STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-3228

)

IRVING HALSEY BRAIN, JR., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on November 29, 1990, at Clearwater, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Division of Real Estate

400 W. Robinson Street Orlando, Florida 32801

For Respondent: Irving Halsey Brain, Jr., pro se

334 State Street Commerce, Georgia 30529

STATEMENT OF THE ISSUES

Whether Respondent is guilty of failure to account for and deliver funds to the person entitled thereto and/or guilty of fraud, misrepresentation, breach of trust, or dishonest dealing in a business transaction.

PRELIMINARY STATEMENT

By Administrative Complaint filed April 26, 1990, the Department of Professional Regulation, Division of Real Estate, Petitioner, seeks to revoke, suspend, or otherwise discipline the license of Irving Halsey Brain, Jr., Respondent as a real estate broker. As grounds therefore, it is alleged that as broker for Jay Hearin Realty Co., Inc., Respondent negotiated leases on two buildings owned by Emily Hammer, on which he was to collect the rents, deduct his commission and remit the balance to Hammer; and that during the months of June, August and September, 1987, Respondent converted to his own use monthly rental payments from one tenant in the amount of $6,955.14 and from the second tenant monthly rental payments totaling $2,486.06. It is further alleged that Mrs. Hammer obtained a default judgment against Respondent in the total amount of $29,168.60, which has not been satisfied. These acts are alleged to constitute violations of Section 475.25(1)(b) and (d), Florida Statutes.

At the hearing, Petitioner called four witnesses, Respondent testified in his own behalf, and seven exhibits were admitted into evidence. Proposed findings have been submitted by the parties. Treatment accorded those proposed findings is contained in the Appendix attached hereto and made a part hereof.

Having considered the testimony and documentary evidence presented, the following is submitted.

FINDINGS OF FACT

1. At all times relevant hereto, Irving Halsey Brain, Jr., was licensed as a real estate broker, and, with his wife, owned the stock of Jay Hearin, Inc.

   
   

2. On October 10, 1983, Respondent negotiated a lease of property between Emily R. Hammer, lessor, and Suncoast Heat Treatment, Inc., lessee, (Exhibit 1) for a period of three years, beginning November 1, 1983, at an initial rental of

   $2,225 per month plus sales tax with annual adjustments for changes in the consumer price index, and the option to renew the lease for an additional three years at the expiration of the initial lease period upon the same terms and conditions. This lease was renewed November 1, 1986, to expire October 31, 1989.

   
   

3. On May 22, 1986, Respondent negotiated the lease agreement between Emily R. Hammer, lessor, and Whitaker Roofing, Inc., lessee, for a building for a period of one year from June 1, 1986 to May 31, 1987, at a monthly rental of

   $1,250 per month plus sales tax, with options to renew the lease in 1987 and 1988 on similar terms and conditions with adjustment to the rent based upon the consumer price index.

   
   

4. Both of these leases provided in clause 21 that the lease was procured through the efforts of Jay Hearin, Inc., who was to collect all rentals coming due from which, as compensation for procuring the lease, the lessor authorized Jay Hearin, Inc., to deduct 8 percent on the Suncoast Lease and 7 percent on the Whitaker lease and remit balance to lessor. Jay Hearin, Inc., was also authorized to pay any invoices applicable to the leased premises which had been approved by the lessor and to deduct the amount so paid.

   
   

5. In February and March, 1987, Whitaker roofing did not remit rent payments to Hearin Realty, and the monthly computer printout Owner's Statements to Mrs. Hammer show only rental payments from Suncoast. However, the monthly statement for April 1987 shows Whitaker made the February, March and April payments, and these payments were remitted to Mrs. Hammer.

   
   

6. The May and June statements do not show payments from Whitaker and, due to an office error, the June payment from Suncoast was not remitted to Mrs. Hammer.

   
   

7. The July statement shows receipt of rent from Whitaker for May and June and for Suncoast for July.

   
   

8. No rental payments were received from either tenant in August, and the September statement reflects payments from Suncoast for August and September.

9. During this period of sporadic collections, Mrs. Hammer became upset at not getting her full rental payments, and attempted several times to contact Respondent Brain without success. Brain testified he also tried to contact Mrs. Hammer without success.

   
   

10. Mrs. Hammer telephoned the tenants about their rental payments, and they told her they had paid Respondent. In August 1987, Mrs. Hammer engaged another real estate agency to manage the property for her and unilaterally terminated her contract with Respondent contained in Exhibit 1. The new agent advised the tenants to submit rentals to him.

    
    

11. On the September 1987 Owner's Statement, Respondent listed the Suncoast rental payments for August and September, deducted his commission, added the June payment which had not been remitted, deducted the rental commission for the balance of the lease for both Suncoast and Whitaker and submitted to Mrs. Hammer a check for the balance of $463.63. This was not accepted by Mrs. Hammer, and she engaged the services of an attorney who filed suit against respondent and Jay Hearin, Inc.

    
    

12. The suit alleged failure to remit rents for the months of June, August and September 1987, from Suncoast in the total amount of $6,955.14 and converting these payments to his own use; and for converting rental payments from Whitaker Roofing for the months of July and August 1987, in the total amount of $2,486.06 to his own use. This complaint alleged these conversions of funds constituted civil theft and demanded triple damages (Exhibit 3).

    
    

13. Instead of filing an answer to the complaint, Respondent submitted a letter (Exhibit 5) to Mrs. Hammer's attorney, Stephen Evans, on February 18, 1988, contending Mrs. Hammer had failed to comply with the terms of the lease agreement.

    
    

14. The attorney for Mrs. Hammer obtained a default judgment against Respondent for triple the sums alleged to have been converted in the total amount of $28,353.60 plus costs of $105.00 and attorney's fee of $680.00 (Exhibit 2).

    
    

15. Respondent then obtained the services of an attorney but was unable to get the judgment set aside (Exhibit 7). In 1989 Respondent submitted, through his attorney, $7,200.00 to Mrs. Hammer which apparently represents the figures shown on the September 1987 Owner's Statement without a deduction for future commissions plus interest and attorney's fees.

    
    

16. Prior to the filing of this administrative complaint Jay Hearin, Inc., filed for bankruptcy and has been declared bankrupt. In his proposed recommended order, Respondent indicated he has also filed personal bankruptcy, but no evidence in this regard was presented at the hearing.

    
    

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

18. Respondent is here charged with dishonest dealings in a business transaction in violating Section 475.25(1)(b), Florida Statutes, and with failure to account and deliver rental funds in violation of Section 475.25(1)(d), Florida Statutes.

19. The only evidence presented to show failure to deliver funds was the civil complaint which made those allegations and the default judgment, the testimony of Mrs. Hammer that she didn't get all of her rental payments, and the testimony of the two tenants that they paid rent for those months, for which rent was allegedly withheld by Jay Hearin Realty, Inc.

    
    

20. Respondent submitted evidence to show lessee Whitaker was late in his payments and that all rental payments had been remitted to Mrs. Hammer after receipt by Respondent except rental payments received from Suncoast for August and September 1987 which had been withheld by Respondent as his commission for obtaining the lease as provided for in paragraph 21 of the lease agreement (Exhibit 1).

    
    

21. Subsequently, Respondent remitted the rent received from Suncoast for the months June, August and September 1987, plus interest and attorney's fee. Respondent has not satisfied the default judgment which provided triple damages to Mrs. Hammer. Respondent acknowledged that due to a misunderstanding between him and his bookkeeper the June rental received from Suncoast was not remitted to Mrs. Hammer until the Owner's Statement for the month of September 1987 was prepared.

    
    

22. It was after Respondent deducted his commissions due pursuant to the lease agreement for future rents that suit was filed on behalf of Mrs. Hammer.

    
    

23. It is also clear that Respondent has remitted all rents collected on behalf of Mrs. Hammer less his commission for those rental payments.

    
    

24. No evidence was presented that the lease agreements (Exhibit 1) were intended by the parties involved to be interpreted other than according to the specific language used therein. Paragraph 21 of those leases clearly provided "As compensation for Jay Hearin, Inc., for procurement of this lease [to be paid a percentage of the monthly rental] each month during the term of this lease. .

    
    

25. The lease for Suncoast expired October 31, 1989. Accordingly, the lease had some 25 months to run when Mrs. Hammer dispensed with Respondent's services in September 1987. Unless the Respondent failed to comply with his obligations under the lease, thereby giving the lessor cause to replace him, Respondent is entitled to the Commission for the duration of the lease. The same is applicable to the Whitaker lease. No evidence was presented on this issue, and no determination is reached regarding Respondent's rights and obligations in this regard.

    
    

26. Here the Petitioner has the burden to prove the misconduct alleged by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 252 (FL 1987). While Mrs. Hammer testified she didn't get her rental payments each month when they were due, no specific dates or amounts of this failure were presented. One of Petitioner's witnesses had cancelled checks available showing the dates and amounts paid during the period in issue in 1987 through September, but he did not present these checks showing dates and amounts paid to Respondent. On the other hand, Respondent's evidence showed, and Respondent acknowledged, that all rental payments received were promptly remitted to Mrs. Hammer during this period except the June, August and September payments from Suncoast. Respondent erroneously failed to remit the June payment when received and accounted for this payment when he submitted the Owner's Statement for September claiming commissions due for the balance of the lease.

27. From the foregoing it is concluded that Petitioner has failed to prove, by clear and convincing evidence, that Irving Halsey Brain, Jr. violated Section 475.25(1)(b) and (d), Florida Statutes as alleged.

RECOMMENDATION

It is recommended that the charges contained in the administrative complaint filed April 26, 1990 against Irving Halsey Brain, Jr. be dismissed.

DONE and ENTERED this 17th day of December, 1990, in Tallahassee, Florida.

K. N. AYERS 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 17th day of December, 1990.

Appendix

1. Accepted

2. Rejected. Respondent was licensed as a broker

3. Accepted

4. Accepted, however, the provision quoted from the lease is Rejected as not being an accurate quote.

5. Rejected. See Exhibit 4.

6. Accepted only insofar as included in HO's #6,7, and 8

7. Accepted

8. Accepted

Treatment accorded Respondent's proposed findings:

1, 2, 3, and 4 Rejected as unsupported by evidence presented at this hearing.

1. Accepted

2. Accepted but for last sentence which is a legal conclusion, not as a fact.

3. Accepted

4. Accepted

5. Accepted only insofar as included in HO's #6,7, and 8 (?)

6. Accepted

7. Accepted

8. Accepted to the extent Respondent submitted $7,200 to Mrs. Hammer.

9. Rejected. Evidence was presented that Jay Hearin, Inc. filed for bankruptcy, but the record does not indicate Respondent filed personal bankruptcy.

10. Rejected as legal argument.

COPIES FURNISHED:

Steven W. Johnson, Esquire Division of Real Estate

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

Irving Halsey Brain, Jr.

334 State Street Commerce, GA 30529

Darlene F. Keller Division Director Division of Real Estate

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

Kenneth Easley General Counsel

Department of Professional Regulation

Northwood Centre

1940 North Monroe Street Suite 60

Tallahassee, FL 32399-0792

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. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN 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: 90-003228

Orders for Case No: 90-003228