Judges: DIANE K. KIESLING
Agency: Department of Business and Professional Regulation
Latest Update: Dec. 18, 1986
Summary: Respondent made unauthorized offer on behalf of trustees and beneficiaries. Recommend suspension and fine.
86-1712.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )
)
Petitioner, )
)
vs. ) CASE NO. 86-1712
)
KEITH ALLEN MILLER and ) KEITH MILLER REALTY COMPANY, )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in Fort Myers, Florida, on September 24 and 25, 1986, before the Division of Administrative Hearings by its designated Hearing Officer Diane K. Kiesling.
APPEARANCES
For Petitioner: James H. Gillis, Esquire
Department of Professional Regulation Division of Real Estate
400 West Robinson Street Orlando, Florida 32802
For Respondent: Howard Hadley, Esquire
827 Deltona Boulevard
Deltona, Florida 32725
The issue is whether Respondents' licenses should be revoked or otherwise penalized based on the alleged violations of Sections 475.25(1)(b) and (o), Florida Statutes, as alleged in the Administrative Complaint filed by Petitioner, Department of Professional Regulation, Division of Real Estate.
Petitioner presented the testimony of Frank J. Aloia, Jerome Martin, Stanley W. Hole, William James Simmonds, Robert S. Jost, Howard W. Ayers, Donn
Davis, William H. Howard, Louis A. Letizia, James H. Kolde, Samuel B. Johnson, William D. Gaddie, Robert A. Bordeaux, George P. Drake, and John Naumann. Petitioner's Exhibits 2-5, 9-11, 16, 18, 19, 33, 36-38, 41, 50- 52, 54, and 55 were admitted in evidence. Respondents Keith Allen Miller and Keith Miller Realty Company presented the testimony of Keith Miller and had Respondent's Exhibits 1-16 admitted in evidence.
The parties filed proposed findings of fact and conclusions of law. All proposed findings of fact and conclusions of law have been considered. A ruling has been made on each proposed finding of fact in the Appendix attached here to and made a part hereof.
FINDING OF FACT
By stipulation the following facts are found.
Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120.45 and 475, Florida Statutes, and the rules promulgated pursuant thereto.
Respondent Keith Allen Miller is now and was at all times material here to a licensed real estate broker in the State of Florida having been issued license number 0060302 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, c/o Keith Miller Realty Company, 14401 S. Tamiami Trail, Ft. Myers, Florida 33912.
Respondent Keith Miller Realty Company is now and was at all times material here to a corporation licensed as a real estate broker in the State of Florida having been issued license number 0060324 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 14401 S. Tamiami Trail, Ft. Myers, Florida 33912.
At all times material herein, Respondent Keith Allen Miller was licensed and operating as a qualifying broker and officer for Respondent Keith Miller Realty Company.
The following findings are based on the evidence presented.
At all times material to these proceedings, Keith Allen Miller was the co-trustee of the Pine Groves Farm Trust. The other trustee was Jack Craft.
In December, 1979, the Corkscrew Golf Property Land Trust was formed with Howard Ayers and George Drake as trustees.
On January 9, 1980, the Pine Groves Farm Trust (Pine Groves) sold 584 acres of land to the Corkscrew Golf Property Land Trust (Corkscrew) and as part of the purchase price Pine Groves took back a purchase money mortgage.
The purchase money mortgage was a second mortgage. There were also four first mortgages held by Alico Corporation which were assumed by Corkscrew.
The 584 acres became the property known as the Wildcat Run project. Corkscrew planned the development of Wildcat Run, a golf course community.
In January, 1983, Corkscrew was negotiating with the Barnett Bank of South Florida, Miami, Florida, for a $10,200,000 development loan for the project. One of the many requirements of the bank was that the development loan be a first mortgage. This could require that the purchase money mortgage held by Pine Groves be satisfied or subordinated.
The loan with Barnett Bank required a non-refundable fee of $178,500 for "points" to be paid by Corkscrew. The trustees, Ayers and Drake, arranged to borrow the money, to be paid back from the proceeds of the development loan. Ayers and Drake would be personally liable for the debt if the development loan did not close.
Extensive negotiating occurred between the trustees of the two trusts and their respective attorneys to work out the details of subordination prior to the development loan closing.
On March 4, 1983, Miller, as trustee of Pine Groves, wrote a letter to Ayers, as trustee of Corkscrew, detailing certain demands of Pine Groves in exchange for a subordination agreement. These demands were rejected by Corkscrew.
The beneficiaries of the trusts had the final say whether their respective trustees would be permitted to execute the subordination agreements and on what terms. Miller was a trustee of Pine Groves and owned approximately
25 percent of the beneficial interests.
One requirement of Pine Groves was that Miller have an exclusive right of sale agreement with Corkscrew. This was necessary to insure that Pine Groves' interests would be more protected in exchange for Pine Groves' giving up its favored position as a mortgagee.
Throughout the negotiations involving the trustees and their attorneys, the terms of the exclusive right of sale agreement and the subordination agreement were discussed. Prior to the closing, both the subordination agreement and the exclusive right of sale agreement were agreed upon by the parties and their respective attorneys.
On June 2, 1983, Miller, as trustee of Pine Groves, executed a subordination agreement. Corkscrew paid the non- refundable fee to Barnett Bank on June 3, 1983.
Barnett Bank would not accept the subordination agreement executed on June 2, 1983, and informed the parties that a subordination agreement prepared by the bank would have to be executed at the closing.
The trustees and their attorneys went to the Barnett Bank for the development loan closing on August 26, 1983. Drake and Ayers refused to sign the exclusive right of sale agreement. Therefore, Miller refused to sign the new subordination agreement. Following more negotiating, Drake and Ayers signed the exclusive right of sale agreement with hand-written addenda, including a condition requiring approval of the Corkscrew beneficiaries before the agreement was valid. Miller signed the subordination agreement. The closing was accomplished and the loan to Corkscrew was made.
The exclusive right of sale agreement was not approved by the Corkscrew beneficiaries. The trustees and their attorneys attempted to negotiate an acceptable exclusive right of sale agreement and various agreements were signed by either Corkscrew's trustees or Miller.
It is difficult to determine when, if ever, a valid, signed exclusive right of sale agreement came into being. While two such documents with cover dates of January, 1985 exist, neither can be relied on. Miller's attorney knew of no valid, signed agreement as of April 11, 1985. Corkscrew's attorneys knew of no valid signed agreement on July 23, 1985. Miller claims to have signed the exclusive right of sale agreement sometime in July, 1985, but says that the date of January 3, 1985, affixed to it was filled in later by someone else. It is
found that an exclusive right of sale agreement did not exist prior to July, 1985. It is unnecessary to determine if one was signed thereafter. At all times material hereto, Miller maintained the only sales office at Wildcat Run and functioned as the sales agent for the project.
Paragraph 10 of the Corkscrew Golf Property Land Trust Agreement provides in pertinent part regarding the Method of Assigning Interest of Beneficiary:
A beneficiary may assign his interest to any one or more other Beneficiaries of
his selection without offering it to the remainder.
Provided, however, that prior to the assignment of any interest by a Beneficiary to any party not already a Beneficiary, he shall first offer it to all the remaining Beneficiaries prorata at the same price and upon the same terms that he has in good faith agreed upon in writing with a bona fide proposed purchaser who is ready, willing and able to purchase at that price and upon those terms . . .
The trustees are responsible for conveying the information about such offers to the Beneficiaries.
Miller and Keith Miller Realty Company as the broker were involved in numerous transactions involving the sale of beneficial interests in Corkscrew. These transactions were as follows:
Date | Seller | Buyer | Total Purchase Price | Net to Seller | Commission to Miller Realty |
2/21/84 |
Daus |
Keith Miller $55,000 Children's Trust |
$39,960.71 |
$15,039.29 |
2/22/84 | Aloia | Keith Miller $55,000 Children's Trust | $44,044.16 | $10,955.84 |
3/01/84 | Martin | Keith Miller $55,000 Children's Trust | $39,960.71 | $15,039.29 |
8/23/84 | Hole | Scott Miller $52,000 | $35,075.00 | $16,925.00 |
8/23/84 | Hole | Kolde $52,000 | $35,075.00 | $16,925.00 |
6/13/84 | Howard | Keith Miller $40,000 | $40,000.00 | 0 |
Children's Trust
1/08/85 Jost Keith Miller $100,000 $100,000 0
Children's Trust
In each of these transactions, the sellers received the price which they desired and knew that Keith Miller as the broker was to receive a commission of the amount received in excess of the amount due to the seller. In each case, the trustees of Corkscrew were made aware of the price and terms of the sale. In each case, the total price was paid by the buyer, commission was paid to the broker and the net was remitted to the seller. Additionally, in the transactions involving Aloia, Martin, Howard and Jost, the buyer was a beneficiary of Corkscrew and the requirements that it be offered to the beneficiaries did not apply.
In each of these transactions, the trustees of Corkscrew approved the sale. If the other beneficiaries did not receive notice of the sale, it was because Drake and Ayers failed to provide that notice.
Wildcat Run began to have financial problems and bankruptcy was a possibility. A marketing study and appraisal of the project was made in order to facilitate obtaining an equity partner to help the project out financially. Miller knew of these financial problems and the need for capital or an equity partner.
Keith Miller and Keith Miller Realty Company received a letter dated April 22, 1985, from Jeffery J. Milton on behalf of BTS Development Corporation. A BTS principal, Dr. William J. Simmonds, had met with Miller to discuss interest in part or all of Wildcat Run. The letter contained the expression of BTS's interest as follows:
BTS Development Corporation is prepared to present a contract based on the above-referenced terms, upon confirmation from you that such terms are acceptable to the Beneficiaries.
The terms of the offer were for BTS to buy the entire Wildcat Run project and to pay $3.7 million cash to the Beneficiaries. BTS would give the Beneficiaries 80 single-family lots and would retire the existing debt on the property, approximately $10.4 million.
Miller failed to advise the trustees or beneficiaries of Corkscrew of the letter or the BTS offer. Instead, Miller rejected the offer and made a counteroffer which would add commission to him that he projected he would have made in the future.
BTS did not accept Miller's counteroffer and instead bought other property. BTS did not negotiate further with Miller.
No earnest money accompanied the letter containing the offer of BTS.
Miller did not convey the offer of BTS or the existence of the letter to Corkscrew until after BTS had terminated its interest in Wildcat Run and after Miller knew that the project was headed for financial ruin. By then it was too late.
CONCLUSION OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.
By Administrative Complaint, Petitioner charged Respondent Keith Allen Miller with 10 counts of violating Section 475.25(1)(b) and 1 count of violating Section 475.25(1)(o). Respondent Keith Miller Realty Company was charged with 9 counts of violating Section 475.25(1)(b) and 1 count of violating Section 475.25(1)(o).
Sections 475.25(1)(b) and (o), Florida Statutes, provide for disciplinary action against a licensee if the licensee:
(b) Has been guilty of fraud, misrepresentation, concealment, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction
. . .
* * *
(o) Has been guilty of misconduct that warrants suspension or has been guilty of a course of conduct or practices which shows that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation may not safely be entrusted to him.
Essentially Respondents were charged with coercing Corkscrew to enter into an exclusive right of sale agreement and with fraudulently concealing the actual purchase price of the beneficial interests which they brokered and for which they received a commission in violation of Sections 475.25(1)(b). Petitioner has failed to prove these allegation by the preponderance of the evidence and by clear and convincing evidence. Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981). Further Petitioner presented no evidence in regard to Counts III, IV , and XIX. Respondents did not act improperly in regard to the exclusive right of sale agreement, the subordination agreement and the development loan closing. Respondents did not act improperly in regard to the sale and purchase of the beneficial interests in Corkscrew. Accordingly, it is concluded that Respondents are not guilty of the violations alleged in Counts III-XIX of the Administrative Complaint.
Counts I and II charge violations in connection with the failure to advise Corkscrew of the BTS offer. Based upon the clear and convincing evidence, Respondents are guilty of violating Section 475.25(1)(b) for their failure to advise Corkscrew of the BTS offer and for their actions in rejecting the BTS offer and making a counteroffer. These actions were not authorized by
the trustees or beneficiaries of Corkscrew. As such, both Keith Allen Miller and Keith Miller Realty Company are guilty of concealment, false pretenses, culpable negligence and breach of trust in a business transaction.
Counts XX and XXI charge each Respondent with a violation of 475.25(1)(o). This section requires guilt for misconduct warranting suspension or guilt for a course of conduct which shows incompetence, negligence, dishonesty or untruthfulness such that the licensee cannot be entrusted with the rights or business affairs of others. Here, Miller's course of conduct in failing to convey the offer to Corkscrew, rejecting the offer without authorization and making a counteroffer without authorization is so negligent, dishonest or untruthful so as to constitute a violation of Section 475.25(1)(o).
RECOMMENDATION
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Professional Regulation, Florida Real
Estate Commission, enter a Final Order and therein:
Dismiss Counts III-XIX of the Administrative Complaint.
Suspend the license of Keith Allen Miller for 90 days and impose a fine of $2,000 based upon Counts I and XX of the Administrative Complaint.
Suspend the license of Keith Miller Realty Company for 90 days and impose a fine of $2,000 based upon Counts II and XXI of the Administrative Complaint.
DONE and ENTERED this 18th day of December, 1986, in Tallahassee, Florida.
DIANE K. KIESLING
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 18th day of December, 1986.
COPIES FURNISHED:
Howard Hadley, Esquire 827 Deltona Boulevard
Deltona, Florida 32725
James H. Gillis, Esquire Department of Professional Regulation, Division of Real
Estate
400 West Robinson Street Orlando, Florida 32802
Harold Huff, Executive Director Department of Professional Regulation Florida Real Estate Commission
400 West Robinson Street Orlando, Florida 32802
Fred Roche, Esquire
130 North Monroe Street Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA
DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION
DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,
Petitioner,
vs. | CASE NO. | 0061818 |
|
| 0152331 |
KEITH ALLEN MILLER and | DOAH NO. | 86-1712 |
KEITH MILLER REALTY COMPANY, |
|
|
Respondents,
/
FINAL ORDER
The Florida Real Estate Commission heard this case on February 18, 1987 to issue a Final Order. Hearing Officer Diane K. Kiesling of the Division of Administrative Hearings presided over a formal hearing on September 24-25, 1986. On December 18, 1986, she issued a Recommended Order, which is adopted by the Florida Real Estate Commission as to all Findings of Fact and Conclusions of Law except for the last paragraph of the Conclusions of Law. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.
Respondents' Exceptions, attached hereto as Exhibit B, are accepted as to Paragraph #1 and rejected as to Paragraph #2 as being cumulative and immaterial.
Therefore, the Florida Real Estate Commission ORDERS that the Respondents' real estate license and registration be suspended for 60 days and that each Respondent pay a $1000 administrative fine. This Order shall be effective 30 days from the date of filing with the Clerk of the Department of Professional Regulation. This Order shall be appealable to the District Court of Appeal within 30 days from date of filing.
DONE AND ORDERED this 18th day of February 1987 in Orlando, Florida.
Harold R. Huff, Director Florida Real Estate Commission
I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to Howard Hadley, Esquire, 827 Deltona Blvd., Deltona, Fl 32725; to Hearing Officer Diane Kiesling, Div. of Adm. Hrgs, 2009 Apalachee Pkway, Tallahassee, Fl 32301; and to James Cillis, Esquire, DPR, P O Box 1900, Orlando, Fl 32802, this 25th day of 1987.
Docket for Case No: 86-001712
Orders for Case No: 86-001712
| Issue Date |
Document |
Summary |
|
Feb. 18, 1987 |
Agency Final Order
|
|
|
Dec. 18, 1986 |
Recommended Order
|
Respondent made unauthorized offer on behalf of trustees and beneficiaries. Recommend suspension and fine.
|
