STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 92-1990

)

SHIRLEY M. FERGUSON AND )

DOSH REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to written notice a formal hearing was held in this case before Larry J. Sartin, a duly designated Hearing Officer of the Division of Administrative Hearings, on June 15, 1992, in Daytona Beach, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson

Senior Attorney

Florida Department of Professional Regulation, Division of Real Estate

Hurston North Tower

400 West Robinson Street Orlando, Florida 32801-1772

For Respondent: R. Michael Kennedy, Esquire

Post Office Box 4319

South Daytona, Florida 32121 STATEMENT OF THE ISSUES

Whether the Respondents' Florida real estate licenses should be disciplined based upon the charge that: (1) the Respondents are guilty of culpable negligence or breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes (1991); (2) the Respondents are guilty of having failed to account or deliver a deposit in violation of Section 475.25(1)(d), Florida Statutes (1991); and/or (3) the Respondents are guilty of having failed to maintain trust funds in a real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes (1991).

PRELIMINARY STATEMENT

On February 2, 1992, the Petitioner, the Department of Professional Regulation, Division of Real Estate (hereinafter referred to as the "Department"), entered an Administrative Complaint against the Respondents,

Shirley M. Ferguson and Dosh Realty, Inc. The Administrative Complaint alleged that Ms. Ferguson and Dosh Realty, Inc., had violated Sections 475.25(1)(b), (d) and (k), Florida Statutes (1991).

The Respondents disputed the charges contained in the Administrative Complaint and requested a formal administrative hearing pursuant to Section 120.57(1), Florida Statutes. By letter dated March 25, 1992, the request for hearing was forwarded to the Division of Administrative Hearings.

The final hearing was originally scheduled for June 18, 1992, by Amended Notice of Hearing. The hearing was moved to June 15, 1992, in response to a motion for continuance filed by the Department.

At the final hearing the Department presented the testimony of Agostino A. Lucente. The Department also offered four exhibits which were accepted into evidence. Ms. Ferguson testified on her own behalf. The Respondents offered no exhibits.

The parties have filed proposed recommended orders containing proposed findings of fact. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order or the proposed finding of fact has been accepted or rejected in the Appendix which is attached h

FINDINGS OF FACT

1. The Department is a state licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular, Chapters 120, 455 and 475, Florida Statutes (1991), and the rules promulgated pursuant thereto.

   
   

2. The Respondents, Shirley M. Ferguson and Dosh Realty, Inc., are now, and were at all times material hereto, licensed real estate brokers in the State of Florida, having been issued license numbers 0393921 and 0252372, respectively, in accordance with Chapter 475, Florida Statutes. The last licenses issued were as brokers, c/o Dosh Realty, Inc., 595 N. Nova Road 105A, Ormond Beach, Florida 32174.

   
   

3. At all times material hereto, Ms. Ferguson was licensed and operating as qualifying broker and officer of Dosh Realty, Inc.

   
   

4. On or about August 1, 1990, Ms. Ferguson maintained and operated a branch office of Dosh Realty, Inc., at the Aliki Condominium located in Daytona Beach.

   
   

5. On or about August 1, 1990, Ms. Ferguson and Carol Savage, a licensed salesperson, entered into an "Independent Contractor Agreement" whereby Ms. Savage agreed to act as a property management agent for Dosh Realty, Inc., at the Aliki Condominium. Ms. Savage's license was registered with Dosh Realty, Inc.

   
   

6. The Independent Contractor Agreement between Ms. Ferguson and Ms. Savage specifically required that Ms. Savage set up "two rental accounts - Dosh Realty, Inc./ (condo name) - one account to be a general account for rentals, the other account to be a non-interest escrow account for security deposits."

7. On August 1, 1990, Ms. Ferguson opened an account, number 1130222031, at Barnett Bank in Ormond Beach, Florida. Ms. Ferguson and Ms. Savage were signatories on the account. The account was not an escrow security account.

   
   

8. Ms. Ferguson inquired of Ms. Savage about a rental escrow account for Aliki Condominium. Ms. Savage informed Ms. Ferguson that security deposits were not required or received and, therefore, no escrow account was necessary. Despite the requirement of the Independent Contractor Agreement that an escrow account be established, Ms. Ferguson did not require that Ms. Savage comply with the terms of the Independent Contractor Agreement.

   
   

9. Between August 1, 1990, and July 20, 1991, Ms. Savage, in the course of her association with the Respondents, solicited and obtained tenants to lease condominium units at the Aliki Condominium. Ms. Savage informed Ms. Ferguson that the agreements for these rentals were verbal. Ms. Ferguson did not insist that written agreements be entered into.

   
   

10. Between August 1, 1990, and July 20, 1991, Ms. Savage in fact received monies as security deposits for rentals at the Aliki Condominium. Not all of the monies received by Ms. Savage were deposited in an account of the Respondents. Respondents were not notified of the security deposits and the Respondents were not aware that the security deposits had been collected.

    
    

11. On July 20, 1991, Ms. Ferguson became aware that Ms. Savage had been collecting security deposits from tenants of the Aliki Condominium. Ms. Ferguson learned that Ms. Savage had taken the deposits and had failed to deliver the deposits to the Respondents.

    
    

12. On or about July 20, 1991, tenants of the Aliki Condominium began to demand a return of their security deposits and Ms. Savage left the State of Florida.

    
    

13. Ms. Ferguson reported the foregoing events to the Department and ultimately filed a complaint against Ms. Savage. Ms. Savage ultimately surrendered her license with the Department for revocation.

    
    

14. The Respondents have not returned the security deposits received by Ms. Savage at the Aliki Condominium.

    
    

15. Although Ms. Ferguson was very cooperative during the Department's investigation of this matter and although Ms. Ferguson did inquire of Ms. Savage concerning the manner in which rentals were handled at Aliki condominium, Ms. Ferguson did not insist, as a condition for the continued use by Ms. Savage of Ms. Ferguson's brokers license and the brokers license of Dosh Realty, Inc., that Ms. Savage use written rental agreements, require deposits and use an escrow account.

    
    

16. Ms. Ferguson acknowledged during the investigation of this matter that monies were received at Dosh Realty's branch office at the Aliki Condominium that were not deposited in an escrow account and that she accepted Ms. Savage's representation that no written leases were entered into at the Aliki Condominium.

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes (1991).

    
    

18. The burden of proof in this proceeding was on the Department. Agrico Chemical Company v. Department of Environmental Regulation, 365 So.2d 759 (Fla. 2d DCA 1979); and Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

    
    

19. Section 475.25, Florida Statutes (1991), authorizes the Florida Real Estate Commission to suspend the license of a Florida real estate broker for period not exceeding seven years, to revoke a real estate license, to impose an administrative fine not to exceed $1,000.00 per count or separate offense and to impose a reprimand (or all of the foregoing), if it finds that a licensee has violated Section 475.25(1)(a)-(r), Florida Statutes (1991).

    
    

20. In this case, the Respondents have been charged with violating Sections 475.25(1)(b), (d) and (k), Florida Statutes (1991). These violations describe culpable negligence and breach of trust in a business transaction, failure to account and deliver a deposit and failure to maintain trust funds in a proper depository.

    
    

21. There is not any real dispute concerning Ms. Savage's actions. Both parties agreed that Ms. Savage's failure to account and deliver deposits and her failure maintain trust funds in a proper depository constituted a breach of trust in a business transaction. At issue is the Respondents' responsibility as the qualifying real estate broker in this matter for the actions of Ms. Savage, whose real estate license was registered with the Respondents.

    
    

22. With regard to Section 475.25(1)(b), Florida Statutes (1991), the Respondents have attempted to prove that Ms. Ferguson acted with all reasonable care to insure compliance with all statutory obligations. The difficulty with the Respondents' position is that Ms. Savage was acting as a real estate agent because of the Respondents' brokers' licenses. Consequently, rather than simply accepting Ms. Savage's assurances that she did not use escrow accounts or enter into written leases, the Respondents could have insisted that she use written leases and an escrow account. The failure to do so constituted a failure of the Respondents to properly supervise Ms. Savage and constitutes culpable negligence.

    
    

23. The Respondents have also argued that, because no monies were actually received by them, they did not violate Sections 475.25(1)(d) or (k), Florida Statutes (1991). This argument is rejected. As the real estate broker, the Respondents had the ultimate responsibility for insuring that funds received by them and the real estate agents under their supervision were properly held in trust.

    
    

24. Based upon the foregoing, it is concluded that the Respondents have violated Sections 475.25(1)(b), (d) and (k), Florida Statutes (1991). In determining what penalty should be imposed on the Respondents, however, several facts mitigate against severe punishment: (1) there was no evidence presented to indicate that the Respondents have ever committed any violations in the past;

(2) Ms. Ferguson has always been very corporative with the Department and, in particular, was very corporative in this matter; (3) Ms. Savage was apparently a thief and Ms. Ferguson was not aware of this fact until after the damage had

been done; and (4) the weight of the evidence failed to prove the extent to which deposits were not returned. Based upon these mitigating factors, the suggestion that the Respondents' license should be suspended for 30 days and that a fine be imposed are unwarranted by the proof.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department enter a Final Order finding that the

Respondents have violated Sections 475.25(1)(b), (d) and (k), Florida Statutes (1991). It is further

RECOMMENDED that Ms. Ferguson be reprimanded, placed on probation for one year and required to complete the 30 hour broker management course.

DONE and ENTERED this day of July, 1992, in Tallahassee, Florida.

LARRY J. SARTIN

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 day of July, 1992.

APPENDIX

Case Number 92-1990

The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Department's Proposed Findings of Fact

Proposed Finding Paragraph Number in Order

of Fact Number of Acceptance or Reason for Rejection

1 1.

2 2.

4 3.

5 4.

1. See 5.

2. See 8.

8 10.

1. See 11. The exact amount of the deposits at issue was not proved by competent substantial evidence.

2. Hereby accepted. 11 12.

12 13-14.

14 15.

15 See 17.

The Respondents' Proposed Findings of Fact

Proposed Finding Paragraph Number in Order

of Fact Number of Acceptance or Reason for Rejection

1 1.

2 2.

3 3.

4 4.

5 5.

6 8.

7 11. See 9-10.

8 10-11.

9 12 and 13. The last sentence is not supported by the weight of the evidence and is not relevant. Although it is true that the exact monies Ms. Savage took were not received by the Respondents, they were responsible and could have returned monies of the Respondents.

COPIES FURNISHED:

Steven W. Johnson Senior Attorney

Department of Professional Regulation Division of Real Estate

Legal Section

Hurston Building, North Tower #308

400 West Robinson Street Orlando, Florida 32801-1772

R. Michael Kennedy, Esquire Post Office Box 4319

South Daytona, Florida 32121

Jack Ray General Counsel

Department of Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

Darlene F. Keller Division Director Division of Real Estate

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

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: 92-001990

Orders for Case No: 92-001990