STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 92-5423

)

SHARON ANN ROZELLE and )

AFFIRMATIVE REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

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 May 20, 1993 in Tampa, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Senior Attorney

Department of Professional Regulation Division of Real Estate

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

For Respondents: Mark A. Neumaier, Esquire

Post Office Box 8623 Tampa, Florida 33674-8623

STATEMENT OF THE ISSUES

Whether Respondents' Florida real estate licenses should be disciplined based on allegations that they were guilty of fraud, misrepresentation, false promises, false pretenses, dishonest dealings by trick, scheme or device, culpable negligence or breach of trust in a business transaction; failed to account or deliver trust funds; placed, or caused to be placed any contract, assignment, deed, will, mortgage, affidavit or other writing which purports to affect the title of, or encumber, any real property if the same is known to be false or not authorized to be placed of record, maliciously or for the purpose of collecting a commission, or to coerce the payment of money to the broker or salesman or other person or for any unlawful purpose; failed to maintain trust funds in the real estate brokerage account or some other depository until properly disbursed; had funds in an escrow account which were personal funds; failed to preserve and make available to Petitioner, books, records and supporting documents of all trust fund transactions; and used an identification of an organization having to do with real estate when it was not authorized to

do so all in violation of Subsections 475.25(1)(a), (b), (d), (e), (k) and 475.42(1)(j), Florida Statutes and rule sections 21V-14.008 and 21V-10.027, Florida Administrative Code.

PRELIMINARY STATEMENT

By its administrative complaint filed May 21, 1992, Petitioner, Department of Professional Regulation, alleged that Respondents violated multiple sections of Chapter 475, Florida Statutes and Rule Chapter 21V, Florida Administrative Code. Based thereon, Petitioner seeks to impose disciplinary action against Respondent's real estate licenses. Respondents disputed the charges and requested a formal hearing pursuant to Chapter 120, Florida Statutes.

At the formal hearing, Petitioner presented the testimony of Mark Clesi, Marjorie May, J. L. Graham and Carol Austin. Petitioner introduced Exhibits 1-

14 which were received in evidence. Respondent testified on her own behalf and introduced ten exhibits which were received in evidence. The parties filed proposed recommended orders which were considered in preparation of this recommended order. Proposed findings not incorporated herein are the subject of specific rulings in an appendix.

FINDINGS OF FACT

1. Petitioner, Department of Professional Regulation, Division of Real Estate, is the state licensing and regulatory agency in Florida charged with the responsibility and duty to prosecute administrative complaints in the field of real estate.

   
   

2. Respondent, Affirmative Realty, Inc., is now and was at all times material hereto, a corporation registered as a real estate broker in Florida having been issued licensed No. 0267334 and the last license issued was at the address of 4815 East Busch Boulevard, Suite 201F, Tampa, Florida.

   
   

3. During times material, Respondent, Sharon Ann Rozelle, was licensed and operating as qualifying broker and officer of Respondent, Affirmative Realty, Inc. having been issued license No. 0541685.

   
   

4. On October 26, 1990, Respondents solicited and obtained a property management agreement with Mark Clesi to manage rental units that he owned (a duplex) located at 10118 North 14th Street in Tampa.

   
   

5. On June 17, 1991, Respondents solicited and obtained a tenant for Unit A of Clesi's duplex. The lease reflected $300.00 as monthly rent with a $200.00 security deposit to be held in trust by Respondents.

   
   

6. On October 12, 1991, Respondents obtained a tenant for Unit B of Clesi's duplex. The lease reflected $280.00 per month as rent with a $200.00 security deposit which was also held in trust by Respondents.

   
   

7. The property management agreement in effect between Respondents and Clesi required Respondents to obtain prior approval before making repairs to Clesi's property. The agreement also called for repairs to be made "as needed". Also, Respondent was required to send monthly reports advising Clesi of monies expended toward the apartment for repairs, management fees and rents collected.

8. During June, 1991, Clesi was not receiving reports on a timely basis and therefore requested that Respondent forward such reports in order that he could timely review them.

   
   

9. During the period when Respondent served as property manager for Clesi's property, it became necessary for Respondent Rozelle to evict a tenant. The eviction came about as a result of the tenant failing to pay rent. In an effort to force the tenant from the property, Clesi turned off the water service to the property for a period of approximately three months. Clesi did so in an effort to informally evict the tenant. When Clesi's effort proved unsuccessful, Respondent initiated formal eviction proceedings. Throughout the course of the eviction proceedings, Respondent made at least six (6) trips to attend various hearings and motions. For her efforts, Respondent charged Clesi a $300.00 service fee which appears reasonable.

   
   

10. After the tenant was evicted, the apartment was extensively damaged and required extensive repairs to make it suitable for human occupancy. Clesi approved the repairs that were necessary to enable the duplex to be rented. Based on the condition of the apartment after the tenant was evicted, it appeared that the evicted tenant had cooked over a charcoal fire for months inside the duplex. Also, there was raw human excrement over the entire bathroom and walls throughout the apartment. The entire apartment had to be sterilized and repainted prior to releasing. The Hillsborough County Health Department issued a notice which banned the duplex from human occupancy until certain specified violations were corrected. Respondent made the necessary repairs and charged Respondent for making them. Although Clesi maintains that he did not authorize all of the repairs that Respondent made, it is more probable than not that he, in fact, authorized the repairs as he was desirous of repairing the property so that he could rent the apartment again.

    
    

11. The maintenance company which performed the repairs was "Rozelle's maintenance", a company which was owned by Respondent. There was no effort on Respondent's part to hide the fact that she owned the company as the invoices sent to Clesi clearly reflected the fact that the repair work was done by Rozelle's maintenance.

    
    

12. Although it is clear that Respondent and Clesi had disagreements on the extent of repairs needed to make the duplex suitable for human occupancy, Clesi paid for all of the repairs with the exception of a kitchen sink which he contends was replaced simply because it was not shiny. On the other hand, Respondent credibly testified that it was more than the appearance of the sink which needed repairs i.e., the drain was leaking, it was rusty and was causing further damage to the cabinets in the kitchen. Despite the fact that Respondent replaced the sink and Clesi refused to pay, Respondent deducted the amount charged for replacing the sink from Clesi's bill and did not remove it from the unit.

    
    

13. Clesi filed a civil claim in Hillsborough County Court seeking

    $1,411.04 contending that Respondent sent him invoices for unauthorized maintenance charges and fees between June of 1991 and February of 1992. Clesi was unsuccessful in that lawsuit as it was judicially determined that Respondent did not owe Clesi any money based on his claim.

    
    

14. On February 7, 1992, Respondent Rozelle filed a claim of lien with the Hillsborough County Circuit Court against Clesi's property for payment of services and Respondent's management of Clesi's duplex. Additionally, Respondent filed five other claims of lien against other owners for property

    management services. All of these claims of lien have since been released and were done forthwith when Respondent was advised that, despite legal advice to the contrary, it was improper and unlawful for her to do so since the claim of lien included a management fee.

    
    

15. On March 14, 1991, Petitioner's investigator, Marjorie G. May, conducted an office inspection and audit of Respondent's escrow accounts based upon records provided (by Respondents). At the time, Respondent's security deposit escrow account maintained at First Union National Bank in Tampa had a trust liability of $350.00 and a bank balance of $270.00 indicating a shortage of approximately $80.00. This shortage came about based on the fact that, unbeknowst to Respondent, her bank debited her account a fee for checks. When these fees came to Respondent's knowledge, she immediately replaced the $79.97 which restored the account to a non-shortage status.

    
    

16. The audit also revealed that Respondent's rental distribution escrow account had a zero trust liability but contained $633.00 which appeared to have been Respondent's personal funds. Part of the overage came about based on the fact that Respondent made a required $200.00 initial deposit (her personal money) to keep the account open and maintained at the bank. The remaining balance was part of a shared commission which Respondent was in the process of disbursing to the proper real estate agent.

    
    

17. Respondents failed to prepare signed written monthly escrow statement- reconciliations comparing total trust liability with reconciled bank balances of all trust accounts. These reconciliation statements were not filed as charges against Respondents inasmuch as Respondents were new brokers. As such, these matters are not at issue in this proceeding.

    
    

18. On April 2, 1992, Petitioner's investigator, J. L. Graham (Scholtz), scheduled an office inspection and audit for Respondent's brokerage activities. This audit was not conducted as Respondent had car trouble on that day and was unable to reschedule it prior to the time that Investigator Graham appeared at Respondent's office.

    
    

19. Approximately three weeks later, April 23, 1992, Investigator Graham made on unscheduled visit at Respondent's office. The audit revealed that some of the bank and accounting records which investigator Graham needed were not at the office as Respondent had taken some of the bank and accounting records to her home after the office was burglarized. Another audit inspection was to be conducted two days later but Respondent was unable to keep that appointment because of a scheduling conflict with an appointment with her attorney.

    
    

20. On April 21, 1991, Respondent resigned from the Greater Tampa Association of Realtors (the Association). Respondent's name continued to be carried on the Association's roll because her dues were paid through the end of the 1991 calendar year.

    
    

21. Respondent utilized the Association's stationery after her resignation during 1991 but whited out the association's letterhead designation on most of the correspondence which left her office. On occasion, a few letters were inadvertently sent out with the Association's letterhead however there was no attempt by Respondent to defraud or otherwise hold herself out as a member of the Association.

    CONCLUSIONS OF LAW

    
    

22. 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.

    
    

23. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

    
    

24. The Petitioner's authority is derived from Chapter 475, Florida Statutes.

    
    

25. Section 475.25, Florida Statutes (1991) authorizes the Commission to suspend a license for a period not exceeding seven (7) 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 violated Subsection 475.25(1)(a),(b),(d)1,(e),(k), Florida Statutes.

    
    

26. The burden is on the Petitioner to prove the counts of the administrative complaint by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

27. Insufficient evidence was offered to establish that Respondent failed to obtain the necessary authorization and approvals to perform the needed repairs to Clesi's duplex pursuant to the property management agreement in effect between Respondent and Clesi. Likewise, Respondent's claim for $300.00 to cover her expenses and costs for the eviction procedure appeared reasonable in the circumstances herein. Throughout the eviction procedure, Clesi was aware that Respondent Rozelle was pursuing the eviction of the tenant who was not paying rent.

    
    

28. Petitioner presented vlear and convincing evidence that Respondent improperly filed claims of lien against Clesi's property. Given the circumstances of this case, and based on the fact that Respondent sought legal advice prior to placing the liens, she engaged in a technical violation of Sections 475.25(1)(a) and 475.42(1)(j), Florida Statutes.

    
    

29. Insufficient evidence was offered to establish that Respondent failed to maintain trust funds and was therefore guilty of culpable negligence or breach of trust in a business transaction. As noted, a deduction was made by Respondent's bank for check fees which were immediately reimbursed by her when she became aware of the charge. Also, the shared commission was properly placed in trust until disbursed to the agent who was over the commission. In all other respects, her trust account appeared to be properly maintained.

    
    

30. Respondent also utilized stationery bearing the letterhead of a real estate association from which she had resigned. The correspondence, however, was not sent on letterhead in such a manner as to lead persons to believe that she was a member in good standing thereof. This is especially so since Respondents main complainant, Mark Clesi, testified that many of the letters he received (after her resignation) had the Tampa Association of Realtor's logo deleted.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that:

Respondent Rozelle be required to pay a fine of $500.00 payable within thirty days of the entry of the Final Order herein. This recommendation is premised on the finding herein that Respondents filed unlawful liens affecting the title to Clesi's property in violation of Section 475.25(1)(a) and 475.42(1)(j), Florida Statutes.

DONE AND ENTERED this 2nd day of September, 1993, in Tallahassee, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 2nd day of September, 1993.

COPIES FURNISHED:

Jack McRay, Acting General Counsel Department of Business and

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

Steven W. Johnson, Senior Attorney Department of Professional Regulation

Division of Real Estate

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

Mark A. Neumaier, Esquire Post Office Box 8623 Tampa, Florida 33674-8623

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: 92-005423

Orders for Case No: 92-005423