Findings Of Fact On September 8, 1987, the Department of Insurance received a letter dated September 1, 1987, from Joseph F. Kinman, Jr., which stated: Another insurance agent (Daniel Bruce Caughey) from Pensacola, Florida and his incorporated agency (Caughey Insurance Agency, Inc.) are refusing to forward premium payments on to Jordan Roberts & Company, Inc. despite a final judgment for such amounts here in Hillsborough County Circuit Court. Enclosed is a copy of the Final Judgment entered August 13, 1987, as well as a copy of the Complaint. We represent Jordan Roberts & Company, as well as Poe & Associates, Inc. here in Tampa, Florida. In approximately August of 1982, Daniel Bruce Caughey and Caughey Insurance Agency, Inc. entered into a brokerage agreement with Jordan Roberts & Company, Inc. wherein Mr. Caughey and the Agency were to collect premiums on behalf of Jordan Roberts & Company, Inc. and in turn, Mr. Caughey and the Agency were to receive commissions. Mr. Caughey signed an Individual Guarantee Agreement on October 21, 1983, guaranteeing that Brokerage Agreement with Caughey Insurance Agency, Inc. Mr. Caughey and the Agency failed to forward the insurance premiums collected on behalf of Jordan Roberts & Company, Inc. despite repeated demands and inquiries. Finally, a lawsuit was filed against Mr. Caughey and the Agency in the Circuit Court of the Thirteenth Judicial Circuit of the State of Florida, in and for Hillsborough County in December of 1986. Final judgment for Jordan Roberts & Company, Inc. against Mr. Caughey and the Agency was entered on August 13, 1987, for an amount of $6,595.94. Mr. Caughey and his Agency have unlawfully withheld monies belonging to an insurer, Jordan Roberts & Company, Inc. and, accordingly, appear to be in violation of Florida Statutes 626 et seq. Jordan Roberts & Company, Inc. has a judgment for unpaid insurance premiums against Mr. Caughey and the Agency, however, Mr. Caughey and the Agency refuse or fail to pay over to Jordan Roberts & Company, Inc. premium funds rightfully belonging to Jordan Roberts & Company, Inc. Accordingly, we would respectfully request that your office conduct an investigation of Mr. Caughey and the Caughey Insurance Agency, Inc. Enclosed with this letter were copies of the complaint and final judgment in the circuit court case, Case No. 86-21454. As found in the main administrative case, Case No. 89-2651: In Count 1, JORO's complaint [in Case No. 86-21454] alleges the existence of a brokerage agreement between JORO and Caughey Insurance Agency, Inc., entered into "[o]n or about April 27, 1982"; execution and delivery of respondent's guarantee "[o]n or about October 21, 1983"; and the agency's indebtedness "for premiums on policies underwritten by [JORO] for the sum of $20,975.36." Petitioner's Exhibit No. 3. In Count II, the complaint also alleges execution and delivery of a promissory note "[o]n or about October 21, 1983," without, however, explicitly indicating its relationship (if any) with the guarantee executed the same date. Petitioner's Exhibit No. 3. The final judgment does not specify which count(s) JORO recovered on. Petitioner's Exhibit No. 4. Attached to the complaint are copies of the promissory note, executed by "CAUGHEY INSURANCE AGENCY, INC., By: D B Caughey Vice President"; the guarantee, executed in the same way; and the brokerage agreement, executed on behalf of Caughey Insurance Agency by "William C. Caughey, President." Although the Individual Guarantee Agreement names respondent as guarantor in the opening paragraph, the corporation is shown as guarantor on the signature line. The complaint does not allege and the judgment does not recite that respondent personally failed to remit premiums but says he is responsible as an officer of the agency. Without any further investigation, as far as the record shows, the Department of Insurance filed a complaint amended on April 24, 1989, to allege, inter alia, that "[o]n or about August 19, 1982 Caughey Insurance Agency, Inc. entered into a brokerage agreement with Jordan Roberts and Company, Inc. . . . requir[ing] Caughey Insurance Agency, Inc. to remit premiums, unearned commissions and additional premiums to Jordan Roberts and Company, Inc."; and that respondent "personally guaranteed the [agency's] obligation under this agreement in" writing, but "failed to remit five thousand five dollars and forty-four cents due under th[e] agreement" for which sum Jordan Roberts and Company, Inc. obtained judgment. After a formal administrative hearing, a recommended order was entered on April 2, 1990, recommending dismissal of the administrative complaint, because "ambiguities in the court papers do not clearly and convincingly rule out the possibility that the court's judgment rests on the dishonored promissory note . . . [rather than] a breach of respondent's [here petitioner's] fiduciary responsibilities." In its final order, the Department dismissed the administrative complaint; Daniel Bruce Caughey was the prevailing party in that case. The parties have stipulated that "Daniel B. Caughey qualifies as a small business party as defined in Section 57.111(3)(d), Florida Statutes." The parties also stipulated that the "total value of the reasonable attorney's fees and costs at issue is $2,830."
The Issue The issues to be determined in this proceeding concern whether the licenses of each Respondent should be subjected to disciplinary action for violations of Chapter 626, Florida Statutes, as more specifically alleged in the Amended Administrative Complaints. If the violations, or any of them, are proven, it must be established what, if any, penalty is warranted.
Findings Of Fact The Department is an agency of the State of Florida charged, as pertinent hereto, with the licensure and regulation of insurance agents of all types and the regulation of the practice of insurance agents, agencies, the business of selling insurance policies, and the insurance industry generally. The Respondents have been licensed by the Department at all times pertinent hereto. Mills Sr. is licensed as a non-resident life and health insurance agent and as a non-resident general lines insurance agent. Mills Jr. has been licensed at all times pertinent hereto as a non-resident life and health insurance agent. The Respondents have been charged with various violations of Chapter 626, Florida Statutes, as more particularly delineated in the Amended Administrative Complaints and as discussed with particularity in the Conclusions of Law below. It is undisputed that Florida Insurance Counselors, Inc. is a corporation organized and licensed under laws of Florida. It was purchased by Mills Sr. in 1988. Both Respondents have a pecuniary interest in Florida Insurance Counselors, Inc. That corporation was a Florida insurance agency engaged in the solicitation and sale of property and casualty insurance, but not in the business of sale of policies of life and health insurance. The corporation ceased doing business on June 1, 1993 and was formally dissolved on August 13, 1993 at the behest of Mills Sr., who was the principal owner, board chairman, and chief executive officer. Mills Jr. was a shareholder and president of the corporation. Mills Sr. has held a Florida non-resident life insurance agent's license and a Florida non-resident health insurance agent's license for many years, since approximately 1956. In 1991, Mills Sr. applied for and received a license as a Florida non-resident general lines agent. General lines agency includes the right to sell property and casualty insurance. Statements made by Mills Sr. in three license applications admitted into evidence in terms of the situs of his principal place of insurance business (Atlanta, Georgia) and the disclosure of his pecuniary interest in Florida Insurance Counselors, Inc. have been shown to be true and correct. In spite of the disclosure as to his pecuniary interest in Florida Insurance Counselors, Inc., upon his application for the non-resident general lines agent's license, the Department nevertheless and mistakenly issued the general lines non-resident agent's license. Upon graduation from college in the late 1940's, Mills Sr. went to work for Atlanta Insurance Company. Except for five years spent in the insurance business in Texas, Mills Sr. has lived in Georgia until the events mentioned hereinbelow. Most of his Georgia career has been associated with the Atlanta, Georgia, area, where his insurance business, residence and domicile has historically been located. The insurance agency owned and controlled by Mills Sr. in Atlanta, Georgia, is called Institutional Managers of America, Inc. In 1986, he sold that business to Monumental General Insurance Company, effective January 1, 1987. The transaction included a three-year management agreement from Mills Sr. In 1987, Mills Sr. started construction of a residence in Gulf Breeze, Florida, where Mills Sr. had earlier owned a summer home. In February, 1989, for unrelated business or financial reasons, Mills Sr. was forced to purchase the insurance business back from Monumental General Insurance Company. Mills Sr. had planned to retire after the expiration of the three-year management agreement responsibility but elected not to retire after he had to purchase the business back. Mills Sr. owns the building in which his agency is located at 395 Johnson Ferry Road N.E., Atlanta, Georgia. He directs the staff in that agency from a room in that office. His toll-free telephone number is for incoming calls to that office. All advertising materials of his business show the Atlanta address. Mills Sr. spends most week nights in his Roswell Road apartment in Atlanta, except for approximately one night every other week spent in his Gulf Breeze, Florida, residence, as well as nights spent on the road when traveling in Alabama, Florida, North Carolina, and South Carolina, where Mills Sr. holds non-resident agent licenses. Mills Sr. owns a farm near Yatesville, Georgia, where he spends some weekends, especially during hunting season. Most other weekends are spent at his residence at 3017 Bay Street, Gulf Breeze, Florida. Mills Sr. and his wife spend some weekends in Atlanta because their social life revolves around Atlanta and he has family in the Atlanta area. The records of the Georgia Insurance Department show that Mills Sr. is licensed as a resident agent in the State of Georgia for life, accident and sickness, property and casualty, surety, and allied lines of insurance. On February 15, 1988, Mills Sr. signed a sworn application seeking Florida homestead property tax exemption and filed that application with the Santa Rosa County property appraiser, listing his address as 3017 Bay Street, Gulf Breeze, Florida. The application stated that Mills Sr. became a permanent resident of Florida on or about June, 1987. Pursuant to that application, Mills Sr. was granted homestead property tax exemption for his property, a residence, located at 3017 Bay Street, Gulf Breeze, Florida. On May 9, 1988, Mills Sr. registered to vote in Santa Rosa County, Florida. In conjunction with that registration, Mills Sr. provided the supervisor of elections of Santa Rosa County with his home address as being 3017 Bay Street, Gulf Breeze, Florida. On January 7, 1989, Mills Sr. signed a renewal application for homestead property tax exemption. On that application, he affirmed that his status as a permanent resident of Florida had not changed since he submitted his original application for tax exemption. Pursuant to the aforementioned renewal application, Mills Sr. was granted continued tax exemption for his property located at 3017 Bay Street, Gulf Breeze, Florida. On January 9, 1990, Carmelia Mills, the wife of Mills Sr., signed an application for homestead property tax exemption for property owned jointly with Mills Sr. applying for the transfer of homestead property tax exemption from the property located at 3017 Bay Street, Gulf Breeze, Florida, to the property located at that address as joint owners (presumably by operation of law as tenants by the entireties). Pursuant to that application, Mills Sr. and his wife were granted the maximum allowable homestead property tax exemption. The maximum allowable homestead property tax exemption for the county is granted only when all owners of the property are permanent residents of Florida. In 1988, when Mills Sr. applied for homestead exemption for the home owned in Gulf Breeze, Santa Rosa County, Florida, he was informed by the office of the property appraiser that he would need to register a car in Florida and register to vote in Florida. Mills Sr. did both and was afforded the homestead exemption mentioned above. He is the owner of a 1989 four-door Chevrolet currently registered in Florida and he remains registered to vote in Florida. He holds a Florida driver's license. He and his wife have enjoyed the benefits of homestead exemption with regard to the above-referenced real estate and residence in Gulf Breeze, Santa Rosa County, Florida, in the manner and for the times referenced in the above Findings of Fact concerning the application for and the granting of the homestead exemption. Mills Sr., and presumably his wife, resided in their home in Atlanta until sometime in 1990 when the home was sold. Mills Sr. then moved into an apartment at 5143 Roswell Road, N.E., Atlanta, Georgia, in 1990 and to this date, resides in that apartment when he is located in Atlanta. In light of the above facts concerning his location and the residences he has maintained with his wife, Mills Sr. has believed that his residence is co-extensive with the situs of his insurance agency business, that is, that it is located in Atlanta, Georgia; and that was his belief at the time he executed all applications for insurance relevant to these proceedings. On August 30, 1976, Mills Sr. applied for licensure as a Florida non- resident life and health insurance agent. The application listed his address as 5910 Garber Drive, Atlanta, Georgia. Pursuant to that application, he was licensed as a non-resident life and health insurance agent. The last paragraph of that application contains a statement by Mills Sr. that "in further support of my application...I do not or will not maintain a place of business in the State of Florida for the purpose of soliciting insurance...". On February 13, 1990, Mills Sr. filed a corporation annual report with the Secretary of State of Florida stating that Mills Sr. was the president, director, and registered agent of Florida Insurance Counselors, Inc. On February 11, 1991, Mills Sr. filed such an annual report with the Secretary of State for that corporation, which stated that he is the president, director, and registered agent of Florida Insurance Counselors, Inc. This report indicated that Mills Sr. had changed his address from 5910 Garber Drive, Atlanta, Georgia, to 3017 Bay Street, Gulf Breeze, Florida. On May 30, 1991, Mills Sr. applied for licensure as a Florida non- resident general lines insurance agent. That application listed his home address as 5143 Roswell Road, N.E., Atlanta, Georgia. On that application, at paragraph 16, Mills Sr. disclosed to the Department that he was part owner of Florida Insurance Counselors, Inc. In spite of this application, in which Mills Sr. provided his Atlanta, Georgia, address and provided the disclosure that he was part owner of Florida Insurance Counselors, Inc., an insurance agency, the Department, by mistake, licensed Mills Sr. as a non-resident general lines insurance agent. On February 27, 1992, Mills Sr. filed a corporation annual report with the Secretary of State which stated that he was still the resident agent of Florida Insurance Counselors, Inc. and that he had become the chief executive officer of that corporation. Mills Sr. has filed no notification to the Department of any change of address nor any disclosure to the Department that he is a resident of Florida, as of the time of this hearing. In 1985, Florida Insurance Counselors, Inc. was incorporated. Mills Sr. owned a partial interest in the corporation at that time. Later, he bought out the other owners, becoming sole owner. Lee Newcomb is a director in the corporation and acted as the Florida licensed agent for the company until on or about May 1, 1992. The corporation did business in the Tampa area with an office in Brandon. The corporation had a Seffner, Florida, mailing address. Mills Sr. owned his interest in Florida Insurance Counselors, Inc. until it ceased doing business on June 1, 1993 and Mills Sr. dissolved the corporation in August of 1993. Mr. Newcomb acted as the Florida resident agent for the corporation and as manager of the agency from its inception. On May 1, 1992, Mills Sr. and Mills Jr. became aware that Mr. Newcomb had suddenly resigned effective April 30, 1992. It was learned from office personnel that Mr. Newcomb may have taken some personal property and records of the agency with him upon leaving. On May 4, 1992, Mills Jr., being concerned with this situation, left Atlanta, Georgia, and drove to Brandon, Florida, where he found that Mr. Newcomb had, indeed, taken certain records of Florida Insurance Counselors, Inc. with him. Florida Insurance Counselors, Inc. had a non-competitive agreement with Mr. Newcomb during his tenure as resident agent and managing agent. Upon his arrival in the Brandon, Florida, office and shortly thereafter, Mills Jr. began interviewing perspective replacement resident agents. He hired a resident licensed agent who commenced working as the resident licensed agent for Florida Insurance Counselors, Inc. after giving proper notice to her former employer. She began working in approximately the last week of May, 1992 for Florida Insurance Counselors, Inc. originating all insurance business and managing and operating the agency after that time. It was learned by Mills Jr. from a secretary in the office that Mr. Newcomb, while he was employed by Florida Insurance Counselors, Inc., was sending in certain applications for insurance coverage to a number of carriers or insurers. Copies of those insurance applications were not in the records of Florida Insurance Counselors, Inc., the implication being that Mr. Newcomb had taken those documents with him when he left. The secretary, Dolores Olrey, prepared as best she could duplicates of those applications from memory. Mills Jr. attempted to find out from the insurance carriers involved if they had received the applications for insurance coverage from Mr. Newcomb as originating agent, in order to find out if Mr. Newcomb had violated the non- competitive agreement by submitting applications for insurance coverage as a separately operating agent or agency while he was actually still working for Florida Insurance Counselors, Inc. Mills Jr. testified that he was told that the companies did not have time to look through their records of recent business to determine if Mr. Newcomb had submitted such applications in that fashion. According to Mills Jr., the companies involved advised him that if he merely submitted a duplicate application for the same coverage for the condominiums involved (property and casualty coverage), he would know if another application had previously been submitted, since the later applications would be automatically rejected if that were the case. Accordingly, Mills Jr. instructed Ms. Olrey to affix his signature stamp on an application by Northeast Heights Condominium of Tamarac, Florida, to the Public Service Mutual Insurance Company of New York, as well as on an application for insurance for the Altamonte Woods Condominium Association of Altamonte Springs, Florida, to MCA Insurance Company of New Jersey. Those were the two applications believed by Ms. Olrey to be replicas of those prepared earlier and submitted by Mr. Newcomb in supposed violation of the non- competitive agreement. These condominium associations were customers of Florida Insurance Counselors, Inc. Mills Sr. sent his applications in for the purpose of acquiring information which could be used against Mr. Newcomb if the Mills and Florida Insurance Counselors, Inc. later attempted to assert that he violated the non-competitive agreement. Mills Jr., however, could have determined by direct contact with those condominium association customers whether or not they had previously submitted an application for insurance through Mr. Newcomb, rather than attempting to find that out indirectly by submitting the applications for insurance involved to the companies. Mills Jr. genuinely believed that both insurance applications would be rejected because he believed that Mr. Newcomb had already sent in the original applications in violation of the non-competitive agreement. In fact, however, only one of the applications was rejected. The application for insurance for the Northeast Heights Condominium Association eventually resulted in a policy being issued by the Public Service Mutual Insurance Company. The effective date of that policy, as requested by the application, was from June 30, 1992 through June 30, 1993. Geraldine Corbitt became the duly-licensed resident agent of Florida Insurance Counselors, Inc. in the last week of May, 1992; therefore, the coverage became effective under her tenure as the appropriate resident agent for Florida Insurance Counselors, Inc., although Mills Jr. actually originated the application which resulted in that policy coverage. The application submitted for the Altamonte Woods Condominium Association was rejected by the insurer because its information, provided to Mills Jr., was that another agent had already received a quote from the company on that business on May 7, 1992, implicitly Mr. Newcomb. On March 2, 1989 through February 27, 1992, annual reports were filed with the Florida Secretary of State for Florida Insurance Counselors, Inc. which stated that Mills Jr. was the vice-president and director of Florida Insurance Counselors, Inc. and lastly, was the president and the director of Florida Insurance Counselors, Inc. For a period of approximately two weeks in May of 1992, as referenced in the above Findings of Fact, Mills Jr. directly operated and controlled the offices of Florida Insurance Counselors, Inc. due to the abrupt departure of the resident insurance agent, Mr. Newcomb. On both policy applications submitted by Mills Jr., the signature of Mills Jr. appears in the space marked "producer's signature" on a policy which was ultimately issued by Public Service Mutual Insurance Company under Policy No. 78-0047889 to Northeast Heights Condominium Association, effective June 30, 1992. The broker was listed as Florida Insurance Counselors, Inc. and "Bill Mills" was listed as the "contact person." Mills Jr. testified and acknowledged that although the policy was issued for the application he submitted, Ms. Corbitt had finalized the transaction after he sent the application to the insurer. The policy bearing the above number does not contain any indication that Ms. Corbitt sold the policy, originated the coverage, nor does her name appear anywhere on the policy. These policies were for the obtaining of coverage for property and casualty insurance in the State of Florida. The transaction or solicitation of property and casualty insurance in the State of Florida requires a general lines insurance agent's license. Mills Jr. holds no such license. Mills Jr. testified at the final hearing that he did not submit the applications for the purpose of transacting insurance business but to determine whether Mr. Newcomb was in violation of the covenant not to compete with Florida Insurance Counselors, Inc. Mills Jr. was a life and health insurance agent, and his experience was totally in the field of life and health insurance. He had no experience in the submission of applications for casualty insurance. Mills Jr. had submitted his application for licensure as a non-resident life and health insurance agent on March 15, 1982. Pursuant to that application, he was licensed in Florida as a non-resident life and health insurance agent. In that application, there was contained the statement executed by Mills Jr. that "in further support of my application...I do not or will not maintain a place of business in the State of Florida for the purpose of soliciting insurance...." Florida Insurance Counselors, Inc. is a Florida corporation engaged in the business of insurance agency and is an insurance agency for the purpose of property and casualty insurance. It does not engage in the business of soliciting and selling life and health insurance.
Recommendation In consideration of the evidence of record, the candor and demeanor of the witnesses, and the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding Respondents, William Dewberry Mills, Sr. and William Dewberry Mills, Jr., guilty of the violations as determined in the above Conclusions of Law and that the remaining counts and statutory violations, found above not to have been proven, should be dismissed in their entirety. It is FURTHER RECOMMENDED that Respondent, William Dewberry Mills, Sr.'s licenses as a non-resident insurance agent in Florida be revoked, without prejudice to his re-application as a resident Florida insurance agent should he so desire, for the same level of licensure or other licensure for which he is, by education and demonstrated competency, qualified. The Respondent, William Dewberry Mills, Jr.'s Florida licenses should be suspended for a period of three (3) months. DONE AND ENTERED this 4th day of February, 1994, in Tallahassee, Florida. P. MICHAEL RUFF 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 4th day of February, 1994. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2350 and 93-2351 Petitioner's Proposed Findings of Fact 1-38. Accepted, but subordinate to the Hearing Officer's findings of fact on the same subject matter in those instances where the Hearing Officer's findings of fact may differ. Respondent's Proposed Findings of Fact 1-16. Accepted, but subordinate to the Hearing Officer's findings of fact on this subject matter to the extent that the Hearing Officer's findings of fact may differ. COPIES FURNISHED: John R. Dunphy, Esquire Department of Insurance Division of Legal Services 612 Larson Building Tallahassee, Florida 32399-0333 Rollin D. Davis, Jr., Esquire SHELL, FLEMING, ET AL. Post Office Box 1831 Pensacola, Florida 32598-1831 Tom Gallagher, Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, Florida 32399-0300 Bill O'Neil, Esquire General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, Florida 32399-0300
