STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OR BUSINESS ) REGULATION, DIVISION OF ALCOHOLIC ) BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) CASE NO. 90-2665

)

NORMAN THEODORE BERRY, )

d/b/a STORMY NORMAN'S, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Daniel M. Kilbride, on July 20, 1990, in Orlando, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Thomas A. Klein, Esquire

Assistant General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, Florida

For Respondent: Mark E. NeJame, Esquire

NeJame & Hyman, P.A. 1520 East Amelia Street Orlando, Florida

STATEMENT OF THE ISSUES

Whether Respondent has fostered, condoned, and/or negligently overlooked trafficking in and use of illegal narcotics and controlled substances on or about the licensed premises.

Whether Respondent has failed to exercise due diligence in supervising his employees and managing his licensed premises so as to prevent the illegal trafficking and use of narcotics on the licensed premises.

Whether Respondent may transfer his alcoholic beverage license to a qualified licensee or if it should be permanently revoked.

PRELIMINARY STATEMENT

On April 27, 1990, the Respondent was served with an Emergency Order of Suspension and Notice to Show Cause filed by the Petitioner. Respondent requested an immediate post- suspension hearing, which was scheduled. Prior to the commencement of that hearing, the parties jointly requested that it be cancelled and a formal hearing be scheduled, which was done. This matter was transferred to the below signed Hearing Officer on July 19, 1990. At the hearing, Respondent's counsel, John D. Harris, filed a Notice of Withdrawal, to which Respondent consented. Attorney Mark E. NeJame filed his Notice of Appearance, and Respondent requested that he be permitted to represent him. New counsel initially requested a continuance of the formal hearing in order for him to conduct further discovery. At the hearing, this motion was withdrawn, and the parties entered stipulated facts on the record. Both parties presented oral argument and waived the filing of proposed findings of fact and conclusions of law. The transcript of the proceeding was filed on July 27, 1990.

Based upon all of the evidence and the stipulation of the parties, the following findings of fact are determined:

FINDINGS OF FACT

1. Respondent is the holder of alcoholic beverage license number 69-0876, series 2-COP, for a licensed premises known as Stormy Norman's, which is located at 3006 South U.S. 17- 92, Casselberry, Seminole County, Florida.

   
   

2. On March 13, 1990, five patrons were observed passing and smoking a marijuana cigarette, just outside the rear door on the "patio".

   
   

3. The "patio" is a fenced-in, partially covered area, which contains picnic tables and is located immediately behind the licensed premises. The patio is primarily accessible through the rear door of the licensed premises, which is usually left open during business hours. However, access could be made to the patio through the back of the premises onto the patio without knowledge of the Respondent as to who was there or what activity was going on.

   
   

4. On March 13, 1990, a patron known as "Billy" sold marijuana to two different patrons on the patio. Subsequently, other patrons were observed dividing up marijuana into plastic bags, rolling "joints" and smoking marijuana on the patio. During this time, the rear door of the licensed premises was open and the smoke from the marijuana cigarettes was easily detectable inside the premises. Also, inside the licenses premises, several patrons openly discussed the purchase and consumption of controlled substances in the presence of employees.

   
   

5. On March 14, 1990, a patron known as "Kelly" sold a plastic bag containing marijuana for the sum of $35.00. The sale was discussed in the presence of the bartender known as "Gordie". After this transaction, Kelly offered to sell large quantities of cocaine to Petitioner's investigators.

   
   

6. On March 15, 1990, while Respondent was on the premises, several patrons rolled "joints", manufactured a "pipe" and smoked marijuana on the patio. These patrons would freely enter and depart the licensed premises from the patio and did nothing to conceal their activities. Inside the licensed premises, the patrons openly discussed the use of controlled substances and

   extended invitations to other patrons to consume the same on the patio. In addition, Kelly openly sold a baggy of marijuana to a patron, in plain view and in the presence of several other patrons and bartender Gordie.

   
   

7. On March 20, 1990, several patrons were rolling and smoking marijuana cigarettes on the patio. A patron known as "Rabbit" sold and delivered marijuana to another patron known as "Stan". During this time, Respondent was on the licensed premises and was in a position to detect the use of controlled substances.

   
   

8. On March 21, 1990, a patron Billy gave Petitioner's investigator a muscle relaxant in exchange for a beer, while in the presence of bartender Gordie at the licensed premises. During this time, Respondent was playing darts near the rear door of the licensed premises and was observed looking out the rear door and watching patrons smoke marijuana. While doing so, several patrons were heard to yell "He's out back doing drugs," in response to bartender Gordie's inquiry about another patron.

   
   

9. On March 22, 1990, Petitioner's investigators made two controlled buys of marijuana while on the patio. One of the sellers was Respondent's day manager, known as "Little Dave".

   
   

10. On the same date, while Respondent was on the licensed premises, several patrons were observed smoking marijuana on the patio, and other patrons were observed in possession of plastic bags containing marijuana inside the licensed premises.

    
    

11. On March 28, 1990, Petitioner's investigator made a controlled buy of marijuana from Respondent's day manager, Little Dave. Just prior to this sale, the bartender known as "Cookie" was asked to make change for a marijuana purchase. In response thereto, Cookie smiled and freely made change for a twenty dollar bill. On this occasion, patrons openly smoked marijuana on the patio, the odor of which was easily detectable inside the licensed premises.

    
    

12. On April 4, 1990, patrons were smoking marijuana on the patio, and the bartender Cookie had open conversations regarding the use of cocaine.

    
    

13. On April 10, 1990, patron Stan sold marijuana on the patio to two patrons.

    
    

14. On April 12, 1990, a patron known as "Fred" approached the bar to purchase a beer. While at the bar, Fred openly displayed two small white pills and a small quantity of marijuana on the bar counter in the presence of bartender Gordie. Subsequently, Fred went to the patio, where he was observed selling white pills to patrons, which were later determined to be "white- crosses".

    
    

15. On April 18, 1990, several patrons were observed rolling and smoking marijuana cigarettes.

    
    

16. On April 19, 1990, Respondent's day manager, Little Dave, sold a small plastic bag containing marijuana to Petitioner's investigator for $35 while on the patio. Throughout this transaction, there was a young boy, approximately 8 years of age, playing on the patio. Also, bartender Cookie went to the patio on three occasions while on duty to smoke a marijuana cigarette. On one occasion

    she was observed blowing marijuana smoke at bartender Gordie's face. During this general time period, Respondent was on the patio while several patrons were smoking marijuana.

    
    

17. On April 24, 1990, Petitioner's investigator made a purchase of a small bag of marijuana in plain view of the bar while on the licensed premises.

    
    

18. On April 25, 1990, several patrons were observed smoking marijuana on the patio of the licensed premises.

    
    

19. At no time throughout the entire investigation did the licensee or any of his employees do or say anything to prevent employees from using or selling controlled substances on the licensed premises.

    
    

20. The Respondent did not participate in the sale of any controlled substances or drugs, nor did he witness the sale of drugs at any time during the course of the investigation.

    
    

21. Respondent was aware of customers smoking marijuana on the patio on several occasions and did not evict them from the premises.

    
    

22. Respondent did ask Little Dave to leave the property on divers occasions when it was discovered that he was selling marijuana, but he was allowed to return to the premises.

    
    

23. Respondent was taken advantage of by his friends and customers and was not aware that drug use was so prevalent, although he did know that at times some marijuana smoking was going on.

    
    

24. Respondent seeks to transfer his beverage license, as provided by Section 561.3 2, Florida Statutes, to Elizabeth Ann Allen of Casselberry, Florida, who would qualify for a temporary license upon application for transfer as provided in Section 561.331, Florida Statutes.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

26. Any store, shop or building which is visited by persons for the purpose of unlawfully using any substance controlled under Chapter 893, or which is used for the illegal keeping, selling or delivery of the same is deemed to be a public nuisance. Section 823.10, Florida Statutes (1989).

    
    

27. It is unlawful to keep or maintain any store, shop, warehouse, dwelling or building which is resorted to by persons using controlled substances in violation of Chapter 893. Section 893.13(2)(a)5, Florida Statutes (1989)

    
    

28. Section 561.29, Florida Statutes (1989) provides in pertinent part:

    
    

    1. The division is given full power and authority to revoke or suspend the license of any person holding a license under the Beverage Law, when it is determined or found by the division upon sufficient cause appearing of:

       1. Violation by the licensee or his or its agents. or employees, on the licensed premises, or elsewhere while in the scope of employment, of any of the law of this state or of the United States,.. .or permitting another on the licensed premises to violate any of the laws of this state or of the United States; except that whether or not the licensee or his or its agents. or employees have been convicted in any criminal court any violation as set forth in this paragraph shall not be considered in proceedings before the division for suspension or revocation of a licenses except as permitted by chapter 92 or the rules of evidence.

          (c) Maintaining a nuisance on the licensed premises.

          (3) The division may impose a civil penalty against a licensee for any violation mentioned in the Beverage Law, or any rule issued pursuant thereto, not to exceed $1,000 for violations arising out of a single transaction. If the licensee fails to pay the civil penalty, his license shall be suspended for such period of time as the division may specify. The funds so collected as civil penalties shall be deposited in the state General Revenue Fund.

          (5) The division may suspend the imposition of any penalty conditioned upon terms the division should in its discretion deem appropriate.

          
          

29. The licensee may be guilty of violating the Beverage Law and of operating a nuisance if he is guilty of intentional wrongdoing or if he fails to exercise due diligence in supervising and maintaining surveillance over the licenses premises. Golden Dolphin No. 2 v. State, Division of Alcoholic Beverages and Tobacco, 403 So.2d 1372 (Fla. 5th DCA 1981); G.& B. of Jacksonville, Inc. v. State, Department of Business Regulation, Division of Beverages, 371 So.2d 137 (Fla. 1st DCA 1979); Jones v. State, Department of Business Regulation, 448 So.2d 1109, 1111 (Fla. 1st DCA 1984). In this matter, the evidence is clear that Respondent had knowledge of the illegal activity on the patio and inside the premises and did nothing to prevent their occurrence. In addition, although Respondent did not personally sell illegal drugs and did not profit from their sale, he was aware that his employees were doing so and did virtually nothing to prevent it. In fact, by looking the other way, Respondent condoned the sale and use of illegal drugs on the licensed premises and therefore was directly responsible for the conditions which made it possible to occur on a continuing basis. Therefore, Respondent is guilty of fostering, condoning, and/or negligently overlooking trafficking in and use of illegal narcotics and controlled substances on or about the premises. Further, Respondent is guilty of failing to exercise due diligence in supervising his employees and managing his licensed premised so as to prevent the illegal trafficking and use of narcotics on the licensed premises.

30. Counsel for Respondent, in his argument, recognizes that revocation may be an appropriate penalty. However, since the Respondent has had no prior violations and was unaware of the extent of the drug activity on the licensed premises, he should be permitted to transfer his license to his designee. Petitioner suggests revocation as the appropriate penalty, as permitted in Section 561.29(1), Florida Statutes. The Division has long considered drug related crimes, perpetrated on a licensed premises to be especially serious.

    
    

31. In view of the flagrant, open, notorious and continuing nature of the illegal drug use and sales on the premises, Respondent's supposed naivete cannot be excused or condoned, and therefore, it would be inappropriate to recommend that Respondent be permitted to transfer his beverage license. Considering all the evidence, and taking into consideration the evidence in mitigation, the ultimate penalty for a first offence is appropriate in this instance.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent's Alcoholic Beverage License Number 69-

0876, Series 2-COP be REVOKED.

DONE AND ENTERED this 4th day of September, 1990, in Tallahassee, Leon County, Florida.

DANIEL N. KILBRIDE

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 4 day of September, 1990.

COPIES FURNISHED:

Thomas A. Klein

Assistant General Counsel Department of Business Regulation The Johns Building

725 S. Bronough Street Tallahassee, FL 32399-1000

Mark E. NeJame, Esquire 1520 E. Amelia Street Orlando, FL 32803

Leonard Ivey Director, DABT

Department of Business Regulation The Johns Building

725 S. Bronough Street Tallahassee, FL 32399-1000

Joseph A. Sole Secretary

Department of Business Regulation The Johns Building

725 S. Bronough Street Tallahassee, FL 32399-1000

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OFFICE OF COMPTROLLER, ) DEPARTMENT OF BANKING AND FINANCE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-2040

)

JAMES W. McKIBBON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on June 19, 1990, at Tampa, Florida.

APPEARANCES

For Petitioner: Stephen M. Christian, Esquire

1313 Tampa Street, Suite 615

Tampa, FL 33602

For Respondent: James W. McKibbon, pro se

5770 Dartmouth Avenue St. Petersburg, FL 33710

STATEMENT OF THE ISSUES

Whether Respondent held himself out as a mortgage broker and acted as a mortgage broker without having a license to so act.

PRELIMINARY STATEMENT

By Administrative Complaint dated January 5, 1990, the Office of the Comptroller, Department of Banking and Finance, seeks to levy a fine and/or enter a cease and desist order against James W. McKibbon, Respondent. As grounds therefor, it is alleged that Respondent held himself out as a mortgage broker and acted as a mortgage broker without being licensed to do so. The

Administrative Complaint charged two other individuals, James Hazen and Gwen Morehead, both licensed mortgage brokers, with working for and arranging loans through an unlicensed corporate mortgage broker. Neither Hazen nor Morehead requested formal proceedings, and the charges against them were resolved at an informal proceeding.

At the hearing, Petitioner called one witness, Respondent testified in his own behalf and four exhibits were identified. Through oversight Exhibit 4 was not offered into evidence, but all parties assumed it had been. All exhibits are now admitted into evidence. Proposed findings submitted by Respondent are accepted, except as noted in the Appendix attached hereto and made a part hereof.

FINDINGS OF FACT

1. At all times relevant hereto, James W. McKibbon was not licensed as a mortgage broker in Florida (Exhibit 1).

   
   

2. MorBanc Financial Corporation was initially registered as a mortgage broker in Florida on February 27, 1989 and remained registered through June 15, 1990 (Exhibit 1).

   
   

3. In August 1988, Respondent was employed by Sovereign Savings Bank to procure qualified home purchases needing mortgage money to be lent by Sovereign.

   
   

4. MorBanc Financial Corporation was incorporated circa 1988 to become a mortgage brokerage firm. It opened a bank account and an office from funds contributed by its organizers.

   
   

5. Respondent was offered shares in MorBanc and was elected president of the company. No evidence was submitted that Respondent was an investor in MorBanc.

   
   

6. Thomas Pollak moved to Florida in 1988 and contracted to purchase a residence. The real estate agent with whom he was working recommended he seek a loan through MorBanc which was located in the same building with the real estate agent. Pollak assumed that MorBanc was a licensed mortgage broker in Florida. McKibbon's business card shows him as President of MorBanc Financial Corporation and lists FHA-VA- Conventional -- presumably loans that can be brokered by MorBanc.

   
   

7. Respondent never told Pollak that he or MorBanc were mortgage brokers, and no applications for a mortgage loan completed by Pollak contained the name MorBanc. Instead, all of the application forms used were those used by Sovereign Savings Bank, and the loan application was submitted to Sovereign Savings Bank. The bank paid Respondent for procuring loans.

   
   

8. MorBanc, prior to becoming registered as a mortgage broker, processed no loans from clients procured by Respondent McKibbon and paid McKibbon no commission or other compensation.

   CONCLUSIONS OF LAW

   
   

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

   
   

10. Section 492.02, Florida Statutes, provides in pertinent part:

    
    

    1. "Mortgage broker" means any person not exempt under s. 494.03 who for compen- sation or gain, either directly or indirectly makes, negotiates, acquires, sells or arranges for, or offers to make, negotiate, acquire, sell, arrange for, a mortgage loan or mortgage loan commitment. This subsection shall not apply to transactions involving the sale or purchase of notes or bonds secured by mortgages which are subject to registration by the department.

    2. "Mortgage brokerage business" means any person which employs a mortgage broker or mortgage brokers, or which, either

    directly or indirectly, makes, negotiates, acquires, sells, or arranges for, or offers to make, negotiate, acquire, sell, or arrange for, a mortgage loan or mortgage loan commitment for compensation or gain, or in the expectation of compensation or gain.

    
    

11. Section 494.093(1)(1), Florida Statutes, provides the Department may take disciplinary action against one acting as a mortgage broker without a mortgage broker license issued by the Department. Such disciplinary action may include the imposition of a fine and/or denial of a license or registration.

    
    

12. Since these proceedings are similar to a license disciplinary proceeding, the Department has to prove the allegations by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

13. Although Respondent appeared to hold himself out as a mortgage broker and MorBanc as a mortgage brokerage business, no clear and convincing evidence was submitted that Respondent acted as a mortgage broker in processing the loan application of Pollak. At the time this loan was processed, Respondent was working for Sovereign Savings Bank processing loans for the bank. He was paid for this by the bank. He received no compensation from MorBanc. No evidence was presented that Respondent brokered or attempted to broker any loan.

    
    

14. Accordingly, Petitioner has failed to prove, by clear and convincing evidence, that Respondent, for compensation or gain, made, negotiated, acquired, sold or arranged for mortgage loans, except for Sovereign Savings Bank by whom he as employed for this purpose.

RECOMMENDATION

It is recommended that the charges against James W. McKibbon that he acted as a mortgage broker without being licensed to do so in Florida be dismissed.

ENTERED this 20th day of July, 1990, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Desoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 1990.

APPENDIX

Petitioner's Proposed Findings Not Accepted.

2. Respondent helped set up the furniture in the office that was provided by one of the financial founders of MorBanc. Not accurate to call Respondent "instrumental" in this task.

1. Teresa Tyler was the real estate agent procuring the contract with Pollak. No evidence was submitted that she was Respondent's real estate salesperson.

   
   

2. While Pollak testified that Respondent mentioned he (Respondent) could work with more than one lender, the only lender mentioned by Respondent was Sovereign, and the loan was processed through Sovereign.

COPIES FURNISHED:

Stephen M. Christian, Esquire William G. Reeves Office of Comptroller General Counsel

1313 Tampa Street, Suite 615 Department of Banking Tampa, FL 33602-3394 and Finance

The Capitol

James W. McKibbon Plaza Level, Room 1302

5770 Dartmouth Avenue Tallahassee, FL 32399-0350 St. Petersburg, FL 33710

Honorable Gerald Lewis Comptroller

State of Florida The Capitol

Tallahassee, FL 32399-0350

Docket for Case No: 90-002665

Orders for Case No: 90-002665