STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 87-1975

)

JAMES ROBERT MILLER, )

)

Respondent. )

)

RECOMMENDED ORDER

Consistent with the Order Granting Continuance furnished to the parties by the undersigned on November 3, 1987, a hearing was held in this case before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings in Sarasota, Florida on December 15, 1987. The issue for consideration was whether the Respondent's license as a real estate salesman in Florida should be disciplined because of the alleged misconduct outlined in the Administrative Complaint.

APPEARANCES

Petitioner: Arthur R. Shell, Jr., Esquire

Department of Professional Regulation Florida Real Estate Commission

400 West Robinson Street Orlando, Florida 32801

Respondent: David D. Davis, Esquire

Rosin & Davis

1900 Main Street, Suite 210

Sarasota, Florida 34236 BACKGROUND INFORMATION

On March 30, 1987, Van B. Poole, then Secretary of the Department of Professional Regulation, executed an Administrative Complaint in this case which in four Counts alleged that Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, and breach of trust in a business transaction; failed to account for and deliver trust funds; operated as a broker while licensed as a salesman or operated as a salesman for a person not registered as his employer; and, collected money without the express consent of his employer; all in violation of various subsections of Section 475.25, Florida Statutes.

On April 27, 1987, the Respondent executed an Election of Rights form in which he disputed the allegations of fact contained in the Administrative Complaint and requested a formal hearing. Thereafter, on May 4, 1987, the file

was forwarded to the Division of Administrative Hearings for the appointment of a Hearing Officer and on June 5, 1987, Hearing Officer Linda M. Rigot set the case for hearing in Sarasota on November 5, 1987.

Thereafter, Respondent moved for a continuance which was, upon good cause shown, granted on November 3, 1987 by the undersigned to whom the case had been transferred in the interim. The case was set for December 15, 1987 at which time it was held as scheduled.

At the Hearing, Petitioner presented the testimony of James D. Claydon, the broker for Creative Realty, Inc.; Thomas A. Nokes, an independent contractor/salesman with Creative Realty; Kathleen Florence Beaudet, an employee of the First Union National Bank of Florida; and Orville L. Allen, a licensed real estate broker. Petitioner also introduced Petitioner's Exhibits 1 through

1. Respondent testified in his own behalf and introduced Respondent's Exhibits A through D.

   
   

   No transcript of the proceedings was furnished and Petitioner failed to submit proposed Findings of Fact. However, Respondent did submit proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

   
   

   FINDINGS OF FACT

   
   

   1. At all times pertinent to the allegations contained herein, the Respondent held a Florida real estate license as a salesman under license number 0409953 and at the time in question, was employed as an independent contractor with Creative Realty of Sarasota, Inc., (Creative) of which James D. Claydon was the qualifying broker.

      
      

   2. The arrangement between Respondent and Mr. Claydon called for Respondent to receive 70% of any commissions earned by Creative on the basis of work done by Respondent. The agreement between the parties was silent concerning whether advertising expenses on properties listed by Respondent would be deducted from his portion of the commission' or whether Creative would assume those costs.

      
      

   3. In December, 1986, Respondent brought about the sale of a restaurant in Sarasota known as Scandal's. Closing on this property was scheduled to be held on or about December 31, 1986. The sale price was $487,500.00 and each broker was to receive one half of the five percent commission, or $12,187.50. Half of that commission was to be paid at closing and the other half to be paid out in subsequent installments.

      
      

   4. Creative's written office procedures at the time called for the procuring agent to attend the closing, secure any funds due the broker, and bring them back to the office for disbursement. Mr. Claydon, the broker, did not attend the December 31, 1986 closing because he was out of town. Before leaving on his trip, and relying on the information given to him regarding the requirements of the closing, he left an escrow check for the closing agent and a commission check for the Respondent with his secretary with instructions that when the Respondent brought back the gross commission check after the closing, she was to deposit it and give Respondent the check for his share in return.

      
      

   5. Before leaving, Mr. Claydon spoke with the Respondent about the closing and also communicated with him by telephone several times while he was away.

      The closing agent would not accept Mr. Claydon's escrow check and the closing

      was held up. It appears that the closing agent wanted a certified check for the escrow funds held by Mr. Claydon rather than a check drawn on the brokerage escrow account. As a result, Respondent took the escrow check left by Mr.

      Claydon to the bank and exchanged it for a cashier's check which he thereafter returned to the closing and satisfied the closing agent.

      
      

   6. When Mr. Claydon return on or about January 2, 1987, he examined the closing file and discovered that the expected commission check for $6,093.75 was missing. Instead, he found a deposit slip in the amount of $1,828.12. He immediately called the bank and inquired as to how the $1,828.12 deposit was made. He was advised that the commission check for $6,093.75 had been negotiated at the bank by the Respondent who received cash for it and deposited 30% ($1,828.12) to Mr. Claydon's account. This was not an authorized transaction since Mr. Miller did not have authority to sign for the company on any fund matters.

      
      

   7. The split of the $6,093.75 check resulted in Respondent, retaining 70% thereof, $4,265.63. Mr. Miller failed to make any deduction for advertising expense and subsequent demands by Mr. Claydon for reimbursement of the advertising expenses were not honored.

      
      

   8. The actual banking transaction was described by Ms. Beaudet, who, at the time in question, was an officer of the bank authorized to approve checks for cashing. The check in question was presented to her for cashing by Respondent on December 31, 1986 at a time when the bank was quite busy. Mr. Miller indicated he had just come from a closing and that the realty company to whom the check was made payable wanted to cash it immediately. She asked Respondent for identification to establish he was with Creative and he presented to her his business card. Mr. Miller had no written authorization to cash the check nor did Ms. Beaudet ask for any. She authorized the check for cashing and the funds were disbursed to Mr. Miller who thereafter deposited a portion to Creative's account.

      
      

   9. There is some question whether the agreement between Mr. Miller and Creative Realty called for advertising and other expenses incidental to a particular piece of property to be deducted from the agent's 70% of the commission. There is no doubt that the split was 70/30, but the question is whether the split was to be of gross or net proceeds. Mr. Claydon contends that the basic agreement called for Respondent to receive 70% of net commissions after deduction of expenses. This was confirmed by Mr. Nokes who has worked with Creative Realty as an independent contractor under a similar arrangement since its inception in 1974. From the beginning, he has received a 70% split across the board in return for his paying his own expenses, including advertising. Whenever he had a closing and received a check as a part thereof, he would immediately bring it to the broker who would issue an exchange check to him for his 70% of net. Under no circumstances would he ever cash a check made payable to Creative Realty. He did not have the authority to do so, and neither did Respondent.

      
      

   10. Nonetheless, the agreement entered into between Miller and Creative, at paragraph 6, deals with commissions but fails to provide for deduction for advertising expenses from the contractor's share of the commission. Paragraph 7 refers to liability for office expenses and provides that the salesman shall not be liable to the broker for office expenses. The deduction of advertising expenses from gross commission was provided for, however, in an office policy letter on file which every new salesperson was required to read and acknowledge.

       Mr. Miller never acknowledged having read that policy letter in writing and denies having ever been advised of it. Mr. Claydon, on the other hand, contends that he was.

       
       

   11. Further, Mr. Claydon contends that when he left for his trip just prior to the closing, he instructed both his secretary and the Respondent, orally, as to how the commission was to be handled.

       
       

   12. Mr. Miller indicated that while he was working with Mr. Claydon, he was directed to place advertising in his own name, but there was never any discussion as to who would pay for it.

       
       

   13. During a phone conversation on December 30, 1986 Claydon and Miller had an argument about the proposed deduction for advertising from Miller's commission. While sitting at Claydon's secretary's desk earlier that day, Miller saw a memorandum prepared by Claydon which indicated that advertising expense and realtor dues were to be deducted from Miller's share of the commission. Miller objected to this because, in his opinion, this was not their agreement. He felt that the contract did not call for these deductions nor had he ever agreed to a deduction for these expenses.

       
       

   14. In this phone call, Miller told Claydon that if he persisted in trying to deduct these expenses from his share of the commission, Miller would resign and Claydon could handle the closing himself. When the parties continued that conversation the following morning, according to Miller, Claydon told him to cash the commission check and deduct his share, and the issue of advertising would be worked out later. Miller does not dispute the fact that he took the commission check to the bank, placed his own name on it in endorsement with the permission of the bank officer, and deposited it to his own account. He then transferred 30% of it to Creative's account. He contends this was consistent with the contract and discussions he had with Claydon. It is found, however, that Claydon did not authorize Miller to cash the gross commission check.

       
       

   15. Miller contends that he was also to receive a proportionate share of the installments scheduled to be paid as the remaining one half of the total commission to Creative on this sale. He denies ever having received them and as a result, filed suit against Claydon for the balance of his commission. Claydon filed an offset claim for the expenses in issue. At no time, however, did Claydon deny Respondent was entitled to 70% of the commission. The parties entered into a stipulation that the split was to be 70/30 of the total commission of the remaining payments and Respondent was awarded a judgement for this minus a set off for expenses in an amount less than those claimed by Mr. Claydon.

       
       

   16. Whether Respondent was to receive the 70% of gross or of net commission has not been resolved and is not a major issue in this case. The ultimate issue is whether Respondent had authority to cash the commission check made payable to Creative Realty, Inc. and withhold any sums therefrom without express permission from the broker. Mr. Claydon has indicated this was not his policy; Mr. Nokes, another agent with the company indicated it was not company policy; and Mr. Allen, another real estate broker in the area for eight years, who heads a firm employing between 20 and 23 associates, indicated that under the independent contractor procedure, it is not the policy in the real estate community. Under those circumstances, Respondent's contention that he had Mr. Claydon's authority to cash the commission check received at the closing is not supportable. Consequently, it is found that his cashing of the check was unauthorized and improper.

       CONCLUSIONS OF LAW

       
       

   17. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.

       
       

   18. In Count One of the Administrative Complaint, Petitioner alleges that the Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, and breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. The evidence of record clearly shows that Respondent's cashing of the gross commission check in question here was accomplished through false pretenses and misrepresentation to the bank loan officer and may also constitute a breach of trust in a business transaction. However, the remaining elements of this statutory provision have not been proven.

       
       

   19. In Count Two, Petitioner alleges that the Respondent is guilty of having failed to account and deliver trust funds in violation of Subsection 475.25(1)(d). Here, Respondent's failure to turn over the gross commission check to his broker constitutes a failure to deliver trust funds. His responsibility was to deliver the funds as he received them and he was obliged to look to his broker for his proportionate share thereof. If he was dissatisfied with what was offered by the broker, his remedy was other than through self help.

       
       

   20. In Count Three, Petitioner alleges that the Respondent is guilty of operating as a broker or of having operated as a salesman for a person not registered as his employer. There is no evidence that Respondent held himself out to be a broker nor that he operated as a salesman for anyone other than the broker with whom his license was placed. Consequently, this allegation must fail.

       
       

   21. In Count Four, Petitioner alleges that the Respondent is guilty of having collected money without the express consent of his employer in violation of subsection 475.42(1)(d) and, thereby, Subsection 475.25 (1)(e). The evidence indicates that the Respondent had the authority from Mr. Claydon to collect the money from the closing agent. His misconduct lay not in the collection as alleged, but in his failure to properly account for the funds once they were collected.

       
       

   22. Having concluded that Respondent is guilty of at least some of the offenses alleged in the Administrative Complaint, the question remains as to an appropriate disciplinary action. Here the evidence is clear that Respondent's misconduct was the result of his desire to protect himself in a relationship with his broker and in no way threatened the interests of any party outside the broker/salesman relationship. Consequently, his misconduct did not adversely affect the public, those whom the discipline statutes are designed to protect. Therefore, though disciplinary action is appropriate, it need not be as severe as would be called for in the event Respondent's misconduct had been directed at the public.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that Respondent be reprimanded.

RECOMMENDED this 27th day of January, 1988, at Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 27th day of January, 1988.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esquire Department of Professional

Regulation

Florida Real Estate Commission

400 West Robinson Street Orlando, Florida 32801

David D. Davis, Esquire Rosin & Davis

1900 Main Street, Suite 210

Sarasota, Florida 34236

Darlene F. Keller

Acting Executive Director Department of Professional

Regulation

Florida Real Estate Commission

400 West Robinson Street Orlando, Florida 32801

Docket for Case No: 87-001975

Orders for Case No: 87-001975