01-004541PL Department Of Insurance vs. Michael Scott Kelly Status: Closed Recommended Order on Tuesday, April 23, 2002.

Summary: Department failed to present clear and convincing evidence that Respondent had not returned the $7,000 collateral and the $850 premium fee.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF INSURANCE, )

)

Petitioner, )

)

vs. ) Case No. 01 - 4541PL

)

MICHAEL SCOTT KELLY, )

)

Respondent. )

)

RECOMMENDED ORDER

Upon due notice , William R. Cave, an Administrative Law

Judge for the Division of Administrative Hearings, held a formal

hearing in this matter on February 20 - 21, 2002, in Daytona

Beach, Florida.

APPEARANCES

For Petitioner: Dickson E. Kesler, Esquire

Department of Insurance

Division of Legal Services

200 East Gaines Street

612 Larson Building

Tallahassee, Florida 32399 - 0333

For Respondent: Steven G. Casano va, Esquire

100 Rialto Place, Suite 510

Melbourne, Florida 32935

STATEMENT OF THE ISSUES

Should Respondent's license as a bail bond agent in the

State of Florida be disciplined for the alleged violation of

cert ain provisions of Chapter 648, Florida Statutes, as set

forth in the Administrative Complaint and, if so, what penalty

should be imposed?

PRELIMINARY STATEMENT

By an Administrative Complaint dated September 7, 2001, and

filed with the Division of Adminis trative Hearings (Division) on

November 27, 2001, the Department of Insurance (Department) is

seeking to revoke, suspend, or otherwise discipline Respondent's

license as a bail bond agent in the State of Florida.

As grounds therefor, the Department alleg es in the

Administrative Complaint that Respondent violated Subsections

648.442(1) and (3); and 648.45(2)(d),(e),(g),(h),(j), and (n),

and (3)(a),(c),(d), and (e), Florida Statutes. By an Election

of Rights dated September 13, 2001, Respondent disputed th e

charges and requested an administrative hearing. By letter

dated November 21, 2001, the Department referred this matter to

the Division for the assignment of an Administrative Law Judge

and for the conduct of an administrative hearing.

At the hearing, the Department presented the testimony of

Johnny Lamb, Linda Jones, William Travis, Jeanette Halstead, and

Charles A. Parish. The Department's Exhibits 1 and 2, and

Composite Exhibit 3(3A - 3H) were admitted in evidence.

Respondent testified in his own beh alf and presented the

testimony of Linda Jones, Randall Ecker, Therese Ecker, Mary Ann

Hinckle, and Selena Kelly. Respondent's Exhibits 1 - 4 were

admitted in evidence.

The second volume of a two - volume Transcript of this

proceeding was filed with the Divis ion on March 7, 2002, with

the first volume being filed on March 13, 2002. The parties

timely filed their Proposed Recommended Orders.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence

adduced at the hearing, the following relevant findings of fact

are made:

1. The Department is the agency of the State of Florida

vested with the statutory authority to administer the

disciplinary provisions of Chapter 648, Florida Statutes.

2. Respondent, at all times relevant to this proceeding,

wa s licensed as a bail bond agent in the State of Florida and

subject to the provisions of Chapter 648, Florida Statutes.

3. Respondent, at all times relevant to this proceeding,

was employed by Alliance Bail Bonds (Alliance), which was owned

by Linda Jon es. There was a verbal employment agreement between

Alliance and Respondent, which provided for, among other things,

Respondent's salary. However, the verbal employment agreement

did not require that Respondent write bail bonds exclusively for

Alliance.

4. At all times relevant to this proceeding, Alliance's

office was located in Respondent's home in Titusville, Brevard

County, Florida, which had a separate entrance and separate

telephone for Alliance. Alliance's files, both active and

inactive, were al so housed in this office.

5. On March 30, 2000, a person identifying himself as

Johnny Lamb contacted Respondent by telephone concerning a bail

bond for an individual known as Bernard J. Dougherty who was

being held in the Brevard County, Florida, jail. The bond

amount was $8,500.00. Since Dougherty was not a resident of the

State of Florida, Respondent wanted Lamb to put up the full

amount of the bond as collateral. However, Lamb advised

Respondent that he did not have enough cash to put up the full

am ount of the bond. Therefore, Respondent and Lamb eventually

agreed on $7,000.00 cash as collateral. Additionally,

Respondent advised Lamb that the premium for writing the bail

bond would be $850.00 (10 percent of the bond amount).

6. Later that same day , Lamb came to Respondent's office

to complete the paperwork and put up the necessary funds for the

collateral and bond premium. Lamb paid Respondent the

collateral and bond premium in cash (U.S. currency, 20's, 50's,

and 100's).

7. Respondent prepared a Collateral Receipt and

Informational Notice (Collateral Receipt), which was signed by

Lamb. The Collateral Receipt indicated that Lamb had deposited

the $7,000.00 collateral with Respondent and had executed an

Indemnity Agreement and Promissory Note. La mb also executed a

Bail Application. Respondent gave Lamb the white copy of the

Collateral Receipt for his records. The goldenrod copy of the

Collateral Receipt was also given to Lamb to be delivered to

Dougherty at the jail. The yellow copy and pink co py of the

Collateral Receipt were retained by Respondent for Alliance's

record.

8. Lamb also paid Respondent $850.00 in cash (U.S.

Currency) for the bail bond premium for which Respondent gave

Lamb a receipt (number 20454) indicating that Lamb had paid th e

bail bond premium in the amount of $850.00.

9. After completing the bond transaction with Lamb,

Respondent prepared a file in Dougherty's name, which included

the copies of the Collateral Receipt, Promissory Note, Indemnity

Agreement, Bail Application, and a copy of the receipt for the

bail bond premium.

10. After preparing the file, Respondent prepared two

Powers of Attorney (Powers), one in the amount of $5,000.00 and

one in the amount of $3,500.00, and proceeded to the Brevard

County jail to intervie w Dougherty.

11. Upon arriving at the Brevard County jail, Respondent

was advised that in addition to the Brevard County charges,

there was an outstanding warrant for Dougherty from Volusia

County and a hold for a parole violation in the State of

Pennsy lvania.

12. Lamb was not present at the Brevard County jail at

this time. Therefore, Respondent advised Dougherty of the

Volusia County warrant and the hold from Pennsylvania.

Respondent further advised Dougherty that although he could post

bond for t he Brevard County charges, Dougherty would not be

released because of the Volusia County warrant and the hold for

parole violation in Pennsylvania.

13. Dougherty advised Respondent that he did not want to

post bond. Whereupon, Respondent attempted to con tact Lamb

using the telephone numbers furnished Respondent by Lamb but was

unsuccessful in locating Lamb.

14. On March 31, 2000, Respondent called the Brevard

County jail and had Lamb paged. Upon being advised that Lamb

was present in the Brevard County jail, Respondent asked that

they instruct Lamb to call Respondent at his office. Lamb

called Respondent at his office and was advised of the situation

concerning Dougherty. Respondent also advised Lamb that he was

on his way to the jail and would bring L amb's money with him.

15. Upon arriving at the Brevard County jail, Respondent

explained the circumstances regarding the posting of bail for

Dougherty and proceeded to return Lamb's money. Lamb did not

have the copies of the Collateral Receipt with him t hat had been

given to Lamb on March 30, 2000. Therefore, Respondent took his

copy of the Collateral Receipt and documented the return of the

$7,000.00 collateral and the $850.00 premium fee. Lamb signed

the documentation on the Collateral Receipt showing the return

of the $7,000.00 collateral and the $850.00 premium fee.

16. Respondent then placed all of the documents, including

the Collateral Receipt with the documentation showing the return

of the $7,000.00 collateral and the $850.00 bond premium, in

D ougherty's file with Dougherty's name highlighted in blue for

filing. Afterwards, Respondent voided the Powers by writing

"Void" across the front of the Powers and had them sent to Linda

Jones by UPS. Subsequently, the Powers were forwarded by Linda

Jone s to Charles A. Parish, Agent for Continental Heritage

Insurance Co., on whom the Powers were written.

17. On March 31, 2000, Respondent returned the $7,000.00

collateral plus the $850.00 bond premium fee to Lamb,

notwithstanding the testimony of Lamb to the contrary, which

lacks credibility.

18. Respondent did not at any time present any of the

paperwork for posting Dougherty's bond, including the Powers, to

the Brevard County jail personnel.

19. Since Alliance's Brevard County files were being kept

at Respondent's office in Titusville, Florida, Respondent did

not forward Dougherty's file to Linda Jones. However, as a

caution, Respondent advised Linda Jones by telephone of what had

occurred in regards to Dougherty, notwithstanding Linda Jones'

testimony to the contrary, which lacks credibility.

20. Sometime in January 2001, Linda Jones came into

Respondent's office in Titusville, Florida, and removed all of

Alliance's Brevard County files, both active and inactive, that

were in the possession of Respond ent. The Alliance files

removed by Linda Jones included Dougherty's inactive file with

the documentation concerning the return of the $7,000.00

collateral and the $850.00 bail bond premium, notwithstanding

Linda Jones' testimony to the contrary, which lac ks credibility.

21. By letter dated May 10, 2001, after talking to William

Travis and Linda Jones, Lamb filed a complaint with the

Department alleging that Respondent had failed to return the

$7,000.00 collateral and this proceeding ensued.

CONCLUSIONS OF LAW

22. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter of this

proceeding pursuant to Subsections 120.57(1), Florida Statutes.

23. Subsections 648.442(1) and (3), Florida Statutes,

provide in pertin ent part as follows:

(1) Collateral security or other

indemnity accepted by a bail bond agent,

except a promissory note or an indemnity

agreement, shall be returned upon final

termination of liability on the bond. . . .

* * *

(3) Such collateral se curity shall be

received and held in the insurer's name by

the bail bond agent in a fiduciary capacity

and, prior to any forfeiture of bail, shall

be kept separate and apart from any other

funds or assets of such bail bond agent.

When collateral security in excess of

$5,000.00 cash or its equivalent is received

by a bail bond agent, the entire amount

shall be immediately forwarded to the

insurer or managing general agent. . . .

24. Subsections 648.45(2)(d),(e),(g),(h),(j), and (n),

and (3)(a),(c),(d ), and (e), Florida Statutes, provide

in pertinent part as follows:

(2) The department shall deny, suspend,

revoke, or refuse to renew any license or

appointment issued under this chapter or the

insurance code, and it shall suspend or

revoke the eligibi lity of any person to hold

a license or appointment under this chapter

or the insurance code, for any violation of

the laws of this state relating to bail or

any violation of the insurance code or for

any of the following causes:

* * *

(d) Willful use , or intended use, of the

license or appointment to circumvent any of

the requirements or prohibitions of this

chapter or the insurance code.

(e) Demonstrated lack of fitness or

trustworthiness to engage in the bail bond

business.

* * *

(g) Fraudule nt or dishonest practices in

the conduct of business under the license or

appointment.

(h) Misappropriation, conversion, or

unlawful withholding of moneys belonging to

a surety, a principal, or others and

received in the conduct of business under a

lice nse.

* * *

(j) Willful failure to comply with or

willful violation of any proper order or

rule of the department or willful violation

of any provision of this chapter or

insurance code.

* * *

(n) Failure to return collateral.

(Emphasis Furnished. )

* * *

(3) The department may deny, suspend,

revoke, or refuse to renew any license or

appointment issued under this chapter or the

insurance code, or it may suspend or revoke

the eligibility of any person to hold a

license or appointment under this chapter or

the insurance code, for any violation of the

laws of this state for any of the following

causes:

(a) A cause for which issuance of the

license or appointment could have been

refused had it then existed and been known

to the department.

* * *

(c) Violation of any law relating to the

business of bail bond insurance or violation

of any provision of the insurance code.

(d) Failure or refusal, upon demand, to

pay over to any insurer the bail bond agent

represents or has represented any mon ey

coming into his or her hands which money

belongs to the insurer.

(e) Being found to be a source of injury

or loss to the public or detrimental to the

public interest or being found by the

department to be no longer carrying on the

bail bond business in good faith. (Emphasis

furnished.)

25. The burden of proof is on the party asserting the

affirmative of an issue before an administrative tribunal,

Florida Department of Transportation v. J.W.C. Company, Inc .,

396 So. 2d 778 (Fla. 1st DCA 1981). To meet this burden, the

Department must establish facts upon which its allegations are

based by clear and convincing evidence. Department of Banking

and Finance, Division of Securities and Investor Protection v.

Osborne Stern and Company , 670 So. 2d 932 (Fla. 1996) and

Subsection 120.57(1)(j), Florida Statutes.

26. The Department has failed to show by clear and

convincing evidence that Respondent, Michael Scott Kelly, failed

to return the $7,000.00 collateral and the $850.00 bail bond

premium to Joh nny Lamb as alleged in the Administrative

Complaint. Thus the Department has failed to establish that

Respondent violated Subsections 648.442(1) and (3); and 648.45

(2)(d),(e),(g),(h),(j), and (n), and (3)(a),(c),(d), and (e),

Florida Statutes.

RECOMMENDA TION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department enter a final order finding

Respondent, Michael Scott Kelly, not guilty of violating

Subsections 648.442(1) and (3); and 648.45(2)(d),(e),(g),(h),

( j), and (n), and (3)(a),(c),(d), and (e), Florida Statutes, and

dismissing the Administrative Complaint filed against Michael

Scott Kelly.

DONE AND ENTERED this 23rd day of April, 2002, 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 Cle rk of the

Division of Administrative Hearings

this 23rd day of April, 2002.

COPIES FURNISHED :

Dickson E. Kesler, Esquire

Department of Insurance

Division of Legal Services

200 East Gaines Street

612 Larson Building

Tallahassee, Florida 32399 - 0333

Hono rable Tom Gallagher

State Treasurer/Insurance Commissioner

Department of Insurance

The Capitol, Plaza Level 02

Tallahassee, Florida 32399 - 0300

Mark Casteel, General Counsel

Department of Insurance

The Capitol, Lower Level 26

Tallahassee, Florida 32399 - 0 307

Steven G. Casanova, Esquire

100 Rialto Place, Suite 510

Melbourne, Florida 32935

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit exceptions within 15 days

from the date of this Recommended Order. Any exceptions to this

R ecommended Order should be filed with the agency that will

issue the Final Order in this case.