STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

vs. ) Case No. 86-4064

)

MICHAEL J. GAYLORD and )

SUZANNE L. GAYLORD, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice the Division of Administrative Hearings by this duly designated hearing officer, K. N. Ayers, held a public hearing in the above styled case on February 4, 1987 at Fort Myers, Florida.

APPEARANCES

FOR PETITIONER: Susan Hartmann, Esquire

Division of Real Estate

400 W. Robinson Street Post Office Box 1900 Orlando, Florida 32802

FOR RESPONDENT: Not present or represented.

By administrative complaint filed July 31, 1986 the Department of Professional Regulation, Division of Real Estate, Petitioner, seeks to revoke, suspend or otherwise discipline the licenses of Michael J. Gaylord as a real estate broker and of Suzanne L. Gaylord as a real estate salesman. As grounds therefor it is alleged that in handling the escrow account of Out Island Properties and in acquiring title to real property from Out Island Properties they were guilty of fraud, misrepresentation, concealment, dishonest dealing and breach of trust in a business transaction; and that Michael Gaylord registered a real estate office with Petitioner but failed to open or maintain an office at the registered location. After waiting an appropriate time for the Respondents to appear the hearing began. Initially nine exhibits were admitted into evidence including a copy of the registered mail receipt for the Notice of Hearing scheduling this case for hearing on February 4, 1987 signed by Michael Gaylord on December 1, 1986 (exhibit 8). Thereafter Petitioner called 6 witnesses and an additional fourteen exhibits were admitted into evidence.

Petitioner's motion to deem Requests for Admissions admitted which were Submitted to Respondent and unanswered by them at the time of hearing was granted. This motion was dated January 28, 1987. Subsequent to the hearing answers to Requests for Admissions by the respondent which had been mailed by respondent to the Real Estate Commission were received. Those responses were sworn to on January 22 and January 23, 1986 and were sent by certified mail to

1. N. Ayers, Florida Real Estate Commission, Division of Real Estate, 4000 W.

   Robinson Street Orlando, Florida and were date stamped received by the commission on January 28, 1987. These responses were forwarded to the Division of Administrative Hearings by letter from Petitioner's attorney dated February 11, 1987 stating the responses had been delivered to her February 10, 1987.

   
   

   Although these responses were not timely filed no Motion to Compel was filed, Respondents were not represented by counsel, and no order compelling answers was ever issued. Accordingly the responses to the Requests for Admissions are accepted and the motion to deem all requests for admissions to be admitted is denied.

   
   

   Proposed findings submitted by Petitioner are accepted except for Proposed Finding of Fact #5 insofar as it is inconsistent with #4 herein; and proposed Finding of Fact #9 insofar as it is inconsistent with the uncontradicted testimony of Brilhart and Rehr that each put approximately $5000 in the escrow account to cover the shortage in that account.

   
   

   FINDINGS OF FACT

   
   

   1. At all times relevant hereto Michael J. Gaylord was licensed as a real estate salesman or broker in Florida end Suzanne L. Gaylord was licensed as a real estate salesman in Florida. Both were affiliated with Out Island Properties.

      
      

   2. Michael Gaylord was employed as a salesman by Out Island Properties effective April 19, 1984 and was licensed as a real estate broker effective April 30, 1986. (exhibit 1).

      
      

   3. Suzanne Gaylord was licensed as a real estate salesman in February 1984, and effective April 19, 1984 was associated with Out Island Properties, Inc. as a real estate salesman (exhibit 2), She served as bookkeeper and office manager in the Out Island Properties office.

      
      

   4. At all times relevant hereto Out Island Properties Inc. was a licensed corporate real estate broker, Out Island Properties Inc. is owned by Arnold Brilhart Jr. and Michael Rehr equally. Both Brilhart and Rehr are licensed real estate salesmen. From exhibit 23, the deposition of Michael Gaylord, it is clear that, at one time, it was intended that he, Rehr and Brilhart would each own a one-third interest in Out Island Properties. This conclusion is reached from the establishing of the land trust agreement with Gaylord as trustee for the benefit of Gaylord, Rehr and Brilhart; that two of these three peoples signatures were required on a check drawn on an Out Island Properties bank account; and from Rehr's testimony. (Tr. p. 38).

      
      

   5. Michael Gaylord was never the qualifying broker at Out Island Properties Inc. but, along with Rehr and Brilhart, he was an authorized signatory on checks written on an Out Island Properties bank account. There were four of these accounts. A real estate escrow account, a real estate operating account, a rental escrow account and a rental operating account. Checks drawn on any of these accounts required the signature of two of the three authorized signers. In addition Michael Gaylord had a trustee account for the sale of lands for which he was trustee for land beneficially owned by Rehr, Brilhart and himself.

      
      

   6. Out Island Properties entered into a purchase agreement to purchase certain land for immediate resale to several purchasers with all transactions to close at one time. Title from the original owner was to go to the Gaylord trust

      and from there to the ultimate purchaser. They agreed to sell two of these lots to Gaylord and in July 1985 those sales closed. Other sales were pending.

      
      

   7. On July 22, 1985 a check was written on Out Island

      Properties escrow account in the amount of $11,500 payable to the closing agent for the purchase of two or more lots shown on exhibit 16. This check purports to bear the signature of Gaylord and Brilhart. Brilhart's signature was forged on this check. Of this $11,500 removed from the escrow account $500 had never been deposited in the escrow account by the person to whose purchase the $500 was attributed at the closing.

      
      

   8. On July 23, 1985 Gaylord exchanged a check drawn on Out Island Properties escrow account payable to Sun Bank in the amount of $20,784 for a cashier's check in the same amount payable to the closing agent's escrow account. This check was used in the closing of two of the lots on exhibit 16. The check was Purportedly signed by Gaylord and Brilhart but the later's Signature was forged. This money taken from the escrow account had not been deposited with funds received from these purchasers.

      
      

   9. In her deposition (exhibit 22) Suzanne Gaylord acknowledge signing Brilhart's name on those three checks (exhibit 12) but insisted that she had Brilhart's telephonic authority to sign his name. Sometimes she was told by Michael Gaylord that Brilhart had authorized her to sign his name to checks. Brilhart denies ever authorizing either respondent to sign his name to any check. So far as the checks drawn on the escrow account (exhibit 12) is concerned, Brilharts testimony is deemed more credible.

      
      

   10. On May 22, 1985 a check Purportedly signed by Gaylord and Rehr (exhibit 17) was drawn on Out Island Properties escrow account payable to guardian title in the amount of $1000. On June 18, 1985 the check was drawn on Out Island Properties operating account, (exhibit 17) purportedly signed by Gaylord and Rehr in the amount of $280.48 payable to United Telephone of Florida. Although Rehr appears to be one of the signers of this check it was not his signature thereon. Respondents testified in their depositions (exhibits

       22 and 23) that Suzanne Gaylord signed Brilharts name on several checks from the operating account and from the escrow account, but only after receiving verbal authorization from him to place his name on a check requiring his signature No such testimony was Presented that Rehr had likewise given verbal authorization for either of the Gaylords to sign his name on a check.

       
       

   11. Both respondents testified that Brilharts often signed checks in blank to be later signed by Gaylord to pay expenses of the office. Brilhart made no reference to this practice in his live testimony.

       
       

   12. After Brilhart and Rehr became suspicious of the transactions involving the accounts over which Michael Gaylord had signature authority, the books and records of the office were obtained and turned over to an accountant for an audit. This audit revealed numerous purchases from the operating accounts had been made for personal expenses for the Gaylords and disclosed the shortage of approximately $10,000 in the Out Island Properties escrow account.

       
       

   13. Demand was made to Gaylord to refund the shortfall in the escrow account but no remittance was received. Brilhart and Rehr replaced the shortage of funds in the escrow account and filed a complaint in the circuit court of Lee County against the Gaylords (exhibit 5). That case was ultimately resolved in a settlement agreement (exhibit 15).

   14. After receiving his broker's license Michael Gaylord applied for and was granted a license by Petitioner to open an office at the Pineland Marina #5. No real estate office was ever opened at that address by Respondent.

       
       

   15. In the purchase of lot 4 block F, a contract to purchase the lot had been executed by Katherine Haynes who had qualified for the mortgage to cover the balance of the purchase price. However, no entry on exhibit 20, recapping the escrow account for the period involved, shows any downpayment was ever received from Haynes. Shortly before the closing Haynes told Gaylord she wouldn't go through with the purchase. He suggested she proceed with the purchase for which he would put up the money and she would quit claim the property to him. To clear this transaction Gaylord withdrew $4000 from the escrow account on check No. 123 (exhibit 12) on which Brilharts name had been forged, added $3013 of his own funds and obtained a cashier's check from Sun Bank in the amount of $7013 (exhibit 12) which was used to close this transaction and the property was deeded to Michael and Suzanne Gaylord. Respondent considers the money withdrawn from the escrow account to be a draw against his profit on the transactions rather than a removal of funds from an escrow account for a purpose other than that for which the funds were escrowed.

       
       

   16. Similarly Respondent used escrowed funds withdrawn from Out Island Properties escrow account without the knowledge or approval of either Rehr or Brilhart to purchase other real properties through Gaylord as trustee with title to Michael and Susan Gaylord. Such withdrawal of funds for a purpose for which the funds had never been deposited in the escrow account caused the shortage in the escrow account which was replaced by Brilhart and Rehr.

       
       

       CONCLUSIONS OF LAW

       
       

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

       
       

   18. Respondents are here charged with violation of Section 475.25(1)(b), Florida Statutes which authorizes the Real Estate Commission to revoke, suspend, or otherwise discipline the license of a licensee if it the licensee:

       
       

       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....

       
       

   19. In addition respondent Michael Gaylord is charged with sections 425.25(1)(e), Florida Statute by failing to maintain an office while registered as an active broker as required by section 425.22, Florida Statutes.

       
       

   20. With respect to this latter charge respondent presented no evidence to rebut the testimony of petitioners witness, Keith Bryan, that respondent never had a office at Pineland Marina #5 and exhibit 1 which shows Michael Gaylord applied for and was granted authority to open Mike Gaylord Realty Office at Pineland Marina #5, Pineland, Florida 33945 on March 18, 1986.

   21. Petitioner has the burden of proof. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla 1st DCA 1977). Whether this burden is by a preponderance of the evidence or by clear and convincing evidence has been subject to disparity of treatment by the courts and has had a checkered career.

       
       

   22. In the most recent judicial pronouncement in a case involving the revocation of a teacher's certificate, the court held in Turlington v. Ferris,

       496 So2d 177 (Fla 1st DCA 1986) that the standard to be used in proving misconduct on the part of the teacher is preponderence of the evidence. Since the requirements far certification of a teacher are considerably higher than those to qualify as a real estate broker or salesman, the standard of proof should be no greater in a proceeding to revoke a real estate license. Applying the docterine announced in Bowling v. Department of Insurance, 394 So.2d165, 172 (Fla 1st DCA 1981) that "the critical matters in issue must be shown by evidence which is indubitably as substantial' as the consequences" certainly no higher standard may be applied in revocation proceedings involving a real estate license than is involved in revoking the certificate of a school teacher.

       
       

   23. From the evidence presented it is clear that respondent Michael Gaylord withdrew and disbursed funds from the Out Island Properties escrow account for a purpose for which the funds were not deposited; that these funds were not held in the escrow account until disbursement thereof was authorized to a person entitled to such disbursement; that using these funds to purchase property in the name of Michael and Suzanne Gaylord constituted fraud, deception, misrepresentation and a breach of trust in a business transaction; that Suzanne Gaylord with the knowledge and encouragement of Michael Gaylord forged Brilharts signature on at least three checks drawn on the Out Island escrow account; and that Michael Gaylord failed to maintain a real estate broker's office at the address authorized by the commission.

       
       

   24. With respect to the checks on which Rehr's signature was forged, no credible evidence was presented that either respondent forged these signatures. In Suzanne Gaylord's deposition she acknowledged signing only Brilhart's name to checks (with his verbal authorization) and no witness identified the maker of the forged signature of Rehr.

       
       

   25. From the forgoing is concluded that both respondents violated section 475.25(1)(b), Florida Statutes as alleged and that Michael Gaylord also violated section 475.25(1)(e), Florida Statutes as alleged. It is

RECOMMENDED that the licenses of Michael Gaylord as a real estate broker and Suzanne Gaylord as a real estate salesman be revoked.

DONE and ORDERED this 23rd day of March, 1987, in Tallahassee, Florida.

K. N. AYERS 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 23rd day of March, 1987.

COPIES FURNISHED:

Susan Hartmann, Esquire Department of Professional

Regulation

Post Office Box 1900 Orlando, Florida 32801

Michael J Gaylord

3908 and 9027 Mockingbird Drive

Sanibel, Florida 33957

Suzanne L. Gaylord 9027 Mockingbird Drive

Sanibel, Florida 33957

Harold Huff Executive Director

Division of Real Estate Department of Professional

Regulation

400 West Robinson Street Orlando, FL 32802

Van Poole, Secretary Department of Professional

Regulation

130 N. Monroe Street Tallahassee, FL 32399-0750

Docket for Case No: 86-004064

Orders for Case No: 86-004064