The Issue Whether the Respondent is guilty on six counts of charging an advance fee for the listing of time-share estates for sale, in violation of Section 721.20(4), Florida Statutes.
Findings Of Fact Respondent is a corporation organized under the laws of Arkansas and was authorized by the Florida Secretary of State to transact business in the State of Florida from November 1991 through December 1997. Respondent's main office is now located in Mountain Home, Arkansas. Respondent's credit card terminals are in Arkansas. Respondent has an escrow and operating account in Mountain Home, Arkansas. Respondent hired Jack McClure to open and operate its Florida office. Jack McClure held a Florida real estate broker's license. National Resort Mart conducted business from its Florida office in Kissimmee, Florida, until McClure's death in December 1997. Respondent opened and maintained escrow and operating accounts in Florida from 1992 through 1997 for its Florida business. The Florida office was limited to the activities of time-share real estate sales. The Respondent did not list time- shares, nor collect any advance fees for listing time-shares at its Kissimmee, Florida, branch office. Global Title Company of Naples, Florida, conducts the closings for Respondent for the majority of their Florida time- share sales. Respondent advertised its Florida office in its direct mail brochure, sent to Florida time-share owners, with the statement: "Our Orlando office is situated only seven miles from Disney World." Ms. Valnecia Williams of Madison, Florida, owns a time- share unit at Cypress Point Resorts in Central Florida. Williams received a mailed "brochure" from Respondent's home office which advised her that Respondent was in the business of buying and selling time-shares. Based on the Respondent's direct mail flyer, Williams called the Kissimmee, Florida, telephone number to find out information related to her listing. Apparently, the call was automatically switched to the home office. She received some initial information. Several weeks later she called the Respondent's Arkansas office and talked to a different salesperson. Williams agreed to list her time-share, Cypress Pointe Resort, Unit 5206, Week 37, with Respondent on March 5, 1997, at an asking price of $12,9000 in an open listing for a period of a year. Consideration was in the form of a seven percent of gross sale of the unit, or a $750 minimum commission, to be paid to Respondent at the closing of the sale. Respondent charged an advance fee of $439 from Ms. Williams of Madison, Florida, at the time she listed her Florida time-share period at Cypress Point Resort for sale with Respondent. Williams authorized Scott Fisher, Respondent's salesperson in Arkansas to charge the refundable advertising and marketing fee of $439 to Williams' USAA Federal Savings Bank charge card. Williams was not pleased with the service provided by Respondent and, on or about July 28, 1997, demanded a refund from the Respondent. Sometime within the next two months Respondent complied with the request and refunded the fee by crediting Williams' charge card with the same amount. Kim Collins of Faith, North Carolina, owns a time-share unit at Westgate Lakes, Orlando, Florida. Collins received brochures from Respondent's home office seeking a listing for her time-share unit in Florida, approximately one year later. Collins called Respondent at an "800" number which was automatically forwarded to Respondent's main office in Arkansas. Eventually, Collins decided to use Respondent's services and borrowed the money from her mother to pay the advance fee and sign the listing contract. Respondent collected an advance fee from Mr. and Mrs. Richard Collins of Faith, North Carolina, of $439 at the time they listed their Florida time-share period at Westgate Lakes, Orlando, for sale with Respondent, by mail and check to the Respondent's main office in Arkansas. Collins' time-share has been listed for sale with Respondent since July 1, 1996. Dan Coffey of Jacksonville, Florida, owns a time-share unit at Orange Lake in Central Florida. Coffey received a brochure from Respondent's home office and called for more information. Coffey agreed to list his unit for sale with Respondent on October 14, 1996, at a negotiable price of $12,900. Respondent collected an advance fee from Mr. and Mrs. Daniel Coffey of Jacksonville, Florida, of $439 at the time they listed their Florida time-share period of Orange Lake Resort, Orlando, Florida, for sale with Respondent. In like manner, Respondent collected an advance fee from Mr. and Mrs. Rick Rogers of Maumee, Ohio, at the time they listed their Florida time-share period with Respondent. Respondent also collected an advance fee from Mr. and Mrs. Donald Gordon of Pensacola, Florida, at the time they listed their Florida time-share period with Respondent. Respondent collected an advance fee from Mr. and Mrs. William Budai of Duquesne, Pennsylvania, of $539 at the time they listed their Florida time-share period at Westgate Villas, Kissimmee, Florida, for sale with Respondent. The contract signed by each complainant was titled "Listing Agreement." The Listing Agreement between the time- share owner of the Florida unit and Respondent was for the listing of their time-share for sale for a percent of gross sale of the unit to be paid at the closing, with an advance fee payable immediately. All transactions between the owners and Respondent were made through the Respondent's home office in Arkansas. No advance fee was collected within the boundaries of the State of Florida. Complainants Collins and Coffey did not receive refunds of the advance fees they paid to Respondent.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes, enter a final order that: Finds Respondent guilty of six violations of Section 721.20(4), Florida Statutes. Respondent pay a penalty of $10,000 per violation for each of the six violations, to be paid within thirty (30) days of the entry of the final order. That Respondent refund $439 each to Kim Collins and Daniel Coffey, to be paid within thirty (30) days of the entry of the final order. That Respondent cease and desist from collecting advance fees for the listing of time-share periods for Florida residents and/or Florida time-share units. DONE AND ENTERED this 20th day of May, 1999, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 20th day of May, 1999. COPIES FURNISHED: Mary Denise O'Brien, Esquire Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 James H. Gillis, Esquire James H. Gillis Associates, P.A. 8424 Pamlico Street Tallahassee, Florida 32817-1514 William Woodyard, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Philip Nowick, Director Division of Florida Land Sales, Condos, and Mobile Homes Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue in this case is whether Respondent is guilty of dishonest dealing by trick, scheme or device in any business transaction in violation of Subsection 475.25(1)(b), Florida Statutes (2008),1 and if so, what penalty should be imposed.
Findings Of Fact Petitioner is the state agency responsible for issuing real estate sales associate licenses and monitoring compliance with all statutes, rules, and regulations governing such licenses. Respondent was at all times relevant to this proceeding a licensed real estate sales associate in the State of Florida and held License No. 3115665. In March 2006, Respondent was introduced to Willie Belle Lewis (Lewis) by a mutual acquaintance. Lewis was interested in selling her house, and Respondent agreed to work for Lewis in that regard. On March 13, 2006, Lewis and Respondent entered into an Exclusive Right of Sale Listing Agreement (the "Agreement"). Under the Agreement, Respondent was to act as Lewis' sales agent for sale of the house. Pursuant to paragraph 7 of the Agreement, Respondent was to receive a commission of six percent of the purchase price. Respondent initially requested a seven percent commission which was the ordinary and customary amount at that time, but agreed to six percent in deference to Lewis' request (and due to the fact that Lewis had recently lost her grandmother and Respondent empathized with her, having just lost her mother). In one version of the Agreement admitted into evidence, there is a notation that any cooperating real estate agent (presumably a buyer's agent) would receive a commission equal to three percent of the purchase price, i.e., one-half of Respondent's six percent commission. Another version of the Agreement admitted into evidence did not address sharing the commission with a cooperating agent. At some point in time (which was not clearly defined during testimony at final hearing) Lewis and Respondent re-negotiated the amount of Respondent's commission.2 Lewis maintains that the re-negotiated commission was three percent; Respondent says the re-negotiated commission was four percent. Respondent's testimony was more credible on this point. The amount of the new commission was not reduced to writing or indicated on either version of the Agreement. There is no indication, for example, what Respondent's commission would have been if a cooperating agent had been involved. It is highly unlikely that Respondent or any other agent would agree to a two percent commission, i.e., one-half of four percent (or 1.5 percent, one-half of three percent). Once the Agreement was signed, Respondent immediately began efforts to sell the Lewis house. Respondent invited Lewis to her (Respondent's) house and offered Lewis plants and flowers from Respondent's yard. Respondent and Lewis dug up various plants and transferred them to Lewis' yard to generate some "curb appeal," i.e., to dress it up for potential buyers. Within days, a potential buyer was found. A Contract for Sale and Purchase (the "Contract") was entered into between Lewis and Mrs. Bibi Khan. Respondent was listed as the seller's agent; no agent was indicated for the buyer. In fact, Respondent agreed to act as buyer's agent as well, performing services as both an agent and a broker. Again, there were two versions of the sales Contract admitted into evidence. On one version, Respondent's signature included only her first name; on the other it included her first and last name. On one version of the Contract, there appears to be "white-out" on Respondent's signature line. Contained and legible under the whited-out portion of the signature is the phrase "3%." Respondent admits she whited out the three percent figure, but that it was done after the closing occurred. The three percent figure appearing at that place in the Contract is confusing. It only makes sense if that was meant to represent Respondent's portion of a six percent commission split between a buyer's agent and a seller's agent. Respondent explained that she whited out the figure because it was not written in both places it was supposed to be. Rather than going through the process of re-doing the entire Contract and re-distributing it to all pertinent parties, she whited it out in one place. The explanation is plausible. However, it seems an unnecessary action inasmuch as the closing had already occurred. When the parties arrived at closing on April 17, 2006, the closing documents--including the HUD Settlement Statement-- indicated a six percent commission for Respondent (as originally stated on the Agreement). Lewis vehemently objected to the commission, saying that it should be three percent as verbally agreed to by her and Respondent.3 Respondent acquiesced at closing and, in front of witnesses, said the commission should be three percent. She asked that a letter be drafted by the closing agent reflecting a three percent commission. In effect, Respondent re-negotiated her commission at that time. She rues having done so and says she was confused, but she did so nonetheless. The closing was only the third closing Respondent had taken part in since becoming licensed. She was not very experienced with the process and seemed to be thinking she was getting a four percent commission, even when three percent was being discussed.4 It is clear, however, that Respondent did verbally agree to a three percent commission during the closing. The closing agent told Lewis to return on Monday and she would re-calculate the commission and provide Lewis with a final check in the appropriate amount. Meanwhile, Respondent attempted to contact Lewis over the weekend to discuss the discrepancy. Respondent wanted to remind Lewis they had agreed on four percent despite what she said at the closing. All attempts at communication with Lewis over the weekend were futile. When Lewis returned to the closing office on the following Monday, she found the check to still be in error as it reflected a four percent commission instead of a three percent commission. Apparently when Respondent advised the closing agent about her mistake regarding the amount of the commission, Respondent still maintained that the verbal agreement was for four percent. This was contrary to her statements during the closing and is not substantiated by any written documentation. Respondent directed the closing agent to issue a check reflecting a four percent commission, instead of the six percent commission reflected on the Agreement. Lewis ultimately, under protest, accepted her $74,264.92 check reflecting a four percent commission to Respondent. The check contained a shortage of $1,600, if a three percent commission had been applied. Lewis continued to seek repayment of the $1,600 she believed she was entitled to receive. Subsequently, Respondent discussed the entire dispute with her sales team and decided that the disputed amount ($1,600) was not worth fighting about. A check was then sent to Lewis in that amount.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner, Department of Business and Professional Regulation, Division of Real Estate, imposing a fine of One Thousand Dollars ($1,000) against Respondent, Marian Lemon Coaxum. DONE AND ENTERED this 26th day of November, 2009, in Tallahassee, Leon County, Florida. R. BRUCE MCKIBBEN 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 26th day of November, 2009.
Findings Of Fact Roy Ahringer, hereinafter referred to as "Respondent" has held real estate broker-salesman license number 0158288 at all times material hereto. From approximately August 15, 1983 to November 20, 1983, and from approximately March 1, 1984 to April 30, 1984, Respondent was licensed and operated as a real estate salesman in the employ of Highlands Holiday Realty, Inc., a licensed brokerage Corporation. On or about August 11, 1983, Highlands Holiday Realty, Inc., obtained from Mildred M. Haydon, as owner, a six month listing to sell certain property designated as Lot 9, Block 353, Section 26 Lake Placid, at a price of "any reasonable cash offer". By the terms of this listing agreement, the listing would continue beyond the six month period "until this agreement is revoked by a ten day's written notice" delivered by the owner to Highlands Holiday Realty, Inc. There is no evidence that this listing agreement was ever revoked and it remained in effect during the time Respondent was employed at Highlands Holiday Realty, Inc. Respondent was therefore an agent for Mildred M. Haydon. While this listing agreement was in effect, Respondent obtained a sales contract on March 29, 1984, executed by Robert J. and Marjorie P. Mitchell, as purchasers, for the purchase of Mildred M. Haydon's Lot 9 at a total purchase price of $5000. On April 30, 1984, the Mitchells executed two checks totaling $5000 to Highlands Holiday Realty which were to be placed in a trust account for this transaction. The contract was initially prepared omitting the name and address of the seller but was later completed by Respondent by having a secretary at Highlands Holiday Realty Inc. type in the names of Roy Ahringer and May Ahringer as sellers. On March 31, 1984 Respondent and his wife, May Ahringer, executed a contract for sale and purchase of Mildred M. Haydon's Lot 9 for the purchase price of $2220. Mildred M. Haydon executed this contract for sale and purchase on April 4, 1984. Subsequently this transaction closed and Respondent, with his wife, purchased the subject property for $2220 on or about May 23 or 24, 1984. The evidence presented establishes that Respondent did not explain to the Mitchells or to Mildred M. Haydon that he would be purchasing the property for $2220 from Mildred M. Haydon and then reselling the property to the Mitchells for $5000. Mildred M. Hayden was not informed of the Mitchell's offer of $5000 for her lot prior to her sale of the lot to Respondent. It is Respondent's contention that he told the Mitchells he was having a problem with the lot owner and that he might have to buy it from her in order to be able to resell it to the Mitchells. However, no evidence supporting this assertion was presented by Respondent, and in any event there is no evidence that the Mitchells or Mildred M. Haydon knew about the difference in the purchase and resale prices which would have resulted from this transaction. When the circumstances surrounding this transaction became apparent to Ronald N. Weisser, broker and owner of Highlands Holiday Realty, Inc., he stopped the Ahringer-Mitchell transaction, and the $5000 paid by the Mitchells for this lot has been returned to them. Respondent still owns the subject property. Mildred M. Hayden was damaged in an amount of approximately $2780 due to Respondent's failure to present the Mitchells' offer to her. The Mitchells were damaged in an amount equal to the interest they were required to pay on money borrowed for the purchase price during the period when the funds were retained in a non-interest bearing escrow account. The parties were allowed to submit post-hearing proposed findings of fact pursuant to Section 120.57(1)(b)4, F.S. A ruling on each proposed finding has been made either directly or indirectly in this Recommended Order except where such proposed findings of fact have been rejected as subordinate, cumulative immaterial or unnecessary.
Recommendation Based upon the foregoing findings of fact and conclusions of law, it is recommended that a Final Order be issued suspending Respondent's license for a period of two (2) years and imposing an administrative fine in the amount of one thousand dollars ($1000). DONE and ENTERED this 10th day of June, 1985 at Tallahassee Florida. Hearings Hearings DONALD D. CONN, Hearing Officer Division of Administrative The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative this 10th day of June, 1985. COPIES FURNISHED: James Gillis, Esquire Post Office Box 1900 Orlando, Florida 32802 Roy Ahringer 232 Harmony Avenue Lake Placid Florida 33852 Harold Huff, Executive Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301
Findings Of Fact The parties stipulated that respondent Donald T. Dean held real estate broker's license No. 0020554, and was employed as a broker-salesman by Adkinson Agency, Inc., in Pensacola, Florida, at all pertinent times. Betty M. Davis was the firm's qualifying broker at all pertinent times. Listed with the agency in the summer of 1979 was an 87-acre parcel located near Perdido Bay in Escambia County. Respondent Dean acted as salesman for Adkinson Agency in the sale of this parcel to Penny Storts Milne and Robert Milne, Jr., her "husband at the time" (T. 134), who acquired the already subdivided property with the intention of offering four-acre tracts for resale. After the Milnes had contracted to purchase the property, but before the transaction closed, they listed the subdivided parcels with Adkinson Agency, respondent Dean being the listing broker, for sale, subject to their obtaining good title. At closing, the sellers of the 87-acre parcel conveyed not to the Milnes personally but to a corporation they controlled. Eventually, on September 21, 1979, a corporation organized specifically for the purpose, Miracle Strip Investments, Inc., took title. Early on there were discussions between respondent Dean and Mrs. Milne about his participation in a joint venture to develop the property, which came to be known as Laura Lake Estates, and a proposed joint venture agreement dated August 6, 1979, was drawn up and signed by respondent and Mrs. Milne. Petitioner's Exhibit No. 4. Mr. Milne declined to sign at that time, however. Even so, respondent continued to work on development of the property. All three signed a subsequent draft of a joint venture agreement on September 21, 1979. Petitioner's Exhibit No. 3. Under the agreement, profits from the sale of the property, if any, were "to be divided equally, between" respondent and Miracle Strip Investment, Inc. The Milnes were to contribute capital and respondent was to secure various permits and oversee construction of drainage ditches, dirt roads and the like. FIRST RESALE PROSPECT In August of 1979, in response to an advertisement in the Pensacola News Journal, William L. Spence, who had just sold his house and was looking for another place to live, telephoned respondent Dean who took him out to Laura Lake Estates. There were no houses or trailers on the property, but respondent assured Mr. Spence that he would be able to move a trailer on to the lot within six weeks. A dirt road, intersected in heavy rains by a creek, ran in front of the four acres the Spences eventually chose. They deposited $300 earnest money against the agreed sales price of $8,000, on August 28, 1979. Petitioner's Exhibit No. 1. This price reflected fair market value at the time. No closing date was specified in the sales contract. Petitioner's Exhibit No. 1. On November 13, 1979, Mr. Spence applied for a permit to install a septic tank on the parcel No. 18. Respondent's Exhibit No. 3. The application was granted on December 5, 1979, with conditions. Mr. Spence inquired about obtaining electricity for a trailer he planned to place on the lot; he spoke to Mark William Creswell of Gulf Power Company, who told him it would cost $1,200 to $1,400 to get power to the lot. Mr. Spence put in a culvert, used a backhoe and placed fill on the lot. A well was dug, with the understanding that Mr. Spence would bear the expense if good water was found. Even though good water was found (at 93 feet) and a usable well was in place, Mr. Spence balked at paying; whereupon the well digger removed the casing. Mr. Spence eventually abandoned his efforts to improve the property, and on February 20, 1980, obtained a refund of the earnest money. Respondent's Exhibit No. 1. He never recovered other moneys he spent on the property. Respondent did not disclose his plans or hopes to enter into a joint venture with the Milnes at the time Mr. Spence signed the sales contract. When the earnest money was refunded, Mr. Dean signed a document as "Agent and Partner." At the time of the hearing, Laura Lake Estates was still uninhabited. BROKER AND SALESMAN Ms. Davis, respondent's broker, learned of respondent's participation in a joint venture when she found respondent's copies of the joint venture agreement and the predecessor draft in a book in his office on or about December, 31, 1979. More than three months earlier, Ms. Davis had agreed to defer half the agency's commission earned on the sale of Laura Lake Estates to the Milnes, even though she paid respondent his share, as selling agent, in full. Ms. Milne explained her agreement with Ms. Davis: Credit Thrift had agreed earlier to give us half of appraised price, as far as loaning us the money, and the day before we were to go to closing they changed that and said half of appraised price or half of contract price, whichever is less. Well, that put us forty- seven thousand dollars ($47,000.00) short - if I remember correctly, and I had a few days to come up with that much money, so one of the things I did with Betty is, I asked her -- They had an eight thousand something dollar ($8,000.00) commission coming due, and I asked her if we could pay - I don't remember if it was four thousand ($4,000.00) or half of it, at the closing, and then we would relist the property with Adkinson Agency with Don as the sales person, and any commissions from that would be paid to her direct- ly, and once the debts were paid off on the sale of that last parcel, she would get paid the other four thousand dollars ($4,000.00), and that way she would in fact get double commissions out of it because she would have the original sale plus the listing of the resale. And, that was to talk her into letting us go through with or postponing the commission, plus I would just as soon have had Don as my agent anyway. Q And Betty Davis agreed to this arrangement? A Yes. There was no time frame put on it however, and she subsequently got upset about the time frame. Q You mean the time frame of paying off this deferred commission? A Yes. There was no time frame placed on it. I just told her, when we got the other debts paid off, which means we close enough property to pay off everybody else, then she would get her commission, prior to me getting any money. Q Now, did you have any understanding as to how Don Dean would be paid, his commission? A I did not, that was between Don and Betty. Respondent never disclosed his interest in the venture to Ms. Davis, even after he signed the second joint venture agreement; and even though Ms. Davis had yet to be paid the full commission due. Respondent never made any money in his capacity as a joint venturer, although he was paid commissions. The findings of fact proposed in petitioner's proposed recommended order have been largely adopted in substance. To the extent they have been rejected, they have been deemed irrelevant or unsupported by the weight of the evidence.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED That Petitioner suspend respondent's license for thirty (30) days. DONE and ENTERED this 4th day of January, 1983, in Tallahassee, Florida. ROBERT T. BENTON, II 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 4th day of January, 1983. COPIES FURNISHED: W. Douglas Moody, Jr., Esquire 119 North Monroe Street Tallahassee, Florida 32301 Edmund W. Holt, Esquire Three West Garden Street 480 Blount Building Pensacola, Florida 32501 Samuel R. Shorstein, Secretary Department of Professional Regulation Old Courthouse Square Building 130 North Monroe Street Tallahassee, Florida 32301 Carlos B. Stafford, Executive Director Department of Professional Regulation, Board of Real Estate P.O. Box 1900 Orlando, Florida 32802 William Furlow, Esquire P.O. Box 1900 Orlando, Florida 32802
The Issue Whether Petitioner, acting on behalf of June Rosacker, is entitled, pursuant to Chapter 717, Florida Statutes, to the $37,281.25 in the Department of Banking and Finance's (Department's) Unclaimed Property Account Number 00963-1981- 00026, which was derived from the Department's sale of five $5,000.00 Florida Development Commission Sunshine Skyway Revenue Bonds, numbers 2114, 2115, 2116, 2117, and 2118, that Gulfstream Bank, N. A., had turned over to the Department as unclaimed property.
Findings Of Fact Based upon the evidence adduced at the final hearing and the record as a whole, the following findings of fact are made to supplement the "Stipulated Facts" set forth in the parties' Prehearing Stipulation: June Rosacker (Mrs. Rosacker) is the widow of Richard Rosacker (Mr. Rosacker). She and her late husband were married for 38 years before he passed away on October 11, 1995. Mr. and Mrs. Rosacker lived in a residence on the premises of Floral Acres, a commercial nursery located at 109 Northeast 17th Street in Delray Beach from 1961 until 1978. It was their first marital residence. Mr. Rosacker was the Vice President of Operations of Floral Acres until 1969, when he resigned his position. Mr. Rosacker's resignation coincided with his cousin, Arthur Rosacker, Jr. (Arthur Jr.), succeeding Arthur Rosacker Sr. (Arthur Sr.), Arthur Jr.'s father and Mr. Rosacker's uncle, as President of Floral Acres. Mr. Rosacker and Arthur Jr. did not get along with each other as well as Mr. Rosacker and Arthur Sr. did. Mr. Rosacker started his own business in 1970. Arthur Sr. executed his Last Will and Testament (Arthur Sr.'s Will) in 1971. Mr. Rosacker was not named a beneficiary in Arthur Sr.'s Will. Arthur Sr. passed away on April 4, 1978. Sometime in the 1970's, Mr. Rosacker received at his and Mrs. Rosacker's Floral Acres residence correspondence from a bank, which was not Mr. and Mrs. Rosacker's "regular bank," advising Mr. Rosacker that the bank was holding $25,000.00 in "funds" in his name. 1/ Mr. Rosacker thought "the bank must have made a mistake." He had no knowledge of the "funds" which were the subject of the bank's correspondence. Mr. Rosacker went to the bank (which was located in Boca Raton) for the purpose of letting the bank know that the "funds" were not his. Upon his return, he told Mrs. Rosacker that had taken care of the matter by telling the bank "it was not his money, he didn't put any money in the bank, and he knew nothing about it." In 1981, Boca Raton-based Gulfstream Bank, N.A. 2/ (Gulfstream) reported to the Department that it was holding as unclaimed property five $5,000.00 Florida Development Commission Sunshine Skyway Revenue Bonds, numbers 2114, 2115, 2116, 2117, and 2118, (Bonds in Question) that had been left in a safe deposit box, number 3228, rented in the name of a "Richard Rosacker" whose address was not "on file" at the bank. 3/ Gulfstream's report to the Department further indicated that the "date of [the] last transaction" involving safe deposit box number 3228 was May 5, 1971. On this date, according to the report, the lessor of the box was Fort Lauderdale-based American National Bank and Trust Company (which subsequently merged with Gulfstream). The bonds were remitted to the Department, which sold them for a total of $37,281.25. At no time did either Mr. or Mrs. Rosacker rent a safe deposit box from American National Bank and Trust Company or Gulfstream. At no time did either Mr. or Mrs. Rosacker purchase Florida Development Commission Sunshine Skyway Revenue Bonds. On May 18, 1984, Mr. Rosacker executed a Declaration of Trust, which provided, in pertinent part, as follows: ARTICLE I TRUST CORPUS This Trust shall consist of the original TEN DOLLARS ($10.00) contribution and additional assets may be contributed by me or by any other person. All trust assets shall be listed on the SCHEDULE OF ASSETS attached hereto, may be comprised of property of any kind and character, including insurance benefits of any nature, and may be added by inter vivos or testamentary transfer, or otherwise at my demise. Any asset registered in the name of the Trust or Trustee 4/ shall be presumed to be a part of this Trust, whether such asset is listed on the SCHEDULE OF ASSETS or omitted therefrom, it being my intent to expand rather than restrict the list of assets held in this Trust. . . . ARTICLE V DISPOSITION AT SETTLOR'S DEMISE-RESIDUARY TRUST PROVISIONS If my wife, JUNE WEBB ROSACKER, survives me, I direct my Trustee to fund into "Trust B" provided under paragraph B the largest amount, if any, that can pass free of Federal estate tax under this instrument by reason of the unified credit and the state death tax credit, reduced by property passing outside this instrument which does not qualify for the marital or charitable deduction in computing Grantor's federal estate tax. The values as finally fixed for Federal estate tax purposes shall govern the funding of this Trust. The balance of my estate I give outright to my wife, June Webb Rosacker. . . . ARTICLE VI APPOINTMENT OF TRUSTEE . . . Upon my demise my wife, JUNE WEBB ROSACKER and my friend, MARVIN SALINE, shall be appointed the Trustees of all shares of this Trust. Should MARVIN SALINE be unable to serve as Trustee, my brother, HANS DONALD ROSACKER shall be appointed Trustee. . . . Should neither of the foregoing be able to serve as Trustee with my spouse then she shall appoint as Trustee a corporate fiduciary. The "Declaration of Trust's" "Schedule of Assets" was left blank. On September 23, 1988, Mr. Rosacker executed an Amendment to Trust Agreement, which provided, in pertinent part, as follows: I hereby amend Article VI, Paragraph A to provide that if my spouse cannot serve as Trustee, then my daughters, JANICE and ELLEN, shall serve as Trustees, or either shall serve as sole trustee if one cannot serve. I then amend Paragraph B to appoint my spouse and my daughters, JANICE and ELLEN, (or either if one cannot serve) as Co-Trustees at my demise. I therefore revoke all reference to MARVIN SALINE and HANS DONALD ROSACKER as potential Trustees, . . . . On May 18, 1984, the same day he executed the Declaration of Trust, Mr. Rosacker also executed a Last Will and Testament, which provided, in pertinent part, as follows: ARTICLE III I give to my beloved wife, JUNE WEBB ROSACKER, in fee, all clothing, jewelry, household goods, personal effects, automobiles and other tangible personal property not otherwise specifically bequeathed by Will, Codicil or Separate Writing, except cash on hand, owned by me at the time of my death. . . . ARTICLE V All the rest, residue and remainder of the property which I may own at the time of my death, real, personal and mixed, tangible and intangible, of whatsoever nature and wheresoever situated, including all property which I may acquire or become entitled to after the execution of this Will, . . . , I bequeath and devise to the Trustee of that Trust Agreement executed by me on , 1984, said assets to be held IN TRUST as part of the Trust Estate as that term is used in said Trust Agreement as further amended at time prior to my death. . . . ARTICLE VI I hereby appoint my wife, JUNE WEBB ROSACKER, to be my Personal Representative of this my Last Will and Testament. . . . Fred Goodman is a Florida-licensed private investigator who does business as Eyes and Ears Investigative Services. He has been "involved in abandoned property matters" for the past nine years. In February of 1994, Mr. Goodman visited Mr. and Mrs. Rosacker at their home in Oveido, Florida, to seek authorization to file a claim with the Department, on behalf of Mr. Rosacker, to recover the proceeds of the sale of the Bonds in Question. Mr. Rosacker declined to give Mr. Goodman such authorization. He told Mr. Goodman that, although he believed that the bonds "were put in the bank for him by his uncle," Arthur Sr., "it was a situation in which he was not going to be able to prove that he owned the funds" and that therefore it would be a "waste of time" for him to pursue the matter. Following Mr. Rosacker's death in 1995, Mr. Goodman entered into an agreement with Mrs. Rosacker in which Mrs. Rosacker agreed to "appoint Eyes and Ears Investigative Services . . . an irrevocable Limited Power of Attorney to proceed on [her] behalf in accordance with [the recovery of the $37,281.25 in assets described in the agreement]; [and] to perform any and all acts, including but not limited to the execution of any and all documents, for and on behalf of [her], as may be required in order to effect the recovery and disbursement of said assets to Eyes and Ears Investigative Services Escrow Account." The agreement provided that, "for full compensation of its Services," Eyes and Ears Investigative Services would be "assigned a fee of 30% [of] said assets." Although it has been almost six years since Mr. Rosacker has passed away, his Last Will and Testament has not yet been probated.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order rejecting Petitioner's claim that Mrs. Rosacker is entitled to the proceeds of the Bonds in Question. DONE AND ENTERED this 4th day of October, 2001, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 4th day of October, 2001.
The Issue The issue to be resolved in this proceeding concerns whether the claim of International Equities Group, Inc. on behalf of Theodore Andrews, the personal representative of the estate of Shirley Andrews, for abandoned property in the custody of the Respondent, in the amount of $16,515.62, should be granted.
Findings Of Fact On or about December 19, 1991, International Equities Group, Inc. (International) filed a claim on behalf of Theodore Andrews, the personal representative for the estate of Shirley Andrews, for the amount of $16,515.62 in abandoned property. This sum was originally in the form of a bank deposit under account no. 1197-1988-00184, originally deposited in Barnett Bank of Palm Beach County, N.A. (the Bank), which was the original "holder" of the property and account in question. There is no dispute that the property constitutes abandoned property having been in possession of the Bank for the required period of seven years without any activity whatever. Consequently, after the Bank attempted to contact the named owner of the account, Arthur G. Cullen, at the last known address and was unable to make such contact because the address proved to be invalid, the account was treated by the Bank and the Department as abandoned. The bank account in question was a savings account with Arthur G. Cullen listed on the signature card as the owner of the account. After determining that no activity had occurred with regard to the account for a period of at least seven years, the Bank attempted to contact Mr. Cullen at the address it had of record, which was 413 Rider Drive, Boynton Beach, Florida 33425. The Bank learned that that address was apparently invalid and consequently, was unable to make any contact with Mr. Cullen. On July 15, 1991, Mr. Schwartz, representing the personal representative of the estate of Shirley Andrews, with power of attorney, contacted Ms. Pam Klettner of the Bank and explained that the social security number listed on the account in question, 118-34-5232, was the social security number of the late Ms. Shirley Andrews. Mr. Schwartz testified that he explained to Ms. Klettner that that listed social security number belonged to the late Ms. Shirley Andrews, as evidenced by social security records and her death certificate. He explained to Ms. Klettner that the Petitioner was the illegitimate father of at least one of Ms. Shirley Andrews' children. He then inquired of Ms. Klettner as to whom the account would be paid to, Ms. Andrews' estate, as her social security number was a match with the social security number entered on the account, or to Mr. Cullen (if he could be found, as the listed address had proved to be invalid according to the post office). Ms. Klettner responded, according to Mr. Schwartz, that she would seek a ruling for that situation from the Bank's legal department and would inform him as to the proper ownership of the account. Mr. Schwartz was later contacted by personnel of the Bank and informed that the owner of the social security number, in the Bank's view, would be the owner of the account and the funds deposited therein and that once the necessary probate documents were generated, Ms. Klettner would draft a letter to the State of Florida Unclaimed Property Department stating that the proper disbursement of the account would be to the Andrews' estate. As a consequence of this communication, Mr. Schwartz contacted Ms. Pam McMahon in the State of New York to begin probate of the Shirley Andrews' estate, informing her of the decision of the Bank regarding required documentation for payment of the account to Mr. Schwartz and International, on behalf of the personal representative, Theodore Andrews. Letters of Administration were apparently issued by the probate court in New York and the above-named claimant, Mr. Schwartz, submitted the proper forms and documents to the State of Florida Unclaimed Property Section, seeking possession of the funds in question. This was because, in the meantime, the Bank had elected to deem the property abandoned and pay the funds over to the custody of the Department. Mr. Schwartz contacted Ms. Klettner and requested that she draft the required letter to the Department to accompany the claim, as she had offered to do earlier. Ms. Klettner apparently informed Mr. Schwartz that she no longer worked in that department and was unable to keep her earlier commitment in this regard. Thereafter, a decree was entered by the Surrogate Court of the State of New York, County of Niagara, purportedly stating that the funds in question should be released to the estate of Shirley Andrews within ten days. According to Mr. Schwartz, the decree was issued to both the State of Florida and to the Bank. The purported court decree was not acted upon in the required ten days and ultimately, this claim was denied by the Department by its denial letter of November 4, 1992. The death certificate of Ms. Shirley Andrews purportedly contains the above-referenced social security number, which is the same social security number as appears on the bank account which is listed under the name of Arthur Cullen. Apparently, personnel of the Department checked that social security number through the State of Florida drivers license indexing system and the number appeared in that system with the name of Arthur G. Cullen attached. However, a credit check using that social security number through a credit reporting agency record revealed that the number matched the name of Ms. Shirley Andrews and not Arthur G. Cullen. The death certificate of Shirley Andrews has not been submitted into evidence and, according to testimony, apparently is not a certified death certificate, although it is inferred from the totality of the testimony that the death certificate was presented to the Department at some point in the claim process. The purported decree of the probate court for the County of Niagara, State of New York, Surrogates Court, has not been presented in evidence either. According to the evidence of record, Arthur G. Cullen, the purported owner of the account, under the Department's theory that the listed name on the account is tantamount to ownership, has never been located. Even if his whereabouts were known, the evidence shows that both the address on the account and the social security number on the account are not apparently those of Arthur G. Cullen. Other than the testimony of Mr. Schwartz, however, no definitive proof in the form of a certified copy of the death certificate bearing the social security number of Shirley Andrews, so that it could be matched to that appearing on the original bank account record, nor a certified copy of the New York probate court's judgement or decree, which might indicate findings of fact or conclusions of law establishing a basis for payment of the funds over to the estate of Shirley Andrews, has been placed in evidence. Consequently, it is determined that adequate proof by a preponderance of the evidence has not been established so as to justify award of the funds in question to the Petitioner.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered denying the claim of International Equities Group, Inc. on behalf of Theodore Andrews, as personal representative of the estate of Shirley Andrews, for the abandoned property in the amount of $16,515.62, with regard to account number 1197-1988-00184, without prejudice to perfection of such claim by submission of appropriate proof and explanation of entitlement to the Department at a later time, subject to any time limits and other requirements contained in Chapter 717, Florida Statutes, and Chapter 3D, Florida Administrative Code. DONE AND ENTERED this 7th day of December, 1993, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 7th day of December, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-2591 Respondent's Proposed Findings of Fact Accepted. Accepted in the sense that the non-certified death certificate may have been presented to the Department by way of explanation of entitlement with regard to the claim in question but such death certificate was not presented in evidence to the Hearing Officer. Accepted in the sense that it demonstrates the basis for the Department's initial denial of the claim. Rejected, as it does not state the entirety of the proof presented to the Hearing Officer in this Section 120.57(1), Florida Statutes, proceeding. Accepted to the extent that it constitutes the Department's basis for denial of the claim. Accepted. COPIES FURNISHED: Mr. Stephen Schwartz International Equities Group, Inc. 1532 Camden Avenue Los Angeles, California 90025 Leslie A. Meek, Esquire Assistant General Counsel Office of the Comptroller 401 North West 2nd Avenue, Suite N-708 Miami, Florida 33128 Honorable Gerald Lewis Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350 William G. Reeves, Esquire General Counsel Department of Banking and Finance The Capitol, Room 1302 Tallahassee, Florida 32399-0350
Findings Of Fact Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular, Section 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent, Richard A. Dunham, Jr., is now and was at all times material to the complaint a licensed real estate salesman in the State of Florida having been issued License No. 0130830 in accordance with Chapter 475, Florida Statutes. The last license issued was as a salesman, c/o Merrill Lynch Realty, operating partnership L.P. LTD., 1234 West Palm Avenue, Sarasota, Florida 34236. Respondent was the sole stockholder of Guaranteed Leasing, Inc., a corporation that was not licensed with the Florida Real Estate Commission. Respondent formed Guaranteed Leasing, Inc., for the purpose of engaging in real estate ventures. Respondent was also the sole stockholder in other corporations established for the same purpose. On August 21, 1986, Guaranteed Leasing, Inc., entered into a lease agreement with Gail Walker whereby Guaranteed Leasing, Inc., leased a furnished townhouse for two years at $500 per month. Thereafter, respondent contacted Elizabeth Mitchell, a business associate and friend of respondent, to obtain her help in subleasing the townhouse. Respondent agreed to let Ms. Mitchell live in the townhouse in return for her maintaining the property and showing it to prospective sublessees. Respondent also agreed to pay Ms. Mitchell $200 if she subleased the property. On September 22, 1986, Kathryn E. Kelly entered into a written lease agreement with Guaranteed Leasing, Inc., to lease the townhouse for $600 per month. Ms. Kelly also agreed to pay a security deposit of $500. Ms. Kelly gave Elizabeth Mitchell a bank check, written to Guaranteed Leasing, Inc., in the amount of $500 for the security deposit. Ms. Mitchell thereafter delivered Ms. Kelly's check of $500 to respondent who deposited the check into the general corporate account of Guaranteed Leasing, Inc. Prior to signing the lease, Ms. Kelly met respondent. She was under the impression that respondent owned Guaranteed Leasing and that Ms. Mitchell worked for him. In December of 1986, Ms. Kelly vacated the townhouse premises. She had paid all appropriate rental payments. Ms. Kelly asked respondent, in person, to return her security deposit. Neither respondent nor Guaranteed Leasing, Inc., returned the security deposit. Neither respondent nor Guaranteed Leasing, Inc., gave notice of intent to impose a claim for damages upon the security deposit. After repeatedly demanding return of the security deposit, which demands were ignored by respondent, Ms. Kelly obtained counsel and filed a lawsuit against respondent, Guaranteed Leasing, Inc., and Ms. Mitchell. On July 1, 1987, a default judgment was entered against respondent, Elizabeth Mitchell and Guaranteed Leasing, Inc., jointly and severally in the amount of $544, plus costs and attorney's fees, for a total judgment of $785. The judgment has not been satisfied. Guaranteed Leasing, Inc., is no longer in existence. Respondent was the sole stockholder of Guaranteed Leasing, Inc., and was an officer of the corporation. Guaranteed Leasing, Inc., had no salaried employees. The only business activity of Guaranteed Leasing, Inc., was the transaction involved in this case. Respondent was in total control of the corporation's activities and was responsible for its actions. Indeed, as perceived by both Ms. Kelly and Mrs. Mitchell, Guaranteed Leasing, Inc., was, in essence, the respondent. Guaranteed Leasing, Inc., was merely the instrumentality through which respondent conducted this business transaction.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered finding that respondent committed those acts set forth in Subsections 475.25(1)(b) and (d), Florida Statutes, suspending respondent's license for a period of three months, and imposing an administrative fine of $1,000. DONE AND ENTERED this 17th day of June, 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 17th day of June, 1988. APPENDIX Petitioner's proposed findings: 1-2. Accepted. 3. Accepted, except as to finding that Mitchell was an "employee" of respondent; however, it is clear that Mitchell was acting as respondent's agent in her dealings with Ms. Kelly. 4-9. Accepted generally. Respondent's proposed findings: 1-8. Accepted generally except as to proposed finding that Mitchell was an "employee" of Guaranteed Leasing, Inc. Mitchell was acting as respondent's agent in her dealings with Ms. Kelly. 9. Rejected as irrelevant. COPIES FURNISHED: James H. Gillis, Esquire Senior Attorney Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Robert P. Rosin, Esquire ROSIN & DAVIS 1900 Main Street Suite 210 Sarasota, Florida 34236 Darlene F. Keller Executive Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 William O'Neil, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750
The Issue At issue in this proceeding is whether Payroll Management, Inc. (“PMI”), a former self-insurer, should be required to increase its qualifying security deposit with the Florida Self- Insurers Guaranty Association, Inc. (“FSIGA”), from $5,144,108 to $7,434,705, as directed by the Department of Financial Services, Division of Workers’ Compensation (the “Department”).
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following Findings of Fact are made: The Department is the state agency responsible for administering the Workers’ Compensation Law, chapter 440, Florida Statutes. The Department’s responsibilities include administration of the self-insurance program in conjunction with FSIGA, pursuant to sections 440.38, 440.385, and 440.386, Florida Statutes. FSIGA is a private, not-for-profit corporation created by section 440.385. The chief purpose of FSIGA is to guarantee payment of covered workers’ compensation claims to employees of its insolvent member self-insurers. All self-insurers, other than public utilities and government entities, are required to be members of FSIGA as a condition of their authority to self- insure. § 440.385(1)(a), Fla. Stat. Sections 440.10(1) and 440.38(1) establish the general requirement that employers must obtain and maintain workers’ compensation insurance in Florida. The exception to this general requirement is set forth in section 440.38(1)(b), which allows an employer to self-insure after furnishing satisfactory proof to FSIGA that such employer “has the financial strength necessary to ensure timely payment of all current and future claims individually and on behalf of its subsidiary and affiliated companies with employees in this state and receiving an authorization from the department to pay such compensation directly.” § 440.38(1)(b), Fla. Stat. FSIGA pays the covered claims of current and former insolvent self-insurer members to the extent an insolvent self- insurer's security deposit is insufficient to cover the claims. An insolvency fund is established and managed by FSIGA for the purpose of meeting the obligations of insolvent members after the exhaustion of any security deposit. Pursuant to section 440.385(3)(a), FSIGA assesses its members to maintain the insolvency fund. In the event FSIGA determines that a current or former member lacks financial strength necessary to ensure timely payment of current and estimated future workers’ compensation claims, FSIGA may recommend that the Department require an increase to such member’s “security deposit in an amount determined by the association to be necessary to ensure payment of compensation claims.” § 440.385(3)(b)7.c., Fla. Stat. The Department is required to accept FSIGA’s recommendation unless it finds by clear and convincing evidence that the recommendation is erroneous. §§ 440.38(1)(b) and 440.385(6)(a), Fla. Stat. PMI is a privately owned professional employer organization headquartered in Fort Walton Beach. It has conducted business throughout Florida and the southeastern United States for over 30 years. PMI was authorized as a self- insurer for workers’ compensation in Florida on September 1, 2001. It was required to post an initial security deposit of $1,000,000 with FSIGA. Between 2001 and 2015, FSIGA made annual recommendations to the Department, pursuant to sections 440.38(1)(b) and 440.385(3)(b)7., as to whether PMI should be required to increase its qualifying security deposit based on a review of the company’s financial strength as reflected in its financial statements. By 2015, PMI’s security deposit had grown to $5,144,108. Through 2015, PMI had posted and maintained its qualifying security deposit every year it participated in the self-insurance program. In late March 2016, PMI submitted an actuarial report dated March 25, 2016, to FSIGA. The actuarial report was prepared by Steven Glicksman and determined that PMI’s estimated outstanding losses, i.e., the cost of unpaid claims, were $7,960,339 as of December 31, 2015, and that the actuarial present value of PMI’s estimated outstanding losses as of December 31, 2015, using a four-percent (4%) discount rate as prescribed by Florida Administrative Code Rule 69L-5.218(2), was $7,434,705. The March 25, 2016, report included the following notes: Comparison to Previous Study The estimated outstanding losses (actuarial central estimate) are $7,960,339 as of December 31, 2015. This compares to $5,514,248 as of December 31, 2015 in the previous study (dated April 30, 2015). The variance is a material adverse deviation. The increases in 2015 are due primarily to actuarial payroll in 2015 being $173,681,101 compared to the projected payroll of $110,000,000. Greater payroll corresponds to an increased exposure to loss. We also observed that 2014 is emerging higher than previous projections. Potential for Material Adverse Deviation The estimated outstanding losses are the actuarial central estimate. It is based on the probable outcomes, but not all possible outcomes. The risk of material adverse deviation is a judgment as to actual losses materially exceeding the actuarial central estimate. The Actuarial Standard of Practice (ASOP 36) requires commentary when the actuary “reasonably believes that there are significant risks and uncertainties that could result in material adverse deviation.” ASOP 36 does not specify a materiality standard. As with all insurance programs, there is the possibility that losses will emerge worse than expected. PMI is a relatively small sized program. The historical loss experience had had an occasional large claim. PMI purchases reinsurance to mitigate the impact of catastrophic claims. It currently has a $500,000 self-insured retention. However, there is the potential for multiple large claims within the retention. There have [been several] operational changes that may have impacted loss development. There is convincing evidence that PMI has accelerated its paying losses and is reserving more adequately [than] it has in the recent past. There has been material change in the mix of class codes. There is a roll-forward extrapolation to December 31, 2016. We have supplemented internal data with insurance industry statistics and actuarial judgment. We have not set a materiality standard. However, based on the above factors, we believe that the estimated outstanding loss amount is subject to a significant level of risk of adverse deviation as of December 31, 2015 and December 31, 2016. This disclosure is based on ASOP 36 and is not intended to be exclusive to this situation. Differences in the disclosure from previous studies are not intended to be a material change in our opinion, unless specifically stated otherwise. It is not a qualification of the study. Effective May 1, 2016, PMI voluntarily terminated its authorization to self-insure its workers’ compensation claims in Florida. On May 11, 2016, FSIGA recommended that the Department require PMI to increase its qualifying security deposit by the amount of $2,290,597.1/ That recommendation was made pursuant to sections 440.38(l)(b) and 440.385(3)(b)7. and rules 69L- 5.209(l)(b) and 69L-5.218(2). The recommendation was based on FSIGA's review of PMI's financial statements and FSIGA’s determination of an equivalent credit rating of Caa3 for PMI, a rating that is less than investment grade.2/ FSIGA determined that PMI did not have the financial strength necessary to ensure timely payment of claims incurred as a self-insurer. The Department accepted FSIGA's recommendation, and by letter dated May 25, 2016, required PMI to increase its qualifying security deposit by the amount of $2,290,597, from $5,144,108 to $7,434,705. As of the date of the hearing, PMI had not posted the additional security with FSIGA. Brian Gee, FSIGA’s Executive Director, testified that he conducted an analysis of PMI's financial strength by examining its audited financial statements for the year ending December 31, 2013, and its draft financial statements for the year ending December 31, 2014.3/ He derived an equivalent credit rating by applying a public domain Moody’s Investors Service methodology. He checked his result against a proprietary Moody’s product called RISCCALC PLUS, a model based on a large database of financial statements. The RISCCALC PLUS model uses default frequencies to derive a credit rating. Mr. Gee’s analysis led him to conclude that PMI does not have the financial strength necessary to ensure the timely payment of its self-insured claims. Mr. Gee testified that his review of PMI’s financial information led him to conclude it lacks the financial strength to ensure timely payment of claims. He cited several factors supporting his conclusion: PMI has shown net losses over the past three years; the company is highly leveraged, with low owners’ equity relative to total liabilities; uncertainty regarding the collectability of a $4 million receivable from British Petroleum (“BP”)4/; and a large amount of back taxes owed to the Internal Revenue Service.5/ Mr. Gee also took note of the facts that PMI’s 2014 financial statement was labeled “draft” and was not a signed auditor’s opinion, and that PMI had supplied no financial statement at all for 2015. He stated that FSIGA had been requesting current financial information from PMI but was not receiving it. Mr. Gee concluded there was enough uncertainty in PMI’s financial situation that he could conclude the company lacked the financial strength to ensure the payment of current and future claims without regard to the calculation of an equivalent credit rating required by rule 69L-5.218(4). Mr. Gee’s conclusion is reasonable in light of the evidence and is hereby accepted. Rule 69L-5.209 requires current and former self- insurers, including PMI, to submit financial statements, audited in accordance with Generally Accepted Auditing Standards, to FSIGA no later than 120 days after the end of their fiscal year. PMI’s fiscal year ends on December 31. As of the hearing date, PMI had submitted only draft unsigned financial statements for fiscal year 2014,6/ and no financial statements at all for fiscal year 2015. On May 11, 2016, the Department received FSIGA's letter recommending the Department require PMI to increase its qualifying security deposit to $7,434,705. The recommendation was reviewed by staff of the Bureau of Financial Accountability (the “Bureau”) in the Department's Division of Workers' Compensation. Bureau Chief Greg Jenkins testified that the review did not involve recreating FSIGA’s work in developing an equivalent credit rating for PMI. FSIGA collects and reviews financial statements and loss reserve information from self- insurers pursuant to contract with the Department and is considered the Department’s financial expert as to these tasks. Mr. Jenkins stated that Bureau staff did review other information for accuracy, including the numerical values set forth in FSIGA’s recommendation letter. Based on his staff’s review, Mr. Jenkins approved the FSIGA recommendation. The Division of Workers’ Compensation, concluding that the FSIGA recommendation was not erroneous, recommended to Chief Financial Officer (“CFO”) Jeff Atwater that the Department accept FSIGA’s recommendation and require PMI to increase its qualifying security deposit by $2,290,597, from $5,144,108 to $7,434,705. By letter dated May 25, 2016, signed by CFO Atwater, the Department required PMI to increase its security deposit by the stated amount. On or about October 19, 2016, PMI submitted an updated actuarial report dated October 18, 2016, to FSIGA. The updated actuarial report was prepared by Mr. Glicksman and determined that PMI’s estimated outstanding losses were $7,265,767 as of August 31, 2016, and that the actuarial present value of PMI’s estimated outstanding losses as of August 31, 2016, using a four percent (4%) discount rate as prescribed by rule 69L-5.218(2), was $6,775,263. Mr. Glicksman also included a projection of losses through December 31, 2016, which he explained as follows: The estimated outstanding losses (actuarial central estimate) are $5,758,346 as of December 31, 2016. The present value of the estimated outstanding losses (actuarial central estimate) is $5,369,488 based on a 4.0% interest rate as of December 31, 2016. These amounts assume old payment patterns. However, the amounts for December 31, 2016 are dependent on PMI’s actual payments from September 1, 2016 to December 31, 2016. Since greater payments results in lower estimated outstanding losses, it is possible that PMI will have estimated outstanding losses of less than $5,758,346 (present value $5,369,488) on December 31, 2016. In fact, we have observed that PMI has accelerated payments. From January 1, 2016 to August 31, 2016, paid losses equaled $4,963,579 ($620,488 per month). We have modeled a continuation of accelerated payments. Assuming projected losses paid of $1,959,647 ($477,395 per month) from September 1, 2016 to December 31, 2016, estimated outstanding losses are $5,356,187 and the present value of the estimated outstanding losses are $4,995,098 on December 31, 2016. We believe these amounts are reasonable. [Citations to internal exhibits omitted.] Mr. Glicksman testified that material differences emerged during the period between his completion of the March 25, 2016, report and the October 18, 2016, report. Mr. Glicksman explained that more recent information, including a date certain for PMI’s termination of its self-insurer authorization, improved loss information, increased reserves, and accelerated claims payments, led him to believe that the estimated losses were less than he had originally projected. Mr. Glicksman testified that, upon noticing that PMI’s claims payments had accelerated much faster than he expected, he contacted Ms. Mickle-Bee regarding the claims data. Ms. Mickle- Bee confirmed to Mr. Glicksman that PMI was closing claims as rapidly as possible. At the hearing, Ms. Mickle-Bee testified that PMI has always paid claims at an “aggressive” rate as an overall costs savings measure. She stated that the company’s experience has been that providing quick medical treatment and paying the bills greatly reduces the chances of litigation. Mr. Glicksman supported this view, testifying that “there’s nothing better than a closed claim to reduce costs.” Mr. Glicksman concluded by stating that “there could be no good outcome” to requiring PMI to increase its security deposit to $7,434,705. He testified, “They’re already holding more than enough money to pay off their claims . . . with almost certainty. And by pushing PMI into . . . a financial stress, it can’t improve their situation, it can only hurt it. I don’t know why they would do it.” Mr. Gee testified that he had as yet reached no conclusions about the October 18, 2016, actuarial report. He testified that a claims reviewer had been assigned to look at the case files, which are the main input into the actuarial process. Mr. Gee also stated that he had made “some preliminary findings about some self-insured retention numbers that appear to be incorrect,” but that he was awaiting results from the claims reviewer in order to draw a conclusion about the report. Mr. Jenkins testified that he has received a copy of PMI’s October 18, 2016, actuarial report. Mr. Jenkins stated that he had glanced at the report but was awaiting a recommendation from FSIGA before undertaking a thorough review of the document.
Recommendation Based on the foregoing, it is, therefore, RECOMMENDED that the Department of Financial Services enter a final order requiring Payroll Management, Inc., to increase its qualifying security deposit with the Florida Self-Insurers Guaranty Association, Inc., by $2,290,597, from $5,144,108 to $7,434,705; or, in the alternative, that the Department of Financial Services withdraw its May 25, 2016, letter requiring Payroll Management, Inc., to increase its qualifying security deposit by the amount of $2,290,597, from $5,144,108 to $7,434,705 and issue a letter requiring PMI to increase its qualifying security deposit to the amount recommended by the Florida Self-Insurers Guaranty Association, Inc., after its review of the October 18, 2016, actuarial report submitted by Payroll Management, Inc. DONE AND ENTERED this 5th day of April, 2017, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON 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 5th day of April, 2017.
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found: At all times material to these proceedings, petitioner, now 26 years of age, has been a resident of the State of Florida. Although he has never been declared incompetent, petitioner has suffered emotional and psychological problems before and since the execution of the Trust Agreement in dispute herein. The Agreement was executed and acknowledged in December of 1971, shortly after petitioner attained his majority. Originally names as trustees were petitioner's mother and Manufacturers Hanover Trust Company of New York, a corporate fiduciary having its principal place of business in New York City. Since the death of petitioner's mother in 1973, petitioner's uncle, James T. Lewis, Jr., and a New York attorney, Thomas P. Ford, have served as co-trustees with Manufacturers Hanover Trust Company. The situs of the trust corpus is New York. Pursuant to the provisions of Florida Statutes Chapter 199, petitioner filed intangible personal property tax returns for 1974 and 1975 reflecting the assets held under the Trust Agreement. (Exhibits 1 and 2). For the year 1974, petitioner paid intangible taxes in the amount of $3,268.29. The amount of $2,069.54 was paid for the year 1975. Contending that the intangible personal property taxes were paid in error, petitioner filed with the respondent Office of the Comptroller a request for refund. (Exhibit 4). By letter dated August 18, 1976, respondent Office of the Comptroller agreed with the position taken by the respondent Department of Revenue and denied petitioner's request for a refund. The basis for the Department of Revenue's determination was that petitioner had a taxable beneficial interest in the trust since his power to revoke and amend was not limited within the meaning of F.A.C. Rule 12B-2.02(3)(e). (Exhibit 5) Petitioner's right of revocation is reserved in Article Tenth of the Trust Agreement, which provides as follows: "The Settlor shall have the right at any time and from time to time, by an instru- ment in writing duly acknowledged and delivered to the Trustees, to revoke or amend this Agreement, in whole or in part with the written consent of the Trustees." (Exhibit 3, page 19) Article Ninth of the Trust Agreement provides that the Trust shall be governed and construed under the laws of the State of New York. (Exhibit 3) It was the testimony of one of the individual trustees and one of the officers of the corporate trustee (both residents of New York) that while there was no condition precedent to the initial request by petitioner for revocation or amendment of the Trust Agreement, the same could not be accomplished without the consent of the trustees. It would be the responsibility of the trustees to exercise their discretion as to whether the request was in the best interest of petitioner. These trustees did not consider their consent to be simply a ministerial duty, but rather a sound exercise of discretion. (Exhibits 6 and 7)
Recommendation Based upon the findings of fact and conclusions of law recited above, it is recommended that the Office of the Comptroller refund to petitioner the 1974 and 1975 intangible personal property taxes paid by him in the total amount of $5,337.83. Respectfully submitted and entered this 24th day of June, 1977, in Tallahassee, Florida. COPIES FURNISHED: Gerald A. Lewis, Comptroller State of Florida The Capitol Tallahassee, Florida 32304 Manley P. Caldwell, Jr. Caldwell, Pacetti, Barrow, and Salisbury Royal Park Building 324 Royal Park Way Palm Beach, Florida 33480 Edwin J. Stacker Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 DIANE D. TREMOR Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675
