vs. ) CASE NO. 86-4529
WILLIAM A. SCOTT and )
Respondents. )
Pursuant to notice, a hearing was held in this cause on June 3, 1987, in Tampa, Florida, before Diane A. Grubbs, Hearing Officer with the Division of Administrative Hearings.
For Petitioner: James H. Gillis, Esquire
400 W. Robinson Street, Suite 308 Post Office Box 1900
Diana K. Wallace, Esquire One Urban Center, Suite 750 4830 West Kennedy Boulevard Tampa, Florida 33609
Whether respondents committed the acts alleged in the Administrative Complaint and, if so, whether respondents' licenses should be revoked or suspended, or whether other disciplinary action should be imposed.
On October 1, 1986, petitioner filed an Administrative Complaint against the respondents. The complaint alleged that at all times material to the complaint, respondent William Scott was a registered real estate broker and salesman and that Harmon Realty, Inc., (Harmon) was a corporation registered as a real estate broker in the State of Florida; that from October 29, 1975, to November 20, 1981, respondent William A. Scott was an officer of and qualifying broker for Harmon; that from May 1, 1980, to June 30, 1981, the respondents employed Stephanie R. Bishop as a salesman and general manager; that upon
termination of employment, Stephanie R. Bishop made claims upon the respondents for payments of earned commissions; that respondents did not pay Ms. Bishop all of the commissions requested; that Ms. Bishop initiated civil actions against Harmon which resulted in a final judgment awarding Ms. Bishop $4,608.35 as commissions due, $91.00 costs and $1,500.00 as attorneys fees; that respondents have not satisfied the judgment; and that respondents intentionally breached the employment agreement and have been unjustly enriched. Based on the foregoing factual allegations, respondents William A. Scott and Harmon were charged with violating subsection 475.25(1)(d) and subsection 475.25(1)(b), Florida Statutes.
Both William A. Scott and Harmon disputed the allegations of fact contained in the Administrative Complaint and requested a formal administrative hearing.
The matter was referred to the Division of Administrative Hearings on November 18, 1986.
At the hearing, the petitioner presented the testimony of Stephanie Bishop, and petitioner's exhibits 1-4 were received in evidence. The respondent presented the testimony of William A. Scott, and respondent's exhibits 1-3 were received in evidence.
The parties filed proposed findings of fact and conclusions of law, and a ruling on each of the proposed findings of fact have been made in the appendix to this order.
Respondent, William A. Scott, is now and was all times material to the Administrative Complaint, a licensed real estate broker-salesman in the State of Florida having been issued License No. 0156911 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker-salesman, c/o Geiger Real Estate Corporation, 112 West Platt Street, Tampa, Florida, 33606.
Respondent Harmon is now and was at all times material to the Administrative Complaint, a corporation registered as a real estate broker in the State of Florida having been issued License No. 0156910 in accordance with Chapter 475, Florida Statutes. The last license issued was delinquent (involuntary inactive) for the reason of failure to renew the last license issued. Last known address for Harmon is 715 South Newport, Tampa, Florida, 33606.
From October 29, 1975, to November 20, 1981, William A. Scott was an officer of and qualifying broker for Harmon.
At the end of 1979, Stephanie R. Bishop entered into an independent contractor agreement with Harmon, whereby she became a realtor associate of Harmon and was to receive a 60 percent commission on real estate sales made by her personally. At some time in 1980, Ms. Bishop became the office manager for Harmon at its Dunedin office. Harmon had three other offices, including its main office in Tampa.
It was agreed that as office manager Ms. Bishop would be paid, in addition to the commission on her personal listings and sales, 40 percent of the net profit of the Dunedin office, if any. When Ms. Bishop became office manager, the office was not making a profit.
After Ms. Bishop had managed the office for several months, her sales decreased because she did not have the time to devote to personal sales and also
manage the office. She thus had no money coming in as commissions from personal sales, and she was receiving no money as office manager because the office was not showing a net profit. Thus, in December of 1980, Ms. Bishop asked Mr. Scott if she could receive a monthly draw that would be applied against her personal commissions and any money that would be owed her as office manager.
In December, 1980 Ms. Bishop and Harmon agreed that Ms. Bishop would receive $1,500 per month beginning in February, 1981, as a draw against her commissions and 40 percent of the net profits of the office. The net profits and losses of the office were cumulative, and Ms. Bishop was to be paid 40 percent of the annual net profit of the office. Net losses incurred prior to December, 1980, were not carried forward. The net office profits and losses, as well as her commission, were to be tallied at the end of each quarter to determine whether Harmon owed Ms. Bishop sums in excess of her draw. A final accounting was to be made in December, 1981, to determine the annual net profit of the office and whether Harmon owed Ms. Bishop additional money or whether Ms. Bishop owed Harmon money. Ms. Bishop would owe Harmon money if the amount of her draws exceeded her commissions and 40 percent of the annual net profit of the office. The agreement was not a written agreement.
In February, 1981, Ms. Bishop received $873.45 as a draw, rather than
$1,500, because she had mistakenly been paid a commission of $626.55 during that month. Rather than have Ms. Bishop return the $626.55 commission and then give Ms. Bishop her $1,500 draw, Harmon gave Ms. Bishop the balance due on her draw.
Ms. Bishop received a draw of $1,500.00 per month from Harmon for the months of March, April and May, 1981, for a total draw from February through May, 1981, of $5,373.45. During the period from February, 1981, through June, 1981, Ms. Bishop did not earn personal commissions from any sales other than that for which she was paid in February, 1981.
The net office profit or loss per month was determined by deducting from the monthly gross office income the sales associates' commissions, franchise fees, office operating expenses, and the office's pro-rata portion of the expenses of the main office for processing escrow transactions and contracts.
From December, 1980, through June, 1981, the Dunedin office of Harmon had a cumulative net loss of $295.95. The monthly net profit/loss was as follows:
December, 1980 | - | $1,631.20 |
January, 1981 | - | 3,344.53 |
February, 1981 | - | 913.17 |
March, 1981 | - | 4,331.39 |
April, 1981 | + | 3,810.93 |
May, 1981 | - | 368.52 |
June, 1981 | + | 6,481.93 |
The Dunedin office of Harmon closed at the end of June, 1981, and Ms. Bishop terminated her relationship with Harmon at that time. Under the agreement reached with Harmon in December of 1980, Ms. Harmon was not due any money from Harmon in her capacity as office manager because Harmon had a net
loss for the seven-month period. Indeed, at the end of June, 1981, Ms. Bishop owed to Harmon, the sum of $5,373.45 which she had been paid as a draw against her personal commissions and her percentage of the net office profits, which commissions and profit percentage from February, 1981 through June, 1981 were zero.
At some point subsequent to June 30, 1981, Ms. Bishop demanded payment for a commission earned on a closing held after June 30, 1981. On July 29, 1981, Mr. Scott wrote Ms. Bishop a letter, enclosing the June operating statement and the operating summary from December, 1980, to June, 1981. In the letter Ms. Scott pointed out that the office had a net loss of $295.95 not counting the money advanced to her as a draw. The letter also pointed out that Ms. Bishop's draw account balance was $5,373.45 as of June 30, 1981, and that her commission on the transaction closed after June 30th was $867.47 leaving a draw account balance of $4,505.98.
Subsequent to that time another sale closed which Ms. Bishop had listed, and the commission due on that sale totaled $2,931.43. The $3,798.90 in commissions earned by Ms. Bishop subsequent to June 30, 1981, is less than the
$5,373.45 which Ms. Bishop had drawn against her commissions. Thus, after deducting the commissions due Ms. Bishop from the draws she had received leaves a total of $1,574.55 which Ms. Bishop received from Harmon over and above all commissions she earned and monies owed to her as office manager through June 30, 1981.
On or about August 27, 1981, Ms. Bishop filed a civil action in Pinellas County Circuit Court against the respondent Harmon, alleging that Harmon had failed and refused to pay her sums due in excess of the $1,500.00 per month draw that she had received. William Scott was not a party to the civil action.
In the civil action, Ms. Bishop filed an accounting with the court on June 2, 1982, which included money allegedly due to her as office manager based on closings of other sales associates from July, 1981, through April, 1982, which were pending at the time the Dunedin office closed. On June 2, 1982, the court entered a Final Judgment against Harmon and in favor of Ms. Bishop in the amount of $4,608.35, based on the accounting that had been provided to the court, together with costs in the sum of $91.00. On November 3, 1982, the court entered an order awarding an attorney's fee of $1,500. Attorney fees had been requested pursuant to Section 448.08, Florida Statutes, on the ground that "plaintiff was a manager of an office and not the typical real estate saleswoman as an independent contractor."
The judgment against Harmon has not been satisfied.
During the period of time Ms. Bishop worked for Harmon, Mr. Scott was president of Harmon and owned 51 percent of the corporation. Harmon was sold at a loss in November, 1981. At the time there was a chattel mortgage on the assets which exceeded the amount for which the corporation could be sold. Mr. Scott and his "partner" had to sign personal notes for the difference so that the corporation could be sold.
At no time did Ms. Bishop file a civil action against William Scott. A final judgment was never entered in Ms. Bishop's favor against Mr. Scott. The final judgment entered against Harmon included sums due to Ms. Bishop as office manager for closings held from November, 1981, through April, 1982. After November 20, 1981, William Scott was no longer the qualifying broker for Harmon.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57, Florida Statutes.
Pursuant to Section 475.25(1), the Florida Real Estate Commission may suspend a license or permit for a period not exceeding 10 years, make 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 has committed any of the acts enumerated in Section 475.25(1). A licensee is subject to discipline if he:
(b) Has been guilty of fraud, misrepresen- tation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence,
or breach of trust in any business transaction ...
(d) Has failed to account or deliver to any person, including a licensee under this chapter, at the time which had been agreed upon or is required by law or, in the
absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money ... or other document or thing of value, including a share of a real estate commission ... 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 ...
In this case, petitioner charged both William A. Scott and Harmon Realty, Inc., with failing to account and deliver a share of commission in violation of Section 475.25(1)(d), Florida Statutes, and with violating Section 475.25(1)(b), Florida Statutes, by intentionally breaching an employment agreement.
In Ferris vs. Turlington, 510 So.2d 292 (Fla. 1987), the Supreme Court held that in a license revocation proceeding the correct standard of proof is that the evidence must be clear and convincing. The court stated that it agreed with the opinion of the District Court in Reid vs. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2nd DCA 1966), which stated:
The power to revoke a license should be exercised with no less careful circumspection than the original granting of it. And the penal sanction should be directed only
toward those who by their conduct have forfeited their right to the privilege, and then only upon clear and convincing proof of substantial causes justifying the forfeiture.
In this case, the only evidence presented by the petitioner to support its charges that respondents intentionally breached an employment agreement and failed to account and deliver commissions earned was the final judgment entered in the civil action against Harmon Realty. Petitioner asserts that the civil judgment establishes that commissions were due from Harmon that were not delivered, and therefore Harmon violated Section 475.25(1)(b) and (d), Florida Statutes. Petitioner asserts that because William Scott was broker of record for Harmon during the time Ms. Bishop worked for Harmon that he also violated Section 475.25(1)(b) and (d), Florida Statutes.
The evidence presented by the petitioner in this case does not establish that respondent William Scott was in violation of Section 475.25(1)(b) or Section 475.25(1)(d). The sole evidence relied upon by petitioner to support the charges was the final judgment entered against Harmon Realty in favor of Ms. Bishop. The final judgment, however, provides no evidentiary basis to support the charges against William Scott. The final judgment was not entered against William Scott, and he was not a party to the civil action. Further, at the time the final judgment was entered, William Scott was not the qualifying broker for the corporation, and apparently had no interest in the corporation. Therefore, the final judgment entered against Harmon Realty, Inc., cannot be considered competent evidence to establish any of the charges against William A. Scott.
The other evidence presented at the hearing simply did not support the charges against Mr. Scott. Indeed, the evidence showed that Ms. Bishop received draws in an amount exceeding the amount earned on commissions and any money due her as the manager of the Dunedin office. Therefore, Petitioner has failed to prove by clear and convincing evidence that William A. Scott violated Section 475.25(1)(b) or Section 475.25(d), Florida Statutes, and the charges against him should be dismissed.
As to Harmon Realty, the judgment establishes that Harmon Realty owes monies to Ms. Bishop based on its employment contract with Ms. Bishop. In Fleischman vs. Department of Professional Regulation, 441 So.2d 1121, 1122-1123 (Fla. 3rd DCA 1983), the court stated:
It is well settled, on one hand, that, absent clear legislative authorization to the contrary, violations of mere contractual rights are concerns only of the courts,
and may not be enforced by disciplinary action undertaken by a regulatory agency like the real estate commission. Moreover, since disciplinary statutes are penal in character and effect, they must, in any case, be strictly interpreted against
the authorization of discipline and in favor of the person sought to be penalized.
Even without the aid of these general rules, however - and thus all the more obviously with it - we believe the correctness of our view of subsection [475.25(1)(d)] is demonstrated on the face of the provision itself. Every statute must be read as a whole with meaning ascribed to every portion and due regard
given to the semantic and contextual inter- relationship between its parts. In this instance, the latter portion of the subsection repeatedly refers to the "personal
property ... or other document or thing of value" described in general terms in the first sentence as "the escrowed property." Thus, fairly, common sensibly and grammatically considered, the reach of subsection (d) is confined to unjustified refusals to account for or return property received in trust or "escrow"
by a real estate licensee in his professional capacity. (Citations omitted).
As in the Fleischman case, the evidence in this case established, at most, a violation of a contractual right. There was no evidence presented that Harmon Realty unjustifiably refused to account for or return property received in trust or escrow. Further, the evidence did not establish that Harmon had retained any monies owed to Ms. Bishop as her personal commissions. However, the Fleischman case did not involve a situation where a judgment had been entered by a court. The question then is whether Harmon's failure to satisfy the judgment entered against it constitutes a violation of Section 475.25(1)(d). In Golub vs. Department of Professional Regulation, 450 So.2d 229, 231 (Fla. 5th DCA 1984), the court stated:
Once there is a judicial determination that a broker is not entitled to retain non-escrowed property then [Section 475.25(1)(d)] is authority to discipline the broker for a failure to account and deliver the property to any person, including a salesman, who
is entitled to its possession.
In this case, the final judgment entered June 2, 1982, established that certain sums were due from Harmon Realty to Ms. Bishop. Harmon Realty did not satisfy the judgment. Therefore, it must be concluded that Harmon Realty, Inc., is in violation of Section 475.25(1)(d) as alleged in the Administrative Complaint. However, the failure to satisfy the judgment does not constitute clear and convincing evidence, in and of itself, that Harmon has been guilty of fraud, misrepresentation, concealment, false promises, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction. In that the petitioner failed to prove this charge by clear and convincing evidence, Count IV of the Administrative Complaint alleging that Harmon Realty, Inc., violated subsection 475.25(1)(b), Florida Statutes, should be dismissed.
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Real Estate Commission enter a Final Order
that respondent, Harmon Realty, Inc., violated Section 475.25(1)(d), Florida Statutes, as alleged in Count II of the Administrative Complaint. It is further recommended that an administrative fine of $1,000 be imposed against Harmon Realty, Inc.
DONE and ENTERED this 2nd day of October, 1987, in Tallahassee, Florida.
DIANE A. GRUBBS
Filed with the Clerk of the Division of Administrative Hearings this 2nd day of October, 1987.
Respondent's Proposed Findings of Fact 1-2. Accepted in #1.
3-4. Accepted in #2.
5. Accepted in #3.
6-7. Accepted in #4, except the date on the license indicates Ms. Bishop became associated with Harmon in 1979.
8. Accepted in #5.
9-10. Accepted as stated in #6 and #7.
18-19. Accepted in #12.
20-21. Accepted in #14.
28-31. Accepted as stated in #16.
36-37. Rejected as a conclusion of law.
38-39. Rejected as unnecessary and cumulative.
James H. Gillis, Esquire Department of Professional Regulation
400 W. Robinson Street Suite 308
Gerald Nelson, Esquire Diane K. Wallace, Esquire One Urban Center, Suite 750 4830 West Kennedy Blvd.
400 W. Robinson Street Post Office Box 1900 Orlando, Florida 32802
130 N. Monroe Street Tallahassee, Florida 32399-0750
