STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-1145

)

STEPHEN P. McCRADY and ) LANDMARK REAL ESTATE AND ) INVESTMENT EXCHANGE, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on July 1, 1986, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Susan J. Hartman, Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondents: Ronald R. Rogowski, Esquire

628 Southeast Fifth Avenue Fort Lauderdale, Florida 33301

BACKGROUND

By administrative complaint filed on February 17, 1986, petitioner, Department of Professional Regulation, Division of Real Estate, has charged that respondents, Steven P. McCrady and Landmark Real Estate and Investment Exchange, Inc., licensed as a real estate broker and corporate broker, respectively, had violated Subsection 475.25(1)(e), Florida Statutes (1985). It is alleged that in 1983 petitioner entered a final order in which respondents were reprimanded and ordered to pay a $500 administrative fine within 30 days from date of final order, that such fine was never paid, and that respondents are accordingly in violation of Rule 21V-10.31, Florida Administrative Code, and Subsection 475.25(1)(e), Florida Statutes (1985).

Respondents disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes (1985). The matter was referred to the Division of Administrative Hearings by petitioner on April 7, 1986, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated May 13, 1986, the final hearing was scheduled on July 1, 1986, in Fort Lauderdale, Florida.

At final hearing, petitioner offered petitioner's exhibits 1-3. All were received except exhibit 3 upon which a ruling was reserved. Respondent testified on his own behalf and offered respondent's exhibit 1 which was received in evidence.

The transcript of hearing was filed on August 4, 1986. Proposed findings of fact and conclusions of law were filed by petitioner on August 13, 1986. A ruling on each finding has been made in the Appendix attached to this Recommended Order.

The issue is whether respondents' real estate licenses should be disciplined for the reasons set forth in the administrative complaint.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. At all times relevant hereto, respondent, Landmark Real Estate and Investment Exchange, Inc. (Landmark), was a corporation licensed as a broker.

   It holds license number 0170938 issued by petitioner, Department of Professional Regulation, Division of Real Estate (Division). Respondent, Stephen P. McCrady, was a licensed real estate broker having been issued license number 0227524 by petitioner. McCrady was also the qualifying broker and officer of Landmark.

   License renewal fees have apparently not been paid by respondents since 1984 and their licenses are accordingly considered to be inactive. However, such licenses can be reactivated by respondents paying the required fees and completing any necessary continuing education requirements. At the present time, McCrady's license has a status of "pending litigation" because of the instant proceeding.

   
   

2. On October 28, 1983, the Division (then the Florida Real Estate Commission) entered a Final Order against respondents in which respondents were reprimanded and ordered to pay a $500 fine within thirty days from the date of order. This fine was never paid.

   
   

3. On April 3, 1984, respondent McCrady filed a chapter 7 petition in the United States Bankruptcy Court for the Southern District of Florida. On September 17, 1984, that Court entered a Discharge of Debtor order which released the debtor (McCrady) "from all dischargeable debts" and declared null and void certain other debts. The order further provided that "all creditors who [sic] debts are discharged ... (or) whose judgments are declared null and void ... are hereby enjoined from commencing, continuing or employing any action, process or act to collect, recover or offset any such debt as a personal liability of the debtor." Respondent Landmark did not file a petition nor was it a party to McCrady's bankruptcy proceeding.

   
   

4. When the agency Final Order was entered, McCrady could not afford to pay the $500 fine. However, he telephoned a Division attorney and asked if he could pay the fine by installments. He was told he could not do this. Shortly afterwards he filed for personal bankruptcy. It was his impression that the bankruptcy proceeding discharged all debts, including the $500 administrative fine. McCrady did not advise the Division that he had filed for bankruptcy until after the complaint in this proceeding had been filed.

5. McCrady intends to again use his real estate license in the future. Because of serious personal and financial problems, he has not used the license for several years.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1985).

   
   

7. Respondents acknowledge that the fine was never paid. However, they contend that the debt was discharged by the bankruptcy court and therefore there was no legal obligation to pay the fine in question. But even if this contention was correct, there is nothing of record to indicate that the corporate licensee filed for bankruptcy. Accordingly, Landmark's obligations were not affected by any bankruptcy proceeding.

   
   

8. The federal bankruptcy rule is contained in Title 11, United States Code. An order of discharge under Title 11 does not discharge an individual debtor from all debts. Section 523 of Title 11 enumerates those debts that are non-dischargeable. More specifically, subsection (7) of Section 523 provides that an individual debtor is not discharged from any debt:

   
   

   1. to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty

      1. relating to a tax of a kind not specified in paragraph (1) of this subsec- tion; or

      2. imposed with respect to a transac- tion or event that occurred before three years before the date of the filing of a petition. (Emphasis added)

         
         

9. An administrative fine imposed by a regulatory agency falls within the purview of subsection 523(7). See, for example, In re Hite, Bkrtcy Tenn. 1985,

   53 B.R. 21 (penalty by county agricultural stabilization and conservation service for tobacco allotment violations nondischargeable); In re Caggiano, Bkrtcy, Mass. 1983, 34 B.R. 449 (fines imposed by city for parking violations not dischargeable); In re Wilson, Bkrtcy, Tenn. 1983, 31 B.R. 191 (traffic fines are nondischargeable). Therefore, the $500 fine imposed upon respondent McCrady was nondischargeable in the bankruptcy proceeding. This conclusion is consistent with the terms of the Discharge of Debtor order which states that the debtor "is released from all dischargeable debts." (Emphasis added)

   
   

10. Rule 21V-1O.31, Florida Administrative Code, provides that:

    
    

    In cases where the Board imposes a civil penalty for violation of Chapters 455 and 475, Laws of Florida, or the rules promulgat- ed thereunder, the penalty shall be paid within thirty (30) days of its imposition by order of the Board.

11. Applying this rule to the facts, the civil penalty of $500 was due and payable by respondents no later than November 28, 1983, or 30 days after the entry of the final order. Because the penalty was not timely paid, a violation of Rule 21V-1O.31 occurred, irrespective of whether a petition for bankruptcy was filed some six months later. This in turn constitutes a violation of Subsection 475.25(1)(e), Florida Statutes (1985), which makes it unlawful for a licensee to violate "any lawful order or rule made or issued under the provisions of this chapter or chapter 455." Therefore, both licensees have violated Chapter 475 as charged in the administrative complaint.

    
    

12. Petitioner's Exhibit 3 is a certification by petitioner's accountant that she searched the Division files and found no record of receiving a $500 fine from respondents. Because the accountant was not present at final hearing, her declaration is clearly a hearsay statement. However, it supplements an admission by respondents at hearing that the fine was never paid and accordingly is admissible under Subsection 120.58(1)(a), Florida Statutes (1985).

    
    

13. In its proposed order petitioner has not suggested a penalty to be imposed upon respondents. At final hearing McCrady gave extenuating circumstances for his failure to pay the fine. These included numerous financial and personal problems which have beset him since 1983. Given these considerations, it is concluded that respondents should be given thirty days from date of final order in this proceeding to each pay their pro-rata portion ($250) of the fine still due and payable. Otherwise, their licenses should be revoked.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondents be found guilty of violating Rule 21V-10.31,

Florida Administrative Code, and Subsection 475.25(1)(e), Florida Statutes (1985), and that they each be required to pay $250 within thirty days from date of the final order in this proceeding to satisfy the terms of the Final Order previously entered on October 23, 1983. Otherwise, their licenses should be revoked.

DONE and ORDERED this 19th day of August, 1986, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 19th day of August, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-1145

Petitioner:

1. Covered in finding of fact 1.

2. Covered in finding of fact 2.

3. Covered in finding of fact 2.

4. Covered in finding of fact 3.

COPIES FURNISHED:

Susan J. Hartman, Esquire Post Office Box 1900 Orlando, Florida 32802

Ronald R. Rogowski, Esquire 628 S.E. 5th Avenue

Ft. Lauderdale, Florida 33301

Mr. Harold R. Huff, Director Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

Docket for Case No: 86-001145

Orders for Case No: 86-001145