STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-2387

) MOLLIE M. HALE COSTA, d/b/a OCALA ) SILVER SPRINGS REAL ESTATE BROKER, )

)

Respondents., )

)

RECOMMENDED ORDER

Pursuant to Notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William R. Cave, held a public hearing on February 5, 1987, in Ocala, Florida. The issue for determination is whether disciplinary action should be taken against the Respondent's real estate broker's license based upon allegations that Respondent violated various provisions of Section 475.25, Florida Statutes.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

DPR-Division of Real Estate

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

For Respondent: No Appearance

BACKGROUND

By Administrative Complaint dated June 5, 1986 and filed with the Division of Administrative Hearings on June 26, 1986, the Petitioner seeks to revoke, suspend or otherwise discipline the real estate broker's license of Mollie M. Hale Costa. As grounds therefore, it is alleged that: (a) Respondent disbursed money from a real estate trust account without proper authorization and utilized said funds for her own use and benefit or for some other use and benefit not intended, in violation of Section 475.25(1)(b)(d)(k), Florida Statutes and; (b) Respondent commingled trust funds and personal funds in her real estate brokerage trust fund bank account in regard to deposits and withdrawals of money from the real estate brokerage trust fund bank account, in violation of Section 474.25(1)(b)(k), Florida Statutes.

Originally this matter was scheduled for hearing on October 8, 1986, however, due to a late change of counsel for Respondent the hearing was rescheduled for December 9, 1986. The December 9, 1986 hearing was rescheduled for February 5, 1987, again due to Respondent's change of counsel at such a late date. The motion for continuance of the December 9, 1986 hearing was heard by

telephone and Respondent's counsel was advised that the hearing was being rescheduled for February 5, 1987 and a notice of hearing was mailed to Respondent's counsel at an address furnished by him and it was not returned by the postal service.

Neither Respondent nor her counsel appeared at the scheduled hearing on February 5, 1987. Their reason for not appearing was that a notice of hearing was not received and they understood that the hearing to be scheduled for February 9, 1985.

After the hearing, Respondent's counsel filed a Motion For Re-hearing and a Motion To Prevent The Rendition of Recommended Order by Hearing Officer. These motions were heard by telephone on February 26, 1987 and were denied by order dated March 10, 1987. However, Respondent's counsel was given fifteen (15) days in which to file Proposed Findings of Fact and Conclusions of Law, using the evidence presented at the hearing on February 5, 1987. On the same date of the order, counsel for Respondent was furnished copies of the exhibits, transcript and Petitioner's Proposed Recommended Order. After some thirty-five (35) days, counsel for Respondent filed a Proposed Recommended Order citing matters that were not before the undersigned at the hearing on February 5, 1987 and attached additional exhibits that likewise were not before the undersigned on February 5, 1987. Therefore, Respondent's Proposed Recommended Order and the exhibits attached thereto will not be considered in the preparation of this Recommended Order.

In support of its position, Petitioner presented the testimony of Wayne Keith Crosby, Pamela Stuart Wamsley and Teri Lynn Lockman. Petitioner's exhibits 1 through 7 were received into evidence.

The parties submitted posthearing Proposed Findings of Fact and Conclusions of Law in the form of a Proposed Recommended Order. A ruling on each proposed finding of fact submitted by the Petitioner has been made as reflected in the Appendix to this Recommended Order, however, the undersigned has declined to rule on Respondent's Proposed findings of Fact for the reasons set out above.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. The Respondent was at all times material to this proceeding a licensed real estate broker in the state of Florida having been issued license number 0035275. The last license issued was as a broker, d/b/a Silver Springs Real Estate, Corp., 4121 East Silver Springs Boulevard, Ocala, Florida 32671.

   
   

2. On or about August 3, 1984, the Respondent obtained Teri L. Lochman (Lochman) as a tenant of certain residential property belonging to Gail and Valerie Cox (Cox) that was involved in a sale to A. Pillot. In connection with this sale, a lease had been prepared between A. Pillot as Lessor and A. Alongi as Lessee. Lochman signed this lease as Lessee, and in connection with this lease, paid Respondent $1,600.00 representing $700.00 for the first month's rent, $700.00 for the last month's rent and $200.00 security deposit. These funds were paid by Lochman to Respondent in two separate checks in the amount of

   $500.00 and $1,100.00 dated August 5, 1984 and August 13, 1984, respectively. The Pillot/Cox escrow account, which had previously been established in

   Respondent's escrow ledger, was credited with these funds and the funds deposited in Respondent's real estate brokerage trust bank account, No. 805 0006583, in the Sun Bank of Ocala (Trust Account), on August 9, 1984 and August 17, 1984, respectively.

   
   

3. Upon attempting to move into the home she had rented, Lochman discovered that Cox was still in possession because the sale had not gone through. At this point, August 17, 1984, Lochman and Cox signed an agreement which would allow Lochman to reside in the home rent free for two weeks while Cox was out of town in return for acting as a security guard.

   
   

4. Sometime after the August 17, 1987 agreement was executed by Lochman and Cox, Lochman and Cox signed a handwritten month to month lease of the premises requiring Lochman to pay Cox $700.00 for the first month's rent,

   $700.00 for the last month's rent and a $200.00 damage deposit. This payment was conditioned upon Lochman receiving her refund from the Respondent. There was no credible evidence that Respondent agreed to release Cox from any previous agreement with Respondent wherein Respondent acted as agent for Cox in obtaining Lochman as a tenant or the handling of Cox's property, i.e. mowing grass or preparing house for rent. Additionally, there was no credible evidence that Respondent agreed to Lochman dealing directly with Cox.

   
   

5. Respondent was at all times relevant to this proceeding acting as agent for Cox, and therefore, demanded from Cox her commission for obtaining Lochman as a tenant and reimbursement for other services rendered before returning Lochman's rental deposit. There is no credible evidence that the Respondent agreed to return Lochman's rental deposit without first obtaining her commission or reimbursement for other services rendered from Cox.

   
   

6. There is no credible evidence to show that Cox paid Respondent her commission or reimbursed Respondent for other services rendered or that Cox made a demand on Respondent to pay the Lochman rental deposit to Lochman.

   
   

7. There is credible evidence that Lochman made a demand on Respondent for the return of her rental deposit and that Respondent refused to return Lochman's rental deposit because there was a dispute between Respondent and Cox concerning Respondent's commission and reimbursement for other services rendered.

   
   

8. Lochman did not pay Cox the rent for the month of September, 1984, therefore, she contends that Respondent only owes her $900.00 of the rental deposit.

   
   

9. Upon Respondent's refusal to pay her the balance of the rental deposit, Lochman obtained a default judgment for $900.00 in civil court, however, and although the record is not clear, the default judgment may have been set aside. (See transcript, page 15, lines 9-13).

   
   

10. The evidence is clear that check no. 257 drawn on the Trust Account in the amount of $1,465.00, paid on April 18, 1985, included $1,278.00 from the Pillot/Cox escrow account and depleted the funds in the Pillot/Cox escrow account. However, there was no evidence presented to show that the Lochman rental deposit was paid to Respondent. Likewise, there was no evidence presented to show that Cox did not receive the Lochman rental deposit.

    
    

11. There was no evidence presented to show the payee on Check No. 257, or any other check, drawn on the Trust Account.

12. There was no evidence presented to show that Respondent commingled trust funds and personal funds in the Trust Account in regard to deposits and withdrawals.

    
    

13. There was insufficient credible evidence to show that Lochman was entitled to delivery of $900.00 or any funds from the Trust Account.

    
    

14. There was no evidence that Respondent notified the Real Estate Commission (Commission) of the conflicting demands on the Lochman rental deposit or followed any of the procedures set forth in the statutes to resolve such a conflict.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding pursuant to Section 120.57(1), Florida Statutes.

    
    

16. The alleged misconduct of which Respondent is accused purportedly violates Section 475.25(1)(b)(d)(k), Florida Statutes and is quoted below:

    
    

    1. The commission may deny an application for licensure, registration, or permit, or

       renewal thereof; may suspend a license or permit for a period not exceeding 10 years; may revoke a license or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, or any or all of the foregoing,

       if it finds that the licensee, permittee, or applicant:

       * * * *

       (b) Has been guilty of fraud, misrepresentation, 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 or any other state, nation, or territory; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee

       or was an identified member of the general public.

       * * * *

       1. Has failed to account or deliver to

          any person, including a licensee under this chapter, at the time which has been agreed upon or is required by law or, in the absence of & person entitled to such accounting and delivery, any personal property such as money, conveyance, lease or other document or thing of value, including a share of a real estate commission, or any secret or

          illegal profit, or any divisible share or portion thereof, which has come into his hands and which is not his property or which he is not in law or equity entitled to retain under the circumstances.

          However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or if conflicting demands have been made upon him for the escrowed property, which property he still maintains in his escrow or trust account, the licensee shall promptly notify the commission of such doubts or conflicting demands and shall promptly:

          1. Request that the commission issue an escrow disbursement order determining who is entitled to the escrowed property.

          2. With the consent of all parties, submit the matter to arbitration; or

          3. By interpleader or otherwise, seek adjudication of the matter by a court.

       If the licensee promptly employs one of the escape procedures contained herein, and if he abides by the order or judgment resulting therefrom, no administrative complaint may be filed against the licensee for failure to account for, deliver, or maintain the escrowed property. (Emphasis supplied).

       * * * *

       (K) Has failed, if a broker, to

       immediately place, upon receipt, any money, fund, 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 with some bank or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly

       authorized; or has failed, if a salesman, to immediately place with his registered employer any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as agent of his registered employer. The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made. (Emphasis supplied.)

       
       

17. In disciplinary proceedings, the burden is upon the regulatory agency to establish facts upon which its allegations of misconduct are based. Balino

v. Department of Health and Rehabilitative Services, 348 So.2d 349 (1 DCA Fla. 1977). The Petitioner has failed to meet its burden of proof that Respondent violated Section 475.25(1)(b)(k), Florida Statutes. However, the Respondent has met its burden of proof to show a violation of Section 475.025(1)(d), Florida Statutes in that Respondent failed to account or deliver or to notify the commission of the conflicting demands on the Lochman rental deposit held in the Trust Account and that Respondent failed to follow the procedures set forth in Section 475.25(1)(d), Florida Statutes when a conflict as to trust account money exists.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the candor and demeanor of the witnesses, it is, therefore,

RECOMMENDED that the Commission enter a Final Order finding the Respondent guilty of failing to notify the Commission of the conflicting demands on the trust funds and failing to follow the procedures set forth for resolving such conflict in violation of Section 475.25(1)(d), Florida Statutes and that Respondent's real estate broker's license be suspended for a period of six (6) months, stay the suspension, place the Respondent on probation for a period of six (6) months under the condition that the issue of conflicting demands on the trust funds be resolved within sixty (60) days and under any other conditions the Commission feels appropriate, and assess an administrative fine of $300.00 to be paid within sixty (60) days of the date of the Final Order.

It is further RECOMMENDED that the Final Order DISMISS Counts I, III, IV and V of the Administrative Complaint filed herein.

Respectfully submitted and entered this 1st day of May, 1987, in Tallahassee, Leon County, Florida.

WILLIAM R. CAVE

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-2387

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties in this case.

Rulings on Proposed Findings of Fact Submitted by the Petitioner 1.-2. Adopted in Finding of Fact 1.

3. Adopted in Findings of Fact 8 and 9.

4.5 Rejected as not supported by substantial competent evidence in the record.

Additionally, Petitioner has treated certain facts in this case as background in unnumbered paragraphs which I have numbered 6-10.

1. Adopted in Finding of Fact 2 as clarified.

2. Adopted in Finding of Fact 4 except for the phrase that Respondent agreed to the return of the rental deposit which is rejected as not being supported by substantial competent evidence in the record. I did not find Lochman's testimony credible in this regard.

3. Adopted in Findings of Fact 8 and 9 as clarified.

4. Adopted in Finding of Fact 10 as clarified.

5. This paragraph is a statement of Lochman's testimony and not presented as a fact, therefore, is rejected.

Rulings on Proposed Findings of Fact Submitted by the Respondent

For the reasons set forth in the Background portions of this Recommended Order, there has been no rulings of Respondent's Proposed Findings of Fact.

COPIES FURNISHED:

Van Poole, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Harold Huff Executive Director

Department of Professional Regulation

Division of Real Estate

400 West Robinson Street Orlando, Florida 32801

James H. Gillis, Esquire Department of Professional

Regulation

Division of Real Estate

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

Jeffrey J. Fitos, Esquire Valley Forge Military Academy Wayne, Pennsylvania 19087

Docket for Case No: 86-002387

Orders for Case No: 86-002387