01-003934PL Department Of Insurance vs. John L. Vath
 Status: Closed
Recommended Order on Friday, February 22, 2002.


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Summary: Bail bondsman failed to properly account for and refund money paid by indemnitor.

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.

Select the PDF icon to view the document.
PDF
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: 05/28/2002
Proceedings: Directions to the Clerk filed by Respondent.
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: 04/26/2002
Proceedings: Joint Stipluation for Substitution of Counsel filed.
PDF:
Date: 04/26/2002
Proceedings: Notice of Appearence of Counsel filed by A. Levine.
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: 04/02/2002
Proceedings: Agency Final Order
PDF:
Date: 04/02/2002
Proceedings: Final Order filed.
PDF:
Date: 03/08/2002
Proceedings: Exceptions to Findings of Fact (filed by Respondents via facsimile).
PDF:
Date: 02/22/2002
Proceedings: Recommended Order
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.
PDF:
Date: 01/15/2002
Proceedings: Finding of Fact (filed by Respondents via facsimile).
PDF:
Date: 01/15/2002
Proceedings: Petitioner`s Proposed Recommended Order filed.
Date: 12/17/2001
Proceedings: Administrative Hearing by Video Teleconference Transcript filed.
PDF:
Date: 11/26/2001
Proceedings: Petitioner`s Exhibits filed.
PDF:
Date: 11/21/2001
Proceedings: Joint Pre-hearing Stipulation filed.
PDF:
Date: 11/21/2001
Proceedings: Notice of Taking Deposition, M. Vath, J. Vath 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.
PDF:
Date: 06/19/2001
Proceedings: Administrative Complaint filed.
PDF:
Date: 06/19/2001
Proceedings: Answer to Administrative Complaint filed.
PDF:
Date: 06/19/2001
Proceedings: Demand for Formal Administrative Hearing Pursuant to Florida Statute 120.569 and 120.57 filed.
PDF:
Date: 06/19/2001
Proceedings: Agency referral 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

Related Florida Statute(s) (7):