STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 86-0898

) PHYLLIS A. CROSBY and CROSBY ) REALTY CORPORATION, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled cause on September 3, 1986, in Tampa, Florida.

APPEARANCES

For Petitioner: Arthur R. Shell, Jr., Esquire

Department of Professional Regulation, Division of Real Estate

400 W. Robinson Street Orlando, Florida 32817

For Respondent: Respondent was neither present

nor represented.

By Administrative Complaint filed December 13, 1985, the Department of Professional Regulation, Division of Real Estate, (Petitioner), seeks to revoke, suspend or otherwise discipline the license of Phyllis A. Crosby and Crosby Realty Corporation (Respondents). As grounds therefore, it is alleged Respondent failed to deliver money to a client for property rented by Respondent as agent for client; failed to place rental money received in escrow; utilized client's funds for Respondent's own purposes; failed to keep money in an escrow account until reimbursement therefrom was authorized; failed to make available for inspection by Real Estate Commission investigators the books and records when properly requested; issued worthless checks for payment of rent, office equipment and supplies; and issued checks drawn on a closed account as rental for office furniture, all in violation of various provisions of Chapter 475, Florida Statutes.

BACKGROUND

This case was initially scheduled to be heard May 22, 1986, by Notice of Hearing dated April 9, 1986. This hearing was continued until June 4, 1986, following receipt of a Motion for continuance by Petitioner alleging that the attorney for Respondents was ill and would be unable to prepare for the June 4

hearing. By Motion for continuance dated May 28, 1986, Lawrence A. Lempert, Esquire, attorney for Respondents, requested the hearing scheduled for June 4, 1986, be continued as he was still incapacitated, and there was insufficient time for Respondent to obtain substitute counsel. That scheduled hearing was cancelled. The case was rescheduled by Notice of Hearing entered June 5, 1986, to be heard July 17, 1986. By Notice of Withdrawal and Request for Continuance dated July 9, 1986, Mr. Lempert advised he was withdrawing as attorney for Respondents. Mr. Lempert was advised by this Hearing Officer that he could not withdraw without permission of the Hearing Officer. By Motion Of Withdrawal And Motion To Continue, Lempert requested permission to withdraw as counsel for Respondents, "based upon the failure of defendants to pay for services rendered and to be rendered as agreed upon, in the sum of $2,750.00 plus other sums for representation in other matters, plus costs of Depositions ordered by Defendant, PHYLLIS A. CROSBY, failure to cooperate with the undersigned in preparation of defense, failure to supply promised materials and needed investigative reports, failure to appear in answer to Subponea [sic] while undersigned did appear not knowing that defendant would not appear, and further based upon the fact that irreconcilable differences exist between the undersigned and defendant, PHYLLIS CROSBY." By Order entered July 16, 1986, Mr. Lempert was authorized to withdraw as counsel for Respondent and the hearing was continued until September 3, 1986. The hearing was held as scheduled without Respondent present.

On September 4, 1986, Respondent telephoned this Hearing Officer to say she did not have notice of the hearing scheduled for and held on September 3, 1986. She was instructed to submit such information in writing. She submitted letter dated September 4, 1986, in which she attested she "did not receive any notice whatsoever, by phone or sepeona [sic], or any written notice of the hearing conducted yesterday in Tampa." In a postscript of this letter, Ms. Crosby stated her "new counsel will call you directly." No such call has been received.

Subsequent thereto an Affidavit was received from Lawrence A. Lempert, Esquire, dated September 16, 1986, affirming that he mailed a copy of the letter allowing him to withdraw as counsel and rescheduling the hearing to Respondent and that, subsequent thereto Respondent telephoned him and, during that conversation, acknowledges that she was aware that the Order had been entered and of the new hearing date.

By Affidavit dated September 9, 1986, Teresa Whitcomb, Secretary to Lawrence A. Lempert, averred that, during the time Phyllis A. Crosby was a client of Lempert, she dealt with Ms. Crosby on a constant and continuing basis; that Lempert advised Crosby of the Order authorizing him to withdraw as counsel and rescheduling the hearing to September 3, 1986, both by regular and certified mail, return receipt requested; although Ms. Crosby failed to pick up the certified letter, she did receive the regular mail from Lempert and evidenced same by telephoning Lempert requesting he represent her at the September 3 hearing; and that Ms. Crosby solicited Mrs. Lempert to intercede on her behalf to induce Lempert to continue to represent her at the September 3 hearing.

By Affidavit dated September 16, 1986, Wendy Lempert, wife of Lawrence A. Lempert, averred that she works in the office of Lawrence A. Lempert; that during the course of her employment she was required to deal with Ms. Crosby on numerous occasions; that Ms. Crosby was provided a copy of the Order rescheduling the hearing to September 3, 1986; that upon receipt of that Order,

Ms. Crosby made contact with Mrs. Lempert and, during the course of the conversation, stated she was aware of the September 3 hearing and urged Mrs. Lempert to intercede with Mr. Lempert and urge him to continue representing her at least through the September 3, 1986 hearing.

Based upon these Affidavits and testimony of witnesses at the hearing that Ms. Crosby directed her employees to never sign for registered or certified mail addressed to her, it is concluded that Respondent had actual notice of the September 3, 1986 hearing and chose not to be present.

At the hearing Petitioner called twelve witnesses, and four exhibits were admitted into evidence. Exhibits 2 and 3 are the depositions of William Nolte and Marilyn Nolte respectively.

FINDINGS OF FACT

1. At all times relevant hereto, Phyllis A. Crosby, Respondent, was registered as a real estate broker by the Florida Board of Real Estate, and was qualifying broker for Crosby Realty Corporation, a corporate real estate broker (Exhibit 4). Crosby had actual knowledge of the hearing scheduled to be heard September 3, 1986, and failed to appear.

   
   

2. William Nolte and Marilyn Nolte owned a duplex in Tampa, Florida that they desired to sell. They talked with Wade Black and Dale Peterson, real estate salesmen with American Realty Company, and agreed to give American Realty Company an exclusive right of sale agreement, a listing agreement to list the property for rent before sale, and to pay a $100 commission for each tenant.

   The exclusive listing agreement dated February 26, 1985 was attached to Exhibit 2, deposition of Marilyn Nolte, as Exhibit 2. Pursuant to these agreements, tenants for each of the apartments were obtained and a buyer for the property was subsequently found.

   
   

3. In March 1985, Crosby purchased American Realty's assets which included the Nolte agreements. Salesmen licenses of Black and Peterson were transferred to Crosby Realty. Rental and deposit checks from the two tenants, totalling

   $1,130.00, were obtained by Black and/or Peterson and delivered to Respondent. This money was never deposited into Respondent's escrow account.

   
   

4. The Noltes demanded remittance of the $1,130.00 minus $200 (commission), or $930.00 from Respondent on numerous occasions and made numerous phone calls to the Crosby Realty Company office to obtain this money without success.

   
   

5. On March 13, 1985, a buyer for the Nolte property was secured by Tam- Bay Realty, and the property was sold with the closing taking place June 9, 1985. Prior to the closing, Nolte wrote to the American Title Company, who closed the transaction, regarding the $930.00 owed Nolte by Respondent and this

   $930.00 was deducted from the commission paid Respondent.

   
   

6. At the closing, Respondent appeared, took the check representing Crosby Realty's Commission less the $930.00 deducted to pay Nolte, and left before the final papers were signed. No commission for the rentals of the sale was ever paid by Respondent to Black or Peterson.

   
   

7. Respondent, during 1985, had three accounts in the Citrus Park Bank in Tampa. One was the Crosby escrow account, one was the Crosby Realty general account, and one was the Phyllis A. Crosby personal expense account. Numerous

   overdrafts were drawn on the general account and personal expenses account and the bank notified the Respondent that these overdraft charges would be deducted from her escrow account as a set-off to keep the bank from losing money because of these overdraft charges. During June 1985, the bank debited the escrow account $88.50 (debit memo Exhibit 1), the July statement contained a debit memo of $283.00, and in August, debit memos of $126.76 and $62.88 appeared. In September 1985, Citrus Park Bank closed all of Respondent's accounts.

   
   

8. On April 29, 1985, Respondent leased office space and a townhouse from Carlton Properties in Tampa. She signed a three-year lease effective May 1, 1985, which provided for two months free rent for the office, with tenant to make a security deposit in the amount of $817.79 (which equals one month rent) due June 1, 1985. This deposit was never made and she was evicted in July. The townhouse lease provided for two weeks free rent with the security deposit due May 15, 1985. Respondent made this payment and one additional payment, but the check for the second payment was returned marked insufficient funds. She was evicted July 22, 1985.

   
   

9. Respondent leased office space on July 9, 1985, from Ayers-Siera Insurance Association in the Carrolwood Village Center for a broker's office. She gave the lessor a check for $842.00 for the August rent and a security deposit. She moved into the office space and the check, written on the Crosby Realty general account, bounced. It was returned for collection twice, marked insufficient funds. When run through a third time, the check was returned marked "account closed." Eviction proceedings were instituted and Respondent's furniture was moved out of the office by the Sheriff in early October. The lessor has never received any monies from Respondent.

   
   

10. In September or early October 1985, Respondent entered into a three year lease agreement with Paramount Triangle to lease office space commencing November 1, 1985. She moved her offices into that space and occupied the premises until April or May 1986 when she departed. During the period that Respondent occupied this office space, only one rental check from her was honored by the bank. Numerous checks given to Paramount Triangle for rent were not honored by the bank. Finally, the last check from Respondent dated March 6, 1986, which Paramount Triangle tried to deposit, was returned showing the account on which the check was drawn was closed on March 4, 1986.

    
    

11. Pamela Glass was employed as a secretary by Respondent from July 6, 1986 through August 6, 1986. During this period, Respondent refused to accept certified mail and became very angry with Glass when she once signed for a certified letter addressed to Respondent. Glass received numerous phone calls from people complaining about not being paid for billing sent to Respondent. When her pay was not forthcoming at the end of the month, Glass quit. Glass also testified, without contradiction, that Respondent held accounts for utilities under various aliases she used for this purpose.

    
    

12. Frank Maye, investigator for Petitioner, failed to get escrow account records from Respondent when requested and made appointments with her to audit her escrow accounts which were not kept by Respondent. Failing to obtain the records from Respondent, Maye subpoenaed the records from the bank.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

14. Respondent received actual notice of the scheduled September 3, 1986 hearing and intentionally failed to appear. Her letter dated September 4, 1986 to this Hearing Officer is as false as were promises to pay rent to her various creditors.

    
    

15. Respondent is primarily charged with violating Section 475.25(1)(b) and (k), Florida Statutes, which provides in pertinent part:

    
    

    The commission may suspend ... revoke a license or permit; may impose an administra- tive fine ... if it finds that the licensee

    (b) Has been guilty of fraud, misrepresenta- tion, concealment, false promises, false pretenses, dishonest dealing by 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...

    
    

    (k) Has failed, if a broker, to immediately place, upon receipt, any money, funds, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with

    a title company, banking institution, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him ... wherein the funds shall be kept until disbursement thereof is properly authorized ...

    
    

16. From the evidence, it is clear that in each of the transactions noted in the findings above, Respondent violated the provisions of Section 475.25(1)(b), Florida Statutes, above quoted. In the events surrounding the Nolte transaction, Respondent failed to deposit the rental money received in the escrow account until disbursement was authorized in violation of Section 475.251)(k), Florida Statutes, quoted above.

    
    

17. The evidence presented indicates that Respondent is grossly irresponsible and has little regard for a business contract. It is,

RECOMMENDED that a final order be entered finding Respondent guilty of violating Sections 475.25(1)(b) and (k), Florida Statutes, as alleged; that the license of Phyllis A. Crosby as a real estate broker be revoked; and that the license of Crosby Realty, Inc., be revoked.

ENTERED this 6th day of November, 1986, in Tallahassee, Florida.

K.N. AYERS Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 6th day of November, 1986.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esquire Department of Professional Regulation Division of Real Estate

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

Phyllis A. Crosby

13246 North Dale Mabry Highway The Village Center

Tampa, Florida 33618

Lawrence A. Lempert, Esquire 1601 West Sligh Avenue Tampa, Florida 33604

Harold Huff, Exec. Director Division of Real Estate

Department of Professional Regulation

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

Fred Roche Secretary

Department of Professional Regulation

130 N. Monroe Street Tallahassee, Florida 32301

Salvatore A. Carpino General Counsel

Department of Professional Regulation

130 N. Monroe Street Tallahassee, Florida 32301

Docket for Case No: 86-000898

Orders for Case No: 86-000898