STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NEVIN H. NORDAL, )

)

Petitioner, )

)

vs. ) CASE NO. 89-3441F

)

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, this matter came on for hearing in Fort Walton Beach, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on September 27, 1989.

APPEARANCES

The parties were represented as follows:

For Petitioner: Mary Koch Polson, Esquire

Cotton, Wesley, Poche', Gates

3 Plew Avenue

Shalimar, Florida 32579

For Respondent: John R. Alexander, Esquire

Department of Professional Regulation

Division of Real Estate

400 W. Robinson Street Orlando, Florida 32802

STATEMENT OF THE ISSUES

The issue at the hearing was whether Petitioner is entitled to an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes and Rule 22I-6.035, Florida Administrative Code.

PRELIMINARY STATEMENT

This action arose after Petitioner, Nevin H. Nordal, received a Final Order adopting the Recommended Order of the Hearing Officer and dismissing the Administrative Complaint filed against him in Case Number 88-3758. That proceeding was styled Department of Professional Regulation, Division of Real Estate v. Nevin H. Nordal, DOAH Case No. 88-3758 (Final Order May 16, 1989). On June 29, 1989, Petitioner filed an application for an award of attorney's fees and costs pursuant to Section 57.111, Florida Statutes and Rule 22I-6.035, Florida Administrative Code.

Rule 22I-6.035 specifically requires the state agency against which a petition for costs and fees is filed to file a response or counter affidavit to the petition within 20 days of the filing of the petition. The Department filed its response on July 21, 1989. The Department's response alleges that Petitioner was not entitled to an award of attorney's fees and costs for the following reasons:

1. The charges against Petitioner in the Administrative Complaint had a reasonable basis in law and fact at the time the Department initiated the underlying proceeding and were therefore substantially justified in the institution of the underlying proceeding.

   
   

2. Special circumstances exist which would make an award of attorney's fees and costs to Petitioner unjust.

At the hearing, Petitioner presented one witness and offered into evidence Petitioner's affidavit of attorney's fees and costs and affidavit of additional fees and costs. Respondent presented one witness and offered three exhibits into evidence. The reasonableness of Petitioner's attorney's fees and costs was stipulated to by the Department at the hearing. Additionally, Petitioner's status as a "small business" as that term is defined in Section 57.111, Florida Statutes, was stipulated to by the Department.

FINDINGS OF FACT

1. Petitioner is the sole proprietor of an unincorporated business engaged in the real estate brokerage business. Petitioner's principal office is located in Niceville, Florida. Petitioner's business does not employ more than twenty- five (25) full-time employees and has a net worth not exceeding $2,000,000.00.

   
   

2. In DOAH Case No. 88-3758, the Department of Professional Regulation, Division of Real Estate, filed an Administrative Complaint dated June 23, 1988. The Administrative Complaint alleged that the Petitioner was guilty of having failed to account and deliver to any person at the time which has 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, deposit, draft or other documents or things of value, 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 violation of Subsection 475.25(1)(d), Florida Statutes. The facts allegedly supporting the Administrative Complaint were Petitioner's failure, after entry of a County Court Judgment, to return a sum of money to the potential buyers of Petitioner's own house. The money was received by Petitioner and retained by Petitioner in a transaction involving the sale of his own home. The transaction did not involve Petitioner as a broker and did not involve Petitioner as an escrow agent. The escrow agent specified in the contract was another real estate company.

   
   

3. The Administrative Complaint was based on the Board's determination of probable cause at its meeting on June 21, 1988. At that meeting, Mr. Fred Wilson, Chief Staff attorney for the Division of Real Estate, presented the case to the probable cause panel. The presentation of the case was wholly based on the investigative file developed by DPR's investigator. A review of that investigative file and the transcript of the probable cause proceeding does not support a finding of probable cause in this case. In order to support such a finding, the evidence considered by the Board must disclose that there is a reasonable basis in law and fact for the agency to proceed with its intended

   action. In this case, The agency's intended action was to clearly and convincingly establish that the licensee failed to account and deliver escrowed property to the person entitled to such property in violation of Section 475.25(1)(d), Florida Statutes and in light of the controlling law in this area as set forth in Fleischman v. Department of Professional Regulation, 441 So.2d 1121 (Fla. 3d DCA 1983).

   
   

4. It is clear that from the inception of these proceedings, the facts which drove the prosecution of this case were that a sale of real property was involved along with an unpaid civil court judgment and a buyer's check with the words "house down payment" written in the space for memos on the check. The investigative report did not contain any facts supporting an escrow between Petitioner and his potential buyers. Nor, did the report contain any facts which established that Petitioner acted as a real estate broker in the transaction involving his house. The investigative report seems to be more concerned with collection of the judgment debt than with ascertaining facts crucial to the determination of a violation in this case. As such, the Division did not have a reasonable basis in law and fact at the time it initiated the action against Petitioner and therefore said proceeding was not substantially justified.

   
   

5. After hearing, a Recommended Order was entered on April 11, 1989, recommending dismissal of the Administrative Complaint. The recommendation was based on findings that the Petitioner, Nevin H. Nordal, was acting as the seller of his own property and not as a broker in the transaction in question and that the sum of money received by the Petitioner was not properly escrowable property. Additionally, the recommendation was based on conclusions of law that Subsection 475.25(1)(d), Florida Statutes, the subsection under which the Petitioner was charged, only applies when escrowed property is involved and is not applicable in instances where a real estate broker is acting as the seller of his own real property unless the contract for sale establishes the seller/broker as the escrow agent, citing Fleischman. Other types of contractual disputes, whether involving personal real estate transactions by a licensee or not, may not be enforced by disciplinary action undertaken by a regulatory agency. The fact that a judgment had been rendered against the Petitioner by the civil court does not, by itself, make a contractual dispute actionable by a regulatory agency since such a judgment was nothing more than a debt similar to any debt owed to a bank or a department store. Mere refusal to pay such debts is not a ground for discipline under Chapter 475.

   
   

6. The Final Order of the Division, through the Florida Real Estate Commission, adopted the Findings of Fact, Conclusions of Law and Recommendation contained in the Recommended Order and dismissed the Administrative Complaint on May 16, 1989.

   
   

7. The Petition for Attorney's Fees and Costs pursuant to Rule 22I-6.035, Florida Administrative Code, and Section 57.111, Florida Statutes, subsequently filed was timely, having been filed within sixty days (60) after the date on which the Petitioner became a prevailing small business party.

   
   

8. According to the initial Affidavit filed by Petitioner's attorney, Petitioner initially incurred legal fees in the amount of $5,160.00 and costs in the amount of $505.65 in DOAH Case NO. 88-3758. These fees and costs are reasonable.

   
   

9. At the Final Hearing in this cause, Petitioner's attorney filed an Affidavit as to Additional Fees and Costs incurred by Petitioner in the

   preparation for and litigation of Petitioner's entitlement to an award of attorney's fees and costs under Section 57.111, Florida Statutes. Said Affidavit stated the additional attorney's fees incurred as $530.00 and the additional costs as $15.40. The additional fees and costs are reasonable.

   
   

10. No evidence was presented that demonstrated the presence of any special circumstances which would make an award of attorney's fees and costs unjust in this case.

    
    

11. Petitioner is entitled to an award of attorney's fees in the amount of

    $5,690.00 and costs in the amount of $521.05 for a total amount of $6,211.05 due to Petitioner from Respondent.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of this proceeding. Sections 120.57(1) and 57.111, Florida Statutes.

    
    

13. Section 57.111(4)(a), Florida Statutes, essentially authorizes the award of attorney's fees and costs to a prevailing small business party in an administrative proceeding initiated by a state agency "unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust."

    
    

14. Section 57.111(d)(d)1.a., Florida Statutes, defines a small business party to include:

    
    

    a sole proprietor of an unincorporated business, including a professional practice, whose principal office is located in this state, who is domiciled in this state, and whose business or professional practice has, at the time the action is initiated by a state agency, not more than 25 full-time employees or a net worth of not more than $2 million, including both personal and business investments; ...

    
    

    Petitioner clearly meets the above definition of a small business party.

    
    

15. Section 57.111(3)(c)(1), Florida Statutes, specified that a small business party is a "prevailing small business party" when:

    
    

    A final judgment or order has been entered in favor of the small business party and such judgment or order has not been reversed on appeal or the time for seeking judicial review of the judgment or order has expired; ...

    
    

16. In this case it is uncontroverted that a Final Order was entered adopting the Recommended Order of the Hearing Officer and dismissing the action on May 16, 1989. The Final Order was in Petitioner's favor. Petitioner is, therefore, a prevailing small business party under the statute's definition.

17. The attorney's fees and costs were reasonable and necessary to defend against the charges filed by the Department against Petitioner. Likewise the additional attorney's fees and costs incurred by Petitioner were reasonable and necessary to determination of the issue of entitlement to such fees and costs. The additional fees and costs are therefore recoverable if the initial fees and costs are recoverable. Crittenden Orange Blossom Fruit v. Stone, 514 So.2d 351 (Fla. 1987) and Bill Rivers Trailers, Inc. v. Miller, 489 So.2d 1139 (Fla. 1st DCA 1986).

    
    

18. Section 57.111(3)(e) specifies that:

A proceeding is "substantially justified" if it had a reasonable basis in law and in fact at the time it was initiated by a state agency.

Respondent was not substantially justified in its course of action for the reasons discussed in the findings of fact. Petitioner's application for attorney's fees and costs is therefore granted.

DONE and ENTERED this 9th day of February, 1990, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

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 9th day of February, 1990.

APPENDIX TO CASE NUMBER 89-3441F

The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7 and 8 of Petitioner's Proposed Recommended Order are adopted in substance, insofar as material.

COPIES FURNISHED:

Mary Koch Polson, Esquire Cotton, Wesley, Poche', Gates

3 Plew Avenue

Shalimar, Florida 32579

John R. Alexander, Esquire Department of Professional

Regulation

Division of Real Estate

400 W. Robinson Street Orlando, Florida 32802

Kenneth E. Easley General Counsel

Department of Professional Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0792

Darlene F. Keller Division Director

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

Docket for Case No: 89-003441F

Orders for Case No: 89-003441F