STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JACK D. OSBORN, )

)

Petitioner, )

)

vs. ) CASE NO. 93-6424

) DEPARTMENT OF BANKING AND FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on February 23, 1994, by telephone conference. The parties participated from their respective offices in Tallahassee and Longwood, Florida and the hearing officer presided from her office in Tallahassee, Florida.

APPEARANCES

For Petitioner: Jack DeWayne Osborn

(representing himself)

303 Pickering Court Longwood, Florida 32779

For Respondent: Cassandra A. Evans, Esquire

Assistant General Counsel Office of Comptroller Department of Banking & Finance The Capitol, Suite 1302

Tallahassee, Florida 32399-0350 STATEMENT OF THE ISSUES

The issue for disposition is whether the Petitioner's application for registration as a mortgage broker should be granted.

PRELIMINARY STATEMENT

On June 21, 1993, Petitioner, Jack D. Osborn (Osborn) filed with the Office of the Comptroller his application for licensure as a mortgage broker. The agency denied the application in a letter dated August 23, 1993, and reiterated the denial in an amended notice of intent to deny entered October 27, 1993.

In response, Osborn requested a formal hearing, and the case was referred to the Division of Administrative Hearings. The hearing was initially set for Orlando, Florida, but both parties agreed to a telephone conference. The proceeding was transcribed and all procedures and formalities were observed, just as if the parties had been present with the hearing officer at a single location.

Mr. Osborn presented legal argument and testified in his own behalf. His following exhibits were received in evidence without objection: Petitioner's Exhibit #1 (documents and letters regarding embezzlement by former employee, Joann Camp), Exhibit #2, (agency's response to admissions), Exhibit #3 (agency's response to interrogatories), and Exhibit #5 (cover letter and offered settlement stipulation in DPR cases). Petitioner's Exhibit #4 (closing statement and bank loan) was offered and ruling was taken under advisement.

After consideration of the agency's objection based on relevance, and Osborn's response, the exhibit is received into evidence. While it has limited probative value, it corroborates Osborn's testimony that he borrowed money.

The agency, through its attorney, presented the testimony of Rex Pierce, Bureau Chief of Financial Staff Programs. These agency exhibits were received in evidence without objection: Respondent's Exhibit #1 (application and attachments), Exhibit #2 (denial letter), Exhibit #3 (amended notice), and Exhibit #4 (administrative complaints).

The hearing transcript was filed and both parties filed post-hearing briefs (Petitioner) or a proposed recommended order (Respondent). These have been considered in the preparation of this recommended order. Respondent's proposed findings #1-4 are rejected as conclusions of law or are addressed in the preliminary statement, above. Proposed findings #5-8 are substantially adopted below.

FINDINGS OF FACT

1. Petitioner, Jack D. Osborn (Osborn), a resident of Longwood, Seminole County, Florida, applied to Respondent, Office of the Comptroller, Department of Banking and Finance (Agency), for licensure as a mortgage broker. On the face of the application, and by an attached narrative explanation, he properly revealed that three Department of Professional Regulation (DPR, now Department of Business and Professional Regulation) complaints were pending against his contractor's licenses.

   
   

2. The administrative complaint in DPR Case #89-6241 alleges that Osborn received $4,620.00 for construction of an in-ground spa, but abandoned the job. The complaint in Case #90-2647 alleges that Osborn failed to pay suppliers and subcontractors in a pool construction job, resulting in a lien being filed, and he abandoned the job. The complaint in Case #89-12623 alleges that Osborn failed to pay subcontractor DeSilva on several pool construction jobs, failed to complete several jobs, and failed a couple of local building department inspections in the jobs. The three administrative complaints were filed by the DPR in August and September 1990 and all three relate to jobs undertaken by Osborn in 1989.

   
   

3. The three complaints allege violations of section 489.129(1)(k), F.S. (abandoning a construction project); section 489.129(1)(j), F.S. (failure to supervise); section 489.129(1)(m), F.S. (fraud, deceit, gross negligence, incompetency or misconduct); section 489.129(1)(h), F.S. (mismanagement or misconduct), and section 489.129(1)(d), F.S. (code violations in work completed).

   
   

4. None of the complaints has gone to hearing, or been referred to the Division of Administrative Hearings. All three were still pending as of the date of the hearing in this case. In March 1991, an attorney with DPR sent Osborn's attorney a letter offering a stipulation, subject to approval by the

   Construction Industry Licensing Board, that the department would dismiss all charges except failure to supervise, in return for a $1,000 fine and probation, should the license be reactivated later.

   
   

5. Osborn credibly explains that his business, Bright Water Pools, Inc., was placed in serious financial jeopardy by the embezzlement, over time, of approximately $100,000 by a former bookkeeper employee, Joann Camp. A 106-count Information, dated October 5, 1992, in Eighteen Judicial Circuit case #G88-2709 CFA, State of Florida v. Joann Camp, alleges forgeries and petit and grand theft with the intent to injure or defraud Jack Osborn and various named banks. (See Petitioner's Exhibit #1) The resolution of the criminal case is unknown.

   
   

6. The impact on the company was devastating. It was forced to pay bills slowly, causing higher prices for labor and materials; rumors of the firm's financial viability affected sales. In an effort to save the company, Osborn refinanced his home and took out a corporate bank loan for which he is personally liable. The business failed, and the difficulties reflected in the allegations of the DPR complaints are a result of the failure.

   
   

7. The sole basis of the agency's intended denial of Osborn's mortgage broker's license application is the pendency of the DPR complaints alleging fraud or dishonest dealing. The agency's procedure is to deny licensure whenever there is such an unresolved complaint. This policy applies without regard to the age of the complaint.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction in this matter pursuant to section 120.57(1), F.S.

   
   

9. As applicant, Osborn has the burden of proving entitlement to the registration he seeks. Florida Department of Transportation v. JWC Co., 396 So.2d 778 (Fla. 1st DCA 1981); Balino v. Dept. of HRS, 348 So.2d 349 (Fla. 1st DCA 1977); Osborne Stern and Co., Inc. v. Dept. of Banking and Finance, 19 Fla.

   L. Weekly D882 (Fla. 1st DCA opinion filed 4/19/94).

   
   

10. Section 494.033(4), F.S. provides, in pertinent part:

    
    

    (4) . . . [I]t is a ground for denial of licensure if the applicant has committed any violation specified in ss. 494.001-494.0077 or has pending against him any criminal prosecution or administrative enforcement action, in any jurisdiction, which involves fraud, dishonest dealing, or any other act of moral turpitude.

    
    

11. It is undisputed that Osborn "has pending" administrative enforcement action which involves fraud or dishonest dealing. The DPR complaints that are pending before the Construction Industry Licensing Board allege a violation of section 489.129(1)(m), F.S. (1989) which provides:

    
    

    489.129 Disciplinary proceedings.-

    1. The board may revoke, suspend, or deny the issuance or renewal of the certificate or registration of a contractor, require financial restitution to a consumer,

    impose an administrative fine not to exceed

    $5,000, place a contractor on probation, require continuing education, assess costs associated with investigation and prosecution, or reprimand or censure a contractor if the contractor, or if the business organization for which the contractor is a primary qualifying agent or is a secondary qualifying agent responsible under s.489.1195, is found guilty of any of the following acts:

    . . .

    (m) Being found guilty of fraud or deceit or of gross negligence, incompetency, or misconduct in the practice of contracting.

    
    

12. The applicant is entitled to explain and present evidence in mitigation of the circumstances behind the pending complaints. It is not his burden to disprove that the violations occurred. Osborne Stern, supra, p. D883. In Osborne Stern, the court went further to say that the agency had the burden, under a statute similar to the one at issue here, to prove the alleged violations occurred if registration were to be denied on that basis. The question of burden was certified to the Florida Supreme Court as a question of great public importance.

    
    

13. Here, it is unnecessary to go as far as the Osborne Stern court. Jack Osborn explained the circumstances surrounding the complaints regarding his contractor's license. His explanation is credible and unrefuted. The DPR complaints do not allege that he stole money from his customers, only that he did not finish a series of jobs after receiving down payments and did not pay bills, and that liens were placed on the property. These facts, alone, do not constitute grounds for license discipline under section 489.129(1), F.S., when a construction business fails. See Hunter v. Dept. of Professional Regulation, 458 So.2d 842 (Fla. 2d DCA 1984).

    
    

14. Osborn has met his burden of proof and is entitled to registration as a mortgage broker.

RECOMMENDATION

Based on the foregoing, it is hereby RECOMMENDED:

that the agency enter its final order granting Jack D. Osborn's application for registration as a mortgage broker.

DONE AND ENTERED this 5th day of August, 1994, in Tallahassee, Florida.

MARY CLARK

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 Division of Administrative Hearings this 5th day of August, 1994.

COPIES FURNISHED:

Cassandra A. Evans, Esquire Assistant General Counsel Office of Comptroller Department of Banking & Finance The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

Jack DeWayne Osborn

303 Pickering Court Longwood, Florida 32779

Honorable Gerald Lewis, Comptroller

The Capitol, Plaza Level Tallahassee, Florida 32399-0350

William G. Reeves, General Counsel Department of Banking & Finance Room 1302, The Capitol 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 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.

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

JACK D. OSBORN,

Petitioner,

vs. DOAH CASE NO. 93-6424

Administrative Proceeding DEPARTMENT OF BANKING AND No. 3051-F-9/93

FINANCE,

Respondent.

/

FINAL ORDER

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 the above referenced proceeding. On February 23, 1994 a formal hearing was held in this matter. On August 5, 1994, a hearing officer from the Division of Administrative Hearings submitted her Recommended Order in this proceeding, a copy of which is attached hereto as Exhibit A. On August 22, 1994, the Department submitted Exceptions to the Recommended Order, a copy of which is attached hereto as Exhibit B. Petitioner Osborn did not file any exceptions to the Recommended Order.

RULINGS ON EXCEPTIONS OF THE DEPARTMENT

First Exception:

In the Department's First Exception, the Department merely makes note of the fact that this agency has a Motion for Rehearing pending before the First District Court of Appeal in the case Osborn Stern & Company, Inc. versus Department of Banking and Finance, 19 Fla. L. Weekly D882 (Fla. 1st DCA Opinion filed April 19, 1994). The Department's exception does not request rejection of the hearing officer's conclusion but merely notes that the value of the Osborn Stern decision as precedent may change. It is unnecessary to either accept or reject this exception because it merely adds a commentary to the status of an existing cited case.

Second Exception:

In the Department's Second Exception, the Department excepts to Paragraph

13 of the Conclusions of Law of the Recommended Order. In its exception, the agency makes a compelling argument that the existence of the pending complaint alone is sufficient grounds to deny the application for licensure as a mortgage

broker under Chapter 494, Florida Statutes. The Agency Head concurs, accepts the Department's exception and Paragraph 13 of the Recommended Order is rejected as contrary to the law.

CONCLUSION

Having ruled on all the exceptions filed by the parties, it is accordingly ordered:

l. The hearing officer's findings of fact and conclusions of law are adopted, except as modified by the foregoing rulings on the Department's exceptions.

2. In accordance with the hearing officer's recommendation, the Department shall grant Petitioner's application for registration as a mortgage broker.

DONE AND ORDERED this 14th day of September, 1994, in Tallahassee, Leon County, Florida.

GERALD LEWIS as Comptroller and Head of the Department of

Banking and Finance

COPIES FURNISHED:

Linda G. Dilworth, Director Division of Finance

Clerk, DOAH

Mary Clark, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

NOTICE OF RIGHT TO JUDICIAL REVIEW

ANY PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK, DEPARTMENT OF BANKING AND FINANCE, SUITE 1302, THE CAPITOL, TALLAHASSEE, FLORIDA 32399-0350, AND A SECOND COPY, ACCOMPANIED BY THE FILING FEES PRESCRIBED BY SECTION 35.22(3), FLORIDA STATUTES, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, 300 MARTIN L. KING, JR., BOULEVARD, TALLAHASSEE, FLORIDA 32399-1850, OR IN THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN THIRTY (30) DAYS OF RENDITION OF THE FINAL ORDER TO BE REVIEWED.

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing Final Order and Notice of Rights was sent by U.S. regular mail to: Jack D. Osborn, 303 Pickering Court, Longwood, Florida 32779, this 14th day of September, 1994.

H. RICHARD BISBEE Deputy General Counsel

Office of the Comptroller Suite 1302, The Capitol

Tallahassee, Florida 32399-0350

(904) 488-9896

Docket for Case No: 93-006424

Orders for Case No: 93-006424