferences therefrom, it is found that the title to the trailer was not a part of the original security posted by Mrs. Camp. Only when Mr. Camp failed to report to court and the bond was estreated did Respondent, facing a financial loss not adequately secured, take the trailer and thereafter prepare the documentation to make it appear it was originally intended as security.

   
   

9. When the Camps returned from their trip to Tennessee, they found their trailer gone and were forced to live in their car for some time because they were unable to find another place to live. Their daughter could not go to school, she claims, because all her clothes were in the trailer. This discomfiture is a direct result of Respondent's taking the trailer.

   
   

10. On May 3, 1989, having heard that Mr. Camp would be at the Post Office to pick up a check on that date, Respondent arrested him there and delivered him to the court officials. The estreated bond was thereafter reinstated and the funds previously forfeited restored to Respondent. As a result, he attempted to contact Mrs. Camp to make arrangements to return the trailer. All his efforts to contact her went unanswered. In the interim, Mrs. Camp's landlady for the trailer lot had indicated she wanted to hold the trailer as security for unpaid rent. Since Mrs. Camp had failed to respond to his inquiries, Respondent

    replaced the trailer on the same site from which he had taken it. As of the date of the hearing, he has yet to return to Mrs. Camp the trailer title he claims to have received as a result of the power of attorney and application for duplicate. It is found that such a title does not exist.

    
    

11. Respondent denies he damaged the trailer as a result of moving it. He claims there was no damage to the sewage line, (a large hose going from the trailer to a barrel buried in the ground); the water system, (a series of garden hoses); or the electrical system, (an extension cord running from the landlady's house). He also denies responsibility for the interior damage claimed, such

    as door hinges and the like, shown in the photographs submitted by Mrs. Camp. Notwithstanding Mrs. Camp's claim that $500.00 worth of groceries, left in the house while they were away, were stolen, Respondent denies any groceries were there other than a small amount in the refrigerator, ($5.00 value), which he discarded. It is found that if any damage was done to the trailer by the move, it would be Respondent's responsibility. However, Mrs. Camp's assertions of damage and theft have not been supported by independent evidence and the estimates of value are considered unreliable.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

13. Petitioner, in its Administrative Complaint, seeks to discipline Respondent's insurance licenses and his eligibility for licensure for several alleged violations of the Insurance Code. Specifically, it claims that by taking the trailer without having a legitimate security interest in it; by causing damage to it thereby; and by causing a loss and inconvenience to the Camps; he violated Sections 648.45(2)(d), (e), (f), (g), (j), and (l), and

    (3) (b) and (d), Florida Statutes. The provisions of Subsection (2) require the Department to discipline by denial, suspension, revocation, or refusal to renew, a license for the:

    
    

    (d). Willful use, or intended use, of the license or permit to circumvent any of the requirements or prohibitions of this chapter or the insurance code.

    Demonstrated lack of fitness or trustworthiness to engage in the bail bond business.

    Demonstrated lack of reasonably adequate knowledge and technical competence to engage in the transactions authorized by the license or permit.

    (g). Fraudulent or dishonest practices in the conduct of business under the license or permit.

    (j). Willful failure to comply with or willful violation of any proper order or rule of the department or willful violation of any provision of this chapter or the insurance code.

    (l). Demonstrated lack of good faith in carrying out contractual obligations and agreements.

14. Subparagraph (3) of this section permits the Department to discipline, as above, a licensee for:

    
    

    (b). Violation of any law relating to the business of bail bond insurance or violation of any provision of the insurance code.

    (d). Showing himself to be a source of injury or loss to the public or detrimental to the public interest or being found by the department to be no longer carrying on the bail bond business in good faith.

    
    

15. The burden of proof in this case is upon the Petitioner, Department, which must, in order to support discipline, establish Respondent's guilt of the misconduct alleged by clear and convincing evidence, Ferris v. Turlinqton, 510 So.2d 292 (Fla. 1987).

    
    

16. The proposed discipline herein is primarily based upon Respondent's seizure of Mrs. Camp's travel trailer as collateral without having a legitimate security interest in it. Though Respondent claimed to have secured a lienholder's interest in a duplicate title to the trailer, procured through a power of attorney to apply for such a title, the evidence did not support this claim.

    
    

17. Instead, the evidence clearly and convincingly demonstrated that when Respondent found that the security he originally accepted was taken out of state, and that Mr. Camp had "jumped' bail, he thereafter took the trailer and falsified the documentary trail to make it look as though he had a legitimate security interest. He could, however, produce no title nor a copy of the power of attorney to rebut Mrs. Camp's denial that she ever participated in giving him the trailer as security. This misconduct clearly establishes that Respondent used his license improperly, ((2)(d)); demonstrates his lack of trustworthiness, ((2) (e)); shows the use of dishonest practices in the conduct of his business, ((2)(g)); constitutes a willful violation of the insurance code, ((2)(j)) and ((3)(b)); and demonstrates a lack of good faith in carrying out contractual arrangements, ((2) (l)). It does not, however, demonstrate a lack of reasonably adequate knowledge or technical competence.

    
    

18. The Respondent's misconduct resulted in a decided loss and inconvenience to the Camps when the were required to live in their car after their return from Tennessee. This constitutes a violation Subsection (3) (b). There was insufficient evidence to establish that the trailer was damaged as a result of Respondent's actions or that the Camp's property was lost thereby. In addition, the fact that Respondent allowed his wife to sign documents, take information, and complete bail bond documents without being licensed as a bondsman or runner, though perhaps a violation of the statute, was not alleged as such in the Administrative Complaint, nor was and amendment to include it as such ever filed or approved. Disciplinary action cannot, therefore, be based on it even if established.

    
    

19. Since Petitioner has established Respondent's guilt of activity proscribed under Section 468.45(2), one of the actions provided therefor must be taken. Petitioner suggests that Respondent's licenses and eligibility for licenses be revoked. However, in light of the fact that this appears to be the

first incident of misconduct involving Respondent, neither revocation of his license nor extended suspension appears appropriate, though the action taken should relate to both licenses held and his eligibility for licensure. An administrative fine not to exceed $1,000.00 is authorized pursuant to Section 468.52.

RECOMMENDATION

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

RECOMMENDED Respondent, Wallace H. Klein's licenses and eligibility for licensure as a general lines agent and limited security agent be suspended for

90 days and that he pay an administrative fine of $1,000.00.

RECOMMENDED this 6 day of June, 1990, in Tallahassee, Florida.

ARNOLD H. POLLOCK, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6 day of June, 1990.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 90-0476

The following constituted my specific rulings pursuant to S 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this matter.

FOR THE PETITIONER:

1. & 2. Accepted and incorporated herein.

3. - 8. Accepted and incorporated herein.

1. & 10. Accepted and incorporated herein.

   1. Rejected as not proven.

   2. Accepted and incorporated herein.

   3. Accepted but irrelevant to the issues.

   4. Accepted and incorporated herein.

   5. Rejected as not proven.

FOR THE RESPONDENT:

1. & 2. Accepted and incorporated herein.

3. - 8. Accepted and incorporated herein.

9. & 10. Rejected as contra to the weight of the evidence.

11. - 14. Accepted and incorporated herein.

COPIES FURNISHED:

Willis F. Melvin, Esquire

412 Larson Building Tallahassee, Florida 32399-0300

James N. Casesa, Esquire 3845 Fifth Avenue North

St. Petersburg, Florida 33713

Tom Gallagher

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Don Dowdell General Counsel

Department of Insurance The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

Docket for Case No: 90-000476

Orders for Case No: 90-000476