01-003934PL
Department Of Insurance vs.
John L. Vath
Status: Closed
Recommended Order on Friday, February 22, 2002.
Recommended Order on Friday, February 22, 2002.
1STATE OF FLORIDA
4DIVISION OF ADMINISTRATIVE HEARINGS
8DEPARTMENT OF INSURANCE, )
12)
13Petitioner, )
15)
16vs. ) Case No. 01 - 3933PL
23)
24MILDRED M. VATH, )
28)
29Respondent. )
31_____________________________________)
32DEPARTMENT OF INSURANCE, )
36)
37Petitioner, )
39)
40vs. ) Case No. 01 - 3934PL
47)
48JOHN L. VATH, )
52)
53Respondent. )
55_____________________________________)
56RECOMMENDED ORDER
58On November 30, 2001, a formal administrative hearing in
67this case was held by videoconference in Tallahassee and Tampa,
77Flori da, before William F. Quattlebaum, Administrative Law
85Judge, Division of Administrative Hearings.
90APPEARANCES
91For Petitioner: James A. Bossart, Esquire
97Department of Insurance
100Division of Legal Services
104200 East Gaines Street, Room 612
110Tallahassee, Florida 32399
113For Respondent: Joseph R. Fritz, Esquire
1194204 North Nebraska Avenue
123Tampa, Florida 33603
126STATEMENT OF THE ISSUE
130The issue in the case is whether the allegations of the
141Administrative Complaints filed by the Petitioner against the
149Respondents are correct and if so, what penalty should be
159imposed.
160PRELIMINARY STATEMENT
162By Administrative Complaints filed on April 10, 2001, the
171Department of Insurance (Petitioner) alleged that Matilda M.
179Vath and John L. Vath (Respondents) violated various provisions
188of the Florida Statutes in their bail bond business. The
198Respondents requested a hearing to address the allegations. The
207Petitioner forward ed the requests to the Division of
216Administrative Hearings, which scheduled and conducted the
223proceeding. The case was transferred to the undersigned
231Administrative Law Judge on November 27, 2001.
238At the hearing, the Petitioner presented the testimony of
247two witnesses and had Exhibits numbered 1 - 4 and 7 - 12 admitted
261into evidence. The Respondents testified on their own behalf.
270A Transcript of the hearing was filed on December 17, 2001.
281Both parties filed Proposed Recommended Orders on January 15,
2902002.
291FINDINGS OF FACT
2941. The Petitioner is the state agency responsible for
303licensure and regulation of limited surety agents (bail
311bondsmen) operating in the State of Florida.
3182. The Respondents are individually licensed as limited
326surety agents in F lorida and are officers and directors of "Big
338John Bail Bonds, Inc.," a bail bond agency.
3463. In November of 1999, Gustavo Porro contacted the
355Respondents regarding bail for Jessie James Bray, a friend of
365Mr. Porro's son. Mr. Porro did not know Mr. Bray .
3764. Based on the charges against Mr. Bray, four bonds were
387issued, two for $1,000 each and two for $250 each, for a total
401bond amount of $2,500. The $1,000 bonds were related to pending
414felony charges and the small bonds were related to pending
424misdemea nor charges.
4275. Mr. Porro signed a contingent promissory note
435indemnifying American Bankers Insurance Company for an amount up
444to $2,500 in the event of bond forfeiture.
4536. Bray did not appear in court on the scheduled date and
465the two $1,000 bonds wer e forfeited. For reasons unclear, the
477two $250 bonds were not forfeited.
4837. The contingent promissory note signed by Mr. Porro
492provided that no funds were due to be paid until the stated
504contingency occurred, stated as "upon forfeiture, estreature or
512b reach of the surety bond."
5188. After Bray did not appear for court, the Respondents
528contacted Mr. Porro and told him that the bonds were forfeited
539and he was required to pay according to the promissory note.
5509. On April 15, 2000, Mr. Porro went to the o ffice of Big
564John Bail Bonds and was told that he owed a total of $2,804,
578which he immediately paid. Mr. Porro was not offered and did
589not request an explanation as to how the total amount due was
601calculated. He received a receipt that appears to have be en
612signed by Ms. Vath.
61610. After Mr. Porro paid the money, Ms. Vath remitted
626$2,000 to the court clerk for the two forfeited bonds. The
638Respondents retained the remaining $804.
64311. Bray was eventually apprehended and returned to
651custody. The Responde nts were not involved in the apprehension.
66112. On July 11, 2000, the court refunded $1,994 to the
673Respondents. The refund included the $2,000 bond forfeitures
682minus a statutory processing fee of $3 for each of the two
694forfeited bonds.
69613. On August 9, 2000, 29 days after the court refunded
707the money to the Respondents, Mr. Porro received a check for
718$1,994 from the Respondents. Mr. Porro, apparently happy to get
729any of his money back, did not ask about the remaining funds and
742no explanation was offe red.
74714. In November of 2000, Ms. Vath contacted Mr. Porro and
758informed him that a clerical error had occurred and that he was
770due to receive additional funds. On November 6, 2000, Mr. Porro
781met with Ms. Vath and received a check for $492.
79115. At the time, that Ms. Vath gave Mr. Porro the $492
803check she explained that he had been overcharged through a
813clerical error, and that the additional amount being refunded
822was the overpayment minus expenses. She explained that the
831expenses included clerical and "investigation" expenses and the
839cost of publishing a notice in a newspaper. There was no
850documentation provided of the expenses charged to Mr. Porro.
85916. At the time the additional refund was made, there was
870no disclosure that the two $250 bonds were ne ver forfeited.
88117. At the hearing, the Respondents offered testimony
889asserting that the charges were miscalculated due to "clerical"
898error and attempting to account for expenses charged to
907Mr. Porro. There was no reliable documentation supporting the
916testimony, which was contradictory and lacked credibility.
923CONCLUSIONS OF LAW
92618. The Division of Administrative Hearings has
933jurisdiction over the parties to and subject matter of this
943proceeding. Sections 120.569 and 120.57(1), Florida Statutes.
95019 . The Department has the burden of proving by clear and
962convincing evidence the allegations against the Respondents.
969Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987). In this case,
981the burden has been met.
98620. The evidence establishes that in their t ransactions
995with Mr. Porro, the Respondents violated sections of the Florida
1005Statutes and the Florida Administrative Code as set forth
1014herein.
101521. Section 648.295(1), Florida Statutes, provides in
1022relevant part as follows:
1026All premiums, return premiums , or other
1032funds belonging to insurers or others
1038received by a person licensed pursuant to
1045this chapter in transactions under her or
1052his license are trust funds received by the
1060licensee in a fiduciary capacity, and the
1067licensee must account for and pay the same
1075to the insurer, insured, or other person
1082entitled to such funds.
108622. The Respondents have failed to properly account for
1095funds paid to them by Mr. Porro. The Respondents have failed to
1107properly return such funds to Mr. Porro.
111423. Section 648.442( 1), Florida Statutes, provides in
1122relevant part as follows:
1126Collateral security or other indemnity
1131accepted by a bail bond agent, except a
1139promissory note or an indemnity agreement,
1145shall be returned upon final termination of
1152liability on the bond.
115624. The Respondents have failed to return the $500 paid to
1167them by Mr. Porro for the two unforfeited misdemeanor bonds.
117725. Section 648.442(4), Florida Statutes, provides in
1184relevant part as follows:
1188When the obligation of the surety on the
1196bond or bonds has been released in writing
1204by the court, the collateral shall be
1211returned to the rightful owner named in the
1219collateral receipt unless another
1223disposition is provided for by legal
1229assignment of the right to receive the
1236collateral to another person.
124026. The evidence fails to establish that the two $500
1250bonds were ever forfeited, and therefore there is no evidence
1260that the court released such forfeited funds. The Respondents
1269have a fiduciary duty to both the client and the insurer.
1280Natelson v. Department of Insurance , 454 So. 2d 31,32 (Fla. 1st
1292DCA 1984). As the fiduciary for Mr. Porro, the Respondents were
1303required to determine the status of the bonds and to pursue
1314their release once the fugitive was returned to the custody of
1325law enforcement officials.
132827. Section 648.45(2), Florida Statutes, provides in
1335relevant part as follows:
1339The department shall deny, suspend, revoke,
1345or refuse to renew any license or
1352appointment issued under this chapter or the
1359insurance code, and it shall suspend or
1366revoke the el igibility of any person to hold
1375a license or appointment under this chapter
1382or the insurance code, for any violation of
1390the laws of this state relating to bail or
1399any violation of the insurance code or for
1407any of the following causes:
1412* * *
1415(d) Willful u se, or intended use, of the
1424license or appointment to circumvent any of
1431the requirements or prohibitions of this
1437chapter or the insurance code.
1442(e) Demonstrated lack of fitness or
1448trustworthiness to engage in the bail bond
1455business.
1456(f) Demonstrated la ck of reasonably
1462adequate knowledge and technical competence
1467to engage in the transactions authorized by
1474the license or appointment.
1478(g) Fraudulent or dishonest practices in
1484the conduct of business under the license or
1492appointment.
1493(h) Misappropriation , conversion, or
1497unlawful withholding of moneys belonging to
1503a surety, a principal, or others and
1510received in the conduct of business under a
1518license.
1519* * *
1522(j) Willful failure to comply with or
1529willful violation of any proper order or
1536rule of the depart ment or willful violation
1544of any provision of this chapter or the
1552insurance code.
1554* * *
1557(l) Demonstrated lack of good faith in
1564carrying out contractual obligations and
1569agreements.
157028. In this case, either the Respondents acted in an
1580untrustworthy and dishonest manner in willful violation of the
1589statutes and rules relevant to this incident or the facts
1599establish a lack of reasonably adequate knowledge and technical
1608competence on their part.
161229. Section 648.45(3), Florida Statutes, provides in
1619relevan t part as follows:
1624(3) The department may deny, suspend,
1630revoke, or refuse to renew any license or
1638appointment issued under this chapter or the
1645insurance code, or it may suspend or revoke
1653the eligibility of any person to hold a
1661license or appointment unde r this chapter or
1669the insurance code, for any violation of the
1677laws of this state relating to bail or any
1686violation of the insurance code or for any
1694of the following causes:
1698* * *
1701(c) Violation of any law relating to the
1709business of bail bond insurance o r violation
1717of any provision of the insurance code.
172430. The evidence establishes that the Respondents have
1732violated the law relating to the business of bail bond insurance
1743as set forth herein.
174731. Section 648.571, Florida Statutes, provides in
1754relevant part as follows:
1758Failure to return collateral; penalty. -- A
1765bail bond agent who has taken collateral or
1773an insurer or managing general agent who
1780holds collateral as security for a bail bond
1788shall, upon demand, make a written request
1795for a discharge of the bond to be delivered
1804to the surety or the agent of the surety.
1813If a discharge is provided to the surety or
1822the agent of the surety pursuant to chapter
1830903, the collateral shall be returned to the
1838indemnitor within 21 days of said discharge
1845being provided. Upon demand, following the
1851written request for discharge and upon
1857diligent inquiry by the surety or the agent
1865of the surety to determine that the bond has
1874been discharged, failure of the court to
1881provide a written discharge to the surety or
1889the agent of the surety pursuant to chapter
1897903 within 7 days, shall cause the
1904cancellation of the bond by operation of law
1912and collateral shall be returned to the
1919indemnitor within 21 days of the written
1926request for discharge. Fees or other
1932charges of any nature othe r than as outlined
1941in this chapter or by rule of the department
1950may not be deducted from the collateral due.
1958However, allowable expenses incurred in the
1964apprehension of the defendant because of a
1971forfeiture of bond or judgment under s.
1978903.29 may be deduct ed if such expenses are
1987accounted for.
198932. The evidence establishes that the Respondents failed
1997to properly return within the specified period of time, the
2007$1,994 that was eventually returned to Mr. Porro.
201633. Additional funds retained by the Respond ents for
2025improperly undocumented "expenses" were due to Mr. Porro and
2034have not been refunded to him.
204034. Rule 4 - 221.105, Florida Administrative Code, provides
2049in relevant part as follows:
20544 - 221.105 Premium Charge Only Permitted.
2061(1) No surety, bail bon d agent, temporary
2069bail bond agent, or managing general agent
2076engaged in the bail bond business shall make
2084any charge, collect, or receive any fee or
2092consideration unless permitted by statute or
2098rule other than the premium based on rates
2106in current use. . . .
2112(2) No bail bond agent shall charge,
2119collect, or receive any fee or consideration
2126for services rendered to the principal or
2133indemnitor in connection with a bail bond,
2140except those fees listed in paragraph (4)
2147and costs necessary to apprehend the
2153prin cipal in the event the principal
2160attempts to flee the jurisdiction of the
2167courts.
2168(3) Prohibited fees include, but are not
2175limited to, any costs regarding arrest,
2181transportation, and surrender within the
2186specified jurisdiction of the court, charges
2192for s torage, maintenance or return of
2199collateral, including releases of liens or
2205satisfactions of mortgages, charges for
2210researching case dispositions or obtaining
2215bond discharges or any charge for other
2222services ordinarily performed by a bondsman
2228or their empl oyees in the regular course of
2237business and any other expenses not
2243documented by check or receipt.
2248(4) Allowable fees include: a) Attorney's
2254fees and court costs associated with filing
2261of motions; b) Documented transportation and
2267lodging expenses outside the jurisdiction of
2273the court; c) Law enforcement costs for
2280housing, re - arrest, transportation, and
2286extradition; and d) A maximum fee of $100
2294for a surrender allowed by law when there
2302has been no forfeiture of the bond.
2309(5) A bail bond agent who has sur rendered a
2319principal and failed to properly refund the
2326premium when required by law shall be
2333subject to discipline as provided in Chapter
2340648 and these rules.
234435. None of the "expenses" identified by the Respondent's
2353is properly documented by a check or receipt. The person who
2364allegedly provided the "receipt" for publication of the
2372fugitive's photograph in a newspaper bases the "receipt" on
2381little more than conjecture. There is no credible documentation
2390for any expenses.
239336. The Respondents attempted t o explain the "error"
2402during their testimony at hearing. The explanation was
2410illogical and lacks credibility.
2414RECOMMENDATION
2415Based on the foregoing Findings of Fact and Conclusions of
2425Law, it is recommended that the Department of Insurance enter a
2436Fina l Order requiring that the Respondents be required to refund
2447$318 to Mr. Porro, which, combined with the previous payments of
2458$1,994 and $492, will constitute refund of the total $2,804 paid
2471by Mr. Porro to the Respondents. It is further recommended that
2482the limited surety licenses of Matilda M. Vath and John L. Vath
2494be suspended for a period of not less than three months or until
2507Mr. Porro receives the remaining $318, whichever is later.
2516DONE AND ENTERED this 22nd day of February, 2002, in
2526Tallahassee, Leon County, Florida.
2530___________________________________
2531WILLIAM F. QUATTLEBAUM
2534Administrative Law Judge
2537Division of Administrative Hearings
2541The DeSoto Building
25441230 Apalachee Parkway
2547Tallahassee, Florida 32399 - 3060
2552(850) 488 - 9675 SUNCOM 278 - 9675
2560Fax F iling (850) 921 - 6847
2567www.doah.state.fl.us
2568Filed with the Clerk of the
2574Division of Administrative Hearings
2578this 22nd day of February, 2002.
2584COPIES FURNISHED :
2587James A. Bossart, Esquire
2591Department of Insurance
2594Division of Legal Services
2598200 East Gaines St reet, Room 612
2605Tallahassee, Florida 32399
2608Joseph R. Fritz, Esquire
26124204 North Nebraska Avenue
2616Tampa, Florida 33603
2619Mark Casteel, General Counsel
2623Department of Insurance
2626The Capitol, Lower Level 26
2631Tallahassee, Florida 32399 - 0307
2636Honorable Tom Gallagh er
2640State Treasurer/Insurance Commissioner
2643Department of Insurance
2646The Capitol, Plaza Level 02
2651Tallahassee, Florida 32399 - 0300
2656NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
2662All parties have the right to submit written exceptions within
267215 days from the date of t his Recommended Order. Any exceptions
2684to this Recommended Order should be filed with the agency that
2695will issue the Final Order in this case.
- Date
- Proceedings
- PDF:
- Date: 07/05/2002
- Proceedings: BY ORDER OF THE COURT: Appellant`s motion for extension of time is granted and the initial brief shall be served by July 19, 2002 filed.
- PDF:
- Date: 06/14/2002
- Proceedings: BY ORDER OF THE COURT: (Appellee`s motion to consolidate the above cases is granted). filed.
- PDF:
- Date: 05/02/2002
- Proceedings: BY ORDER OF THE COURT: (the joint stipulation for entry of order staying suspension is granted). filed.
- PDF:
- Date: 04/25/2002
- Proceedings: Letter to DOAH from the District Court of Appeal filed. DCA Case No. 2D02-1504
- PDF:
- Date: 04/25/2002
- Proceedings: Letter to DOAH from the District Court of Appeal filed. DCA Case No. 2D02-1524
- PDF:
- Date: 04/19/2002
- Proceedings: Motion to Stay Suspension of License (filed by Respondent via facsimile).
- PDF:
- Date: 03/08/2002
- Proceedings: Exceptions to Findings of Fact (filed by Respondents via facsimile).
- PDF:
- Date: 02/22/2002
- Proceedings: Recommended Order cover letter identifying hearing record referred to the Agency sent out.
- PDF:
- Date: 02/22/2002
- Proceedings: Recommended Order issued (hearing held November 30, 2001) CASE CLOSED.
- Date: 12/17/2001
- Proceedings: Administrative Hearing by Video Teleconference Transcript filed.
- PDF:
- Date: 10/24/2001
- Proceedings: Order of Consolidation issued. (consolidated cases are: 01-003933PL, 01-00394PL)
- PDF:
- Date: 10/24/2001
- Proceedings: Letter to Judge Judge Kirkland from J. Bossart in reply to Initial Order (filed via facsimile).
- PDF:
- Date: 10/17/2001
- Proceedings: Order Granting Motion to Reopen Former Division of Administrative Hearings Case Nos. 01-2438PL and 01-2439PL issued.
- PDF:
- Date: 10/10/2001
- Proceedings: Petitioner`s Motion to Reassume Jurisdiction and Reset Final Hearing filed.
Case Information
- Judge:
- WILLIAM F. QUATTLEBAUM
- Date Filed:
- 10/10/2001
- Date Assignment:
- 11/27/2001
- Last Docket Entry:
- 07/05/2002
- Location:
- Tampa, Florida
- District:
- Middle
- Agency:
- ADOPTED IN TOTO
- Suffix:
- PL
Counsels
-
James A. Bossart, Esquire
Address of Record -
Joseph R. Fritz, Esquire
Address of Record -
Arnold D Levine, Esquire
Address of Record