STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) CASE NO. 89-5626

) WATER OAK MANAGEMENT CORPORATION, )

as general partner of WATER OAK, ) Ltd. )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Leesburg, Florida, before Robert T. Benton II, Hearing Officer of the Division of Administrative Hearings, on March 20, 1990. Proceedings came to a temporary halt the following day when the parties entered into a settlement agreement.

Subsequently, claiming the settlement agreement had been breached, respondent moved for resumption of the formal hearing. Petitioner did not oppose this motion. Without passing on any question concerning the settlement agreement, the hearing officer scheduled the concluding portion of the final hearing for Tallahassee on October 9, 1990.

The Division of Administrative Hearings received the hearing transcript on October 18, 1990. On October 29, 1990, the parties filed proposed recommended orders. The attached appendix addresses proposed findings of fact by number.

ISSUE

Whether petitioner should rescind its approval of prospectus amendments contained in amended prospectuses petitioner accepted for filing on June 23, 1988?

PRELIMINARY STATEMENT

Respondent filed proposed amendments to three mobile home park prospectuses with petitioner's Bureau of Mobile Homes on April 6, 1988. Petitioner accepted the amendments for filing, and directed respondent to distribute them to home owners on June 23, 1988. On April 25, 1989, some ten months after petitioner approved the amendments, petitioner's Joann S. Dixon wrote respondent, stating

additional information has required us to reconsider our acceptance of these amendments. Rule

7D-31.001(5), Florida Administrative Code, sets limitations on the types of changes that can be made to a prospectus that has been delivered to a home owner.

The [amendments] . . . would be governed by subsection

1. of this rule. Since our records do not include the requisite consent of the home owners, the Bureau is rescinding its acceptance of the subject amendments.

   
   

   Petitioner's Exhibit NO. 3. Apparently the unidentified "additional information" consisted of an allegation that respondent had leased three lots in phase II before the amendments were approved. On September 19, 1989, petitioner issued a "NOTICE AND ORDER OF REJECTION," directing respondent to show cause "why the prospectus received on April 6, 1988, should not be rejected pursuant to Rule 7D-30.003, Florida Administrative Code," even though petitioner had earlier accepted and approved the prospectus (actually three amended prospectuses) for filing, on June 23, 1988.

   
   

   Respondent filed a request for formal administrative hearing, in response to the "NOTICE AND ORDER OF REJECTION," and petitioner referred respondent's hearing request to the Division of Administrative Hearings, in accordance with Section 120.57(1)(b)3., Florida Statutes (1989).

   
   

   FINDINGS OF FACT

   
   

   1. Respondent (Water Oak) manages a mobile home park in Lake County known as Water Oak Country Club Estates (the park). The previous owner envisioned phased development of an eventual total of 1,479 lots, and so stated in the original or "P" prospectus filed with petitioner's Bureau of Mobile Homes (the Bureau).

      
      

   2. The "P" prospectus contemplated a 587-lot "Golfside Villas" section when phase II of the park was developed. The "P" prospectus disclosed plans to build a separate recreational complex for Golfside Villas, leaving the main recreational complex for the exclusive use of other park residents. But the "P" prospectus stated:

      
      

      Water Oak Estate Mobile Home Park has a clubhouse, swimming pool, tennis courts and a shuffleboard center, which will be available for use by the park residents. The maximum number of lots that will use these shared facilities at the present time is 1,479, which is the total number of lots within the park. The Golfside Villas Section will use these facilities until

      November 1, 1987, at which time they will use their own facilities, and will no longer use Water Oak Estate facilities except by invitation from the Water Oak Residents' Association, or the Park Management.

      
      

      After Water Oak, Ltd. acquired the park, respondent or its agent filed an amended prospectus ("P86") with the Bureau. The "P86" prospectus differed from the "P" prospectus only to the extent required by the 1986 amendments to Chapter 723, Florida Statutes (1989), and did not alter disclosures regarding recreational facilities.

      
      

   3. A third Water Oak prospectus ("P2"), preserved the Golfside Villas concept and the idea of a separate recreational complex. As filed with the Bureau, however, the P2 prospectus stated:

      
      

      The recreational and other common areas discussed above are completed and available for use by the residents.

      The maximum number of home sites that are presently entitled to use these facilities is 590.

      
      

      FUTURE IMPROVEMENTS--

      Water Oak Country Club Estates will build an additional clubhouse, a swimming pool, and a shuffleboard center, which will be for and in the Golfside Villas Section.

      Management may increase or decrease the size or modify the use of any of the shared facilities to serve the changing needs of the community, as determined by management.

      
      

      Petitioner's Exhibit No. 4, p. 7. In due course, the Bureau approved all three prospectuses, "P", "P86" and "P2", one after another. In approving prospectuses "P86" and "P2", the Bureau implicitly deemed them consistent with earlier approved prospectus(es).

      
      

   4. Because of considerations not pertinent here, Water Oak decided to abandon the idea of a discrete Golfside Villas section with its own exclusive recreational complex. Instead, it proposed, in developing phase II, to build the recreational complex contemplated in prospectuses "P", "P86" and "P2" (the original prospectuses) but to make both the phase II recreational complex and the original complex available to all residents of the park.

      
      

   5. Accordingly, Water Oak proposed amendments to the original prospectuses outlining its revised plans, and on April 16, 1988, filed them with the Bureau. Water Oak's cover letter explained:

   
   

   More specifically, a new clubhouse, heated swimming pool and shuffle board center open to all park residents will soon be available for use and so information concerning those facilities has been moved from the "Future Improvements" sections of these documents to the "Recreational and Other Common Areas" section.

   The proposed amendments are designed to make the "RECREATIONAL AND COMMON FACILITIES" section of all

   these prospectuses identical, and thus the existing versions of that section are deleted in their entirety in each prospectus and the new language substituted.

   . . .

   One other point is relevant to your consideration in this matter. The original owner of Water Oak Country Club Estates intended to designate a section of the park as the "Golfside Villas." However, no such section was ever developed ant the current owner has decided not to develop that section as such.

   Therefore, the Golfside Villas section of the park will not be created. Thus, all references to the Golfside Villas are now proposed to be deleted from all of the prospectuses in use in the park.

   No homeowner has leased a lot in an area designated as "the Golfside Villas," nor has any resident received any lease or other notification stating that his lot is in an area known as the Golfside Villas.

   Petitioner's Exhibit No. 3 (Emphasis in original.) Bureau personnel reviewed the amendments and approved the applications. Respondent's Exhibits Nos. 4 and

   1. After the approval, Water Oak gave prospective lessees amended P2 prospectuses, and entered into 60 or more leases with new residents to whom they had furnished amended prospectuses.

      
      

   2. Petitioner's Exhibit No. 7, a printed map of the park that is not part of any prospectus, labels a shaded portion in the northeast as "GOLFSIDE VILLAS AREA." Margerie Monski received a copy of the map on August 4, 1987, (T.411) before she and her husband leased a lot depicted on the unshaded portion of the map, in phase I.

      
      

   3. Respondent leased lot No. 2472 to Mr. and Mrs. Edward Reposa on April 4, 1988. T. 445; Petitioner's Exhibit No. 11. When respondent filed proposed prospectus amendments two days later, it had leased no other lot within the shaded area on Petitioner's Exhibit No. 7. Respondent leased lot No. 2510 to Mr. and Mrs. Alador Kurucz on April 20, 1988, and lot No. 2519 to Mr. and Mrs. Lloyd W. Wunder on June 8, 1988. Petitioner's Exhibits Nos. 12 and 13.

      
      

   4. Lots Nos. 2472, 2510 and 2519 all lie within the part of the park represented by the shaded area on Petitioner's Exhibit No. 7. But, as far as the evidence showed, none of the three lots' lessees has ever seen Petitioner's Exhibit No. 7 or any other map of the park on which Golfside Villas was depicted as a discrete section. No prospectus ever indicated that lots had been or were being leased in Golfside Villas.

      
      

   5. Unbeknownst to Water Oak, Mel Bishop Enterprises, Inc., the predecessor in interest who initially continued as park manager for Water Oak, filed a map similar to Petitioner's Exhibit No. 7 with the Bureau on October 27, 1987 (a prerequisite to its lawful use as advertising.) Petitioner's Exhibit No. 6.

      Lots depicted in the shaded area number far fewer than the 587 mentioned in the original prospectuses.

      
      

   6. The three original prospectuses, "P", "P86" and "P2", contain maps of phase I only. Front, back, left side and right side lot dimensions are listed for phase I, lot by lot. With respect to Golfside Villa lot dimensions, only the following appears:

      
      

      Front Left Side 1-587 - - - - 56 90

      Petitioner's Exhibit No. 4. On April 6, 1988, respondent's principals were under the impression that no specific area within the park had ever been officially designated as Golfside Villas. Nothing in any of the materials they reviewed when respondent acquired the park located Golfside Villas at a particular spot on the land reserved for development in phase II.

   7. Testifying at hearing, petitioner's personnel conceded that respondent had no intention to mislead the Bureau with regard to any fact material to approval or acceptance of respondent's prospectus amendments. Nor did the evidence show that the fact that the respondent leased three lots depicted within the shaded area on Petitioner's Exhibit No. 7 would have been material in the Bureau's original decision to approve respondent's prospectus amendments.

      CONCLUSIONS OF LAW

      
      

   8. Since the Department of Business Regulation referred respondent's hearing request to the Division of Administrative Hearings, in accordance with Section 120.57(1)(b)3., Florida Statutes (1989), "the division has jurisdiction over the formal proceeding." Section 120.57(1)(b)3., Florida Statutes (1989).

      
      

   9. When petitioner originally approved or accepted respondent's prospectus amendments for filing on June 23, 1990, it took final agency action which it is not free to revisit or disturb, except in accordance with prescribed procedures. Kalbach v. Department of Health and Rehabilitative Services, 563 So.2d 809 (Fla. 2nd DCA 1990); Taylor v. Department of Professional Regulation, Board of Medical Examiners, 493 So.2d 498 (Fla. 1st DCA 1986); Systems Management Associates, Inc. v. State, Department of Health and Rehabilitative Services, 391 So.2d 688 (Fla. 1st DCA 1980). Petitioner's intention to "reject" respondent's prospectus amendments at this point raises the question whether petitioner has statutory authority to rescind its approval of prospectuses, once it has accepted them for filing and directed their distribution.

      
      

   10. In keeping with the Administrative Procedure Act, petitioner's Notice and Order of Rejection must be construed to be in the nature of an administrative complaint seeking rescission or revocation of its approval of respondent's prospectus amendments. Petitioner cannot ignore final agency action it has already taken. Kalbach v. Department of Health and Rehabilitative Services, 563 So.2d 809 (Fla. 2nd DCA 1990).

       
       

   11. After petitioner approved respondent's prospectus amendments, respondent furnished amended prospectuses to numerous new tenants, who contracted with reference to them. "The first issue is whether the Division has statutory authority to rescind approval of amendments to a prospectus filing." Petitioner's Proposed Recommended Order, p. 17. Petitioner and all other "[a]dministrative agencies are creatures of statute and have only such powers as statutes confer." Fiat Motors of North America, Inc. v. Calvin, 356 So.2d 908, 909 (Fla. 1st DCA 1978).

       
       

   12. The statutes make no mention of rescinding approval of prospectuses, even if they have never been distributed by a park owner. In appropriate circumstances, petitioner's Division of Florida Land Sales, Condominiums, and Mobile Homes is authorized to

       
       

2. . . . issue an order requiring the mobile home park owner . . . to take . . . affirmative action . . . [which] will carry out the purposes of . . . Chapter [723 and/or] . . .

(d) 1. . . . impose a civil penalty against any mobile home park owner . . . for any violation of . . . chapter [723, in which event a] . . . penalty may be imposed on the basis of each separate violation . . . and for each day of continuing violation, but in no event may the penalty for each separate violation or for each day of continuing violation exceed $5,000.

Section 723.006(5), Florida Statutes (1989). But petitioner has filed no pleading alleging any "violation of any provision of . . . chapter [723] or any rule promulgated pursuant [t]hereto." Section 723.006(5), Florida Statutes (1989).

1. Prospectuses do more than inform prospective mobile home lot lessees of the terms and conditions on which park owners offer lots within their parks. Without delivery of an approved prospectus, any new mobile home lot tenancy is voidable at the tenant's election. Section 723.011(1)(a), Florida Statutes (1989). Whether prospectuses are approved may also affect rents. The law provides:

   
   

   No park owner may increase the lot rental amount until an approved prospectus has been delivered if one is required.

   
   

   Section 723.031(7), Florida Statutes (1989). Respondent is required to deliver an approved prospectus to each tenant before raising rents, because respondent's mobile home park contains "26 or more lots." Section 723.011(1)(a), Florida Statutes (1989). But the statutory scheme does not contemplate lowering rents retroactively, or rendering voidable lot rental agreements not voidable when entered into, whenever petitioner decides to reconsider its approval of a prospectus.

   
   

2. Even assuming petitioner had substantive authority for revoking or rescinding approval in appropriate cases, strict procedural protections apply in any disciplinary case, and the prosecuting agency's burden is to prove grounds clearly and convincingly. Ferris vs. Turlington, 510 So.2d 292 (Fla. 1987).

See Addington vs. Texas, 441 U.S. 426 (1979); Ferris vs. Austin, 487 So.2d 1163 (Fla. 5th DCA 1986); Anheuser-Busch, Inc. vs. Department of Business Regulation,

393 So.2d 1177 (Fla. 1st DCA 1981); Walker vs. State Board of Optometry, 322 So.2d 612 (Fla. 3d DCA 1975); Reid vs. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2nd DCA 1966). In the present case, petitioner neither pleaded nor proved any good reason to rescind its approval of the amendments to respondent's original prospectuses.

RECOMMENDATION

It is, accordingly, RECOMMENDED:

That petitioner dismiss its notice and order of rejection.

DONE AND ENTERED this 21st day of November, 1990, in Tallahassee, Florida.

ROBERT T. BENTON, II

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

21st day of November, 1990.

APPENDIX

Petitioner's proposed findings of fact Nos. 1, 2, 3, 4, 5, 7, 8, 9, 11, 12, 13,

14, 16, 17, 18, 26, 30, 31, 32, 35, 37, 38, 41, 45 and 49 have been adopted, in substance, insofar as material.

With respect to petitioner's proposed finding of fact No. 6, the pertinent part of the letter is quoted.

Petitioner's proposed findings of fact Nos. 10, 15, 28, 33, 34, 39, 40, 42 and

50 pertain to immaterial matters.

With respect to petitioner's proposed finding of fact No. 19, 24, 27, 43 and 44, no prospectus located a "Golfside Villas section of the park" at any specific place.

Petitioner's proposed findings of fact Nos. 20, 21, 22, 23, 25 and 47 pertain to subordinate matters.

With respect to petitioner's proposed finding of fact No. 29, Mr. Stoppa made the allegation, but no prospectus located a "Golfside Villas section of the park" at any specific place.

With respect to petitioner's proposed finding of fact No. 36, only two such leases were proven.

With respect to petitioner's proposed finding of fact No. 46, see paragraph 10 of the findings of fact.

With respect to petitioner's proposed finding of fact No. 48, it was not clear from the evidence what the basis was.

Respondent's proposed findings of fact Nos. 1, 2, 3, 5, 6, 7, 8, 9, 11, 12, 21

22, 24, 28, 29, 30, 31, 34, 35, 37, 38, 42, 43, 44 and 45 have been adopted, in substance, insofar as material.

With respect to respondent's proposed finding of fact No. 4, the number was 587.

Respondent's proposed findings of fact Nos. 10, 25 and 39 pertain to immaterial matters.

Respondent's proposed findings of fact Nos. 13, 14, 15, 16, 17, 18, 19, 20, 26,

27, 32, 33, 36 and 41 pertain to subordinate matters.

With respect to respondent's proposed finding of fact No. 23, it is not clear what petitioner's policy was at any given time.

With respect to respondent's proposed finding of fact No. 40, petitioner failed to prove its materiality.

Copies furnished:

Debra Roberts, Esquire Assistant General Counsel Department of Business

Regulation

725 South Bronough Street Tallahassee, FL 32301

Daniel C. Brown, Esquire

Katz, Kutter, Haigler, Alderman Davis, Marks & Rutledge, P.A.

215 South Monroe Street

First Florida Bank Bldg., Suite 400 Tallahassee, FL 32301

E. James Kearney, Director Department of Business Regulation Florida Land Sales, Condominiums,

and Mobile Homes

725 South Bronough Street Tallahassee, FL 32399-1000

General Counsel

Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

Docket for Case No: 89-005626

Orders for Case No: 89-005626