STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, ) FLORIDA REAL ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 77-2065

) HOME OWNERS DIRECT SALES, INC., ) AND ROGER L. DAVIS, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on March 8, 1978, in Ft. Lauderdale, Florida.

APPEARANCES

For Petitioner: Louis B. Guttmann, III, Esquire

Florida Real Estate Commission

400 West Robinson Avenue Post Office Box 1900 Orlando, Florida 32802

For Respondent: Roger L. Davis, Esquire c/o "A" Inc.

1980 North Atlantic Boulevard Cocoa Beach, Florida 32931

Appearing in proper person and on behalf of Respondent Home Owners Direct Sales, Inc.

The Florida Real Estate Commission (herein sometimes called the Commission) based on its five count administrative complaint filed July 20, 1977, seeks to revoke, suspend or otherwise discipline the above referenced licenses and the licensees right to practice thereunder based on the allegations set forth hereinafter in detail.

Based on the testimony of the witnesses and their demeanor while testifying, including the entire record compiled herein, I make the following:

FINDINGS OF FACT

1. The Respondent, Home Owners Direct Sales, Inc., is now and was at all times alleged herein a registered real estate entity. Respondent, Roger L. Davis is now a registered real estate broker and from July 30, 1976 to the present time, has been a registered real estate broker, President and active firm member of Respondent, Home Owners Direct Sales, Inc. Respondent Davis, by and through agents of Respondent Home Owners Direct Sales, Inc., solicited from property owners in the Dade, Broward and Palm Beach County areas the payment of

   a fee in return for listings to sell their property in a magazine which was published by Home Owners Direct Sales, Inc.

   
   

2. The complaint alleges that in its solicitation efforts, Respondents advised property owners that the magazine would be published monthly and contain the property owners listing; that such representations were false and known to be false when made; that subscribers relied upon such representations which prompted them to simultaneously pay a listing fee; that none of said fees received subsequent to July 1, 1976 were held or maintained in a trust account and that by reason thereof, the Respondents are guilty of fraud, misrepresentation, concealment, false pretenses, false promises, etc. within the meaning of Subsection 475.25(1)(a), Florida Statutes, and Respondent Home Owners Direct Sales, Inc. by and through President Davis is additionally guilty of collecting an advance fee without depositing 75 percent thereof in a trust account in violation of Subsection 475.452, Florida Statutes, all in violation of Subsection 475.25(1)(d), Florida Statutes. The complaint alleges further that the Respondents, as a means to assure the receipt of said deferred payments, recorded the deferred payment contract amount as liens against the real property interest of those who chose this method of payment for the service to be performed by Home Owners Direct Sales, Inc. Based thereon, the complaint alleges that the Respondents have placed upon the public records of the county, a lien which purports to affect the title of, or encumber, real property for the purpose of collecting a commission or to coerce the payment of money to the broker in violation of Subsection 475.42(1)(j) Florida Statutes, and derivatively in violation of Subsection 475.25(1)(d), Florida Statutes.

   Further, the complaint alleges that approximately 207 contracts were recorded in Broward County as liens of which there presently remains outstanding approximately 187 liens against the real property interests of those who chose the deferred payment method of compensation to Respondent Home Owners Direct Sales, Inc.; that Respondent has failed to take any steps to remove said liens from the public records and that by reason thereof, Respondent Home Owners Direct Sales, Inc. by and through its President, Roger L. Davis, is guilty of false pretenses, dishonest dealing, trick, scheme or device in a business transaction in violation of Subsection 475.25(1)(a), Florida Statutes.

   
   

3. The complaint also alleges that Ronald Kavin, during times material, was a registered real estate salesman in the employ of Home Owners Direct Sales, Inc.; that pursuant to the terms of his (Kavin) employment agreement, Respondent Home Owners Direct Sales, Inc. by and through its President, Roger L. Davis, paid the sums of $250 and $150 by checks dated September 16 and 29, 1976, respectively to salesman Kavin which were returned for nonsufficient funds. Based thereon, the complaint alleges that the Respondents are guilty of dishonest dealing in violation of Subsection 475.25(1)(a), Florida Statutes. Based thereon, the complaint concludes that the Respondents are guilty of a course of conduct or practices which show that they are so dishonest and untruthful that the money, property transactions and rights of investors and those with whom they may sustain a confidential relation may not be safely entrusted to them, all in violation of Subsection 475.25(3), Florida Statutes.

   
   

4. An examination of the record compiled herein reveals that sometime during the month of March, 1975, a corporate brokerage agreement was entered into between Jeff Davey, James McKay and Marylin Benjamin. As a means of doing business, the parties utilized a previously established Florida corporation, Macoda, Inc. James McKay was President of the corporation and Jeff Davey and Marylin Benjamin were Vice Presidents with Benjamin also serving as active broker. Jeff Davey was the son-in-law of President McKay who advanced the initial funds for capitalizing the corporation. Jeff Davey was charged with

   publishing and distributing the magazine, ensuring that signs were placed on the property of owners who utilized the service, and taking photos of such properties.

   
   

5. Messr. McKay envisioned establishing a profitable, ongoing venture for his son-in-law and daughter. As originally conceived, the corporation planned to publish a magazine which would illustrate real property that was available for sale by owners in Dade, Broward and Palm Beach counties. The procedure simply stated involved putting the sellers of property in contact with buyers so that a viewing time could be arranged between them. Further negotiations between seller and prospective buyer were usually handled solely between them without any input or assistance from the personnel of Respondent Home Owners Direct Sales, Inc.

   
   

6. During the early days of the corporate venture, monies collected from advertisers and all publication expenses, office expenses and salaries were handled by Jeff Davis and/or James McKay. In the early months of the operation, Messrs. Davey and McKay, pursuant to guidance and counseling from their accountants and lawyers, collateralized the listing fee contracts and used them as receivables to defray the steadily mounting negative cash flow resulting from the business operations. Sometime in December, 1975, Jeff Davey left the country for personal reasons. Thereafter, Messr. McKay took a more active role in the publication of the magazine and took sole charge of financial matters and policy decisions. The best guesstimate is that during this period, the venture was operating at a deficit of approximately $200,000 and was committed to substantial fixed overhead expenses.

   
   

7. Mr. McKay who was retired and wealthy, contacted Respondent Roger L. Davis, who was then the publisher of a business and financial opportunity magazine and engaged his services to try to sell the business. Respondent Davis advertised the business in his financial opportunity publication for the asking price of $50,000. After several months of screening prospects, it became apparent to Respondent Davis that he would be unsuccessful in his efforts to locate a prospective buyer for the business and so advised the owner, Messr. McKay. During June or July of 1976, Respondent Davis offered to purchase the business for the outstanding obligations which amounted to approximately

   $12,000.

   
   

8. At the outset of his assumption, Messr. Davis satisfied outstanding obligations of approximately $7,000 which were due to the printer. That amount also represented outstanding bills for rent, phone, salaries and other current expenses. Respondent Davis testified that when he purchased the business in June, 1976, the books were in a shambles and it was extremely difficult to determine what receivables the corporation was due and what obligations were due and owing. His testimony which was corroborated by his ex-wife, Ann Davis, reveals that he (Davis) made an honest good faith effort to satisfy all outstanding obligations with the limited funds available. He was able to obtain extensions from the printer so that approximately 15,000 copies of the magazine's November issue was printed. Respondent Davis found difficulty in physically laying out the magazine due to his lack of experience in layout work. By this time, Davis had exhausted all of his available revenues from the service and he had no funds to hire personnel to perform those functions. He contacted several property owners who had a listing agreement with Respondent Home Owners Direct Sales, Inc. after he took over its operations and was able to determine that approximately 50 - 60 property owners had in fact sold their houses and therefore no longer needed the service. He also testified that he was not responsible for filing the liens on the property of owners who utilized the

   deferred payment plan with Respondent Home Owners Direct Sales, Inc. He related several instances wherein he, when confronted by a property owner and was advised that an outstanding lien was affecting the title to their property, gave a release or satisfaction for the lien.

   
   

9. When Respondent Davis took over the operations of the business, he retained the services of Ronald Kavin for office and sales manager in overall charge of initiating sales. His overall responsibilities included training salesmen, making appointments for sales persons and assuring that they kept appointments. Approximately September 16, 1976, Messr. Kavin approached Respondent Davis for $250 which he needed to pay a garage repair bill. Messr. Davis credibly testified that he advised Messr. Kavin that although he had no money, he would issue him a check which should not be deposited until he assured him that sufficient funds were on deposit in the bank to cover the check. Approximately two weeks later, Messr. Kavin again approached Messr. Davis for

   $150 to defray expenses which he had incurred in his duties as office manager. Again Respondent Davis explained that while he had no money, he expected to obtain some money shortly from an investor whom he had arranged financing for some property which he owned and that he (Kavin) should not attempt to negotiate the check until he had prior clearance from Davis that he had sufficient monies on deposit in the bank. Messr. Kavin attempted to negotiate both checks which were returned for nonsufficient funds.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Chapter 120.57(1), Florida Statutes.

    
    

11. The authority of the Commission is derived from Chapter 475, Florida Statutes.

    
    

12. The parties were noticed pursuant to the notice provisions of Chapter

    120 and 475, Florida Statutes.

    
    

13. Insufficient evidence was offered to establish that Respondent Davis recorded approximately 207 advertising contracts as liens in Broward County as alleged in count three. However, in view of the evidence that Respondent assumed the Presidency of the corporation in June, 1976, and has failed to take any positive steps to remove from the public records, many outstanding liens which came to his attention, I find that he is guilty of dishonest dealing, trick, scheme or device in a business transaction in violation of Subsection 475.25(1)(a), Florida Statutes

    
    

14. In all other respects, insufficient evidence was offered to establish that the Respondents engaged in the conduct as alleged in the remaining allegations of the administrative complaint filed herein.

RECOMMENDATION

Based on the foregoing findings and conclusions, I hereby recommend that the registration of the Respondent corporation, Home Owners Direct Sales, Inc. and the license and registration of Respondent Roger Davis be placed on probation for a period of one year.

RECOMMENDED this 22nd day of May, 1978, in Tallahassee, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675

COPIES FURNISHED:

Louis B. Guttmann, III, Esquire Florida Real Estate Commission

400 West Robinson Avenue Post Office Box 1900 Orlando, Florida 32802

Roger L. Davis, Esquire c/o "A" Inc.

1980 North Atlantic Boulevard Cocoa Beach, Florida 32931

================================================================= AGENCY FINAL ORDER

================================================================= FLORIDA REAL ESTATE COMMISSION

FLORIDA REAL ESTATE COMMISSION,

An agency of the state of Florida,

Plaintiff, PROGRESS DOCKET NO. 3218 BROWARD COUNTY

1. DOAH CASE NO. 77-2065

   
   

   HOME OWNERS DIRECT SALES INC. and ROGER L. DAVIS,

   
   

   Respondents.

   /

   
   

   FINAL ORDER

   
   

   At a regular meeting of the Florida Real Estate Commission held at the Executive Headquarters in Orlando, Florida, on June 21, 1978.

   PRESENT: Maggie S. Lassetter, Chairman Levie D. Smith, Jr., Vice Chairman Arthur N. Hamel, Member

   
   

   APPEARANCES: Frederick H. Wilsen, Esquire

   Attorney for Plaintiff

   
   

   Roger L. Davis, Esquire Attorney for Defendants

   
   

   This matter came on for Final Order upon the Hearing Officer's Recommended Order, the Plaintiff's and Defendants' Exception thereto, and upon consideration thereof, together with a review of the complete record and oral argument of both attorneys and statements made by the Defendant in person, and the Commission being fully advised in the premises finds:

   
   

   1.

   
   

   What the last address Defendant Home Owners Direct Sales Inc. has registered with the Commission is as a corporation operating as a real estate broker, 1540 East Commercial Boulevard, Suite C West, Fort Lauderdale, Florida 33334.

   
   

   2.

   
   

   That the last address Defendant Roger L. Davis has registered with the Commission is as a real estate broker, c/o "A" Inc., 1980 North Atlantic Boulevard, Cocoa Beach, Florida 32931.

   
   

   3.

   
   

   The Plaintiff's Exceptions to the Hearing Officer's Recommended Order are not well taken and should be denied except as to penalty.

   
   

   4.

   
   

   The Defendants' Exceptions to the Hearing Officer's Recommended Order are not well taken and should be rejected.

   
   

   5.

   
   

   The Hearing Officer's Recommended Order is supported by competent, substantial evidence in the record and should be adopted as the Order of the Commission except as to penalty.

   
   

   IT IS THEREUPON ORDERED that:

   
   

   1. The Plaintiff's Exceptions to the Hearing Officer's Recommended Order be, and the same are hereby, denied, except as to penalty:

      
      

   2. The Defendants' Exceptions to the Hearing Officer's Recommended Order be, and the same are hereby, denied; and

      
      

   3. The Hearing Officer's Findings of Fact and Conclusions of Law be, and the same are hereby, adopted by the Commission.

The Hearing Officer's Recommended Order that the registrations of Defendants "be placed on probation for period of one year" be, and the same is hereby rejected.

IT IS THEREUPON ORDERED that the Defendants be, and they are hereby, found guilty of violating Subsection 475.25(1)(a), Florida Statutes, as charged in the Administrative Complaint in Count 3, and for said violation, the registrations of Defendants are hereby suspended for a period of two (2) years, with the last twelve (12) months thereof suspended.

DONE AND ORDERED at Orlando, Florida, this 22nd day of June, 1978.

Maggie S. Lassetter Chairman

Levie D. Smith, Jr. Vice Chairman

Arthur N. Hamel Member

I CERTIFY that a copy of the foregoing Final Order was mailed to Roger L. Davis, Esquire, Attorney for Defendants, c/o "A" Inc., 1980 North Atlantic Boulevard, Cocoa Beach, Florida 32931, by United States registered mail this 26th day of June, 1978.

Executive Director

NOTICE TO DEFENDANTS:

This Order shall become effective on the 23rd day of July, 1978. However, you have a right of review by an Appellate Court, if you desire.

You are to comply with this Order. We are enclosing an envelope for your convenience in returning your certificates on or before the effective date of this Final Order.

================================================================= DISTRICT COURT ORDER

=================================================================

IN THE DISTRICT COURT OF APPEAL OF FLORIDA

THIRD DISTRICT

ROGER L. DAVIS, JULY TERM, A.D. 1978 MONDAY, SEPTEMBER 25, 1978

Appellant,

CASE NO. 78-1485

vs. DOAH CASE NO. 77-2065

FLORIDA REAL ESTATE COMMISSION,

Appellee.

/

Upon the court's own motion, it is ordered that the appeal which was entered in this cause in the Florida Real Estate Commission for Broward County, Florida (Case No. 3218) be and the same is hereby dismissed for failure to comply with the Florida Appellate Rules.

A True Copy ATTEST:

LOUIS J. SPALLONE

Clerk District Court of Appeal, Third District

By: Chief Deputy Clerk

cc: Roger L. Davis

Fla. Real Estate Comm.

Docket for Case No: 77-002065

Orders for Case No: 77-002065