Findings Of Fact Petitioner is a state governmental licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular Section 20.30, F.S., Chapters 120.455 and 475, F.S., and the rules promulgated pursuant thereto. Respondent is now and at all times material hereto was a licensed real estate salesman in the State of Florida having been issued License No. 0418629, in accordance with Chapter 475, F.S. The last license issued was as a salesman with a home address of 594 Andrews Street, Ormond Beach, Florida, 32075. From April 8, 1987, until September 11, 1987 he was on inactive status. From September 11, 1987 until at least November, 1987, he was on active status. His license expired March 31, 1988 and has not been renewed. Respondent and the owners (Goldsmiths) of certain property at 49 Sea Island Drive, North Ormond Beach, Florida, entered into an equity sharing agreement on October 1, 1986. Thereafter, Respondent was half owner of the property, and acted as agent for himself and the Goldsmiths for management and rental of the property. Sometime in early 1987, Respondent's former wife contacted Richard M. Dow of Watson Realty Corporation concerning Watson Realty Corporation's assuming management and rental authority over the property. Mr. Dow gave Respondent's wife a packet of information which included several types of material, including but not limited to, a blank standard lease form which had been stamped at the top with the name WATSON REALTY CORPORATION 425 S. YONGE STREET [U.S. 1] ORMOND BEACH, Florida 32074 The name "Watson Realty" was also printed in the body of the lease as agent for the premises, which, like all other crucial information was left blank. No agreement was ever reached by which Watson Realty Corp. or Mr. Dow were to take over management of the premises. On or about April 1, 1987, while still on active license status, the Respondent negotiated a six month lease of the premises at 49 Sea Island Drive, North Ormond Beach, Florida, with Sidney and Edythe Hirsch. By filling out the blank lease form obtained from Watson Realty Corp., Respondent entered into the six-month lease on behalf of himself and the Goldsmiths. He filled out the blank spaces with his name as lessor and the Hirsches as lessees, and crossed out the "Watson Realty Corp." in the body of the lease, substituting his own name therefor. He failed to cross out the stamped Watson Realty Corp. name and address at the top of the page. At the time of the signing of the lease, Respondent advised Mr. Hirsch that he was a licensed real estate agent because he had been taught he must make such disclosures in personal dealings so as not to take advantage of laymen. At formal hearing, he denied ever representing himself as an agent of Watson Realty Corp. or of Mr. Dow. Mr. Hirsch likewise testified that no such representation was made, only that Respondent said something like, "I work with them." Both Respondent and Mr. Hirsch concur that Respondent represented himself as the owner of the property in question without mentioning the Goldsmiths' interest. Hirsch knew and agreed to the scratching through of the Watson corporate name in the body of the contract, and to the substitution of Respondent's name therefor, but no one thought to cross through the stamped Watson name and address at the top of the page. In connection with the lease, Mr. Hirsch gave to the Respondent a $600 security deposit. Respondent shared the rent proceeds with the Goldsmiths even though he did not include their names on the lease or specifically advise the Hirsches of the Goldsmiths' interest in the property. Although the better course of action would have been for Respondent to make a fuller disclosure and to accurately make out the lease agreement with regard to the Goldsmiths' interest, no fraud or intent to defraud either the Goldsmiths or the Hirsches was demonstrated in Respondent's omissions in this regard. At no time alleged herein was Respondent registered as a real estate salesman in the employ of Watson Realty Corp. and at no time was the Respondent employed by Watson Realty Corp. in any capacity. Upon the termination of the lease period, the Hirsches vacated the house and made demands upon the Respondent for the return of their $600 security deposit. The Respondent refused to return the deposit because of substantial damage to the property in three rooms of the house. Hirsches' attorney and Respondent met to attempt to resolve the issue and then had a trial date set. Respondent appeared on the originally scheduled trial date but the case was continued. Respondent separated from his wife and moved to a different address without maintaining contact with the Hirsches' attorney, the court, the Department of Professional Regulation, or the Florida Real Estate Commission (FREC). Over a period of time, he lived at several addresses and eventually moved out of state. Although he was still living in the State of Florida at the time, he did not appear for trial on the security deposit demand, and on January 14, 1988, the Hirsches obtained a civil judgment against Respondent for payment of the $600 security deposit. Respondent had not satisfied the judgment as of the date of the filing of the Administrative Complaint herein and did not do so up through the date of formal hearing. Although Respondent expended a great deal of effort at formal hearing attempting to establish that he never received actual notice of the trial date for the $600 civil damages suit due to his frequent change of addresses during the course of his divorce, that is immaterial because the law presumes notice once suit is filed and properly served as apparently occurred in that case. Unless set aside, the judgment against Respondent was final and Respondent owed Hirsch the money due under it. However, under the circumstances, it is found that Respondent did not fail to pay Hirsch on the judgment through any intent to defraud, but merely through a misunderstanding as to the effect of the judgment. Mr. Hirsch eventually sought and obtained reimbursement of the $600 judgment amount from the FREC client security fund. The fund paid after significant unsuccessful attempts had been made to find Respondent. Respondent also maintained that he did not know about the reimbursement proceedings instituted by FREC until four days before formal hearing and he made offers at formal hearing to pay off this amount. He was not charged in the pending Administrative Complaint in this proceeding with any fraud with regard to his failure to respond to service in the FREC client security fund reimbursement proceeding.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission enter a Final Order dismissing the Administrative Complaint. DONE and ENTERED this 30th day of May, 1989, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 30th day of May, 1989. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 88-6331 The following constitute specific rulings pursuant to Section 120.59(2), F.S., upon the parties' respective Proposed Findings of Fact (PFOF): Petitioner' s PFOF: Petitioner filed no PFOF. Respondent' s PFOF: 1,13,14 Accepted in part; the remainder is rejected as subordinate to the facts as found. 2-5 Rejected as subordinate to the facts as found. 6-12 Rejected as immaterial and as referencing and relying upon matters outside the record as created at formal hearing. 15,16 Rejected in part as subordinate to the facts as found and in part as cumulative and otherwise as mere argument. COPIES FURNISHED: Arthur R. Shell, Jr. Senior Attorney Division of Real Estate Department of Professional Regulation 400 W. Robinson Street Orlando, Florida 32801 Mr. Frederick A. Bentley 402 Daytona Avenue Holly Hill, Florida 32017 Darlene F. Keller, Director Division of Real Estate 400 W. Robinson Street Tallahassee, Florida 32802 Kenneth Easley, General Counsel Department of Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0750
The Issue Whether Respondent's Florida real estate license should be revoked or otherwise disciplined for violations of Sections 475.25(1)(b), 475.25(1)(e), and 475.25(1)(k), Florida Statutes.
Findings Of Fact Petitioner, Department of Business and Professional Regulation, Division of Real Estate, is the state licensing and regulatory agency charged with the responsibility and duty to enforce the provisions of Chapter 475, Florida Statutes, and the rules promulgated pursuant thereto. At all material times, Respondent, Lee Scott Marose, was a licensed real estate salesperson in the State of Florida, having been issued license No. 0584225, pursuant to Chapter 475, Florida Statutes. From December 10, 1993 to June 6, 1994, Respondent was employed as a real estate salesperson with Tam-Bay Realty, Inc., in Hillsborough County, Florida. On or about February 1, 1994, Respondent solicited and obtained a residential lease between Richard Akers, Sr. (Owner), and R. Dugan Fry (Tenant) for property located at 1731 Staysail Drive, Valrico, Florida. The lease provided for rental payments of $850.00 per month. On or about May 1, 1994, in accordance with the lease, the Tenant sent Respondent a check in the amount of $850.00 payable to Tam-Bay Realty. Respondent did not deliver the May 1, 1994 check to Tam-Bay Realty, but instead caused the Tenant to issue another check dated May 9, 1994, in the amount of $850.00 payable to Respondent. Respondent received the May 9, 1994 check, cashed the check, and diverted the funds to his own use. Due to Respondent's actions, Tam-Bay Realty refunded the money to the Owner, and dismissed Respondent from its employment. During the investigation of this matter by Petitioner, Respondent admitted to Petitioner's investigator the conversion of the rental check, but explained that his actions were an attempt to shorten the "turn-around" time on the rental check, and that he had been unable to replace the funds because money had been stolen from his personal checking account.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that: Respondent be found in violation of the above-cited statutory provisions, and that Respondent's Florida real estate license be revoked. RECOMMENDED in Tallahassee, Leon County, Florida, this 8th day of September, 1995. RICHARD HIXSON 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 8th day of September, 1995. APPENDIX As to Petitioner's proposed findings: 1.-9. Accepted and incorporated. COPIES FURNISHED: Steven W. Johnson,, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900 Lee Scott Marose 18950 U.S. Highway 144, #133 Mount Dora, Florida 32757 Darlene F. Keller, Division Director 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Petitioner is a Florida corporation for profit located at 1933 Commonwealth Lane, Tallahassee, Leon County, Florida. At all times pertinent to this case Petitioner has operated a business in Florida. Respondent is a Florida state agency. Its duties include the administration of Community Development Block Grants in Florida, (hereinafter referred to as CDBG). Petitioner requested Respondent to reimburse money related to administrative services which Petitioner provided to Okaloosa County, Florida related to a CDBG. The petition for those monies was filed in February, 1993. The request for reimbursement was in the amount of $43,274.92. Respondent denied that request. In turn, by opportunity provided by Respondent, Petitioner sought an administrative hearing pursuant to Section 120.57(1), Florida Statutes, to challenge Respondent's preliminary agency decision denying the request for reimbursement. The case was forwarded to the Division of Administrative Hearings to assign a hearing officer to conduct a formal hearing to resolve the dispute between Petitioner and Respondent. The administrative proceeding concerning the reimbursement claim was considered in the case Clark, Roumelis & Associates, Inc., v. State of Florida, Department of Community Affairs, Respondent, DOAH Case No. 93-1306. At the time Petitioner initiated the action to seek reimbursement and was afforded the point of entry to contest the preliminary action denying the reimbursement request, Petitioner employed no more than twenty-five (25) full- time employees and had a net worth of not more than $2 million dollars. Following a formal hearing a recommended order was entered by the undersigned which recommended that Petitioner be paid $43,274.92. The recommended order was entered on September 29, 1993. In turn, Respondent's final order dated December 28, 1993 denied the petition for reimbursement. Petitioner took an appeal to the First District Court of Appeal, State of Florida, Case No. 94-0151. In an Opinion filed February 16, 1995, the First District Court of Appeal decided in favor of Petitioner by reversing Respondent's final order and remanding the case. Respondent sought rehearing and rehearing on en banc which was denied on March 24, 1995 by the First District Court of Appeal. Respondent sought further review before the Florida Supreme Court, Case No. 85,581, which denied that review by not accepting jurisdiction. That decision by the Florida Supreme Court was made on September 6, 1995. On September 13, 1995, Petitioner filed a petition with the Division of Administrative Hearings pursuant to Section 57.111, Florida Statutes. Through that action Petitioner sought the reimbursement of attorney's fees and costs associated with DOAH Case No. 93-1306 and the appeals that followed the December 28, 1993 final order denying the reimbursement. Contrary to the requirements set forth in Section 60Q-2.035(5)(a), Florida Administrative Code, Respondent did not file a response to the petition within twenty (20) days of the filing of the petition seeking reimbursement attorney's fees and costs. Neither party has sought an evidentiary hearing for the Division of Administrative Hearings to consider Petitioner's request for reimbursement of attorney's fees and costs. Therefore this case has proceeded without an evidentiary hearing. Rule 60Q-2.035(7), Florida Administrative Code. In that setting Respondent is deemed to have waived its opportunity to contest whether the attorney's fees and costs claimed are unreasonable; whether Petitioner is not a prevailing small business party in DOAH Case No. 93-1306; whether Respondent's actions in denying Petitioner's claim for monetary reimbursement related to administrative services provided to Okaloosa County, Florida in the CDBG was a decision which was substantially justified in law and fact; whether circumstances exist which would make the award of attorney's fees and costs unjust and to present the defense that the Respondent was only a nominal party in DOAH Case No. 93-1306. See Rule 60Q-2.035(5)(a), Florida Administrative Code. Consistent with Rule 60Q-2.035(7), Florida Administrative Code the following additional facts are found for or against the award of attorney's fees and costs, based upon the pleadings and supporting documents in the files and records in the Division of Administrative Hearings: Petitioner is a small business party and a prevailing small business party in the matters considered in DOAH Case No. 93-1306 and the court appeals that followed. Petitioner's attorney has submitted an affidavit claiming, "In the administrative proceedings of this action, 140.8 hours were expended to the date of Respondent's Final Order of December 28, 1993. Total Fees: $21,120.00." Petitioner's attorney has submitted an affidavit claiming, "In the administrative proceedings of this action, $2,141.78 in costs were incurred to the date of Respondent's Final Order of December 28, 1993." Petitioner's attorney has submitted an affidavit claiming, "In the appellate proceedings in this action (First District Court of Appeal Case No. 94-0151 in Florida Supreme Court, Case No. 85,581), 79.0 hours were expended and $310.66 in costs were incurred to the date of the Supreme Court's denial of September 6, 1995. Total Fees: $13,258.00. Total Costs: $310.66." The affidavits submitted by Petitioner concerning the claim for attorney's fees and costs incurred to the date of Respondent's final order of December 28, 1993, failed to adequately " . . . reveal the nature and extent of the services rendered by the attorney as well as the costs incurred in preparations, motions, [and] hearings . . . in the proceeding" by "itemizing" the claim. Section 57.111(4)(b)1, Florida Statutes. By contrast, the attorney's affidavit filed for attorney's fees and costs in the appellate proceedings was adequate to identify services rendered by the attorney and costs incurred related to appeals in the proceeding. Section 57.111(4)(b)1, Florida Statutes. The amount of attorney's fees and costs for appellate proceedings is within the $15,000.00 cap for recovery of attorney's fees and costs as set forth in Section 57.111(4)(d)2., Florida Statutes.
Findings Of Fact Respondent is and at all material times has been a licensed real estate broker in the State of Florida. He holds license number 0404010. On or about October 14, 1985, Respondent, as seller, entered into a purchase and sale contract with William and Lois Ehmke, as buyers, with respect to Respondent's condominium known as Unit 502 of Blind Pass Lagoon Condominiums located at 9825 Harrell Avenue, Treasure Island, Florida. The Ehmke contract called for a purchase price of $85,000, which included $15,000 as an earnest money deposit. The contract form provided a paragraph for the closing date, but this was left blank. The only special clause in the contract provided that: The Buyer(s) shall pay $550.00 monthly beginning the date said unit is occupied by buyer and until buyers home in Deluth, Minn. is sold. At the time of closing upon Condo Unit 502, Phase 3, the buyers' shall reimburse the Seller the difference between $550.00 and actual costs to carry the unit per month. ($755.00 plus 90.00 maintenance, or $300.pr [i.e., $300 per month]. The Ehmkes duly paid Respondent the $15,000 deposit and moved into the condominium, which they occupied continuously from October, 1985, through December, 1986. The Ehmkes paid Respondent $550 per month for each month of their occupancy. When making the deal, the Ehmkes were aware that the average time that a house remained unsold on the market in Deluth was 210 days. They knew that the market was very slow because of a sluggish local economy. They expected their house to be sold in about 210 days. After 210 days passed and the house had not sold after the Ehmkes' good faith efforts to sell it, the Ehmkes asked Respondent to refund their $15,000 deposit. Respondent refused. Negotiations resulted in Respondent returning to the Ehmkes $10,000 of the deposit in July, 1987. Respondent did not stand in a confidential or fiduciary relationship with the Ehmkes. William Ehmke had owned and operated a restaurant in Deluth and, after meeting Respondent, initiated discussions with Respondent concerning Mr. Ehmke's desire to purchase property in Florida. Respondent showed the Ehmkes other properties and informed them from the start that Respondent and his daughter owned the condominium unit in question. The mortgage payments, insurance, taxes, and maintenance fees on the condominium unit were about $850 per month in October, 1985. During the period that the Ehmkes occupied the condominium unit, the maintenance fees went up by $30 per month and there was a $1200 special assessment. All of these expenses were borne by Respondent. However, Mr. Ehmke was aware that every month he was losing $300 of his deposit toward these expenses. The fair rental value of the condominium unit from December 1 through April 30 each year is $1400 to $1600 per month. By the time that the Ehmkes vacated the unit, Respondent had paid at least $3000 in monthly expenses over the rent received and the $1200 the special assessment. He had also lost at least $3000 in premium seasonal rentals. Mr. Ehmke has since received his real estate salesman's license. He admits that the $5000 retained by Respondent does not cover Respondent's out-of- pocket expenses. He also admits that he has no complaints about the transaction in retrospect. Frank Myles owns all of the stock of Myles, Inc., which owned Unit 202 of Blind Pass Lagoon Condominiums in Treasure Island. Having been neighbors with Respondent for two years and also involved part-time in real estate sales, Mr. Myles mentioned to Respondent that he was trying to sell his unit. After their conversation, Respondent delivered to Mr. Myles a contract for the purchase and sale of his unit. The contract was executed by all parties on July 29, 1986. The buyers were Ralph and Margaret Magno, who had recently purchased another unit in the same complex through Respondent as the broker. The purchase price was $94,000 to be paid cash at closing, as Mr. Myles had said he desired. The contract contained no contingencies, such as for financing, which was also consistent with Mr. Myles' previous instructions to Respondent. The contract called for a closing on or before August 25, 1986, and provided that time was of the essence. The Magnos paid an earnest money deposit of $8000 to Pat Jano and Associates, "reg. real estate broker." The form language of the contract provided that Respondent was to "hold said earnest money or deposit and act as escrow agent until closing of deal ..." The contract elsewhere provided that if the purchaser failed to perform any of his obligations, then he "shall forfeit said earnest money or deposit; and the same shall be retained by the Seller as liquidated damages, and the escrow agent is hereby authorized by the purchaser to pay over to the Seller the earnest money or deposit." In the event of a default by the purchaser, the earnest money would be divided equally between Respondent and the seller. On or about August 13 or 14, 1986, the Magnos discovered that the financing terms that they had arranged with a third-party lender could no longer be obtained. Respondent promptly notified Mr. Myles of the problem. Mr. Myles and Respondent tried unsuccessfully to resolve the problem with the lender, which ultimately declined to make the loan. When first informed of the buyers' financing problems, Mr. Myles told Respondent that the two of them should push the sellers through to closing. (Tr. 82.) Immediately after this conversation with Respondent, Mr. Myles stepped aside so that his lawyer could handle what had become a "shaky" deal. (Tr. 84.) On August 16, 1986, Respondent refunded all of the earnest money to the Magnos by delivering to Mr. Magno a check drawn on Respondent's escrow account in the amount of $8000 and payable to Mr. Magno. Respondent returned the deposit without the prior knowledge of Mr. Myles or consent of Myles, Inc. (Tr. 73 and 8.) Mr. Myles' lawyer sent a letter dated August 20, 1986, to Respondent informing him that Myles, Inc. intended to proceed to closing and would not consent to the release of the earnest money deposit to the Magnos. Mr. Myles appeared at the closing at the time and place specified in the contract. The Magnos did not appear. Myles, Inc. never received its share of the forfeited deposit. Myles, Inc., through Mr. Myles, stated in a letter dated May 13, 1987, that it was "no longer" pursuing any legal action against Respondent and that no suits were filed and no further action would be taken. During a lengthy meeting with Petitioner's investigator, Respondent never suggested that he had had Myles' permission to return the Magnos' deposit. Rather, he said only that he had returned the deposit out of "loyalty" to the Magnos. At the hearing, Respondent testified that he told Mr. Myles that Respondent was going to return the deposit to the Magnos and Mr. Myles' only reaction was that "those are the breaks." (Tr. 129.) This apparent inconsistency between the testimony of Mr. Myles and Respondent, both of whom were credible witnesses, is reconciled by the finding that Mr. Myles never consented to the release of the earnest money, but Respondent misunderstood their conversation in this regard. Since October 16, 1986, Respondent's principal place of business has been 7345 Bay Street, St. Petersburg, Florida. Respondent failed to maintain a sign at this location from October 16, 1986, through January 8, 1987. He was having a sign prepared by a third party during that time.
Recommendation Based on the foregoing, it is recommended that a final order be entered dismissing Counts I, II and IV of the Administrative Complaint and finding Respondent guilty of the allegations set forth in Counts III and V of the Administrative Complaint. It is recommended that the Final Order impose an administrative fine of $1000 with respect to Count III and a reprimand with respect to Count V. ENTERED this 20th day of May, 1988, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of May, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-4391 Treatment Accorded Petitioner's proposed Findings 1,3-5. Adopted. 2,6. Rejected as unnecessary and irrelevant. The location of Respondent's "principal office and each branch office" is relevant under Section 475.22 to determine where he was required to maintain a sign. The statute does not refer to the office registered with Petitioner. 7-8,16. Adopted. 9-.14. Adopted. 15,17. Rejected as unnecessary. 18. Rejected as unnecessary and irrelevant for the reason set forth for rejecting the proposed findings in paragraphs 2 and 6. Treatment Accorded Respondent's Proposed Findings Rejected as legal argument, except that Respondent and the Ehmkes entered into a contract. Last sentence - rejected as unnecessary and irrelevant. Remainder rejected as contrary to the greater weight of the evidence. Rejected as unnecessary, except that the blast sentence is adopted as to the sign being made. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Brian E. Johnson, Esquire 7190 Seminole Boulevard Seminole, Florida 34642 Darlene F. Keller Executive Director Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 William O'Neil General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750
Findings Of Fact On August 24, 1967 Thomas York, an employee of Yell for Pennell, one of the fund members, was injured while so employed and, as a result of the injury, is a paraplegic. A judge of industrial claims has entered an order requiring the payment of $42.00 per week compensation plus medical and nursing expenses for York. Nursing care has recently been running $91.00 per week. York is the only outstanding claim for the 1967 fund year. The average medical expenses for York over the past several years has averaged $8,800 per year. For the 1975 year the medical costs for York were $17,14O. Thomas York is 57 years old. Because of his physical condition aggravated by a drinking problem his life expectancy is approximately five years. The proposed assessment, if each fund amber pays the full amount of time assessment, will produce less than $50,000 income to the fund. The medical payments on behalf of York have materially increased during the past three years. If this trend continues the assessment herein requested will be used up in less than two years. Each fund member is individually and collectively liable for the compensation and medical expenses for York. In the event the fund fails to make payments when due and suit is brought on behalf of York the Trustees or individual embers will be liable for the payments as well as attorney's fees. The fund is current on weekly compensation payments to York, but has deferred payments of medical expenses with the concurrence of the doctor. The present assets remaining in the fund to make payments is less than $1,000. The primary insurance carrier for the fund, State Fire & casualty Company, went into receivership and no payments can be anticipated from this source. The Trustees brought legal action against various parties to recoup expenses to the fund resulting from the default of the primary carrier, but to date those actions have not been marked with success.
The Issue The issue is whether Respondents failed to file four quarterly and one annual financial statements and failed to maintain minimum amounts of net worth and working capital. If so, an additional issue is what penalty should be imposed.
Findings Of Fact At all material times, Respondent Susan Jan Haggerty (Haggerty) was the controlling person of Respondent Suncoast Resource Management, Inc. (Suncoast). The Board of Employee Leasing Companies (Board) licensed Suncoast as an employee leasing company, holding license number EL 0000055, and Haggerty as the company’s controlling person, holding license number CO 0000125. Haggerty is also the licensed controlling person for Suncoast Management Group, Inc., an employee leasing company licensed since January 1994. Respondents applied for their licenses in July 1992. Suncoast was first licensed on March 22, 1994, and Haggerty was first licensed on January 13, 1994. Haggerty’s license remains currently in effect. However, following its surrender, as described below, Suncoast’s license became null and void on September 12, 1995. During 1994--its first year of licensed operation-- Suncoast encountered financial problems. At some point prior to December 31, 1994, a workers’ compensation carrier won a judgment of about $200,000 against Suncoast for unpaid workers’ compensation premiums. During 1994, Haggerty decided to close Suncoast. She instructed the company’s independent accountant to contact Board staff and find out how to close down the company, from a regulatory standpoint. An unidentified male staffperson employed by the Board informed the accountant by telephone that all the Respondents had to do was to write the Board a letter informing it of what was happening and to submit the quarterly compiled financial statement. The accountant conveyed these instructions to Haggerty in October or November 1994. Suncoast ceased doing business effective December 31, 1994. During this month, Suncoast terminated its last employee. During 1994, Suncoast had a gross Florida payroll of less than $2.5 million. During 1995, an investigator for Petitioner contacted Haggerty and discussed some of the unfiled financial statements that are the subject of these cases. In an effort to resolve this matter, Suncoast formally surrendered its license on August 2, 1995. The Administrative Complaints allege that Respondents failed to file five financial statements with the Board. These are four quarterly financial statements due for the quarters ending December 31, 1994, and following, and the 1994 annual financial statement. There are also allegations of failure to maintain minimum requirements of net worth and working capital. It appears that Suncoast did not file any quarterly financial statements prior to the one due for December 1994. However, Petitioner did not elect to allege violations of the law for these failures to file. For the relevant period, Suncoast only filed two statements with the Board of Employee Leasing Companies. The first statement was a quarterly financial statement for the last quarter of 1994, which was filed in March 1996--well after the ordinary deadline for such quarterly statements. The second statement was an annual financial statement for 1994. The accountant prepared this statement, dated June 4, 1995, and Haggerty filed it with the Board of Employee Leasing Companies on July 10, 1996--also well after the ordinary deadline for such annual statements. The 1994 financial statement is compiled, not audited or reviewed. The 1994 financial statement reveals that Suncoast had a tangible accounting net worth deficiency of about $180,000 and a positive working capital of $28,737, which reflects current assets and current liabilities and treats the $200,000 judgment as a long-term liability. Suncoast never obtain Board-approved security to offset the $180,000 deficiency in its net worth.
Recommendation It is RECOMMENDED that the Board of Employee Leasing Companies enter a final order dismissing the administrative complaint against Suncoast Resource Management, Inc. and suspending Susan Jan Haggerty’s license for a period equal to the earlier of five years or until she proves to the reasonable satisfaction of the Board that the $200,000 judgment in favor of the workers’ compensation carrier has been satisfied or vacated with all judicial review concluded; but in no event shall the term of the suspension be less than one year. ENTERED in Tallahassee, Florida, on June 5, 1997. COPIES FURNISHED: Mary Ellen Clark Senior Attorney Department of Business and Professional Regulation 1940 North Monroe Street Suite 60 ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings on June 5, 1997. Tallahassee, Florida 32399-0792 Attorney Frank M. Gafford Post Office Box 1789 Lake City, Florida 32506-1789 Isla Jones Executive Director Board of Employee Leasing Companies 1940 North Monroe Street Tallahassee, Florida 32399-0792 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether Respondent owes $1,568,399.00 or $2,323,765.60 as a penalty for failing to secure workers' compensation insurance for its employees, as required by Florida law.
Findings Of Fact Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the sweeping factual stipulations set forth in the parties' June 1, 2005, Joint Stipulation3: Legislative History of the "Penalty Calculation" Provisions of Section 440.107(7), Florida Statutes Since October 1, 2003, the effective date of Chapter 2003-412, Laws of Florida, Section 440.107(7)(d)1., Florida Statutes, has provided as follows: In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer who has failed to secure the payment of compensation as required by this chapter a penalty equal to 1.5 times the amount the employer would have paid in premium when applying approved manual rates to the employer's payroll during periods for which it failed to secure the payment of workers' compensation required by this chapter within the preceding 3-year period or $1,000, whichever is greater. Prior to its being amended by Chapter 2003-412, Laws of Florida, Section 440.107(7), Florida Statutes, read, in pertinent part, as follows: In addition to any penalty, stop-work order, or injunction, the department shall assess against any employer, who has failed to secure the payment of compensation as required by this chapter, a penalty in the following amount: An amount equal to at least the amount that the employer would have paid or up to twice the amount the employer would have paid during periods it illegally failed to secure payment of compensation in the preceding 3-year period based on the employer's payroll during the preceding 3- year period; or One thousand dollars, whichever is greater. The Senate Staff Analysis and Economic Analysis for the senate bill that ultimately became Chapter 2003-412, Laws of Florida, contained the following explanation of the "change" the bill would make to the foregoing "penalty calculation" provisions of Section 440.107(7), Florida Statutes4: The department is required to assess an employer that fails to secure the payment of compensation an amount equal to 1.5 times, rather than 2 times, the amount the employer would have paid in the preceding three years or $1,000, which is greater. There was no mention in the staff analysis of any other "change" to these provisions. The NCCI Basic Manual The National Council on Compensation Insurance, Inc. (NCCI) is a licensed rating organization that makes rate filings in Florida on behalf of workers' compensation insurers (who are bound by these filings if the filings are approved by Florida's Office of Insurance Regulation, unless a "deviation" is permitted pursuant to Section 627.11, Florida Statutes). The NCCI publishes and submits to the Office of Insurance Regulation for approval a Basic Manual that contains standard workers' compensation premium rates for specified payroll code classifications, as well as a methodology for calculating the amount of workers' compensation insurance premiums employers may be charged. This methodology is referred to in the Basic Manual as the "Florida Workers Compensation Premium Algorithm" (Algorithm). According to the Algorithm, the first step in the premium calculating process is to determine the employer's "manual premium," which is accomplished by applying the rates set forth in the manual (or manual rates) to the employer's payroll as follows (for each payroll code classification): "(PAYROLL/100) x RATE)." Adjustments to the "manual premium" are then made, as appropriate, before a final premium is calculated. Among the factors taken into consideration in determining the extent of any such adjustments to the "manual premium" in a particular case are the employer's loss experience, deductible amounts, premium size (with employers who pay "larger premium[s]" entitled to a "Premium Discount"), and, in the case of a "policy that contains one or more contracting classifications," the wages the employer pays its employees in these classifications (with employers "paying their employees a better wage" entitled to a "Contracting Classification Premium Adjustment Program" credit). Petitioner's Construction of the "Penalty Calculation" Provisions of Section 440.107(7), Florida Statutes In discharging its responsibility under Section 440.107(7), Florida Statutes, to assess a penalty "against any employer who has failed to secure the payment of compensation as required," Petitioner has consistently construed the language in the statute, "the amount the employer would have paid," as meaning the aggregate of the "manual premiums" for each applicable payroll code classification, calculated as described in the NCCI Basic Manual. It has done so under both the pre- and post-Chapter 2003-412, Laws of Florida, versions of Section 440.107(7). This construction is incorporated in Petitioner's "Penalty Calculation Worksheet," which Florida Administrative Code Rule 69L-6.027 provides Petitioner "shall use" when "calculating penalties to be assessed against employers pursuant to Section 440.107, F.S." (Florida Administrative Code Rule 69L-6.027 first took effect on December 29, 2004.) Penalty Calculation in the Instant Case In the instant case, "1.5 times the amount the [Respondent] would have paid in premium when applying approved manual rates to [Respondent's] payroll during periods for which it failed to secure the payment of workers' compensation" equals $2,323,765.60.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner order Respondent to pay a $2,323,765.60 penalty for failing to secure workers' compensation insurance for its employees. DONE AND ENTERED this 5th day of August, 2005, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 5th day of August, 2005.
