STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE ) AND TREASURER, )

)

Petitioner, )

)

vs. ) Case No. 94-6944

)

TIMOTHY Z. REGISTER, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Daniel M. Kilbride, held a formal hearing in the above-styled case on June 20, 1995, in Orlando, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Michael K. McCormick, Esquire

Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

For Respondent Jeb Berman, Esquire

Infantino and Berman Post Office Drawer 30

Winter Park, Florida 32790 STATEMENT OF THE ISSUES

Whether Respondent's license as a general lines insurance agent in Florida should be disciplined because the Respondent failed to pay within 30 days a judgment entered against him on June 8, 1994 in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation, which the Administrative Complaint alleges represented fiduciary funds made up of premiums, return premiums, and unearned commissions owed to First Miami Insurance Company, an insurer, as required by Section 631.155, Florida Statutes.

PRELIMINARY STATEMENT

By an Administrative Complaint, dated October 21, 1994, the Department of Insurance and Treasurer (Petitioner) alleged that Respondent violated various sections of Chapter 626, and Section 631.155, Florida Statutes. On November 21, 1994, through counsel, Respondent denied the allegations of the Complaint and requested a formal hearing. The matter was referred to the Division of Administrative Hearings on December 21, 1994. The matter was noticed and set

for hearing on April 28, 1995. At Respondent's request, the April 28, 1995 hearing was continued. The hearing was reset for June 20, 1995 and was heard as scheduled.

At the hearing, the Petitioner called one witness and introduced five exhibits. Exhibits #1 and #2 were accepted into evidence. Exhibit #3 was accepted into evidence except as to hearsay contained therein. Exhibits #4 and #5 were accepted into evidence subject to relevance. One exhibit was offered, but not admitted. Respondent presented no evidence.

The hearing was recorded and the transcript was filed on August 2, 1995. Respondent filed his proposed findings of fact and conclusions of law on June 26, 1995. Petitioner filed its proposals on August 11, 1995. The parties' proposals have been given careful consideration and have been incorporated herein when supported by the evidence. My specific rulings on the parties proposals are contained in the Appendix attached hereto.

FINDINGS OF FACT

1. Petitioner is the state agency in Florida responsible for the regulation and licensing of general lines insurance agents. Its responsibility includes the duty to sanction those licensed under the insurance code for violations of the code.

   
   

2. At all times relevant, Respondent was a licensed general lines insurance agent and possessed license #265736194 issued by the Petitioner on December 21, 1990. Respondent's license is presently active.

   
   

3. On June 5, 1992, an order of liquidation, injunction and notice of automatic stay was entered in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation.

   
   

4. On December 14, 1992, Salma Zacur, the operations manager for the receiver for First Miami Insurance Company, mailed a letter to Respondent.

   
   

5. On June 7, 1993, a summary order directing immediate delivery of funds was entered in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation.

   
   

6. On June 8, 1994, an order on receiver's motion for entry of final judgment was entered in Case No. 92-1766, Circuit Court, Leon County, Florida, In Re: The Receivership of First Miami Insurance Company, a Florida corporation.

   
   

7. Petitioner failed to produce evidence of the contents of the December 14, 1992 letter which was non-hearsay and, therefore, failed to establish the relevance of the court orders of June 7, 1993 and June 8, 1994 in this matter.

   
   

8. The Petitioner failed to present clear and convincing evidence that Respondent violated Section 631.155, or Chapter 626, Florida Statutes.

   
   

   CONCLUSIONS OF LAW

   
   

9. 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.

10. The Petitioner has the responsibility to administer and enforce Chapters 626 and 631, Florida Statutes, including the duty to sanction those licensed under the insurance code for violations of the code.

    
    

11. The Petitioner has jurisdiction to sanction Respondent's license as a general lines insurance agent.

    
    

12. The Petitioner must prove by clear and convincing evidence the allegations in the Administrative Complaint charging Respondent with violations of the statutes. Balino v. Department of Health and Rehabilitative Services,

    348 SO.2d 349 (Fla. 1st DCA 1977); Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

13. Petitioner has failed to meet its burden of proof with relevant, material and non-hearsay evidence, as required by Section 120.58(1), Florida Statutes.

    
    

14. Although it was shown that Salma Zacur, Receiver for the First Miami, mailed a letter to Respondent on December 14, 1992, Petitioner did not produce admissible evidence relating to the contents of the letter. Therefore, the contents of the letter cannot be considered in making a finding of fact.

    
    

15. Petitioner did not produce admissible evidence which would show the relevance of the summary order, dated June 7, 1993, or the order of June 8, 1994, and they have not been considered. Nor has the contents of the Promissory Note been considered, which was offered but not admitted in evidence.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department enter a final order dismissing the

Administrative Complaint filed against Respondent.

DONE and ENTERED this 23rd day of August, 1995, in Tallahassee, Florida.

DANIEL M. 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 23rd day of August, 1995.

APPENDIX

The following constitutes my specific rulings, in accordance with Section 120.57(1)(b)9., Florida Statutes.

Proposed findings of fact submitted by Petitioner.

Accepted in substance: paragraphs 1, 2, 3, 4, 5, 7 (in part), 12 (in part).

Rejected as not proven by clear and convincing evidence: paragraphs 6, 7 (in part), 8, 9, 10, 11, 12 (in part) 13.

Proposed findings of fact submitted by Respondent.

Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, and 7.

COPIES FURNISHED:

Bill Nelson

State Treasurer and Insurance Commissioner

The Capitol, Plaza Level Tallahassee, Florida 32399-0300

Dan Sumner

Acting General Counsel Department of Insurance The Capitol, PL-11

Tallahassee, Florida 32399-0300

Michael K. McCormick, Esquire Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

Jed Berman, Esquire Infantino and Berman

1. O. Drawer 30

   Winter Park, Florida 32790

   
   

   NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

   
   

   All parties have the right to submit written exceptions to the 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 consult with the agency that will issue the final order in this case concerning their 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

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

   
   

   THE TREASURER OF THE STATE OF FLORIDA DEPARTMENT OF INSURANCE

   
   

   BILL NELSON

   
   

   IN THE MATTER OF: CASE NO: 08822-94-A ASSIGNMENT NO: 11970-95-F

   TIMOTHY Z. REGISTER DOAH CASE NO: 94-6944

   /

   
   

   FINAL ORDER

   
   

   THIS CAUSE came on before the undersigned Treasurer of the State of Florida, acting in his capacity as Insurance Commissioner, for consideration and final agency action. On October 21, 1994, an Administrative Complaint was filed charging the Respondent with violating various sections of Chapter 626 and Section 631.155, Florida Statutes. The Respondent timely filed a request for a formal proceeding in accordance with Section 120.57(1), Florida Statutes.

   Pursuant to notice, after properly requested continuances, the formal hearing was held on June 20,1995, in Orlando, Florida, before the Honorable Daniel M. Kilbride, a duly appointed Hearing Officer of Division of Administrative Hearings.

   
   

   After consideration of the evidence, argument, and testimony presented at the hearing, the Hearing Officer issued his Recommended Order, (attached as Exhibit A), on August 23, 1995. The Hearing Officer Recommended that the Department enter a final order dismissing the Administrative Complaint. The Hearing Officer's recommendation was based upon his findings that the Petitioner-Department's letter of December 14,1992, notifying the Respondent of commissions and premiums owed the Department as Receiver of First Miami Insurance Company, was hearsay and that without the admissibility of the critical information contained in that letter, the Petitioner failed to establish the relevance of two court orders issued by the Second Judicial Circuit for Leon County, Florida, dated June 7,1993, and June 8, 1994, which resulted in a Final Judgment against the Respondent for funds owed the Department as Receiver. As a result of its failure to show the relevance of those two exhibits, the Hearing Officer found that the Department therefore failed to show by clear and convincing evidence that the Respondent had

   committed the violations stated in the Administrative Complaint. The Department (hereafter referred to as Petitioner), filed numerous exceptions to the Recommended Order. The Respondent did not file exceptions. Based upon the complete review of the record, including the original charging document, the transcript and evidence adduced at the formal hearing, the Recommended Order and exceptions thereto, and relevant statutes, rules and case law, find as follows:

   
   

   RULING ON PETITIONER'S EXCEPTIONS TO THE RECOMMENDED ORDER:

   
   

   1. The Petitioner first takes exception to the Hearing Officer's Finding of Fact number 7 in which the Hearing Officer states that the Petitioner failed

      to produce non-hearsay evidence as to the contents of the December 14,1992, demand letter. The Petitioner's exception is accepted. The Petitioner's witness, Salma Zacur, testified under oath at the hearing that the demand letter sent to the Respondent on December 14,1992, was an ordinary business form routinely used by the Department to notify agents of monies owed (TR-16), that the letter contained a copy of her signature as an employee of the Department (TR-16), and that she mailed the letter to the Respondent's at his last known address. (TR-16). This letter meets the requirements of a business record-and as such is an exception to the hearsay rule, Section 90-803(6), Florida Statutes. Furthermore, even assuming arguendo that the letter does not qualify as a business record exception to the hearsay rule, the testimony of the Petitioner's witness is sufficient to meet the latitude for hearsay authorized by Section 120.58(1)(a), Florida Statutes, when such evidence explains other evidence. In an administrative proceedings, hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but shall not be sufficient in itself to support finding, unless it would be admissible over objection in civil actions. Campbell v. Central Florida Zoological Society, 432 So.2d 684 (Fla. 3rd DCA 1984); See e.g. State Department of Admn., Division of Retirement v. Porter, 591 So.2d 1108 (Fla. 2nd. DCA 1992). This letter was not the sole evidence used to support this finding. The finding was primarily supported by Petitioner's Exhibit 4 and 5. This letter should have been accepted into evidence and thus, the two court orders of the Second Circuit should have been admitted as relevant and given appropriate weight in this proceeding.

      
      

   2. The Petitioner also excepts the Hearing Officer's Findings of Fact, number 8, which the Hearing Officer found that the Petitioner failed to present by clear and convincing evidence that the Respondent had violated Section 631.155, Florida Statutes. This Petitioner's exception is also accepted. The two court orders of the Second Judicial Circuit for Leon County, Florida Petitioner's, Exhibits 4 and 5, are relevant to, and probative of, this matter as they establish that the Petitioner owed the Petitioner $5,629.04, plus interest, on June 7,1993, and that $4,508.85, plus interest, of that debt was still owed on June 8, 1994, the date the Final Judgment of the indebtness was entered. Section 631.155, Florida Statutes, expressly requires that the indebtedness be paid to the Receiver within 30 days of judgment. As this was not done, Respondent's action constituted a per se violation of that statutory section.

      
      

   3. The Petitioner also excepts to the Hearing Officer's Conclusion of Law number 15, in which the Hearing Officer concluded that the Petitioner did not produce admissible evidence which showed the relevance of the Summary Order, dated June 7,1993, the Final Order dated June 8,1994, or the promissory note of the Respondent, which was offered, but not admitted. Petitioner's Exhibit 1, which was accepted into evidence, indicates the Second Circuit's valid appointment of the Petitioner as Receiver of the First Miami Insurance Company. The Petitioner's demand letter of December 14,1992, which have accepted into evidence as Exhibit 3, was corroborated by the Department witness, Salma Zacur. This letter provided the Respondent with more than sufficient notice of the monies owed the Petitioner. By Petitioner's Exhibit 4, the Second Circuit ordered the Respondent to deliver to the Petitioner the monies referenced in the demand letter of December 14,1992. Approximately one year later, the Second Circuit by Petitioner's Exhibit 5, granted the Petitioner final judgment of the unpaid balance of this same indebtedness. These two court orders are admissible under the statutory authority of Section 92.05, Florida Statutes, which provides:

      "92.05. All final judgments and decrees heretofore and hereafter rendered and entered into the courts of record of this state, and certified copies thereof, shall he admissible as prima facie evidence in several courts of this state of the entry and validity of such judgments." The Petitioner's exception that Petitioner's Exhibit 4 and Petitioners Exhibit 5 are. admissible are relevant to this matter is apparent and accepted.

      
      

   4. The Petitioner also excepted to the Hearing Officer's Recommendation that the Administrative Complaint dated October 21, 1994, against the Respondent be dismissed. The Petitioner recommends instead that a Final Order should be entered revoking the license of the Respondent, pursuant to Section 631.155, Florida Statutes. This exception will be addressed later in this Final Order.

      
      

   5. The Petitioner also excepted to the Appendix of the Hearing Officer, whereby the Hearing Officer rejected as not proven by clear and convincing evidence, Paragraphs 12 and 13 of the Petitioner's Recommended Order. Paragraph

      12 was proven by a certified court record and paragraph 13 by the admission of the Respondent. (Admission 7, dated 14,1995). This exception is therefore also accepted.

      
      

   6. As stated previously, the Petitioner excepted to the Hearing Officer's recommendation that the Department enter a Final Order dismissing the Administrative Complaint against the Respondent. This exception is accepted. The two court orders of the Second Circuit, Petitioner's Exhibits 4 and 5, are not only relevant both because of the foundation laid by the demand letter of December 14,1992, Petitioner's Exhibit No. 3, but also as a business records exception to the hearsay rule, Section 90.803(8), Florida Statutes. In addition, the two court orders should have been accepted as prima facie evidence of the judgment against the Petitioner under the authority granted by Section 92.05, Florida Statutes. A formal judgment in a case signed by a judge, which is recorded by the clerk upon the minutes of the court, certified to as a properly certified copy, is admissible as evidence of the judgment. Mansfield

v. Johnson, 40 So.196 (Fla.1906). See e.g. Huddleston v. Graham, 74 So. 414 (Fla.1917). These two orders clearly prove that funds were owed to the Petitioner by the Respondent and that the funds were not paid within 30 days of judgment. Additionally, as to proof of the existence of the indebtness, which was the subject of Petitioner's Exhibits 4 and 5, this jurisdiction recognizes the theory of collateral estoppel. Gordon v. Gordon, 59 So.2d. 40 (Fla. 1952). This doctrine mandates that material facts or issues which were in issue in a former action, which were admitted or determined in a former action or were conclusively settled or determined in the former action, are conclusively settled as between the same parties or their privies, whether the cause of action in the two suits is the same or not. Universal Construction Company v. City of Ft. Lauderdale, 68 So.2d 366 (Fla. 1953); Ward v. Zeidwig, 521 So.2d 215, 219 (Fla.4th DCA 1988). Collateral estoppel can occur in two different types of cases: those where res adjudicata is involved and those where estoppel by judgment is applicable. The difference between res adjudicata and estoppel by judgment is that under res adjudicata, a final decree or judgment bars a subsequent suit between the same parties when the second suit involves the same cause of action and is conclusive to all matters germane thereto that were or could have been raised in the first suit. The principle of estoppel by judgment is applicable where the causes of action in the two cases are different, in which event, the judgment in the first suit only estops the parties from

relitigating in the second suit the same issues - that is the same facts and/or questions - common to both causes of action, which were actually adjudicated in the first litigation. Gordon v. Gordon, 59 So.2d 40 (1952). The judgment in the first action estops the parties or their privies from relitigating in the second suit issues common to both causes of action which were actually present, fully litigated and resolved in the first suit. Mobile Oil v. Shevin, 354 So.2d

372 (Fla. 1977); Tampa v. Lewis, 488 So.2d 860 (Fla. 2nd. DCA 1986), Prudential Ins. Co. v. Turkal, 528 So.2d 487 (Fla. 3rd DCA, 1988), Green v. State, Dept. of Health Rehabilitative Services, 412 So.2d 413 (Fla. 3rd DCA 1982).

In the present matter, the Circuit Court of the 2nd Judicial Circuit in and for Leon County, Florida, Case No. 92-1766, entered a summary order that the Respondent owed and should immediately deliver $5,629,04, plus interest from June 5, 1992, to the Petitioner. This same court in the same-styled case, on June 8, 1994, entered a Final Judgment against the Respondent in the amount of

$4,508.85, plus interest. The issue of this indebtedness owed to the Department by the Respondent was fully litigated in the actions described in Exhibit 4 and

5. Under the theory of estoppel by judgment, the Department is not required to again relitigate the indebtedness and it can be used in this action.

8. Section 631.155, Florida Statutes, reads in pertinent part as follows:

Premiums and unearned commissions which

have been collected on behalf of an insurer by an agent, solicitor, agency or other entity constitute an asset of the insurer for which the agent, solicitor, agency or other entity has a duty to account to the receiver and to pay over amounts as may be due. Compliance with this section and payment of sums determined to be owed by the court within 30 days of judgment or other payment terms approved by the court,

shall constitute requirements for continued licensure of a person holding a license under the Florida Insurance Code, and failure to comply with this section shall be sufficient grounds for the license revocation. (Emphasis provided).

The Petitioner's Exhibit 3, corroborated by the Petitioner's witness, clearly notified the Respondent of the indebtedness owed to the Department as Receiver of the First Miami Insurance Company. Petitioner's Exhibit 4 and 5, for the reasons stated herein irrevocably establish the existence of the indebtedness. The Petitioner, by admission 7, dated June 14,1995, conceded that the indebtedness was not paid within 30 days of judgment. This evidence is sufficient to find that the Respondent violated Sections 631.155 and 626.621(2), Florida Statutes.

The Respondent's failure to pay the premiums and commissions due to the Petitioner as ordered by the Second Circuit within the time period set forth in Section 631.155, Florida Statutes, seriously compromised or could have compromised the Respondent's policyholders in Florida as those funds which should have been used for the payment of legitimate claims were not available for that purpose due to Respondent's illegal acts. Therefore, the Respondent's blatant failure to pay over monies due and owing to the Receiver for payment of the claims fully warrants the revocation of his insurance licenses.

WHEREFORE, upon careful consideration of the record, the submissions the Parties and being otherwise fully advised in the premises, It is ORDERED:

1. The Findings of Fact of the Hearing Officer are adopted as the Department's Findings of Fact, with the exception of paragraphs 7 and 8.

   
   

2. The Conclusions of Law, of the Hearing Officer are adopted in full as the Department's Conclusions of Law, with the exception of paragraphs 13,14, and 15.

   
   

3. The Hearing Officer's recommendation that the Department enter a final order dismissing the Administrative Complaint filed against the Respondent is rejected. All licenses, appointments and eligibility for insurance licensure hereto issued to Timothy Z. Register, within the purview of the Department of Insurance, are hereby REVOKED.

During the period of revocation, Timothy Z. Register shall not engage in or attempt or profess to engage in any transaction or business for which a license or appointment is required under the Insurance Code or directly or indirectly own, control, or be employed in any manner by any insurance agent or agency.

Timothy Z. Register shall immediately surrender his or her photo license identification to the Department.

Timothy Z. Register shall have the right to apply for another license or appointment under the Insurance Code within two (2) years from the date of this Order. The Department shall not, however, grant a new license or appointment or reinstate eligibility to hold such license or appointment if it finds that the circumstance or circumstances for which the eligibility was revoked still exists.

Any party to these proceedings adversely affected by this Order is entitled to seek review of this Order pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure. Review proceedings must be instituted by filing a petition or notice of appeal with the General Counsel, aging as the agency clerk, at 612 Larson Building, Tallahassee, Florida 32399- 0333, and a copy of the same with the appropriate District Court of Appeal within thirty (30) of rendition of this Order.

DONE and ORDERED this 6th day of December, 1995.

BILL NELSON

Treasurer and

Insurance Commissioner

COPIES FURNISHED:

BILL NELSON

State Treasurer and Insurance Commissioner The Capitol, Plaza Level

Tallahassee, Florida 32399-0300

DAN SUMNER

Acting General Counsel Department of Insurance The Capitol, PL-11

Tallahassee, Florida 32399-0300

MICHAEL K. MCCORMICK, ESQUIRE

Division of Legal Services 612 Larson Building

Tallahassee, Florida 32399-0300

JED BERMAN, ESQUIRE

Infantino and Berman

P.O. Drawer 30

Winter Park, Florida 32790

Docket for Case No: 94-006944

Orders for Case No: 94-006944