Osborne Stern and Co., Inc. v. Department of Banking and Finance, Div. of Securities and Investor Protection, No. 91-488

CourtCourt of Appeal of Florida (US)
Writing for the CourtPER CURIAM; ALLEN; BOOTH; ZEHMER; ZEHMER; BOOTH
Citation647 So.2d 245
Parties19 Fla. L. Weekly D2428 OSBORNE STERN AND COMPANY, INC., and Douglas W. Osborne, Appellants, v. DEPARTMENT OF BANKING AND FINANCE, DIVISION OF SECURITIES AND INVESTOR PROTECTION, Appellee.
Decision Date18 November 1994
Docket NumberNo. 91-488

Page 245

647 So.2d 245
19 Fla. L. Weekly D2428
OSBORNE STERN AND COMPANY, INC., and Douglas W. Osborne, Appellants,
v.
DEPARTMENT OF BANKING AND FINANCE, DIVISION OF SECURITIES
AND INVESTOR PROTECTION, Appellee.
No. 91-488.
District Court of Appeal of Florida,
First District.
Nov. 18, 1994.

Page 246

R. David Prescott and Edward W. Dougherty, Jr., of Mang, Rett & Collette, P.A., Tallahassee, for appellants.

William G. Reeves, Gen. Counsel, and Gary L. Printy, Asst. Gen. Counsel, Office of the Comptroller, Tallahassee, for appellee.

REVISED OPINION

PER CURIAM.

This is an appeal from a final cease and desist order of the Department of Banking and Finance (the Department), which also denies applications for registration to deal in securities and imposes administrative fines. We reverse and remand for further proceedings because the hearing officer erred in excluding evidence of mitigating circumstances as to three of the four statutes appellants were accused of violating and because the hearing officer applied an improper burden of proof.

Appellants applied for registration with the Department to deal in securities. 1 By letter of December 5, 1989, the Department notified appellants of its intent to deny the registration applications under section 517.161, Florida Statutes (1989), 2 based upon appellants'

Page 247

having violated sections 517.12(1), 517.07, 517.301(1)(a)2, and 517.301(1)(c), Florida Statutes (1989). 3 Appellants filed a petition for formal hearing, and the matter was referred to the Division of Administrative Hearings and assigned case number 90-873. On May 3, 1990, the Department issued a notice of intent to issue a cease and desist order and impose administrative fines against appellants and others under section 517.221. 4 As to appellants, the notice was based upon the same facts and circumstances alleged in the prior notice of intent to deny the registration applications. Appellants petitioned for a formal hearing, and the matter was referred to DOAH, assigned case number 90-4584, and consolidated with case number 90-873.

Prior to the hearing, the Department filed a motion in limine as to both cases to preclude appellants from introducing evidence of mitigating circumstances as to the alleged violations of sections 517.12(1), 517.07, and 517.301(1)(a)2, Florida Statutes, on the ground that these sections impose strict liability. The Department did not seek to preclude such evidence as to the alleged violations of section 517.301(1)(c), Florida Statutes, which imposes liability based upon a "knowingly and willfully" standard. By written pro-se response, appellants argued that evidence of mitigating circumstances would be relevant, even under the strict liability statutes, to the exercise of the Department's discretion "to properly assess what damages, if any, [appellants] are responsible for." The hearing officer granted the motion.

The hearing officer ruled that appellants had the burden of proving their entitlement to registration by a preponderance of the evidence, citing Florida Department of Transportation v. J.W.C. Company, 396 So.2d 778 (Fla. 1st DCA 1981), and Balino v.

Page 248

Department of Health & Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977), and further ruled that the Department, in seeking to impose civil penalties upon appellants, likewise had to prove the allegations in the cease and desist proceeding by a preponderance of the evidence, citing Florida Department of Transportation v. J.W.C. Company. The Department's final order approved this ruling.

At the hearing, Douglas W. Osborne appeared pro se and on behalf of Osborne Stern. Although Osborne admitted generally to having violated unspecified security laws, he denied fraudulent intent. The hearing officer sustained the Department's objections to parts of Osborne's testimony on the ground that such testimony was irrelevant mitigating evidence. The Department's representative testified that she contacted appellants and told them they were not to trade in Florida until registered. The representative then offered as proof of appellants' misconduct a series of letters and affidavits from Florida investors with whom appellants had traded.

In his recommended order of December 5, 1990, the hearing officer found that appellants had violated each of the four predicate statutes. The hearing officer recommended imposition of a $5,000 fine as to each violation, denial of appellants' applications for registration, and entry of a final cease and desist order. The Department denied the applications for registration, entered a final cease and desist order, and imposed a $5,000 fine for each of the four statutes appellants were found to have violated.

We turn, then, to the issues raised by appellants. Section 517.161, Florida Statutes, under which the Department denied the applications for registration, permits, but does not require, the Department to deny an application upon proof that an applicant has violated one or more of the provisions of chapter 517. The Department is required to make a determination as to whether an applicant has demonstrated worthiness to transact business as a dealer of securities in this state. 5 The statutory scheme contemplates that an applicant be permitted to explain and mitigate the circumstances of any violations of chapter 517 found to have occurred. Castleman v. Office of the Comptroller, Dept. of Banking & Finance, 538 So.2d 1365, 1367 (Fla. 1st DCA 1989). Section 517.221, Florida Statutes, under which the Department issued its cease and desist order and under which the Department imposed administrative fines upon appellants, also requires the Department to exercise its discretion. Under the circumstances of this case, the refusal to permit appellants to present evidence of mitigating circumstances before denying appellants' applications for registration and before entering the final cease and desist order and assessing $20,000 in penalties, was a material error which impaired the fairness of the proceedings below. See section 120.68(8), Florida Statutes (1989). Accordingly, we must reverse on this point.

The hearing officer correctly ruled that an applicant for licensure or registration to engage in a particular profession or occupation bears the burden of showing entitlement thereto by a preponderance of the evidence. However, that does not mean that the applicant must disprove that violations occurred as alleged by the Department; the Department had the burden of proving the alleged violations actually occurred if the registration is to be denied on that ground.

In Ferris v. Turlington, 510 So.2d 292 (Fla.1987), the supreme court explained:

The correct standard for the revocation of a professional license such as that of a lawyer, real estate broker, or, as in this instance, a teacher, is that the evidence must be clear and convincing. We agree with the district court in Reid v. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2d DCA 1966), that:

The power to revoke a license should be exercised with no less careful circumspection than the original granting of it.

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And the penal sanctions should be directed only toward those who by their conduct have forfeited their right to the privilege, and then only upon clear and convincing proof of substantial causes justifying the forfeiture.

In a case where the proceedings implicate the loss of livelihood, an elevated standard is necessary to protect the rights and interests of the accused.

510 So.2d at 294-95. We construe the supreme court's...

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6 practice notes
  • R.C. v. Dep't of Agric. & Consumer Servs., 1D19-2797
    • United States
    • Florida District Court of Appeals
    • 16 Junio 2021
    ...Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932, 934 (Fla. 1996) (quoting Osborne Stern & Co., Inc. v. Dep't of Banking & Fin. , 647 So. 2d 245, 250 (Fla. 1st DCA 1994) (Booth, J., concurring and dissenting)).II.Second, the Department's erroneous denial of Appellant's statutory entit......
  • R. C. v. Dep't of Agric. & Consumer Servs., Div. of Licensing, No. 1D19-2797
    • United States
    • Court of Appeal of Florida (US)
    • 16 Junio 2021
    ...of Banking & Fin. v. Osborne Stern & Co., 670 So. 2d 932, 934 (Fla. 1996) (quoting Osborne Stern & Co., Inc. v. Dep't of Banking & Fin., 647 So. 2d 245, 250 (Fla. 1st DCA 1994) (Booth, J., concurring and dissenting)).II. Second, the Department's erroneous denial of Appellant's statutory ent......
  • S. Fla. Water Mgmt. Dist. v. Rli Live Oak, LLC, No. SC12–2336.
    • United States
    • United States State Supreme Court of Florida
    • 22 Mayo 2014
    ...of administrative fines is subject to the clear and convincing evidence standard. Osborne Stern & Co. v. Dep't of Banking and Fin., 647 So.2d 245, 249 (Fla. 1st DCA 1994). However, the First District also certified the following question to this Court: IN DENYING AN APPLICATION FOR REGISTRA......
  • Department of Banking and Finance, Div. of Securities and Investor Protection v. Osborne Stern and Co., No. 84827
    • United States
    • United States State Supreme Court of Florida
    • 28 Marzo 1996
    ...AND FINANCE REQUIRED TO PROVE SUCH ALLEGATIONS BY CLEAR AND CONVINCING EVIDENCE? Osborne Stern & Co. v. Department of Banking and Fin., 647 So.2d 245 (Fla. 1st DCA 1994). We have jurisdiction. Art. V, § 3(b)(4), Fla. Respondents appealed from an order of the Department of Banking and Financ......
  • Request a trial to view additional results
6 cases
  • R.C. v. Dep't of Agric. & Consumer Servs., 1D19-2797
    • United States
    • Florida District Court of Appeals
    • 16 Junio 2021
    ...Banking & Fin. v. Osborne Stern & Co. , 670 So. 2d 932, 934 (Fla. 1996) (quoting Osborne Stern & Co., Inc. v. Dep't of Banking & Fin. , 647 So. 2d 245, 250 (Fla. 1st DCA 1994) (Booth, J., concurring and dissenting)).II.Second, the Department's erroneous denial of Appellant's statutory entit......
  • R. C. v. Dep't of Agric. & Consumer Servs., Div. of Licensing, No. 1D19-2797
    • United States
    • Court of Appeal of Florida (US)
    • 16 Junio 2021
    ...of Banking & Fin. v. Osborne Stern & Co., 670 So. 2d 932, 934 (Fla. 1996) (quoting Osborne Stern & Co., Inc. v. Dep't of Banking & Fin., 647 So. 2d 245, 250 (Fla. 1st DCA 1994) (Booth, J., concurring and dissenting)).II. Second, the Department's erroneous denial of Appellant's statutory ent......
  • S. Fla. Water Mgmt. Dist. v. Rli Live Oak, LLC, No. SC12–2336.
    • United States
    • United States State Supreme Court of Florida
    • 22 Mayo 2014
    ...of administrative fines is subject to the clear and convincing evidence standard. Osborne Stern & Co. v. Dep't of Banking and Fin., 647 So.2d 245, 249 (Fla. 1st DCA 1994). However, the First District also certified the following question to this Court: IN DENYING AN APPLICATION FOR REGISTRA......
  • Department of Banking and Finance, Div. of Securities and Investor Protection v. Osborne Stern and Co., No. 84827
    • United States
    • United States State Supreme Court of Florida
    • 28 Marzo 1996
    ...AND FINANCE REQUIRED TO PROVE SUCH ALLEGATIONS BY CLEAR AND CONVINCING EVIDENCE? Osborne Stern & Co. v. Department of Banking and Fin., 647 So.2d 245 (Fla. 1st DCA 1994). We have jurisdiction. Art. V, § 3(b)(4), Fla. Respondents appealed from an order of the Department of Banking and Financ......
  • Request a trial to view additional results

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