STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DIVISION OF FLORIDA LAND SALES ) AND CONDOMINIUMS, )
)
Petitioner, )
)
vs. ) CASE NO. 80-001
)
CAVALIER GROUP, INC., )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, in Room
160 of the New State Office Building, Miami, Florida at 10:00 A.M. The issue for determination is whether respondent's order of registration should be revoked or a civil penalty or other measures be imposed for the reasons set forth in the Notice to Show Cause dated August 1, 1979.
APPEARANCES
For Petitioner: Joseph M. Matthews, Esquire
Department of Business Regulation Johns Building
725 South Bronough Street Tallahassee, Florida 32301
For Respondent: Charles S. Domina, Esquire
250 Bird Road, Suite 104 Coral Gables, Florida 33146
INTRODUCTION
On August 1, 1979, the petitioner Division of Florida Land Sales and Condominiums issued a Notice to Show Cause why it should not issue an order revoking respondent's registration or impose a civil penalty for the alleged violations or require other affirmative action. Said Notice alleged, in general, that respondent Cavalier Group had violated Florida Statutes, Chapter
478 (now Chapter 498) in that it failed to file certain quarterly encumbrance reports; it failed to complete, as promised, certain access roads in Miami Green Acres and therefore a material change had been effected without prior notification to and approval by the petitioner; it failed to disclose to the petitioner that real estate taxes were unpaid and delinquent; and it issued warranty deeds to contract purchasers which were subject to the encumbrance of tax certificates. At the beginning of the administrative hearing, the petitioner acknowledged that the respondent had filed its quarterly encumbrance reports and no further evidence was offered on that charge.
At the conclusion of the hearing, the parties were invited to submit to the Hearing Officer proposed findings of fact, proposed conclusions of law and a proposed recommendation as to the issues. Both parties submitted proposed orders. To the extent that the parties' proposed findings of fact are not included in this Recommended Order, they are rejected as being either unsupported by competent, substantial evidence, irrelevant or immaterial to the issues for consideration or as constituting conclusions of law as opposed to findings of fact.
FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
Respondent Cavalier Group filed applications for and obtained orders of registration from petitioner for Miami's Green Acres, Units I and II, in 1967 and 1968. Miami's Green Acres is located in the far western portion of Dade County and consists of 488 lots, ranging from 2 1/2 to 10 acres in size. Most of the lots have been sold by way of Agreement for Deed, and the last sale to the public occurred in 1974. Well over 200 lots have been deeded to the purchasers.
The Florida Public Offering Statement, effective April 1, 1969, filed with the petitioner provides in pertinent part that
"Miami's Green Acres presently has a mile and one-half of graded access roads. All other similar roads within the subdivision will be completed at the time the deed is required to be delivered to the purchasers."
It further provides that
"Access to the individual tracts will be pro- vided by graded access roads composed of compacted sand and rock .... These streets have been dedicated to Dade County for public
use, but have not been accepted for maintenance."
With respect to real estate taxes, the Public Offering Statement provides that
"Real estate taxes will be advanced by seller as per contract and purchaser billed therefor prior to deeding of property. Seller retains possession until contract is paid in full and title is conveyed."
The Agreements for Deed contain similar provisions.
Tommy Farrell, a securities examiner with the petitioner, inspected the subject Miami Green Acres on May 22, 1979. Out of approximately eighteen (18) miles of road promised in the Public Offering Statement, Ms. Ferrell observed only 1 1/4 miles of drivable roads and approximately 6 miles of road which had been originally cut through, but were currently impassable by automobile.
The road work has been completed for Unit I of the subdivision. According to Eugene R. Melton, respondent's president, the road work for Unit II has not been completed for various reasons. Initially, the construction of roads was held back because respondent's mortgagee, Arvida Corporation, refused to join in the declaration of easements. This fact concerning Arvida's refusal was made known to the petitioner at the time petitioner approved respondent's registration. Without any further notice to the petitioner concerning the promised road completion, respondent did not begin construction on the roads for Unit II until November, 1974. Approximately two weeks of work was accomplished when Dade County issued a cease and desist order. In February or March of 1975, the cease and desist order was lifted and construction recommenced. In May or June, 1975, heavy rains occurred and construction stopped. At this time, according to Mr. Melton, the road work was approximately 25 to 30 percent complete. No further work was done on the roads until May of 1976, when respondent entered into a contract with a company for the remainder of the work. This work continued only for a few months, bringing the completion up to 40 percent, according to respondent. Except for cleaning up, no further work occurred in 1976 or thereafter. Apparently, the Department of Environmental Regulation and the Army Corps of Engineers became involved in the project and all work ceased. Again, except for the 1968 failure of the mortgagee to join in the dedication of easements, respondent has never advised the petitioner of the problems it was having in the construction of the roads.
Kenneth Harris, who was accepted as an expert witness in agricultural road construction, estimated that the cost of completing the remaining road work would be $16,400.00. This estimate was based upon a view of the premises and the assumption that the fill materials could be obtained at a price substantially below market price. Mr. Harris could not recall which roads he traversed while making his physical inspection and he underestimated the amount of road work needed to be done. The last subdivider's annual report submitted to the petitioner by the respondent indicates that approximately $75,000.00 remains to be spent on road work.
Respondent did not pay the real estate taxes that accrued on lots within the subdivision during the years 1977 and 1978 prior to the date such taxes became delinquent. These taxes, with the exception of two or three parcels still unpaid, were not paid by respondent until March of 1980. 1/ Prior to March of 1980, respondent had collected from purchasers monies for reimbursement for taxes that had not been timely paid.
Respondent did issue warranty deeds to some purchasers at the time that the 1977 and 1978 real estate taxes were delinquent. It is not clear from the evidence how many such deeds were issued, whether the purchasers were aware that the taxes were outstanding at the time they received their warranty deeds, or whether those purchasers had indeed already paid respondent for the taxes.
The quarterly encumbrance reports filed by respondent with the petitioner covering the period from January 1, 1978, through June 30, 1979, do not inform the petitioner that the taxes were unpaid and delinquent. After the filing of the Notice to Show Cause, respondent included the unpaid taxes as an encumbrance on the quarterly encumbrance reports.
CONCLUSIONS OF LAW
The respondent is charged with certain violations of Chapter 478, Florida Statutes (now Chapter 498) relating to the noncompletion of promised roads and the failure to timely pay real estate taxes.
Florida Statutes (1977), s. 478.121(3), now codified in substantially the same language as s. 498.033(3), provides that
"After an order of registration has been issued, no material change, alteration, or modification of the offering shall be made by the subdivider without first notifying the division in writing and obtaining written approval from the division director."
Here, the evidence clearly demonstrates that the Public Offering Statement promised that graded access roads within the subdivision would be completed at the time the deeds were required to be delivered to the purchasers. Respondent did not adhere to its representations. As of the date of the hearing, some eleven miles out of eighteen miles of roadway had not even been cut by the respondent. This constitutes a material change, alteration or modification of the offering for which no notice to the petitioner was given nor approval from the petitioner obtained, in violation of Florida Statutes, s. 478.121(3), (1977)(now 498.033(3)).
As to the charge relating to the failure to pay taxes in a timely manner, the evidence clearly illustrates that neither the 1977 nor the 1978 taxes were paid until long after the date upon which they became delinquent. The evidence further illustrates that the petitioner was not notified of said delinquency until after the Notice to Show Cause was issued in August of 1979. Inasmuch as the respondent represented that it would advance the real estate taxes and the purchasers were entitled to rely upon the timely payment of the
same, this too constitutes a material change in the offering for which notice to and approval from the petitioner was lacking. Also, Section 478.052(2), Florida Statutes (1977), (now s. 498.039(3)), provides that subdividers shall submit quarterly reports indicating that timely payments have been made for the satisfaction of any encumbrance upon the subdivided lands. The quarterly encumbrance reports filed by the respondent indicate respondent's failure to include thereon the nonpayment of delinquent taxes, and thus a violation of this statutory provision has been demonstrated.
Paragraph 4 of the Notice to Show Cause charges that the respondent issued warranty deeds which were subject to the encumbrance of tax certificates sold by the tax collector of Putnam County. No evidence was adduced at the hearing concerning this allegation. Likewise, there was insufficient evidence adduced at the hearing to prove that tax certificates for 1978 has been issued and sold by the tax collector of Dade County, as charged in paragraph 3 of the Notice to Show Cause.
In summary, it is concluded that the petitioner has adequately demonstrated that respondent is guilty of violating Section 478.121(3), Florida Statutes (1977)(now s. 498.033(3)), by failing to notify and receive written approval from the petitioner for material changes in its offering and of violating Section 478.052(2), Florida Statutes (1977)(now s. 498.039(3)), by failing to list the unpaid real estate taxes as an encumbrance on the quarterly encumbrance reports to the petitioner.
For such violations, the Division seeks to revoke the respondent's registrations for Miami Green Acres, to impose civil penalties, and to order the respondent to enter into an improvement trust account based upon the estimated cost of completion of improvements. The undersigned has carefully reviewed the
statutory provisions relating to revocation and suspension of registration. Section 478.161(1), Florida Statutes (1977); Section 498.049(1), Florida Statutes (1979). The petitioner has failed to allege or to prove at the hearing any act which would authorize revocation or suspension under those statutes.
Section 478.161(3), Florida Statutes (1977),(now s. 498.049(4)), does authorize civil penalties for violations of the land sales practices law, and Rule 7D- 6.03, Florida Administrative Code, authorizes the petitioner to require financial security deemed adequate to insure that the Plan of development has adequate safeguards and assurances.
Based upon the findings of fact and conclusions of law recited above, it is RECOMMENDED that:
the respondent be found guilty of violating Sections 478.121(3) and 478.052(2), Florida Statutes (1977), (now ss. 498.033(3) and 498.039(3));
a civil penalty be imposed against the respondent for such violations in the total amount of $5,000.00;
the respondent submit to the Petitioner within thirty (30) days of the final order a new estimate from a duly licensed engineer of the cost of constructing all roads promised in the Florida Public Offering Statement;
the respondent enter into an improvement trust account based upon the estimated cost of completion of the promised road work; and
the respondent be ordered to immediately pay all delinquent real estate taxes.
Respectfully submitted and entered this 28th day of April, 1980, in Tallahassee, Florida.
DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301
(904) 488-9675
ENDNOTE
1/ The undersigned sustained the objections of the respondent as to testimony regarding the payment of 1979 real estate taxes inasmuch as this charge was not included in the Notice to Show Cause and such taxes, as of the date of the hearing, had not yet become delinquent.
COPIES FURNISHED:
Joseph M. Matthews, Esquire Department of Business Regulation Johns Building
725 South Bronough Street Tallahassee, Florida 32301
Charles S. Domina, Esquire
250 Bird Road Suite 104
Coral Gables, Florida 33146
Earl M. Foster, Director Division of Florida Land Sales
and Condominiums
725 South Bronough Street Tallahassee, Florida 32301
================================================================= AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION
DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS 725 SOUTH BRONOUGH STREET - JOHNS BUILDING
TALLAHASSEE, FLORIDA 32301
DIVISION OF FLORIDA LAND SALES AND CONDOMINIUMS,
Petitioner,
vs. DOCKET NO. 79098RSD
DOAH CASE NO. 80-001
CAVALIER GROUP, INC.,
Respondent.
/
FINAL ORDER
COMES NOW the Division of Florida Land Sales and Condominiums (hereinafter the "Division" or "Petitioner") to issue this Final Order pursuant to Chapters
120 and 498, Florida Statutes.
INTRODUCTION
Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, in Room
160 of the New State Office Building, Miami, Florida at 10:00 A.M. The issue
for determination was whether respondent's Order of Registration should be revoked or a civil penalty or other measures be imposed for the reasons set forth in the Notice to Show Cause dated August 1, 1979. Both parties were represented by counsel:
APPEARANCES
For Petitioner: Joseph M. Matthews, Esquire
Department of Business Regulation Johns Building
725 South Bronough Street Tallahassee, Florida 32301
For Respondent: Charles S. Domina, Esquire
250 Bird Road, Suite 104 Coral Gables, Florida 33146
The Division's Notice to Show Cause alleged, in general, that Respondent Cavalier Group had violated Florida Statutes, Chapter 478 (now Chapter 498) in that it failed to file certain quarterly encumbrance reports; it failed to complete, as promised, certain access roads in Miami Green Acres and therefore a material change had been effected without prior notification to and approval by the Petitioner; it failed to disclose to the Petitioner that real estate taxes were unpaid and delinquent; and it issued warranty deeds to contract purchasers which were subject to the encumbrance of tax certificates. At the beginning of the administrative hearing, the Petitioner acknowledged that the Respondent had filed its quarterly encumbrance reports and no further evidence was offered on that charge.
At the conclusion of the hearing, the parties were invited to submit to the Hearing Officer proposed findings of fact, proposed conclusions of law and a proposed recommendation as to the issues. Both parties submitted proposed orders. On April 28, 1980, Hearing Officer Tremor submitted to the Division a Recommended Order which accepted certain portions of the proposed orders submitted by the parties, and rejected the remaining portions as being unsupported by competent, substantial evidence, irrelevant or immaterial to the issues presented or as constituting conclusions of law as opposed to findings of fact. The Recommended Order contained in the following findings of fact, which findings are hereby adopted as the findings of the Division.
FINDINGS OF FACT
Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:
Respondent Cavalier Group filed application for and obtained Orders of Registration from Petitioner for Miami's Green Acres, Units I and II, in 1967 and 1968. Miami's Green Acres is located in the far western portion of Dade County and consists of 488 lots, ranging from 2 1/2 to 10 acres in size. Most of the lots have been sold by way of Agreement for Deed, and the last sale to the public occurred in 1974. Well over 200 lots have been deeded to the purchasers.
The Florida Public Offering Statement, effective April 1, 1969, filed with the Petitioner provides in pertinent part that
"Miami's Green Acres presently has a mile and one-half of graded access roads. All other similar roads within the subdivision will be completed at the time the deed is required to be delivered to the purchasers."
It further provides that:
"Access to the individual tracts will be provided by graded access roads composed of compacted sand and rock... These street have been dedicated to Dade County for public use, but have not been accepted for maintenance."
With respect to real estate taxes, the Public Offering Statement provides that:
"Real estate taxes will be advanced by seller as per contract and purchaser billed
therefor prior to deeding of property. Seller retains possession until contract is paid in full and title is conveyed."
The Agreements for Deed contain similar provisions.
Tommie Ferrell, a Securities Examiner with the Petitioner, inspected the subject Miami's Green Acres on May 22, 1979. Out of approximately eighteen
miles of road promised in the Public Offering Statement, Ms. Ferrell observed only 1 1/4 miles of drivable roads and approximately 6 miles of road which had been originally cut through, but were currently impassible by automobile.
The road work has been completed for Unit I of the subdivision. According to Eugene R. Melton, Respondent's President, the road work for Unit II has not been completed for various reasons. Initially, the construction of roads was held back because Respondent's mortgagee, Arvida Corporation, refused to join in the declaration of easements. This fact concerning Arvida's refusal was made known to the Petitioner at the time Petitioner approved Respondent's registration. Without any further notice to the Petitioner concerning the promised road completion, Respondent did not begin construction of the roads for Unit II until November, 1974. Approximately two weeks of work was accomplished when Dade County issued a cease and desist order. In February or March of 1975, the cease and desist order was lifted and construction recommenced. In May or June, 1975, heavy rains occurred and construction stopped. At this time, according to Mr. Melton, the road work was approximately 25 to 30 percent complete. No further work was done on the roads until May of 1976, when Respondent entered into a contract with a company for the remainder of the work. This work continued only for a few months, bringing the completion up to 40 percent, according to Respondent. Except for cleaning up, no further work occurred in 1976 or thereafter. Apparently, the Department of Environmental Regulation and the Army Corps of Engineers became involved in the project and all work ceased. Again, except for the 1968 failure of the mortgagee to join in the dedication of easements, Respondent has never advised the Petitioner of the problems it was having in the construction of the roads.
Kenneth Harris, who was accepted as an expert witness in agricultural road construction, estimated that the cost of completing the remaining road work
would be $16,400.00. This estimate was based upon a view of the premises and the assumption that the fill materials could be obtained at a price substantially below market price. Mr. Harris could not recall which roads he traversed while making his physical inspection and he underestimated the amount of road work needed to be done. The last subdivider's annual report submitted to the Petitioner by the Respondent indicates that approximately $75,000.00 remains to be spent on road work.
Respondent did not pay the real estate taxes that accrued on lots within the subdivision during the years 1977 and 1978 prior to the date such taxes became delinquent. These taxes, with the exception of two or three parcels still unpaid, were not paid by Respondent until March of 1980. Prior to March of 1980, Respondent had collected from purchasers monies for reimbursement for taxes that had not been timely paid.
Respondent did issue warranty deeds to some purchasers at the time that the 1977 and 1978 real estate taxes were delinquent. It is not clear from the evidence how many such deeds were issued, whether the purchasers were aware that the taxes were outstanding at the time they received their warranty deeds, or whether those purchasers had indeed already paid Respondent for the taxes.
The quarterly encumbrance reports filed by Respondent with the Petitioner covering the period from January 1, 1978, through June 30, 1979, do not inform the Petitioner that the taxes were unpaid and delinquent. After the filing of the Notice to Show Cause, Respondent included the unpaid taxes as an encumbrance on the quarterly encumbrance reports.
CONCLUSIONS OF LAW
The Respondent is charged with certain violation of Chapter 478, Florida Statutes (now Chapter 498) relating to the noncompletion of promised roads and the failure to timely pay real estate taxes.
Florida Statutes (1977), S 478.121(3), now codified in substantially the same language as S 498.033(3), provides that
"After an order of registration has been issued, no material change, alteration, or modification of the offering shall be made by the subdivider without first notifying
the division in writing and obtaining written approval from the division director."
Here, the evidence clearly demonstrates that the Public Offering Statement promised that graded access roads within the subdivision would be completed at the time the deeds were required to be delivered to the purchasers. Respondent did not adhere to its representations. As of the date of the hearing, some eleven miles out of eighteen miles of roadway had not even been cut by the Respondent. This constitutes a material change, alteration or modification of the offering for which no notice to the Petitioner was given nor approval from the Petitioner obtained, in violation of Florida Statutes, S478.121(3), (1977) (now 498.033(3).
As to the change relating to the failure to pay taxes in a timely manner, the evidence clearly illustrates that neither the 1977 nor the 1978 taxes were paid until long after the date upon which they became delinquent. The evidence further illustrates that the Petitioner was not notified of said delinquency
until after the Notice to Show Cause was issued in August of 1979. Inasmuch as the Respondent represented that it would advance the real estate taxes and the purchasers were entitled to rely upon the timely payment of the same, this too constitutes a material change in the offering for which notice to and approval from the Petitioner was lacking. Also, S 478.052(2), Florida Statutes, (1977), (now 498.039 (301), provides that subdividers shall submit quarterly reports indicating that timely payments have been made for the satisfaction of any encumbrance upon the subdivided lands. The quarterly encumbrance reports filed by the Respondent indicate Respondent's failure to include thereon the nonpayment of delinquent taxes, and thus a violation of this statutory provision has been demonstrated.
In summary, it is concluded that the Respondent is guilty of violating S478.121(3), Florida Statutes (1977) (now S498.033(3)), by failing to notify and receive written approval from the Petitioner for material changes in its offering and of violating S478.052(2), Florida Statutes (1977) (now S498.039(3)), by failing to list the unpaid real estate taxes as an encumbrance on the quarterly encumbrance reports to the Petitioner.
For such violation, the Division seeks to impose civil penalties, and to order the Respondent to enter into an improvement trust account based upon the estimated cost of completion of improvements. Section 478.161(3), Florida Statutes (1977), (now S498.049(4)), does authorize civil penalties for violations of the land sales practices law, and Rule 7D-6.03, Florida Administrative Code, authorizes the Petitioner to require financial security deemed adequate to insure that the plan of development has adequate safeguards and assurances.
ORDER
Based upon the findings of fact and conclusions of law recited above, it is ORDERED that:
the Respondent is found guilty of violating Sections 478.121(3) and 478.052(2), Florida Statutes (1977), (now SS498.033(3) and 498.039(3);
a civil penalty is imposed against the Respondent for such violations in the total amount of $5,000.00, which amount shall be paid to the order of the State Treasury, Land Sales and Condominiums Trust Fund on or before the 20th days following the date of this Order;
the Respondent shall submit to the Petitioner within thirty (30) days of the date of this Order a new estimate from a duly licensed engineer of the cost of constructing all roads promised in the Florida Public Offering Statement;
the Respondent shall pay all delinquent real estate taxes within ten
days of the date of this Order.
DONE AND ORDERED in Tallahassee, Leon County, Florida, this 4th day of June, 1980.
EARL M. FOSTER, Director EARL M. FOSTER
Division of Florida Land Sales and Condominiums
Department of Business Regulation State of Florida
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a copy of the foregoing was mailed by certified mail, return receipt requested to the CAVALIER GROUP, INC., Nationwide Building, 8625 Biscayne Boulevard, Miami, Florida, 33128, and by regular mail to CHARLES DOMINA, ESQ., 250 Bird Road, Suite 104, Coral Gables, Florida, 33146, this 5th day of June, 1980.
By: LAUREN A. [ILLEGIBLE]
| Issue Date | Proceedings |
|---|---|
| Jun. 06, 1980 | Final Order filed. |
| Apr. 28, 1980 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jun. 04, 1980 | Agency Final Order | |
| Apr. 28, 1980 | Recommended Order | Respondent didn't notify of changes in its offering or get Petitioner's okay, nor did it file quarterly encumbrance reports. Recommend fine/compliance. |
