STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, )

)

Petitioner, )

)

vs. ) CASE NO. 92-5598

)

PAUL ANDREW DANLEY. )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Largo, Florida on January 13, 1993 before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Janine B. Myrick, Esquire

Department of Professional Regulation Division of Real Estate

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

For the Respondent: Gilbert P. McPherson, Esquire

1822 Drew Street, Suite 8

Clearwater, Florida 34625 STATEMENT OF THE ISSUES

The issue for consideration in this hearing is whether Respondent's license as a real estate salesman in Florida should be disciplined because of the matters set out in the Administrative Complaint filed herein.

PRELIMINARY MATTERS

By Administrative Complaint filed on May 21, 1992, the Department of Professional Regulation, (Department) on behalf of the Florida Real Estate Commission, charged Respondent with several violations of Section 472.25, Florida Statutes, alleging that he failed to account for or deliver a deposit; failed to immediately place a deposit entrusted to him with his employer; and operated as a broker while licensed as a salesman.

Respondent thereafter requested a formal hearing and this hearing followed.

At the hearing, Petitioner presented the testimony of Deborah Isabelle, tenant of the property in question; Charles R. Arn, a real estate broker with whom Respondent was affiliated as an independent contractor at the time of the alleged offenses; Carl M. Carpenter, president of a home inspection service; and

Mary Sue Sutton, an investigator for the Department. Petitioner also introduced Petitioner's Exhibits 1 - 15. Respondent testified in his own behalf and introduced Respondent's Exhibits A - C.

A transcript was provided. Subsequent to the hearing, counsel for Petitoner submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order. Counsel for Respondent submitted post- hearing matters which purport to be Proposed Findings of Fact but which are more in the nature of Conclusions of Law. In any case, those proposals were considered prior to the completion of this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the allegations contained herein, Petitioner, Division of Real Estate, was the state agency in Florida responsible for the regulation of the real estate profession and for the licensing of real estate professionals.

   
   

2. Respondent was, at all times material to the issues herein, a licensed real estate salesman in this state. He was issued salesman's license 0419038 and from August 27, 1990 through September 2, 1991, was an active salesman with Scarlett Faulic & Associates located in Indian Shores, Florida. From September 3, 1991 through September 30, 1991, he was a salesman with Arn Realty Group, Inc., also in Indian Shores. Effective October 1, 1991, his license became inactive due to non-renewal and remained in that status until he renewed it on April 16, 1992 when he affiliated as a salesman with First Gulf Beach Realty, Inc. in Indian Rocks Beach, Florida. From July 28, 1992 to the date of the hearing, he was an active salesman with Bobby Byrd Real Estate, Inc. in Clearwater.

   
   

3. Sometime prior to June 13, 1991, Ted Plihcik, presently a resident of Coram, New York and formerly the owner/occupant of the property in issue which is located in Pinellas County, Florida, met the Respondent at a garage sale at Respondent's home. Because Mr. Plihcik intended to move out of the area, he entered into a listing agreement with Respondent on behalf of Arn Realty's predecessor, under which the firm was either to rent or sell the property. This agreement was to expire on December 31, 1991, and there is no evidence it was cancelled prior to expiration.

   
   

4. Sometime after Mr. Plihcik moved to New York, he received a telephone call from Respondent in which Respondent said he had a couple to rent the property for the rental amount previously stipulated, $650.00 per month, from which Respondent was to get a commission of 10%. Respondent indicated he would take a deposit from the tenants and that he had a signed lease.

   
   

5. Prior to his departure, Mr. Plihcik had started to make some renovations to the property's garage. He had redone the bathroom area and was planning to make another room out of the garage. However, he never got around to completing the job or to putting in the windows. He had decided to change it back into a garage, and in fact the prospective tenants wanted a garage rather than another bedroom, so he directed Respondent to hire someone to finish the reconversion.

   
   

6. At Plihcik's request, Respondent got several estimates for the work which Plihcik felt were too high. At that point, Respondent offered to do the work himself. Plihcik agreed and gave Respondent authorization to use the deposit money to pay for necessary materials and consistent with that

   agreement, on September 14, 1991, by letter, Plihcik authorized Arn Realty Group to release money to Danley for the "alterations and repairs he is doing to my property...." Because the Isabelles did not pay the full two month deposit, Mr. Plihcik later revised the authorization to allow Respondent to use rent money as well, but he did not relieve Respondent from the requirement to turn any money received as rent over to Arn Realty upon receipt and thereafter get payment from the company. It is obvious that Plihcik was under the opinion that the deposit money Danley had received from the tenants had been turned over to the broker, Arn Realty.

   
   

7. Mr. Plihcik tried unsuccessfully repeatedly to contact the Respondent requesting a copy of the lease agreement, copies of receipts for materials purchased for the garage work, or anything else pertinent, even sending at least one letter by certified mail, the receipt for which bore what Plihcik recognized as Respondent's signature. He received no responses.

   
   

8. Sometime in early August, 1991, Deborah Isabelle and her husband rented Mr. Plihcik's house through Respondent and put up a [portion of the 1st and last month rent. They also signed a lease which called for rent at $525.00 per month but, notwithstanding many requests for one, never received a copy. Each time they asked, Respondent would say he would get them one but he never did.

   
   

9. At the time they rented the property, the garage was under repair and, after some negotiation, it was orally agreed upon that the work would be completed by move-in time, September 1, 1991. At one point, Respondent asked the Isabelles to pay the rent in cash because it would be easier for him to buy the things needed for the repair work he was to do. They acceded to this request for a while, writing some checks to the supermarket for cash to pay Respondent, but got only one receipt.

   
   

10. Because they were uncomfortable with this cash arrangement, they asked Respondent for the name of the owner of the property and he replied, merely, "Ted." On one occasion, mail for Mr. Plihcik from a real estate agency came to the house. Ms. Isabelle thereafter got Mr. Plihcik's New York address from the County records, contacted him, and asked him if he had received his rent. She received a negative reply. She also asked him about the lease they had signed and he related he had not received one of those, either. In fact, when she called, Mr. Plihcik didn't know who she was he had never heard their name.

    
    

11. During that conversation, Ms. Isabelle advised Mr. Plihcik that they had not received any of the things Respondent had promised; that he was also asking them for cash; and was frequently at the house. Mr. Plihcik said he'd take care of it but no more was done.

    
    

12. In November, 1991, Ms. Isabelle set up a three way telephone call between the Isabelles, Mr. Plihcik and the Respondent. During that call, Respondent claimed he was doing the work promised; that he had mailed Mr. Plihcik some money in cash several weeks previously and could not understand why it had not been received.

    
    

13. The lease agreement, at paragraph 6, dealing with maintenance and grounds upkeep, purports to require the Isabelles "... to help convert 3rd bedroom back to garage in lieu of $650.00 rent." Though Respondent contends the rent was reduced from $650.00 per month, as was called for in the listing agreement, to $525.00, conditioned upon the tenants' help with the work on the garage conversion, there is no evidence that Mr. Plihcik ever agreed to accept less than the $650.00 per month rent. In addition, Ms. Isabelle claims they did

    not agree to do any work and the lease did not contain that provision at the time they signed it some 2 or 3 weeks after they moved in. It is found that Respondent's contention is without merit even though Mr. Isabelle did take down some 2x4's so he could install his tool bench.

    
    

14. Over the period of their occupancy, the Isabelles paid Mr. Danley a total of $1,531.50 by check directly or by check written for cash and turned over, as well as an additional $400.00 in cash. Six hundred dollars of the checks were made payable to Arn Realty, and it appears they were deposited to that company's account. The balance of the checks and the cash were either payable to Respondent directly or, in the case of the Kash & Karry checks, written for cash to give to him. Of the $400.00 Arn Realty check, $300.00 was paid over by company check to Respondent for repairs to the instant property on the same day as the Isabelles' check was deposited to the company account.

    
    

15. Respondent admits he received a total of $1,355.00 from the Isabelle's, either directly or indirectly, but claims all of it was used for work on the house. He also claims he is still owed $1,001.00 from Mr. Plihcik which includes $630.00 in real estate commission owed the broker. Nonetheless, Mr. Plihcik claims he received none of the money paid to Respondent, nor has Respondent presented any evidence to show the money was spent on either materials or labor for the garage reconversion.

    
    

16. Mr. Arn, the broker supervising Respondent during the time is issue here claims he had no knowledge Respondent had obtained a tenant for Mr. Plihcik before he got Plihcik's letter. His records show a listing agreement for the property which calls for a rental commission in the event the property were leased by the company. In this case, the commission would be paid to the company, not the salesman, and would be deposited to the company's escrow account for later split with the associate involved. At no time would it be appropriate for the sales associate to collect and disburse funds without going through the broker and he would not do it that way. He did not authorize it here.

    
    

17. Mr. Arn admits to having written at least one check to Respondent from money's received from the tenant for work to be done on the Plihcik property.

    He released that money only after he received a letter from Mr. Plihcik authorizing the release of funds to Respondent. All the money he received from the checks he received in August, 1991, in the amount of $600.00, was paid out to Respondent for repair costs. When he subsequently received a letter from Mr. Plihcik regarding cash which Respondent claimed he had mailed directly but which was not received, Mr. Arn replied in writing that he had not authorized Respondent to either receive or disburse funds directly.

    
    

18. The Isabelles moved out of the house in either December, 1991 or January, 1992. By that time, Respondent had done very little work on the property. Some building materials were still on the property which Mr. Plihcik said he had left there. They are sure Respondent had not provided it.

    
    

19. Mr. Carl Carpenter, a registered contractor and home inspector examined the property in question in March, 1992 for a potential purchaser. At that time, he found the garage in the process of being converted to a room. The framing had been installed as had the windows, and the sheet rock was partially installed. There was also a small bathroom which was not operating properly.

    It was his opinion that the construction was progressing from garage to room, and not the opposite.

20. Mr. Carpenter was also of the opinion that to convert the room back to a garage would cost somewhere in the range of $600.00 and should take about 2 days. It would about double that to reinstall the bath. The bath he saw on the property was old. Respondent offered an estimate to reconvert the garage from a contractor obtained in August, 1991 which showed a total price of $1,606.00. While this is substantially more than the price cited by Mr. Carpenter, whose estimate seems rather out of line, cost is not the issue. The important part of Carpenter's testimony relates to his belief that the work in progress seemed more of conversion to a room rather than return to a garage and tends to indicate Respondent had done little if any work on the property.

    
    

21. Ms. Sutton, the Division's investigator, interviewed Respondent 3 times regarding this matter and found his statements to be inconsistent. While he claimed he had done some work on the property and had not finished it, he could not give her the exact amount he had received from the Isabelles. He also gave her a list of what he had spent the money he had received on, but had no receipts from workers or suppliers to back it up. Mr. Danly claimed he had sent cash to Mr. Plihcik but denied receiving any cash payments from the Isabelles. He claimed he gave them receipts for what they gave him, but they have no memory of receiving any.

    
    

22. Mr. Danley takes no issue with the facts as outlined by Ms. Isabelle except as to the remodeling of the garage which he claims is not covered by the restrictions contained in Chapter 475, Florida Statutes. He claims that the payments made by the Isabelles were authorized by Mr. Plihcik to be kept by him as compensation for the repair work on the garage and not to be transmitted to Plihcik as owner because the work needed to be done and Plihcik did not have the money to pay to have it done.

    
    

23. He also asserts that the lease was signed by the Isabelles with the requirement in it that they would help with the work as a condition of reducing the rent. He delayed starting on the remodeling until he got the money from Mr. Arn, which, at least in part, was as early as August 29, 1991. When he got that check, he started work. Originally, he states, he hired 2 young men to do the dry-wall, but the bathroom had to be framed before the dry wall could be installed. Then the water heater was installed and the power line installed for that, all of which he claims he did himself. The framing and closing up of the old door to the kitchen was done by Respondent with the assistance of a contractor. All of this, he asserts, was done in September and October, 1991, contrary to the Isabelle's claim that the only work done prior to their departure was the installation of some dry wall.

    
    

24. Some materials were already in place but some of that had been damaged and had to be replaced. He claims he had 3 helpers to do all this work and paid them in cash. The sink was put back into its original position and he got the material to reinstall the toilet which he was unable to do because of back problems.

    
    

25. Mr. Danley denies ever asking the Isabelles for cash or loans. He claims the only payments he received were in the form of checks payable to him or to Arn, and all money received from them was used for the work. He also admits to collecting the rent due in October which, he claims, was used for the restoration project. The only checks introduced into evidence not payable to Arn or Danley are 3 payable to Kash & Karry and of these, two are endorsed by Daniel Isabelle and one bears no endorsement at all. These are the checks which Ms. Isabelle claims were made to provide cash for Respondent at his request.

    Taken together, the evidence as presented by both sides tends to support Ms. Isabelle's story.

    
    

26. Mr. Danley claims he did not finish the work because he could not find a door for the garage. He claims to have called many places but was unable to find a single garage door. A call to a Scotty's building supply store in that area revealed a single garage door was readily available, though by special order. Finally, he bought one from a builder in St. Petersburg for $235.00 which was paid in cash. The price included installation the following morning, and the site was already prepared. However, the builder never showed up with the door and he lost the payment. On balance, Respondent's account of the matter, unsupported as it is by any direct evidence beyond his own testimony, is found to be less than credible.

    
    

    CONCLUSIONS OF LAW

    
    

27. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

28. In the Administrative Complaint filed herein, the Division seeks to discipline Respondent's license as a real estate salesman in Florida because, it alleges, he is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; of failing to account for or deliver trust funds; of failing to immediately place with his employer any funds entrusted to him as agent of his employer; and of acting as a broker while licensed as a salesman, all in violation of various subsections of Sections 475.25(1), Florida Statutes.

    
    

29. Section 475.25, Florida Statutes, authorizes the Florida Real Estate Commission to discipline a real estate professional's license for any of the misconduct outlined in the various subsections of that provision, including those alleged to have been committed by Respondent herein. Before doing so, however, it must establish Respondent's guilt of the offenses alleged by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

30. In the instant case, the evidence clearly shows that the Mr. Plihcik's initial contact with the Respondent, though it may have been through a casual meeting at a garage sale, was finalized by his signing a listing agreement with the predecessor of Arn Realty, Inc. with Respondent as the sales person. This formalized the relationship as a real estate transaction and anything that followed occurred within the parameters of that relationship unless the parties entered into a different relationship outside those boundaries. This agreement apparently was in effect at all times pertinent to the issues herein.

    
    

31. While Mr. Plihcik may have agreed with Respondent that Respondent would do the work to reconvert the garage from add-on room back to a garage, and be paid from the rental proceeds from the lease of that property, it was all within the envelope of the rental agency relationship. Respondent's relationship with Plihcik was not that of a contractor who signed on to reconvert the garage. It was that of a real estate salesperson who took a listing for his broker and who, thereafter, and consistent with that real estate relationship, also agreed to do the construction work in support of the rental relationship he had developed. That Mr. Plihcik saw it as such is shown by the fact that when contact with Respondent was interrupted, Plihcik sought his redress through Arn Realty which he considered to be his rental agent.

32. That real estate agency connection clearly being established, it was then incumbent upon the Respondent to conduct himself consistent with the standards established for real estate professionals by the legislature through its statutes and by the Commission through its rules.

    
    

33. In evaluating the state of the evidence presented at this hearing, a trier of fact must, especially when that evidence is, as here, in a state of confilct, consider the relative positions of the parties to determine who has the most to gain by telling the truth or by telling an untruth. In this case, Ms. Isabelle stands to gain nothing from telling an untrue story. There is no evidence that the Isabelles are under any pressure from Mr. Plihcik to pay additional rental justifying an effort to avoid that payment by showing they were misled. There is no evidence they are in any type of relationship with the Respondent their position in which could be enhanced by painting him with a less than truthful brush. In addition, there is no evidence that the Commission has in any way sought to compel misinformation from them.

    
    

34. On the other hand, Respondent's license as a real estate professional is in jeopardy and he faces the imposition of administrative fines in a significant amount if determined to have been in violation of the statutes as alleged. He, therefore, has a substantial motivation to color the truth. However, this factor is not dispositive of the matter. His testimony, standing alone, is contradictory in some particulars and in others, leaves substantial questions unanswered. For example, why did he not keep any evidence of the supplies he purchased or the labor he paid? Even had he paid in cash as he asserts, knowing he would have to account to Mr. Plihcik for what he spent, common prudence would have dictated he either get a receipt in each case or keep a detailed record of each expenditure. This was not done. Even if not intentional misconduct, the evidence is clear and convincing that his performance in this matter was at best culpably negligent and in violation of the provisions of the statute. However, there is substantial evidence of misrepresentation, false pretenses, and dishonest dealing as well.

    
    

35. By the same token, the evidence also clearly shows that save for the initial $600.00 received from the Isabelles which he turned over to Arn Realty, all other funds which Respondent received from the Isabelles, either in cash or by check, were maintained by him without being funneled through his broker. Respondent claims he had authority from Mr. Plihcik to use the funds received as rent from the Isabelles for the reconversion of the garage. Mr. Plihcik confirms this, but the evidence is clear that this authority was within limits and not carte blanche. Respondent and Mr. Plihcik had discussed the amount it would cost to accomplish the reconversion and Plihcik had vetoed an estimate of just over $1,600.00. The evidence suggests that the understanding between Plihcik and Respondent was that the work would take no more than that to be realized from the first and last month rent taken as security. The evidence shows that that money, or the greatest portion thereof, was processed through Arn Realty.

    
    

36. There was, however, a substantial additional amount of money paid to Respondent by the Isabelles by cash and check which was never passed through Arn Realty. Mr. Plihcik had confirmed in writing to Arn the authority to use at least a portion of that money for the reconversion. Respondent's failure to deliver those funds he received directly from the Isabelles to Arn Realty constitutes, under the circumstance of this case, a violation of both Sections 475.25(1)(d)1 and (k), Florida Statutes. In so far as Respondent's actions

    constitute the act of a broker, they are in violation of Section 475.25(1)(b) and (a), Florida Statutes, as well.

    
    

37. Respondent claims that since he failed to renew his license on October 1, 1991, his actions were no longer within the parameters of those subject to regulation by the Commission, and that, therefore, the Commission has no jurisdiction to take disciplinary action against him or his license for those matters which occurred during the period his license was inactive. To be sure, Respondent's license became inactive on September 30, 1991, and was not renewed on October 1, 1991, as would have been required to continue the license in force. However, the license had not been revoked, suspended, or placed under probation at the time it became inactive. By operation of law, Respondent was still a licensed real estate salesman, but his license had, by his own failure to renew, become inactive. This does not mean he no longer held a license but only that he could not lawfully practice his profession under that license while it was in an inactive status. It could have been renewed at any time merely by a request for reactivation and the payment of a fee. This also does not mean that his actions did not constitute real estate transactions but only that they were not lawful.

    
    

38. Petitioner seeks to impose substantial discipline upon the Respondent and his license, suggesting as appropriate a suspension for 3 years with completion of additional continuing professional education, a reprimand, and an administrative fine of $2000.00. It justifies this proposal on the basis of Respondent's cavalier treatment of all those who dealt with him in this relationship: Mr. Arn, who was deprived of his fair share of the commission earned; Mr. Plihcik who received none of the rental income from his property and who benefited not at all from Respondent's abortive efforts at reconversion; and the Isabelles who did not receive the garage they had agreed upon and whose quiet enjoyment of the property they rented was jeopardized by Respondent's misconduct.

    
    

39. It having been concluded that Respondent's misconduct constitutes all the violations alleged in the Administrative Complaint, the maximum penalty which could be imposed by the Commission would be a revocation of this license and a fine of $4,000.00. However, the evidence is clear that Respondent's misconduct was founded in his failure properly to account for the funds he received and his failure to provide the improvements he agreed upon as a part of his dealings with Mr. Plihcik. The remaining allegations would appear to be multiplicious for penalty purposes. In addition, the amount in issue is relatively small and the financial loss as a result of Respondent's misconduct not significant. Therefore, revocation is clearly not appropriate, and a fine for each of the two basic areas of misconduct established is sufficient. A reprimand is also appropriate. It is clear, therefore, that the penalty suggested by the Petitioner is appropriate both under the terms of the Commission's rule and under the equities of this case.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore, recommended that a Final Order be issued by the Florida Real Estate Commission suspending Respondent, Paul Andrew Danley's license as a real estate salesman in Florida for a period of 3 years under such terms and conditions as are considered appropriate by the Commission; imposing a total administrative fine of $2,000.00; and imposing a reprimand.

RECOMMENDED this 1st day of March, 1993, in Tallahassee, Florida.

ARNOLD H. POLLOCK

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 1st day of March, 1993.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-5598

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

FOR THE PETITIONER:

FOR THE RESPONDENT:

1. A - E. Considered more to be either argumnent on the state of the evidence or conclusions of law. Not accepted as a statement of fact as finally found.

COPIES FURNISHED:

Janine B. Myrick, Esquire

DPR - Division of Real Estate

400 West Robinson Street, Suite N-308

P.O. Box 1900

Orlando, Florida 32802-1900

Gilbert P. McPherson, Esquire 1822 Drew Street, Suite 8

Clearwater, Florida 34625

Jack McRay 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

P.O. 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 consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency which will issue the Final Order in this case.

Docket for Case No: 92-005598

Orders for Case No: 92-005598