BRIAN D. BONECK,
vs.
Respondent.
) Case No. 07-1052
On July 25, 2007, an administrative hearing in this case was held by teleconference in Tallahassee, Florida, and
Las Vegas, Nevada, before William F. Quattlebaum, Administrative Law Judge of the Division of Administrative Hearings.
For Petitioner: Brian D. Boneck, pro se
70 East Horizon Ridge Parkway, No. 140 Henderson, Nevada 89002
Whether the Petitioner's application for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent should be approved or denied.
In a Notice of Denial dated December 11, 2006, the Department of Financial Services (Respondent) notified Brian D. Boneck (Petitioner) that his application for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent had been denied.
The Petitioner disputed the denial and requested a formal hearing. The matter was forwarded to the Division of Administrative Hearings, which scheduled and conducted the proceeding.
At the hearing, the Petitioner testified on his own behalf, presented the testimony of two witnesses, and had Exhibits A through G admitted into evidence. The Respondent presented no witnesses and had Composite Exhibit A (consisting of Exhibits 1 through 6) admitted into evidence.
A Transcript of the hearing was filed on August 13, 2007. On July 30, 2007, the Petitioner filed a letter that has been considered as a Proposed Recommended Order. The Respondent did not file a proposed recommended order.
On August 4, 2006, the Petitioner filed an application for licensure as a "09-20" nonresident general lines insurance agent and a "91-20" nonresident surplus lines insurance agent.
By Notice of Denial dated December 11, 2006, the Respondent denied the Petitioner's application for licensure. The Notice of Denial, in material part, sets forth the factual basis for the denial as follows:
You, Brian D. Boneck, at all times pertinent to the facts set below, were licensed in this state as a resident general lines insurance agent. You, Brian D. Boneck, at all times pertinent to the facts set forth below, were the owner of Brooke Agency Services of Bradenton, Florida. You,
Brian D. Boneck, at all times pertinent to the facts set forth below, were the President and owner of Sierra Insurance Underwriters, Inc.
On or about the last week of December, 2005, Christopher Waters of Port Charlotte, Florida, called the Brooke Agency in Bradenton, Florida, and spoke to you,
Brian D. Boneck, regarding the renewal of a commercial general liability insurance policy for Waters Developers, LLC. On or about, January 4, 2006, Mr. Waters delivered a check to you in the amount of $809.30, payable to Sierra Underwriters. This check was to pay the down payment on the premium for renewal of Mr. Waters' general liability policy. Sometime in April 2006, Mr. Waters was notified by Mid-Continental [sic] Casualty Company that the policy was cancelled for non-payment of premium. You, Brian D. Boneck, failed to submit the money paid to you by Mr. Waters to the insurer, Mid-Continental [sic] Casualty Company, or to the insurer's general agent, Florida Homebuilders Insurance Agency, Inc. You, Brian D. Boneck, misappropriated the down payment made to you by Mr. Waters. To this date, you have not returned the money to Mr. Waters or paid the money to Mid- Continental [sic] Casualty Company, or to
the Florida Homebuilders Insurance Agency, Inc.
Your ownership of Brooke Agency Services of Bradenton, Florida, was through a franchise agreement with Brooke Franchise Corporation. Brook Insurance and Financial Services is a subsidiary corporation that manages business for Brooke Franchise Corporation. Pursuant to this relationship, you, Brian D. Boneck, were required to pay a share of the commissions received by Brooke Agency Service of Bradenton to Brooke Insurance and Financial Services and were required to provide information on insurance sales to Brooke Insurance and Financial Services.
According to a sworn affidavit by Marian Ann Eupizi, who was formerly employed by you at Brooke Agency Services, you, Brian D. Boneck, also misappropriated premium payments made to you by other customers whose insurance was written by you or other agents of Brooke Agency Services of Bradenton, Florida, through the Florida Homebuilders Insurance Agency. You,
Brian D. Boneck, did this by having customers write premium checks payable to your other company, Sierra Insurance Underwriters, Inc. By doing so, Brooke Insurance and Financial Services was unaware of your actions and you also misappropriated commissions owed to them. Also according to Ms. Eupizi, you, Brian D. Boneck, in mid- 2005, misappropriated a refund check issued for a policy on Callis Construction in the amount of approximately $1200.
The Respondent offered no reliable evidence at the hearing to support the allegations which served as the factual basis for the denial.
As to the allegation that Christopher Waters delivered the check to the Petitioner, the Respondent offered only the
sworn affidavit of Mr. Waters and various attachments in support of the allegation.
At the hearing, the Petitioner testified that he did not accept premium checks from customers and that the office staff accepted and processed premium checks. The Respondent offered no credible evidence to the contrary, and, for purposes of this Order, the Petitioner's testimony is credited.
The Petitioner testified that the Waters account was one of 35 transferred to the corporate franchisor when the Petitioner sold the agency back to the Brooke Agency Services. Negotiations for the sale occurred over a period of time and concluded with a bill of sale executed in August 2006. Although the Petitioner's testimony regarding the chronology of the sale was poorly defined, there was no evidence that the Waters account was not included within those transferred.
As to the allegation that the premium was misappropriated and not forwarded to Mid-Continent Casualty Insurance Company, the Respondent offered a copy of a sworn statement wherein a Mid-Continent Casualty representative alleged that the company's investigation indicated that the Waters premium was never forwarded through the Brook Agency to the Florida Homebuilders Insurance Agency, which initially issued and then ultimately cancelled the policy. Additionally, the Respondent offered a copy of an email to the Respondent's
investigator from a representative of Florida Home Builders Insurance, Inc., wherein the representative restates information provided to the email writer from unidentified representatives of the Brooke Agency and AmGro Premium Finance Company (with whom the remaining premium due from Mr. Waters had been financed).
The Respondent also offered banking records apparently provided in response to a subpoena that indicate the Waters check was deposited into the Sierra Insurance Underwriters Account, to whom the check was made payable. The Respondent offered no credible evidence that the deposit of the Waters check into the Sierra account was improper.
As to the allegation that no money had been refunded to Mr. Waters as of the December 11, 2006, Notice of Denial, the Petitioner testified that the money was refunded by a check to Mr. Waters and had a check to Waters Developers from Sierra Underwriters, Inc., dated July 24, 2006, for $1,471 admitted into evidence. It is unclear why the refund amount exceeded the initial premium amount, but there is no evidence contrary to the Petitioner's testimony that the check was issued as a premium refund.
As to the allegations related to the ownership structure of the Petitioner's agency, the Respondent offered no credible evidence regarding the interrelationship between the
Brooke entities or how the Brooke entities operated with the Petitioner’s Sierra Underwriters, Inc.
Regarding the allegations attributed to sworn affidavit of Marian Ann Eupizi, the Petitioner testified that Ms. Eupizi was a customer service representative who was not involved in the fiscal operation of the agency and whom he had fired for falsification of documents. There was no credible evidence contrary to the Petitioner's testimony, and it is credited. Ms. Eupizi’s affidavit has been disregarded in its entirety. There was no credible evidence to support the assertion in the affidavit that the Petitioner misappropriated premium payments from other customers, misappropriated commissions due to Brooke Insurance and Financial Services, or misappropriated a refund check to an entity identified as Callis
Construction.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes (2006).
Section 626.611, Florida Statutes (2006), in relevant part, provides as follows:
Grounds for compulsory refusal, suspension, or revocation of agent's, title agency's, adjuster's, customer representative's,
service representative's, or managing general agent's license or appointment.--The department shall deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, title agency, adjuster, customer representative, service representative, or managing general agent, and it shall suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist:
Lack of one or more of the qualifications for the license or appointment as specified in this code.
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(7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.
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Fraudulent or dishonest practices in the conduct of business under the license or appointment.
Misappropriation, conversion, or unlawful withholding of moneys belonging to insurers or insureds or beneficiaries or to others and received in conduct of business under the license or appointment.
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(13) Willful failure to comply with, or willful violation of, any proper order or rule of the department or willful violation of any provision of this code.
Section 626.621, Florida Statutes (2006), in relevant part, provides as follows:
Grounds for discretionary refusal, suspension, or revocation of agent's, adjuster's, customer representative's, service representative's, or managing general agent's license or appointment.--The department may, in its discretion, deny an application for, suspend, revoke, or refuse to renew or continue the license or appointment of any applicant, agent, adjuster, customer representative, service representative, or managing general agent, and it may suspend or revoke the eligibility to hold a license or appointment of any such person, if it finds that as to the applicant, licensee, or appointee any one or more of the following applicable grounds exist under circumstances for which such denial, suspension, revocation, or refusal is not mandatory under s. 626.611:
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(4) Failure or refusal, upon demand, to pay over to any insurer he or she represents or has represented any money coming into his or her hands belonging to the insurer.
Section 626.731, Florida Statutes (2006), in relevant part, provides as follows:
Qualifications for general lines agent's license.--
The department shall not grant or issue a license as general lines agent to any individual found by it to be untrustworthy or incompetent. . . .
As the applicant for licensure as an insurance agent, the Petitioner has the ultimate burden of proving by a preponderance of the evidence that he is entitled to issuance of
the license. See Department of Banking & Finance, Division of Securities & Investor Protection v. Osborne Stern & Company, 670 So. 2d 932, 934 (Fla. 1966); § 120.57(1)(j), Fla. Stat.
(2006). The Respondent has the burden of presenting evidence to support its reasons for denying the Petitioner's application.
Id. Also see Porras v. Department of Financial Services, DOAH Case No 05-4188, Final Order dated June 2, 2006, a licensure case, wherein the Respondent adopted in full, a Recommended Order dated March 29, 2006, including the Conclusion of Law (Paragraph 12) stating that the Respondent "has the burden of presenting evidence to support its reasons" for denial of the application. The concept of administrative stare decisis requires that the Respondent must adhere to its precedents or explain its deviation. Gessler v. Department of Business and
Professional Regulation, 627 So. 2d 501 (Fla. 4th DCA 1993).
In this case, the Respondent failed to present credible evidence sufficient to support the factual basis for its denial of the Petitioner's application as set forth in the Notice of Denial dated December 11, 2006.
The Notice alleged that the Petitioner misappropriated a premium check given to him by Mr. Waters, routinely misappropriated premium funds received from other insureds, misappropriated a $1,200 refund check to Callis Construction,
and failed to pay commissions to Brooke Insurance and Financial Services.
The Respondent called no witnesses to testify at the hearing, relying on sworn affidavits and documents collected by the Respondent's investigator. All of the documents offered in support of the denial are hearsay evidence.
Section 90.801, Florida Statutes (2007), provides as follows:
90.801 Hearsay; definitions; exceptions.--
The following definitions apply under this chapter:
A "statement" is:
An oral or written assertion; or
Nonverbal conduct of a person if it is intended by the person as an assertion.
A "declarant" is a person who makes a statement.
"Hearsay" is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.
A statement is not hearsay if the declarant testifies at the trial or hearing and is subject to cross-examination concerning the statement and the statement is:
Inconsistent with the declarant's testimony and was given under oath subject to the penalty of perjury at a trial, hearing, or other proceeding or in a deposition;
Consistent with the declarant's testimony and is offered to rebut an express or implied charge against the declarant of improper influence, motive, or recent fabrication; or
One of identification of a person made after perceiving the person.
The Petitioner, a non-lawyer, did not formally object to the introduction of the Respondent’s exhibits. Nonetheless, such hearsay evidence may not be used to support Findings of Fact in an administrative hearing. Subsection 120.57(1)(c), Florida Statutes (2007), provides as follows:
Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.
In both affidavits, the affiants indicated their willingness to testify at the hearing. The affidavits of Mr. Waters and Ms. Eupizi could have been supported by their
testimony, had either affiant testified at the hearing, but the Respondent did not call any witnesses to the hearing. When asked at the hearing about the lack of witnesses, counsel for the Respondent stated that he was calling no witnesses, apparently because of the distance involved. It should be noted that the hearing was being conducted telephonically, with the Petitioner and his witnesses located in Las Vegas.
Additionally, none of the hearsay evidence offered by the Respondent would have been admissible over an objection in a civil action.
Section 90.804, Florida Statutes (2007), provides exceptions applicable to situations where the declarant of the hearsay statement is unavailable. There was no evidence offered that any of the declarants in this case were unavailable.
Various additional exceptions to the rule excluding hearsay evidence are set forth at Section 90.803, Florida Statutes (2007). At the hearing, counsel for the Respondent identified the exhibits as "regularly-kept business documents" that were "under seal of the Department."
Subsection 90.803(6), Florida Statutes (2007), provides an exception from the hearsay rule for certain business records and provides in relevant part as follows:
(a) A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinion, or diagnosis, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity and if it was the regular practice of that business activity to make such memorandum, report, record, or data compilation, all as shown by the testimony of the custodian or other qualified witness, or as shown by a certification or declaration that complies with paragraph (c) and s. 90.902(11), unless the sources of information or other circumstances show lack of trustworthiness. The term "business" as used in this paragraph includes a business,
institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit. (Emphasis supplied.)
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(c) A party intending to offer evidence under paragraph (a) by means of a certification or declaration shall serve reasonable written notice of that intention upon every other party and shall make the evidence available for inspection sufficiently in advance of its offer in evidence to provide to any other party a fair opportunity to challenge the admissibility of the evidence. If the evidence is maintained in a foreign country, the party intending to offer the evidence must provide written notice of that intention at the arraignment or as soon after the arraignment as is practicable or, in a civil case, 60 days before the trial. A motion opposing the admissibility of such evidence must be made by the opposing party and determined by the court before trial. A party's failure to file such a motion before trial constitutes a waiver of objection to the evidence, but the court for good cause shown may grant relief from the waiver.
Subsection 90.902(11), Florida Statutes (2007), provides as follows:
(11) An original or a duplicate of evidence that would be admissible under s. 90.803(6), which is maintained in a foreign country or domestic location and is accompanied by a certification or declaration from the custodian of the records or another qualified person certifying or declaring that the record:
Was made at or near the time of the occurrence of the matters set forth by, or
from information transmitted by, a person having knowledge of those matters;
Was kept in the course of the regularly conducted activity; and
Was made as a regular practice in the course of the regularly conducted activity,
provided that falsely making such a certification or declaration would subject the maker to criminal penalty under the laws of the foreign or domestic location in which the certification or declaration was signed.
The certification attached to Respondent's Composite Exhibit A states only that the "attached documents are true and correct copies of the original documents kept" in the agency's file and does not remedy the hearsay nature of the exhibits.
Additionally, as set forth in the Findings of Fact, letters and emails from various company representatives were also hearsay, and were based, at least in part, upon statements made by other parties. Section 90.805, Florida Statutes (2007), provides as follows:
Hearsay within hearsay is not excluded under
s. 90.802, provided each part of the combined statements conforms with an exception to the hearsay rule as provided in s. 90.803 or s. 90.804.
Here, none of the statements contained within the "business records" conform with exceptions to the hearsay rule.
Although not specifically cited by the Respondent as grounds for admission of the documents, Subsection 90.803(8),
Florida Statutes, provides an exception for various public records and reports "setting forth the activities of the office or agency, or matters observed pursuant to duty imposed by law as to matters which there was a duty to report." This exception would perhaps be applicable to the Respondent's investigatory file but again, the source of the information set forth in the investigatory file was to a large degree based on the hearsay statements by Mr. Waters, Ms. Eupizi, and various other parties, none of which were corroborated by non-hearsay evidence.
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services enter a final order granting the application of Brian D. Boneck for licensure as a nonresident general lines insurance agent and a nonresident surplus lines insurance agent.
DONE AND ENTERED this 18th day of September, 2007, in Tallahassee, Leon County, Florida.
WILLIAM F. QUATTLEBAUM
Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 2007.
Brian D. Boneck
70 East Horizon Ridge Parkway, No. 140 Henderson, Nevada 89002
William Gautier Kitchen, Esquire Department of Financial Services Division of Legal Services
Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Daniel Sumner, General Counsel Department of Financial Services The Capitol Plaza Level 11 Tallahassee, Florida 32399-0307
15 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
