SC Administrative Law Court Decisions

This insurance and bail bondsman license matter comes before me pursuant to S.C. Code Ann. §§ 1-23-600(B); 1-23-310; 38-43-130 and 38-53-160 (Supp. 1997). The South Carolina Department of Insurance ("DOI") seeks to revoke the resident insurance agent's license and bail bondsman's license of Respondent David M. Alexis and the insurance agency license of Respondent A&J Bonding Company for allegedly violating South Carolina's insurance laws and deceiving or dealing unjustly with the citizens of this State. A contested case hearing was conducted before the Administrative Law Judge Division on January 12 and 19, 1997. Upon consideration of the relevant and probative evidence and the applicable law, I find and conclude Respondents committed the violations charged and hereby revoke the licenses at issue in this case.

The contested case hearing in this matter commenced on January 12, 1998. Respondents were absent but were represented by counsel. Respondents' counsel stated that Respondent Alexis had traveled to New York for the weekend prior and was probably trapped by an ice storm there. Based on this information, Petitioner agreed to a continuance of Respondents' presentation of its case until January 19, 1998, and then presented its case to the Court. Respondents'

attorney was given ample opportunity to review all evidence submitted and to cross-examine each of Petitioner's witnesses.

On January 15, 1998, Petitioner filed a Motion to Dismiss with supproting affidavits establishing that Alexis was not in New York on January 12, 1998, but in Columbia, South Carolina, and available to appear at the contested case hearing. Petitioner's Motion to Dismiss was heard when the contested case hearing reconvened on January 19, 1998. Although Alexis was, in fact, available to testify on January 12, 1988, but chose not to appear at the hearing, the Motion to Dismiss was denied. Respondent's dilatory tactic, disrespect for the Court, unnecessary delay and inconveneince, and unfair advantage was not rewarded, however. Because Alexis' absence on January 12, was the sole ground for recess of the hearing until January 19, Alexis was not allowed to testify upon his appearance at the January 19, proceeding.

By a preponderance of the evidence, I find the following facts:

1. The Administrative Law Judge Division has subject matter and personal jurisdiction in this matter.
2. All parties were given timely notice of the date, time, place, and nature of the hearing, and all parties entered a general appearance at the hearing.
3. Respondent Alexis is licensed by the Director of the South Carolina Department of Insurance as a resident insurance agent for Amwest Surety Insurance Company (Amwest).
4. Respondent Alexis is licensed by the Director of the South Carolina Department of Insurance as a bail bondsman.
5. Respondent A&J Bonding is licensed in the State of South Carolina as a resident insurance agency.
6. Respondent Alexis holds a contract with Roche Surety, Inc. which requires him to report and pay to that company bail bond premiums he writes on behalf of Amwest.
7. The contract between Alexis and Roche requires Alexis to deposit with Roche 10% of the premiums he writes to a separate "build up fund" to cover potential losses for bail bonds estreated when defendants fail to appear in court.
8. Pursuant to the above contract, Roche audited the business of Respondent A&J Bonding on April 11, 1997.
9. The audit revealed that Respondent Alexis had written $84,697.20 in bail bond premium through his agency without reporting it as required and that Alexis owed Amwest $16,939.36 in premium and owed $8,469.72 to the build up fund to cover those bonds.
10. Respondent Alexis attempted to pay these amounts via checks #1990 and #1991 on a NationsBank account held by Respondent A&J Bonding, but both checks were returned for non-sufficient funds.
11. Gil Rodriguez, Executive Vice President of Roche, repeatedly attempted to resolve the matter with Respondent Alexis but was unsuccessful. The money remains unpaid.
12. On at least three occasions Respondent Alexis employed Reginald Y. Lewis as a runner to locate and capture defendants that Respondent A&J Bonding had bonded out of jail and who had failed to appear for court.
13. Reginald Y. Lewis is not licensed in any capacity by the South Carolina Department of Insurance.
14. On July 17, 1996, Respondent Alexis received $1,240 from Mrs. Beverly B. Tucker and her sister-in-law in return for his agreement on behalf of Respondent A&J Bonding to bond Mr. G. Glen Bethea out of jail.
15. The $1,240 received from Mrs. Tucker represented 10% of the $12,408 required for the bond.
16. On July 18, 1996, Tucker delivered a satellite television system as collateral on this bond to Respondent Alexis at the offices of Respondent A&J Bonding.
17. As agreed upon, Respondent A&J Bonding posted bail bonds for $10,000 and $2,288 on behalf of Bethea on July 20, 1996. In addition to these two bonds, Respondent A&J Bonding posted a $5,408 bail bond that same day.
18. Tucker was never told about any of these bonds or advised of any hearing dates or the actual status of the matter.
19. By repeating his promise that he would get Bethea out of Jail, Respondent Alexis collected a another $350 from Tucker on July 20, 1996. Tucker was not informed of what the additional money was for specifically, and he was not informed that it represented the first payment of a new $1,350 obligation.
20. Bethea was never actually released from jail, and Amwest never incurred any risk on any of the bail bonds written for Bethea.
21. Tucker requested that the Respondents return her money and the satellite system she had left as collateral.
22. Respondent Alexis refused to refund any of the money and has not done so to date. He did return the satellite system, but only after Tucker and her sister-in-law had employed an attorney to help resolve the matter.
23. S. C. Code Ann. § 38-43-130 (Supp. 1997) provides that an insurance agent's license may be revoked when that agent has violated any of the State's insurance laws or wilfully deceived or dealt unjustly with the citizens of this State. Sections 38-43-130(3) and (4) define "wilfully deceived or dealt unjustly with the citizens of this State" to include "failing to transmit promptly or pay all or a portion of the amount of insurance premium" and "issuing his check covering all or a portion of an insurance premium which is not accepted by the bank on which it is written when it is initially submitted." S.C. Code Ann.

§ 38-43-30 (Supp. 1997) makes it clear that these provisions apply to insurance agencies as well.

1. S.C. Code Ann. § 38-53-150 (Supp. 1997) provides a list of offenses for which a bail bondsman's license may be revoked. That list includes violation of any laws of this State relating to bail in the course of dealings under the license issued him by the director or his designee; misappropriation, conversion, or unlawful withholding of monies belonging to insurers or others and received in the conduct of business under the license; fraudulent or dishonest practices in the conduct of business under the license; failure to comply with or violation of the provisions of this chapter or of any order of the director or his designee or regulation of the department; conducted his affairs under the license in a way that demonstrates incompetency or untrustworthiness.

Based upon the foregoing Findings of Fact, I conclude the following as a matter of law.

1. Section 1-23-600(B) grants the Administrative Law Judge Division general jurisdiction over all hearings of contested cases as defined by § 1-23-310 where such hearings involve an executive branch department and where a single officer is authorized or permitted by law or regulation to hear and decide such cases.
2. The Administrative Law Judge Division has jurisdiction to hear contested cases involving insurance agent and bail bondsman licensing issues. S.C. Code Ann. §§ 38-43-130 and 38-53-160 (Supp. 1997). Section 38-43-130 provides that an insurance agent's license may be revoked when that agent has violated any of the State's insurance laws or wilfully deceived or dealt unjustly with the citizens of this State. Sections 38-53-160(3) and (4 ) "wilfully deceived or dealt unjustly with the citizens of this State" to include "failing to transmit promptly or pay all or a portion of the amount of insurance premium" and "issuing his check covering all or a portion of an insurance premium which is not accepted by the bank on which it is written when it is initially submitted." Section 38-43-30 makes clear that these provisions apply to insurance agencies as well.
3. Unless otherwise provided by law, the proper standard of proof to be applied in a contested case conducted pursuant to the APA is a preponderance of the evidence. Anonymous (M-156-90) v. State Bd. of Medical Examiners, Op. No. 24754 (S.C. Sup. Ct. filed January 26, 1998) (Davis Adv. Sh. No. 5); National Health Corp. v. South Carolina Dep't. of Health and Envtl Control, 298 S.C. 373, 380 S.E.2d 841 (Ct. App. 1989); 25A S.C. Code Ann. Regs. 61-72 § 702 (Supp. 1997).
4. Findings of fact based upon a "preponderance" of the evidence are those supported by the greatest "weight, amount, credibility or truth" as reflected by the whole of the evidence before the court, or "evidence which convinces as to its truth." Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225, 235 (1955); Nettles v. Nettles, 138 S.C. 318, 136 S.E. 297 (1927).
5. The trier of fact must weigh and pass upon the credibility of evidence presented. See S.C. Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge is in the best position to weigh witnesses' demeanor and veracity and to evaluate their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).
6. Section 38-53-150 provides a list of offenses for which a bail bondsman's license may be revoked. That list includes violation of any laws of this State relating to bail in the course of dealings under the license issued him by the director or his designee; misappropriation, conversion, or unlawful withholding of monies belonging to insurers or others and received in the conduct of business under the license; fraudulent or dishonest practices in the conduct of business under the license; failure to comply with or violation of the provisions of this chapter or of any order of the director or his designee or regulation of the department; conducted his affairs under the license in a way that demonstrates incompetency or untrustworthiness.
7. The Respondents wilfully deceived or dealt unjustly with the citizens of South Carolina by failing to remit $16,939.36 in premium to Amwest as required by the contract with Roche. This conduct violates S.C. Code Ann. §§ 38-43-130(3); 38-43-240, and 38-53-150(4) (Supp. 1997).
8. The Respondents wilfully deceived or dealt unjustly with the citizens of South Carolina by issuing a check covering the above-referenced premium which was refused by the bank on which it was written when it was initially submitted. S.C. Code Ann. § 38-43-130(4) (Supp. 1997).
9. The Respondents wilfully deceived or dealt unjustly with the citizens of South Carolina by their continued failure to pay the premium due to Amwest in violation of S.C. Code Ann. § 38-53-150(4) (Supp. 1997).
10. The Respondents wilfully deceived or dealt unjustly with the citizens of South Carolina by failing to promptly return Tucker's collateral when it became clear that there would be no liability on the bonds issued for Bethea. This conduct violates S.C. Code Ann.

§§ 38-53-150(4) and 38-53-170(e) (Supp. 1997).

1. The Respondents employed Reginald Y. Lewis as a "runner" as that term is defined in S.C. Code Ann. § 38-53-10(9) (1989). Doing so without having Lewis being licensed by the South Carolina Department of Insurance is a violation of S.C. Code Ann. §§ 38-53-80 and 38-53-150(7) (Supp. 1997).
2. Respondents' failure to report the significant amount of premium written to Amwest, failure to pay premiums and other funds due that insurer, use of an unlicensed runner, and mishandling of Mrs. Tucker's account constitute dishonest practices which violate S.C. Code Ann. § 38-53-150(5) (Supp. 1997) and demonstrate the Respondents' untrustworthiness in the conduct of business. S.C. Code Ann. § 38-53-150(8) (Supp. 1997).

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law,

IT THEREFORE ORDERED that the license of David M. Alexis to act as a resident insurance agent within the State of South Carolina is hereby revoked and that no license issued through the South Carolina Department of Insurance shall be issued to him.

IT IS FURTHER ORDERED that the license of David M. Alexis to act as a bail bondsman within the State of South Carolina is revoked and that no license issued through the South Carolina Department of Insurance shall be issued to him.

IT IS FURTHER ORDERED that the license of A&J Bonding Company to transact business as a resident insurance agency within the State of South Carolina is hereby revoked.

IT IS FURTHER ORDERED that a copy of this Final Order and Decision shall be transmitted to the National Association of Insurance Commissioners for distribution to its current member states and to each insurer for which Respondent Alexis is currently licensed, through the

South Carolina Department of Insurance, as a resident insurance agent within the State of South Carolina.

AND IT IS SO ORDERED.

STEPHEN P. BATES

Administrative Law Judge

March 9, 1998

Columbia, South Carolina