Respondent. )
) DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )
vs. ) CASE NO. 92-1322
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a formal hearing in this case on June 10, 1992, in New Port Richey, Florida.
For Petitioner: Janine B. Myrick, Esquire
For Respondent: L. Jean Jones DuBrian, pro se
Whether Respondent Kenneth M. Mossell's real estate license should be disciplined because he allegedly engaged in dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; collected money in connection with a real estate brokerage transaction except in the name of his employer and with the express consent thereof; registered as an officer of a corporation while licensed as a salesman; operated as a broker while licensed as a salesman; and failed to account and deliver any secret or illegal profit in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(b) and (d), Florida Statutes; Rule Sections 21V-14.012(2) and (3), and 21V-5.016, Florida Administrative Code; and whether Respondent L. Jean Jones DuBrian's real estate license should be disciplined based upon the charge that she is guilty of dishonest dealing by trick, scheme, or device, culpable negligence or breach of trust in business transactions; operated as a broker under a trade name without causing said name to be noted in the Commission records and placed on her license; or operated as a member of a partnership or as a corporation or as an officer or manager thereof, without said partnership or corporation holding a valid current registration; failed to prepare and sign required written monthly escrow reconciliation statements, all in violation of Subsections 475.25(1)(b) and (e); 475.42(1)(k), Florida Statutes, and Rule Sections 21V-14.012(2) and (3), Florida Administrative Code.
By its Administrative Complaint filed January 27, 1992, Petitioner, Department of Professional Regulation, Division of Real Estate, hereinafter (DPR or Petitioner), seeks to discipline the Respondents L. Jean Jones DuBrian and Kenneth Milton Mossell's real estate licenses. Respondents dispute the charges and requested a formal hearing. Pursuant to their request, this matter was referred to the Division of Administrative Hearings and a formal hearing was held on June 10, 1992, in New Port Richey, Florida.
At hearing, Petitioner was granted leave to keep the record open for late- filed depositions, and filed an ore tenus motion to correct a scrivener's error in Count IV of the Administrative Complaint.
Petitioner presented the testimony of Linda Sychowski; Jonathan Rummey; Scott Spoerl; Department of Professional Regulation Investigators Marjorie May and Leo Huddleston; Walter Hankinson, Jr.; Maureen Conley, Records Custodian for Barnett Bank; Arthur Wagenseil; James R. Irwin; Edmund Lekowski and Frederick Reimer. Respondents testified on their behalf and Respondent Mossell called his wife, Mary Patricia Mossell, as a witness. Petitioner's exhibits 1-19 and Respondents' exhibits A-H were offered and received in evidence at the hearing.
During the formal hearing, Petitioner made an ore tenus motion to amend paragraph 17 of the Administrative Complaint to state that Respondent DuBrian acknowledged that she collected rents and disbursed income from an account entitled "L. Jean Jones DuBrian Registered Real Estate Broker," account number 1575212562 and an account entitled "L. Jean Jones DuBrian Escrow Account," account number 1512410876, both of which were maintained at Barnett Bank. Both Respondents agreed to the amendment. Further, Petitioner's counsel deleted references to Respondent Mossell as appeared in paragraph 10 of the Administrative Complaint.
Petitioner submitted a proposed recommended order, which was considered in preparation of this recommended order. Proposed findings not incorporated herein are addressed in the attached Appendix.
Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of Florida, specifically Chapters 120, 455 and 475, Florida Statutes, and rules and regulations promulgated thereunder.
Respondent DuBrian is now, and was at all times material hereto, a licensed real estate broker in the State of Florida having been issued license number 0306696 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker, c/o United Team, Inc. t/a ERA, 5844 Main Street, New Port Richey, Florida.
Respondent Mossell is now, and was at all times material hereto, a licensed real estate salesperson in Florida, having been issued license number 0538751. The last license issued was as a non-active salesperson, 3432 Lori Lane, New Port Richey, Florida.
Linda Sychowski, Frederick Reimer and Mary Patricia Mossell were officers of Majestic Realty and Leasing, Incorporated (Majestic), which was formed during May of 1989. Respondent Mossell was the primary financial investor.
On or about April 16, 1990, Sychowski filed Majestic's annual report for 1990 with the Secretary of State listing Mary Patricia Mossell as Director/Treasurer, Sychowski as Director/President and Reimer as Director/Vice President.
Respondent DuBrian was never an officer, director or shareholder of Majestic.
During August 1989, pursuant to a verbal agreement, Respondent DuBrian became qualifying broker for Majestic.
During August 1989, Sychowski notarized Respondent DuBrian's signature on a document titled "State of Florida, Department of Professional Regulation, Division of Real Estate, Application and Request for Licensure of a Real Estate Brokerage Corporation or Partnership." Respondent DuBrian's name appears on the portion of the form listing all corporate officers and directors.
During October 1989, Respondent Mossell opened an escrow account at Citizens and Southern Bank (C & S) on behalf of Majestic.
Respondent Mossell and Sychowski were signatories on the C & S account and Respondent Mossell signed as Secretary of the corporation.
On September 20, 1990, Sychowski notified the Department of Professional Regulation that Respondent DuBrian had been terminated as broker of record for Majestic.
President Linda Sychowski denies that she had any understanding that Respondent DuBrian would operate an independent real estate company outside of Majestic or that DuBrian would receive commissions for real estate activities except through Majestic.
Sychowski is not a real estate licensee and relied upon Respondent DuBrian's competency as a broker.
During April 1990, Sychowski signed check numbers 119 and 120 drawn on Majestic's escrow account. Those checks were payable to Respondent Mossell's wife, Mary Patricia Mossell, as reimbursement for the return of a security deposit and cleaning services.
Sychowski learned, subsequent to Respondent DuBrian's termination, that DuBrian operated a real estate brokerage company out of her home independent of her activities as a broker with Majestic. She learned of DuBrian's other brokerage activities during a deposition in conjunction with a civil suit filed by DuBrian against Majestic.
During October 1989, Jonathan Rummey entered into a lease agreement to rent property at 5416 Aloha Boulevard. Rummey paid monthly rent pursuant to the agreement and vacated the property during October 1990. Initially Rummey paid rent to Majestic and later DuBrian notified him that she had moved to another real estate company and that the rent was to be paid directly to her.
Rummey understood that DuBrian was acting as an agent for the landlord and, as such, was receiving a commission from the landlord.
Respondent Mossell was aware that Respondent DuBrian was conducting a real estate rental business from her home. Mossell knew this when DuBrian was hired as the qualifying broker for Majestic. Mossell permitted DuBrian to continue operating her independent rental brokerage business. Mossell allowed this since he thought that it would not be financially prudent for DuBrian to leave her ongoing business and hire on with a new firm, Majestic, which had no rental accounts.
During April 1989, Scott Spoerl entered a lease agreement with Respondent DuBrian for rental property he owned. The agreement provided that rental payments would be made to Respondent "L. Jean DuBrian, Registered Real Estate Broker."
Respondent DuBrian received ten percent of the rents collected as her fee for providing rental services to Spoerl.
Spoerl received checks for his portion of the rent from Respondent DuBrian's account entitled "L. Jean Jones DuBrian Escrow Account."
During May 1990, DPR Investigator Marjorie May conducted an inspection and escrow account audit of Majestic. At the time, Respondent DuBrian was Majestic's qualifying broker.
During that audit, Investigator May discovered that Respondent DuBrian was not preparing and signing monthly reconciliation reports.
During October 1988 Walter Hankinson, Jr., and his wife entered into an agreement to rent property for $500 per month from DuBrian. The Hankinson's paid monthly rent to Respondent DuBrian personally. The Hankinsons vacated the property during January 1992.
The bank account entitled "Kenneth Mossell or Jean DuBrian, Special Account Number One," account number 1519555601 maintained at Barnett Bank had statements dated October 11, 1989, and November 9, 1989. No other statements were issued for that account.
Two checks were drawn on the above-referenced account, one payable to and endorsed by Kathy Renquist and one dated October 23, 1989, payable to cash. The latter check was endorsed and cashed by Respondent Mossell.
The referenced account was a personal and not a business account.
Escrow accounts are usually identified as such. Banks label escrow accounts as such because the account is not directly charged.
When bank accounts are set up, the account is designated as the customer instructs. The customer signs the signature card after the account title is typed in.
During July 1989, Arthur Wagenseil entered a lease agreement to rent property from Respondent DuBrian. Respondent DuBrian represented the landlord and the monthly lease payments were paid directly to her.
In July 1989, James Irwin entered a one year lease agreement with Wagenseil. As part of the agreement, Irwin paid Respondent DuBrian a ten percent (10%) commission of rents received.
Typically, Respondent DuBrian received the rent from the tenant, deducted the necessary expenses and her commission, and remitted the balance to the landlord (Irwin).
Respondent DuBrian advised Irwin that she had arranged with Majestic to keep her clients and business the way she was doing it at the time.
During July 1989, Edmund Lekowski entered a two year lease agreement to rent property, paying $390 per month in rent to Respondent DuBrian as agent for the landlord.
In May 1989, Frederick Reimer participated in the formation of Majestic as a director and principal. The other officers of the corporation were Sychowski and Mary Patricia Mossell.
Majestic was established to engage in the business of renting and leasing realty.
Reimer is not licensed as a real estate salesperson or broker. Reimer met Respondent DuBrian when she applied for and was hired as the broker for Majestic.
Respondent Mossell was a part owner of Majestic and, as noted, was the primary financial investor.
The corporate escrow account was maintained at C & S Bank and Respondent DuBrian was not a signatory on the account.
Respondent DuBrian was employed at Majestic to meet the requirement of having a broker on staff. Reimer relied on Respondent DuBrian's knowledge of real estate law. Reimer was unaware of Respondent's DuBrian's operation of a separate rental/leasing business from her home.
Respondent DuBrian was not an officer of Majestic nor did she inform Reimer of the legal requirement that she be an officer of the corporation and a signatory on the escrow account.
Leo Huddleston, an investigator with Petitioner, met with Respondents DuBrian and Mossell on March 19, 1991, at which time Respondent DuBrian acknowledged that she was not a signatory on the Majestic escrow account because she was not a stockholder or shareholder.
During the March 19, 1991 interview, Respondent DuBrian advised Huddleston that she was conducting a rental business, as a broker, separate and distinct from Majestic.
During the March 19, 1991, meeting, Respondent DuBrian advised Investigator Huddleston that she was unaware that radon and agency disclosures and written monthly reconciliations were required.
Also, during that meeting with Investigator Huddleston, Respondent Mossell advised that he was a signatory on the Majestic escrow account and that he withdrew $310 from that escrow account when a Mr. Schlatterman vacated some rental property that was leased from Majestic.
Respondent Mossell's withdrawal was based on repayment and reimbursement to his wife for cleaning the Schlatterman's vacated apartment and a $250.00 cash refund of a security deposit that Mary Mossell had given to the tenant, Schlatterman. Respondent Mossell did not provide Investigator Huddleston with documentation for the claim on the Schlatterman's security deposit. In this regard, the Schlatterman's experienced an emergency and had to vacate on a weekend when the banks were closed.
At the time of Investigator Huddleston's interview of Respondents during March 1991, Respondent DuBrian acknowledged that while she was employed as qualifying broker for Majestic, she was also operating an independent rental business.
Investigator Huddleston's investigation of the Petitioner's records revealed that Respondent DuBrian was only registered as qualifying broker for Majestic and for no other company.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Subsection 120.57(1), Florida Statutes (1991).
The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.
The Petitioner's authority is derived from Chapter 475, Florida Statutes (1991).
Section 475.25, Florida Statutes (1991), provides that the Florida Real Estate Commission may suspend a license for a period not exceeding eight
(8) years; revoke a real estate license; impose an administrative fine not to exceed $1,000 for each count or separate offense; and may impose a reprimand or, any or all of the foregoing, if it finds that a licensee has violated Section 475.25(1), Florida Statutes (1991).
Section 475.25(1)(b), Florida Statutes (1991), proscribes fraud, misrepresentation, concealment, false pretenses, false promises, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in any business transaction.
Section 475.25(1)(d), Florida Statutes (1991), proscribes failing to account or deliver to any person, including a licensee under this chapter, 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, any personal property such as money, fund, deposit, check, draft, abstract of title, including a share of a real estate commission, or any secret or illegal profit, or any divisible share or portion thereof, 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.
Section 475.25(1)(e), Florida Statutes (1991), proscribes violations of any of the provisions of Chapter 475, Florida Statutes (1991), or any lawful order or rule made or issued under the provisions of Chapters 455 or 475, Florida Statutes (1991).
Section 475.42(1)(b), Florida Statutes (1991), proscribes persons licensed as a salesman from operating as a broker or operating as a salesman for any person not registered as his employer.
Section 475.42(1)(d), Florida Statutes (1991), proscribes salespersons collecting any money in connection with any real estate brokerage transaction, whether as a commission, deposit, payment, rental, or otherwise, except in the name of the employer and with the express consent of the employer.
Section 475.42(1)(k), Florida Statutes (1991), proscribes operating as a broker under a trade name without causing the trade name to be noted in the records of the commission and placed on his license, or so operate as a member of a partnership or as a corporation or as an officer or manager thereof, unless said partnership or corporation is the holder of a valid current registration.
Florida Administrative Code rule section 21V-5.016 provides that officers and directors who expect to be active must possess the qualifications required by law and become licensed in the same manner and by the same procedure as any other applicant for active license; but requests for licenses, while such person is an officer or director of that, or any other corporation, shall be included with a request for registration for the corporation and its other officers and directors. No registration shall be issued to the corporation or partnership unless every broker licensed with the corporation or partnership is registered as an officer, director or partner of the corporation or partnership. No salesman or broker-salesman may be registered as an officer, director or general partner of the corporation or partnership.
Florida Administrative Code rule section 21V-14.102(2) provides, in pertinent part, that a broker shall cause to be made at least monthly, a written statement comparing the broker's total liability with the reconciled bank balance(s) of all trust accounts. The broker shall review, sign and date the monthly statement-reconciliation.
Florida Administrative Code rule section 21V-14.012(3) provides, in pertinent part, that whenever the broker trust liability and the bank balances do not agree, the reconciliation shall contain a description or explanation for the difference(s) and any corrective action taken reference shortages or overages of funds in the account(s).
Petitioner has the burden of establishing the allegations of the Administrative Complaint by clear and convincing evidence. See Balino v. Department of Health and Rehabilitative Services, 348 So.2d 34 (Fla. 1st DCA 1977); and State ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973).
Culpable negligence is "that reckless indifference to the rights of others, which is equivalent to an intentional violation of them." See Jackson v. State, 100 So.2d 839, 840 (Fla. 1st DCA 1958).
Petitioner presented clear and convincing evidence which establishes that Respondent L. Jean DuBrian operated as a broker under a trade name without causing the name to be noted in the records of the commission in violation of Subsections 475.42(1)(k) and 475.25(1)(e), Florida Statutes.
Petitioner presented clear and convincing evidence which establishes that Respondent L. Jean DuBrian, while operating as a broker, failed to prepare and sign the required written monthly escrow reconciliation statements in violation of Subsection 475.25(1)(e), Florida Statutes and rule section 21V- 14.012(2) and (3), Florida Administrative Code.
Petitioner presented clear and convincing evidence which establishes that Respondent Kenneth M. Mossell, while licensed as a salesman, registered as an officer of Majestic, in violation of Subsection 475.25(1)(b), Florida Statutes and rule section 21V-5.016, Florida Administrative Code.
Petitioner presented clear and convincing evidence which establishes that Respondent Kenneth M. Mossell failed to deliver a secret profit in violation of Subsection 475.25(1)(d), Florida Statutes.
