STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1705

) GARY D. GARRISON and JOSEPH M. ) ARBREE, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned matter, after due notice, at West Palm Beach, Florida, on September 17 and November 23, 1981, before Thomas C. Oldham, Hearing Officer.

APPEARANCES

For Petitioner: Harold M. Braxton, Esquire

45 Southwest 36th Court Miami, Florida 33135

and

Salvatore A. Carpino, Esquire Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Benjamin T. Shuman, Esquire

611 North Pine Hills Road Orlando, Florida 32808

ISSUE PRESENTED

Whether Respondent Garrison's license as a real estate broker and Respondent Arbree's license as a broker-salesman should be suspended or revoked, or the licensees otherwise disciplined for alleged violations of Chapter 475, F.S., as set forth in the Administrative Complaint, dated December 22, 1980.

This proceeding commenced with the filing of an Administrative Complaint by the Department of Professional Regulation on December 22, 1980 alleging that Respondents Gary D. Garrison and Joseph M. Arbree had violated Subsection 475.25(1)(a), Florida Statutes in connection with a 1977 real estate transaction wherein Respondents allegedly failed to disclose to the seller that purchaser Respondent Arbree was a licensed broker-salesman and that Respondent Garrison had, or would have a financial interest in the property upon its purchase. The Respondents requested an administrative hearing on the charge and filed a Motion to Dismiss claiming that Petitioner lacked jurisdiction to proceed in the cause in that there had been no lawful compliance with the provisions of Section

establishment of any fiduciary relationship between the Respondents and the seller of the property in question, and that Petitioner had not complied with

the motion was reserved until argument was presented at the final hearing. At that time, the motion was denied for reasons which will be set forth in the

Petitioner forwarded the Request for Hearings to this Division on July 1, 1981 and hearing was set for September 17, 1981. On August 27, 1981, Petitioner

Oklahoma on September 9, 1981. Respondent filed objections to the said notice, together with a Motion For Protective Order, claiming that the notice period was

depositions outside the State for use at trial. Respondent sought either to have the notice "stricken" or that a protective order be entered to require

deposition or, alternatively, that the deposition testimony not be allowed in evidence at final hearing. The motion was denied by the Hearing Officer on

At final hearing on September 17, 1981, Petitioner announced that the deposition of McNickle, an indispensable witness, had not yet been received.

deposition as a late-filed exhibit, a continuance was granted until November 23, 1981, to permit receipt of the deposition and to afford Respondents an

its taking in Oklahoma.

Although the parties were afforded the opportunity to file Proposed herein, no post-hearing submissions have been filed.

FINDINGS OF FACT

times material to the complaint was registered as a real estate salesman with Investment Equity Corporation, Palm Beach Gardens, Florida. Respondent Joseph

he was associated with Investment Equity Corporation during the times material to the allegations in the Complaint. (Testimony of Respondents)

1. acre unimproved lots in a development called Palm Beach Country Estates located in Palm Beach County, Florida. The purchase price of each lot was

   
   

   telephoned Respondent Garrison and they thereafter had several telephone conversations which led to the sale of the three lots to Respondent Arbree. The

   
   

   found that Respondent Garrison's version is more credible. In the initial conversation, McNickle advised Garrison of his ownership of the three lots and

   
   

   to inspect the lots and advise him as to the distance to electrical power, the type of roads adjacent to the lots, and whether the lots were corner lots.

   
   

   and that he was interested in trying to get his money back from the company. There was no mention of the value of the lots or of listing the property for

   sale. Garrison inspected the lots and, in a subsequent telephone conversation with McNickle, informed him that the nearest electrical power was approximately 1-3/4 miles from the lot locations, that they were on a dirt road, and that none were corner lots. He also informed him that the lots were approximately fifty percent under water during the rainy season. During this conversation, Garrison told McNickle that he had an "associate" with Investment Equity who sometimes purchased such lots. McNickle asked him to see if he could obtain an offer on the lots.

   
   

   1. Garrison then asked Respondent Arbree if he desired to purchase the lots, and the latter agreed if he could obtain financing for the purchase. Arbree asked Garrison if there was a listing on the property and Garrison told him that there was not. The reason for this inquiry was that Arbree had in the past frequently made personal purchases of real estate and had disclosed his status as a real estate salesman on such contracts when the property was listed with a broker. A question had arisen in his office as to when licensed real estate personnel should disclose their status to sellers when buying on their own account. Arbree had resolved this question in his mind some time previously by telephoning the legal office of the Florida Real Estate Commission and receiving information from someone there that it was not necessary to make such disclosure if the property was not listed with a real estate office. (Testimony of Respondents, McNickle (Deposition-Petitioner's Exhibit 3), Petitioner's Exhibit 4-1, Respondents' Exhibits 1-4)

      
      

   2. On February 28, 1977, Respondent Arbree executed a deposit receipt contract whereby he agreed to pay McNickle $15,000.00 for the three lots. The contract originally provided for a $500.00 deposit evidenced by Arbree's promissory note to be held in trust by the Investment Equity Corporation, but this was later deleted by the parties at the request of McNickle, and a $500.00 check as deposit was placed in the Investment Equity Corporation Trust Account on March 10, 1977. The check was drawn on the account of J. V. Company and signed by both Respondents. J. V. Company was simply a bank account established by Arbree and Garrison sometime prior to the McNickle transaction to serve as a depository for funds which were generated through sales for their private account. Both signatures were required for issuance of checks. Originally, the funds in the account were exclusively those of Arbree and these were the funds used for the deposit and subsequent mortgage payments to McNickle. (Testimony of Respondents, Petitioner's Exhibits 1, 4-5, 4-9, 5)

      
      

   3. The deposit receipt contract was executed by Melvin F. McNickle and his wife on March 10, 1977. The contract provided that "The buyer hereby recognizes Investment Equity Corporation by separate agreement as the broker in this transaction". This provision made reference to the fact that in cases where associates of Investment Equity Corporation purchased property in their own name which was not listed with the firm, the firm broker did not require payment of any commission. On the other hand, if an associate sold his own property, whether or not listed with Investment Equity Corporation, office policy required that he pay the firm a three percent commission for overhead, escrow maintenance, and the like. The commission was payable directly to the company and not shared with any of the associates. McNickle did not enter into a listing contract with the firm nor did he pay a real estate commission on the sale. The real estate transaction closed on August 1, 1977. Warranty deeds, dated July 26, 1977, for each of the three lots were issued by McNickle to Arbree. (Testimony of Respondents, Brown, Petitioner's Exhibits 1, 4-3, 4-4, 4- 5)

Garden lots and is familiar with the selling price places the top value on choice lots of $8,000.00 in 1977, and $4,000.00 to $5,000.00 if fill was

1. Shortly after Arbree had contracted with McNickle for the sale of the lots, Arbree told Garrison that if the lots could be resold at a profit, he

   
   

   McNickle contract had been entered into, another associate at Investment Equity Corporation told Garrison that he had a prospect looking for vacant land, and

   
   

   prospect, Carl Doty, was contacted by Garrison and, on March 17, 1977, a contract for sale and purchase was entered into between Arbree and Doty for the

   
   

   Investment Equity Corporation as the broker and agreed to pay a commission of three percent of the gross sales price to the firm. This was in accordance with

   
   

   minimum commission for processing a sale of property owned by the associate. Garrison did not receive a commission on the sale, but did receive one half of

   
   

   Arbree. Warranty deeds were issued to Doty by Arbree on August 24, 1977. The proceeds of the sale were placed in the J. V. Company bank account. (Testimony

   
   

2. This case was originally docketed in the Florida Real Estate Commission in September, 1978, but was not investigated until December, 1979. A prior

   
   

   to comply with the notice provisions of Chapter 120, Florida Statutes. (Testimony of Stephens)

   
   

3. Petitioner's proposed disciplinary action against both Respondents is predicated upon their alleged failure to disclose to the seller of the lots in

   
   

   Petitioner, and that Respondent Garrison had or would have a financial interest in the said property upon its purchase. The said nondisclosure is alleged to

   
   

   trick or device, breach of trust", and that thereby each Respondent "has aided, assisted or conspired with another in furtherance thereof, all in violation of

   
   

   subsequently reenacted and renumbered (Subsection 475.25(1)(b), F.S. (1981)), the provisions of the cited ground for disciplinary action have remained the

   
   

   penalties.

   
   

4. The evidence in this case falls short of the standard required under

   
   

   (Fla. 1st DCA 1981), i.e., that in a proceeding which "may result in the loss of a valuable business or professional license, the critical matters at issue must

   
   

   Here, the fact that the real property in question was not the subject of a listing contract with Respondents' firm, Investment Equity Corporation, raises

   
   

   commission was paid to Respondent Garrison or to the firm by the seller, nor was any expected. Respondents and their broker treated the transaction as a private

   Respondents misled McNickle in any respect. Garrison made it clear at the outset that Arbree was his associate in the firm and was acting in his own behalf. The circumstances demonstrate that Garrison was acting as a gratuitous "middle man" for the benefit of both parties. The offer of Arbree, which was accepted by McNickle, was not unreasonable in the light of the location of the lots and other relevant considerations bearing on market value.

   
   

5. The evidence shows that the McNickle lots were purchased solely with Arbree's funds, even though the checks issued for the deposit and several mortgage payments were drawn on the "J. V. Company" account which had been used in a limited fashion in the past by both Respondents in real estate ventures. No competent evidence was presented to show that Respondent Garrison had acquired a financial interest in the Arbree-McNickle transaction. On the

   contrary, the evidence establishes that subsequent purchaser Doty was made known to Garrison as a prospective purchaser of the lots only after the purchase contract between Arbree and McNickle had been executed, and that Respondents had not agreed to split any profits in a resale until that time. It is undoubtedly true that if Investment Equity Corporation had had a broker-principal fiduciary relationship with McNickle, the duties resulting therefrom would have also been imposed upon Garrison as a salesman, and he would have been obliged to disclose to McNickle the circumstances concerning his subsequent interest in the resale to Doty. This was not the case, however, and no such duty can be found in the light of the existing circumstances. Although it is recognized that a registrant can violate Subsection 475.25(1)(a), F.S. (1977) for dishonest conduct in a business transaction for his own account, as well as for such conduct in which his only interest is as a broker (or salesman) Sellars v.

   Florida Real Estate Commission, 380 So.2d, 1052 (Fla. 1st DCA 1979), the evidence here is insufficient to so characterize Respondents' conduct. It is therefore concluded that Petitioner has failed to establish that Respondents violated Section 475.25(1)(a), F.S. as alleged.

   
   

6. Although the foregoing conclusion renders it unnecessary to deal with Respondents' various claims concerning Petitioner's failure to accord them procedural rights in the prehearing process, it is considered that the amendment to Section 120.60(6), F.S. by Chapter 81-180, Laws of Florida, effective July 1, 1981, renders any defense based on the prior Section 120.60(6)(1979) no longer available. Additionally, Respondents' contentions that this proceeding is barred by the statute of limitations applicable to criminal prosecutions or by statutory laches are not well founded. Finally, Respondents did not establish any failure of Petitioner to comply with the applicable provisions of Chapter 455, Florida Statutes, in processing this case.

RECOMMENDATION

It is recommended that the Board of Real Estate dismiss the allegations against Respondents Gary D. Garrison and Joseph M. Arbree.

DONE and ENTERED this 6th day of January, 1982, in Tallahassee, Florida.

Division of Administrative Hearings The Oakland Building

Tallahassee, Florida 32301

(904) 488-9675

Division of Administrative Hearings this 6th day of January, 1982.

Harold M. Braxton, Esquire

45 Southwest 36th Court

Salvatore A. Carpino, Esquire Department of Professional

130 North Monroe Street Tallahassee, Florida 32301

611 North Pine Hills Road Orlando, Florida 32808

Assistant General Counsel Department of Professional

130 North Monroe Street Tallahassee, Florida 32301

Executive Director

Florida Board of Real Estate Orlando, Florida 32802

Docket for Case No: 81-001705

Orders for Case No: 81-001705