The Issue Whether the Respondent is indebted to Petitioner as alleged in the Complaint filed with the Department of Agriculture and Consumer Services.
Findings Of Fact Robert Sepos is the comptroller for Ben-Bud Growers, Inc. As such Mr. Sepos maintains the company records which document amounts owed to it by others. As to this case, Mr. Sepos presented the invoices and statements due and owing from the Respondent. Based upon the unpaid invoices, Respondent owes Petitioner the sum of $2,626.00. Respondent acknowledged that the sum of $2,626.00 is owed but claimed that such amount was not for the purchase of agricultural products as contemplated by Chapter 604, Florida Statutes. According to Mr. Towell the bulk of the debt owed to Petitioner is for packaging and shipping fees for produce from growers represented by Fantastic Produce. Mr. Towell maintains that packing and shipping fees are not encompassed within Chapter 604, Florida Statutes. Mr. Sepos could not verify what sum, if any, of the total amount claimed was for agricultural products (versus packing or shipping). Based upon the admissions made by Mr. Towell, Respondent owes the Petitioner for agricultural products the sum of $347.25 in this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a Final Order approving Petitioner's claim in the amount of $347.25 and disallowing the remainder. DONE AND ENTERED this 7th day of November, 1997, in Tallahassee, Leon County, Florida. J. D. Parrish 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 this 7th day of November, 1997. COPIES FURNISHED: Brenda D. Hyatt, Chief Department of Agriculture and Consumer Services Mayo Building, Room 508 Tallahassee, Florida 32399 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza 01 Tallahassee, Florida 32399 Ben Litowich, President Ben-Bud Growers, Inc. 6261 West Atlantic Boulevard Margate, Florida 33063 George Towell, President George Towell Distributors, Inc. d/b/a Fantastic Produce Post Office Box 159 Belle Glade, Florida 33430 American Southern Insurance Company Legal Department 3715 Northside Parkway, 8th Floor Atlanta, Georgia 30327
Findings Of Fact At all times pertinent to these proceedings, Respondent, Private Money Mortgage Company (PMMC), was a mortgage brokerage business in the State of Florida holding License Number HB592732699 that had been issued by Petitioner. At all times pertinent to these proceedings, Frank Donahue was a licensed mortgage broker in the State of Florida holding License Number HA267474770 that had been issued by Petitioner. The Department of Banking and Finance, the Petitioner in these proceedings, is the agency of the State of Florida charged with the responsibility of enforcing the provisions of Chapter 494, Florida Statutes. In 1985, Mr. and Mrs. A. Charles Cinelli bought a house in Palm Beach County, Florida, and moved from upstate New York to Palm Beach County, Florida. Respondent, Frank Donahue, assisted Mr. and Mrs. Cinelli in obtaining financing for the home the Cinellis purchased in Palm Beach, County. In connection with this 1985 transaction, Mr. Donahue forwarded to the Cinellis an "Exclusive Broker Agreement", which they executed and returned to him. Because this 1985 transaction involved a purchase, Mr. Donahue ordered an appraisal for this property and charged its cost as a part of the Cinelli's closing costs. Subsequent to that transaction, Mr. Donahue and his wife, Brenda, saw Mr. and Mrs. Cinelli at occasional social events. Franklin T. Smith is a certified public accountant who performed professional services for Mr. and Mrs. Cinelli and for Mr. and Mrs. Donahue. Mr. Smith referred the Cinellis to Mr. Donahue in 1985 and advised the Cinellis during the transaction that is the subject of this proceeding. Prior to December 2, 1988, Mr. Cinelli contacted several mortgage brokers in the Palm Beach County area to discuss the possibility of obtaining a mortgage on certain real property located in upstate New York. Mr. Cinelli contacted Mr. Donahue by telephone and discussed with him his desire to raise capital to begin a business in Florida. Mr. Cinelli estimated that he would require approximately $1,000,000 to start this business. Mr. Cinelli told Mr. Donahue that he and Mrs. Cinelli owned certain commercial real property in upstate New York and that State Farm Insurance Company held an option to purchase this property for the sum of $1,450,000. Mr. Cinelli did not want to wait to learn whether State Farm intended to exercise this option to purchase and he discussed with Mr. Donahue the possibility of obtaining the desired capital by securing a mortgage on this property. Mr. Donahue advised Mr. Cinelli that he could expect to secure a mortgage for approximately $700,000 (which was approximately 50% of the amount of the option contract) and that he would need a current appraisal. Mr. Donahue also informed Mr. Cinelli that he would require the sum of $2,500 as a non-refundable deposit to begin seeking such a commitment. On or about December 2, 1988, Mr. Cinelli provided Mr. Donahue with a copy of the option agreement with State Farm and with a copy of the agreement dated September 21, 1988, which extended the time within which State Farm could exercise its option for an additional six months. Mr. Cinelli reiterated to Mr. Donahue that the option price was for $1,450,000 and that he wanted to mortgage the property for $1,000,000. Mr. Cinelli also provided Mr. Donahue with the name, address, and telephone number of Mr. Wayne Lupe, who was represented by Mr. Cinelli to be his MAI appraiser in Schenectady, New York. On December 15, 1988, Mr. Donahue sent to Mr. Cinelli a letter which attached an "Exclusive Broker Agreement" that had been executed by Mr. Donahue on December 15, 1988. This was the same "Exclusive Broker Agreement" form that Mr. Donahue had used for the 1985 Cinelli transaction. The body of the letter provided as follows: Enclosed please find a copy of my exclusive brokers agreement detailing the probable terms of the loan which you are seeking. This agreement is the same agreement which you signed when you purchased your current resi- dence. The agreement calls for both you & Joan to sign and return along with a nonrefundable deposit in the amount of $2500.00 to Private Money Mortgage Corp. The above noted deposit shall be credited towards your closing costs at the time of closing, if a commitment is offered. I have spoken to several of my investors about your concerns and I am awaiting confirmation of their substantial interests prior to ordering the appraisal. I will contact you as soon as I have received the return of this agreement along with your deposit in order to fill you in on our efforts to secure you the most competitive loan on your desired terms. The Exclusive Broker Agreement reflected that the amount of the mortgage would be $700,000 and disclosed that the total estimated costs that would be incurred in securing the mortgage was $78,346, which included a broker's fee of $35,000 and an estimated appraisal fee of $3,500. The Exclusive Broker Agreement, signed by Mr. Donahue on December 15, 1988, contained the following provision: DEPOSIT: In consideration of the sum of $2,500, receipt of which is hereby acknowledged, and in compliance with Chapter 494, Florida Statutes, Broker accepts this application and agrees to exert his/her best effort to obtain a commitment for loan in accordance with the terms and conditions set forth herein. This deposit shall be credited toward closing costs at the time of closing the permanent loan or commitment, less Broker's expenses. Among the "Standards" which were incorporated as terms and conditions of the Exclusive Broker Agreement was the following: Deposit. Client simultaneously with execution of this agreement has deposited with broker the amounts stated in this agreement in order to secure the obligations owed by client to broker in the event of default of client as provided in the agreement and to reimburse broker of any and all expenses, including telephone charges, lodging, and administrative fees for credit checks and processing appraisals and the like, including upon any cancellation by client, reimbursement for broker's time expended incurred by broker, whether or not a loan commitment is obtained by broker. Mr. Cinelli was concerned that he would be incurring substantial fees and costs if Mr. Donahue obtained a commitment and Mr. Cinelli decided not to accept it. Mr. Smith advised Mr. Cinelli that the estimated expenses were not abnormally high, but he suggested that his liability should be limited. In response to those concerns, Mr. Donahue prepared and delivered between December 15, 1988, and the end of the year an addendum to the Exclusive Broker Agreement that would have limited Mr. Cinelli's liability to the sum of $7,500. That addendum provided, in pertinent part, as follows: It is hereby understood and agreed by the parties that in the event a loan commitment is offered to the applicants & they decide to refuse this commitment, the applicants liability will be limited to the sum of Five Thousand Dollars plus the original deposit of $2,500.00 for a total amount of $7,500.00. It is further understood that said commitment must bear approximately the same terms and conditions as the attached agreement. Mr. and Mrs. Cinelli gave Mr. Smith the sum of $2,500 in cash to deliver to Mr. Donahue, but there is conflicting testimony as to when this money was delivered to Mr. Smith for delivery to Mr. Donahue. Mr. Cinelli testified that the money was delivered before the Exclusive Broker Agreement dated December 15, 1988, was prepared. Mr. Donahue testified that the money was delivered after both the Exclusive Broker Agreement and the addendum thereto had been delivered to Mr. Cinelli. Mr. Donahue also testified that the statement contained in the Exclusive Broker Agreement that he signed on December 15, 1988, acknowledging his receipt of the $2,500 deposit was false. He did not explain why the addendum referred to the sum of $2,500 as "the original deposit". Mr. Smith did not recall when he delivered this money to Mr. Donahue, but he did recall having delivered the cash the same day he received it from the Cinellis. While his testimony is that he received the $2,500 during his initial meeting with Mr. and Mrs. Cinelli (which would be before Mr. Cinelli received the Exclusive Broker Agreement) this testimony lacks credibility because of Mr. Smith's lack of certainty as to dates. In addition, this testimony conflicts with the letter Mr. Smith wrote to Mr. Donahue at Mr. Donahue's request on August 28, 1989, which clearly indicates that the $2,500 was not paid until after the addendum to the Exclusive Broker Agreement had been prepared. This conflict is resolved by finding that the greater weight of the evidence establishes that the sum of $2,500 was delivered by Mr. Smith to Mr. Donahue after Mr. Cinelli had received both the Exclusive Broker Agreement and the addendum thereto. Mr. Donahue did not provide the Cinellis with any type of written agreement, other than his letter of December 15, 1998, the Exclusive Broker Agreement, and the addendum when he received the cash from Mr. Smith. There was no written receipt for these funds, nor was there any written memorandum of understanding between Mr. Donahue and the Cinellis as to whether payment for the appraisal that Mr. Donahue and Mr. Cinelli had discussed would be made from the $2,500. Mr. Cinelli was of the belief that $2,000 of the $2,500 deposit would be earmarked for the payment of the appraisal. Mr. Donahue was of the belief that the $2,500 was a non-refundable retainer and he treated that sum as an earned fee. There was no meeting of the minds between Mr. Cinelli and Mr. Donahue as to the nature of the $2,500 deposit, other than it was non-refundable. Specifically, there was no agreement as to what costs, if any, would be paid from that deposit. Mr. Donahue's normal business practice in transactions involving a refinance of property is different than his practice in transactions involving a purchase of property. In purchase transactions (such as the 1985 Cinelli transaction), Mr. Donahue arranges for the appraisals and treats the costs of the appraisal as an expense to be paid by the purchaser at closing. In refinance transactions (such as the 1988 Cinelli transaction), it is his practice to require his customer to deal directly with the appraiser in ordering and paying the costs of the appraisal. Respondents failed to establish that in the subject transaction, Mr. Donahue made it clear that Mr. Cinelli would be responsible for ordering and paying the cost of the appraisal. Mr. Cinelli believed that $2,000 of the $2,500 he later gave Mr. Donahue would be earmarked for the payment of the appraisal. Neither Mr. Donahue's letter of December 15, 1998, the Exclusive Broker Agreement, nor the addendum clearly resolved the dispute. There was a dispute between Mr. Donahue and Mr. Cinelli as to who ordered the appraisal. Mr. Cinelli denied that he ordered the appraisal and that his calls to his appraiser, Mr. Lupe, was only to advise him of Mr. Donahue's forthcoming call. Mr. Donahue denied that he ordered the appraisal and that his contacts with Mr. Lupe were after Mr. Cinelli had ordered the appraisal. Mr. Donahue contends that his contacts with the appraiser were merely to give the appraiser instructions as to the information that should be reflected by the appraisal. This dispute is resolved by finding that Mr. Cinelli ordered the appraisal through Mr. Lupe and that Mr. Donahue advised Mr. Lupe as to the information that should be reflected by the appraisal. It was determined from conversations between Mr. Donahue and Mr. Lupe that Mr. Lupe was not qualified to perform the appraisal and that Mr. Lupe would engage Albert L. Friedman, MAI and William J. McEvoy of Capitol Real Estate and Appraisal Company of Schenectady, New York, on Mr. Cinelli's behalf to perform the work. Messrs. Friedman and McEvoy prepared the appraisal and certified the same to Mr. Cinelli on March 13, 1989. The appraised value of the property was $2,100,000. As of the date of the formal hearing, the appraiser's bill of $2,000 had not been paid. Capitol Real Estate and Appraisal Company had billed both Mr. Donahue and Mr. Cinelli and an attorney representing Capitol Real Estate and Appraisal Company had written Mr. Cinelli a demand letter. It was the dispute over the payment of the appraiser's fee that prompted the complaint the Cinellis filed against Respondents. The Cinellis did not execute the Exclusive Broker Agreement and the addendum because they wanted to wait on the appraisal to see if the appraised value would permit them to borrow more than $700,000 and because they were not satisfied with the amount of the projected costs of consummating the transaction. Mr. Cinelli misled Mr. Donahue as to his intentions to execute these agreements. Mr. Donahue made several requests to the Cinellis that they execute the Exclusive Broker Agreement and addendum and return them to him. Despite the absence of an executed brokerage agreement, Mr. Donahue exerted considerable effort to seek a commitment consistent with the Exclusive Broker's Agreement and succeeded in securing such a commitment in April 1989. No part of the $2,500 Mr. Donahue received from Mr. Smith on behalf of the Cinellis was placed in escrow by Mr. Donahue. Respondents have made no accounting of the $2,500 and have paid no part of the appraisal bill. Mr. Donahue claims the deposit as a non-refundable earned fee, despite the absence of a written agreement to that effect. The Cinellis sold the subject property to State Farm in June 1989.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered by Petitioner which finds: that Respondents violated the provisions of Rule 3D-40.006(5), Florida Administrative Code, by accepting the $2,500 deposit from the Cinellis without a written agreement as to the disposition of those funds; that Respondents violated the provisions of Section 494.055(1)(e), Florida Statutes, and Rule 3D-40.006(6)(a), Florida Administrative Code, by failing to place said deposit in escrow; and that Respondents violated the provisions of by Section 494.055(1)(f), Florida Statutes, by failing to account for said deposit. It is further recommended that an administrative fine be levied against Respondents in the total amount of $1,000.00 for said violations. It is further recommended that the final order place the licenses of Respondents on probation for a period of one year with three special conditions of probation. The first special condition of probation would require Respondents to pay Capitol Real Estate and Appraisal Company the sum of $2,000 within sixty days of the Final Order. The second special condition of probation would terminate Respondents' probation upon timely compliance with the first special condition of probation. The third special condition of probation would prohibit Respondents from conducting any business as mortgage brokers within the State of Florida for a period of six months should Respondents fail to timely comply with the first condition of probation. RECOMMENDED in Tallahassee, Leon County, Florida, this 9th day of January, 1991. CLAUDE B. ARRINGTON 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 9th day of January, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-4708 The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. The proposed findings of fact in paragraphs 1, 3-10, and 13 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 2 and 11 are adopted in part by the Recommended Order, and are rejected in part as being contrary to the findings made. The proposed findings of fact in paragraph 12 are adopted in part by the Recommended Order, and are rejected in part as being argument. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent. The proposed findings of fact in paragraphs 1-3 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraphs 4-6, 14, and 17 are rejected as being subordinate to the findings made. The proposed findings of fact in paragraph 7 are adopted in part by the Recommended Order. The characterization of the Cinellis having a "long standing relationship" with Mr. Donahue is rejected as being ambiguous and unnecessary to the conclusions reached. The proposed findings of fact in paragraph 8 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraphs 9-11 are adopted in part by the Recommended Order, but are rejected to the extent that they are subordinate to the findings made. The proposed findings of fact in paragraphs 12 and 13 are rejected as being recitation of testimony or as being subordinate to the findings made. The proposed findings of fact in paragraph 15 are rejected as being subordinate to the findings made or as being contrary to the findings made or to the conclusions reached. The proposed findings of fact in paragraph 16 are adopted in part by the Recommended Order, and are rejected in part as being unnecessary to the conclusions reached. COPIES FURNISHED: Deborah Guller, Esquire Office of the Comptroller 111 Georgia Avenue, Suite 211 West Palm Beach, Florida 33401-5293 Marie A. Mattox, Esquire Douglass, Cooper, Coppins & Powell Post Office Box 1674 Tallahassee, Florida 32302-1674 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 William G. Reeves General Counsel The Capitol Plaza Level, Room 1302 Tallahassee, Florida 32399-0350
The Issue The issue in the case is whether Respondent received an insurance premium payment from a client and failed to remit it to the insurer in order to obtain insurance for the client, in violation of Sections 626.611(4), (5), (7), (8), (9), (10), and (13), 626.621(2) and (6), 626.9561, 626.9521, and 626.9541(1)(e)1. and (o)1.
Findings Of Fact At all material times, Respondent has been licensed as a Surplus Lines Agent, Life and Health (debit) Agent, Life Agent, Life and Health Agent, and General Lines Insurance Agent. On July 22, 1988, Charles M. Wilks visited the office of Respondent to purchase insurance on his automobile. Respondent quoted him a premium of $1257 for a one-year term commencing August 19, 1988. Mr. Wilks decided to purchase the insurance at the quoted premium. Accordingly, he gave Respondent a check in the amount of $1257 payable to Respondent's insurance agency. The same day, Respondent gave Mr. Wilks an agency receipt and Temporary Binder and Receipt effective from August 19, 1988, through August 19, 1989. The temporary binder showed the insurer as Dairyland Insurance Company. Respondent caused the check to be promptly cashed and credited to his agency's account. However, Mr. Wilks never received a policy. His wife called the agency every week after the policy did not arrive promptly. But she was unsuccessful in obtaining the policy despite promises by employees of the agency that they would mail the policy to the Wilkses. Upset because the automobile was no longer covered by insurance, Mr. Wilks visited Respondent at his office in November and demanded a policy. Respondent stated that Dairyland could not insure the type of car for which Mr. Wilks sought insurance because the car was a special customized model. In fact, Respondent had never submitted the application for insurance or the premium to Dairyland for issuance of a policy. Respondent convinced Mr. Wilks to purchase the insurance from a different company. Refunding one-half of the previously paid premium, Respondent issued Mr. Wilks a certificate of insurance that purportedly reflects coverage for the automobile from November 7, 1988, through November 7, 1989, from Clarindon National. Respondent again failed to submit the policy application to the insurer. When Mr. Wilks had still not obtained a policy by January, 1989, he went to Respondent's office, but learned that he had moved. After some effort, Mr. Wilks tracked down Respondent and demanded the return of the remaining premium payment that he had previously made. Respondent finally gave Mr. Wilks a check for the balance. Taking the check immediately to the bank, Mr. Wilks received payment on it. Dairyland was less fortunate with Respondent's checks. By letter dated October 19, 1988, the insurer informed Respondent that his authority to write insurance for the company was withdrawn effective December 12, 1988. As of February 14, 1990, the sum owed to Dairyland by Respondent's agency totalled $1049.43 in nonsufficient funds checks.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the Department of Insurance enter a Final Order revoking all of Respondent's above-described licenses. DONE and ORDERED this 29 day of March, 1989, in Tallahassee, Florida. ROBERT E. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29 day of March, 1989. Copies to: Hon. Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Don Dowdell General Counsel Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Nancy S. Isenberg, Attorney Division of Legal Services Department of Insurance 412 Larson Building Tallahassee, FL 32399-0300 Anthony Brooks 500 E. Semoran Blvd., Suite 32 Casselberry , FL 32707
Findings Of Fact From January 15, 1980, until November 30, 1981, Respondent was the only licensed general lines agent at the C&M Insurance Agency of Dade County, located at 1014 Northwest 27th Avenue, Miami, Florida. At the same time, Respondent also sold insurance as Authorized Insurance Agency at The North Miami Flea Market, 14135 Northwest Seventh Avenue, Miami, Florida. While Respondent was the only licensed agent at that C&M address, his contract with C&M Insurance Agency expressly prohibited him and his employees or agents from soliciting or selling any form of insurance. Rather, the contract provided That Respondent was only permitted to use office space to prepare and file income tax returns at the C&M Northwest 27th Avenue address and also at C&M's other offices located on South Dixie Highway and on South State Road Seven. While doing business at the North Miami Flea Market, Respondent held himself out as president of Authorized Insurance Agency. During the same time period, Respondent wrote business at The North Miami Flea Market during the week and not just on weekends. Further, on December 19, 20 and 22, 1920, Respondent wrote business at both The North Miami Flea Market and at the C&M Northwest 27th Avenue address. On September 9, 1981, John G. Holmes completed an application and paid $639 for automobile insurance with National Security Insurance Company. The application was signed by Respondent and contains C&M's Northwest 27th Avenue address. Neither the application nor the insurance premium monies were ever forwarded to National Security Insurance Company. Holmes has never received either insurance coverage on his automobile or a refund of his insurance premium. On October 6, 1981, Antje Kalb purchased an automobile. The salesman at the dealership told her she needed to purchase insurance and gave her the name and telephone number for C&M's Northwest 27th Avenue office. She called C&M, and someone from that Agency came to the dealership. Kalb gave to C&M's representative $783 for full automobile insurance coverage, and the C&M employee gave Kalb a receipt for her premium. The receipt carries the C&M Northwest 27th Avenue address, and the binder given to Kalb carries Respondent's signature. Neither Kalb's application nor her premium payment were ever forwarded to the insurer, Commercial Union Insurance Company, and Kalb has never received either her automobile insurance coverage or a refund of her premium payment. On July 14, 1980, Sidney Sugarman from C&M's South State Road Seven office entered into a written agency agreement with Fortune Insurance Company. Between November 1, 1980, and January 31, 1981, Respondent signed and sent 23 applications for automobile insurance to Fortune Insurance Company, which applications reflected that the business had been written out of C&M's Northwest 27th Avenue address. Fortune issued policies to The insureds based upon those applications. Respondent performed all The acts and duties of a general lines insurance agent for Fortune Insurance Company. On October 24, 1980, Respondent entered into a written agency agreement on behalf of Authorized Insurance Agency with Fortune Insurance Company. Between October 31, 1980, and January 31, 1981, Respondent signed and sent 14 applications for automobile insurance from Authorized Insurance Agency to Fortune Insurance Company. Fortune issued policies to the insureds based upon these applications. Respondent performed all The acts and duties of a general lines insurance agent for Fortune Insurance Company. Respondent was not licensed with Fortune Insurance Company until June 17, 1981. Fortune Insurance Company and Respondent had no brokerage arrangements prior to June 17, 1981; rather, all applications submitted by Respondent to Fortune Insurance Company prior to that date were written as direct contracts and not through any brokerage arrangement.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered dismissing Count II of the Administrative Complaint filed herein; finding Respondent guilty of The allegations contained in Counts I, III, IV, V and VI of the Administrative Complaint filed herein; and revoking all licenses currently possessed by Respondent and his eligibility to hold a license pursuant to Chapter 626, Florida Statutes. DONE and RECOMMENDED this 19th day of October, 1983, in Tallahassee, Leon County, Florida. LINDA M. RIGOT, 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 19th day of October, 1983. COPIES FURNISHED: Curtis A. Billingsley, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301 Mr. Eugene Lipofsky 1851 NE 168th Street North Miami Beach, Florida 33162 The Honorable Bill Gunter Insurance Commissioner and Treasurer The Capitol Tallahassee, Florida 32301
Findings Of Fact Robert Sepos is the comptroller for Ben-Bud Growers, Inc. As such Mr. Sepos maintains the company records which document amounts owed to it by others. As to this case, Mr. Sepos presented the invoices and statements due and owing from the Respondent. Based upon the unpaid invoices, Respondent owes Petitioner the sum of $10,471.80. Respondent acknowledged that the sum of $10,471.80 is owed to Petitioner but claimed that such amount was not for the purchase of agricultural products as contemplated by Chapter 604, Florida Statutes. According to Mr. Towell the bulk of the debt owed to Petitioner is for packaging and shipping fees for produce from growers represented by Fantastic Produce. Mr. Towell maintains that packing and shipping fees are not encompassed within Chapter 604, Florida Statutes. Mr. Sepos could not verify what sum, if any, of the total amount claimed was for agricultural products (versus packing or shipping). Based upon the admissions made by Mr. Towell, Respondent owes the Petitioner for agricultural products the sum of $775.00 in this case.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a Final Order approving Petitioner's claim in the amount of $775.00 and disallowing the remainder. DONE AND ENTERED this 7th day of November, 1997, in Tallahassee, Leon County, Florida. J. D. Parrish 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 this 7th day of November, 1997. COPIES FURNISHED: Brenda D. Hyatt, Chief Department of Agriculture and Consumer Services Mayo Building, Room 508 Tallahassee, Florida 32399 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza 01 Tallahassee, Florida 32399 Ben Litowich, President Ben-Bud Growers, Inc. 6261 West Atlantic Boulevard Margate, Florida 33063 George Towell, President George Towell Distributors, Inc. d/b/a Fantastic Produce Post Office Box 159 Belle Glade, Florida 33430 American Southern Insurance Company Legal Department 3715 Northside Parkway, 8th Floor Atlanta, Georgia 30327
The Issue The ultimate issue for determination in this proceeding is whether Petitioner should withdraw Respondent's approval as an Eligible Surplus Lines Insurer in Florida for the reasons stated in the Order To Show Cause.
Findings Of Fact Petitioner is the administrative agency charged with responsibility for administering and enforcing the provisions of Chapter 626, Florida Statutes. Respondent is an alien insurer subject to the provisions of Section 626.918, Florida Statutes. Respondent is organized under the laws of Antigua and Barbuda, B.W.I. Respondent's port of entry is in Florida. Respondent is an unauthorized insurer in the state. An unauthorized insurer is not issued a certificate of authority or license to sell insurance in the state. An unauthorized insurer is made eligible to conduct business in the state pursuant to the Unauthorized Insurer Process Law in Sections 626.904 through 626.912, Florida Statutes. Respondent is eligible to sell surplus lines insurance pursuant to Sections 626.913 through 626.937, Florida Statutes. There are approximately 215 surplus lines insurers in the state. They do not participate in the Florida Guaranty Fund. /1 Surplus lines insurers are not eligible to sell life insurance, basic workers' compensation, or primary automobile liability insurance. Surplus lines insurers are eligible to write only those risks that a licensed carrier in Florida will not write. Respondent derives 100 percent of its business from the sale of insurance in Florida. Respondent's annual premium volume in 1990 was approximately $11.2 million. Of the total premiums received in 1990, approximately $7 million was attributable to physical damage premiums for private passenger automobiles and approximately $4.2 million was attributable to other liability insurance. Respondent filed an annual report for the fiscal year ending December 31, 1990, and quarterly reports for the quarters ending September 30, 1990, and March 31, 1991. Admitted assets on all three reports was comprised primarily of cash and common stock. The reported value of common stock exceeded 10 percent of the reported value of admitted assets in each report. The reported value of admitted assets in the annual report was $13,457,506. Cash and common stock were valued in the respective amounts of $3,490,701 and $8,385,365. The reported value of common stock was approximately 62 percent of the reported value of admitted assets. The reported value of admitted assets in the quarterly report ending September 30, 1990, was $10,450,539. /2 Cash and common stock were valued in the quarterly report for September 30, 1990, in the respective amounts of $1,365,129 and $5,811,711. The reported value of common stock was approximately 55.6 percent of the reported value of admitted assets. The reported value of admitted assets in the quarterly report ending March 31, 1991, was $10,022,106. 3/ Cash and common stock were valued in the quarterly report for March 31, 1991, in the respective amounts of $3,635,626 and $4,676,645. The reported value of common stock was approximately 46.6 percent of the reported value of admitted assets. The date of acquisition, cost, or market value of the common stock cannot be determined from the reports filed with Petitioner or from the other evidence presented during this proceeding. Petitioner would normally use the Securities Valuation Office as an indicator of the proper value of common stock listed in the financial reports. Respondent was requested to submit the particular stock for valuation and failed to do so. 4/ Respondent reported the value stock of subsidiaries and related corporations to be $403,000. The projected ratio of written premiums to surplus as to policyholders was 8.33 percent, or approximately 4.3 percent over the statutory limit imposed on authorized insurers. 5/ The actual ratios for the year, however, were in compliance with statutory limits. Respondent increased its capital by approximately $2.5 million dollars. The infusion of capital in that approximate amount brought Respondent into statutory compliance with respect to both subsidiary stock and net written premium ratios. Respondent is required by law to maintain a trust fund for the protection of its policy holders in an amount equal to the capital and surplus required of authorized insurers. Respondent established a trust fund in the amount of $1 million when it was approved as an eligible surplus lines insurer on August 11, 1988. The amount of the trust fund was equal to the capital and surplus required of authorized insurers at that time and satisfied all state requirements. The amount of capital and surplus required of authorized insurers has subsequently been increased to $1.150 million. Respondent was not charged in the Order To Show Cause with failing to maintain its trust fund in an amount of capital and surplus required of authorized insurers and that issue is irrelevant for the purposes of this proceeding. /6 The trust fund must consist of investments of the same general character and quality as are eligible investments for like funds of like domestic insurers. The trust fund maintained by Respondent is not required to be reflected as a line item in the financial statements contained in any of the reports required to be filed by Respondent and is not separately stated. There is no way to determine from the required financial reports what assets are contained in the trust fund or whether the trust fund assets consist entirely of cash, entirely of common stock, or some combination thereof. Admitted assets include cash on deposit in an amount sufficient to capitalize the trust fund Respondent is required to maintain. Cash on deposit increased $2,125,572 from September 30, 1990, to December 31, 1990, and $144,925 from December 30, 1990, to March 31, 1991. The value of common stock increased $2,573,654 from September 30, 1990, to December 30, 1990, and decreased $3,708,720 from December 30, 1990, to March 31, 1991.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner should enter a Final Order finding Respondent not guilty of the allegations in the Order To Show Cause and imposing no disciplinary action against Respondent's eligibility as an unauthorized alien surplus lines insurer. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 21st of January 1992. DANIEL MANRY 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 21st day of January 1992.
Findings Of Fact Upon consideration of the oral testimony and documentary evidence adduced at the hearing, the following relevant facts are found: At all times pertinent to this proceeding, Petitioners were producers of agricultural products in the State of Florida as defined in Section 604.15(5), Florida Statutes (1983). At all times pertinent to this proceeding, Respondent GMS was a licensed dealer in agricultural products as defined by Section 604.15(1), Florida Statutes (1983), issued license no. 936 by the Department and bonded by Commercial Union Insurance Company (Commercial) in the sum of $50,000.00 - Bond No. CZ 7117346. At all times pertinent to this proceeding, Respondent Commercial was authorized to do business in the State of Florida. The complaint filed by Petitioner was timely filed in accordance with Section 604.21(1), Florida Statutes (1983). Prior to Petitioners selling or delivering any watermelons (melons) to Respondent GMS, Petitioners and Respondent GMS entered into a verbal contract whereby: (a) Petitioners would harvest and load their melons on trucks furnished by Respondent GMS at Petitioners' farm; (b) the loading, grading and inspection, if any, was to be supervised by, and the responsibility of Respondent GMS or its agent; (c) the melons were to be U.S. No. 1 grade; (d) the melons were purchased F.O.B. Petitioner's farm subject to acceptance by Respondent GMS, with title and risk of loss passing to Respondent GMS at point of shipment (See Transcript Page 95 lines 5-7); (e) the price was left open subject to Petitioners being paid the market price for the melons at place of shipment on the day of shipment as determined by Respondent GMS less one (1) or two (2) cent sales charge, depending on the price; and requiring Respondent GMS to notify Petitioners on a daily basis of that price and; (f) the settlement was to be made by Respondent GMS within a reasonable time after the sale of the melons by Respondent GMS. Respondent GMS was not acting as Petitioners agent in the sale of the melons for the account of the Petitioners on a net return basis nor was it acting as a negotiating broker between the Petitioners and the buyers. Respondent GMS did not make the type of accounting to Petitioners as required by Section 604.22, Florida Statutes had it been their agent. Although Respondent GMS purchased over twenty (20) loads of melons from the Petitioners, there are only ten (10) loads of melons in dispute and they are represented by track report numbers 536 dated April 29, 1985, 534 dated April 30, 1985, 2363 and 537, dated May 1, 1985, 2379, 2386 and 538 dated May 2, 1985, and 2385, 2412 and 2387 dated May 3, 1985. Jennings W. Starling (Starling) was the agent of Respondent GMS responsible for loading; grading- inspecting and accepting and approving the loads of melons for shipment that Respondent GMS was purchasing from Petitioners during the 1985 melon season. Petitioners and Starling were both aware that some of the melons had hollow hearth a conditions if known, would cause the melons to be rejected. Aware of this condition in the melons, Starling allowed Petitioners to load the melons on the truck furnished by Respondent GMS. Starling rejected from 20 percent to 40 percent of the melons harvested and brought in from Petitioners' fields before accepting and approving a load for shipment. Starling accepted and approved for shipment all ten (10) of the disputed loads of melons. On a daily basis, Robert E. McDaniel, Sr., one of the Petitioners, would contact the office of Respondent GMS in Lakeland Florida to obtain the price being paid that day by Respondent GMS to Petitioners but was not always successful, however, he would within a day or two obtain the price for a particular day. Robert E. McDaniel did obtain the price to be paid by Respondent GMS for the ten (10) disputed loads and informed his son Robert E. McDaniel, Jr. of those prices. The prices quoted to Robert E. McDaniel, Sr. by Respondent GMS on the ten (10) disputed loads were 12 cents, 10 cents, 8 cents, 8 cents, 8 cents, 8 cents, 8 cents, 7 cents, 7 cents, and 7 cents on tract reports number 536, 534, 2363, 537, 2379, 2386, 538, 2385, 2412 and 2387, respectively. No written record of their prices was produced at the hearing but the testimony of Robert E. McDaniel Sr. concerning these prices was the most credible evidence presented. After the melons were shipped, sometimes as much as one week after, a track report was given to Robert E. McDaniel Jr. by Starling for initialing. Sometimes a price would be indicated on the track report but this price was based on selling price at point of destination and not the market price at point of shipment. Also, the letters "H.H." would also appear on the track report which, according to the testimony of Starling, indicated hollow heart but the evidence was insufficient to prove that Starling had rejected these loads for shipment because of a hollow heart condition in the melons. The loads in question were paid for by Respondent GMS based on a price at point of destination under its drafts no. 831912 and 851311. The amount in dispute is as follows: DATE TRACK NET AMOUNT AMOUNT SHIPPED
Recommendation Based upon the Findings of Fact and Conclusions of Law recited herein, it is RECOMMENDED that Respondent GMS be ordered to pay to the Petitioners the sum of $11.212.31. It is further RECOMMENDED that if Respondent GMS fails to timely pay the Petitioners as ordered, then Respondent Commercial be ordered to pay the Department as required by Section 604.21, Florida Statutes (1983) and that the Department reimburse the Petitioners in accordance with Section 604.21, Florida Statutes (1983). Respectfully submitted and entered this 13th day of June, 1986, in Tallahassee, Leon County, Florida. Hearings Hearings WILLIAM R. CAVE Hearing Officer Division of Administrative The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative this 13th day of June, 1986.
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: In January, 1990, the Respondent filed an application for credit with the Petitioner. The terms and conditions of the credit application provided: "All written 'Terms and Conditions of Sale' on invoices, statements, contracts or other written agreements must be observed and performed as stated." Further, the application provided: Payment of all amounts due shall be made not later than 30 days from the billing date. Amounts in default will be subject to a SERVICE CHARGE of 1 1/2 % per month (18 % Per Annum) on the unpaid balance. Failure to make payment within terms will result in cancellation of credit. Following acceptance of that application, Respondent sought to purchase sod from Petitioner's LaBelle sod farm. Invoices issued by Petitioner to Respondent at the time of the delivery of the sod provided that the amounts owed would be payable upon receipt of invoice. Further, the printed invoice required the purchaser to make claims within 24 hours of delivery or pick up. The invoices reiterated the 18 percent service charge for past due accounts. From December, 1990, through January 17, 1991, Respondent purchased and accepted in excess of $45,000 worth of sod from the Petitioner. The invoices for those purchases are identified in this record as Petitioner's exhibit 2. From January 30, 1991 until March 4, 1991, Respondent purchased and accepted $4,664.00 worth of sod from the Petitioner. The invoices for those purchases are identified in the record as Petitioner's exhibit 3. In February, 1991, when the Petitioner became concerned about nonpayment for the amounts claimed, contact with the Respondent was made for the purpose of resolving the matter. When those efforts failed to secure payment, the Petitioner instituted action through the Department of Agriculture against the Respondent's bond. The Petitioner claimed $45,080.25 was due for the invoices prior to January 30, 1991. The Petitioner claimed $4,664.00 was owed for the invoices subsequent to January 30, 1991. Subsequent to its claims, Petitioner received payments from the Respondent in the following amounts: $5,000.00 on March 11, 1991; $5,000 on March 26, 1991; and $2,000.00 on April 30, 1991. Applying the total of those payments ($12,000) to the indebtedness on the first claim reduces that amount to $33,080.25. Prior to the claims being filed, Respondent had notified Petitioner that some sod deliveries had been unacceptable because of the quality of the sod or the amount. Respondent claimed the Petitioner had "shorted" the square footage amounts per pallet so that Respondent was being charged for a pallet that did not contain the requisite square footage of sod. On one occasion, in January, 1991, the Petitioner gave Respondent a credit in the amount of $1,173.75 for either refund on poor quality sod or a shortage. The Respondent continued to purchase sod from Petitioner until its credit was no longer accepted by Petitioner, i.e. March 4, 1991. Respondent did not, within 24 hours of receipt of sod, make a claim regarding the quality of the sod or the amount. By letter dated March 14, 1991, the Respondent, through its attorney, advised Petitioner as follows: St. Amour Sod Services, Inc., does not dispute the balance due to you as set forth in your letter and they will pay same in payments that are being determined now. For your information, the balance accrued because of the loss of several of our customers resulting from the poor quality of sod purchased from your firm. Respondent did not timely challenge the quality of the sod accepted, and did not present evidence regarding its alleged poor quality.
Recommendation Based on the foregoing, it is RECOMMENDED: That the Department of Agriculture and Consumer Services enter a final order finding that Respondent is indebted to Petitioner in the amounts of $33,080.25 and $4,664.00, with service charge to be computed through the date of the final order; directing Respondent to make payment of the amounts to Petitioner within 15 days following the issuance of the order; and, notifying all parties that if such payment is not timely made, the Department will seek recovery from Respondent's surety, Aetna Casualty and Surety Company. DONE and ENTERED this 13th day of March, 1992, 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 13th day of March, 1992. APPENDIX TO CASE NOS. 91-6388A AND 91-6389A RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY PETITIONER: 1. Paragraphs 1 through 4 are accepted. RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY RESPONDENT: Paragraph 1 is accepted. Paragraphs 2, 3, 4, 6, 7, and 8 are rejected as contrary to the weight of the credible evidence or unsupported by the record in this case. With regard to paragraph 5, that portion of the paragraph which states the amount of payments made by Respondent ($12,000) is accepted. Otherwise, rejected as stated in 2. above. COPIES FURNISHED: Barry L. Miller P.O. Box 1966 Orlando, FL 32802 Gary A. Ralph 2272 Airport Rd. South, Ste. 101 Naples, FL 33962 Hon. Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler General Counsel Dept. of Agriculture & Consumer Svcs. The Capitol, PL-10 Tallahassee, FL 32399-0810 Aetna Casualty & Surety Company Attn: Legal Dept. 151 Farmington Ave. Hartford, CT 06156
Conclusions THIS CAUSE, arising under Florida’s “Agricultural License and Bond Law” (Sections 604.15-604.34), Florida Statutes, came before the Commissioner of Agriculture of the State of Florida for consideration and final agency action. On October 21, 2008, the Petitioner, Ricky A. Branch, III, a producer of agricultural products as defined by Section 604.15(9), Florida Statutes, timely filed an administrative claim pursuant to Section 604.21, Florida Statutes, to collect $31,296.18 for eggplants they sold to Respondent, a licensed dealer in agricultural products. Respondent’s license for the time in question was supported by a surety bond required by Section 604.20, Florida Statutes, written by Fidelity and Deposit Company of Maryland in the amount of $100,000. On January 7, 2009, a Notice of Filing of ‘an Amended Claim was mailed to Respondent and Co-Respondent. On January 27, 2009, the Respondent filed an ANSWER OF RESPONDENT with attachments wherein they denied the claim as being valid, admitted no indebtedness and requested a hearing. Therefore, this matter was referred to the Division of Administrative Hearings (DOAH) for an administrative hearing in accordance with the provisions of Section 120.57(1), Florida Statutes. An administrative hearing was scheduled in this matter for April 17, 2009. Attached to the NOTICE OF HEARING was an ORDER OF PRE-HEARING INSTRUCTIONS with instructions for the parties to follow prior to and at the hearing. On March 30, 2009, the Respondent filed a ' MOTION TO CONTINUE FINAL HEARING. The Administrative Law Judge (“Judge”) issued an ORDER GRANTING CONTINUANCE (“Order”) on April 3, 2009. In the Judge’s Order, he asked the parties to confer and advise him on the status of the matter among other things. An ORDER RE-SCHEDULING. HEARING was issued on April 16, 2009 and a new hearing date was set for June 9, 2009. Prior to the hearing, on June 5, 2009, the Respondent filed a RESPONDENT’S MOTION TO DISMISS claiming their efforts to contact the Claimant have been futile. Additionally, Respondent asserts that Claimant failed to comply with the ORDER GRANTING CONTINUANCE, the ORDER RE-SCHEDULING HEARING and the ORDER OF PRE-HEARING INSTRUCTIONS issued by DOAH. For the aforesaid reasons, the Respondent feels the Claimant’s claim should be denied and the claim dismissed with prejudice. On June 16, 2009, the Judge issued a RECOMMENDED ORDER OF DISMISSAL, a copy of which is attached hereto as EXHIBIT “A”, to which neither party filed written exceptions with this Department. . Upon the consideration of the foregoing and being otherwise fully advised in the premises, it is ORDERED: Based on the fact that the Claimant failed to appear at the final hearing with DOAH on June 9, 2009 and failed to meet his burden of proof in presenting evidence in support of his claim, the Department adopts the Judge’s RECOMMENDED ORDER OF DISMISSAL. The Department hereby dismisses the captioned claim and the file is closed without further action. Any party to these proceedings adversely affected by this Final Order is entitled to seek review of this Final Order pursuant to Section 120.68, Florida Statutes (2002) and Rule 9.110, Florida Rules of Appellate Procedure (2003). Review proceedings must be instituted by filing a petition or notice of appeal with the Agency Clerk, 5" Floor, Mayo Building, Tallahassee, FL 32399-0800. A copy of the petition for review or notice of appeal, accompanied by the filing fees prescribed by law must also be filed with the appropriate District Court of Appeal within thirty (30) days of the date this Final Ondet yas filed with the Agency Clerk. DONE AND ORDERED this77_ day of , 2009. ES H. BRONSON TERRY/L. RHODES Assi Commissioner of Agriculture Ke Filed with Agency Clerk this? _ day of , 2009. (pL Vb AM Agency Clerk COPIES FURNISHED TO: Judge Daniel Manry Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (Certified Receipt No. 7160 3901 9848 2604 4626) Mr. Gary Wishnatzki, Registered Agent Wishnatzki, Inc., d/b/a Wishnatzki Farms 100 Stearn Avenue Plant City, FL 33566 (Certified Receipt No. 7160 3901 9848 2605 1259) Mr. Ricky A. Branch, IIT Post Office Box 42 Webster, FL 33597 (Certified Receipt No. 7160 3901 9848 2605 1266) Ms. Kathy Alves, Claims Specialist Fidelity & Deposit Company of Maryland Post Office Box 87 , Baltimore, MD 21203-0087 (Certified Receipt No. 7160 3901 9848 2605 1273) (Claim No. 6380046897) Thomas F. Munro, Esquire FOLEY & LARDNER LLP 100 North Tampa Street, Suite 2700 Tampa, FL 33602 (Certified Receipt No. 7160 3901 9848 2605 1280) . Mr. Bedford Wilder General Counsel Staff Mayo Building, M-11 Tallahassee, Florida 32399-0800 Ms. Stephenie Butscher and Mr. Mark Moritz, Field Representatives
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times relevant to this proceeding, respondent William J. Hartnett, Sr. was licensed as an ordinary life including disability, general lines, surplus lines and disability insurance agent. He has been in the insurance business since 1942 and was first licensed in 1947. Respondent originally organized the Southern American Fire Insurance Company. For the first year or so, he was its sole employee on a nonsalary basis and was nonsalaried for the first ten years of the company's operation. From 1965 on, respondent did not hold a 220 lines license with Southern American, as he did with other insurance entities. Respondent did not sign policies as agent for Southern American. With Southern American, respondent acted as a general agent and was authorized by the board of directors to receive a five percent override commission on the total volume of business. On or about October 27, 1975, a seizure order was entered by the Circuit Court of Leon County which directed the Florida Department of Insurance to take over the business and financial affairs of Southern American. This company has since gone into liquidation pursuant to Chapter 631, Florida Statutes. The Southern American March 31 and June 30, 1975, quarterly statements were prepared by Mr. R.L. Huard, the then assistant treasurer of Southern American, were signed by the respondent, and were filed with the Department of Insurance. The work papers for those statements had been approved by the respondent. Mr. Huard had been instructed by respondent when he was first hired in 1972 not to show on the quarterly statements the over 90-day old balances because they would all be "cleaned up" at the end of the year. Such balances had, in fact, been paid at the end of each of the two years that Mr. Huard was with the company up until the time the Department took over in 1975. It was the respondent's testimony that had the seizure order not been entered, the agencies' lines of credit would still have been open and that all balances could have been collected through September of 1975. The March 31, 1975, and June 30, 1975, quarterly statements of Southern American filed with the Department of Insurance reflected a substantial amount of agents' balances that at the time of reporting were over 90 days old. The elimination of such balances from those two statements would have left Southern American impaired under usual insurance accounting practices as reflected in the Florida Statutes. The over-90 day old agents' balances were due from agencies in which respondent had an interest as an officer, director or stockholder. In 1969, various officials of the Department of Insurance had discussions with the respondent regarding agents' balances which were over ninety days old. On or about December 28, 1973, respondent did deposit the proceeds of certain reinsurance treaties in the amount of $13,218.98 into the account of Southern American. This findings is determined from the testimony of respondent and from a copy of the check and a deposit slip received into evidence as Exhibit M. The deposit slip illustrates that the $13,218.96 check was one of two checks comprising a total deposit of $30,857.12. As a result of information made available to the parties shortly before the hearing, it was stipulated that there never was a direct reinsurance treaty between Southern American and Cottonbelt Insurance Company. It was further stipulated that Southern American did submit single risk policies on a facultative basis through General Aviation Insurance Brokers for Southern American to D.O. Howell and Company, Ltd., in London, England, which in turn placed policies so submitted with Cottonbelt through other brokers. The Department offered no other evidence concerning the checks amounting to $16,600.00 referred to in Count V. As noted above, respondent was authorized by the board of directors to receive as general agent for Southern American a five percent override on all premiums. He was also authorized to receive an annual salary and certain bonuses. For the years 1974 and 1975, respondent did not receive his total annual salaries. The total premium written in Southern American through North Star Insurance Agency from 1968 through 1975 was approximately $700,000.00. Monies owed Southern American by North Star were paid by checks made payable to the respondent, as agent. In his capacity as general agent of Southern American, respondent did receive funds in the approximate amount of $45,000.00 from subagent North Star in payment of premiums due Southern American on policies of insurance issued by Southern American through North Star. Such funds were not deposited into the account of Southern American by respondent, but were instead retained by respondent as an offset against commissions end salary due him from Southern American. This occurred in 1975. When the seizure order was entered in October of 1975, the monies due Southern American from North Star were carried on the books of Southern American as accounts receivable.
Recommendation Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that the licenses of respondent to engage in the business of insurance be suspended for a period of six (6) months. Respectfully submitted and entered this 10th day of July, 1979, in Tallahassee, Florida. COPIES FURNISHED: Honorable William Gunter State Treasurer and Insurance Commissioner The Capitol Tallahassee, Florida 32301 S. Strom Maxwell, Esquire Department of Insurance Suite 428-A, Larson Building Tallahassee, Florida 32301 Robert J. Kelly, Esquire Rogers, Towers, Bailey, Jones and Gay Post Office Box 1872 Tallahassee, Florida 32302 DIANE D. TREMOR 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 10th day of July, 1979.
