The Issue Did Respondent knowingly permit a person who had been convicted of or who had pled guilty or no contest to a felony or a crime involving moral turpitude or a crime punishable by imprisonment of one year or more under law of any state, territory or country, regardless of whether adjudication of guilt was withheld, to engage in the bail bond business as an employee of Respondent's bail bond agency? If yes, should Respondent have her limited surety agent license disciplined?
Findings Of Fact At all relevant times Respondent was licensed by Petitioner as a limited surety agent, license no. 224404483. Petitioner has regulatory jurisdiction over that license. For that reason Petitioner may impose discipline should Respondent violate laws pertaining to Respondent's activities associated with the license. Respondent is President and Director of Crews Bonding Agency, Inc., 24 North Liberty Street, Jacksonville, Florida 32222, through which business she performs insurance-related activities concerning bail bonds. Crews Bonding Agency, Inc. was incorporated in Florida on March 31, 1988. The corporation is organized for the purpose of transacting any or all lawful business. The corporation provides bail bonds at the Liberty Street premises. The corporation also runs a parking lot concession at that location. Both businesses were operated at times relevant to the inquiry. On August 28, 1995, Star Legal Research, Inc. was incorporated to operate at 350 East Forsyth Street, Jacksonville, Florida 32202. That street address is the street adjacent to the Liberty Street address. The Star Legal Research business works out of the same building that Crews Bonding Agency uses. The difference being that the entrance to Crews Bonding Agency is on Liberty Street and the Star Legal Research entrance is on Forsyth Street. A 1995-96 occupational license was issued to Star Legal Research c/o Jack I. Etheridge, Jr., Respondent's son, for the period October 1, 1995 to September 30, 1996. Jack I. Etheridge, Jr. owns Star Legal Research. Jack I. Etheridge, Jr. stated that the purpose for incorporating Star Legal Research was to provide work for Jack I. Etheridge, his father and Respondent's husband, in a setting in which Mr. Jack Etheridge, Jr. contends would be unassociated with Crews Bonding Agency. The attempt to disassociate Mr. Jack Etheridge from Crews Bonding Agency will be subsequently explained. When the hearing was convened Jack I. Etheridge had been working in an office in the building where Crews Bonding Agency has its business. That employment was under the guise of Star Legal Research. The office where Jack I. Etheridge works in the building is separated from the office associated with Crews Bonding Agency by a door. Jack I. Etheridge uses a separate entrance into the office where he works. That entrance is from Forsyth Street rather than the Bonding agency entrance from Liberty Street. The business done by Star Legal Research, according to Jack Etheridge, Jr., is one where "you can research any type of legal matters . . . that's pretty much it". Again, Jack Etheridge, Jr. states that his father, Jack Etheridge, ". . . researches legal, you know, business". Under this arrangement, Jack Etheridge is supposedly no longer affiliated with the Crews Bonding Agency in operating its parking lot or otherwise. From the record, it is unclear exactly what is meant by Jack Etheridge's performance of legal research. At present, the bail bond business is done in the front office to the building that houses Crews Bonding Agency and Star Legal Research. That office faces Liberty Street. In addition to the office where bail bond activities are conducted and the back office which faces Forsyth Street, where Star Legal Research is housed, there is a kitchen in the building. That constitutes the rooms in that building. Contrary to the claim by his son that Jack Etheridge is no longer affiliated with Crews Bonding Agency, Respondent identified that the present circumstances are such that Jack Etheridge helps with the Crews Bonding Agency parking lot business "if he sees a car and I don't, he will go there . . .". Respondent identified that she principally handles the parking lot when she is there at the business premises, but that on one occasion, she was in the hospital and was not available to do that work. Further, she stated that her physician did not really want her "running back and forth to the parking lot". Respondent intends to transfer the parking lot business from Crews Bonding Agency to Star Legal Research by January 1997. At one time, Jack Etheridge had been licensed by Petitioner as an insurance agent entitled to participate in bail bond activities. Prior to the passage of Section 648.44(3), Florida Statutes (1983), he had been convicted of a felony in Florida. Section 648.44(3), Florida Statutes (1983), stated: No person who has been convicted of or who has pleaded guilty or no contest to any felony, regardless of whether adjudication of guilt was withheld, may participate as a director, officer, manager, or employee of any bail bond agency or office thereof or own shares in any closely held corporation which has any interest in any bail bond business. Having a concern that Section 648.44(3), Florida Statutes (1983), might disqualify him from continuing to act as an insurance agent in the bail bond business, Jack Etheridge brought suit in the Circuit Court, Fourth Judicial Circuit, In and For Duval County, Florida, Case No. 82-10537CA, Division K. Petitioner was named defendant in that suit. As a result, an order was entered stating: The provisions of Florida Statutes 648.44(3), Fla. Stat. (1983), or its successor(s) do not and cannot be determined to effect the status of plaintiff, Jack I. Etheridge, in his individual capacity as an officer and director of F.G.C. Bonding Insurance Corporation nor his ability to continue to maintain stock ownership of shares of F.G.C. Bonding Insurance Corporation. The provisions of this paragraph shall serve as notice to all interested parties that said statute does not apply to Jack I. Etheridge, individually, nor in his capacity as an officer, director and stockholder in F.G.C. Bonding Insurance Corporation. Subsequently, in a case in the United States District Court, Middle District of Louisiana, Case No. CR.89-40-A-M1, Jack Etheridge pled guilty and was found guilty and convicted of the offense of mail fraud, in accordance with 18 U.S.C. 1341-2. For this offense, he was imprisoned for a period of five years and ordered to make restitution in the amount of $237,393.83. The sentence was imposed on April 6, 1990. At that time, Jack Etheridge was not licensed by Petitioner. Respondent had separated from Mr. Jack Etheridge in 1986. She was reunited with her husband in 1989. Respondent was aware that her husband had been convicted in Florida in state court, the offense for which he sought relief in Circuit Court Case No. 82-10537CA, Division K, and that he had committed the federal offense in Case No. CR.89-40-A-M1. In August or September, 1992, federal probation officers came to the Crews Bonding Agency and spoke to Respondent about her husband's pending release from federal prison. In particular, those persons indicated that Mr. Jack Etheridge was going to be released in December of 1992. In this conversation, the probation officers told Respondent that they expected the husband to work for Crews Bonding Agency in a capacity that did not involve the handling of bail. Respondent told them that her husband could not work at the agency because she did not wish to jeopardize her Florida insurance license and livelihood. This is taken to mean that she was concerned about having a convicted felon working for her at the bail bond agency. In the conversation with the probation officers, Respondent was persuaded that the probation officers had the authority to place her husband with the bail bond agency to give the husband employment in some capacity, other than dealing with bail bond activities. The probation officers did not indicate the specific authority for requiring this placement. Respondent replied to the probation officers that her husband could run the parking lot and clean up. In offering that arrangement, Respondent operated on the assumption that the probation officers were familiar with the requirements in the Florida Insurance Regulations and Statutes. In the conversation between Respondent and the federal probation officers, Respondent made no mention of the ruling in the Circuit Court Case No. 82-10537CA, Division K, concerning her husband's exemption from Section 648.44(3), Florida Statutes (1983), and its effects, or any subsequent law. After the conversation with the probation officers, and prior to her husband's release from prison, Respondent sought advice of counsel concerning the propriety of having her husband employed by Crews Bonding Agency. Robert Persons, Esquire is corporate counsel for Crews Bonding Agency. He incorporated the business. He has done work for the business as corporate counsel, beginning in 1988. He was aware that Mr. Jack Etheridge had been incarcerated in the federal corrections system. Before Mr. Jack Etheridge was released, Mr. Persons reviewed the previously-quoted language in Circuit Court Case No. 82-10537CA, Division K, in response to Respondent's request for legal advice. Respondent had told Mr. Persons that it was possible that she was going to hire her husband to run the parking lot for the Crews Bonding Agency. She wanted to know if there would be a problem with Petitioner's statutes that prohibited a bonding agency from operating with a felon working for it. Specifically, Respondent asked Mr. Persons if her husband could work in the parking lot. Mr. Persons told Respondent that his interpretation of the order was that the statutory prohibition against felons working for a bonding agency did not apply to her husband. For that reason, he did not believe that there would be a problem having the husband work at the parking lot. Moreover, he told Respondent that he did not believe that it presented a problem, in that the activities by the husband, when running the parking lot business, did not involve employment with the bail bonding operation. When he gave this advice, Mr. Persons was familiar with the parking lot concessions operation, having used the parking lot himself. He was also familiar with the bail bond business conducted by Crews Bonding Agency. John Gary Baker, Esquire was retained to assist Mr. Jack Etheridge in meeting the terms of the federal parole granted the client. This included correspondence with the probation office in an attempt to obtain early release. Once Mr. Jack Etheridge was released, Mr. Baker went with the client and spoke to probation officer, Diane Thomas. This conversation took place sometime in late August or early September, 1993. Ms. Thomas told Mr. Baker and Mr. Etheridge that Mr. Etheridge needed to obtain a job as a means to meet requirements for restitution. In this conversation, Ms. Thomas inquired concerning Respondent's income in an attempt to determine the amount that Mr. Etheridge should pay in the way of restitution. Mr. Baker tried to impress Ms. Thomas with the fact that Respondent's income and business were separate from Mr. Etheridge's circumstance. In the conversation, Mr. Etheridge told Ms. Thomas that he wished to be a bus driver. That was his profession prior to being involved in the insurance business in Louisiana, which led to his incarceration. Ms. Thomas would not agree to that arrangement. She indicated that Mr. Etheridge had to be located in a place where the probation officers could come and see him at anytime, day or night. Ms. Thomas asked the question about whether Mr. Etheridge could work for his wife at Crews Bonding Agency, and Mr. Etheridge stated that he did not wish to work for his wife. Ms. Thomas responded to these remarks by saying that she had an order that indicated that Mr. Etheridge could work at the Crews Bonding Agency. This refers to the Circuit Court Case No. 82-10537CA, Division K. Ms. Thomas further told Mr. Etheridge that Mr. Etheridge needed to work at Crews Bonding Agency. Before the date upon which the meeting was held with Ms. Thomas, Mr. Baker had not been acquainted with the circuit court order. When Mr. Baker and Mr. Etheridge left the meeting with Ms. Thomas, they went to the Crews Bonding Agency office; and Mr. Etheridge produced a copy of the circuit court order. Respondent was there at that time. Mr. Baker reviewed the order and expressed an opinion to Respondent and her husband that the husband could work at Crews Bonding Agency in any capacity, other than giving out forms or advice about bail bonds. At that point, there was conversation about the husband running the parking lot. That arrangement was one which Mr. Baker stated would be acceptable and would satisfy the terms of Mr. Etheridge's probation. Moreover, Mr. Baker offered the advice that the circuit court order would allow the husband to attend to clerical matters, such as answering the telephones. David R. Fletcher, Esquire was acquainted with Respondent. Mr. Fletcher was aware that Jack Etheridge had been incarcerated in a federal facility. Mr. Fletcher was approached by Respondent, who asked Mr. Fletcher about the Circuit Court Case No. 82-10537CA, Division K, and the meaning of the order. In particular, Respondent made Mr. Fletcher aware that she was concerned about the federal probation office's instructions or the condition upon which Mr. Etheridge's probation would be served as an employee at Crews Bonding Agency. Respondent told Mr. Fletcher that she was concerned that this would create a problem because of the husband's prior record, taken to mean felony record. When Mr. Fletcher read the order, he expressed the opinion that the husband was exempt from the disqualifying provisions for felons working in a bail bond agency. At the time the conversation was held between Mr. Fletcher and Respondent concerning the husband's status as a felon, Mr. Fletcher understood that the husband would be returning from incarceration and working at the bail bond agency as a parking lot attendant. Respondent relied upon advice of counsel in deciding to allow her husband to work at the bail bond agency as a parking lot attendant. As contemplated by the instructions which the probation officers gave Mr. Jack Etheridge, he took employment at the Crews Bonding Agency. His duties included running the parking lot, vacuuming the building where the bond agency was located, and answering the telephone at the bail bond agency. When he would answer the telephone, Respondent noted that Jack Etheridge would state that he was not a bail bond agent and that the person who was calling would need to speak to the "bonds man". At times, Respondent received calls that had been patched through from the bail bond agency to another location, through efforts by Jack Etheridge. Respondent is aware that her husband took messages for the bail bond agency, as well. Respondent observed that Jack Etheridge principally stayed in the back office, which fronts Forsyth Street, when he worked for the Crews Bonding Agency as parking lot attendant. Specific remarks made by Jack Etheridge in receiving calls for the bonding agency would be "Crews Bonding, would you hold please". If someone needed to speak to Respondent immediately, Mr. Etheridge would state "she is busy, hold please, if you will give me your number, I will have her call you back". Once while Jack Etheridge was employed at the Crews Bonding Agency, following release from federal prison, Ms. Thomas came to the agency to check on his status. Upon that occasion, Respondent spoke to Ms. Thomas and asked if her husband could drive a bus, instead of being employed by the bail bond agency. Ms. Thomas replied in the negative and stated that the husband had to stay with the agency and work with Respondent. Ms. Thomas told Respondent that Mr. Jack Etheridge had to be paid a check from the bonding agency. Respondent honored that request. The reason given for requiring that Mr. Jack Etheridge be paid a check was based upon the statement by Ms. Thomas that the husband had to take evidence of the check being issued and present that to the probation office. According to the Florida Department of Labor and Employment Security, Jack Etheridge was paid $800.00 for four weeks worked in the third quarter of 1993; $2,800.00 for 13 weeks worked in the fourth quarter of 1993; $2,419.23 for 12 weeks worked in the first quarter of 1994; $2,854.61 for 13 weeks worked in the second quarter of 1994; and $3,080.00 for 13 weeks worked in the third quarter of 1994. Jack Etheridge, Jr. observed that his father, upon taking the position as parking lot attendant, worked in the kitchen area of the premises most of the time for a period and then moved into the back office, which fronts Forsyth Street, later on. The kitchen area is separated from the room where the bail bonding business is conducted. The room on Liberty Street is where Respondent has traditionally conducted her bail bond business. Jack Etheridge, Jr. never observed his father work in a bail bond capacity once the father returned from incarceration. He did observe that when a car came into the parking lot, his father would direct the driver where to park the car and then return to the building. Jack Etheridge, Jr. made these observations while working in the front office, where bail bond business was conducted, and never noted his father being in that front office. Jack Etheridge, Jr. was at the premises most every day before attending the police academy. After attending the police academy, he spends most of his time at the bail bond agency, pending employment as a policeman. Mr. Persons goes to the location of the bail bond agency two to three times per week and uses a parking space in the parking lot. On those occasions, he sees Jack Etheridge in the parking lot. Mr. Persons has seen Jack Etheridge at the location of the Crews Bonding Agency numerous times, following Jack Etheridge's release from prison. Mr. Persons has gone to that location 150 times within two and one-half years, and it would be uncommon for Jack Etheridge not to have been at the location when Mr. Persons came by. On some visits Mr. Persons has spent as much as 15 or 20 minutes with Respondent and her son at the bail bond agency. On occasions when he visited the bail bond agency, he has never observed Mr. Jack Etheridge do anything related to the bail bond business, unless one considers that answering the telephone at the bail bond agency, when Respondent is unable to, constitutes bail bond business. Mr. Persons has seen Jack Etheridge put a caller on hold and then refer the call to Respondent. The observation by Mr. Persons, where Mr. Jack Etheridge was involved with answering the telephone in the bail bond office, was not the usual circumstance. In the past, when Mr. Persons observed the operation at the bail bond agency, the door separating the room that faces Liberty Street and the room that faces Forsyth Street was open. More recently, that door has been closed between the two rooms. Mr. Persons observed that in the more recent circumstances, Jack Etheridge was using the office that fronts Forsyth Street. Mr. Persons observed that at the time the hearing was conducted, Jack Etheridge was still maintaining the parking lot. Mr. Persons observed that prior to the creation of the Star Legal Research business, Jack Etheridge, when not located in the parking lot, would be found in the office which fronts Forsyth Street. In summary, under the present circumstances, it is unclear what Mr. Jack Etheridge is principally involved with at the premises primarily associated with Crews Bonding Agency and its businesses. Following advice by Mr. Baker that it would be acceptable for Mr. Jack Etheridge to work at the bail bond agency, he has been in the Crews Bonding Agency office approximately 100 times. On almost every occasion, Jack Etheridge would be in the back room on Forsyth Street. Nine out of ten times, Jack Etheridge would be in that location when observed by Mr. Baker. The only times that Mr. Baker would observe Jack Etheridge in the front office, where the bail bonding business was being conducted, would be if other bail bond agency employees were out making a bond or something of that nature. In that instance, Jack Etheridge would be sitting in the front office, where the bail bond business is conducted; and if someone came to park their car, he would take care of that business. If someone came into the office and asked about a bail bond, Jack Etheridge would remark, "Look, Anne (Respondent) is going to be back in a half hour, she is making a bond, or Clara will be back. Come back, or you can sit over there and wait". Clara refers to another employee of the bail bond agency. Mr. Baker also observed that on the occasion on which Jack Etheridge was in the front office, he would refuse to give information about bail bonds and limit himself to handling parking duties and answering the telephone if no one else was available to answer the telephone. Mr. Fletcher has seen Jack Etheridge at the bail bond agency location approximately twice per week, following Mr. Etheridge's release from incarceration. On these occasions, Mr. Fletcher would give Jack Etheridge keys to Mr. Fletcher's car and seek assistance in parking. In these visits to the agency, Mr. Fletcher never observed Jack Etheridge perform work as a bail bond agent. In fact, he never observed Jack Etheridge work anywhere other than in the parking lot. Respondent and her husband brought further action in Circuit Court Case No. 82-10537CA, assigned to Division CV-F. At that time, the previous judge, who had issued the aforementioned order on March 27, 1984, was not presiding in the case. That refers to the Honorable Henry Lee Adams, Jr., who now serves as a federal district judge. The judge who presided in the reopening of the circuit court case was the Honorable Lawrence D. Fay, Circuit Judge. On October 30, 1995, Judge Fay entered an order in Case No. 82- 10537CA, Division CV-F, enjoining consideration of Count I to the present administrative complaint, in which he ordered: The Plaintiff's Motion for Injunction is here- by GRANTED with respect to Count I of the Administrative Complaint and First Amended Administrative Complaint filed by Defendant against Plaintiff, Anne Evans Etheridge, and Defendant shall be enjoined from proceeding against Plaintiff, Anne Evans Etheridge, as to Count I of same in DOAH Case No. 95-3964. Judge Fay also ruled: The Plaintiff's Motion for Injunction is here- by DENIED with respect to the filing of any complaints under Section 648.44(7), Florida Statutes, relative to convictions, guilty pleas, or no contest pleas by Jack I. Ethe- ridge entered subsequent to March 27, 1984. Plaintiffs have failed to exhaust adminis- trative remedies. Based upon the orders by Judge Fay, administrative prosecution has proceeded to resolve Count II to the administrative complaint addressed in DOAH Case No. 95-3964.
Recommendation Based upon the findings of fact and the conclusions of law, it is, RECOMMENDED: That a Final Order be entered which dismisses the First Amended Administrative Complaint. DONE and ENTERED this 15th day of February, 1996, in Tallahassee, Florida. CHARLES C. ADAMS, 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 15th day of February, 1996. APPENDIX TO RECOMMENDED ORDER CASE NO. 95-3964 The following discussion is given concerning the proposed findings of fact and conclusions of law by the parties. Petitioner's Findings: Paragraphs 1 through 4 are subordinate to facts found. Paragraph 5 constitutes legal argument. Respondent's Findings: Paragraph 1 is subordinate to facts found. Paragraph 2 is not necessary to the resolution of the dispute. Paragraph 3 is subordinate to facts found. Paragraph 4 is established through the Preliminary Statement. Paragraphs 5 and 6 are subordinate to facts found. Paragraph 7 is subordinate to facts found, with the exception that several other local attorneys were not contacted for advice. One additional attorney was sought out for advice, Mr. Baker. Paragraph 8, the first sentence is not necessary to the resolution of the dispute. The remaining sentences are subordinate to facts found. Paragraphs 9 through 13 are subordinate to facts found. Paragraph 14 is not necessary to the resolution of the dispute. Paragraphs 15-16 are subordinate to facts found. COPIES FURNISHED: Dickson E. Kesler, Esquire Department of Insurance Division of Agent and Agency Services 8070 North West 53rd Street, Suite 103 Miami, FL 33166 Judy Groover, Esquire 24 North Market Street, Suite 301-A Jacksonville, FL 32202 Bill Nelson, State Treasurer and Insurance Commissioner Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300 Dan Sumner, Acting General Counsel Department of Insurance and Treasurer The Capitol, PL-11 Tallahassee, FL 32399-0300
Findings Of Fact Respondent, Larry K. Sechrest, was at all times relevant to the charges contained in the Administrative Complaint, licensed as limited surety agent in the State of Florida representing Allied Fidelity Insurance Company ("Allied"). In February, 1982, Respondent's accounts with Allied were audited by their representative at which time it was discovered that Respondent executed but did not report 202 powers of attorney. The aforementioned powers represented $11,464.51 in premiums due Allied, and an additional $5,732 due the buildup fund. On March 4, 1982, Allied demanded that the Respondent remit to them these premiums and buildup fund payments and account for and return the missing powers of attorney. Respondent had failed to comply with Allied's demands as of the date this Administrative Complaint was filed by Petitioner (July 20, 1982). Respondent subsequently offered to repay Allied at the rate of $1,000 per month, but this was refused. At the final hearing on February 16, 1983, Respondent offered to repay the total amount due within 30 days. On April 29, 1981, Respondent attempted to post a ne exeat bond in the amount of $25,000 for Douglas R. Valentine of Manatee County, Florida, based on power of attorney number FL2800913 issued by Allied. Respondent had not been given authority by Allied to post ne exeat bonds. Power of attorney number FL2800913 was by its language to be issued for appearance bonds only.
Recommendation Based on the foregoing, it is RECOMMENDED: That Petitioner enter a Final Order finding Respondent guilty of violating Subsections 648.45(1)(d), (h) and (j), Florida Statutes (1981), as charged in Count I of the Administrative Complaint, and suspending his limited surety agent's license for one year; provided, however, that such license shall not be reinstated until Respondent has made restitution to the Allied Fidelity Insurance Company. DONE and ENTERED this 20th day of May, 1983, in Tallahassee, Florida. R. T. CARPENTER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 FILED with the Clerk of the Division of Administrative Hearings this 20th day of May, 1983. COPIES FURNISHED: Clark R. Jennings, Esquire Department of Insurance The Capitol Tallahassee, Florida 32301 Jerry Surfus, Esquire 150 East Avenue, South Sarasota, Florida 33577 The Honorable Bill Gunter Insurance Commissioner Department of Insurance The Capitol Tallahassee, Florida 32301 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF INSURANCE AND TREASURER IN THE MATTER OF LARRY K. SECHREST Revocation of License and Case No. 82-L-162J Eligibility for Licensure DOAH Case No. 82-2617 Limited Surety Agent / ORDER REVOKING RESPONDENT'S LICENSES AND ELIGIBILITY TO HOLD LICENSES THIS MATTER came on to be considered upon the transcript of record of hearing held on February 16, 1983, in Sarasota, Florida, and the Report, Findings, Conclusions and Recommendations of the Hearing Examiner dated May 20, 1983. Upon consideration thereof and being otherwise fully advised in the premises, it is ORDERED: The Findings of Fact of the Hearing Examiner are adopted. The Conclusions of Law of the Hearing Examiner are adopted. The Recommendation of the Hearing Examiner is rejected for the following reasons: Section 648.49, Florida Statutes prohibits the establishment of a period of suspension in excess of one (1) year. The Department lacks the authority to condition any Order upon financial restitution by a Respondent to any aggrieved party listed in an Administrative Complaint. Revocation of license and eligibility for licensure is an appropriate remedy under the statutory authority cited in the Administrative Complaint, and the Hearing Officer's Conclusions of Law. All licenses of the Respondent, LARRY K. SECHREST, heretofore issued within the purview of the Florida Department of Insurance and eligibility to hold said licenses be, and the same are hereby revoked. DONE and ORDERED at Tallahassee, Florida, this 28th day of June , 1983. BILL GUNTER Insurance Commissioner and Treasurer WILLIAM D. RUBIN Assistant Insurance Commissioner and Treasurer COPIES FURNISHED: Jerry Surfus, Esquire 150 East Avenue, South Sarasota, Florida 33577 Clark R. Jennings, Esquire Department of Insurance 413-B Larson Building Tallahassee, Florida 32301
The Issue Whether the Respondent's license as a limited surety agent should be suspended, revoked or otherwise disciplined based upon the allegations set forth in the Administrative Complaint.
Findings Of Fact Background At all times material to these proceedings, Respondent Harris was licensed as a limited surety agent and continues to be eligible for licensure and appointment in Florida. On June 2, 1988, Respondent executed a bail bond agreement with Indiana Lumbermen's Mutual Insurance Company (Indiana Lumbermen's) as the insurer of the surety bonds, Underwriters Surety, Inc. (Underwriters) as its agent, and Jim Fowler, Jr. d/b/a Fowler Enterprises (Fowler) as its representative indemnitor and supervising representative. Under the terms of the agreement, Indiana Lumbermen's agreed to act as surety on bail bonds solicited and signed in its name by Respondent Harris. In turn, he agreed to charge, collect and remit all bond premiums through Fowler, who has a separate agreement with Indiana Lumbermen's and Underwriters regarding those duties. Additionally, Respondent agreed to hold Indiana Lumbermen's, Underwriters, and Fowler harmless for all bond forfeitures and court costs expended by any of them for bail bonds issued in Indiana Lumbermen's name by him. Because Fowler was also required to indemnify Indiana Lumbermen's and Underwriters against bond forfeitures and court costs resulting from bonds issued by Respondent Harris, a $10,000 mortgage was placed against Respondent's home as collateral for such losses by Fowler. Indiana Lumbermen's and Underwriters also required Respondent Harris to place two per cent of the face amount of each bond in an indemnity fund. The agreement states that after each indemnification is finally determined and satisfied, the remaining portion of the indemnity fund will be delivered to the Respondent or to Fowler. Fowler and the Respondent agreed that when the indemnity fund built up to $25,000.00 in reserved funds, Fowler would release the mortgage. Respondent could also request that the amount of money he was required to place into the indemnity fund for subsequent bond executions be reduced to one per cent of the face of the bonds. After the bail bond agreement was executed by all parties and the Respondent's wife in June of 1988, the bail bonds service office was opened in Tampa, Hillsborough County, Florida. Bond Forfeitures On December 12, 1988, two final judgments were entered in Hillsborough County which required the forfeiture of Surety Bond Power No. BB1-168638 and No. BB1-168639 due to the failure of Charles Douglas, Jr., to appear to answer criminal charges for which the bonds had been issued. Each bond was in the principal amount of $1,000.00 and was issued by Respondent Harris as Attorney- In-Fact for Indiana Lumbermen's. The sum of the two judgments was $2,000.00 and $169.00 and court costs. Warren H. Dawson, attorney for the Defendant, motioned the court to vacate the judgments on January 24, 1989. Instead vacating the judgments, the court stayed the enforcement of the judgments until April 26, 1989. At the chose of the time period, Charles Douglas, Jr., was not located, ad the bond funds were forfeited to the State of Florida for the use and benefit of Hillsborough County. These funds, totalling 2,000.00, were paid to the Clerk of Court by Harry Hamner Enterprises on May 18, 1989, as agent for Fowler. Court costs of $84.50 were paid by Respondent Harris, and $84.50 in court costs remain outstanding. The funds paid to the Clerk of Court on behalf of Fowler were issued to a low Fowler to comply with the bail bond agreement as super representative. Respondent Harris is still obligated to indemnify Fowler for the payment. On December 3, 1990, a remittance of $1,000.00 was given to Fowler because Defendant had been located. As this hearing took place only three days later, it is unknown if a check for the other S1,000.00 was forthcoming to Fowler. If the failure to remit the owner $1,000.00 was an oversight, it could be easily corrected by the Clerk of Court as the location of the Defendant would allow we return of these funds as well. On June 4, 1989, a final judgment was entered in Hillsborough County which required the forfeiture of Surety Bond Power No. BB1-200214 due to the failure of Ivan R. Jacob to appear in court to answer the criminal charges for which the bond had been issued. The bond was in the principal amount of $1,000.00 and was issued by Respondent Harris as Attorney-In-Fact for Indiana Lumbermen's. The judgment was for $1,000.00 and $84.50 in court costs. Warren H. Dawson, attorney for the Defendant, motioned the court to vacate and set aside the judgment and costs on July 12, 1989. The motion was granted on August 24, 1989, except that the payment of $84.50 in court costs was still required. The outstanding court costs of $84.50 were paid by Rubin C. Bazarte, Bail Bonds, on behalf of Indiana Lumbermen's on August 28, 1989. Respondent Harris has not indemnified Indiana Lumbermen's for those funds expended to pay the court costs as required by the bail bond agreement. He is still obligated to do so. On June 14, 1989, a final judgment was entered in Hillsborough County which required the forfeiture of Surety Bond Power No. BB1-197205 due to the failure of William A. Evans to appear to answer criminal charges for which the bond had been issued. The principal amount of the bond was $500.00. It was issued by Respondent Harris as Attorney-In-Fact for Indiana Lumbermen's. The sum of the judgment was $500.00 with court costs of $84.50. The judgment and court costs were satisfied by Rubin C. Bazarte, Bail Bonds, on behalf of Indiana Lumbermen's on August 28, 1939. Respondent Harris has not indemnified Indiana Lumbermen's for the funds expended, as required by the bail bond agreement. On June 21, 1989, a final judgment was entered in Hillsborough County which required the forfeiture of Surety Bond Power No. BB1-197204 due to the failure of Williams A. Evans, Jr., to answer criminal charges for which the bond had been issued. The principal amount of the bond was $500.00, and it was issued by Respondent Harris as Attorney-In-Fact for Indiana Lumbermen's. The sum of the judgment was $500.00 plus court costs of $84.50. On August 28, 1989, the judgment and court costs were satisfied by Rubin C. Bazarte, Bail Bonds, on behalf of Indiana Lumbermen's. Respondent Harris has not indemnified Indiana Lumbermen's for the funds expended, as required by the bail bond agreement. Respondent has not received funds to pay for the bond forfeitures from any source. Bond Net Premiums As part of his duties regarding the issuance of bonds for Indiana Lumbermen's, Respondent was required to regularly report the execution of bail bonds to Fowler and Underwriters. The net premiums were to be paid to either of these agents for Indiana Lumbermen's. According to the business records maintained by Fowler, the Respondent failed to remit the required net premiums owed with reports numbered 35, 36, 37 and 38. The amount of money owed for these premiums is $2,370.00. For April 7, 1989, Rosettia Jacobs paid Respondent $1,000.00 to obtain two bonds for the pretrial release of her son, Andre Hudson. Two bonds, with a face value of $5,000.00 each were executed by Respondent that day. The net premiums for two bonds with a face value of $10,000.00 were listed on bail bond execution report number 36, but the net premium was never paid to Fowler or Underwriters from the cash received from Rosettia Jacobs for that purpose. In July 1989, Melvin Rolfe met with Respondent's son, who represented he could accept funds on behalf of his father for the bail bond business. Melvin Rolfe gave Respondent's son $250.00 for a bail bond in order to obtain the pretrial release of his brother, Joseph Rolfe. Of these funds, $100.00 was for payment of the gross premium and $150.00 was collateral. The bond for $1,000.00 was executed by Respondent on August 1, 1989. The collateral given to Respondent's son was not noted on bail bond execution report number 35. The net premium for the $1,000.00 bond for Joseph Rolfe was not sent to Fowler or Underwriters from the cash delivered by Melvin Rolfe for that purpose. On August 1, 1989, Melvin Hamilton gave the Respondent $250.00 for two bonds in order to obtain the pretrial release of his brother, Mark Hamilton. One bond premium was $100.00 and the other bond premium was $50.00. The additional $100.00 was collateral. Bonds with the total face value of $1,250.00 were executed by Respondent on August 1, 1989. The collateral was not noted on the bail bond execution report number 35, and the net premiums were not sent to Fowler or Underwriters from the funds delivered by Melvin Hamilton for that purpose. On August 4, 1989, Charles Rodriguez paid $350.00 for bond premiums to Respondent in order to obtain the pretrial release of his wife, Tina Dunn. The total gross premium amount was $450.00. Respondent extended credit to Charles Rodriguez and issued three bonds with the total face value of $4,500.00 on August 4, 1989. Although the bonds were issued and noted on bail bond execution report 35, the net premiums were not sent to Fowler or Underwriters from the funds delivered by Charles Rodriguez for that purpose. On September 13, 1989, Fowler, as supervising representative for Indiana Lumbermen's and Underwriters, sent a formal demand to Respondent for the $2,370.00 due for premiums not included with reports numbered 35-38. Respondent has failed to pay any of the funds actually received for those premiums to Fowler, Underwriters, or Lumbermen's. Mitigation Respondent has made some attempts to locate defendants whose bonds have been forfeited to the state. Respondent extended credit to some people seeking bail bonds so he never collected some of the money owed to Indiana Lumbermen's for premiums.
Recommendation Based upon the foregoing, which demonstrates that Respondent misappropriated net bond premiums owed the insurer on four occasions between April and early August 1989, it is RECOMMENDED: The limited surety license of Rudolph Harris, Respondent, be suspended for one year, pursuant to Section 648.49(1), Florida Statutes [1987]. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 22nd day of February 1991. VERONICA E. DONNELLY 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 22nd day of February, 1991. APPENDIX TO RECOMMENDED ORDER CASE NO. 90-4689 Petitioner's proposed finding of fact are addressed as follows: Accepted. See HO #1. Accepted. See HO #1. Rejected. Contrary to fact. See #18-#23. Also, irrelevant as to charging document which claimed Respondent misappropriated bond forfeiture funds. Rejected. Irrelevant as to charging document which claim Respondent misappropriated forfeiture funds. See HO $14-#17. Rejected. Contrary to fact. See HO #8-#13. Accepted. See HO #35. COPIES FURNISHED: Gordon T. Nicol, Esquire Department of Insurance 412 Larson Building Tallahassee, FL 32399-0300 Rudolph Harris 812 E. Henderson Avenue Tampa, FL 33602 Tom Gallagher State Treasurer and Insurance Commissioner The Capitol, Plaza Level Tallahassee, FL 32399-0300 Bill O'Neil General Counsel Department of Insurance and Treasurer The Capitol, Plaza Level Tallahassee, FL 32399-0300
The Issue The issues are whether Respondent, who is a limited surety agent, is guilty of violating Section 648.571(1), Florida Statutes, by failing to return the collateral within 21 days after the discharge of the bail bond; Section 648.45(2)(e), Florida Statutes, by demonstrating lack of fitness or trustworthiness to engage in the bail bond business; Section 648.45(2)(g), Florida Statutes, by engaging in fraudulent or dishonest practices in the conduct of business under the license; and Section 648.45(2)(j), Florida Statutes, by willfully failing to comply with, or willfully violating any proper order or rule of the department or willfully violating any provision of Chapter 648, Florida Statutes, or the Insurance Code. If guilty of any of these violations, an additional issue is the penalty that should be imposed.
Findings Of Fact At all material times, Respondent has been a licensed surety agent, holding license number A134458. Respondent is the president and owner of Big Larry Bail Bonds in Fort Lauderdale. Mark Blackman, who is 45 years old, is a licensed mortgage broker and sophisticated in business matters. He has been convicted four times of driving under the influence over the past 20 years. The arrest that resulted in the fourth conviction took place on December 7, 2003. Mr. Blackman's girlfriend at the time of his arrest, Tracy, suggested that he purchase a bail bond from Respondent. Tracy, who was addicted to crack cocaine, had previously purchased a bail bond from Respondent when she had been arrested for the possession of cocaine. Mr. Blackman instructed Tracy to visit Respondent's office and arrange for Respondent to post bond, which was $23,500. Respondent agreed to post bond, but only if Mr. Blackman paid the bond premium of $2350 and delivered, as security, a note for the entire bail bond, an indemnity agreement, title to his 2002 C32 Mercedes Benz, and the vehicle itself. With Tracy's help, Mr. Blackman complied with these conditions, and Respondent bailed him out of jail. At this point, the agreement between Respondent and Mr. Blackman, with respect to the car, was that Respondent would store the car in a safe place. Accordingly, immediately upon receiving the car, Respondent drove it to a body shop where it could be stored safely and without charge. Three or four days later, while out on bail, Mr. Blackman was arrested for felony possession of cocaine. The judge revoked the original bond and refused to set bond for the new offense. At this time, the vehicle no longer served as security because the bail bond that it had secured no longer existed. Thus, at this time, Mr. Blackman was entitled to the return of the vehicle. Neither Mr. Blackman nor Respondent was under any misimpression as to Mr. Blackman's status at the time of the second arrest. Both men knew that Mr. Blackman would not be able to be released from jail on bail for these alleged offenses. Mr. Blackman would remain in jail until February 2004, after which time, following a plea deal, Mr. Blackman began serving nights in jail. The day after his re-arrest, Mr. Blackman called Respondent from jail and asked him if he would help Mr. Blackman sell the vehicle. Mr. Blackman explained that he knew that he was going to lose his driver's license. He asked Respondent if he knew anyone who worked at an automobile auction. Eventually, Mr. Blackman asked Respondent if he wanted to purchase the car, but Respondent declined, at least initially. Within a day or two after speaking to Mr. Blackman the day after his re-arrest, Respondent removed the car from the body shop, so he could show it to a prospective buyer. Respondent did not return the car to the body shop, but instead kept the car at his office or home. The record does not establish that Respondent had driven the car for any reason prior to showing it two or three days after Respondent's second arrest. For several reasons, Mr. Blackman was content with Respondent's possession of the car after it no longer served as collateral for a bail bond. Although released from jail during days starting in February 2004, Mr. Blackman remained concerned about the car during the evenings, while he was in jail. As he explained to Respondent at the time, Mr. Blackman did not want his brother to have access to the car. As Mr. Blackman testified at the hearing, he was also concerned that a friend of Tracy not have access to the car. Mr. Blackman's concerns may have extended to Tracy, who he later determined stole $20,000 from Mr. Blackman while he was in jail. Unable to drive the car due to his loss of driving privileges, Mr. Blackman did not want the car parked in his crime-ridden neighborhood. Additionally, Mr. Blackman's auto insurance expired in January 2004. For these reasons, Mr. Blackman was in no hurry after his re-arrest for Respondent to give up possession of Mr. Blackman's car. The car was safer with Respondent than it would have been returned to Mr. Blackman. Mr. Blackman knew that he would not be charged storage and was hopeful that Respondent would sell the car for Mr. Blackman. At no time, though, did Respondent try to document the change from his holding the car as collateral for a bail bond to holding it for the convenience of Mr. Blackman. Specifically, Respondent never tried to obtain Mr. Blackman's signature on a collateral release, which would document that the car no longer secured a now-nonexistent bail bond. Respondent claimed that he could not obtain Mr. Blackman's signature while he was in jail, but it is customary for limited surety agents to visit inmates in jail to obtain their signatures on paperwork, such as a collateral release. Also, in February 2004, Respondent could have obtained Mr. Blackman's signature at anytime during the day. After showing the car the first time, two or three days after Mr. Blackman's second arrest, Respondent began to use the vehicle for his personal and business purposes, as well as occasionally showing it to a prospective buyer. After January 2004, Mr. Blackman's car was no longer insured. It is unclear whether the registration and license tag expired during this period. Before Mr. Blackman was released on days, Respondent produced offers of $28,000 and $29,000 from two different persons, but Mr. Blackman wanted $38,000 for the car and refused these offers. After being released on days, Mr. Blackman did not visit Respondent or ask for him to return the car. Mr. Blackman was likely preoccupied with other matters immediately after his release from jail in February. Failing to report to jail one night shortly after his release, Mr. Blackman violated one of the conditions of his sentence, took off, and was re-arrested and returned to jail in March or April 2004. Only after he was again incarcerated did Mr. Blackman re-address the issue of the car with Respondent. The first thing he did was tell Respondent to deduct $1200 from the price of the car for a bond forfeiture on a bond that Respondent had written on Tracy. The next thing, on April 13, 2004, Mr. Blackman entered into a written agreement with Respondent for the sale of the vehicle, on the same date, to Respondent for $35,000 cash. However, Respondent backed out of the deal. About six weeks later, in late May 2004, Mr. Blackman sent his sister to pick up the car. She had a power of attorney, but it did not apply to the car, so Respondent would not release the car to her. This was a reasonable action on Respondent's part, given his knowledge of Mr. Blackman's distrust of at least one other family member. A couple of weeks later, in early June, Mr. Blackman's sister returned with a proper power of attorney, and Respondent released the car to her. After taking the car from Respondent, Mr. Blackman's sister and her husband noticed that the car had considerably higher mileage than Mr. Blackman had said that it should have. Respondent had driven the vehicle 7,000 to 10,000 miles during the six months that he had possessed the car, but entirely after the second arrest in December. Respondent was cavalier about his use of the car, as he incurred numerous parking tickets, as well as tolls on Mr. Blackman's SunPass transponder that was in the car when it was delivered to Respondent--all of which charges were imposed on Mr. Blackman. After repeated demands, Respondent paid off only some of these charges. The additional mileage that Respondent put on the vehicle reduced the vehicle's fair market value by as much as $3000. On August 1, 2004, Mr. Blackman's sister, using her power of attorney and with her brother's approval, sold the car for $33,000 to a person other than Respondent.
Recommendation It is RECOMMENDED that the Department of Financial Services enter a final order dismissing Counts I and III, finding Respondent guilty of violation Section 648.45(2)(e), Florida Statutes, in Count II, and imposing a six-month suspension and a $5000 administrative fine. DONE AND ENTERED this 19th day of October, 2006, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE 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 19th day of October, 2006. COPIES FURNISHED: Greg S. Marr, Esquire Department of Financial Services Division of Legal Services 200 East Gaines Street Tallahassee, Florida 32399-0333 Michael A. Levin, Esquire Law Offices of Michael A. Levin Global Commerce Center 1900 North Commerce Parkway Weston, Florida 33326 Larry Lorenzo Jones 1310 Sistrunk Boulevard Fort Lauderdale, Florida 33331 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capital, Plaza Level 11 Tallahassee, Florida 32399-0300 Carlos G. Muñiz, General Counsel Department of Financial Services The Capitol Plaza Level 11 Tallahassee, Florida 32399-0307
Findings Of Fact C & W Sales, Inc., was licensed as a dealer in agricultural products under license No. 1367 and was so licensed at all times here relevant. At the time of the incorporation of C & W Sales, Inc., Henry T. Watson was listed as an officer (President) and director of the company. The company was run by Philip A. Roberts, the brother-in-law of Watson. Roberts applied on behalf of C & W Sales, Inc., to FFB for an agriculture bond in the amount of $20,000 for the period 5/19/79 until 5/19/80 (Exhibit 1) . As a condition for issuing this bond FFB required and obtained a general agreement of indemnity from Roberts and Watson and their wives (Exhibit 2) which was executed on 2 May 1979. In addition to agreeing to save Florida Farm Bureau harmless from all claims arising out of the bond paragraph 14 provided: That this indemnity is continuing and will apply to any and all bonds, as provided in the opening paragraph of this Agreement which the Company may have executed or procured the execution of from time to time, and over an indefinite period of years; however, any Indemnitor may by written notice to the Company at its Home Office, Gainesville, Florida disavow his liability as to bond(s) which may be executed by the Company subsequent to fifteen days after receipt by the Company of such notice. Agriculture bond (Exhibit 4) was issued on 5/19/79 for one year and upon expiration on 5/19/80 the bond was renewed for an additional period of one year (Exhibit 5). Subsequent to the expiration of the 1979-80 bond (Exhibit 4) and reissuance of the 1980-81 bond (Exhibit 5) but within the prescribed time for submitting a claim against the agriculture dealer and his bond, John T. Brantley, Jr., filed a claim against C & W Sales in the amount of $8,317.05 for payment owed on a transaction which occurred during the 1979-80 period. When C & W Sales failed to pay or respond to the Commissioner of Agriculture's demands for payment, claim was made on the 1979-80 bond and FFB remitted to the Commissioner of Agriculture a check for the Brantley claim (Exhibit 6). Around February 1980 Watson became disenchanted with Roberts' running of C & W Sales, Inc. and wanted out. He told Roberts to get someone to buy his (Watson) stock and to get his name out of the company. Roberts said he would. Watson never advised FFB that he would no longer be an indemnitor under the bond. During the period covered by the bond year beginning 5/19/80 claims against C & W Sales, Inc., were submitted to the Commissioner of Agriculture by Henry L. Watson in the amount of $32,326.50; Hugh D. Martin in the amount of $1,932.80; Jesse J. Wilson in the amount of $1,490.00; John T. Brantley, Jr., in the amount of $15,024.40; and Philip Dean and Willie Bass in the amount of $4,919.13, for a total of $55,692.83. The Commissioner of Agriculture notified C & W Sales of these claims and advised them of the opportunity to contest the validity of the claims. No response was received from C & W Sales and Roberts appears to have departed the area to parts unknown. An order demanding payment was submitted to C & W Sales and when payment of these claims was not made, FFB, as surety on the bond, was notified by the department of its surety on the bond, was notified by the department of its obligation under the bond and a demand for payment of $20,000 to the department was made. There is no dispute regarding the accuracy or validly of the claims against C & W Sales contained in Finding 7 above. Nor does FFB contest its liability under the agriculture bond it issued for the 1980-81 bond year. However, FFB claimed an equitable setoff for the percentage of the $20,000 that would go to Watson. This setoff is claimed by virtue of Watson's indemnity agreement. By the stipulation the parties have agreed that the FFB is entitled to the pro rata share of the $20,000 to Watson.
Findings Of Fact In April 1995, DMS issued ITB #94/95-053 soliciting bids for providing an indefinite quantity of interior painting of buildings statewide. Bidders were to submit unit prices for ten categories of work in each of five districts. The unit prices were added together to arrive at a total for each of the five districts. The invitation to bid (ITB) contemplated the award of five contracts--one for each district. The contract was to be issued for one year with the anticipated renewals of one year each. The ITB provided that bids would be "evaluated and awarded to the responsible low bidder(s) per region." On May 1, 1995, DMS issued an addendum to the ITB. DMS issued the addendum to add the requirement for a bid bond or cashier's check in the amount of $5,000. The purchasing specialist in charge of the solicitation had inadvertently omitted the bid bond requirement from the ITB. The purpose of the bid bond is to compensate the agency for damages in the event the low bidder fails to enter the contract at issue. To underscore the importance of the bid bond requirement, DMS required that all bidders return a signed acknowledgment form with their bid. Ten bidders submitted bids on May 15, 1995. The lowest bidder for regions two through four was Brighton Painting Company (Brighton). Although the ITB provided that bids could only be withdrawn prior to bid opening, David Batts, who will be responsible for managing the contracts, contacted Brighton's president after the bid opening and questioned him because the contractor was based in Illinois. Based on that conversation, Mr. Batts determined that Brighton would not be able to adequately manage the contract while based out of state. Although the ITB provided that bids could only be withdrawn prior to bid opening, DMS allowed Brighton to withdraw its bid. Taul submitted the lowest bid for region one and the second low bid for regions two through five. J. F. Ward Painting and Decorating (Ward) submitted the third lowest bid for regions one, two, four and five. CEM Enterprises, Inc., d/b/a Sunshine Painting (CEM) submitted the third lowest bid for region three. The total of the unit prices submitted by Ward and CEM were higher than the total of the unit prices submitted by Taul. 1/ After the bid opening, all bids were reviewed by the agency purchasing office in order to determine responsiveness. Ms. Joyce Plummer is the purchasing officer for DMS, who was responsible for evaluating and awarding the contract. Ms. Plummer found no irregularities in her review of Taul's bid. After her review, Ms. Plummer provided Mr. Batts the three lowest bids for review by him. Mr. Batts reviewed the bids because he was the individual primarily responsible for preparing the ITB and because he would be the contract administrator once the contracts were awarded. On May 30, 1995, at 10:20 a.m., DMS posted a notice of intent to award the contract to Ward. The posting indicated that Taul's bid was disqualified for failure to submit a bid bond. Ms. Plummer posted the notice of intent to award the contracts to Ward based on the opinion of Mr. Batts that Taul had not submitted a valid bid bond. At the request of Mr. Taul, DMS Bureau Chief Wayne Smith reviewed Taul's bid bond and determined that it was responsive. At that time DMS had in its possession a letter from the surety agent affirming the surety's obligation in a minimum amount of $5,000 under the bid bond. 2/ Ms. Plummer therefore reconsidered the posting and spoke with another purchasing officer, Kathleen McKenzie. Ms. McKenzie had been employed by DMS longer than Ms. Plummer and she recalled a prior bid process in which a bid bond similar to Taul's had been accepted. McKenzie did not know at the time she gave her opinion that the contract in question was an indefinite quantity contract. As a result of the further inquiry into the sufficiency of Taul's bid bond, DMS posted an amended bid tabulation announcing its notice of intent to award the contracts to Taul. Sometime after the second posting, Mr. Ward called Mr. Batts to discuss the award to Taul. Mr. Batts advised Mr. Ward that, in his opinion, Taul's bid bond was no good. After this conversation with Mr. Batts, Ward filed a notice of intent to protest the award to Taul. When she received the notice of intent to protest filed by Ward, Ms. Plummer discussed the matter with DMS assistant general counsel. 3/ As a result of that discussion, Ms. Plummer posted a second amended tabulation indicating an award of all five regions to Ward. That tabulation subsequently also was amended to represent the award of the contract for region three to CEM. The first posting showing an intent to award to Ward was verified by Mr. Batts and Ms. Plummer. The second posting showing an intent to award to Taul was verified by Ms. Plummer. The third and fourth postings were verified by DMS general counsel. The bid security requirement in the ITB called for submission of a bid bond or a cashier's check in the amount of $5,000. The ITB also required bidders to commit to furnishing a $100,000 performance and payment bond if they were successful. In order to obtain a bid bond, a bidder must secure a commitment from the bonding company to issue a performance and payment bond. If the surety agrees to provide the payment bond, it will issue a bid bond without charge. Taul has been in the commercial painting business since 1978. For the past 8 years 95 percent of its work has been awarded by governmental entities pursuant to competitive bids. Taul has consistently expressed the intent to execute and perform the contracts in accordance with its bid in this case. In obtaining the bid bond in this case, Taul followed his standard practice--contacting the bonding agent and providing information regarding the nature of the contract and extent of commitment that would be required for the performance and payment bond. The bid specification for the bonds was given to and reviewed by the surety agent. The surety agent, David Pichard, was of the opinion that, since the ITB called for a performance bond in the amount of $100,000 and because the amount of the contract was indefinite, the amount of the bid upon which to issue the bid bond was $100,000. The standard bid bond requirement on public contracts is five percent. The plain wording of the bid bond submitted is that the sum of the surety obligation is "FIVE PER CENT (5 percent) OF AMOUNT BID." Since the contract to be awarded in this case is for an indefinite quantity of work, the "amount bid" is indeterminate. Petitioner was unable to establish, either prior to or at the final hearing, what the "amount of the bid" is. Mr. Batts was of the opinion that the amount of the bid bond was not clear. Based on that opinion, Mr. Batts believed that the bond did not meet the specification in the ITB. The purpose of the bid bond requirement was to ensure that DMS received considered bids. Due to the vagaries of the contract DMS wanted a contractor it could depend on to enter into the contract in case there was an emergency painting need such as storm damage. With a valid bid bond or a cashier's check the contractor could not unilaterally decide to walk away from the bid without leaving money on the table. The ITB addendum is clear and definite with respect to the required bid bond. Taul's bid bond is indefinite and not specific with regard to the amount of the bid bond furnished. Taul's bid bond was therefore not responsive with regard to the bid bond requirement. Petitioner has failed to prove that the agency acted arbitrarily, capriciously, fraudulently, or illegally, in determining that Petitioner's bid was materially not responsive to the requirements of the ITB at issue.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent enter a Final Order dismissing Petitioner's formal bid protest. DONE and ORDERED this 11th day of September, 1995, in Tallahassee, Florida. JAMES W. YORK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 11th day of September, 1995.
