The Issue The issues to be resolved in this proceeding concern whether the Respondent, Above All Lawn Care & Landscaping, Inc. (Above All), should be required to pay the sum of $7,129.05 to the Petitioner for landscape plants and materials allegedly purchased by the Respondent from the Petitioner, and, with regard to the Hartford Fire Insurance Company, whether it should be obligated for the payment of the plants and materials in question to the extent of its surety bond number 2 1BSBBU 6765 (the Bond), in the bonded amount of $4,999.00.
Findings Of Fact The Petitioner, Skinner Nurseries, Inc. (Skinner), is a corporation whose address is 2970 Hartley Road, Suite 302, Jacksonville, Florida. The Respondent Above All is a corporation whose address is Post Office Box 2772, Ocala, Florida. The Respondent was licensed as a dealer in agriculture products at times pertinent hereto and was supported by surety bond number 2 1BSBBU 6765, in the amount of $4,999.00. The surety bond was issued by the co- Respondent, Hardford Fire Insurance Company, as surety. The conditions and provisions of the bond were to assure proper accounting and payment to producers, their agents or representatives for agricultural products purchased by the Respondent, Above All. On July 23, 2003 through August 1, 2003, Skinner Nurseries, Inc. sold the Respondent certain nursery plants as an agent for Florida producers, totaling $7,129.05. That amount remains unpaid to Skinner. The subject complaint was filed with the Department within six months of the dates of sale. The only response to the complaint by the Respondent was that to the effect that it agreed that amounts were owed to Skinner, but it disagreed with the amounts Skinner was claiming. The testimony of Chris Diaz establishes that invoices in the amount of $7,129.05 represent the number of trees, shrubs, and various nursery stock or materials sold and shipped to the Respondent. The Petitioner sent statements on a monthly basis, as well as certified letters, to the Respondent and received no payment at all in return, not even as to an undisputed amount. The amount of $7,079.05 referenced in the Administrative Complaint does not include freight charges. The goods and materials in question were shipped from the Bunnell nursery site of Skinner to the Respondent's location in Ocala, Florida. The Respondent did not appear at either hearing scheduled and presented no testimony or evidence. The facts that are established by the Petitioner are thus undisputed. The Respondent has never paid any of the amounts represented by the subject invoices contained in Petitioner's Composite Exhibit 1 in evidence.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, and the candor and demeanor of the witness, it is, therefore, RECOMMENDED that a final order be entered by the Department of Agriculture and Consumer Services requiring that Above All Law Care & Landscaping, Inc., pay the complainant Skinner Nurseries, Inc., the amount of $7,129.05, to be paid within fifteen days from the date of entry of a final order in this matter. In the event that the Respondent does not comply with that order then the surety, Hartford Fire Insurance Company, should be ordered to provide payment under the conditions and provisions of the applicable bond. DONE AND ENTERED this 27th day of December, 2004, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 27th day of December, 2004. COPIES FURNISHED: Honorable Charles H. Bronson Commissioner of Agriculture Department of Agriculture and Consumer Services The Capitol, Plaza Level 01 Tallahassee, Florida 32399-0810 Richard D. Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 01 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Bureau Chief Department of Agriculture and Consumer Services Bureau of License and Bond 407 South Calhoun Street, Mayo Building Tallahassee, Florida 32399-0800 Daniel I. Lawrence, President Above All Landscaping Post Office Box 2772 Ocala, Florida 34471 Chris Diaz Skinner Nurseries, Inc. 2970 Hartley Road, Suite 302 Jacksonville, Florida 32257 Scott Cochrane Hartford Insurance Company Hartford Plaza, T-4 Hartford, Connecticut 06115
The Issue Does Petitioner, Department of Financial Services (DFS), have authority to determine if Respondent, Alberto Luis Sotero (Mr. Sotero) and Respondent, FalconTrust Group, Inc. (FalconTrust), wrongfully took or witheld premium funds owed an insurance company while a civil action between the insurance company and Mr. Sotero and FalconTrust pends in Circuit Court presenting the same issues? Should the insurance agent license of Mr. Sotero be disciplined for alleged violations of Sections 626.561(1), 626.611(7), 626.611(10), 626.611(13), and 626.621(4), Florida Statutes (2007)?1. Should the insurance agency license of FalconTrust be disciplined for alleged violations of Section 626.561(1), 626.6215(5)(a), 626.6215(5)(d). 626.6215(5)(f), and 626.6215(5)(k), Florida Statutes?
Findings Of Fact Based on the testimony and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Mr. Sotero is licensed by DFS as an insurance agent in Florida and has been at all times material to this matter. He holds license number A249545. FalconTrust is licensed by DFS as an insurance agency in this state and has been at all times material to this matter. It holds license number L014424. Mr. Sotero is an officer and director of FalconTrust and held these positions at all times material to this proceeding. Mr. Sotero also controlled and directed all actions of FalconTrust described in these Findings of Fact. Zurich American Insurance Company is a commercial property and casualty insurance company. FalconTrust Commercial Risk Specialists, Inc., and Zurich-American Insurance Group entered into an "Agency-Company Agreement" (Agency Agreement) that was effective January 1, 1999. The Agency Agreement bound the following Zurich entities, referred to collectively as Zurich: Zurich Insurance Company, U.S. Branch; Zurich American Insurance Company of Illinois; American Guarantee and Liability Insurance Company; American Zurich Insurance Company; and Steadfast Insurance Company. The Agreement specified that FalconTrust was an "independent Agent and not an employee of the Company [Zurich.]". . .. The Agency Agreement also stated: All premiums collected by you [Falcontrust] are our [Zurich's] property and are held by you as trust funds. You have no interest in such premiums and shall make no deduction therefrom before paying same to us [Zurich] except for the commission if any authorized by us in writing to be deducted by you and you shall not under any circumstances make personal use of such funds either in paying expense or otherwise. If the laws or regulations of the above state listed in your address require you to handle premiums in a fiduciary capacity or as trust funds you agree that all premiums of any kind received by or paid to you shall be segregated held apart by you in a premium trust fund account opened by you with a bank insured at all times by the Federal Deposit Insurance Corporation and chargeable to you in a fiduciary capacity as trustee for our benefit and on our behalf and you shall pay such premiums as provided in this agreement. (emphasis supplied. The Agency Agreement commits Zurich to pay FalconTrust commissions "on terms to be negotiated . . . ." It requires FalconTrust to pay "any sub agent or sub producer fees or commissions required." The Agency Agreement also provides: Suspension or termination of this Agreement does not relieve you of the duty to account for and pay us all premiums for which you are responsible in accordance with Section 2 and return commissions for which you are responsible in accordance with Section 3 [the Commission section.] The Agency Agreement was for Mr. Sotero and Falcontrust to submit insurance applications for the Zurich companies to underwrite property and casualty insurance, primarily for long- haul trucking. The Agency Agreement and all the parties contemplated that Mr. Sotero and FalconTrust would deduct agreed-upon commissions from premiums and remit the remaining funds to Zurich. On September 14, 2000, Zurich and Mr. Sotero amended the Agency Agreement to change the due date for premium payments and to replace FalconTrust Group, Inc. (FalconTrust) for FalconTrust Commercial Risk Specialists, Inc., and to replace Zurich-American Insurance Group and Zurich Insurance Company, U.S. Branch, with Zurich U.S. Mr. Sotero and Zurich's authorized agent, Account Executive Sue Marcello, negotiated the terms of the commission agreement as contemplated in the Agency Agreement. Mr. Sotero confirmed the terms in a July 20, 1999, letter to Ms. Marcello. The parties agreed on a two-part commission. One part was to be paid from the premiums upon collection of the premiums. The second part, contingent upon the program continuing for five years, was to be paid by Zurich to Mr. Sotero and FalconTrust. The total commission was 20 percent. FalconTrust and Mr. Sotero were authorized to deduct 13 percent of the commission from premiums before forwarding them to Zurich. The remaining seven percent Zurich was to pay to Mr. Sotero and FalconTrust at the end of the program or after the fifth year anniversary date. The letter spelled out clearly that Zurich would hold the money constituting the seven percent and was entitled to all investment income earned on the money. The passage describing the arrangement reads as follows: Our total commission is 20 percent however Zurich will hold and retain the first 7 percent commission where they are entitle [sic] to earn investment income. I understand that FalconTrust will not benefit from this compounded investment income. However you mentioned you would increase our initial commission that is set at 13 percent currently from time to time depending on FalconTrust reaching their goals, but it will never exceed a total commission of 20 percent. It is to our understanding that the difference will be paid at the end of the program or after the fifth year anniversary date being 12/31/2005, but not earlier than five years. I do understand that if Zurich and/or FalconTrust cancels the program on or before the fourth year being 12/31/2004 that we are not entitle [sic] to our remaining commission that you will be holding. If the program is cancelled after 12/31/2004 by FalconTrust and/or Zurich it is understood that all commission being held will be considered earned. (emphasis added.) Until the program ended, the parties conducted themselves under the Agency Agreement as described in the letter. At some point the parties agreed to decrease the percentage retained by Zurich to five percent and increase the percentage initially paid to and kept by FalconTrust to 15 percent. During the course of the relationship FalconTrust produced approximately $146,000,000 in premiums for Zurich. At all times relevant to this matter, all premium payments, except for the portion deducted by sub-agents and producers before forwarding the payments to Mr. Sotero and FalconTrust were deposited into a trust account. The various sub-agents of FalconTrust collected premiums and forwarded them to FalconTrust, after deducting their commissions, which were a subpart of the FalconTrust 13 percent commission. FalconTrust in turn forwarded the remaining premium funds after deducting the portion of its 13 percent left after the sub-agent deduction. This was consistent with the Agency Agreement and accepted as proper by Zurich at all times. All parties realized that the held-back seven percent, later five percent, was money that Zurich would owe and pay if the conditions for payment were met. The parties conducted themselves in keeping with that understanding. Mr. Sotero and FalconTrust described the practice this way in their Third Amended Complaint in a court proceeding about this dispute: "In accordance with the Commission Agreement, Zurich held the contingency/holdback commission and received investment income thereon." (Emphasis supplied.) In 2006 Zurich decided to end the program. In a letter dated December 8, 2006, Tim Anders, Vice President of Zurich, notified Mr. Sotero that Zurich was terminating the Agency-Company Agreement of January 1, 1999. The letter was specific. It said Zurich was providing "notification of termination of that certain Agency-Company Agreement between Zurich American Insurance Company, Zurich American Insurance Co. of Illinois, American Guarantee and Liability Insurance Co., American Zurich Insurance Company, Steadfast Insurance Company . . . and FalconTrust Grup, Inc. . . ., dated January 1, 1999, . . .." Mr. Sotero wrote asking Zurich to reconsider or at least extend the termination date past the March 15, 2007, date provided in the letter. Zurich agreed to extend the termination date to April 30, 2007. At the time of termination FalconTrust had fulfilled all of the requirements under the Agency-Agreement for receipt of the held-back portion of the commissions. Mr. Sotero asked Zurich to pay the held-back commission amounts. He calculated the amount to exceed $7,000,000. Zurich did not pay the held- back commission amounts. As the program was winding down and the termination date approached, FalconTrust continued to receive premiums. As the Agency Agreement and negotiated commission structure provided, FalconTrust deducted its initial commission from the premium payments. But, reacting to Zurich's failure to begin paying the held back commission amounts, Mr. Sotero engaged in "self help." He deducted at least $6,000,000 from the premium payments from customers, received and deposited in the trust account. He took the money as payment from Zurich of earned and held back commissions.3 Nothing in the Agency Agreement or negotiated commission agreement authorized this action. In March of 2007, Mr. Sotero and FalconTrust also brought suit against Zurich in the Circuit Court for the Eleventh Judicial Circuit, Miami, Florida. The issues in that proceeding include whether Mr. Sotero and FalconTrust wrongfully took premiums and how much Zurich owes them for commissions. As of the final hearing, that cause (Case Number 07-6199-CA-01) remained pending before the court and set for jury trial in August 2010. There is no evidence of a final disposition. But the court has entered a partial Summary Judgment determining that FalconTrust wrongfully took premium funds for the commissions that it maintained Zurich owed. The court's Order concludes that the issue is not whether Zurich owed money to FalconTrust, but whether FalconTrust was entitled to take the funds when it did. Like the undersigned, the court determines that it was not. Between December 8, 2006, the date of the cancelation letter, and April 30, 2007, the program termination date, Mr. Sotero and FalconTrust did not remit to Zurich any of the approximately $6,000,000 in premium payments received. Despite not receiving premiums, Zurich did not cancel or refuse to issue the policies for which the premiums taken by Mr. Sotero and FalconTrust were payment. The policies remained in effect.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Financial Services suspend the license of Adalberto L. Sotero for nine months and suspend the license of FalconTrust Group, Inc. for nine months. DONE AND ENTERED this 15th day of October, 2010, in Tallahassee, Leon County, Florida. S JOHN D. C. NEWTON, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of October, 2010.
Findings Of Fact At all pertinent times, respondent Beach Landscaping, Inc. d/b/a Landscape Technologies or Landscape Technologies, Inc. or as Land Tech (Beach) operated as a dealer in agricultural products under license No. 2889 issued by the Department of Agriculture and Consumer Services (DACS). On Beach's behalf, respondent Regency Insurance Company posted a surety bond with DACS, No. SF00356 in the amount of $3,000, effective September 24, 1988, through September 23, 1989, to secure payment for Florida agricultural products. Testimony of Brooks. On August 30, 1989, Beach took delivery from petitioners of seven live oak trees petitioners grew near Chiefland, Florida, agreeing to pay $125 for each which, with sales tax, aggregated $927.50. Petitioners's Exhibit No. 1, Inv. No. 716280. Testimony of Cochran. Having earlier made a deposit of $637.50, Beach took delivery from petitioners on September 18, 1989, of 15 Florida-grown live oak trees, agreeing to pay $170 for each. With sales tax (but less the deposit) Beach owed petitioners $2,065.50 on account of this transaction. Petitioners's Exhibit No. 1, Inv. No. 716788. Testimony of Cochran. The next day Beach took delivery from petitioners of 15 more Florida- grown trees again agreeing to pay $170 for each. Again with sales tax and less an earlier deposit, indebtedness on account of the transaction aggregated $2,065.50. Petitioners's Exhibit No. 1, Inv. No. 716790. Testimony of Cochran. Finally, on September 20, 1989, Beach took delivery from petitioners of 16 Florida-grown live oak trees, agreeing to pay $170 for each, which with sales tax and less an earlier deposit, amounted to $2,203.20. Petitioners's Exhibit No. 1, Inv. No. 716791. Testimony of Cochran. On March 3, 1990, Beach or Landscape Technologies, Inc. paid petitioners $1,000, thereby reducing indebtedness to petitioners on account of the foregoing transactions from $7,261.70 to $6,261.70. Petitioners applied a check in the amount of $1,500 to reduce the indebtedness to $4,761.70, even though the check purported to be in payment of another invoice. In the answer it filed with DACS, Landscape Technologies, Inc., admitted indebtedness of $4,661.10.
Recommendation It is, accordingly, RECOMMENDED: That DACS order Beach to pay petitioners four thousand seven hundred sixty-one dollars and seventy cents ($4,761.70) within fifteen (15) days of the final order. That, in the event Beach fails to pay petitioners four thousand seven hundred sixty-one dollars and seventy cents ($4,761.70) within fifteen (15) days of the final order, DACS order Regency Insurance Company to pay three thousand dollars ($3,000) or such lesser sum as satisfies the requirements of Section 604.21(8), Florida Statutes (1989), for disbursal to petitioners. DONE and ENTERED this 19th day of April, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II 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 19th day of April, 1991. COPIES FURNISHED TO: CHRISTOPHER B. PHILLIPS LANDSCAPE TECHNOLOGIES, INC. 523 LAKEVIEW ROAD CLEARWATER, FL 34616 REGENCY INSURANCE COMPANY POST OFFICE BOX 190 HALLANDALE, FL 33009-0190 CLINTON H. COULTER, JR., ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES TALLAHASSEE, FL 32399-0800 J. COCHRAN & RUSSELL STRANGE C & S TREE FARM ROUTE 1, BOX 738 CHIEFLAND, FL 32626 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE DEPARTMENT OF AGRICULTURAL AND CONSUMER SERVICES THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURAL AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800
The Issue Whether Respondent, Redland Brokers, a dealer in agricultural products, is indebted to Petitioner, a producer of agricultural products, for 529 hampers of peas delivered by Petitioner to Redland Brokers on May 2, 3, and 7, 1996, and subsequently resold by Redland Brokers on behalf of Petitioner.
Findings Of Fact Petitioner is a producer of agricultural products. Respondent, Redland Brokers Exchange, Inc. (Redland), is a dealer in agricultural products. At all times pertinent to this proceeding, there was a marketing agreement in effect between Petitioner and Redland. This agreement provided, in pertinent part, as follows: The grower (Petitioner) gives Redland Brokers Exchange, Inc. the right to sell or consign to the general trade. No guarantees as to sales price are made and only amounts actually received by Redland Brokers Exchange less selling charges, loading charges, cooling charges and any other charges will be paid to the grower. Final settlement will be made within a reasonable length of time and may be held until payment is received from the purchaser. On May 2, 1996, Martin Ruiz, the son of the Petitioner, delivered to Redland 233 hampers of peas for sale on consignment. On May 3, 1996, Mr. Ruiz delivered to Redland 38 hampers of peas for sale on consignment. On May 3, 1996, Mr. Ruiz delivered to Redland 124 hampers of peas. On May 7, 1996, Mr. Ruiz delivered to Redland 134 hampers of peas. These peas were produced by Petitioner and her family. Petitioner asserts that the sale price for the peas delivered on May 2 and 3, 1996, should have been $20.00 per hamper. Petitioner asserts that the sale price for the peas delivered May 7, 1996, should have been $14.00 per hamper. Petitioner does not challenge the amounts deducted from the sales price by Redland for its commission, advances it made to the grower, and for crates. The greater weight of the evidence established that Mr. Ruiz was misinformed as to the fair market value for the peas that were delivered to Redland in May 1996 and that he believed the price to be greater than the actual fair market value. Redland did not misrepresent to Petitioner the fair market value of these peas. The greater weight of the evidence established that Redland sold the peas that Petitioner delivered to it in the regular course of business and that it paid Petitioner in full for that product consistent with the marketing agreement that was in effect. The lower prices were the result of falling market prices and the poor quality of some of the peas. Petitioner failed to establish that Redland was indebted to her as a result of these transactions.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner’s complaint be dismissed. DONE AND ENTERED this 7th day of April, 1997, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON 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 April, 1997. COPIES FURNISHED: Oralia Vera, pro se 14500 Southwest 280th Street, Lot 4 Homestead, Florida 33032 Frank T. Basso, Jr., President Redland Brokers Exchange, Inc. Post Office Box 343544 Florida City, Florida 33034 Florida Farm Bureau General Insurance Company (Legal Dept.) Post Office Box 147030 Gainesville, Florida 32614 Brenda Hyatt, Chief Bureau of Licensing & Bond Department of Agriculture 508 Mayo Building Tallahassee, Florida 32399-0800 Richard Tritschler, General Counsel Department of Agriculture The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Honorable Bob Crawford Commissioner of Agriculture The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810
The Issue Whether Respondent, an insurance agent licensed in Florida, violated specified Florida Statutes and agency rules in the sale of an annuity to two senior citizens, as charged in the Administrative Complaint, and, if so, the penalty that should be imposed against Respondent's license.
Findings Of Fact The Parties At all times relevant, Respondent was licensed by Petitioner as an annuity, health, and life insurance agent in Florida. Petitioner is the state agency charged with licensing and regulating insurance agents and taking disciplinary action for violations of the laws and rules it administers. Background Annuities This case arises from Respondent's sale of an Allianz Life Insurance of North America equity indexed annuity ("Allianz annuity") to Robert and Frances Wexler in June 2004. An annuity is a contractual arrangement under which an insurance company, in exchange for a premium, agrees to pay the owner a specified income for a period of time. Annuities generally are classified as "fixed" or "variable." Under a fixed annuity, the benefit is paid according to a predetermined interest rate. Under a variable annuity, the premium is invested on the owner's behalf, and the amount of the benefit, when paid, reflects the performance of that investment. Fixed annuities can be either "immediate" or "deferred." Under an immediate fixed annuity, the insurer begins paying the benefit upon purchase of the annuity. Under a deferred annuity, the premium is allowed to grow over time until the contract "matures" or is "annuitized" and the insurer begins paying the benefit. The Allianz annuity that Respondent sold to the Wexlers is a fixed deferred annuity. The Allianz annuity at issue also is an equity index annuity. This means that the insurer pays a benefit to the insured based on a premium that earns interest at a rate determined by the performance of a designated market index. The premium is not invested in the market for the owner's account; rather, the interest rate rises or falls in relation to the index's performance, within predetermined limits. Equity index annuities typically are long-term investments. Owners of equity index annuities have limited access to the funds invested and accumulating in their accounts, although some equity index annuities, such as the Allianz annuity at issue in this case, permit yearly penalty-free withdrawals at set percentages. The accrued interest generally is not taxed until the funds are withdrawn or the benefit is paid under annuity. The purchaser may incur substantial surrender charges for canceling the contract and withdrawing his or her funds before a specified date. Some equity index annuities identify a date——often many years in the future——on which the insurer will "annuitize" the contract if the purchaser has not already opted to do so. This date is sometimes called the "maturity date." The benefit payable under the annuity is determined based on the account's value as of the maturity date, and the payments to the owner of the annuity begin at that time. The Wexlers Robert Wexler was born in 1930. He was 73 years old in 2004, when Respondent sold him the Allianz annuity at issue in this case. His wife, Frances Wexler, was born in 1932, and she was 71 years old at the time. Both Wexlers finished high school and took some college courses. They married after Mr. Wexler joined the Air Force. While in the Air Force, Mr. Wexler studied electronics, which ultimately led to his career in that field in the private sector. He worked for IBM, Univac, and General Electric before retiring in 1994. Mrs. Wexler worked for a small family-owned printing firm for over 26 years, and retired in 1997. The Wexlers raised three children, and they lived in the same home in Pennsylvania for 40 years. While living in Pennsylvania, the Wexlers saved money by using Mrs. Wexler's salary to pay their living expenses and saving most of Mr. Wexler's earnings in a retirement account. They never bought annuities, but did trade stocks, which resulted in financial loss. For many years, the Wexlers visited Florida as "snowbirds" and eventually purchased a condominium in a gated community in Deerfield Beach, Florida. In 1998, the Wexlers sold their home in Pennsylvania, liquidated the stocks they owned, and bought a larger condominium in the same gated community. They moved permanently to Florida in 1998, with approximately $500,000 in liquid assets. The 2002 Aviva Annuity Respondent met the Wexlers in 2002, when he worked for the Cornerstone Financial Group ("Cornerstone"). Cornerstone had mailed out cards to persons 65 years old and older and the Wexlers sent in a reply card with boxes checked indicating interest in learning about Cornerstone's products. Based on that contact, Respondent arranged an in-home appointment with the Wexlers. At that time, the Wexlers informed Respondent that they had three financial investment goals: safety of their invested principal; long-term growth of their investment; and at some point years in the future, having a fixed income stream for the rest of their lives. The Wexlers consider themselves "conservative" financial investors, and they live off of their monthly social security and retirement pension checks. Being able to take money out of an annuity to cover routine living expenses was not a high priority for the Wexlers. They were more interested in leaving their investment alone and allowing it to grow, and they communicated this information to Respondent. Based on this information, Respondent sold the Wexlers an Aviva3/ equity index annuity. The Wexlers paid a $60,000.00 premium. The annuity was issued on June 11, 2002, and had a maturity date of June 11, 2031. The policy allowed partial withdrawal beginning immediately, without charge, of up to ten percent of the value of the account on the prior certificate anniversary date. If the insured withdrew more than that amount, a withdrawal charge was assessed, with the amount4/ of the withdrawal charge decreasing over a ten-year period, so that starting in year 11, there was no withdrawal charge. Pursuant to this withdrawal charge schedule, if the Wexlers withdrew all of their money from the policy——in effect, "surrendering" the policy——before the ten-year withdrawal charge period had expired, they would be assessed charges according to the withdrawal charge schedule. Under such circumstances, withdrawal charges are referred to as "surrender charges." The Aviva policy allocated the premium to three investment strategies. Specifically, 50% was allocated to the Annual Equity Index Strategy ("AEIS"), which is the Standard & Poors (S&P) 500 index excluding dividend income. The AES investment strategy had a minimum guaranteed interest rate of zero percent. The remaining 50% of the premium was invested equally in the Investment Grade Bond Index Strategy (IGBIS") and the Guaranteed One-Year Strategy ("GOS"). The IGBIS strategy was tied to the Lehman Brothers Aggregate Index, and, at the time, had a minimum guaranteed interest rate of two percent per year. The GOS investment strategy had a four percent per year current interest rate and a two percent minimum guaranteed interest rate per year. No evidence was presented about how the Aviva policy would have performed to date had the Wexlers not surrendered the policy. The 2004 Allianz Annuity In June 2004, Respondent paid the Wexlers another visit. At that time, Respondent was with Global Financial Group and was marketing different products. Respondent met with the Wexlers to discuss an Allianz annuity that, in his view, had "better" features than the Aviva annuity he sold them two years earlier. The evidence establishes that Respondent spent at least an hour or more reviewing the Allianz annuity with the Wexlers. In Mr. Wexler's own words, Respondent spent time "explain[ing] it, patiently talking about it." Mr. Wexler nonetheless claimed5/ at hearing that Respondent did not provide a comparison of the Alliance and Aviva policies. Respondent testified that he did provide such a comparison, and the undersigned finds his testimony more persuasive. Mr. Wexler testified that Respondent told them that surrendering their Aviva annuity and moving their funds into the Allianz annuity would cause them to incur a substantial surrender charge,6/ but that they would recoup the charge through a bonus provided by the Allianz annuity. Respondent credibly testified that he told the Wexlers that the bonus would be available if they annuitized the policy. Mr. Wexler did not recall Respondent discussing the specifics of annuitizing the Allianz policy with him, and Respondent confirmed that he did not extensively discuss annuitization with the Wexlers. This was because Mr. Wexler told Respondent that they had liquid assets and were not interested in immediately generating an income stream from the annuity, but instead were interested in leaving their investment alone to grow over time. Using information provided by Mr. Wexler, Respondent filled out paperwork, consisting of the Application for Annuity and Authorization to Transfer Funds, required for the Wexlers to surrender their Aviva annuity and purchase the Allianz annuity. According to Mr. Wexler, Respondent selected the type of product (here, the 10% Bonus PowerDex Elite Annuity) on the Application for Annuity form, and also selected the percentage of funds to be allocated into specific investment strategies on a Supplemental Application form. Respondent testified that he always fills out the forms for his clients, and he credibly testified that he reviewed the selected strategies with the Wexlers. Mr. Wexler executed the "Agreements and Signatures" section of the Application for Annuity.7/ This section states in pertinent part: It is agreed that: (1) All statements and answers given above are true and complete to the best of my knowledge; . . . (5) I understand that I may return my policy within the free look period (shown of the first page of my policy) if I am dissatisfied for any reason; and (6) I believe this annuity is suitable for my financial goals. Respondent provided the Wexlers with a copy of a Statement of Understanding regarding the Allianz annuity. This document explained the key aspects of the annuity in substantial detail. Mr. Wexler executed the Statement of Understanding, confirming that he received a copy of that document, and that he reviewed and understood key aspects of the annuity. The document states in pertinent part: I received a copy of this Statement of Understanding. The agent has answered my questions. I have also reviewed the 10% Bonus PowerDex Elite Annuity consumer brochure. I understand that any values shown, other than the Guaranteed Minimum Values, are not guarantees, promises, or warranties. I understand that I may return my policy within the free look period (shown on the first page of the policy) if I am dissatisfied for any reason. The Wexlers paid a premium of $58,125.01 for the Allianz annuity, and invested an additional $8000.00, for a total investment of $66,125.01. As a result of surrendering the Aviva policy to purchase the Allianz annuity, they incurred a surrender charge of $5,726.89. The Allianz annuity, Policy No. 70097189, was issued on July 16, 2004. Once the Allianz annuity was issued, Respondent delivered it to the Wexlers and reviewed it with them. Respondent again informed the Wexlers of the 20-day free look period during which they could return the annuity and obtain a full refund of the premium. Mr. Wexler did not read the annuity and "stashed it away." The Allianz annuity had been approved by Petitioner for sale to investors, including senior investors, when Respondent sold the annuity to the Wexlers in 2004. Respondent credibly testified that Mr. Wexler did not tell him that he had purchased annuities from other agents, and Mr. Wexler could not clearly recall8/ whether he had provided Respondent information regarding his other annuities purchases. Respondent earned a commission of $6,281.92 on the sale of the Allianz annuity to the Wexlers. Comparison of the Aviva and Allianz Annuities The parties agree that annuities are intended to be long-term investments. Beyond that, there is substantial disagreement regarding whether the Allianz annuity was, in reality, a "better" investment than the Aviva annuity for the Wexlers. Respondent maintained that the Allianz policy had several advantages over the Aviva policy. Petitioner asserts that the Allianz annuity either had some substantial disadvantages, or, at best, did not offer any significant advantages over the Aviva policy. Respondent testified that a key reason for introducing the Allianz policy to the Wexlers was that it had a higher index-tied earnings cap than the Aviva policy, so it could earn more than the Aviva policy. Petitioner asserts, and a review of the policies confirms, that the Aviva policy had a higher cap rate——specifically, 15% for the first year with a 10% minimum guaranteed index cap rate thereafter for the Aviva policy, as compared to 12% for the first year, with a guaranteed five percent minimum thereafter for the Allianz policy. Thus, the Aviva policy provides greater potential for index-tied earnings than the Allianz policy. The evidence shows that Respondent provided the Wexlers inaccurate information on this policy term. Respondent maintained that the Allianz annuity had a 100% participation rate, as compared to only a 60% participation rate for the Aviva policy, so that under the Allianz policy, the Wexlers would keep 100% of any gains due to increases in the S&P Index, whereas under the Aviva policy, they would keep only 60% of those gains. Petitioner disputes that the Aviva policy contained a limit on participation rate. A review of the policies shows that they both state a 100% participation rate in the selected investment indices; however, under the Aviva policy, there is a "certificate charge" that is deducted when calculating the owner's index earnings. Whether this deduction is expressed as a "lower participation rate" or considered a "fee," the fact remains that under the Aviva policy, the owner got to keep less money from his or her index investment. Accordingly, it is determined that Respondent accurately informed the Wexlers on this point. Respondent claimed, and apparently communicated to the Wexlers, that there was no risk in the Allianz investment, because gains resulting from the investment allocation indices were locked in so the Wexlers would never lose their invested principal or any gains they realized on the investment indices. Petitioner, on the other hand, asserted that the Allianz policy embodied substantial risk because negative index adjustments were deducted from the policy's current value. Although Petitioner is correct regarding the policy's current value, Respondent is correct regarding the effect of negative index performance on the annuity's high water value. The policy's annuitization value is the greater of these two values, so the high water value is likely more important for investors like the Wexlers, who wish to leave their investment alone rather than annuitize in the short term. Although the Wexlers' investment value under the Allianz annuity may have declined in years 2008 and 2009 due to poor S&P Index performance (which also would have affected the value of the Aviva policy, had the Wexlers still owned it), the annuitization value of the policy was not negatively affected by the poor performance of that index. In light of Respondent's understanding of the Wexlers' investment goals, his representations on this point were reasonable and not materially inaccurate. The Allianz policy provided a ten percent bonus for money invested for the first five years, and the bonus was accessible if either the policyholder annuitized the policy or as a death benefit to the policy's beneficiary. By contrast, the Aviva policy offered no bonuses after the first year. Petitioner characterizes the Allianz bonus as an "ephemeral" feature because of the limits on its availability. However, the credible evidence establishes that Respondent informed the Wexlers about these limitations, and that they were aware of them when they purchased the annuity. Under the Aviva policy, the Wexlers could annuitize at any time before the policy's maturity date. Under the Allianz policy they could only annuitize after five years, could not withdraw more than 5% of the account value of the annuity on an annual basis, and could not withdraw more than 25% of the account value over the life of the annuity. Notwithstanding, the credible evidence establishes that Respondent told the Wexlers about the annuitization limits of the Allianz policy, and they were aware of these limitations when they purchased the policy. Both policies imposed surrender charges for withdrawal of funds before the maturity date. Under the Aviva policy, withdrawal charges applied during the first ten years; under the Allianz policy, surrender charges could be incurred for the lifetime of the policy pursuant to a formula and terms established in the policy. This information is clearly stated in the policy's contract summary, and Respondent credibly testified that he fully reviewed the annuity with the Wexlers before he sold it to them, and again when he delivered it to them after issuance. Both annuities had death benefit features. The Allianz annuity provided that if the owner died, the accumulation value9/ would be paid to the beneficiary over a five-year period. The Aviva annuity provided that if the annuitant was less than 75 years old on the contract date, the death benefit would be the greater of the account value or the guaranteed account value.10/ On balance, the policies' death benefits features were similar, and there is no persuasive evidence that Respondent touted the Allianz annuity as having a superior death benefit to induce the Wexlers to purchase the annuity. The Allianz annuity featured a nursing home benefit that allowed withdrawal of the policy's full annuitization value over a five-year period if the insured was admitted to a nursing home for 30 or more days. However, the Wexlers already had insurance coverage providing assisted living benefits. Respondent acknowledged that the Allianz policy nursing home benefit was of relatively little value to the Wexlers. The evidence is insufficient to prove that Respondent represented this feature as a substantial advantage in inducing the Wexlers to purchase the Allianz annuity. Ultimate Findings of Fact Regarding Alleged Statutory and Rule Violations For the reasons explained in detail below, the undersigned determines, as a matter of ultimate fact, that Petitioner did not show, by clear and convincing evidence, that Respondent violated section 626.611(5), (7), (9), or (13); 626.9541(1)(a)1, (1)(e)1, or (1)(l); or 626.621(6); or rules 69B-215.210 or 69B-215.230.11 Alleged Violations of Section 627.611 Section 626.611 sets forth violations for which suspension or revocation of an insurance agent's license is mandatory. Petitioner has charged Respondent with violating sections 626.611(5), (7), (9), and (13). These offenses require a finding that the licensee had intent to commit the act constituting the offense. See Beckett v. Dep't of Fin. Servs., 982 So. 2d 94, 99 (Fla. 1st DCA 2008); see also Bowling v. Dep't of Ins., 394 So. 2d 165 (Fla. 1st DCA 1981). Here, the evidence does not clearly and convincingly show intent on Respondent's part with respect to any of the alleged violations of section 627.611. Although Respondent provided inaccurate information to the Wexlers on a material term——the comparative index earnings caps, which affect how much the Wexlers could earn through the policies' investment strategies——the evidence does not establish that Respondent intentionally misinformed the Wexlers on this policy term. To that point, Respondent accurately represented all other material terms of the Allianz policy to the Wexlers. The undersigned finds this probative in determining that Respondent's misstatement was made unintentionally, rather than willfully or knowingly. See Munch v. Dep't of Bus. and Prof'l Reg., 592 So. 2d 1136, 1143-44 (Fla. 1st DCA 2008)(to find an offense of "misrepresentation," an intentional act must be proven). Section 626.611(5) makes the willful misrepresentation of any insurance policy or annuity contract or the willful deception with regard to any such policy or contract a ground for suspending or revoking an agent's license. Petitioner did not prove that Respondent willfully misrepresented any aspect of the Allianz or Aviva policies to the Wexlers or willfully deceived them regarding the policies. Respondent credibly testified that he reviewed the key terms of the Allianz policy with the Wexlers, and there is no persuasive evidence in the record to the contrary. Although Respondent did inaccurately represent the Allianz policy as having greater index-tied earnings potential than the Aviva policy, the evidence does not clearly and convincingly establish that Respondent willfully misrepresented this information to the Wexlers, or willfully deceived them, to induce them to purchase the policy. Accordingly, Petitioner did not prove, by clear and convincing evidence, that Respondent violated section 626.611(5). Section 626.611(7) makes the demonstrated lack of fitness or trustworthiness to engage in the business of insurance a ground for suspending or revoking an agent's license. Again, a finding of intent on the licensee's part is required to find a violation of this subsection. The evidence does not clearly and convincingly establish that Respondent intended to provide incorrect, misleading, deceptive, or fraudulent information to the Wexlers to induce them to purchase the Allianz policy. As such, Petitioner failed to prove, by clear and convincing evidence, a demonstrated lack of fitness or untrustworthiness on Respondent's part to engage in the business of insurance, in violation of section 626.611(7). Section 626.611(9) makes fraudulent or dishonest practices in conducting business under an insurance agent license grounds for suspension or revocation of the license. As previously discussed, although Respondent provided incorrect information to the Wexlers regarding the comparative investment strategy caps for the Allianz and Aviva annuities, the evidence does not clearly and convincingly establish that Respondent intended to do so. Accordingly, Petitioner failed to prove, by clear and convincing evidence, that Respondent violated section 626.611(9) by engaging in fraudulent or dishonest practices in the sale of the Allianz policy to the Wexlers. Section 626.611(13) provides that willful failure to comply with, or willful violation of, Petitioner's orders or rules, or any willful violation of any provision of the Florida Insurance Code constitutes a basis for suspending or revoking an insurance agent license. Again, Petitioner failed to prove, by clear and convincing evidence, that Respondent willfully violated its rules or orders, or willfully violated the Florida Insurance Code, in connection with the sale of the Allianz annuity to the Wexlers. Although Respondent did provide incorrect information on a key term——the comparative investment strategy caps, which affected the annuities' comparative earnings potential——the persuasive evidence in the record does not support a finding that Respondent willfully did so. Thus, Petitioner failed to prove, by clear and convincing evidence, that Respondent violated section 626.611(13). Alleged Violations of Section 626.9541 Section 626.9541 is entitled "unfair methods of competition and unfair or deceptive acts or practices defined." This statute defines the types of acts that constitute unfair methods of competition and unfair or deceptive acts or practices in the insurance industry, but it does not independently authorize disciplinary action. Werner v. Dep't of Ins., 689 So. 1211, 1214 (Fla. 1st DCA 1997). Petitioner has charged Respondent with engaging in acts set forth in section 626.9541(1)(a)1., specifically, that he knowingly made, issued, circulated, or caused to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, or comparison which misrepresents provides that making any estimate, statement, sales presentation, omission, or comparison which misrepresents the benefits, advantages, conditions, or terms of any insurance policy. As discussed above, the evidence does not clearly and convincingly establish that Respondent knowingly engaged in any of these acts. Thus, Petitioner did not prove, by clear and convincing evidence, that Respondent engaged in unfair methods of competition or unfair or deceptive acts as provided in section 626.9541(1)(a)1. Petitioner also charged Respondent with engaging in acts defined in section 626.9541(1)(e)1. This section requires, as a predicate for the imposition of discipline, a finding that the licensee knowingly made false material statements through a variety of actions described in that provision. Again, the evidence does not establish that Respondent knowingly engaged in any of these acts. Accordingly, Petitioner did not prove, by clear and convincing evidence, that Respondent engaged in unfair methods of competition or unfair or deceptive acts as provided in section 626.9541(1)(e)1. Petitioner has charged Respondent with "twisting," which is defined in section 626.9541(1)(l) as knowingly making any misleading representation or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies for the purposes of inducing, or tending to induce, any person to surrender, terminate, or convert any insurance policy or to take out a policy of insurance in another insurer. Again, there is no persuasive evidence that Respondent knowingly committed any of the acts described in this statute. Thus, Petitioner did not prove, by clear and convincing evidence, that Respondent engaged in twisting under section 626.9541(1)(1), Florida Statutes. Alleged Violation of Section 626.621 Section 626.621 sets forth violations for which suspension or revocation of an insurance agent's license is discretionary.12/ Petitioner has charged Respondent with violating section 626.621(6) by engaging in unfair methods of competition or in unfair or deceptive acts or practices, as prohibited by part IX of chapter 626, or having otherwise shown himself to be a source of injury or loss to the public or detrimental to the public interest. For the reasons previously discussed, the evidence does not clearly and convincingly establish that Respondent engaged in any actions that could be considered unfair methods of competition or deceptive acts or practices under chapter 626, part IX. Accordingly, Petitioner has not shown, by clear and convincing evidence, that Respondent engaged in acts under section 626.621(6) that justify the suspension or revocation of his insurance agent's license. Alleged Violations of Agency Rules Petitioner charged Respondent with violating rule 69B- 215.210. This rule provides that the business of life insurance13/ is a public trust in which all agents of all companies have an obligation to work together in serving the best interests of the insuring public, by understanding and observing the laws governing life insurance by letter and in spirit by presenting accurately and completely every fact essential to a client's decision, and by being fair in all relations with colleagues and competitors and always placing the policyholder's interests first. The rule implements section 626.797, entitled "code of ethics," which directs Petitioner to adopt a code of ethics to "govern the conduct of life agents in their relations with the public, other agents, and the insurers," and to establish standards of conduct to avoid the commission of acts that would constitute grounds for suspension or revocation under sections 626.611, 626.621, and unfair trade practices and unfair methods of competition under chapter 626, part IX. The rule must be interpreted and applied consistent with the law it is implementing. As previously discussed, the violations of sections 626.611, 626.621, and 626.9541 with which Respondent was charged all require that he have intent to commit the act constituting the violation. The persuasive evidence does not establish that Respondent had the requisite intent necessary to find a violation of rule 69B-215.210.14/ Petitioner also charged Respondent with violating rule 69B-215.230. Rule 69B-215.230(1) makes unethical the misrepresentation of the terms of any policy issued or to be issued or the benefits or advantages promised by that policy. This rule implements sections 626.797 and 626.9541(1)(a) and (b), violations of which require a showing or willful or knowing misrepresentation. Further, "misrepresentation" requires that an intentional act be proven for a violation to be found. See Walker v. Dep't. of Bus. and Prof'l Reg., 705 So. 2d 652, 654 (Fla. 5th DCA 1998). As previously discussed, the evidence does not clearly and convincingly establish that Respondent knowingly or willfully provided incorrect information or misstatements to the Wexlers regarding the Allianz policy. Accordingly, Petitioner has not shown, by clear and convincing evidence, that Respondent violated Rule 69B-230.210(1).15/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Financial Services dismiss the Administrative Complaint against Respondent. DONE AND ENTERED this 15th day of June, 2012, in Tallahassee, Leon County, Florida. S CATHY M. SELLERS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 15th day of June, 2012.
The Issue Whether Redland Brokers Exchange, Inc., is owed $2,602.60 for agricultural products ordered by and delivered to Mo-Bo Enterprises, Inc.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Redland Brokers is an agent for producers of Florida-grown agricultural products. Mo-Bo is a dealer in such products in the normal course of its business and is bonded by Armor. During the period from October 28, 1994, until November 11, 1994, Mo-Bo ordered various agricultural products from Redland Brokers. In accordance with the usual practice of Redland Brokers when doing business with Mo-Bo, the orders were accepted by telephone and the items were loaded onto trucks sent by Mo-Bo to Redland Brokers's warehouse. Redland Brokers sent the following invoices to Mo-Bo for agricultural products order by and delivered to Mo-Bo: November19, 1994 Invoice Number 275 $180.00 November5, 1994 Invoice Number 290 756.00 November11, 1994 Invoice Number 319 793.00 November19, 1994 Invoice Number 334 353.60 November19, 1994 Invoice Number 338 520.00 TOTAL $2,602.60 Payment was due twenty-one days from the date each invoice was mailed. Despite repeated demands, Mo-Bo has not paid any of the amounts reflected in these invoices. As of September 6, 1995, the date of the formal hearing, $2,602.60 remained due and owing to Redland Brokers.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order ordering Mo-Bo Enterprises, Inc., to pay $2,602.60 to Redland Brokers Exchange, Inc., and, if Mo-Bo Enterprises, Inc., does not pay this amount, ordering Armor Insurance Company to pay this amount, up to its maximum liability under its bond. DONE AND ENTERED this 10th day of October 1995, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO 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 October 1995. COPIES FURNISHED: Frank T. Basso, Jr., Owner Amy L. Glasow, Owner Redland Brokers Exchange, Inc. 401 North Redland Road Homestead, Florida 33030 Paul Boris Mo-Bo Enterprises, Inc. Post Office Box 1899 Pompano Beach, Florida 33061 Mark J. Albrechta, Esquire Armor Insurance Company Legal Department Post Office Box 15250 Tampa, Florida 33684-5250 The Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard Tritschler, Esquire General Counsel Department of Agriculture and Consumer Services The Capitol, PL-10 Tallahassee, Florida 32399-0810 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture and Consumer Services 508 Mayo Building Tallahassee, Florida 32399-0800
Findings Of Fact In the summer of 1986, petitioner, Leo R. Fleming, as the agent for a Mr. Griffin, entered into an agreement with Jimmy Davis, representing D & M Pecan Company, to sell an unspecified amount of watermelons to D & M at the "ground" price which was to be determined daily. The parties also agreed to "joint" the melons, meaning that D & M and Mr. Griffin would split whatever profit or loss was made on the sale of the watermelons. Under the terms of the agreement D & M supplied the trucks and petitioner was responsible for harvesting and loading the melons on the trucks. Fifteen loads of watermelons were loaded and sold to D & M between June 28 and July 2, 1986. On June 28, 1986, D & M paid petitioner $3,000 as an advance on the watermelons so that the field crew could be paid. On June 30, 1986, D & M paid $5,000 and on July 2, 1986, D & M paid $3,000. None of the monies paid to petitioner between June 28 and July 2 were for specific loads or lots of melons, but were advances to be credited against the total amount that was ultimately owed to petitioner. From the first day of loading, June 28, 1986, D & M experienced problems with the melons loaded by petitioner. Mr. Davis would call petitioner the night before the loading to advise him as to the type and size of melon that was to be put on each truck to be loaded the following day. However, petitioner would get the orders confused, which resulted in the trucks being loaded with a different size and type of watermelon than was ordered. D & M usually did not discover the problem until the trucks reached their destination. On a few occasions, the discrepancies were discovered when petitioner called back in after the trucks had left the field to report the amount of melons put on each truck. In any event, the failure to load the right melons on the trucks caused D & M to have to find other buyers and reroute the trucks or reduce the price of the melons delivered. On July 12, 1986, petitioner and Mr. Davis met in Cordele, Georgia, for the purpose of determining the amount owed by D & M for the watermelons. Petitioner brought typed invoices with him which reflected the type of watermelon, the number of pounds shipped, and ground price per pound for each lot or load. However, due to the problems with the wrong melons being loaded, the parties agreed to reduce the price per pound on those loads which had not been loaded as ordered. The adjusted price agreed upon was written on the original invoices and the typed price was marked through. No adjustment was made for the lots that were loaded properly. Lot 621 was not included in the negotiations because petitioner did not present an invoice for that lot and neither party at that time knew what had happened to that truck. However, the parties did agree to settle the other 14 loads for a total price of $25,783.60. (See Appendix A which lists the invoiced price and negotiated price per load.) D & M deducted $10,000 from that total for the advances that had been made and gave petitioner a check for $15,783.60. 1/ The stamp marks on the back of the check reveal that the check was deposited by petitioner on or before July 14, 1986. On July 15, 1986, petitioner wrote a check to the grower for the watermelons. The amount of the check was based on the negotiated price minus petitioner's commission and the cost of the harvesters. This amount is reflected on the original invoices. (P.Ex.1) However, Mr. Griffin did not accept the changes in the price and insisted upon payment from petitioner based on the original invoiced amount. Petitioner then paid Mr. Griffin based on the original invoiced amount "for keeping him from going to the PACA." (T-30) Thereafter, on August 6, 1986, petitioner sent D & M a statement reflecting a balance due based on the original invoiced amounts. From thee evidence presented, it is clear that on July 12, 1986, the parties reached an agreement concerning the full amount to be paid for all the loads of watermelons purchased by D & M except for the load labelled Lot No. 621. D & M admits that it owes petitioner for Lot No. 621, but it contends that it only owes $1,898.40 for that load, whereas the invoice indicates that $2,133.90 is owed. Mr. Davis explained that D & M should not have to pay $2,133.90 for that load because that was the total amount it was able to get for the load. In other words, if D & M paid the full invoiced amount, it would not make a profit. Nevertheless, the original agreement of the parties was that D & M would pay ground price for the melons. D & M paid full invoice price on the melons that were correctly loaded and paid an agreed upon adjusted price for the melons that were not loaded as ordered. D & M failed to present any evidence establishing that Lot No. 621 consisted of melons that were not of the type and size ordered. Therefore, D & M owes petitioner $2,133.90 for Lot 621.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by the Department of Agriculture directing respondent to pay petitioner the sum of $2,133.90 within 15 days after the final order is entered. DONE AND ENTERED this 26th day of February, 1988, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 1988.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearings the following facts are found: At all times pertinent to this proceeding, Petitioner was a producer of agricultural products in the State of Florida as defined in Section 604.15(5), Florida Statutes (1983). However, since the pallets were not an agricultural product produced by Petitioner and were not considered in the price of the bahia sod but were exchanged back and forth between Petitioner and his customer, including Respondent American, they are not considered to be an agricultural product in this case and are excluded from any consideration for payment under Section 604.15-604.30, Florida Statutes. The amount charged Respondent American for these pallets was $1,188.00. At all times pertinent to this proceeding, Respondent American was a licensed dealer in agricultural products as defined by Section 604.15(1), Florida Statutes (1983), issued license No. 3774 by the Department, and bonded by Respondent Peerless Insurance Company (Peerless) in the sum of $15,000 - Bond No. SK-2 87 38. At all times pertinent to this proceeding, Respondent Peerless 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). During the month of January, 1985 Respondent American purchased numerous pallets of bahia grass sod from Petitioner paying $16.00 per pallet but has refused to pay for 240 pallets at $16.00 per flat for a total amount of $3,840.00 picked up by Respondent American's employees and billed by Petitioner between January 16, 1985 and January 26, 1985. Respondent American did not contest having received 204 pallets of bahia grass sod represented by invoice number. 6774- for 18 pallets on 1/16/85; 6783, 6785, and 6788 for 18 pallets each on 1/17/85; 6791, 6793, 6794, 6795, and 6800 for 16 pallets each on 1/18/85 and 6799 for 18 pallets on 1/18/85, 6831 for 18 pallets on 1/28/85; and 6834 for 16 pallets on 1/30/85 but contested invoice numbers 6835 and 6836 for 18 pallets each on 1/26/85. Gary L. Curtis stipulated at the hearing that Respondent American had received the 36 pallets of bahia grass sod represented by invoice numbers 6835 and 6836 which left only the matter of Respondent American's contention that it was owed credit for 20 pallets of bahia sod received in December, 1984 that was of poor quality and fell apart and had to be replaced because it could not be used. The evidence was insufficient to prove that any of the sod purchased by Respondent American from Petitioner fell apart or was of poor quality and as a result could not he utilized by Respondent American.
Recommendation Based upon the Findings of Fact and Conclusions of Law recited herein it is RECOMMENDED that Respondent American be ordered to pay to the Petitioner the sum of $3,840.00. It is further RECOMMENDED that if Respondent American fails to timely pay the Petitioner as ordered then Respondent Peerless be ordered to pay the Department as required by Section 604.21, Florida Statutes (1983) and that the Department reimburse the Petitioner in accordance with Section 604.21, Florida Statutes (1983). Respectfully submitted and entered this 10th day of March, 1986, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 10th day of March, 1986. COPIES FURNISHED: Doyle Conner, Commissioner Department of Agriculture and Consumer Services The Capitol Tallahassee, Florida 32301 Robert Chastain, General Counsel Department of Agriculture and Consumer Services Mayo Building, Room 513 Tallahassee, Florida 32301 Ron Weaver, Esquire Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301 Joe W. Kight, Chief License and Bond Mayo Building Tallahassee, Florida 32301 Gary L. Curtis, President American Sod Company, Inc. Post Office Box 1370 Longwood, Florida 32750 Mid Florida Sod Company 4141 Canoe Creek Road St. Cloud, Florida 32769 Peerless Insurance Company 611 Aymore Road/Suite 202 Winter Park, Florida 32789 Raymond E. Cramer Esquire Post Office Box 607 St. Cloud, Florida 32769
The Issue The issue in this case is whether Respondents have violated provisions of Section 627.837, Florida Statutes, through payment of alleged monetary inducements to insurance agents for the purpose of securing contracts which finance insurance premiums.
Findings Of Fact Petitioner is the Department of Insurance and Treasurer (Department). Respondents are Puritan Budget Plan, Inc., and Gibraltar Budget Plan, Inc., (Respondents). Findings contained in paragraphs 3- 23, were stipulated to by the parties. Stipulated Facts Common shares in Respondents' corporations were sold to insurance agent/shareholders for between $500.00 and $2,500.00 per share, depending on date purchased. Presently, and for the purposes of this litigation, marketing and/or administrative fees paid by Respondents to agent/shareholders range from $1.00 to $13.00 per contract produced, depending on the number of payments made, and the amount of the down payment. Each per contract marketing and/or administrative fee paid by Respondents to agent/shareholders is completely unrelated to the number of contracts produced by that agent/shareholder, and is based upon the characteristics of each contract, pursuant to the terms of the shareholder purchase agreement. Perry & Co., pursuant to a written agreement, manages the day to day activities of Respondents, including solicitation of new shareholder/agents. Alex Campos is currently President of Perry & Co. Perry & Co., Dick Perry or Alex Campos have no equity ownership, either direct or indirect, in Respondents corporations. No shareholder of Perry & Co. is also a shareholder in either Respondent, and no shareholder of the Respondents is a shareholder in Perry & Co. No officer or director of Perry & Co. is an officer or director of either Respondent, and no officer or director of either Respondent is an officer or director of Perry & Co. The individual management agreements between Perry & Co. and Respondents are terminable with proper notice by either party. Respondent Puritan Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Puritans' principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Respondent Gibraltar Budget Plan, Inc., was originally licensed by the Department as a premium finance company in 1984, pursuant to the provisions of Chapter 627, Part XV, Florida Statutes. Gibraltar's principle office is located at 2635 Century Parkway, Suite 1000, Atlanta, Georgia 30345. Customers of Respondents are typically financing automobile insurance premiums. There is little if any variation among licensed premium finance companies in the State of Florida as to the interest rate charged to customers. In 1988, the Department inquired of Respondents' activities in relation to agent/shareholder compensation arrangements. After several meetings with representatives from Respondents, the Department closed the matter without taking any action. Also in 1988, the Department proposed the adoption of Rule 4-18.009, which in part would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes, but later withdrew the proposed rule. Again in 1994, the Department proposed a rule which would have explicitly made payment of processing fees or stock dividends a violation of Section 627.837, Florida Statutes. After a hearing and adverse ruling by the hearing officer, the Department withdrew proposed Rule 4-196.030(8). Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in the unnecessary financing of contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. Financial consideration paid to insurance agents in exchange for the production of premium finance contracts may result in insurance agents adding or sliding unnecessary products to make the total cost of insurance more expensive and induce the financing of additional contracts, and the Department believes Section 627.837, Florida Statutes, was intended to make such conduct illegal. An "inducement" is presently defined as "an incentive which motivates an insurance purchaser to finance the premium payment or which motivates any person to lead or influence an insured into financing the insurance coverage being purchased; or any compensation or consideration presented to a person based upon specific business performance whether under written agreement or otherwise." Rule 4-196.030(4), Florida Administrative Code (July 27, 1995). This rule is currently effective but presently on appeal. There is no evidence that Respondents unnecessarily financed any premium finance contracts or engaged in any "sliding" of unnecessary products to induce the unnecessary financing of contracts. Section 627.837, Florida Statutes, does not prohibit the payment of corporate dividends based on stock ownership to shareholders who are also insurance agents. According to the Final Bill Analysis for H.B. 2471, in 1995 the Legislature amended Section 627.837, Florida Statutes, relating to rebates and inducements. This section was amended to clarify that this statute does not prohibit an insurance agent or agents from owning a premium finance company. The statute, as amended, is silent on the issue of how owner-agents may be compensated. Other Facts Approximately 80 percent of Respondents' insureds will turn to the shareholder/agent to handle premium mailing and collection. When a shareholder/agent provides these valuable services and labor to Respondents through the servicing of the premium finance contract with an insured, payment for those services and/or recoupment of the expenses involved with their provision is made, at least in part, in the form of the marketing and administrative fees paid by Respondents to the shareholder/agent. The marketing and administrative fee payment by Respondents to shareholder/agents is made from the net profit of the corporation and represents payment of ownership interest (dividends) to shareholder/agents in addition to payment for shareholder/agent services or expenses. Respondents generally finance "non-standard" private passenger automobile insurance. Such insurance generally covers younger drivers and drivers with infraction points against their license. The average non-standard premium is $500 per year. Thirty percent of non-standard insureds will cancel their insurance prior to the renewal date. Cancellation of policies and financing arrangements by non-standard insurers require the agent to return unearned commissions, about $30 generally. In contrast, payment of an insurance premium in cash guarantees an agent his/her entire commission, an average of $90 per non-standard policy. Consequently, the financial interest of most agents is best served by cash sale of auto insurance as opposed to financing the insurance. The average amount generated by 95 percent of all premium finance contracts executed in Florida would yield an agent/shareholder approximately six dollars per contract.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered dismissing the Administrative Complaints. DONE and ENTERED in Tallahassee, Florida, this 28th day of November, 1995. DON W. DAVIS, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of November, 1995. APPENDIX In accordance with provisions of Section 120.59, Florida Statutes, the following rulings are made on the proposed findings of fact submitted on behalf of the parties. Petitioner's Proposed Findings 1.-11. Accepted to extent included within stipulated facts, otherwise rejected for lack of citation to the record. 12. First sentence is rejected as not substantially dispositive of the issues presented. Remainder rejected for lack of record citation if not included within stipulated facts. 13.-15. Rejected to extent not included within stipulation, no citation to record. Incorporated by reference. Rejected, no record citation, legal conclusion. 18.-19. Rejected, not materially dispositive. 20. Rejected, no record citation. 21.-23. Rejected, not materially dispositive. Rejected, record citation and relevancy. Rejected, weight of the evidence. Incorporated by reference. Respondent's Proposed Findings 1. Rejected, unnecessary to result. 2.-3. Accepted, not verbatim. 4. Rejected, unnecessary. 5.-7. Accepted, not verbatim. 8.-9. Rejected, unnecessary. 10. Accepted per stipulation. 11.-12. Rejected, unnecessary. 13. Accepted per stipulation. 14.-16. Accepted, not verbatim. Rejected, hearsay. Rejected, relevance. Rejected, unnecessary. 20.-22. Accepted per stipulation. 23. Rejected, unnecessary. 24.-57. Incorporated by reference. 58.-60. Rejected, unnecessary. 61.-62. Rejected, subordinate and not materially dispositive. 63.-67. Rejected as unnecessary to extent not included in stipulated facts. Accepted per stipulation. Rejected, unnecessary. Accepted per stipulation. 72.-76. Rejected, unnecessary. 77. Accepted per stipulation. 78.-79. Incorporated by reference. 80.-87. Accepted per stipulation. 88. Incorporated by reference. 89.-90. Accepted per stipulation. 91.-95. Rejected, subordinate. 96. Accepted. 97.-101. Rejected, unnecessary. 102. Incorporated by reference. COPIES FURNISHED: Alan Liefer, Esquire Division of Legal Services 612 Larson Building Tallahassee, FL 32399-0333 Steven M. Malono, Esquire Cobb, Cole & Bell 131 N. Gadsden St. Tallahassee, FL 32301 Bill Nelson State Treasurer and Insurance Commissioner Department of Insurance The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner Acting General Counsel Department of Insurance The Capitol, PL-11 Tallahassee, FL 32399-0300
