STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-2983

)

JOHN F. MCCAIN, )

)

Respondent. )

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

)

Petitioner, )

)

vs. ) CASE NO. 88-5237

) JAY H. MILLER and DYNAMIC REALTY ) INC., t/a DYNAMIC COMMERCIAL GROUP, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in these consolidated cases on February 10, 1989 in Clearwater, Florida and on April 20, 1989 in St. Petersburg, Florida. Thereafter the parties filed proposed recommended orders which were considered in preparation of this recommended order. Proposed findings which are not incorporated herein are the subject of specific rulings in an appendix attached hereto.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Department of Professional Regulation Division of Real Estate

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

For Respondents: Jan J. Piper, Esquire

Post Office Box 210

St. Petersburg, Florida 23731

Steven O. Cole, Esquire McMullen, Everett, Logan,

Marquardt and Cline, P.A. Post Office Box 1669 Clearwater, Florida 34617

ISSUES

Whether the Respondents are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust, in a business transaction in violation of subsections 475.25(1)(b),(d) and (k), Florida Statutes, by virtue of the sale of the Wal-Mar Motel by Montver, Inc., to Derek and Lucy Lea.

INTRODUCTION AND BACKGROUND

By administrative complaints filed on March 25, 1988, and October 4, 1988, Petitioner alleges that Respondents violated the real estate licensing law by misrepresenting and overstating the per night room rate, the past occupancy rates, the gross income rates and future reservations of the Wal-Mar, that such statements were known or should have been known to be false and incomplete at the time made and that the Leas relied upon such representations in purchasing the Wal-Mar. Respondents disputed that there was any impropriety in their actions and alleged that all data furnished the purchasers was accurate and founded upon the best information then available to them. Respondents requested a formal hearing.

At the hearing, Petitioner presented the testimony of Lucy and Derek Lea, its investigator Frank May, and Respondent's Miller and McCain testified on their behalf and presented the testimony of J. Warren Hughes and Kathy McCain. Petitioner tendered 7 exhibits and Respondents tendered 3 exhibits which were received in evidence.

Based upon the evidence presented at the hearing, the following factual findings are made:

FINDINGS OF FACT

1. At times material hereto, Respondents were the holders of the following Florida real estate license numbers: John H. McCain (McCain), license number 0192076; J. H. Miller license number 364090 and Dynamic Realty, Dynamic Commercial Group, license number 0044285. The licenses issued to Respondents McCain, Miller and Dynamic Realty were as broker, salesman and corporate broker, respectively.

   
   

2. Prior to December, 1983, Derek and Lucy Lea, who are married, were residents of England. During the summer of 1983, they became interested in purchasing property in the United States and determined that in order to immigrate they would need to purchase and become owners of an American business. In keeping with their interests, they came to Florida (Pinellas County) during October, 1983 to inquire about the purchase of a motel listed by Respondent

   McCain. The Leas were assisted in their search by Dynamic Realty and J. Miller as selling brokers, acting as co-broker with Edna Stokes of Great Britain.

   
   

3. The Leas learned of properties for sale in the States through advertisements, and decided that they were interested in purchasing a motel. Their preference was to own a business on the west coast of Florida because of the residence of Mrs. Lea's relatives in the Tampa area.

   
   

4. The Leas responded to an advertisement of Edna Stokes who offered them information pertaining to Florida properties. The Leas advised Stokes of their special requirements, including a preference for the west coast of Florida, a motel business which offered a single story residence to accommodate the physical needs of Mrs. Lea's mother and a business situated off the major thoroughfares such that they could house their numerous pets and permit them to roam freely.

   
   

5. Edna Stokes provided information on several motels in Florida including two in the Ft. Lauderdale area. Three were noted in the Clearwater/Dunedin area, one of which was under contract to another party and therefore not available. Of the remaining two, only one had the special locale and elevation requirements requested by the Leas, the Wal-Mar Motel located in Dunedin.

   
   

6. The Leas had no prior experience in the motel business. During 1983, Mr. Lea was unemployed and his prior experience had been as a messenger in a bookmaking establishment. The major source of family support came from Mrs. Lea's employment as a computer operator.

   
   

7. During October, 1983, the Leas began negotiations to purchase the Wal- Mar after they inspected the property late one evening. Respondent Miller made an arrangement for Mrs. Lea to revisit the Wal-Mar the next day. The Wal-Mar was listed for sale by Respondent McCain. Mrs. Lea, in the company of Respondents Miller, McCain and Kathy McCain, the daughter of Respondent McCain and the then manager of the hotel, inspected the Wal-Mar. Mrs. Lea concluded her inspection the following day.

   
   

8. During the evening when Mrs. Lea inspected the Wal- Mar, she spoke to her husband by phone and they then decided to make an offer to purchase. Respondent Miller prepared an offer in accordance with Mrs. Lea's instructions and as a safeguard, included provisions in the purchase offer to protect the Leas' interest by allowing a suitable time for inspection and verification of both the physical condition of the premises and the financial books and records.

   
   

9. The Leas' offer was accepted and Mrs. Lea returned to England. Respondent Miller later assembled financial data furnished by the owner and forwarded it to the Leas for their personal review. In addition to the written information passed on by Kathy McCain, Respondent Miller included an independent summary of survey results compiled by him of similar area motels respecting comparable rates.

   
   

10. The Leas reviewed the information provided by Respondent Miller and confirmed their approval and satisfaction of the data by returning a telegram to Respondents Miller and Dynamic stating that the pertinent condition of the contract (paragraph 17E) was approved. 1/

    
    

11. The Leas returned to the United States and closed the transaction on December 17, 1983. They operated the Wal-Mar Motel through approximately January, 1985.

12. The Leas enjoyed marginal success during the winter season of 1984 and made agreed mortgage payments to the seller for three months. Thereafter, they made no further payments although they continued to live and operate the motel and collected income for approximately ten additional months. They were eventually foreclosed and the property was returned to the seller. The Leas filed a civil suit and obtained a judgement against Respondent Dynamic. Dynamic did not appeal the judgement in favor of the Leas. However, the effect of that judgement is not dispositive of the issues relating to Respondent Dynamic's alleged wrongdoings herein based on, inter alia, different standards of proof in the two forums and Respondent counsel's stated position that Dynamic chose not to seek appellate review based solely on financial considerations.

    
    

13. When the Leas contracted to purchase the motel, there was a general expectation within the tourist industry in the Tampa Bay area that the upcoming winter season would be a banner season. One factor leading to this expectation was the scheduling of the Super Bowl which was played in Tampa during 1984 and which was expected to bring a large influx of additional visitors. However, the expected increase in tourism did not occur and the area suffered a remarkably and unusually cold winter which led to a marked drop in tourism. Kathy McCain, who had agreed to assist the Leas in operating the motel and to assure a smooth transition, was unexpectedly told by the Leas that she should prepare to leave within days following the Leas purchase of the Wal-Mar. Ms. McCain inquired of the Leas whether they wanted to review certain files she maintained of past visitors such that the Leas could canvas them to determine whether or not they could generate some business through that medium and the Leas declined her offer. Kathy McCain thereafter disposed of the motel registration cards based on the Leas' wishes.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

15. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

    
    

16. The authority of the Petitioner is derived from Chapter 475, Florida Statutes. Petitioner has the burden of proof in this proceeding. See Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). Petitioner's burden is substantial since Petitioner seeks to revoke the Respondent's professional licenses. The required standard of proof is by clear and convincing evidence. See Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). Petitioner has failed to meet the requisite burden in this case.

    
    

17. Insufficient evidence was offered herein to establish that the Respondents were guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction as alleged by virtue of the sale of the Wal-Mar Motel to Derek and Lucy Lea. Here the evidence demonstrates that Respondent Miller undertook the required care to protect the Leas' interest and drafted the contract in a fashion which allowed them an opportunity to investigate the property independently as well. Respondent Miller conducted an independent survey and compiled financial information relative to the room rates at other area motels. The survey results were provided to the Leas prior to purchase of the Wal-Mar. There was no

evidence which indicates that Respondents altered, omitted or otherwise fabricated information which was furnished to the Leas for consideration in their purchase of the Wal-Mar. Petitioner's offer, during hearing, of a civil judgement for money damages against Respondent Dynamic in favor of the Leas provides no basis for a determination herein that Respondent Dynamic was guilty of wrongdoing. Finally, the evidence demonstrates that Respondents acted in an honest, truthful and trustworthy manner consistent with their obligations pursuant to Chapter 475, Florida Statutes, during their dealings with the Leas.

RECOMMENDATION

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

Petitioner enter a Final Order dismissing the administrative complaint filed herein in its entirety.

Recommended this 24th day of May, 1989, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of May, 1989.

ENDNOTE

1/ That condition allowed the Leas an opportunity to review and approve books and records which verified the reported expenses and gross income. It also allowed them an opportunity to test the reasonableness of the projected gross income furnished by the owners through the listing broker.

COPIES FURNISHED:

Steven W. Johnson, Esquire

Department of Professional Regulation Division of Real Estate

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

Stephen O. Cole, Esquire First National Bank Building Post Office Box 1669 Clearwater, Florida 33731

J. J. Piper, Esquire Post Office Box 210

St. Petersburg, Florida 33731

Kenneth E. Easley, Esquire General Counsel

Department of Professional Regulation 1940 North Monroe, Suite 60

Tallahassee, Florida 32399-0729

Darlene F. Keller

Department of Professional Regulation Division of Real Estate

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

Docket for Case No: 88-002983

Orders for Case No: 88-002983