Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: Florida Brethren Homes, Inc. is a not for profit corporation doing business as the Palms. The Palms is a nursing home facility certified to participate in the Medicaid program. The Department is the state agency charged with the responsibility of reviewing costs claimed by facilities participating in the Medicaid program. The Palms filed a cost report for Medicaid reimbursement for the fiscal period ending December 31, 1987. The cost report reviews the past payment rate and sets the prospective rate. The Department reviewed Petitioner's report and disallowed interest costs in the amount of $298,500 which were included by the Palms. The Palms timely challenged that disallowance. In 1984, the Palms participated in a revenue bond issuance in order to finance the construction of certain improvements to its health care facilities. That bond issue in the amount of $13,970,000 bore a tax exempt interest rate of approximately 12.89 %. For the period ending December 31, 1987, the interest which was due on that bond debt was $298,500. On April 5, 1988, the Palms filed a Chapter 11 action in the Bankruptcy Court for the Southern District of Florida. The Palms did not pay the accrued interest prior to filing its petition in bankruptcy. In fact, the Palms was in default on the interest at the time of the bankruptcy petition. The Medicaid rate which had been established prior to that time had presumed an allowable interest cost for the period and had included that interest payment in the calculation of the rates then available to the Palms. In filing bankruptcy, the Palms sought to restructure its debt. As a result, the Palms executed an Amended And Restated Indenture of Trust which included the accrued but unpaid interest which had accumulated under the 1984 revenue bond issue. The plan called for a bond issuance and for deferred interest certificates to cover the unpaid interest. The deferred interest certificates had not been issued as of the date of the final hearing. The accrued but unpaid interest provided in the deferred interest certificate has a maturity date of December 1, 2016. The unpaid interest is subject to a mandatory prepayment from available net cash flow after December 1, 1992. The restructure of Petitioner's debt has allowed it to remain in business. The plan of reorganization was entered into as a good faith, arm's length transaction. The plan of reorganization was confirmed by the Bankruptcy Court and the proceedings before that tribunal have concluded. In its audit of the Palms, the Department determined that the deferred interest obligation does not mature and become due and payable until December 1, 2016, and that, therefore, the interest expense is not a reimbursable cost for the period that ended December 31, 1987. The Palms' claims that for cost reimbursement purposes the accrued interest was paid by the refinancing of the debt and that the amount should remain an allowable cost to be included for that period.
Recommendation Based upon the foregoing, it is RECOMMENDED: That the Department audit disallowing interest claimed for the period that ended December 31, 1987, be confirmed. DONE and ENTERED this 14th day of June, 1991, in Tallahassee, Leon County, Florida. Joyous D. Parrish Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of June, 1991. APPENDIX TO CASE NO. 90-1770 Rulings on the proposed findings of fact submitted by the Petitioner: Paragraphs 1 through 3 are accepted. Paragraphs 4 and 5 are not findings of fact but restate the stipulation reached by the parties at the outset of the hearing. Paragraphs 6 through 11 are accepted. Paragraph 12 is rejected as it is not a finding of fact but, if accurate, would be a conclusion of law. Such conclusion has not been reached in this case. Paragraph 13 is rejected as irrelevant. Paragraph 14 is accepted. With regard to paragraph 15, it is accepted that the repayment of the accrued interest is not a short term liability. Otherwise, the paragraph is rejected as irrelevant. Paragraph 16 is rejected as a restatement of the issue or fact not supported by the weight of the evidence. Paragraph 17 is rejected as irrelevant. Paragraph 18 is accepted. Paragraph 19 is rejected as irrelevant. Paragraphs 20 and 21 are rejected as irrelevant or a conclusion of law. Paragraph 22 is accepted. Paragraph 23 is rejected as irrelevant. Paragraph 24 is rejected as a conclusion of law not supported by the record in this case. Paragraph 25 is rejected to the extent that the term "refinancing" is used to suggest a payment of allowable interest; it is accepted that restructuring the Palms' debt was required to allow it to continue in business. Paragraph 26 is rejected as irrelevant. Rulings on the proposed findings of fact submitted by the Department: 1. Paragraphs 1 through 14 are accepted. COPIES FURNISHED: Scott D. LaRue Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Karen L. Goldsmith Goldsmith and Grout, P.A. P.O. Box 2011 Winter Park, Florida 32790-2011 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Linda K. Harris Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
Findings Of Fact Carmine Amato is a real estate broker holding license number 0110690, and is the broker for Wise Realty in Broward County, Florida, which he wholly owns. Amerigo DiPietro is a real estate salesman holding license number 0326813. At all times in question, DiPietro was employed by Wise Realty, and Amato was his supervising broker. In August, 1980, DiPietro took a sales contract from Charles and Jennie Conroy for the sale of their home in Broward County, Florida, described as Lot 3, Block 5 of Margate Estates, Section 3. DiPietro suggested to the Conroys that they could afford a larger home by selling their present house and using the equity to put a down payment on a new house. The Conroys subsequently contracted to buy a larger and more expensive house in Broward County from the Hocenics, said house described as Lot 13, Block 8 of Kimberly Forrest. DiPietro found buyers, the Meads, for the Conroys' house; however, the Meads were unable to qualify, and the contract did not close. The Conroys were anxious to close on the Hocenics' house and, as a result, sought a loan from Security Pacific Finance Company, said loan being referred to as a "swing" loan. The Conroys used this swing loan to close on the Hocenics' house, and this loan was secured by a security interest in their old home and the Hocenics' home. The Conroys were not induced in any manner by the Respondents to seek this swing loan. Having obtained the loan, the Conroys closed on the Hocenics' house, moved out of their old house and into the Hocenics' house, and assumed financial responsibility for both homes. Because the Conroys were short $2400, DiPietro took a note from the Conroys payable from the proceeds of the sale of their house. This represented money due DiPietro, which the Conroys could not pay at closing. DiPietro continued to attempt to sell the Conroys' old home and found another buyer, the La Serras. The La Serras qualified, but the Conroys could not raise $3400 needed to pay off their obligation at the closing of the sale of their old home. Because of this, the La Serra transaction did not close. In an effort to save the deal and close the La Serra contract, DiPietro made every effort, even agreeing to take a note for the commissions due to Wise's sales people, who represented both buyer and seller. The Conroys refused to close. With the swing loan almost due, Mrs. Conroy asked DiPietro if he and Amato would buy their old house outright. Eventually, DiPietro and Amato agreed to buy the house and accept financial responsibility for the first mortgage if the Conroys would agree to certain conditions. DiPietro indicated from the outset that neither he nor Amato had sufficient cash to purchase the house outright, and that financing would have to be arranged. DiPietro also advised the Conroys that, if this financing could not be arranged, the swing loan would have to be extended, and that it would be necessary for the Conroys to work with Amato and him to arrange for the extension of this loan. The specific conditions which the Conroys would have to meet were as follow: (a) the Conroys would give Amato and DiPietro a quit claim deed to their old house; (b) the Conroys would do those things necessary to extend the swing loan another six months; and (c) DiPietro and Amato would assume immediate financial responsibility for the house and, during the six months' period, sell it or arrange for long-term financing. The Conroys concurred in this agreement and executed a quit claim deed to their old house to the Respondents. DiPietro tried three different companies, seeking substitute financing for the house. When he failed in this, DiPietro contacted Mr. Conroy about renewing the swing loan. Mr. Conroy accompanied DiPietro to Security Pacific to renew the swing loan. DiPietro attempted to get Security Pacific to substitute any of a number of pieces of property owned by Amato and him for the Conroys' new house and to release its security interest in said house. Because of Security Pacific's excellent equity position in this new house, Security Pacific was unwilling to release its encumbrance on the Conroys' house. Security Pacific said it would release its interest in the Conroys' house only if the amount of the loan was paid down to an amount that the old house could secure. Neither Amato, DiPietro nor Conroy could afford to do this. Security Pacific said it would renew the loan only upon the Conroys' reapplication. Lastly, Security Pacific made clear that it still looked to the Conroys and to their new house as primary security on the swing loan. During all this time, the Conroys' old home was vacant. It had been vandalized and had suffered significant damage which decreased its value. In addition, no yard maintenance had been performed during the period since the Conroys had moved out. To be salable, substantial repairs and maintenance had to be performed by DiPietro and Amato. The revelation that Security Pacific looked to him and his wife for payment of the loan secured by their new house frightened Mr. Conroy. The Conroys were already financially strapped, having been responsible for the payments on both houses during this time. With the swing loan nearly due, and envisioning the loss of both houses and being left with an unsatisfied $28,000 debt, Conroy went to an attorney. The attorney advised Conroy not to join with DiPietro and Amato in extending the swing loan. When the swing loan was not extended, Security Pacific commenced foreclosure proceedings. Amato and DiPietro kept up the payments on the first mortgage, although Mrs. Conroy had to complain at first when these payments were late. The first three payments (July, August and September) were delayed following transfer from the Conroys to Amato and DiPietro. DiPietro and Amato did not promise to assume sole responsibility for the swing loan. DiPietro's representation was that they would try to refinance the property, and that if they could not refinance it they would assume primary responsibility for payment of the swing loan if the Conroys would join with them in extending the swing loan. Respondent Amato never saw or spoke to the Conroys and never made any promises which he did not fulfill. When the foreclosure action commenced, DiPietro stepped up his effort to sell the Conroys' old house and, approximately six to eight weeks later, sold it after substantial repairs were completed. The sales price was $57,000. At the time of the sale, approximately $32,000 was owed on the house to Security Pacific, and approximately $21,000 was owed to Heritage Mortgage Company on the first mortgage. Respondent Amato had put approximately $2,000 into repairs on the house, and Wise Realty was owed a note of approximately $2400 representing commission on the Hocenic/Conroy sale.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the following is recommended: That the charges against the Respondent, Carmine Amato, be dismissed, it having been found that he had no contact with the Conroys, could not have made any representations to them, and is not guilty of Violating Section 475.25(1)(b), Florida Statutes; and That the charges against the Respondent, Amerigo DiPietro, be dismissed, it having been found that he made no misrepresentations to the Conroys and therefore did not violate Section 475.25(1)(b), Florida Statutes. DONE and RECOMMENDED this 14th day of April, 1983, in Tallahassee, Leon County, Florida. STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 1983. COPIES FURNISHED: Fred Langford, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Lawrence F. Kranert, Jr., Esquire 1000 South Federal Highway, Suite 103 Fort Lauderdale, Florida 33316 David F. Hannan, Esquire 3300 Inverrary Boulevard, Suite 200 Lauderhill, Florida 33319 Harold Huff, Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Frederick Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 William M. Furlow, Esquire Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact At all times pertinent to the charges, Respondent was a licensed real estate salesman and broker-salesman, license number 0326235. In 1983, Dorothy Nutt and Diane Falstad were the owners of a house located at 608 Hillcrest Street, Orlando, Florida. In December of 1983, Ms. Nutt and Ms. Falstad placed this house for sale with real estate broker Frank Daley. The listing was an exclusive listing except as to the Respondent and another individual, for which no commission would be paid, if a contract submitted by the Respondent was accepted by Nutt and Falstad prior to December 26, 1983. On December 25, 1983, the Respondent, along with his parents, Barbara Okoniewski and Louis Okoniewski, Jr., submitted a written contract to Diane Falstad and Dorothy Nutt for the purchase of the 608 Hillcrest Street property. The contract was accepted by the sellers on December 26, 1983. The contract, as executed by the Respondent and his parents, specified that a $1,000 deposit was to be held in escrow by "Closing Agents." Additionally, Respondent represented to Ms. Falstad that the $1,000 deposit was being maintained in an escrow account. Pursuant to the terms of the contract, Respondent applied for a V.A. mortgage loan, but was later determined to be ineligible. Subsequent thereto, on or about February 8, 1984, application was made with Residential Financial Corporation (RFC), to obtain financing to purchase the 608 Hillcrest Street property. The application was in the name of the Respondent's parents, with Respondent handling the matter on their behalf. Thereafter, the Respondent requested that the loan officer (Charlyne Becker) at RFC not submit the loan application for approval to the underwriters. Pursuant to his request, the application was not submitted for approval. The transaction did not close. Subsequent to the scheduled date of closing both Ms. Falstad and Ms. Nutt made demands of the Respondent for forfeiture of the $1,000 deposit, due to their belief that, he had breached the contract by failing to secure financing. It was not until after the scheduled closing date that the sellers learned the $1,000 was not in escro. To date, Respondent has neither deposited the $1,000 in any trust account nor paid any money to the sellers. Respondent admits through his own testimony, that he did not make the deposit, nor was the deposit placed in any escrow account by his parents. Respondent's testimony, which was not rebutted, established that he and his parents sought to purchase the 608 Hillcrest Street property and that adjacent to it for rental purposes. However, they were advised by the RFC loan officer (Charlyne Becker) that the applications were not likely to be approved by RFC. Respondent did not thereafter pursue any of the loan applications.
Recommendation Based on the foregoing, it is RECOMMENDED that Petitioner enter a Final Order fining Respondent $500. DONE and ENTERED this 12th day of July, 1985 in Tallahassee, Florida. R. T. CARPENTER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 1985. COPIES FURNISHED: James R. Mitchell, Esq. Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Louis S. Okoniewski 730 Lake View Avenue, N.E. Atlanta, Georgia 30308 Harold Huff. Executive Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esq. General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 ================================================================ =
Findings Of Fact Based upon the witnesses' testimony and the documentary evidence received herein, the following relevant facts are found. During December of 1977, an agreement was entered into between W. C. Brown and Tommy Bishop for the purchase/sale of 480 acres of land in Northeast Walton County for a total purchase price of $240,000. Pursuant to that agreement, Tommy Bishop agreed to assume $170,000 of a mortgage which was held by the Federal Land Bank Board and a note for $50,000 to W. C. Brown, payable in ten (10) annual installments plus a $20,000 cash payment upon receipt of which the purchaser, Tommy Bishop, could take possession of the parcel in question. (Petitioners' Composite Exhibit A). By warranty deed dated September 14, 1976, the subject parcel was transferred from the Browns to Tommy and Betty M. Bishop. (Respondent's Composite Exhibit A.) On or about March 16, 1977, Tommy Bishop and his wife transferred the subject parcel of land to his father, Leon F. Bishop, and his wife, Dorothy M. Bishop. A quit claim deed was executed and was recorded in the Official Records of Walton County at Book 119, page 181. (Respondent's Exhibit B.) It is this quit claim deed that is the focus of this Petition. Petitioner, Leon F. Bishop, contends that he purchased the subject tract of land from the Browns and gave it to his son as a means to encourage him to settle down and assist him in the farming and cattle operation, without success. Petitioner contends that he alone was principally obligated to make all the payments necessary to satisfy the obligation to the seller, and that at no point was his son, Tommy Bishop, ever obligated to make any payments on the obligation. Petitioner testified that he endorsed the notes and made all payments to the Federal Home Loan Bank Board and to the Bank of Florala, Alabama. Although it is true that the documents received evidence that the Petitioner satisfied the obligations necessary to consummate the purchase of the subject parcel of land, until the quit claim deed executed on March 16, 1977, was entered into between his son and himself, the son was equally obligated to satisfy the obligations. Hover, once the quit claim deed was executed, there was a shift in the economic burden and, as such, a taxable transfer occurred on the quit claim deed, creating a documentary tax obligation authorized pursuant to Section 201.02, Florida Statutes. Also, see Rule 12A-4.12(2), Florida Administrative Code.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby, RECOMMENDED: That the Department of Revenue's proposed assessment filed herein be upheld. ENTERED this 26th day of October, 1979, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 COPIES FURNISHED: Gillis E. Powell, Esquire John D. Moriarty, Esquire Post Office Box 277 Department of Revenue Crestview, Florida 32536 Room 103, Carlton Building Tallahassee, Florida 32301 Barbara Staros Harmon, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32301
The Issue By this petition, American Foam Rubber Distributors, Inc. (AFRD) and Edward Rothbard seek to have the Department of Revenue's assessment for documentary stamp tax and penalties on a transfer of real property by quit claim deed from Edward Rothbard to AFRD set aside. Petitioners contend that the transfer was without consideration and therefore nontaxable under sec. 201.02, F.S. , while Respondent contends that consideration flowed to the grantor by virtue of the grantee making the mortgage payments; and therefore, documentary tax stamps were due on the deed of conveyance computed on the amount of the mortgage at the time of transfer. One witness testified in behalf of Petitioners and four exhibits were admitted into evidence. From the pleadings, interrogatories and evidence presented at the hearing, the facts are largely undisputed and are as follows:
Findings Of Fact Edward Rothbard owns 100 percent of the outstanding stock of AFRD and he has been the sole shareholder and chief executive officer of the company since the company s inception in 1962. On March 9, 1973 the Seaboard Coastline Railroad (SCL) entered into an agreement with AFRD to sell a tract of land in Miami to the latter at an agreed price of $116,978.00 with certain conditions. The principal condition was that the grantee erect a warehouse on the property within one year from the date of the transfer. By deed dated August 23, 1973 the property was conveyed by SCL to Edward Rothbard rather than as per the contract. This deed was apparently delivered in late October, 1973 and the proper documentary stamp tax was paid on this transaction. Mr. Rothbard's testimony that the sole reason for taking the property in his name was to expedite the transaction was not rebutted. In exhibits 1 and 2 copies of letters from SCL dated September 21 and 26, 1973, SCL referred to Rothbard as nominee of AFRD to be grantee of the property. Exhibit 4, the title page of an interim title insurance binder, indicates that the title insurance policy on the property purchased from SCL was intended to be in the name of AFRD. In August, 1974 the building erected on the site for the use and benefit of AFRD was completed and Edward Rothbard mortgaged the property to secure a note in the amount of $550,000.00. His wife also executed the note and mortgage. AFRD occupied the building in September, 1975 and made all mortgage payments to the mortgagee including the first payment. By quitclaim deed executed February 26, 1975 Edward Rothbard conveyed the property here involved to AFRD subject to the mortgage. Minimum documentary tax stamps were placed on this deed. On February 26, 1975 the outstanding balance due on the mortgage was $543,969.59.
Findings Of Fact At the beginning of the hearing in this cause, it was stipulated and agreed to that certain pleadings and exhibits would constitute the factual basis for consideration of the case. Specifically, the parties agreed that the First Amended Petition and its parts that were admitted by the Respondent; together with interrogatories propounded by the Respondent to the Petitioner and the answers thereto; and Exhibits A and C attached to the First Amended Petition; would be the underlying facts that could be examined in arriving at a statement of the facts, and ultimate conclusions of law. A further refinement in the stipulation and agreement of the parties was their acceptance of the stated amount of $952.05 in surtax owed, if it were concluded that any amount of surtax was properly assessed. Finally, the parties agreed that copies of the aforementioned Exhibits A and C could be utilized in deliberating this case. (Copies of the First Amended Petition, Answer to that Petition, Interrogatories propounded by the Respondent and Answers provided by the Petitioner, and Exhibits A and C attached to the First Amended Petition, are hereby made a part of the record herein and forwarded to the agency head in lieu of a transcript.) The Petitioner in this action is Wisconsin Real Estate Investment Trust, whose address is Marine Plaza, 111 East Wisconsin Avenue, Milwaukee, Wisconsin 53202. On or about April 11, 1975 the Petitioner was a grantee in the certain Warranty Deed from James E. Russell, Jr., as trustee to Wisconsin Real Estate Investment Trust, dated April 11, 1975, and recorded May 20, 1975, in Official Records Book 2620, Page 1812, Public Records of Orange County, Florida (hereinafter referred to as the "Warranty Deed"). A copy of the said Warranty Deed is a part of the First Amended Petition found as Exhibit A. The conveyance of the property as set forth in the Warranty Deed was subject to certain mortgages described in detail upon Exhibit A attached to the Warranty Deed and identified briefly as follows, to wit: A first mortgage to Prudential Insurance Company of America in the amount of three million three hundred thousand dollars ($3,300,000); Four "Second" mortgages to the Petitioner herein, said mortgages being in the total amount of eight hundred sixty five thousand, eight hundred fifty four dollars ($865,854); A "third" mortgage granted by Orlando Quadrant Development Limited to United Associates, Inc. in the amount of five hundred thousand dollars ($500,000). Exhibit A to the Warranty Deed also contained the following provision: "It is the intent of the Grantor and the Grantee that this conveyance shall not cause a merger of the mortgages held by the Grantee which are described above, and the fee simple title of the Grantee received hereby in that said mortgage shall remain in full force and effect and shall continue to be a lien on the property." Documentary stamps were paid with respect to the full amount of the purchase price in the amount of four million, six hundred sixty five thousand, eight hundred fifty four dollars ($4,665,854.) and minimum stamps for surtax in the amount of fifty five cents ($.55) were paid. On or about August 20, 1975, the Respondent delivered to Petitioner a form letter styled "Request for Information and Response" requesting the reason why minimum surtax was paid. Petitioner replied that minimum surtax was paid because the transaction constituted a sale and not a deed in lieu of foreclosure. A copy of the "Request for Information and Response" was attached as Exhibit B to the First Amended Petition. On or about November 20, 1975, the Respondent sent to Petitioner a "Proposed Notice of Assessment" informing Petitioner of a proposed imposition of tax in the amount of nine hundred fifty two and 05/100 dollars ($952.05) and a penalty in the amount of nine hundred fifty two and 05/100 dollars ($952.05), for a total assessment of one thousand nine hundred four and 10/100 dollars ($1,904.10). A copy of the "Proposed Notice of Assessment" was attached to the First Amended Petition as Exhibit C. In response to the Proposed Notice, the Petitioner, through counsel, wrote to Respondent on December 11, 1975, questioning the necessity for surtax charge under the present status of Florida Law. In that letter there was a formal request for conference within thirty (30) days of the proposed assessment to discuss the assessment before it became final. A copy of the letter of December 11, 1975 was Exhibit D to the First Amended Petition. On December 24, 1975, the Petitioner wrote the Respondent with respect to a telephone conference that was held with Respondent wherein the Respondent indicated there was a legal authority for imposition of surtax against Petitioner. The Respondent sent the information to Petitioner under cover of a letter dated January 2, 1976, and the Petitioner responded to said letter by letter dated January 9, 1976 wherein the position of the Petitioner with respect to the imposition of the surtax was set forth in detail. A copy of the Petitioner's letter of January 9, 1976, was made Exhibit E to the First Amended Petition. Subsequent to the letter of January 9, 1976, Respondent requested by telephone that Petitioner provide Respondent with a copy of the Declaration of Trust of Petitioner, which said Declaration of Trust was sent to Respondent under cover letter dated June 7, 1976. On September 8, 1976, Respondent sent Petitioner a notice that a Tax Warrant and Execution had been prepared and would be filed. A copy of said letter of September 8, 1976 was made Exhibit F to the First Amended Petition. Informal efforts to resolve the dispute were not effective and this led to a formal hearing. A closer look at the events involved in the conveyance of the Warranty Deed points out that the first mortgage held by Prudential Life Insurance Company of America was in default at that time, and the institution of foreclosure proceedings was eminent. The Grantee, Petitioner, held three mortgages subordinate to the first mortgage held by Prudential Life Insurance Company, and it was felt that the conveyance from Grantor to Grantee was the best method of protecting Grantee's interest. The conveyance did not provide for merger of the ownership interest and the mortgage interest in favor of the Grantee, on the face of the Warranty Deed. In fact, the Warranty Deed disclaims such merger, as stated before. There was no agreement either in writing or verbally between the Grantor and the Grantee with respect to payment or non-payment of the second mortgages held by the Grantee, subsequent to the transfer. None of the second mortgages held by the Grantee, Petitioner, have been satisfied of record at the time of conveyance or since that time. There has been no payment of principal and interest on the second mortgages in question since the conveyance under the Warranty Deed. The Petitioner advances its argument in opposition to the documentary surtax premised on the assertion that such tax does not apply to amounts of existing mortgages on the real estate sold, and therefore no surtax should be levied, because the four second mortgages at issue are still in existence. In stating this position the Petitioner refers to 201.021, F.S. which states: "(1) A documentary surtax, in addition to the tax levied in s. 201.02, is levied on those documents taxed by s. 201.02 at the rate of 55 cents per $500 of the consideration paid; provided, that when real estate is sold, the consideration, for purposes of this tax, shall not include amounts of existing mortgages on the real estate sold. If the full amount of the consideration is not shown on the face of the document, then the tax shall be at the rate of 55 cents on each $500 or fractional part thereof of the consideration." The Petitioner also makes reference to Rule 12A-4.12(4)(e) pertaining to the definition of consideration as found in 201.021, F.S. The pertinent provision of that rule says: "For Consideration - Surtax: The term "consideration" under 201.021, F.S., includes but is not limited to: (e) Conveyance where outstanding mortgage debt, lien or encumbrance is cancelled, satisfied, or otherwise rendered unenforceable by the conveyance." According to the Petitioner the four subject mortgages are not cancelled, satisfied, or otherwise rendered unenforceable by the conveyance, and consequently there is no taxable "consideration". They rely on the aforementioned language of the Warranty Deed which disclaims the merger of the mortgage debt with the equity of redemption when the conveyance was made. Moreover, under the Petitioner's argument, because it has stated its intention not to have a merger that stated intention should control and no merger should apply. For this proposition the Petitioner cites the case of Friedman v. Pohnl, 143 So.2d 690, (3 DCA Fla. 1962). Within the language of the case is reference to the case of Jackson v. Relf, 26 Fla. 465, 8 So. 184 (Fla. 1890). The Jackson case, supra, states that it is the intention of the person in whom the debt and equity of redemption are united that determines if there is a merger of the mortgage debt and equity of redemption, or if the mortgage debt continues to be in force and effect. The Petitioner also argues that the reason it elected not to merge the debt claim and equity of redemption, was to protect its priority position under the second mortgages over the third mortgage holder in the case of any sale to any third party and assumption of a second mortgage by a third party or in the case of any formal foreclosure. The Respondent counters the Petitioner's argument by claiming that the four subject second mortgages have been extinguished, thereby entitling the Respondent to impose a documentary surtax under the authority of 201.021(1), F.S. and Rule 12A-4.12(4)(e) F.A.C. The Respondent feels that you may look behind the disclaimer statement found in the Warranty Deed and by the facts of the conveyance determine that there is a merger for purposes of taxation. The Respondent relies upon a series of case decisions in arriving at this position. The first two cases Gay v. Inter-County Tel & Tel. Co., 60 So.2d 22 (Fla. 1952) and Choctawhatchee Electric Corp. v. Green, 132 So.2d 556 (Fla. 1961), it argues, stand for the proposition that the Documentary Stamp Tax Act in Florida is similar to the Federal Act 26 U.S.C.A. 1800 et. seq. and the same construction given to the federal tax cases in the federal courts, may be given to the Florida documentary stamp tax cases in the Florida cases. Using that theory as a basis for the persuasiveness of the federal authority, the Petitioner then cites the cases of Mutual Life Ins. Co. of New York v. United States, 110 F Supp. 606 (1953) and Railroad Federal Sav. & Loan Ass'n. v. United States, 135 F.2d 290. According to the Respondent, the two federal cases were sufficiently close in their facts to be applicable to the case at bar. Furthermore, since these cases required the payment of federal documentary tax, the Respondent believes that the rationale used in those cases would sustain a claim for documentary surtax and penalty in the case sub judice. An examination of the two federal cases shows them to be distinguishable in their facts. Mutual Life, supra, is distinguishable for two reasons. The first reason being that certain mortgage debts spoken of in that case had clauses indicating that the mortgage on the property was not to merge with the fee and that the mortgage would remain with the property notwithstanding conveyance; however, in all those cases a covenant had been given not to sue on the mortgage debt, which extinguished the mortgage debt. No such covenant has been given in the case at bar, and consequently the consideration, constituted of the extinguishment found in Mutual Life, supra, is not found in the case at bar. There is a second distinguishing factor between the Mutual Life case and the present case. That pertains to the fact that the action in Mutual Life involved the laws of the State of New York, which were being applied to a different set of facts. Under the New York Law, consideration was also found to exist notwithstanding a clause which disclaimed any merger of the fee and mortgage. This situation pertained to five mortgage cases in which no covenant not to sue had been given. The New York Law, according to the opinion in Mutual Life, called for the extinguishment of the mortgages in those five cases, due to the statutory statement which prohibited deficiency judgments on the mortgage indebtedness, because the fair market value of the property exceeded the debt claim. Therefore under the statement of the case, the mortgage indebtedness was extinguished as a matter of law, by transferring the interest in the fee to the mortgagee. A tax was placed on that transfer, based upon the extinguishment of the mortgage debt as consideration. The law in Florida does not prohibit a foreclosure suit by the second mortgage holder in the way set forth in the New York Law. In addition, the five mortgages in the Mutual Life case were not surrounded by first and third mortgages as is the case herein. The existence of the first and third mortgages, is a legitimate reason to maintain the second mortgages held by the Petitioner, as a protection against the other mortgagees. The other federal case cited by the Petitioner is the Railroad Federal case, supra. This case involved a deed in lieu of foreclosure and the imposition of a tax on the balance of principal and accrued interest due on the mortgages plus any cash amount paid. These mortgages involved in the Railroad Federal case were later cancelled by the resale or the subsequent purchase subject to the mortgages. The deed also contained an agreement not to seek a deficiency judgment on the part of the mortgagee which made it clear that the mortgagee was taking the property in full satisfaction of the mortgage indebtedness. In fact the mortgagee did not seek a deficiency judgment, nor was any further interest paid or demanded. This is distinguishable from the case at bar, in that the clear intent of the mortgagor and mortgagee herein is to keep active the second mortgages. The Respondent cited several administrative cases namely: Friedman v. State of Florida, Department of Revenue, Case No. 75-1304: Hutner v. State of Florida, Department of Revenue, Case No. 75-1771; and Atico Mortgage Investors v. State of Florida, Department of Revenue, Case No 77-1124. Respondent cited too, Opinion of the Attorney General, 059-203. Without discussing those administrative cases and the Attorney General's Opinion, they are all distinguishable in their facts and would not appear to have application to the case at bar. Based on an analysis of the evidential facts and the argument of the parties, the position of the Petitioner is well founded and the documentary surtax and penalty should not be paid.
Recommendation It is recommended that the subject assessment of documentary surtax and penalty be set aside. DONE and ENTERED this 6th day of October, 1977, in Tallahassee, Florida. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: R. Lee Bennett, Esquire Lowndes, Peirsol, Drosdick & Doster, P.A. Suite 443, First Federal Building Post Office Box 2809 Orlando, Florida 32802 Edwin J. Stacker, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 John D. Moriarty, Esquire Department of Revenue Division of Administration Carlton Building Tallahassee, Florida 32304
Findings Of Fact Exhibit 2 evidences some 13 arrests of Petitioner, most of which are for the offense of larceny. Although this document is hearsay, Petitioner readily acknowledged that in 1980 and 1984 he was a drug addict and supported his habit by stealing. Exhibit 3 consists of 6 convictions of grand theft and burglary on August 1, 1980, another count in 1984 and one count of attempted grand theft on October 26, 1990. The period between 1980 and 1984 was a period in Petitioner's life immediately following his discharge from the armed forces. On October 26, 1990, Petitioner was adjudicated guilty of grand theft following a plea of nolo contendere to the charge of obtaining or using or attempting to obtain or use the property of another with intent to deprive the owner of the use thereof of personal property of the value of $300 or more. Petitioner testified that in 1990 his 19 year old stepson, who was preparing to enter college, while driving Petitioner's pickup truck, stopped near a parked vehicle and attempted to steal personal property therefrom, but fled when someone observed him. The license number of the pickup was traced to Petitioner. The stepson confessed his actions to Petitioner and when the police arrived, Petitioner, who already had a criminal record that could hardly be blemished further, told the police that he was the driver of the pickup. He was charged with the offense of attempted grand larceny, pled nolo contendere, was adjudicated guilty and was sentenced to 5 years in prison of which he served some 7 months. The stepson graduated from college and is now married, gainfully employed, and raising a family. When submitting his application for licensure, Petitioner further testified that he researched the definition of moral turpitude, spoke to his lawyer and other people regarding his conviction of grand larceny, and was told that the offense did not necessarily constitute an offense involving moral turpitude. Accordingly, Petitioner assumed that he had not been convicted of an offense involving moral turpitude and marked item 5 on his application "No" which asked if he had ever been found guilty of a crime involving fraud, dishonest dealing, or any other act of moral turpitude. Petitioner contends that he told Respondent's employees, with whom he discussed his application for licensure, of his criminal record and was told this was not disqualifying. Accordingly, he spent the money to obtain the required mortgage broker education certificate and to take and pass the examination for mortgage broker license, only to be told after these efforts that he could not qualify for licensure.
Recommendation It is RECOMMENDED that a Final Order be issued denying the application of Stephen J. Matala for a licensure as a mortgage broker. DONE AND ENTERED this 27th day of January 1994 in Tallahassee, Leon County, Florida. K. N. AYERS 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 27th day of January 1994. COPIES FURNISHED: Stephen J. Matala 32414 Marchmont Circle Dade City, Florida 33525 Lisa L. Elwell, Esquire Office of the Comptroller Department of Banking and Finance 1313 Tampa Street, Suite 615 Tampa, Florida 33602-3394 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: Respondent, Department of Banking and Finance, Division of Finance (Division), is the state agency charged with administering the mortgage brokerage guaranty fund (fund) codified in Sections 494.042 through 494.045, Florida Statutes (1987). Among other things, the Division processes claims for payment from the fund by persons who were parties to a mortgage financing transaction and who have suffered monetary damages as a result of a violation of the law by a licensed mortgage broker. In this case, the perpetrator was Stackhouse Mortgage Corporation (Stackhouse), which held mortgage brokerage license number HB-0006527 from September 19, 1976 through August 31, 1986 and operated at least part of that time in the Brevard County area. In order to perfect a successful claim and be assured of participating in the distribution of moneys from the fund, a person must satisfy a number of statutory criteria within a specified time period after the first notice is filed. This proceeding involves a number of claims by various parties who suffered monetary damages as a result of the illicit acts of Stackhouse. The principal factual issues are whether petitioners, Robert Motes, Machiko Motes, Madge Chesser and Christiane E. Driscoll, all claimants, satisfied the required statutory criteria within the specified time period, and whether the first valid and complete notice of a claim was filed on January 20, 1987 as maintained by the Division, or occurred on a later date as urged by petitioners. These issues are crucial to petitioners' interests since the amount of money to be distributed from the fund for all claimants (on a pro rata basis) is $100,000, and all of that money has been proposed to be distributed to intervenors and other claimants because of the alleged untimeliness of petitioners' claims. The Stackhouse matter first came to the Division's attention on January 20, 1987 when it received by certified mail a letter containing a copy of a complaint filed against Stackhouse by intervenors, Richard S. and Althea M. Rucki, in the circuit court of the eighteenth judicial circuit in and for Brevard County. This filing constituted the first valid and complete notice of the matter. As such, it triggered a two year time period in which other claimants had to file such notice with the Division and then satisfy all statutory criteria in order to share in the first, and in this case the only, distribution of moneys from the fund. Intervenors eventually obtained a summary final judgment against Stackhouse on January 10, 1989 in the amount of $27,200 plus $1,972 in interest, $76 in court costs, and $2,000 in attorney's fees. Copies of the judgment, unsatisfied writ of execution and affidavit of diligent search were filed with the Division on January 19, 1989, or within two years from the date the first notice was filed. After the Rucki notice was filed, a number of claimants, including the other intervenors, filed their notices with the Division within the two year time period and thereafter satisfied all pertinent statutory criteria. Their names, dates of filing their final claims with the Division, and amounts of final judgment, including costs and fees, are listed below in the order in which the claimants filed their first notice with the Division: Claimant Date of Filing Claim Amount of judgment Roberts January 19, 1989 $84,562.30 Rucki January 19, 1989 31,248.00 Gantz January 19, 1989 15,634.28 Carman January 19, 1989 48,767.87 Thomas July 21, 1988 40,103.22 Hahn January 19, 1989 14,165.14 Ulriksson January 18, 1989 14,497.00 Choate January 18, 1989 28,994.00 Anderson December 22, 1988 84,443.20 Resnick December 22, 1988 32,912.22 It is noted that each of the foregoing claimants satisfied all statutory requirements prior to the date of the filing of their respective final claims with the Division. This included the obtaining of a judgment against the debtor, having a writ of execution issued upon the judgment which was later returned unsatisfied, and thereafter having made a reasonable search and inquiry to ascertain whether the judgment debtor possessed any property or other assets to be used in satisfying the judgment. Based upon the judgments obtained by the above claimants, those persons are entitled to distribution from the fund in the following pro rata amounts: Anderson claim - $10,950.00 Resnick claim - 10,950.00 Carman claim - 10,950.00 Thomas claim - 10,950.00 Ulriksson claim - 7,937.83 Choate claim - 10,950.00 Roberts claim - 10,950.00 Gantz claim - 7,697.63 Hahn claim - 7,714.54 Rucki claim - 10,950.00 $100.000.00 On July 27, 1988 petitioners, Robert and Machiko Motes and Madge Chesser, filed their notices with the Division. On August 2, 1988, they were advised by the Division that "the first time period for payment of the Guaranty Fund claims is `two years after the first claim.'" Even so, petitioners did not complete all required statutory steps and file their final claims with the Division until March 1, 1989, or after the two year period had expired. Petitioner, Christiane E. Driscoll, filed her notice, copy of complaint and final judgment on January 23, 1989. Thereafter, she completed all required statutory steps and filed her final claim with the Division on June 6, 1989. As a consequence, none of petitioners are entitled to share in the first distribution of moneys from the fund. An attorney who once represented Driscoll, Rafael A. Burguet, made inquiry by telephone with a Division employee in either late December 1988 or early January 1989 concerning the steps required to process a claim on behalf of his client. It was his recollection that the Division employee did not advise him that the two year period for perfecting claims was triggered in January 1987. On January 20, 1989, Burguet sent a letter to the Division with a copy of the complaint and final judgment against Stackhouse. In the letter, he requested the Division to "please advise as to what further requirements you may have to file this claim." On January 23, 1989 a Division employee acknowledged by letter that the Division had received the complaint and judgment. The letter contained copies of the relevant portions of the Florida Statutes and advice that "claims for recovery against Stackhouse Mortgage Corporation are currently being forwarded to our Legal Department for the drafting of a Notice of Intent to either grant or deny payment from the Fund." There is no evidence that the Division made any positive representations to Burguet that either mislead him or caused him to delay in filing his claim. Similarly, the Division responded on August 2, 1988 to the initial filing of the Motes and Chesser notices with advice that the time period for complying with the statutory criteria was "two years after the first claim." Although there were subsequent telephone conversations (but no written communications) between their attorney and the Division, there was no evidence that the Division made any positive representations that would mislead petitioners or otherwise cause them to delay processing their claims. Petitioners Motes and Chesser contend that the first valid and complete notice was not received by the Division until May 20, 1987 when intervenor Carman filed a complaint against Stackhouse in circuit court and also filed her claim and copy of the complaint with the Division the same date. Under this theory, the two year period would not expire until May 19, 1989. This contention is based on the fact that the Rucki complaint was filed in circuit court on January 9, 1987 but the claim and copy of the complaint were not filed with the Division until January 20, 1987. Petitioners contend that subsection 494.043(1)(e) requires both acts to be accomplished the same date. However, this construction of the statute is contrary to the manner in which it has been construed by the Division. According to the stipulated testimony of an employee of the Brevard County sheriff's office, if the property to be levied on is not listed on the instructions to levy, the sheriff's office requires a court order prior to filing a return nulla bona. In this case seven claimants obtained such a court order directing the sheriff to furnish a return nulla bona as to the writ of execution. However, petitioners Motes and Chesser did not do so until after the two year time period had expired. The records received in evidence reflect that the initial inquiry made by Robert and Virginia R. Enteen was never pursued and therefore their claim should be denied.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent enter a final order distributing the moneys from the mortgage brokerage guaranty fund in a manner consistent with its proposed agency action entered on June 21, 1989. The requests of petitioners to share in the first distribution of moneys from the fund should be DENIED. DONE and ORDERED this 11th day of December, 1989 in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER 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 11th day of December, 1989.
