STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

JEFFREY CARL PELLET, )

)

Petitioner, )

)

vs. ) Case No. 11-4054

) FLORIDA DEPARTMENT OF FINANCIAL ) SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on April 17, 2012, by video teleconference between Lauderdale Lakes and Tallahassee, Florida, before Administrative Law Judge Claude B. Arrington of the Division of Administrative Hearings (DOAH).

APPEARANCES

For Petitioner: Michael D. Gelety, Esquire

1209 Southeast 3rd Avenue

Fort Lauderdale, Florida 33316

For Respondent: David J. Busch, Esquire

Department of Financial Services Division of Legal Services

612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399

STATEMENT OF THE ISSUE

Whether the Florida Department of Financial Services (the Department) has grounds to deny the application for an "All-

Lines Public Adjuster's" license filed by Jeffrey Carl Pellet (Mr. Pellet) as alleged in the Department's Notice of Amended Denial and Notice of Permanent Bar dated January 19, 2012.

Specifically, two grounds for denial were at issue. First, whether Mr. Pellet's action in litigating a subpoena served on him in 2008 by the Department constitutes grounds to deny his application. Second, whether Mr. Pellet's criminal history disqualifies him from licensure.

PRELIMINARY STATEMENT

The Department denied Mr. Pellet's application for licensure as an "All Lines Public Adjuster." The Department's initial denial letter asserted that his failure to timely comply with a subpoena served upon him by the Department in 2008 constituted grounds for the denial based on the following provisions: sections 624.307(3); 624.317(1); 624.318(1), (2),

and (5); 624.321(1)(b) and (2); 626.561(2); 626.601(1);

626.611(7) and (13); 626.621(1), (2), (3), and (13); 626.870(4);

and 626.8698(1), Florida Statutes. Mr. Pellet timely requested a formal administrative hearing to challenge the Department's proposed action, the matter was referred to DOAH, and this proceeding followed. Thereafter, the Department amended its denial letter by asserting that Mr. Pellet's criminal history disqualifies him from licensure.

At the formal hearing, Mr. Pellet testified on his own behalf and presented the additional testimony of Andrew Fuxa. Mr. Pellet's pre-marked Exhibits 3, 10-13, 15, and 22 were admitted into evidence. The Department presented the testimony of Robert Keegan and Matt Tamplin, both of whom are Department employees. The Department's Exhibits 1-15 were admitted into evidence.

On April 16, 2012, counsel for Mr. Pellet filed a "Motion to Declare Florida Statute 626.207 Unconstitutional on its Face and as Applied to Petitioner Pellet" and "Pellet's Motion to Strike Department's Amended Denial of License and Notice of Permanent Bar and Motion in Limine to Prevent Mention or Use of Information and Allegations Contained Therein as a Justification for Denial of Licensure." The motion to strike and the motion in limine were denied on the merits.1/ No ruling was made on the merits of the motion asserting that the statute is unconstitutional because the undersigned lacks the authority to do so. It is well established that only a court of competent jurisdiction can rule on constitutional issues. See Key Haven Associated Enters., Inc., v. Trs. of the Internal Improvement

Trust Fund, 427 So. 2d 153 (Fla. 1982).

A Transcript of the proceedings, consisting of two volumes, was filed on May 3, 2012. Both parties filed Proposed

Recommended Orders (PROs), which have been duly considered by the undersigned in the preparation of this Recommended Order.2/

FINDINGS OF FACT

1. The Department is the state agency that regulates the practice of insurance in the State of Florida.

2. On April 20, 2011, Mr. Pellet filed with the Department an application for an "All-Lines Independent Adjuster's" license.

   CRIMINAL HISTORY

   
   

3. On October 13, 1987, Mr. Pellet entered a plea of nolo contendere to three counts of insurance fraud and three counts of grand theft. Adjudication of guilt was withheld. He was ordered to serve six months of community control to be followed by 2.5 years of probation. Mr. Pellet's term of probation was terminated May 24, 1989.3/

   CHANGE IN THE LAW

   
   

4. Before it was invalidated in April 2010, Florida Administrative Code Rule 69B-211.042(8)(a) contained a 15-year waiting period before a person with Mr. Pellet's criminal history would become eligible for the type license at issue in this proceeding.4/

5. Section 6 of chapter 2011-174, Laws of Florida, created subsection 626.207(3), Florida Statutes. That provision became effective on July 1, 2011, and provides as follows:

   
   

   (3) An applicant who commits a felony of the first degree; a capital felony; a felony involving money laundering, fraud, or embezzlement; or a felony directly related to the financial services business is permanently barred from applying for a license under this part. This bar applies to convictions, guilty pleas, or nolo contendere pleas, regardless of adjudication, by any applicant, officer, director, majority owner, partner, manager, or other person who manages or controls any applicant.

   
   

6. Section 626.207(1) defines the term "financial services business" to include any financial activity regulated by the Department of Financial Services, Office of Insurance Regulation, or Office of Financial Regulation. The foregoing provision is applicable to the type of application submitted by Mr. Pellet.

7. The foregoing provision is applicable to Mr. Pellet's application because his application was pending when the provision became law. Section 18 of chapter 2011-174, Laws of Florida, provides as follows:

   The amendments to s. 626.207, Florida Statutes, made by this act do not apply retroactively and apply only to applicants whose applications are pending or submitted on or after the date that the amendments to

   s. 626.207, Florida Statutes, made by this act become law. This section shall take effect upon this act becoming a law.

   
   

   PRIOR LICENSE

   
   

8. In compliance with the then existing 15-year waiting

   
   

   period, Mr. Pellet waited until December 18, 2003, to file with the Department an application for licensure as an "Independent Adjuster." That application disclosed Mr. Pellet's criminal history. On July 9, 2004, the Department granted Mr. Pellet's application and issued an "Independent Adjuster" license to him.5/ He held that license until he converted it to a "Public Adjuster Apprentice" license in August 2009. Mr. Pellet's "Public Adjuster Apprentice" license expired February 11, 2011.6/ Mr. Pellet held no license from the Department as of the date of the formal hearing.

   SUBPOENA

   
   

9. Prior to February 12, 2008, the Department received complaints that Mr. Pellet was performing services beyond the scope of his licensure. At that time, Mr. Pellet was an owner and operator of a business known as Professional Insurance Estimating & Appraisals. On February 12, 2008, the Department served an investigative subpoena on Mr. Pellet by leaving the subpoena with an employee of Mr. Pellet at Mr. Pellet's office. The subpoena was directed to Mr. Pellet and to an associate of Mr. Pellet who is not involved in this proceeding. The subpoena cited the following authority for the subpoena: sections 624.307, 624.310, 624.317, 624.318, 624.321, 626.561, 626.601, 626.748, and 626.9561. The subpoena demanded that Mr. Pellet produce to the Department: the complete claim files for seven

   
   

   named consumers "including the contracts entered with each of these consumers, communications with these consumers and or their insurers, the request for appraisal for each of these consumers, the companies settlement checks, the consumer check made payable to Pellet or Professional Insurance Estimating & Appraisals, and the bank account name and number for Professional Estimating & Appraisals' bank account."

10. Mr. Pellet did not comply with the subpoena. Instead, Mr. Pellet filed "Motion for a Protective Order and to Quash Subpoena" (Motion to Quash) in Broward circuit court. The Motion to Quash was heard by a magistrate who denied the Motion to Quash as it related "to non-testimonial production of files, records, documents, etc." The magistrate's report ordered

    Mr. Pellet and his associate to comply with the subpoena within

    
    

    30 days unless they filed an objection and requested a hearing before the circuit judge within the 30-day period. On

    February 18, 2009, the circuit judge denied the Motion to Quash and also denied the exceptions to the magistrate's report that had been filed on behalf of Mr. Pellet. The circuit judge ratified and "approved in all respects" of the magistrate's report.

11. On March 10, 2009, Mr. Pellet, through counsel, offered to produce two of the seven consumer files demanded by the subpoena and asserted that the other five consumer files had

    
    

    been shredded before the subpoena was issued. No offer was made as to the banking information demanded by the subpoena. The Department rejected that offer.

12. Mr. Pellet appealed the order denying the Motion to Quash to the Fourth District Court of Appeal. On May 19, 2010, the court affirmed the order denying the Motion to Quash.

    Mr. Pellet filed a motion for re-hearing, which was denied by the court on June 16, 2010.

13. During the course of the formal hearing before the undersigned Mr. Pellet repeated the offer to produce two of the seven consumer files demanded by the subpoena and asserted that the other five consumer files had been shredded before the subpoena was issued. No offer was made as to the banking information demanded by the subpoena. The Department rejected that offer.

14. Mr. Pellet's action in litigating the subpoena impeded the Department's investigation into his alleged wrongdoing.

15. Mr. Pellet has paid the fee and passed a pre-licensure examination, which are pre-requisites for the license he seeks.

    CONCLUSIONS OF LAW

    
    

16. DOAH has jurisdiction over the subject matter of and the parties to this proceeding pursuant to sections 120.569 and 120.57(1).

    
    

17. This is a de novo proceeding designed to formulate final agency action. See Hamilton Cnty Bd. of Cnty. Comm'rs v.

    Dep't Envtl. Reg., 587 So. 2d 1378 (Fla. 1st DCA 1991) and section 120.57(1)(k).

18. As the applicant, Mr. Pellet has the burden of proving his entitlement to the relief he seeks by a preponderance of the evidence. See Dep't of Banking and Fin. v. Osborne Stern, 670 So. 2d. 932 (Fla. 1996) and Dep't of Transp. v. J. W. C. Co., Inc., 396 So. 2d 778 (Fla. 1st DCA 1981).

19. A "preponderance" of the evidence means the greater weight of the evidence. See Fireman's Fund Indemnity Co. v. Perry, 5 So. 2d 862 (Fla. 1942).

20. The authorities relied upon by the Department, which are recited in the Amended Denial Letter (Department's Exhibit 15), provide it with the authority to subpoena Mr. Pellet's files and business bank accounts in order to investigate the complaints against him. His resistance to the subpoena was rejected by the magistrate, the circuit judge, and the appellate court. That resistance impeded the Department's investigation.

21. Section 626.611 provides, in relevant part, as

    
    

    follows:

    
    

    The department shall deny an application for

    . . . license or appointment, if it finds that as to the application . . . any one or more of the following applicable grounds exist:

    
    

    * * *

    
    

    (7) Demonstrated lack of fitness or trustworthiness to engage in the business of insurance.

    * * *

    
    

    (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.

    
    

22. The Department asserts that it has grounds to deny Mr. Pellet's application pursuant to subsections 626.11(7) and (13). The Department failed to prove that Mr. Pelllet "demonstrated lack of fitness or trustworthiness to engage in the business of insurance" when he opted to litigate the validity of the Department's subpoena because that action does not reflect on his "fitness" or "trustworthiness."

23. The Department proved that Mr. Pellet willfully failed to comply with a valid subpoena, which provided grounds to deny his application pursuant to section 626.611(13).

24. Moreover, the Department should deny Mr. Pellet's application pursuant to the provisions of section 626.207(3).

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services enter a final order denying Mr. Pellet's application for license as an "All-Lines Public Lines Adjuster."

DONE AND ENTERED this 11th day of July, 2012, in Tallahassee, Leon County, Florida.

S

CLAUDE B. ARRINGTON

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 11th day of July, 2012.

ENDNOTES

1/ The Department's amended denial referenced Mr. Pellet's criminal plea and recited its statutory authority. The amended denial letter included the following:

In 2006 several complaints were received by the Department alleging that you were acting as a public adjuster without being licensed as such. The complaints arose from various sources (Companies and consumers) on claims stemming from Hurricane Katrina. Your defense was that you have always acted as an appraiser in assisting consumers in the settlement of claims, not as a public adjuster. As part of its investigation in February 2008, the Bureau of Investigation, acting through Department investigators Montero and Keegan, served a subpoena on you at your place of business, Professional Insurance Estimating & Appraisals (PIE). In response to that request you retained a lawyer who moved to quash the subpoena in the Broward County Circuit Court. After several preliminary pleadings were filed,

the case was initially heard by then Magistrate Barbara MccCarthy in April 2008. On May 15, 2008, Magistrate McCarthy issued a recommendation to Circuit Judge Aleman upholding the Department's subpoena. A hearing was held before Judge Aleman on February 18, 2009, at the conclusion of which Judge Aleman ruled for the Department. On March 19, 2009, you took an appeal to the Fourth District Court of Appeal. That Court also ruled for the Department, its last order dated June 16, 2010, denied your motion for rehearing. As a result, you were required to comply with the Department's subpoena but failed to do so. After the Department had spent two and one-half years in two courts defending its subpoena, it filed a seven-count Administrative Complaint in August 2010, the last count complaining of your continued failure to comply with its subpoena. The other counts addressed your alleged public adjusting activities dating back to 2002. In October 2010 you surrendered your independent adjuster license and your apprentice license expired in February 2011, resulting in voluntary dismissal of the administrative charges that sought to discipline licenses you no longer held. Your failure, as a prior licensee, to honor the Department's subpoena, upheld as lawful by both a circuit court and a district court of appeal, and your plea to the crime of insurance fraud, requires [sic] that you not be granted further licensure by this Department, and that you are permanently barred from applying for licensure in the future.

2/ The undersigned granted the joint motion for an extension of time to file PROs. The respective PROs were timely filed.

3/ Mr. Pellet has not had any involvement with the criminal justice system since he was discharged from probation.

4/ Florida Administrative Code Rule 69B-211.042(8)(a) was held invalid by the Amended Final Order entered in Santana v. Dep't

of Fin. Servs., Case No. 09-0829RX (Fla. DOAH April 29, 2010), aff'd, 61 So. 3d 1116 (Fla. 1st DCA 2011).

5/ Mr. Pellet argues that the change in the law should not be applied to him because he has already "paid" for his criminal history by waiting the 15-year period before applying for and receiving licensure from the Department. That argument is not persuasive because the undersigned has no authority to disregard the plain meaning of the amended statute.

6/ On August 6, 2010, the Department filed an Administrative Complaint against Mr. Pellet alleging that he engaged in activities beyond the scope of his license. That proceeding was referred to DOAH and assigned Case No. 10-8909PL. That proceeding, which included allegations relating to Mr. Pellet's failure to comply with the subpoena, was voluntarily dismissed after Mr. Pellet's licensure expired.

COPIES FURNISHED:

Julie Jones, CP, FRP, Agency Clerk Department of Financial Services

Division of Legal Services

200 East Gaines Street Tallahassee, Florida 32399-0390

David J. Busch, Esquire Department of Financial Services

Division of Legal Services 612 Larson Building

200 East Gaines Street Tallahassee, Florida 32399 david.busch@myfloridacfo.com

Michael D. Gelety, Esquire 1209 Southeast 3rd Avenue

Fort Lauderdale, Florida 33316 mgeletyattorney@gmail.com

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

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.

Docket for Case No: 11-004054

Orders for Case No: 11-004054