The Issue The issues presented in this action concern the Petitioner's failure to renew the Respondent's Florida Farm Labor Contractor Certificate of Registration for the year 1981. The refusal to renew the certificate is premised upon the alleged failure on the part of the Respondent to furnish Felix Munoz and others with an itemized statement of deductions made from their payments for rent, and loans owed to the Petitioner, and by doing so purportedly acting contrary to Subsection 450.33(7), Florida Statutes. In addition, it is alleged, as a ground for refusal to renew the certificate, that Raul Saldivar, Jr., failed to distribute when due all monies or other items of value entrusted him by third persons for such purpose in violation of Subsection 450.33(2), Florida Statutes, and Rule 385-4.08(8)(a), Florida Administrative Code, by receiving payroll checks payable to Arnulfo Ramirez, Esteban Guerraro, Carmen Cruz, Juan Cruz, Santos Martinez, and Leonel Flores; further, that Respondent took the payroll checks in the absence of the farm workers, endorsed and deposited the checks to his bank account. FINDINGS OF FACT 1/ In the years 1979 and 1980, the Respondent had been granted a Florida Farm Labor Contractor Certificate of Registration from the State Department of Labor and Employment Security in keeping with the terms and conditions of Chapter 450, Florida Statutes. When Saldivar applied for the renewal of his Florida Farm Labor Contractor Certificate of Registration for 1981, he was refused renewal for the reasons set forth in the issues statement of this Recommended Order. The Respondent has, in all other respects, complied with the necessary conditions for his relicensure. Beginning in August, 1979, and continuing into 1980, the Respondent was a member of a partnership known as R & S Sons. Particularly in the year 1980, Saldivar, as a member of the partnership, was involved in providing farm labor employees to various tomato growers (Corkscrew Growers, Greener's Farm, C & G Farms, Johnson's Farm, Harvey Brothers, and R & S Sons, which was the partnership farm.) There was no written contract between the growers and Saldivar. Each grower would pay Saldivar for transporting the farm laborers to the growers' farms, and in addition, pay Saldivar for running a labor camp, that is, the place at which the farm laborers resided when they were not employed picking tomatoes. This latter item was the payment for rent for the laborers. The Respondent was also paid by the growers for the units of tomatoes picked by the laborers on an increment payment basis known as a "bin." The Respondent maintained a list of farm laborers through the device of a time card for each employee that worked for a week or mere for one of the growers. Those farm employees had Social Security cards and the growers furnished Workers' Compensation Insurance coverage for the benefit of the farm laborers. There were approximately 200 farm laborers in the category being provided by the Respondent's organization. The drivers of the tomato hauling trucks worked for the growers but the trucks belonged to the Saldivar organization and the picking buckets were also provided by this latter group. The farm laborers were paid by checks issued by the various growers. They were made up from time records maintained by the Respondent's organization. The check had attached to it a stub indicating the amount of pay, and the amount of Social Security deductions and the stub was available to be maintained by the employee. The information placed on the time records was gained from field supervisors who were employees of the growers. (Although the growers had field supervisors immediately in charge of the farm laborers, Saldivar was the overall coordinator for the activities of these laborers.) No withholding amount was taken out of the checks of the laborers other than Social Security. The payroll records of the Respondent would indicate the net earnings and gross amount paid to each farm laborer. Payment to the farm laborers was made at the farm labor camp managed by the Respondent. The process for disbursing the checks was to call the laborer by name and Saldivar would hand the check to the laborer. One of the farm laborers who lived at the Saldivar camp and picked tomatoes for a grower in the area was Felix Munoz. Munoz arrived at the Saldivar camp in August, 1979. Saldivar, at that point, loaned Munoz money to pay for Munoz's transportation to Florida. There was no repayment of the travel loan for a period of time for reason of unavailability of work for Munoz. In late September, Munoz began to repay the loan, and the method of repayment was at the time wherein the Respondent disbursed the payroll check from the grower to Munoz. Munoz would in turn endorse the check over to the Respondent and receive cash in the face amount of the check, and then give the Respondent some of that cash as repayment for the loan. Munoz was not provided a statement of the amount repaid on the loan. Respondent did have the amount written on a piece of paper over which he had control. The same loan arrangements for transportation that were involved with the laborer Munoz occurred with other farm laborers living in the Saldivar camp, and the same method was utilized for handling the manner of repayment of the indebtedness, and for recording the matters of the indebtedness. Munoz and other farm laborers also paid the Respondent rent for living at the Respondent's farm labor camp and the rent was paid from the proceeds of the checks for their efforts as tomato pickers. Munoz and others were not given statements of the amount they had paid to Saldivar for rent. Arnulfo Ramirez, Esteban Guerrero, Carnen Cruz, Juan Cruz, Santos Martinez and Leonel Flores were farm laborers who arrived at the Saldivar camp in December, 1979. These individuals, as with others spoken to above, were loaned money to pay for their transportation costs to Florida. The Respondent loaned them the money, and they in turn, agreed to repay the transportation loan from salaries earned and by the method identified before. These individuals had left the area of the State when the growers issued their last paycheck. Therefore, Respondent picked up the paychecks from the growers, and acting on the advice of counsel, endorsed the farm laborers' names to the checks and deposited them in the Respondent's account and the proceeds were used as credit against the transportation loans owed by these individuals.
Findings Of Fact During January and February, 1987, Respondent acted as a farm labor contractor without a certificate of registration having been issued to him by Petitioner. Specifically, he was hired by Goodson Farms as a farm labor contractor, after holding himself out as such, and did act as a farm labor contractor by supplying and transporting 55 to 75 farm workers for the harvesting of cauliflower at Goodson Farms. He received payment for his services and disbursed payments to these workers. Respondent has failed to possess, for a period of three years, proof of payments he has made to each farm worker for whom he has acted as a farm labor contractor. Records he did provide to Herb Mize, crew chief compliance officer, were incomplete and did not include a record of payments for social security, income taxes withheld, and deductions for food and transportation.
Recommendation Based on the foregoing, it is RECOMMENDED that Petitioner enter a Final Order assessing an administrative penalty of $1400.00 against Respondent. DONE AND ENTERED this 23rd day of October, 1987, in Tallahassee, Florida. DONALD D. CONN 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 23rd day of October, 1987. COPIES FURNISHED: Moses E. Williams, Esquire Department of Labor and Employment Security 2562 Executive Center Circle East Montgomery Building, Suite 117 Tallahassee, Florida 32399-2152 James Quillen, II, Esquire 509 North Morgan Street Tampa, Florida 33602 Hugo Menendez, Secretary Department of Labor and Employment Security 2590 Executive Center Circle East 206 Berkeley Building Tallahassee, Florida 32399-2152 Kenneth Hart, Esquire General Counsel Department of Labor and Employment Security 2562 Executive Center Circle East 131 Montgomery Building Tallahassee, Florida 32399-2151
The Issue Whether Respondent owes payment to Petitioner in the amount of $60,748.78 for watermelons sold by Petitioner to Respondent.
Findings Of Fact Between May 18 and June 5, 1990, Petitioner James G. Young sold a total of 40 truckloads of watermelons to Respondent Maddox Brothers Produce, Inc. Petitioner was to have received a price of five cents per pound through May 26, 1990 and four cents per pound through the remainder of the shipping season. Respondent has failed to pay $60,748.78 of the amount owed to Petitioner for such produce. At no time did Petitioner received any complaint that the watermelons were unsatisfactory. Respondent is a licensed agricultural dealer engaged in the business of brokering agricultural products, Florida license #0030. Respondent is subject to regulation by the Department. Respondent has posted a Fireman's Fund Insurance Company surety bond #11141308327 in the amount of $50,000 with the Department. Respondent did not appear at the hearing. No evidence was presented to contradict the testimony of the Petitioner.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that The Florida Department of Agriculture and Consumer Services enter a Final Order requiring Maddox Brothers Produce, Inc., to pay to Petitioner the sum of $60,748.78. DONE and RECOMMENDED this 26th day of April, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM 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 26th day of April, 1991. COPIES FURNISHED: The Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard Tritschler General Counsel 515 Mayo Building Tallahassee, Florida 32399-0800 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture 508 Mayo Building Tallahassee, Florida 32399-0800 James G. Young Route 3 Box 272-A Wildwood, Florida 34758 Patricia M. Harper, President Maddox Brothers Produce, Inc. 2124 Forest Avenue Knoxville, Tennessee 37916 Fireman's Fund Insurance Company Surety Claims Center Post Office Box 193136 San Francisco, Florida 94119-3136
Findings Of Fact At all pertinent times, respondent Beach Landscaping, Inc. d/b/a Landscape Technologies or Landscape Technologies, Inc. or as Land Tech (Beach) operated as a dealer in agricultural products under license No. 2889 issued by the Department of Agriculture and Consumer Services (DACS). On Beach's behalf, respondent Regency Insurance Company posted a surety bond with DACS, No. SF00356 in the amount of $3,000, effective September 24, 1988, through September 23, 1989, to secure payment for Florida agricultural products. Testimony of Brooks. On August 30, 1989, Beach took delivery from petitioners of seven live oak trees petitioners grew near Chiefland, Florida, agreeing to pay $125 for each which, with sales tax, aggregated $927.50. Petitioners's Exhibit No. 1, Inv. No. 716280. Testimony of Cochran. Having earlier made a deposit of $637.50, Beach took delivery from petitioners on September 18, 1989, of 15 Florida-grown live oak trees, agreeing to pay $170 for each. With sales tax (but less the deposit) Beach owed petitioners $2,065.50 on account of this transaction. Petitioners's Exhibit No. 1, Inv. No. 716788. Testimony of Cochran. The next day Beach took delivery from petitioners of 15 more Florida- grown trees again agreeing to pay $170 for each. Again with sales tax and less an earlier deposit, indebtedness on account of the transaction aggregated $2,065.50. Petitioners's Exhibit No. 1, Inv. No. 716790. Testimony of Cochran. Finally, on September 20, 1989, Beach took delivery from petitioners of 16 Florida-grown live oak trees, agreeing to pay $170 for each, which with sales tax and less an earlier deposit, amounted to $2,203.20. Petitioners's Exhibit No. 1, Inv. No. 716791. Testimony of Cochran. On March 3, 1990, Beach or Landscape Technologies, Inc. paid petitioners $1,000, thereby reducing indebtedness to petitioners on account of the foregoing transactions from $7,261.70 to $6,261.70. Petitioners applied a check in the amount of $1,500 to reduce the indebtedness to $4,761.70, even though the check purported to be in payment of another invoice. In the answer it filed with DACS, Landscape Technologies, Inc., admitted indebtedness of $4,661.10.
Recommendation It is, accordingly, RECOMMENDED: That DACS order Beach to pay petitioners four thousand seven hundred sixty-one dollars and seventy cents ($4,761.70) within fifteen (15) days of the final order. That, in the event Beach fails to pay petitioners four thousand seven hundred sixty-one dollars and seventy cents ($4,761.70) within fifteen (15) days of the final order, DACS order Regency Insurance Company to pay three thousand dollars ($3,000) or such lesser sum as satisfies the requirements of Section 604.21(8), Florida Statutes (1989), for disbursal to petitioners. DONE and ENTERED this 19th day of April, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of April, 1991. COPIES FURNISHED TO: CHRISTOPHER B. PHILLIPS LANDSCAPE TECHNOLOGIES, INC. 523 LAKEVIEW ROAD CLEARWATER, FL 34616 REGENCY INSURANCE COMPANY POST OFFICE BOX 190 HALLANDALE, FL 33009-0190 CLINTON H. COULTER, JR., ESQUIRE DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES TALLAHASSEE, FL 32399-0800 J. COCHRAN & RUSSELL STRANGE C & S TREE FARM ROUTE 1, BOX 738 CHIEFLAND, FL 32626 HONORABLE BOB CRAWFORD COMMISSIONER OF AGRICULTURE DEPARTMENT OF AGRICULTURAL AND CONSUMER SERVICES THE CAPITOL, PL-10 TALLAHASSEE, FL 32399-0810 RICHARD TRITSCHLER, GENERAL COUNSEL DEPARTMENT OF AGRICULTURAL AND CONSUMER SERVICES 515 MAYO BUILDING TALLAHASSEE, FL 32399-0800
The Issue The issue is whether Boyer Produce, Inc. and its surety, Southern Farm Bureau Casualty Insurance Company, owe petitioner $1,751.80 as alleged in the complaint.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: In July 1993, petitioner, Patricia Thomas, was given authority by her brother to sell all remaining watermelons on his farm located in Citra, Florida. This amounted to approximately one truckload. She eventually sold them to respondent, Boyer Produce, Inc., a dealer (broker) in agricultural products located in Williston, Florida. Its owner and president is Kennedy Boyer (Boyer), who represented his firm in this proceeding. As an agricultural dealer, respondent is required to obtain a license from and post a surety bond with the Department of Agriculture and Consumer Services (Department). In this case, the bond has been posted by respondent, Southern Farm Bureau Casualty Insurance Company, and is in the amount of $75,000.00. Although the parties had never had business dealings before this transaction, through a mutual acquaintance, Randy Rowe, respondent learned that petitioner was interested in selling her watermelons. After Boyer visited the field and examined three watermelons which he described as "good," Boyer offered to purchase a truckload for 4 per pound if all melons were of the same quality. Thomas declined and counteroffered with a price of 5 per pound. The parties then agreed to split the difference and arrived at a sales price of 4 per pound. During the negotiations, Rowe acted as an intermediary between the parties and observed the formation of the contract as well as the loading of the goods onto the truck. Although the matter is in dispute, it is found that both parties agreed that Thomas would be paid 4 per pound for "good" watermelons delivered. This meant that petitioner would not be paid unless and until the watermelons were delivered to their final destination in "good" condition. In the trade, being in "good condition" meant that the watermelons would meet U. S. Grade No. 1 standards. Respondent also agreed to provide a truck and driver at petitioner's field and to transport the produce to Brooklyn, New York, the final destination. At the same time, petitioner was given the responsibility of loading the watermelons on the truck. To assist petitioner in meeting her up- front labor costs, respondent advanced $500.00 as partial payment for the shipment. Winston Smith was hired by respondent to transport the melons to New York. He arrived at petitioner's field on Saturday, July 16, 1993, and remained there while approximately 46,000 pounds of melons were loaded on an open top flat bed trailer. One of the loaders said the melons were "packed real tight," and four bales of straw were used in packing. According to Rowe, who observed the loading, the watermelons packed that day were in "good" condition, and any nonconforming watermelons were "kicked" off the truck. Also, by way of admission, the driver, as agent for Boyer, acknowledged to Rowe that the melons loaded were in "good" condition. Late that afternoon, a thunderstorm came through the area and, due to lightening, no further loading could be performed. Since around 46,000 pounds had already been loaded, petitioner desired for the truck to be sent on its way north. Smith, however, told petitioner he wanted 50,000 pounds in order to make his trip to New York worthwhile and he would not go with anything less. Acceding to his wishes, petitioner agreed to meet Smith the next morning and load an additional two hundred watermelons, or 4,000 pounds, on the truck. Smith then drove the loaded truck to a nearby motel where he spent the night. That evening it rained, and this resulted in the uncovered watermelons and straw getting wet. The next morning, Smith telephoned petitioner and advised her to meet him at 9:00 a. m. at a local Starvin' Marvin store, which had a weight scale that could certify the weight of the shipment. Petitioner carried two hundred watermelons to the store at 9:00 a. m., but Smith did not arrive. Around noon, she received a call from Smith advising that his truck was broken down at the motel and would not start. The watermelons were then taken to the motel and loaded onto the trailer. In all, 50,040 pounds were loaded. Smith's truck would still not start after the watermelons were loaded, and Smith refused to spend any money out of his own pocket to repair the truck. Not wanting to delay the shipment any longer, petitioner gave Smith $35.00 to have someone assist him in starting the vehicle. In order for the repairs to be made, the loaded trailer had to be jacked up and the truck unhooked from and later rehooked to the trailer. This was accomplished only with great difficulty, and Smith was forced to "jostle" the trailer with the power unit for some two hours altogether. According to Rowe, he warned Smith that such jostling could bruise the melons and "mess them up." Smith was also cautioned early on that he should make the necessary repairs as soon as possible so that the load of watermelons would not continue to sit uncovered in the sun. The truck eventually departed around 9:00 p. m., Sunday evening after the uncovered trailer had sat in the sun all day. The shipment was delivered to Brooklyn on the following Tuesday afternoon or evening, and it was inspected by a government inspector on Wednesday morning. According to the inspection report, which has been received in evidence, the load was split evenly between crimson and jubilee melons, and 23 percent and 21 percent, respectively, of the two types of melons failed to meet grade. No greater than a 12 percent "margin" is allowed on government inspections. Almost all of the defects cited in the report were attributable to the melons being "over-ripe." The buyer in New York rejected the entire shipment as not meeting standards. Respondent then sold the shipment for only $1350.00 resulting in a loss of $350.00 on the transaction. In addition, respondent says the driver (Smith) accepted $1200.00 instead of the $2,000.00 he would have normally charged to transport a load to New York. When petitioner asked for her money a few weeks later, respondent declined, saying the goods had not met specification when delivered to their destination, and if she had any remedy at all, it was against Smith, the driver. If petitioner had been paid 4 per pound for the entire shipment, she would have been entitled to an additional $1,751.80, or a total of $2,251.80. Petitioner contends that the melons failed to meet grade because of the negligence of the driver. More specifically, she says the loaded melons sat in the sun for almost two days, including all day Sunday after being soaked from the Saturday evening rain. If wet melons are exposed to the hot sun for any length of time, they run the risk of "wet burning," which causes decay. But even if this occurred, only 1 percent of the shipment was found to have "decay" by the government inspector. Petitioner also says that by being jostled for two hours on Sunday, the melons were bruised. Again, however, the melons were rejected primarily because they were over-ripe, not bruised. Therefore, and consistent with the findings in the inspection report, it is found that the jostling and wet burning did not have a material impact on the quality of the melons. Respondent contended the melons were close to being fully ripened when they were picked and loaded. In this regard, Charles Strange, Sr. agreed that if the melons sat in the field for another four or five days, they would have started "going bad." By this, it may be reasonably inferred that, unless the melons were loaded and delivered in a timely manner, they would have become over-ripe and would not meet grade within a matter of days. Therefore, a timely delivery of the melons was extremely important, and to the extent respondent's agent, Smith, experienced at least a twenty-four hour delay in delivering the melons through no fault of petitioner, this contributed in part to their failure to meet grade. Petitioner is accordingly entitled to some additional compensation, a fair allocation of which is one-half of the value of the shipment, or $1125.90, less the $500.00 already paid.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by the Department of Agriculture and Consumer Services requiring respondent to pay petitioner $625.90 within thirty days from date of the agency's final order. In the event such payment is not timely made, the surety should be liable for such payment. DONE AND ENTERED this 2nd day of December, 1993, in Tallahassee, Florida. DONALD R. ALEXANDER 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 2nd day of December, 1993. COPIES FURNISHED: Honorable Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Brenda D. Hyatt, Chief Bureau of Licensing & Bond 508 Mayo Building Tallahassee, Florida 32399-0800 Richard A. Tritschler, Esquire The Capitol, PL-10 Tallahassee, Florida 32399-0810 Southern Farm Bureau Casualty Insurance Company Post Office Box 1985 Jackson, Mississippi 39215-1985 Patricia Thomas Post Office Box 522 Archer, Florida 32618 Kennedy Boyer 15A South West 2nd Avenue Williston, Florida 32696
Findings Of Fact Respondent Charles W. Crowell, a State Farm agent under the terms of an agency agreement declaring him an independent contractor, has never employed 15 or more employees at any one time. During the 20 weeks next before petitioner Donna Clark left his employ, he had no more than three full-time and two part- time employees. As a State Farm agent, Mr. Crowell is contractually bound not to represent other insurance companies. State Farm, which has employed more than 15 persons at all pertinent times, prescribes policy forms, premiums, fees and charges for insurance, and prescribes underwriting rules its agents (and so their employees) must follow. Most premiums reach State Farm in the form of checks drawn by insured persons. But, as required by state law and his agreement with State Farm alike, Mr. Crowell maintains a separate premium fund account, into which customers' cash premium payments are deposited. Moneys are disbursed directly from this account to State Farm, which has the right to audit the account. State Farm determines Crowell's compensation based on the amount of premiums it receives on policies he has written, and writes him checks accordingly. At year's end, State Farm reports these payments to the IRS on a form 1099, not on a W-2 form. Mr. Crowell receives no compensation directly from the premium fund account. When an agent retires and in certain other instances, State Farm allocates policies among remaining agents, while honoring preferences policyholders express for particular agents. But it does not restrict agents to a particular territory or otherwise dictate where its agents conduct business. State Farm reserves the right to approve any advertising by an agency using State Farm's name or logo. But certain business cards bearing the logo are "pre-approved," except for the name of the agent or other employee in the agent's office which is to appear on the card. Mr. Crowell sets his own hours and it was he who decided the office would open at nine and close at five. Some days he does not open his office for business, even though State Farm offices are open. If he closes his office on days State Farm is closed, it may well be because he cannot do business with State Farm. But he is free to keep office hours on such days if he chooses. His compensation does not depend directly on the amount of time his office is open, or on the amount of time he spends at work. Mr. Crowell, not State Farm, decides whom to employ in his office, and sets hours, salaries and benefits for these employees. He, not State Farm, personally pays wages and benefits (if any), along with employment taxes for which employers are liable on account of their employees. But, on unemployment compensation tax forms, gives as the employer's name "CHARLES W. CROWELL STATE FARM INSURANCE COS" and signs as Charles W. Crowell Agent." Respondent's Exhibit No. 2. Mr. Crowell drew salary checks in favor of Ms. Clark and other employees in his office on his own business checking account, which is not subject to audit by State Farm. These salary checks did not bear State Farm's name or logo. The parties have stipulated, as follows: "5. Crowell's office is located at 908 Michigan Avenue in Pensacola, Florida, and he personally owns the property and building where his office is located. State Farm has no interest or property rights in this facility. The only forms, manuals, and other documents located in Crowell's office which are the property of State Farm are insurance product information, including names of policyholders. The equipment, furniture and other supplies located at or used in Crowell's office are owned or leased by Crowell, and not State Farm. Crowell personally hired Donna M. Clark, and State Farm took no part in, exercised no control over, and had no input regarding Crowell's decision to hire Ms. Clark. Crowell sets the work hours, wages and benefits of his employees, including the number of employees employed by his business, without consultation with or the approval of State Farm. Crowell personally pays the salaries or wages and employment taxes, including Florida Workers' Compensation, Unemployment Compensation, Social Security (FICA) and federal tax withholding, on all of his employees, including Ms. Clark, and State Farm pays no salaries to or taxes on behalf of any of Crowell's employees. State Farm provides no benefits to the employees of its State Farm agents, and Crowell decides whether employment benefits such as health or life insurance are provided to Crowell's employees, including whether there is any cost to the employee. Such policies can be purchased by the State Farm Agent from State Farm, if he chooses to do so. Crowell, not State Farm, maintains all personnel records on his employees, including Ms. Clark. State Farm does not have any personnel records as to petitioner Donna Clark. Crowell's business is to sell State Farm policies and service State Farm policyholders. State Farm prescribes policy forms, premiums, fees and charges for insurance, and prescribes underwriting rules pertaining to writing State Farm insurance. Employees of State Farm Agents such as Mr. Crowell are not required to attend State Farm meetings or training sessions. State Farm offers training on topics selected by State Farm Agents, to which the State Farm Agents, such as Mr. Crowell, may choose to send their employees, for a fee payable to State Farm. State Farm requires Crowell to maintain a premium fund account, which is a trust account for the deposit of insurance premiums which are the property of State Farm. All cash premiums from policyholders are deposited to the premium fund account, and premium funds are promptly forwarded to State Farm. Premiums paid by check are sent directly to State Farm, and the large majority of premiums received by Crowell are by check. The premium fund account is subject to auditing by State Farm. As part of the audit of the premium fund account, State Farm develops a profit and loss statement which compares the claims experience of policies serviced by the Agent to the premiums generated by those policies and thus reflects the profit or loss to State Farm. Such profit and loss statement is for State Farm's own use in determining its own profitability and does not show or indicate the success of Mr. Crowell in his personal business as an insurance agent. Crowell maintains separate accounts for his personal and business funds which are not subject to any auditing by State Farm. Crowell is not paid for his sales activities out of the premium fund account, but is paid on a commission basis after all premium funds have been deposited with State Farm. Crowell personally directed Clark to attend certain training courses conducted by the local district manager of State Farm on underwriting insurance and product knowledge only. State farm does not require State Farm Agents to send their employees to training courses conducted by State Farm. State Farm does not allow employees of State Farm Agents to attend training courses concerning financial management or conduct of the agency, and Clark did not attend any such courses." Although not stipulated by the parties, evidence showed that, at one of the training courses Ms. Clark attended, a speaker told employees in attendance that they comprised State Farm's "front line." State Farm decides, with input from its agents, which courses and seminars to offer, but it is up to individual agents to decide who, if anybody, attends from their offices. State Farm employees known as agency managers coordinate operations of agents in their assigned area. When the agency manager decides another agent is needed, he recruits a trainee, who works for State Farm for two years or so (unless discharged earlier.) After this period of training, State Farm offers most trainees the opportunity to terminate employment and become agents. With State Farm's permission, an agent may incorporate. Even as independent contractors, agents receive contributions from State Farm toward personal insurance premiums, which are treated as part of the agents' income. The State Farm manager for the Pensacola area while Ms. Clark worked in Mr. Crowell's office offered bonuses to agents' employees who won contests, although this violated company policy. Ms. Clark did not, however, participate in any contest or receive a bonus. A number of unlicensed people in Mr. Crowell's office sign policies when he is unavailable. Because this practice is widespread, Insurance Commissioner Gallagher has insisted that insurance agents see that more office staff are licensed. Accordingly, State Farm's agency manager has asked State Farm agents to identify office personnel for licensure. Employees of a State Farm agency must be approved by State Farm, in order to obtain licenses. After an agent identifies an employee and the employee sits for an examination, State Farm does a background check and makes its decision about sponsorship. Ms. Clark did not seek licensure as an insurance agent, although she was among those who signed policies. In the course or her work, she spoke directly with underwriting personnel in Jacksonville, on Mr. Crowell's behalf or with his acquiescance.
Recommendation It is, accordingly, RECOMMENDED: That the Florida Commission on Human Relations enter a final order dismissing the petition. DONE and ENTERED this 3rd day of August, 1990, in Tallahassee, Florida. ROBERT T. BENTON, II 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 3rd day of August, 1990. COPIES FURNISHED: Donald A. Griffin, Executive Director Florida Commission on Human Relations 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1570 Dana Baird, General Counsel Florida Commission on Human Realtions 325 John Knox Road Building F, Suite 240 Tallahassee, FL 32399-1570 Karen Lessard, Esquire 15 West LaRua Street Pensacola, FL 32501 Kathryn Errington, Esquire HARRELL, WILTSHIRE, SWEARINGEN, WILSON & HARRELL, P.A. 201 East Government Street P.O. Drawer 1832 Pensacola, FL 32501 Mary Jarrett, Esquire 2065 Herschel Street P.O. Box 40089 Jacksonville, FL 32203
The Issue The issues are whether (a) respondent, Medardo G. Soto, should have a $1,500 civil penalty imposed for allegedly violating Sections 450.33(5) and and 450.35, Florida Statutes (1989), and (b) whether respondent, Martin G. Soto, should have a $250 civil penalty imposed for allegedly violating Section 450.30, Florida Statutes (1989).
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: This controversy arose on the morning of January 29, 1990, when Larry Coker, a compliance officer with petitioner, Department of Labor and Employment Security, Division of Labor, Employment, and Training (Division), made an inspection of a citrus harvesting crew working in an orange grove on the Black Bay Citrus and Cattle Company on County Road 763 in DeSoto County, Florida. The purpose of the inspection was to determine whether the crew and its supervising contractor were in compliance with state regulations. Upon entering the premises, Coker observed a crew of eighteen workers harvesting fruit in a citrus grove. Respondent, Martin G. Soto (Martin), was operating a high lift at the work site. Coker approached Martin and asked him who was the farm labor contractor for the crew. Martin responded that his brother, Medardo G. Soto (Medardo), who is also a respondent in this cause, was the licensed farm labor contractor but he (Medardo) was in Immokalee. Martin acknowledged that he (Martin) was supervising the crew for his bother and was being paid $50 per day to do so. Division records reflect that Martin is not licensed by the State to perform that activity. Accordingly, it has been established through Martin's admissions and Coker's observations that Martin was acting as a farm labor contractor without a license. Martin was issued a citation that day which he read and signed. At the bottom of the citation Martin acknowledged that the charges contained therein were true. By allowing his brother to supervise a crew without a proper license, Medardo used an unregistered farm labor contractor in contravention of the law. Martin further acknowledged that he had driven the workers to the field that day in Medardo's 1986 Ford van. A search of Division records revealed that the 1986 Ford van did not have the required vehicle inspection or proof of liability insurance on file with Division offices. Agency rules require that evidence of such inspection and insurance be filed with the Division. Accordingly, it is found that Medardo operated a vehicle used to transport workers without furnishing the Division proof of the necessary vehicle inspection and insurance.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered finding that respondent Medardo G. Soto has violated Sections 450.33(5) and (9) and 450.35, Florida Statutes (1989) and that respondent Martin G. Soto has violated Subsection 450.30(1), Florida Statutes (1989). It is further recommended that Medardo and Martin Soto be fined $1,500 and $250, respectively, such fines to be paid within thirty days from date of the final order entered by the Division. DONE and ENTERED this 29th of October, 1990, in Tallahassee, Florida. DONALD ALEXANDER Hearing Officer Division of Administraive 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 29th day of October, 1990. COPIES FURNISHED: Francisco R. Rivera, Esquire 307 Hartman Building 2012 Capital Circle, S. E. Tallahassee, FL 32399-0658 Mr. Medardo G. Soto 1013 North 19th Street Immokalee, FL 33934 Mr. Martin Soto 1013 North 19th Street Immokalee, FL 33934 Hugo Menendez, Secretary Dept. of Labor and Employment Security 307 Hartman Building 2012 Capital Circle, S. E. Tallahassee, FL 32399-0658 Stephen D. Barron, Esquire 307 Hartman Building 2012 Capital Circle, S.E. Tallahassee, FL 32399-0658
The Issue Should the Department of Insurance (now known as the Department of Financial Services, Office of Insurance Regulation) (Department) approve three insurance endorsement forms that State Farm Florida Insurance Company (State Farm) filed on November 15, 2001?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: State Farm is a domestic insurance company that the Department has licensed to transact property and casualty insurance in the State of Florida. The Department is the state agency charged with the duty to regulate insurers doing business in the State of Florida. State Farm offers five types of homeowners' policies that have been approved for use in Florida, an FP-7921 (HO1), FP-7923 (HO3), FP-7924 (HO4), FP-7925 ( HO5-Extra), and FP-2926 (HO6). The HO1 is a "named perils" policy and provides coverage only for those perils specifically named in the policy. This policy is not offered in other states, and in Florida accounts for less than one percent of all of all policies in force. The HO3, HO5, and HO6 policies are known as "open perils" policies providing coverage for all risks unless specifically excluded by the policy. Although similar to HO3, the HO5 policy provides somewhat broader coverage with respect to settlement provisions. The HO6 policy is specifically geared toward condominium owners and the HO4 policy is the policy form that applies to renters. Of all the policies offered in Florida, the HO3 is the most widely used policy form and will be quoted from and used as the exemplar in this Recommended Order. The HO3 policy contains introductory provisions entitled "Declarations" and "Definitions," and is then divided into two coverage sections, Sections I and II. Section I refers to property coverage and with Section II referring to liability coverage. Section I is divided into a number of subcategories including the following: Coverage A (Dwelling), Coverage B (Personal Property), Section C (Loss of Use), Additional Coverage, Losses Insured, Losses Not Insured, and Conditions. Following the Section II provisions there are additional sections entitled "Section I and II-Conditions" and a section entitled "Optional Provisions." The HO3 policy provides coverage under Coverage A (Dwelling) for all risks of loss unless it is a "loss not insured." As stated in the policy: "We insure for accidental direct physical loss to the property described in Coverage A, except as provided in SECTION I - LOSSES NOT INSURED." (Emphasis in the original.) However, coverage for personal property (Coverage B) does not provide such "open perils" coverage. Rather, it provides coverage only for 16 named perils, contains a number of limitations on personal property that it does cover, and reflects a number of personal property items that it does not cover. All of State Farm's homeowners' policies currently provide some limited coverage relating to mold. Although the policies exclude mold as a covered peril, they provide some limited coverage for mold-related losses resulting from covered perils, such as a covered water loss that causes mold-related damage. Historically, there have been exclusions in property insurance for ordinance of law, earth movement, flood, war, the neglect of the insured, and nuclear hazard. Mold that resulted from a covered peril has historically not been excluded. On November 15, 2001, State Farm filed three proposed endorsement forms (Fungus (Including Mold) Exclusion Endorsement): (1) FE-5397 for use with HO1 policies; (2) FE- 5398, for use with HO3, HO5, and HO6 policies; and (3) FE-5399 for use with HO4 policies. The homeowners' policies, which the endorsements were to apply, had been previously approved by, and were on file with the Department, in accordance with Section 627.410, Florida Statutes. The goal of the endorsements was to eliminate mold coverage from State Farm's existing homeowners policies in Florida. State Farm's current rates do not include the cost of providing the mold coverage that the endorsements seek to exclude. However, there is insufficient evidence to establish facts to show that State Farm would need to substantially raise its rates to include those costs. Before filing the mold-exclusion endorsements, State Farm entered into discussions with the Department about giving policyholders the choice of buying back some of the to-be- excluded mold coverage through buy-back endorsements (buy- backs). State Farm filed its buy-backs in June 2002, after failing to work out a solution with the Department that would have allowed for their approval. Although the Department disapproved the buy-backs in December 2002, State Farm has committed itself to provide policyholders with the optional buy-backs, if the exclusions are approved. If the exclusion endorsements are approved along with the buy-back provisions, any cost increase would be restricted to those policyholders who choose to purchase mold coverage through a buy-back. State Farm's filings of mold-exclusion endorsements are consistent with a nationwide effort by State Farm Fire & Casualty Insurance Company, an affiliate of State Farm to eliminate mold coverage in homeowners policies. In Florida, State Farm's endorsements accomplish the complete elimination of mold coverage chiefly through the addition of a new exclusion for fungus, including mold, within "SECTION I - LOSSES NOT INSURED." (Emphasis in the original.) The endorsements, when coupled with the underlying policy, state in relevant part as follows: 2. We do not insure under any coverage for any loss which would not have occurred in the absence of one or more of the following excluded events. We do not insure for such loss regardless of: (a) the cause of the excluded event; or (b) other causes of the loss; or (c) whether other causes acted concurrently or in any sequence with the excluded event to produce the loss; or (d) whether the event occurs suddenly or gradually, involves isolated or widespread damage, arises from natural or external forces, or occurs as result of any combination of these: * * * g. Fungus. (Emphasis in the original.) (The text of the endorsement is underlined.) The endorsements delete all references to the term mold found in SECTION 1 - LOSSES INSURED. (Emphasis in the original.) The endorsements define fungus as follows: "fungus" means any type or form of fungus, including mold, mildew, mycotoxins, spores, scents or byproducts produced or released by fungi. (Emphasis furnished.) This total exclusion of mold coverage, using language clearly encompassing all manner of causation and occurrence, replaces the mold exclusions in the existing policies that do not use such broad language. The difference between the post- and pre-endorsement policies can be seen from comparing the above-quoted endorsement as incorporated into HO3 policy on the one hand, with the mold exclusions as they currently exist in the HO3 policy on the other hand. While the endorsements totally exclude coverage for fungus (mold), and deny payment for mold damage historically provided to insureds, the endorsements are not ambiguous, notwithstanding the testimony offered by the Department to the contrary, which lacks credibility. The endorsements do not add coverage. Instead, the endorsements eliminate coverage for mold that currently exists. However, this fact alone does not render the endorsements inconsistent, misleading, or deceptive when the endorsements are read in their entirety along with the remaining provisions of the policies. State Farm's endorsements were initially deemed approved pursuant to Section 627.410, Florida Statutes, which provides that an endorsement filed with the Department is deemed approved if it is not approved or disapproved within 30 days, or 45 days if there has been an extension, of its filing.. By letter dated June 28, 2002, the Department withdrew its deemed approval of the three endorsements and notified State Farm of its basis for disapproval. The Department's original disapproval letter cites three bases for disapproval. The Department asserts that State Farm's endorsements: (1) contain ambiguities in violation of Section 627.411(1)(b), Florida Statutes; (2) deceptively affect the risk purported to be assumed in the general coverage of the contract, also in violation of Section 627.411(1)(b), Florida Statutes; and (3) deny policyholders the right to obtain "comprehensive coverage" as that term is used in Section 626.9641(1)(b), Florida Statutes, which is part of the policyholders' bill of rights. On December 4, 2002, the Department moved for leave to amend its original disapproval letter. The motion was granted. The Department's amended disapproval letter, which the Department back-dated to June 28, 2002, reiterates the previously alleged bases for disapproval and cites two additional bases for disapproval: (1) the alleged violation of Section 626.9641(1)(b), Florida Statutes, itself constitutes a violation of Section 627.411(1)(a), Florida Statutes; and (2) the endorsements, because they exclude coverage that "through custom and usage has become a standard or uniform provision" in Florida, violate Section 627.412(2), Florida Statutes. There is insufficient evidence to establish facts to show that the provision for mold coverage has, through custom and usage, become a standard or uniform provision. Likewise, there is insufficient evidence to establish facts to show that there is a "natural association between mold and water." In the fall of 2001, the Department began receiving a large influx of filings seeking to exclude or severely limit coverage for mold. Including State Farm's filing, the Department received between 400 and 450 filings representing between 200 and 250 insurers primarily between October 1, 2001, through the end of 2002. In the face of the inordinate number of filings, the Department sought input from all sectors of the public. The Department met with insurers and other interested persons and held four public forums around the state to determine the impact the filings would have on insurance contracts, the industry, and the market place. In the mean time, the Department routinely sought waivers from the insurers of the statutory review period set forth in Section 627.410(2), Florida Statutes, and additionally requested that insurers withdraw their filings. Insurers were advised by the Department that failure to waive the statutory review period or to withdraw their filings would result in the filing being disapproved. The Department initially approved the endorsements to limit or exclude mold coverage of three insurers: USAA, Maryland Casualty, and American Strategic. However, the Department withdrew its approval for each of these companies in letters dated September 18, 2002. The Department asserts that it does not have a policy to disapprove filings simply because they discuss mold or seek to limit or exclude coverage for claims involving mold damage. The Department admits that it is required to examine all filings based upon the statutory scheme. However, the Department has not approved a single one of the over 450 filings, regardless of the language or structure of the endorsements. The simple fact is that the Department had a policy from the fall of 2001 through December 16, 2002, imposing a moratorium on the exclusion or limitation of mold coverage. The Department altered that policy on December 17, 2002, when it entered into a settlement with Florida Farm Bureau General Insurance Company (Farm Bureau), wherein Farm Bureau's endorsement was approved allowing a reduction in mold coverage from policy limits to a sub-limit of $10,000.00 per occurrence, $20,000.00 annual aggregate. The Department's previous position that policies offered to Florida's consumers should not be significantly reduced was abandoned at that time. There was insufficient evidence to establish facts to show that the $10,000.00 coverage was a reasonable amount of coverage for the vast majority of claims for mold damage. The endorsements seek to limit or exclude coverage for mold that has existed for decades. There is scant Florida experience to support the need for limitations or exclusions on mold coverage. Even so, the Department cannot disapprove endorsement forms without authority to do so. There is no statutory authority mandating mold coverage to the extent of policy limits or otherwise in order for policyholders to have comprehensive coverage. Beginning September 15, 2001, the Department did not approve a single mold endorsement seeking to exclude or limit coverage for mold as a resulting loss from a covered peril until December 17, 2002, when it approved a filing by Farm Bureau as a part of a settlement of an administrative proceeding in which the parties were awaiting ruling after a final hearing.
Recommendation Based on the foregoing Findings of Fact and conclusions of Law, it is RECOMMENDED that the Department enter a final order approving the endorsements filed with the Department by State Farm on November 15, 2001. DONE AND ENTERED this 5th day of June, 2003, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 5th day of June, 2003. COPIES FURNISHED: S. Marc Herskovitz, Esquire Division of Legal Services Department of Financial Services Office of Insurance Regulation 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 Anthony B. Miller, Esquire Division of Legal Services Department of Financial Services Office of Insurance Regulation 612 Larson Building 200 East Gaines Street Tallahassee, Florida 32399-0333 C. Ryan Reetz, Esquire Jim Toplin, Esquire Amie Riggle, Esquire Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33131 Vincent J. Rio, III, Esquire State Farm Florida Insurance Company 315 South Calhoun Street, Suite 344 Tallahassee, Florida 32301 Mark Casteel, General Counsel Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300 Honorable Tom Gallagher Chief Financial Officer Department of Financial Services The Capitol, Plaza Level 11 Tallahassee, Florida 32399-0300
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following findings of fact: On January 9, 1986, Ron Brooks, Crew Chief Compliance Officer for the Bureau of Agricultural Programs performed a compliance check in a citrus grove on Lindsey Road, Indian River County, owned by Hamilton Groves of Vero Beach, Florida. Brooks observed Hector Florez and Juan Florez apparently supervising two crews harvesting crops across the road from one another. When Brooks confronted the two men, neither Hector nor Juan Florez could produce a certificate of registration and there were no "Work Conditions Statement" postings at either worksite. Both Hector and Juan Florez stated that the Respondent, Noe Florez, was the contractor and that they worked for him. They stated that Respondent was running another crew at a different location. Later that day, Brooks' investigation revealed that Richard Kirkland was the primary contractor. When Brooks spoke with Kirkland, Kirkland stated that the workers were split up into three crews and that Respondent worked for him and was in charge of all three crews. On January 9, 1986, the Respondent was not registered as a farm labor contractor with the Department of Labor and Employment Security. Brooks subsequently issued violation citations to Richard Kirkland for working an unregistered crewleader and to Respondent, for failure to register as a farm labor contractor.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that a civil penalty of $1,000 be assessed against Respondent. DONE and ORDERED this 17th day of April, 1987 in Tallahassee, Leon County, Florida. W. MATTHEW STEVENSON 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 17th day of April, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-4344M The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner (None submitted) Rulings on Proposed Findings of Fact Submitted by the Respondent Adopted in Finding of Fact 4. Adopted in Finding of Fact 6. Rejected as unnecessary and/or subordinate. Addressed in Procedural Backgrounds Section. COPIES FURNISHED: Moses E. Williams, Esquire. Department of Labor and Employment Security The Montgomery Bldg., Suite 117 2562 Executive Center, East Tallahassee, Florida 32399-0658 Noe B. Florez 6990 45th Street Vero Beach, Florida 32960 Kenneth Hart, Esquire General Counsel Department of Labor and Employment Security 131 Montgomery Building 2562 Executive Center Circle, East Tallahassee, Florida 32399-0658 Hugo Menendez Secretary Department of Labor and Employment Security 206 Berkeley Bldg. 2590 Executive Center Circle, East Tallahassee, Florida 32399-2152
