vs. ) CASE NO. 78-976
IRVING Z. MANN, STANLEY M. ) ROBBINS, and I. Z. MANN REALTY ) CORPORATION, )
Respondents. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William E. Williams, held a public hearing in this case on August 7, 1978, in Sarasota, Florida.
For Petitioner: Frederick H. Wilson, Esquire
For Respondent: Henry P. Trawick, Jr., Esquire
The Florida Real Estate Commission (the "Commission") issued an Administrative Complaint against the Respondents on March 23, 1978. On April 7, 1978, the Respondents filed an Answer, a Motion to Quash the Administrative Complaint, and a Demand for Hearing. The Motion to Quash was denied by the Commission by Order dated May 19, 1978. Thereafter, in accordance with the provision of Florida Statutes, Section 120.57(1)(b)(3), the Commission requested that a hearing officer from the Division of Administrative Hearings be assigned to conduct the hearing. The final hearing was scheduled by notices dated June 22, 1978 and June 30, 1978.
In the Administrative Complaint, the Commission seeks to revoke, suspend, or otherwise discipline Respondents Irving Z. Mann, Stanley M. Robbins, and I.Z. Mann Realty Corporation for allegedly failing to pay real estate commissions due Fritz K. Grolock, a registered real estate salesman, on sales described in Counts One through Three of the Administrative Complaint. The Administrative Complaint alleges that Mr. Grolock made several demands on Irving Z. Mann and Stanley M. Robbins for payment of the commissions, that Messrs. Mann and Robbins made promises and representations that those commissions would be paid, but no payments have as yet been made to Mr. Grolock. The Commission asserts that the Respondents' failure to pay these commissions despite their promises to do so makes them
". . . guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, business transaction, in this state, all in violation of Subsection 475.25(1)(a), Florida Statutes."
At the final hearing, the Commission called Barbara S. Brown and Fritz K. Grolock as its witnesses. The Respondents called Irving Z. Mann and Stanley M. Robbins as their witnesses. The Commission offered Petitioner's Exhibits Numbers 1 and 2, and Respondents offered Respondents' Exhibits Numbers 1 and 2, all of which were received into evidence.
I.Z. Mann Realty Corporation was at all times material to this proceeding a corporation registered as a real estate broker with the Commission, with its principal business address at 240 North Washington Boulevard, Sarasota, Florida, 33577.
Irving Z. Mann was at all times material to this proceeding a real estate broker registered with the Commission, and the holder of two registration certificates: one as an individual broker with an office at 2197 Princeton Street, Sarasota, Florida 33577; and the other license as president and active broker of I.Z. Mann Realty Corporation.
Stanley M. Robbins was at all times material to this proceeding a registered real estate salesman in the employ of I.Z. Mann Realty Corporation.
At all times material to this proceeding Fritz K. Grolock was a registered real estate salesman, and from April 12, 1972, to February 2, 1976, he was registered with the Commission as a real estate salesman in the employ of
I.Z. Mann Realty Corporation. From February 2, 1976, to November 29, 1976, Mr. Grolock was registered with the Commission as a real estate salesman in the employ of I.Z. Mann & Associates, Inc.
At all times material to this proceeding Irving Z. Mann was president, and Stanley M. Robbins was vice president, assistant secretary, treasurer and general sales manager of I.Z. Mann & Associates, Inc., a Florida corporation which was the owner and developer of the Palma Sola Harbor condominium development in Sarasota County, Florida.
On or before February 4, 1976, Mr. Grolock and Mr. Robbins had agreed that Mr. Grolock would receive for his services as a real estate salesman for
I.Z. Mann & Associates, Inc. a three percent commission based upon the sales price of individual condominium units sold at Palma Sola Harbor. Commissions were to be paid to Mr.Grolock at the end of the month in which the sale of each such unit was consummated. Mr. Robbins explained to Mr. Grolock at the time of this agreement that I.Z. Mann & Associates, Inc. was short of cash, and that should Grolock make any sales, he might have to wait for some indefinite period of time to receive his commission. Mr. Grolock indicated his willingness at the time to proceed on that basis.
No testimony was adduced, and no documentary evidence was offered to establish that Mr. Grolock was employed by I.Z. Mann Realty Corporation, Inc.,
at any time material to the allegations contained in the Administrative Complaint.
During the course of his employment as a real estate salesman with I.Z. Mann Realty Corporation, Inc. Mr. Grolock solicited and obtained a real property sales contract between Elmer C. Sutter and Ruth W. Sutter, as purchasers, and
I.Z. Mann Realty Corporation, Inc., as seller, for a condominium unit in the Palma Sola Harbor project. The purchase price of the unit was $26,450, and the evidence established that Mr.Grolock is due, and has not been paid, a commission of $793.50 for that sale.
During the course of his employment as a real estate salesman with I.Z. Mann & Associates, Inc., Mr. Grolock solicited and obtained a real property sales contract between Martin G. Tepatti and Dorothy L. Tepatti, as purchasers, and I.Z. Mann Realty Corporation, Inc., as seller, for a condominium unit in the Palma Sola Harbor project. The purchase price of the unit was $37,450, and the evidence established that Mr. Grolock is due, and has not been paid, a commission of $1,123.50 for that sale.
During the course of his employment as a real estate salesman with
I.Z. Mann Realty Corporation, Inc., Mr. Grolock solicited and obtained real property sales contract (Petitioner's Exhibit #1) dated April 29, 1976, between Donald F. Brown and Barbara S. Brown, as purchasers, and I.Z. Mann Realty Corporation, Inc. as seller, for a condominium unit in the Palma Sola Harbor project. The purchase price of the unit was $37,450, and the evidence established that Mr. Grolock is due, and has not been paid, a real estate commission of $1,123.50 for that sale.
Mr. Grolock did not attend the closing of any of the three transactions referenced above and described in the Administrative Complaint. However, the only evidence of record establishes that these transactions resulted in "negative closings" that is, after deductions of amounts due on the pre-existing construction mortgage, charges for documentary stamp taxes, tax
pro-rations and the like, no funds remained for disbursement to I.Z. Mann Realty Corporation, Inc. for payment to Mr. Grolock as a commission. Neither Mr. Mann, Mr. Robbins, I.Z. Mann Realty Corporation, nor I.Z. Mann & Associates, Inc. received any funds at the closing of these transactions.
Some time after the closings of the three transactions described in the Administrative Complaint, Mr. Grolock spoke with Mr. Robbins concerning non- payment of his commissions. Mr. Robbins explained t6hat the three transactions had resulted in "negative closings," but that if Mr. Grolock would be patient he would be paid his commissions in due course. Mr. Robbins discussed the commissions once or twice thereafter with Mr. Grolock, each time explaining that the company was short of money but that Mr. Grolock would be paid eventually.
Because of poor market conditions in the condominium industry, I.Z. Mann Realty & Associates experienced financial problems which ultimately resulted in the company's insolvency. The company eventually voluntarily relinquished its assets to creditors, or had its interest in those assets foreclosed, and at the present time is no longer actively engaged in business.
By letters to Mr. Robbins dated December 7, 1976, and January 19, 1977, (Petitioner's Exhibit #2) Mr. Grolock demanded that some arrangements be made for payment of his past due commissions. When he received no reply to these letters, Mr. Grolock sent a letter (Petitioner's Exhibit #2) to Mr. Mann dated April 25, 1977, listing the transactions which resulted in $3,040.50 being
owed to him for real estate commissions. Shortly after receiving this letter, Mr. Mann telephoned Mr. Grolock, on May 5, 1977, and told him ". . . the company had been inactive for a long time, but that I would see to it that he would get paid eventually. Just give us a chance to get some money to do it." (Transcript, p. 63). Mr. Grolock agreed at that time to wait for payment of his commissions.
Some time after his May 5, 1977, telephone conversation with Mr. Mann, Mr. Grolock filed a complaint with the Commission ". . . [b]ecause I found no other recourse. . . [t]o obtain my commission . . . ." (Transcript, p. 26).
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Subsection 120.57(1), 120.60, Florida Statutes.
In license revocation or suspension proceedings undertaken pursuant to Section 475.25, Florida Statutes, the burden of establishing that a licensed real estate broker has violated the Florida Real Estate License Law lies with the Commission. State ex rel Vining v. Florida Real Estate Commission, 281. So2d 487 (Fla. 1973).
In the Administrative Complaint filed in this cause, the Commission contends that the Respondents' failure to pay certain earned commissions to a real estate salesman, together with their continued assurances tot he salesman that he would be paid in due course, constitute a violation of Section 475.25(1)(a), Florida Statutes, and alleges that by reason of such actions the Respondents are:
. . . guilty of fraud, misrepresentation, concealment, false promises, false pretenses dishonest dealing, trick, scheme or device, culpable negligence, or breach of trust in a business transaction. . . .
Respondents charged with violating any other provisions of the Florida Real Estate License Law, or of any of the Commissions's rules and regulations.
Section 475.25(1)(a), Florida Statutes, provides, in part, that:
The registration of a registrant may be suspended for a period not exceeding 2 years, or until compliance with a lawful order imposed in the final order of suspension, or both, upon a finding of facts showing that the registrant has:
Been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence, or breach of trust in
any business transaction, in this state ;
has violated a duty imposed upon him by law
or by the terms of a listing contract, written, oral, express or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such
misconduct and in furtherance thereof; or has formed an intent, design, or scheme to
engage in any such misconduct, and has intent, design or scheme. It shall be immaterial
to the guilt of the registrant, the the victim, or intended victim, of the misconduct has sustained no damage or loss or the damage or loss base been settled and paid, after discovery of the misconduct, or whether such victim, or intended victim, thereof, was a customer or a person in confidential
relation with the registrant, or was an identified member of the general public . . . .
In Brod v. Jernigan, 188 So. 2d 575, 581 (Fla. 2d DCA 1966) the court held that:
Chapter 475 vests in the Florida Real Estate Commission a broad discretionary power and authority to supervise the privileged business of real estate broker and to deal firmly with those engaged in it, even to the point of taking away their means of livelihood by revocation or suspension of license.
But such potent administrative weapons must always be reasonable and cautiously, and even sparingly utilized. The administrative processes of the Commission should be aimed at the dishonest and unscrupulous operator, one who cheats swindles, or defrauds the general public in handling real estate transactions . . . (Emphasis added)
In Horne v. Florida Real Estate Commission, 163 So. 2d 515 (Fla. 1st DCA 1964), a registered real estate broker and a registered real estate saleswoman appealed an order of the Florida Real Estate Commission denying their Motion to Quash a count of an information predicated upon an alleged violation of Section 475.25(1)(a), Florida Statutes. In the course of its decision, the court held that dishonest dealings between real estate brokers and their salesmen which do not affect members of the general public are not appropriate subjects for disciplinary proceedings under Section 475.25(1)(a), Florida Statutes. In its opinion, the court pointed out that:
An examination of the instant information discloses that the charges outlined are predicated upon factual matters pertaining solely to the internal business affairs
of a real estate agency and the decision reached by the Real Estate Commission, if permitted to decide the matter, would usurp the role of the established judiciary. By analogy, to sustain the Commission's position being here asserted, we would be compelled
to conclude that if a husband real estate salesman should be charged by the Commission with lying to his wife about his commission derived from a real estate transaction, a determination by the Commission that would
subject the husband to disciplinary proceedings by the Commission . . . [W]e conclude that
the fraud so charged by the Commission is directed to factual matters outside of the Commission's jurisdiction and in which the general public will not be harmed or otherwise concerned. 163 So. 2d at 517-518. (Emphasis added).
No substantive legislative changes have been made in Section 475.25(1)(a), Florida Statutes, since the Horne decision.
In Cannon v. Florida Real Estate Commission, 221 So. 2d 240 (Fla. 4th DCA 1969), the court reversed an order of the Commission suspending a broker's license for failing to pay a salesman's commission, and observed that:
The relationship between a real estate broker and his sales personnel is contractual in nature. Enforcement of rights thereunder, absent fraud, concealment or dishonest acts, should be by a court of proper jurisdiction rather than by an administrative agency.
221 So. at 241-242.
In Brod v. Jernigan, supra, the court reversed an order of the Commission suspending a broker's license for an alleged violation of Section 475.(1)(a), Florida Statutes, and observed that:
. . . . .The statute requires the promise to be false to be grounds for suspension. A promise that is merely unfulfilled is not necessarily a false promise. A promise to do something in the future, even if made as representation to induce the other person to enter into a contract, does not amount to fraud in a legal sense. 188 So. 2d at 579.
The evidence in the instant case jails to establish any conduct on the part of I.Z. Mann, Stanley M. Robbins or I.Z. Mann Realty Corporation amounting to fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence or breach of trust. The Respondents' failure to pay Mr. Grolock commissions which they freely admitted are due and owing to him, simply does not meet the standard for revocation or suspension of licenses contemplated by Section 475.25(1)(a), Florida Statutes, and cases construing that statute. No evidence was adduced to show that the promises were false when made, and they could not have been made for the purpose of inducing Mr. Grolock's reliance upon them since the acts for which compensation was due had already been performed when the promises were made. In summary, the evidence admits no other conclusion than that the promises to pay Mr. Grolock were made in good faith, and that unforeseen, and unforeseeable, economic conditions combined to make Respondents unable to perform as they had hoped.
The relief sought by the Commission in its Administrative Complaint should be denied, and the Administrative Complaint should be dismissed.
That a final order be entered by the Florida Real Estate Commission dismissing the complaint against Respondents Irving Z. Mann, Stanley M. Robbins andI.Z. Mann Realty Corporation
RECOMMENDED this 5th day of September, 1978, in Tallahassee, Florida.
WILLIAM E. WILLIAMS
Frederick H. Wilson, Esquire Staff Attorney
Henry P. Trawick, Jr., Esquire Post Office Box 4019
