STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-2962

) SANDRA K. LINTON and KEY REALTY ) CO. OF PENSACOLA, INC., t/a ) KEY REALTY COMPANY, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter came on for hearing in Pensacola, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on July 20, 1990.

APPEARANCES

The parties were represented as follows:

For Petitioner: James H. Gillis, Esquire

DPR - Division of Real Estate

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

For Respondent: John L. Miller, Esquire

Johnson, Green & Locklin, P.A. Post Office Box 605

Milton, Florida 32572 STATEMENT OF THE ISSUE

Whether the Respondents' real estate broker's license should be suspended, revoked, or otherwise disciplined based upon alleged violations of Chapter 475, Florida Statutes.

PRELIMINARY STATEMENT

On April 26, 1990, the Petitioner, Department of Professional Regulation, in an Administrative Complaint, charged the Respondents, Sandra K. Linton and Key Realty Co. of Pensacola, Inc. with a series of violations of Chapter 475, Florida Statutes. The Respondents are charged with (1) violating Subsection 475.25(1)(e), Florida Statutes, by failing to file monthly escrow status reports as required by a previous final order dated November 7, 1989; (2) violating Subsection 475.25(1)(b), Florida Statutes, by failing to properly maintain

escrow accounts; (3) violating Subsection 475.25(1)(d), Florida Statutes, by failing to account and deliver trust funds; (4) violating Subsection 475.25(1)(k), Florida Statutes, by failing to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized; (5) violating Subsection 475.25(1)(d), Florida Statutes, by failing to timely account and deliver rental funds; (6) violating Subsection 475.25(1)(b), Florida Statutes, by acts constituting fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence or breach of trust in a business transaction; and (7) violating Subsection 475.25(1)(o), Florida Statutes, by being found guilty for a second time of misconduct that warrants suspension or being found guilty of a course of conduct or practices which show that she/it is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom she/it may sustain a confidential relation may not safely be entrusted to her/it. The Respondents contested the allegations contained in the Administrative Complaint and requested a formal administrative hearing.

At the hearing, petitioner presented the testimony of three witnesses and offered fifteen exhibits into evidence. The Respondent testified in her own behalf and offered nine exhibits into evidence.

Petitioner filed its proposed Recommended Order on August 9, 1990.

Respondent did not file a proposed Recommended Order. Petitioner's proposed findings of fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the evidence or were immaterial, cumulative or subordinate. Specific rulings on the Petitioner's proposed findings of fact are contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material to these proceedings, Respondent, Sandra K. Linton, was a licensed real estate broker in Florida, holding license number 0419502. Ms. Linton was the owner and qualifying broker for Respondent Key Realty Co. of Pensacola, Inc. (Key Realty). Key Realty was a licensed real estate brokerage company in Florida, holding license number 0244319. Both Respondents, and in particular Ms. Linton, have excellent character references from other active members of the real estate community.

   
   

2. On November 7, 1989, Petitioner entered a Final Order against Respondents for escrow account violations of Chapter 475, Florida Statutes. Among other things, the Final Order required Respondents to submit monthly escrow account status reports. From November 7, 1989, through March 27, 1990, the Respondents did not file any escrow account status reports as required by the Final Order.

   
   

3. Ms. Linton had turned the responsibility of filing those reports over to her accountant. However, Ms. Linton did not check to see if the escrow reports were filed by her accountant. Her accountant's full-time employment was as a contract auditor for the U.S. Navy. In October, 1989, the accountant was assigned to audit a contract in the Pacific and moved to the Pacific island which was the site of the contract. The accountant advised Ms. Linton that he would be leaving in October. After' October, 1989, the accountant no longer did any accounting work for Respondent. However, Ms. Linton did not make arrangements for the filing of the escrow account reports required by the Final

   Order after her accountant left the country. No sufficient excuse was offered by Ms. Linton for her failure to file or ensure the filing of these escrow reports.

   
   

4. The Respondents' rental escrow account revealed a shortage of $2,008.14 as of March 21, 1990. The money to cover the shortage was placed in a desk drawer in the Respondent's office for deposit while the Respondent was on vacation. Her employees failed to make the deposit. Given these facts, the resultant shortage was a very minor transgression of Chapter 475, Florida Statutes, and Rule 21-V, Florida Administrative Code.

   
   

5. Additionally, Bank charges totaling $328 were debited from the rental escrow account from June 1989 to February 1990. The Respondent's bank, Barnett Bank of Pensacola, had erroneously charged the rental escrow account for these bank charges despite instructions from the Respondent not to do so. All of the debited bank charges were either replaced by the bank or Ms. Linton. Since it was the bank's actions which caused these charges to be made to Respondents' rental escrow account and not Respondents' actions, no violation of Chapter 475, Florida Statutes, can be attributed to either Respondent.

   
   

6. Several checks totaling $3,605.15 were written by Respondent, Sandra K. Linton, from the rental escrow account and later returned due to nonsufficient funds. The checks were returned for nonsufficient funds due to the bank's hold policy. Since Respondent had consummated numerous transactions with Barnett Bank of Pensacola in which the hold policy was not applied to her account, Respondent had no knowledge that the bank's hold policy would be applied to her account.

   No reliable evidence was presented that this set of facts constituted bad accounting methods on the part of Respondents or otherwise violated the provisions of Chapter 475, Florida Statutes.

   
   

7. In the course of operating a rental management business, Respondents, on October 25, 1989, entered into a rental property management agreement with Richard and Susan Vigeant. The agreement called for monthly rental statements and disbursements. Respondents collected rental funds on behalf of the Vigeants from November, 1989, to February, 1990. However, Respondents did not provide monthly statements or deliver net rental funds to the Vigeants until March 6, 1990. Respondents were under the impression that the Vigeant's funds were to be held by the Respondents for minor repairs to the Lessor's property. The Vigeants were not under such an impression and, after numerous phone calls for more than a month, the Vigeants' requested disbursement of the net rental funds on February 20, 1990. The funds were disbursed to the Vigeants on March 6, 1990.

   
   

8. Respondents failure to give the Vigeants monthly accounting reports as required by the rental management agreement violates Section 475.25 (1)(d), Florida Statutes. However, this violation, while not minor, is also not overly serious and should not receive severe discipline.

   
   

9. None of the evidence demonstrates that Ms. Linton or her business were guilty of any fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence or breach of trust in a business transaction. The evidence did show that Ms. Linton is not very good at maintaining the rental escrow account or at seeing that the rental escrow account was properly maintained. Respondents' recordkeeping is poor and in disarray. The evidence was clear that Ms. Linton does not have the inclination, desire, or capability to maintain her broker's escrow account. The strongest evidence to support this conclusion is that all

   of Respondent's latest difficulties with her escrow account occurred after she had already been disciplined for escrow account violations which occurred prior to the events under consideration here. 1/ Given this inability, Respondent cannot be entrusted to properly handle escrow funds given to her. Since Respondents are not competent to handle escrow matters Respondents' licenses should be revoked.

   
   

10. The Respondent does not currently have the financial ability to pay any fines and such a penalty would not be appropriate in this case.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the parties to and subject matter of this proceeding. Sections 120.57 and 120.60, Florida Statutes.

    
    

12. Section 475.25, Florida Statutes, empowers the Florida Real Estate Commission to revoke, suspend, or otherwise discipline the real estate licenses of the Respondents if Respondents are found guilty of any of the acts enumerated in Section 475.25, Florida Statutes. Section 475.25(1), Florida Statutes, provides as follows, in pertinent part:

    
    

    1. The Commission may . . . suspend a license or permit for a period not exceeding ten years; may 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 the licensee, permittee, or applicant .

       (b) Has been guilty of . . . false promises, culpable negligence, or breach of trust

       in any business transaction . . . has violated a duty imposed upon him by law or the terms of the listing contract, written, oral, express, or implied, in a real estate transaction .

       1. Has failed to account or deliver to any person . . . at the time which has been

          agreed upon . . . or . . . upon demand of the person entitled to such accounting and

          delivery, any personal property such as

          money, fund, deposit, check, . . . 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

       2. Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.

       (k) Has failed, if a broker, to immediately replace, upon receipt, any money, fund, deposit, or draft entrusted to him by any person dealing with him as a broker in

       escrow with a . . . banking institution . or to deposit such funds in a trust or escrow

       account maintained by him with some bank wherein the funds shall be kept until disbursement thereof is properly authorized.

       
       

13. In Count I of the Administrative Complaint, the Respondents are charged with failing to file monthly escrow status reports as required by a previous order dated November 7, 1989. It is undisputed that such reports were not filed. Even though the Respondents relied on Ms. Linton's accountant to prepare the reports, Respondents are guilty of having violated Section 475.25(1)(e), Florida Statutes, as set forth in Count I of the Complaint.

    
    

14. Counts II through VII of the Complaint alleged that the Respondents are guilty of failing to adequately maintain rental escrow and sales escrow' accounts. It is undisputed that a substantial portion of the errors and irregularities alleged in Counts II through VII were the result of bank errors committed by the Respondent's bank, Barnett Bank of Pensacola. Those bank errors cannot subject Respondents to discipline for violation of Chapter 475, Florida Statutes. However, Respondents did have escrow shortages which resulted from Ms. Linton's failure to timely make a deposit and ensure that the deposit was made. Because the deposit was in the office, the transgression is minor. Based upon the escrow shortages resulting from the failure to make an immediate escrow deposit, the Respondents are guilty of having violated Subsection 475.25(1)(k), Florida Statutes. The evidence, however, does not support the Respondents being guilty of having violated Subsections 475.25(1)(b) and 475.25(1)(d), Florida Statutes. Even though the Respondent, Sandra K. Linton, should have exercised greater diligence in maintaining the escrow accounts, the evidence does not support a finding of fraud, misrepresentation, false promises, dishonest dealing by trick, scheme, or devise, or culpable negligence as stated in Subsection 475.25(1) (b). Rivard v. McCoy, 212 So.2d 672 (Fla. 1st DCA 1968); Waltman v. Florida Real Estate Commission, 254 So.2d 32 (Fla. 3rd DCA 1971). The evidence involved in Counts II-VII of the Administrative Complaint also does not support a finding that the Respondents failed to deliver trust funds in violation of Subsection 475.25(1)(d), Florida Statutes.

    
    

15. Counts VIII through XI of the Administrative Complaint relate to the Respondents' mismanagement of rental escrow property pursuant to a rental agreement entered into by Respondents and Richard and Susan Vigeant. The evidence shows that the Respondents collected rental funds for the Vigeants from November 1989 to February 1990, but did not provide monthly statements or deliver net rental funds to the Vigeants until March 6, 1990. The evidence further showed that the Vigeants did not request disbursements of the net rental funds until February 20, 1990,'and the funds were disbursed to the Vigeants thereafter on March 6, 1990. Even though the funds were disbursed on request, it is clear from the evidence that the monthly statements were not timely prepared and delivered to the Vigeants. Therefore, the Respondents are guilty of having violated Subsection 475.25(1)(d), Florida Statutes. The evidence, however, does not support the Respondents having been guilty of violating Subsection 475.25(1)(b), Florida Statutes.

    
    

16. Counts XII and XIII allege that the Respondent(s) are guilty for a second time of misconduct that warrants the suspension of Respondents' license, or having engaged in a course of conduct that shows that the Respondents are so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom she/it may sustain a confidential relation, may not safely be entrusted to them. Since the Respondents' license was not previously suspended, and there was no showing that their conduct that gave rise to the Order on November 7, 1989, was conduct that

warranted the suspension of her license, the Petitioner must prove that the Respondents have engaged in a course of conduct or practices which shows that she/it is so incompetent, negligent, dishonest, or untruthful, that the money, property, transactions, and rights of investors, or those with whom she/it may sustain a confidential relationship may not safely be entrusted to them. The evidence was clear that Respondents do not currently have the capability, desire or discipline to properly maintain their broker's escrow accounts. Although Respondents' record keeping is not suggestive of fraud or misrepresentation, their record keeping is poor. In fact, Ms. Linton is a good and honest salesperson. She simply is not very good at the escrow end of a real estate business. Since it is the responsibility for the proper maintenance and management of these escrow accounts which sets a broker apart from a real estate salesman, Respondents' license should be revoked with no adverse impact on Ms.

Linton's ability to obtain a real estate salesman's license.

RECOMMENDATION

Based upon the findings of fact and conclusions of law, it is RECOMMENDED:

The Division enter a Final Order finding Respondents guilty of four violations of Chapter 475, Florida Statutes, and revoking Respondents' real estate broker's licenses.

DONE and ENTERED this 24th day of September, 1990, at Tallahassee, 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 24th day of September, 1990.

ENDNOTES

1/ The evidence did not demonstrate that the violations which were the subject of the Final Order entered on November 7, 1989, would have subjected Respondents to suspension of their licenses.

APPENDIX TO RECOMMENDED ORDER CASE NO. 90-2962

The following constitute specific rulings pursuant to Section 120.59(2) Florida Statues upon the parties' respective proposed findings of fact:

Petitioner's Proposed Findings of Fact:

1. The facts contained in paragraphs 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, and 13 of the proposed findings of fact are adopted in substance, insofar as material.

   
   

2. The facts contained in paragraph 1 of the proposed findings of face are subordinate.

Respondent's Proposed Findings of Fact: None submitted.

COPIES FURNISHED:

James H. Gillis, Esquire

DPR - Division of Real Estate

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

John L. Miller, Esquire Johnson, Green & Locklin, P.A. Post Office Box 605

Milton, Florida 32572

Darlene F. Keller

Director, Division of Real Estate

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

Kenneth E. Easley, General Counsel Department of Professional

Regulation Suite 60

1940 North Monroe Street Tallahassee, Florida 32399-0792

STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 90-2962

)

SANDRA K. LINTON AND )

KEY REALTY CO. OF )

PENSACOLA, INC., T/A )

KEY REALTY COMPANY, )

)

Respondents. )

)

CORRECTED RECOMMENDED ORDER

Pursuant to Rule 22I-6.032, Florida Statutes, the previous Recommended Order entered in this action, dated September 24, 1990 is corrected to reflect that Petitioner did not file a Proposed Recommended Order and that Respondent did file a Proposed Recommended Order. The Proposed Recommended Order ruled on in the Appendix was the Respondent's Proposed Recommended Order.

DONE AND ORDERED this 2d day of October, 1990, in Tallahassee, Leon County, Florida.

COPIES FURNISHED:

James H. Gillis, Esquire

DPR - Division of Real Estate

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

DIANE CLEAVINGER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 2d day of October, 1990.

John L. Miller, Esquire Johnson, Green & Locklin, P.A. Post Office Box 605

Milton, Florida 32572

Darlene K. Keller

Director, Division of Real Estate

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

Kenneth E. Easley, Esquire Department of Professional Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0750

Docket for Case No: 90-002962

Orders for Case No: 90-002962