STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE )

AND TREASURER, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5648

)

DAVID ALEXANDER MOLLISON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held in Orlando, Florida, on January 31, 1991, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Attorney David D. Hershel

Division of Legal Services

412 Larson Building Tallahassee, Florida 32399

For Respondent: Attorney Alan B. Robinson

56 East Pine Street Orlando, Florida 32801

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent is guilty of a violation of bail bondsmen disciplinary statutes.

PRELIMINARY STATEMENT

In an Administrative Complaint filed on August 6, 1990, Petitioner alleges that Respondent, after entering into an agreement to post a bond for a client and posting the bond, demanded additional security and, upon refusal, arrested and recommitted the client to custody upon Respondent's falseaccusation that the client had unlawfully left the state.

The Administrative Complaint charges that Respondent thereby wilfully used or intended to use his license or permit to violate provisions of Chapter 648, in violation of Section 648.45(2)(d), Florida Statutes; demonstrated lack of fitness or trustworthiness to engage in the bail bond business, in violation of Section 648.45(2)(e), Florida Statutes; demonstrated lack of reasonably adequate knowledge and technical competence to engage in transactions authorized by his license or permit, in violation of Section 648.25(2)(f), Florida Statutes; committed fraudulent or dishonest practices in the conduct of business under his license or permit, in violation of Section 658.45(2)(g),

Florida Statutes; wilfully failed to comply with or wilfully violated any proper order or rule of Petitioner or wilfully violated any provision of Chapter 648 or the insurance code, in violation of Section 648.45(2)(j), Florida Statutes; demonstrated lack of good faith in carrying out contractual obligations and agreements, in violation of Section 648.45(2)(l), Florida Statutes; violated any law relating to the business of bail bond insurance or violated any provision of the insurance code, in violation of Section 648.45(3)(b), Florida Statutes; and showed himself to be a source of injury or loss to the public or detrimental to the public interest or found by Petitioner to be no longer carrying on the bail bond business in good faith, in violation of Section 648.45(3)(d), Florida Statutes.

On August 24, 1990, Respondent served an answerrequesting a formal administrative hearing.

At the commencement of the hearing, Petitioner requested leave to amend the Administrative Complaint in the following respects: Paragraph 5 to allege six promissory notes rather than one note; Paragraph 6 to allege collateral receipt number 127604 rather than receipt number 12704; and a new allegation that the alleged behavior constituted the unlawful withholding of funds, in violation of Section 648.45(2)(h), Florida Statutes. In the absence of objection, the request was granted.

At the hearing, Petitioner called three witnesses and offered into evidence ten exhibits. Respondent called five witnesses and offered into evidence three exhibits. All exhibits were admitted into evidence. A transcript was filed on February 14, 1991. Petitioner filed a proposed recommended order, whose findings are adopted except for the word "full" in Paragraph 7, the second sentence of Paragraph 10, and Paragraph 18 (against the weight of the evidence) and Paragraph 17 (irrelevant).

FINDINGS OF FACT

1. At all material times, Respondent has been licensed in the State of Florida as a bail bondsman. He operates Freedom Bail Bonds in Orlando, Florida.

   
   

2. On May 28, 1988, law enforcement officers of the Orange County Sheriff's Office arrested John P. Moody and placed him in the Orange County jail. Mr. Moody had never previously been arrested. After he was arrested, Mr. Moody contactedRespondent about obtaining a bail bond in order to get out of jail.

   
   

3. Respondent agreed to come to the jail and interview Mr. Moody to determine if Freedom Bail Bonds could provide him a bond. When Respondent arrived at the jail on the evening of May 28, he was informed by an officer of the three charges that were pending against Mr. Moody. The bond was $1000 per charge, and the premium was 10% of the bond.

   
   

4. Respondent met with Mr. Moody and asked him whether he had any assets to secure the bond. Mr. Moody explained that he had no assets such as a car, cash, or cash equivalent. However, he said that he owned jointly with his mother some land in Orange County.

5. At the conclusion of the interview, Respondent had decided to write the bond. Respondent then learned from the booking officer that another charge had been added. Following a brief conversation between Respondent and Mr. Moody concerning the new charge, Respondent learned from the booking officer that a fifth charge had been added. After another conversation with Mr. Moody, Respondent learned in this manner that a sixth, and final, charge had been added.

   
   

6. In all, Mr. Moody was charged with one count of failing to return a hired automobile and five counts of fraudulent bank deposits. Each charge carried a $1000 bond, so Mr. Moody now required a total bond of $6000, which in turn required a total premium of $600.

   
   

7. Due to the increased amount of the bond, Respondent informed Mr. Moody that he would have to secure the bond with a mortgage on the property jointly held with his mother. Mr. Moody agreed, but asked Respondent not to contact Mr. Moody's mother immediately. It was the middle of the night, and Mr. Moody's mother is an invalid. Respondent agreed to allow Mr. Moody to contact his mother later and obtain her signature on a mortgage.

   
   

8. Because Mr. Moody lacked the funds, a friend, Marion Reed Johnson, agreed to pay the premium. Knowing that Mr. Moody would not be able to obtain that evening his mother's signature to a mortgage, Respondent insisted on some interim security and agreed to accept six $1000 promissory notes from Mr. Johnson. These notes were payable on demand, but, according to their terms, became void if Mr. Moody appeared in court when ordered to do so and discharged all of the obligations of the bail bond.

   
   

9. Respondent gave Mr. Johnson receipts for the $600 premium and six $1000 notes as soon as Respondent received these items. At the same time, also on the evening of May 28, Respondent completed a bail bond application and indemnity form, on which Mr. Moody provided certain background information. Mr. Moody and Mr. Johnson also signed indemnifications in favor of the surety.

   
   

10. The application form states that the surety:

    
    

    shall have control and jurisdiction over the principal during the term for which the bond is executed and shall have the right to apprehend, arrest and surrender the principal to the proper officials at any time as provided by law.

    
    

11. The application form also provides:

    
    

    1. In the event surrender of principal is made prior to the time set for principal's appearances, and for reason other than as enumerated below is paragraph 3, then principal shall be entitled to a refund of the bond premium.

    2. It is understood and agreed that the happening of any one of the following events shall constitute a breach of principal's obligations to the Surety hereunder, and the Surety shall have the right to forthwith apprehend, arrest and surrender principal,

       and principal shall have no right to any refund of premium whatsoever. Said events which shall constitute a breach of principal's obligations hereunder are:

       1. If principal shall depart the jurisdiction of the court without the written consent of the court and the Surety or its Agent.

          * * *

          1. If principal shall commit any act which shall constitute reasonable evidence

             of principal's intention to cause a forfeiture of said bond.

             * * *

             
             

12. The application and indemnities were signed. Mr. Johnson paid the

    $600 premium and executed and delivered the six $1000 demand notes. Respondent then caused Freedom Bail Bond to issue the bond. Mr. Moody was released from the jail during the evening of his arrest (actually during the predawn hours of May 29).

    
    

13. May 28 was a Saturday. The following Monday, Respondent gave one of his employees a copy of the warranty deed from Mr. Moody's mother to herself and Mr. Moody. Mr. Moody hadgiven a copy of the deed to Respondent during their initial interview in order to allow Respondent to prepare the mortgage that Mr. Moody had agreed to provide.

    
    

14. Respondent instructed the employee to use the legal description from the warranty deed to prepare a mortgage and send it to Mr. Moody for execution by his mother and him. The employee did as instructed and promptly mailed the mortgage to Mr. Moody with instructions for execution, witnessing, and notarization.

    
    

15. After about a week, Respondent asked the employee if she had received the executed mortgage. She replied that she had not and proceeded to telephone Mr. Moody. When she asked him about the mortgage, Mr. Moody did not express any unwillingness to sign it, but said that he had not received it. Confirming the mailing address, the employee agreed to send him another mortgage and did so on June 6, 1988.

    
    

16. Several times after mailing the second mortgage, the employee contacted Mr. Moody and discussed the need to get the document fully executed and delivered to Freedom Bail Bonds. On one occasion, Mr. Moody agreed to return the executed mortgage on June 22. But on the last of these conversations, Mr. Moody informed the employee, for the first time, that he had no intention of providing the mortgage. The employee told Respondent what Mr. Moody had said and returned the file to Respondent for further action.

    
    

17. At about the same time that Respondent's officehad sent the mortgage to Mr. Moody the second time, Mr. Moody's sister telephoned Respondent. Estranged from her brother, she was concerned that Mr. Moody, whom she believed had misused funds of their invalid mother in the past, might try to obtain their mother's signature on a mortgage to secure a bond in order to get out of jail.

18. Mr. Moody's sister informed Respondent that her brother was not authorized to obtain their mother's signature on the mortgage. She said that her brother was not to be trusted, had improperly removed money from their mother's trust in the past, and had defaulted on at least one debt so as to require the creditor to lien the jointly held property in order to be repaid.

    
    

19. At about the same time, a different employee of Respondent received an anonymous telephone tip that Mr. Moody was about to depart, or had already departed, on a trip to Alabama with another man. The informant described what turned out to be a vehicle owned by Mr. Johnson, with whom Mr. Moody had been living since his release from jail on May 29.

    
    

20. Several attempts by Respondent's employees to reach Mr. Moody over the next two to four days were unsuccessful. In fact, Mr. Moody had gone to Alabama, which is outside the jurisdiction of the Orange County Circuit Court.

    
    

21. On July 18, 1988, one of Respondent's employees contacted the Clerk of Court's office and learned that Mr. Moody had not qualified for the services of a Public Defender. In addition, the employee had been notified on or about July 6, byreceipt of a notice of hearing on a Determination of Counsel, that Mr. Moody had not been diligent in obtaining counsel. After determining that other Determination of Counsel hearings had been and were being set by the Court, the employee reasonably concluded that Mr. Moody was not diligently trying to obtain counsel or independently resolve the pending criminal matters. The employee communicated this information to Respondent on July 18.

    
    

22. Respondent contacted Mr. Moody by telephone on July 18 and asked when he was going to supply the executed mortgage. Mr. Moody responded that he had determined that Respondent did not need the additional security and was not going to provide it.

    
    

23. At this point, Respondent concluded that it was likely that Mr. Moody had in fact left the state without permission. Respondent also concluded that Mr. Moody no longer represented an acceptable risk. Respondent thus directed another employee to join him to arrest Mr. Moody and surrender him to the Orange County Sheriff's Office.

    
    

24. Respondent and his employee immediately visited Mr. Moody and asked him whether he had left the state. Mr. Moody admitted doing so. Respondent and the employee then arrested Mr. Moody and returned him to jail.

    
    

25. Mr. Moody remained in jail for 63 days until he pleaded guilty to the charges. He was sentenced to the time served, placed on probation for four years, and required to makerestitution, which he has done so far in accordance with the schedule.

    
    

26. Following his release from jail, Mr. Moody returned to live with Mr. Johnson and gradually repaid him the $600 that he owed him. Although Mr. Moody demanded return of the $600, he never offered any proof of payment to Mr. Johnson. Mr. Johnson never demanded the return of the money.

    
    

27. Respondent has retained the $600 premium. The six $1000 notes were automatically voided when Mr. Moody was arrested on July 18.

    CONCLUSIONS OF LAW

    
    

28. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes.)

    
    

29. Petitioner has jurisdiction over the licensing of bail bondsmen. Section 648.45.

    
    

30. Petitioner shall "suspend [or] revoke" the license of any bail bondsman on any of the following grounds set forth in Section 648.45(2):

    
    

    * * *

    1. 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.

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

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

    4. Fraudulent or dishonest practices in the conduct of business under the license or permit.

    5. Misappropriation, conversion, or unlawful withholding of moneys belonging to a surety, a principal, or others received in the conduct of business under a license.

    * * *

    (j) Willful failure to comply with or willful violation of any proper order or rule of [Petitioner] 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.

    
    

31. Petitioner may "suspend [or] revoke" the license of any bail bondsman on any of the following grounds set forth in Section 648.45(3):

    
    

    * * *

    (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 [Petitioner] to be no longer carrying on the bail bond business in good faith.

32. Petitioner must prove the material allegations by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d292 (Fla. 1987).

    
    

33. Petitioner has failed to prove by the requisite standard any of the material allegations of the Administrative Complaint. Unauthorized travel outside the state breached the bond and relieved Respondent of any obligation to return the premium to Mr. Moody or Mr. Johnson. It is thus unnecessary to consider whether Mr. Moody committed any act that constituted reasonable evidence of his intention to cause a forfeiture of the bond.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Department of Insurance and Treasurer enter a final order dismissing the Administrative Complaint.

ENTERED this 22nd day of March, 1991, in Tallahassee, Florida.

ROBERT E. MEALE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399

(904) 488

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of March, 1991.

COPIES FURNISHED:

Hon. Tom Gallagher

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, FL 32399

Bill O'Neil, General Counsel Department of Insurance

The Capitol, Plaza Level Tallahassee, FL 32399

Attorney David D. Hershel Division of Legal Services

412 Larson Building Tallahassee, FL 32399

Attorney Alan B. Robinson

56 East Pine Street Orlando, FL 32801

Docket for Case No: 90-005648

Orders for Case No: 90-005648