STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALTERNATIVE MORTGAGE )

CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 92-4313

)

DEPARTMENT OF BANKING )

AND FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on October 1, 1992, in West Palm Beach, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jay J. Reynolds, Esquire

Post Office Box 490

Boca Raton, Florida 33429-0490

For Respondent: Bridget L. Ryan, Esquire

Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350 STATEMENT OF THE ISSUE

Whether Petitioner's application for licensure as a mortgage lender pursuant to the "Saving Clause," Section 494.0065, Florida Statutes, should be granted.

PRELIMINARY STATEMENT

By letter docketed with the Clerk of its Division of Finance on June 10, 1992 (hereinafter referred to as the "Notice of Denial" or "Notice"), the Department of Banking and Finance (hereinafter referred to as the "Department") notified Petitioner of its intention to deny his application to be licensed as a mortgage lender pursuant to the "Saving Clause," Section 494.0065, Florida Statutes. In the Notice, the Department gave the following explanation for its proposed action:

The denial is based on Section 494.0072(2)(k), Florida Statutes. Section 494.0072(2), "Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken: (k) Acting as a mortgage lender or correspondent mortgage lender without a current, active

license issued under ss. 494.006-494.0077." The Department's investigation reveals Alternative Mortgage Corporation has acted as a mortgage lender without a current, active license.

Petitioner requested a formal administrative hearing on the Department's proposed denial of its application. On July 14, 1992, the case was referred to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct the formal administrative hearing Petitioner had requested.

On August 31, 1992, Petitioner filed a motion requesting that the "Hearing Officer enter an Order of Summary Final Judgment in favor of [Petitioner] and in opposition to the Department." On September 18, 1992, the Department filed a response in opposition to the motion. A hearing on the motion was held by telephone conference call on September 21, 1992. That same day, the Hearing Officer issued an order denying the motion.

On September 22, 1992, the Department filed a motion "for leave to amend the Notice of Denial filed in this matter and for a continuance of this proceeding." In its motion, the Department asserted that an investigation "just recently completed by the Department's examiners" had revealed that there were "additional and substantial grounds for denial [of Petitioner's application for licensure] pursuant to Chapter 494, Florida Statutes." There was no indication in the Department's motion, however, what these "additional and substantial grounds" were, and no Amended Notice of Denial accompanied the motion.

Accordingly, on September 24, 1992, after receiving Petitioner's response in opposition to the Department's motion and hearing argument on the matter during a telephone conference call, the Hearing Officer issued an order denying the motion. 1/

On September 29, 1992, the Department filed a second motion for leave to amend the Notice of Denial. Unlike its first motion for leave to amend, its second motion identified with specificity the change it sought to make to the Notice Denial, to wit: the addition of a paragraph reading as follows:

Additionally, the savings clause, Section 494.0065, Florida Statutes, requires that the applicant be in good standing. Alternative Mortgage Corporation is not in good standing due to the fact its registration as a mortgage brokerage business has been suspended by the Department by the Immediate Final Order docketed in Case Number 2571-F-9/92.

Argument on this second motion for leave to amend was heard at the outset of the final hearing, before the taking of any evidence. The Hearing Officer reserved ruling on the motion and gave the parties the opportunity to present further argument on the matter in their post-hearing submittals. In addition, the Hearing Officer instructed Petitioner to advise him in writing within ten days of the conclusion of the hearing as to whether it disputed the factual allegation that "its registration as a mortgage brokerage business has been suspended by the Department by the Immediate Final Order docketed in Case Number 2571-F-9/92." The Hearing Officer indicated that if it became necessary to resolve any dispute between the parties regarding this matter, he would not do so without first conducting further evidentiary proceedings.

Five witnesses testified at the final hearing: David Taylor, a Financial Examiner Analyst Supervisor with the Department's Division of Finance; Stacey

Interlandi, Petitioner's President and its principal broker; A. Ronald Mims, a Financial Examiner Analyst II with the Department's Division of Finance; William Kirschner, Petitioner's owner and its chairman of the board; and Ralph

Scheidt, a Financial Investigator with the Department's Division of Finance. In addition to the testimony of these witnesses, a total of 20 exhibits were offered into evidence. Nineteen of these 20 exhibits were received by the Hearing Officer. The Hearing Officer reserved ruling on the admissibility of the remaining exhibit, Respondent's Exhibit 12, which was a certified copy of the immediate final order referenced in the Department's second motion for leave to amend.

At the close of the evidentiary portion of the hearing on October 1, 1992, the Hearing Officer advised the parties on the record that post-hearing submittals had to be filed no later than ten days following the Hearing Officer's receipt of the hearing transcript. The Hearing Officer received the hearing transcript on October 9, 1992.

On October 19, 1992, the Department timely filed a proposed recommended order, as well as a memorandum of law in support of its second motion for leave to amend. The Department's proposed recommended order contains, what are labelled as, "findings of fact." These "findings of fact" proposed by the Department have been carefully considered and are specifically addressed in the Appendix to this Recommended Order.

On October 27, 1992, Petitioner filed a proposed recommended order (which, unlike the Department's proposed recommended order, contains no specifically identified "findings of fact") and a reply to the Department's memorandum of law. In its proposed recommended order, Petitioner, among other things, acknowledges that the immediate final order referenced in the Department's second motion for leave to amend has indeed issued as alleged by the Department in the motion.

The Hearing Officer, on October 28, 1992, issued an order announcing that he would "consider the contents of Petitioner's proposed recommended order notwithstanding that it [had been] untimely filed" and that, "in the interest of fairness," he would "provide the Department the opportunity to file, if it so desire[d], a supplemental proposed recommended order within seven days of the date of the issuance of this order." The following day, October 29, 1992, the Department filed a motion to strike Petitioner's proposed recommended order on the ground that the proposed recommended order had not been timely filed. To the extent that this motion requests the Hearing Officer to reconsider his October 28, 1992, order, the motion is denied.

On November 4, 1992, the Department filed a notice of supplemental authority in which it advised the Hearing Officer (1) that "[o]n or about October 12, 1992, the Petitioner filed an Emergency Petition for Supersedeas and Motion for Stay of Proceedings and Review in the Fourth District Court of Appeal," which, among other things, requested a stay of the immediate final order referenced in the Department's second motion for leave to amend, and (2) that the Fourth District Court of Appeal subsequently denied Petitioner's petition. No further pleadings have been filed in this cause.

FINDINGS OF FACT

Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made:

1. Petitioner is a Florida corporation headquartered in Boca Raton, Florida.

   
   

2. William Kirschner is Petitioner's owner and chairman of the board. Stacey Interlandi is its President and principal broker.

   
   

3. Petitioner is in the mortgage lending and brokerage business. All of the mortgage loans it makes are sold to investors.

   
   

4. Petitioner held an active mortgage brokerage business registration (No. HB 592567137 00) issued pursuant to former Section 494.039, Florida Statutes, which was effective from September 1, 1990, until its expiration on August 31, 1992. 2/

   
   

5. It currently holds a mortgage brokerage business license (No. MBB 592567137 000) issued pursuant to Section 494.0031, Florida Statutes. The effective date of this license was September 1, 1992. The license expires on August 31, 1994.

   
   

6. From October 1, 1989, through September 30, 1991, Petitioner acted as a seller or assignor of mortgage loans and/or a servicer of mortgage loans.

   
   

7. Since October 1, 1991, Petitioner has made mortgage loans by advancing funds to mortgage loan applicants. With respect to each of these loans, however, the commitment to advance funds was made prior to October 1, 1991.

   
   

8. Since October 1, 1991, Petitioner has sold or assigned mortgage loans to non-institutional investors, but for no monetary gain.

   
   

9. Since October 1, 1991, Petitioner has serviced mortgage loans pursuant to agreements into which it entered prior to October 1, 1991.

   
   

10. At no time has Petitioner been licensed as a mortgage lender pursuant to Chapter 494, Part III, Florida Statutes.

    
    

11. On or about July 31, 1991, the Department sent the following written advisement concerning the revisions made by the 1991 Legislature to Chapter 494, Florida Statutes, to all registered mortgage brokerage businesses, including Petitioner:

    
    

    The 1991 Legislature revised Chapter 494,

    Florida Statutes, effective October 1, 1991. A copy of the new law is enclosed. Some of the changes which affect mortgage brokerage businesses are:

    1. A mortgage brokerage business may not make (fund) loans or service loans. Only mortgage lenders and correspondent mortgage lenders may make (fund) loans. Only mortgage lenders may service loans. A mortgage brokerage business may ONLY act as a mortgage broker. "Act as a mortgage broker" is defined as:

       "... for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, accepting or offering to accept an application for a mortgage loan, soliciting or offering to solicit a mortgage

       loan on behalf of a borrower, or negotiating or offering to negotiate the terms or conditions of a mortgage loan on behalf of a lender."

    2. There are no net worth requirements for mortgage brokerage businesses.

    3. A principal broker designation form must be completed and maintained in the principal place of business and a branch broker designation form must be completed and maintained at each branch. The required forms will be sent to your office prior to

       October 1, 1991.

    4. To act as a mortgage broker, a licensed individual must be an associate of a licensed brokerage business and is prohibited from being an associate of more than one mortgage brokerage business. "Associate" is defined as:

       ". . . a person employed by or acting as an independent contractor for a mortgage brokerage business . . ."

    5. Under the new law, no fee or notification to the Department is required when a mortgage broker becomes an associate of your business. However, the license of each mortgage broker must be prominently displayed in the business office where the associate acts as a mortgage broker. Note: The Department will discontinue processing change of status requests under the current law effective August 1, 1991.

    6. Mortgage brokerage businesses in good standing which hold an active registration are eligible to apply for licensure as a mortgage lender pursuant to the saving clause. The applicant must have:

       1. For at least 12 months during the period of October 1, 1989, through September 30, 1991, engaged in the business of either acting as a seller or assignor of mortgage loans or as a servicer of mortgage loans, or both;

       2. Documented a minimum net worth of $25,000 in audited financial statements;

       3. Applied for licensure pursuant to the saving clause before January 1, 1992 and paid an application fee of $100.

          Should you meet the above requirements and wish to apply for licensure as a mortgage lender pursuant to the saving clause or if you wish to apply for licensure as a mortgage lender pursuant to Section 494.0061, please contact the Department for the appropriate application. These applications will be available in early September 1991.

          THESE CHANGES ARE EFFECTIVE OCTOBER 1, 1991. PLEASE REVIEW THE ENCLOSED COPY OF THE LAW CAREFULLY FOR OTHER CHANGES WHICH MAY AFFECT YOUR MORTGAGE BROKERAGE BUSINESS.

          
          

12. As promised, application forms for licensure as a mortgage lender were available the first week of September, 1991.

    
    

13. Petitioner requested such an application form on September 18, 1991. The requested form was mailed to Petitioner the following day.

    
    

14. On December 31, 1991, Petitioner submitted a completed application for licensure as a mortgage lender pursuant to the "saving clause," Section 494.0065, Florida Statutes. The application was accompanied by an application fee of $100.00 and an audited financial statement reflecting that Petitioner had a net worth in excess of $25,000.00.

    
    

15. At the time of the submission of its application, Petitioner had an unblemished disciplinary record.

    
    

    CONCLUSIONS OF LAW

    
    

16. Petitioner is seeking a mortgage lender license pursuant Section 494.0065, Florida Statutes, which provides in pertinent part as follows:

    
    

    (1)(a) Any person in good standing who holds an active registration pursuant to former s.

    494.039 . . . is eligible to apply to the department for a mortgage lender's license and is eligible for licensure if the applicant:

    1. For at least 12 months during the period of October 1, 1989, through September 30, 1991, has engaged in the business of either acting as a seller or assignor of mortgage loans or as a servicer of mortgage loans, or both;

    2. Has documented a minimum net worth of

       $25,000 in audited financial statements; and

    3. Has applied for licensure pursuant to this section by January 1, 1992, and has paid an application fee of $100.

    
    

17. Section 494.0065, Florida Statutes, is part of the "Mortgage Brokerage and Mortgage Lending Act," (hereinafter referred to as the "Act") which became effective October 1, 1991. Chapter 91-245, Sections 36, 45 and 61, Laws of Florida.

    
    

18. Its title, which it was given by the Legislature, is "Saving Clause." Chapter 91-245, Section 36, Laws of Florida.

    
    

19. Typically, "[w]here a saving clause is appended to an act which by express declaration or by necessary implication repeals another enactment, the law repealed is continued in force as to existing rights . . . in accordance with the terms of the saving clause." Dade County v. Wiseheart, 198 So.2d 94, 97 (Fla. 3d DCA 1967).

20. In the instant case, the law repealed was former Chapter 494, Florida Statutes, which included Section 494.039, Florida Statutes, as amended by Chapter 89-237, Laws of Florida. Chapter 91-245, Section 51, Laws of Florida.

    
    

21. The "Saving Clause" gave those holding an active mortgage brokerage business registration issued pursuant to former Section 494.039, Florida Statutes, the opportunity to convert their registration into a mortgage lender's license authorizing them to act as a mortgage lender under the Act, provided they met the requirements specified in the "Saving Clause," which on the whole were less stringent than the requirements they would otherwise have to meet to obtain such a license.

    
    

22. In its Notice of Denial, the Department indicated that it intended to deny Petitioner's application for licensure, not because Petitioner failed to meet the requirements specified in the "Saving Clause," but on the ground that Petitioner had "acted as a mortgage lender without a current, active license," contrary to subsection (2)(k) of Section 494.0072, Florida Statutes.

    
    

23. Section 494.0072, Florida Statutes, is also part of the Act. It provides in pertinent part as follows:

    
    

    1. Whenever the department finds a person

       in violation of an act specified in subsection (2), it may enter an order imposing one or more of the following penalties against that person:

       * * *

       (f) Denial of a license or registration.

    2. Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (1) may be taken:

    * * *

    (k) Acting as a mortgage lender . . . without a current, active license issued under ss. 494.006-494.0077.

    
    

    To "act as a mortgage lender," within the meaning of Section 494.0072(2)(k), Florida Statutes, "means to make a mortgage loan or to service a mortgage loan for others or, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, to sell or offer to sell a mortgage loan to a noninstitutional investor." Section 494.001(3), Fla. Stat.

    
    

24. The evidence adduced at hearing establishes that, since October 1, 1991, Petitioner has "acted as mortgage lender" without having a current, active mortgage lender's license authorizing it to engage in such activity, as alleged by the Department in the Notice of Denial.

    
    

25. That Petitioner has done so, however, does not provide the Department with a basis upon which to deny Petitioner licensure under the "Saving Clause."

    
    

26. To the extent that Section 494.0072, Florida Statutes, provides that an applicant may be deprived of a license to which he would otherwise be entitled for having engaged in conduct proscribed therein, it is a penal statute. See Wilson v. Pest Control Commission of Florida, 199 So.2d 777, 779 (Fla. 4th DCA 1967). As such, it must be strictly construed and not extended beyond its intended reach. If there are any doubts concerning its applicability, these doubts must be resolved in favor of limiting, rather than

    extending, its scope of operation. See Trotter v. State, 576 So.2d 691, 694 (Fla. 1990); Florida Industrial Commission v. Manpower, Inc. of Miami, 91 So.2d 197, 199 (Fla. 1956); Holmberg v. Department of Natural Resources, 503 So.2d 944, 947 (Fla. 1st DCA 1987); Fleischman v. Department of Professional Regulation, 441 So.2d 1121, 1123 (Fla. 3d DCA 1983).

    
    

27. Furthermore, to properly interpret Section 494.0072, Florida Statutes, it is necessary to read it in pari materia with the other provisions of the Act. See Major v. State, 180 So.2d 335, 337 (Fla. 1965); Schorb v. Schorb, 547 So.2d 985, 987 (Fla. 2d DCA 1989).

    
    

28. Examined in isolation, apart from the other provisions of the Act, Section 494.0072, Florida Statutes, is susceptible of the interpretation, urged by the Department, that it may be applied to prevent a person who has engaged in conduct that it proscribes from obtaining licensure under the "Saving Clause;" however, when it is read together with the remaining provisions of the Act, particularly the "Saving Clause" itself, including its title, 3/ as well as Section 494.0061, Florida Statutes, the conclusion is inescapable that such was not the intent of the Legislature. 4/

    
    

29. Section 494.0061, Florida Statutes, prescribes the requirements that those not qualifying for licensure under the "Saving Clause" must meet to receive a mortgage lender's license. It provides in pertinent part as follows:

    
    

    1. The department may require each applicant for a mortgage lender's license to provide any information reasonably necessary to make a determination of the applicant's eligibility for licensure. The department shall issue an initial mortgage lender's license to any corporation that submits:

       1. A completed application form;

       2. A nonrefundable fee set by rule of the department in an amount that may not exceed

          $500;

       3. Audited financial statements, which documents disclose that the applicant has a bona fide and verifiable net worth, pursuant to generally accepted accounting principles, of at least $250,000, which must be continuously maintained as a condition of licensure;

       4. A surety bond in the amount of $10,000, payable to the state and conditioned upon compliance with ss. 494.001-494.0077, which inures to the department and which must be continuously maintained thereafter in full force; and

       5. Documentation that the applicant is duly incorporated under the laws of this state or another state of the United States.

    2. Notwithstanding the provisions of subsection (1), it is a ground for denial of licensure if the applicant, any principal officer or director of the applicant, or any natural person owning a 10-percent or greater interest in the applicant, or any natural

    person who is the ultimate equitable owner of a 10-percent or greater interest in the applicant has committed any violation specified in s. 494.0072 . . .

    
    

30. Significantly, the "Saving Clause" has no provision comparable to subsection (2) of 494.0061, Florida Statutes, providing that a violation of Section 494.0072 may result in the denial of licensure.

    
    

31. It must be presumed that the Legislature acted intentionally and purposely in including such language in Section 494.0061, Florida Statutes, and omitting it from the "Saving Clause." See Myers v. Hawkins, 362 So.2d 926, 929 (Fla. 1978); Florida State Racing Commission v. Bourquardez, 42 So.2d 87, 89 (Fla. 1949); Department of Professional Regulation, Board of Medical Examiners

    v. Durani, 455 So.2d 515, 518 (Fla. 1st DCA 1984); Ocasio v. Bureau of Crimes Compensation Division of Workers' Compensation, 408 So.2d 751, 753 (Fla. 3d DCA 1982); U.S. v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972).

    
    

32. Accordingly, the Department may not deny the license for which Petitioner has applied on the ground that Petitioner has violated Section 494.0072(2)(k), Florida Statutes.

    
    

33. In its second motion for leave to amend the Notice of Denial, Petitioner contends that Petitioner's application for licensure should be denied for the additional reason that on September 30, 1992, almost nine months after Petitioner had submitted its application, the Department issued an immediate final order suspending Petitioner's mortgage brokerage business registration and that therefore Petitioner does not meet the "good standing" requirement of the "Saving Clause." The argument is not a persuasive one.

    
    

34. The term "good standing," as it is used in the Act, is defined in Section 494.001(7), Florida Statutes, as follows:

    
    

    "Good standing" means that the registrant or licensee, or a subsidiary or affiliate thereof is not, at the time of application, being penalized for one or more of the following disciplinary actions by a licensing authority of any state, territory, or country:

    1. Revocation of a license or registration;

    2. Suspension of a license or registration;

    3. Probation of a license or registration for an offense involving fraud, dishonest dealing, or an act of moral turpitude.

    
    

    (Emphasis supplied.)

    
    

35. An applicant's "good standing" therefore is measured "at the time of application." Accordingly, as Petitioner convincingly argues, subsequent disciplinary action taken against the applicant has no bearing on his "good standing." To hold otherwise would render meaningless the qualifying phrase, "at the time of application," used by the Legislature in Section 494.001(7), Florida Statutes, to define "good standing," and would thus run afoul of the prohibition against regarding operative statutory language as mere surplusage bereft of meaning and effect. See City of Pompano Beach v. Capalbo, 455 So.2d

    468, 469 (Fla. 4th DCA 1984); Terrinoni v. Westward Ho!, 418 So.2d 1143, 1146 (Fla. 1st DCA 1982); Pinellas County v. Wooley, 189 So.2d 217, 219 (Fla. 2d DCA 1966).

    
    

36. In its proposed recommended order, the Department argues that the refusal to take into consideration the post-application suspension of Petitioner's registration as a mortgage brokerage business in determining Petitioner's "good standing" would be contrary to the principle articulated in McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977) and other cases that "a Section 120.57 hearing is a de novo proceeding intended to formulate agency action" and therefore in a licensure case "the hearing officer may properly consider relevant evidence of changed circumstances since the filing date of the application." A very similar argument was advanced by the appellants in Meridian, Inc. v. Department of Health and Rehabilitative Services, 548 So.2d 1169 (Fla. 1st DCA 1989), who took the position that, in passing on their applications for certificates of need to construct additional nursing home beds and in determining whether such beds were needed, the agency should have used the most recent population data available, instead of the data that was available at the time the applications were required to be filed. The appellate court rejected this argument, reasoning as follows:

    
    

    Appellants argue that this result is contrary to the principle explicated in McDonald v.

    Department of Banking and Finance,

    346 So.2d 569 (Fla. 1st DCA 1977), that a hearing officer conducting a section 120.57 proceeding should freely consider relevant evidence of changing economic conditions and other current circumstances external to the application in passing upon the propriety of an application for a banking license. We have no quarrel with the application of this principle in appropriate cases where the underlying legislation contemplates that the agency will consider changing conditions right up to the date of the final order. Here, however, the underlying organic statutory authority contemplates comparative review based upon a fixed pool of bed need set at the time of the initial applications. This factor necessarily distinguishes McDonald from the case under review, and precludes application of the principle cited from McDonald.

    
    

    Id. at 1171. See also Gulf Court Nursing Center v. Department of Health and Rehabilitative Services, 483 So.2d 700, 710 (Fla. 1st DCA 1985)("[t]he key to McDonald's holding that evidence of changed conditions or circumstances should be considered in the 120.57 hearing is its requirement that such evidence be 'relevant' to the application;" "[c]ertainly, the hearing officer in a section

    120.57 proceeding is not limited to consideration of the record made by HRS during its preliminary investigation of the CON application and may freely consider any and all additional evidence of changed conditions since the preliminary review, so long as it is relevant to the fixed pool under consideration").

    
    

37. In the instant case, the "underlying organic legislation" mandates that the Department limit its inquiry, with respect to the issue of an

    applicant's "good standing," to the circumstances as they existed "at the time of application." Evidence that these circumstances have changed therefore is not relevant to the "good standing" issue and thus McDonald and its progeny do not require that such evidence be received and considered in determining the applicant's "good standing."

    
    

38. The Department further contends in its proposed recommended order that any interpretation of the Act that would not allow it to consider such evidence would lead to "absurd results to the detriment of the public" inasmuch as it would "allow licensure of individuals and corporations who have engaged in fraud, dishonest dealing and acts of moral turpitude resulting in revocation, suspension or probation of a license." To permit the licensure of these individuals and corporations, the Department argues, "would jeopardize the Florida consumers utilizing the mortgage lending services of these individuals and corporations."

    
    

39. The Hearing Officer disagrees that the licensure of these individuals and corporations is an "absurd result" not contemplated by the Legislature. The Department is vested with the authority, pursuant to Section 494.0072(2)(i), Florida Statutes, to suspend or revoke a mortgage lender's license if a licensee has had "a license, or the equivalent, to practice any profession or occupation revoked, suspended, or otherwise acted against, including the denial of licensure by a licensing authority of this state or another state, territory or country for fraud, dishonest dealing, or any other act of moral turpitude." Moreover, if it "finds that immediate serious danger to the public health, safety or welfare requires emergency suspension, restriction, or limitation of a license," it may take such emergency action summarily, provided that it promptly institutes a formal suspension or revocation proceeding. Section 120.60(8), Fla. Stat. Accordingly, if the Department determines that such a danger exists based upon post-application disciplinary action taken against a person who has applied for a mortgage lender's license under the "Saving Clause," it may, immediately after granting licensure, summarily suspend the license to protect the public interest. The Hearing Officer therefore finds unwarranted the Department's concerns that the licensure of such a person and others like him will create an "absurd" situation "jeopardiz[ing] . . . Florida consumers" that must be avoided.

    
    

40. In furtherance of its attempt to convince the Hearing Officer that he should recommend adoption of the interpretation of the "good standing" requirement offered in its proposed recommended order, 5/ the Department argues that such interpretation "should be given great weight" since the "Department is charged with administering and enforcing the provisions of Chapter 494, Florida Statutes." In support of this contention, the Department cites cases which stand for the proposition that an appellate court, in reviewing final agency action, must give great weight to the agency's construction of a statute that the agency is responsible for administering and enforcing. These cases upon which the Department relies, however, are inapposite to the instant case.

    Unlike an appellate court, a Hearing Officer in a Section 120.57(1) proceeding does not review final agency action. Indeed, there is no final agency action yet for him to review. Rather than performing a review function, the Hearing Officer's role in such a proceeding is to assist the agency in deciding what final action it should take, including how it should construe applicable statutory provisions to the extent that the agency has not already adopted an interpretation of such a provision pursuant to the rulemaking procedures set forth in Section 120.54, Florida Statutes. To effectively render such assistance in a manner that promotes responsible decision making with respect to matters of statutory interpretation, the Hearing Officer must be free to

    evaluate a proposed interpretation based exclusively upon its merit without regard to whether the interpretation was proposed by the agency or another party to the proceeding. See McDonald v. Department of Banking and Finance, 346 So.2d at 582-83. The Hearing Officer has conducted such an unfettered evaluation of the respective interpretations of the "good standing" requirement advanced by the parties in the instant case and, based upon this evaluation, recommends that the Department utilize the interpretation offered by Petitioner in determining whether Petitioner has met this requirement.

    
    

41. Under this interpretation, the post-application issuance of the immediate final order purporting to suspend Petitioner's mortgage brokerage business registration does not have any bearing on Petitioner's "good standing," as that term is used in the "Saving Clause." Accordingly, the Department's second motion for leave to amend the Notice of Denial to include the issuance of this immediate final order as an additional ground for denying Petitioner's application for licensure is denied, and Respondent's Exhibit 12, which was offered in anticipation of the Hearing Officer granting such leave, will not be received into evidence.

    
    

42. The evidence demonstrates that Petitioner has met all of the requirements for licensure specified in the "Saving Clause:" from October 1, 1989, through September 30, 1991, Petitioner acted as a seller or assignor of mortgage loans and/or a servicer of mortgage loans; Petitioner applied for licensure pursuant to this statutory provision by January 1, 1992, and its application was accompanied by an application fee of $100.00 and an audited financial statement reflecting that its net worth was in excess of $25,000.00; and at the time of its application, Petitioner was in "good standing" and held an active mortgage brokerage business registration issued pursuant to former Section 494.039, Florida Statutes.

    
    

43. The Department therefore should issue Petitioner the mortgage lender's license for which it has applied.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby

RECOMMENDED that the Department enter a final order granting Petitioner's application for licensure as a mortgage lender pursuant to the "Saving Clause."

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 18th day of November, 1992.

STUART M. LERNER

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 18th day of November, 1992.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-4313

The following are the Hearing Officer's specific rulings on the findings of facts proposed by the Department:

1-7. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order.

8. Rejected because it is more in the nature of a statement of the law, albeit an accurate one, than a finding of fact.

9-12. Accepted and incorporated in substance.

13. Rejected because it is more in the nature of a statement of the law, albeit an accurate one, than a finding of fact.

14-15. Accepted and incorporated in substance.

16. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.

17-21. Accepted and incorporated in substance.

22. Rejected because it is not supported by persuasive competent substantial evidence.

24 6/-39. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

40. Rejected because, even if true, it would have no bearing on the outcome of the instant case.

ENDNOTES

1/ In his order, the Hearing Officer cited Silvers v. Drake, 188 So.2d 377 (Fla. 1st DCA 1966), a case in which it was held that the trial court did not abuse its discretion in denying a motion for leave to file a second amended complaint where "[n]o second amended complaint was submitted with the motion for the court's examination as to its sufficiency, nor did the motion incorporate the additional facts or theories of law on which appellant would rely to state a cause of action if permitted to file a second amended complaint."

2/ Accordingly, by September 30, 1992, the date of the issuance of the immediate final order in Case Number 2571-F-9/92, which, among other things, purported to suspend Petitioner's registration as a mortgage brokerage business, Petitioner's registration had already expired.

3/ In determining legislative intent, which is "the polestar by which the court [or administrative tribunal] must be guided" in construing a statute, "due weight and effect" must be given to the title of the statute selected by the Legislature. See State v. Webb, 398 So.2d 820, 824-25 (Fla. 1981).

4/ That is not to say, however, that after he receives his license the person may not be disciplined pursuant to Section 494.0072, Florida Statutes, for having engaged in such conduct.

5/ This interpretation proposed by the Department is not codified in any Department rule.

6/ The Department's proposed recommended order does not contain a finding of fact 23.

COPIES FURNISHED:

Jay J. Reynolds, Esquire Post Office Box 490

Boca Raton, Florida 33429-0490

Bridget L. Ryan, Esquire Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

William G. Reeves, General Counsel Office of the Comptroller

The Capitol, Suite 1302 Tallahassee, Florida 32399-0350

Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD OF TIME WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

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AGENCY FINAL ORDER

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STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

ALTERNATIVE MORTGAGE CORPORATION,

Petitioner,

ADMINISTRATIVE PROCEEDING

vs. NO. 2514-F-7/92

DOAH CASE NO. 92-4313

DEPARTMENT OF BANKING AND FINANCE,

Respondent.

/

FINAL ORDER AND NOTICE OF RIGHTS

This matter has come before the undersigned as head of the Department of Banking and Finance, Division of Finance, ("Department"), for the entry of a Final Order in this proceeding. On November 18, 1992, a Hearing Officer from the Division of Administrative Hearings submitted his Recommended Order in this proceeding, a copy of which is attached hereto as Exhibit "A". On or about December 10, 1992, after entry of an order granting an extension to file its exceptions, the Respondent, Department of Banking and Finance (the "Respondent"), filed its exceptions to the Recommended Order, a copy of which is attached hereto as Exhibit "B".

This matter arose when the Department, by letter dated June 10, 1992, notified the Petitioner, Alternative Mortgage Corporation ("Petitioner"), of its intention to deny its application to be licensed on a mortgage lender pursuant to the "Savings Clause," Section 496.0065, Florida Statutes.

The Department timely received the Petitioner's petition for hearing. The matter was referred to the Division of Administrative Hearings on July 14, 1992, for the assignment of a hearing officer to conduct a formal administrative hearing. Thereafter, the parties responded to the Initial Order entered by the Hearing Officer. A final hearing was scheduled for October 1, 1992, in West Palm Beach, Florida. On October 1, 1992, the formal hearing in this matter was held in West Palm Beach before Hearing Officer Stuart M. Lerner.

The Hearing Officer's November 18, 1992, Recommended Order recommends that the Department enter a Final Order granting Petitioner's application for licensure as a mortgage lender pursuant to the "Savings Clause."

RULING ON EXCEPTIONS BY RESPONDENT

First Exception: The Respondent takes exception to the Hearing Officer's Conclusion of Law in paragraph 40 wherein the Hearing Officer concluded that an

agency's interpretation of a governing statute need only be given great deference by an appellate count and not the Hearing Officer since his function is to aid the agency in interpreting this statute.

The Department agrees with the Respondent that the Hearing Officer erroneously rejected the well settled policy that an agency's interpretation of governing statutes is accorded great deference. Therefore, the Hearing Officer's Conclusion of Law as stated above is rejected based upon the substantial case law which accords great deference to an agency's interpretation of its statutes, even if this interpretation is not the most desirable or the only interpretation. Little Manyon Island, Inc. v. Department of Environmental Regulation, 492 So.2d 735 (Fla. 1st DCA 1986). Furthermore, since the Hearing Officer did not present any case law to support his position that these "deference" cases apply only to appellate courts and not administrative hearings, the Department is unable to concur with the Hearing Officer's interpretation. Therefore, Respondent's first exception is accepted as to the issue of deference.

Having accepted Respondent's first exception as to the issue of deference, it nevertheless is noted that there is lacking evidence in the transcript as to the department's interpretation of the term "good standing." Therefore, in the absence of such record evidence, the Department will nevertheless concur with the ultimate result reached by the hearing officer.

Second Exception: The Respondent, in its second exception, argues that the Recommended Order's Conclusion of Law set forth in paragraph 26 of the Order is erroneous to the extent the hearing officer concludes that Section 494.0072, Florida Statutes, is a penal statute and, as such, must be strictly construed and not extended beyond its intended reach. The Respondent's second exception is well taken and the hearing officer's conclusion of law in paragraph 26 of the order is specifically rejected. The cases cited by the hearing officer in support of his proposition, as noted by the Department's counsel, are inapplicable to the instant case---a license denial proceeding. Instead, the cases cited deal with two enforcement actions, a permit renewal action (in which licensure is protected under Section 120.60(6), Florida Statutes, from expiration until final agency action) and a capital punishment case. The law is clearly settled that licensure is a privilege, not a right; consequently, statutes applied during a licensing denial procedure (as opposed to a license discipline case), are applied in a non-penal manner. See Hevilla v. Department of Professional Regulation, 11 F.A.L.R. 1730 (1989). 1/

Third Exception: As to the Respondent's third exception (paragraph's 25-32 of the Recommended Order), the Department rejects the exception, finding the hearing officer's interpretation in the limited context of the "Savings Clause" statutory language persuasive. The Department notes, in so holding, that the hearing officer has found no prohibition which would or will prevent the Department from filing an enforcement action (emergency or otherwise) for revocation, or suspension of the subject license or otherwise imposing sanctions based upon, inter-alia, the unlicensed activity clearly documented in the findings of fact.

Fourth Exception: The Respondent also takes exception to the Recommended Order's Conclusions of Law in Paragraphs 33-41 wherein the Hearing Officer essentially concluded that the Department may not deny Petitioner's application under the particular limiting language of the "Savings Clause" based upon the fact that the Petitioner's mortgage broker's business license was suspended by emergency order on September 30, 1992. The Respondent argued that the

suspension of Petitioner's mortgage brokerage business license did not allow Petitioner to meet the "good standing" definition of the "Saving Clause" as provided in Section 494.001(7), Florida Statutes. The Department concurs with the Hearing Officer's Conclusions of Law contained in Paragraphs 33, 34, 35, 36,

37, 38, 39, and 41 and the Respondent's fourth exception is rejected. Paragraph

40 of the Conclusions of Law is separately dealt with in the ruling on the first exception.

Fifth Exception: The Department concurs with the Hearing Officer's Conclusion of Law in Paragraph 39 as to the availability of post-licensure enforcement actions against the Petitioner and therefore rejects the Respondent's fifth exception.

FINAL ORDER

Having ruled on all of the exceptions filed by the Respondent to the Recommended Order, it is hereby ORDERED:

1. Except to the extent such are modified hereafter, the Hearing Officer's Findings of Fact and Conclusions of Law in the Recommended Order attached hereto, are hereby adopted and incorporated by reference herein as the Findings of Fact and Conclusions of Law of this Final Order.

   
   

2. Petitioner's application for licensure as a mortgage lender pursuant to the "Savings Clause" contained in Section 494.0065, Florida Statutes, is hereby GRANTED.

DONE and ORDERED this 31st day of December, 1992, in Tallahassee, Florida.

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

ENDNOTES

1/ As further support, the Division notes that because petitioner seeks to take advantage of the "grandfathering" clause in question, (which is an exception to a general statutory prohibition) such must be strictly construed against the Petitioner. See State v. Nourse, 340 So.2nd 966 (Fla. 3rd DCA 1976). See also University Hospital v. Department of Health and Rehabilitative Services, 11

F.A.L.R. 1150 (1988).

COPIES FURNISHED:

Stuart M. Lerner, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Randall A. Holland, Director Division of Finance

Bridget L. Ryan

Assistant General Counsel Office of the Comptroller Suite 1302, The Capitol

Tallahassee, Florida 32399-0350

Anthony F. DiMarco Assistant General Counsel Office of the Comptroller Suite 1302, The Capitol

Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER SHALL BE ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES REVIEW PROCEEDINGS ARE GOVERNED BY FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE (1) A 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 AND THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN THIRTY (30) DAYS OF THE RENDITION OF THE ORDER TO BE REVIEWED.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was sent by

U.S Regular Mail to Jay J. Reynolds, Attorney for Petitioner, Post Office Box 490, Boca Raton, Florida 33429-0490 this 3 day of December, 1992.

ANTHONY DiMIARO

Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, FL 32399-0350

(904) 488-9896

Docket for Case No: 92-004313

Orders for Case No: 92-004313