NICHOLAS A. MUSASHE t/a ) APARTMENT LOCATOR SPECIALISTS, )
vs. ) CASE NO. 92-6544F
Respondent. )
By stipulation of the parties, this case was presented for determination on the record, without necessity for an evidentiary hearing.
For Petitioner: William M. Furlow, Esquire
Katz, Kutter, Haigler, Alderman Davis, & Marks, P.A.
For Respondent: James H. Gillis, Esquire
Department of Professional Regulation Division of Real Estate-Legal Section Hurston Building North Tower, Suite N-308
Petitioner seeks attorney's fees and costs as a prevailing small business party pursuant to Section 57.111, F.S. Appropriate stipulations have eliminated all but this central issue: whether the underlying enforcement proceeding had a reasonable basis in law and fact at the time that it was initiated or whether special circumstances exist which would make the award unjust.
On September 2, 1992, the Florida Real Estate Commission (FREC) entered its Final Order granting Nicholas A. Musashe's motion to dismiss an administrative complaint in Case No. 171336 (DOAH #91-4463). On October 28, 1992, Musashe timely filed his petition for costs and fees.
The agency filed its answer on November 12, 1992.
A prehearing conference was conducted on December 3, 1992, by telephone.
At that time the parties made certain stipulations and agreed that the remaining issue could be determined on the record without need for an evidentiary hearing.
The record was filed on January 14, 1993, and the parties' proposed final orders were filed on January 27 and 29, 1993.
These and the parties' pleadings have been considered here, and specific rulings on the proposed findings of fact are found in the attached Appendix.
Nicholas A. Musashe is a licensed real estate broker in the State of Florida and was the respondent in the case, Department of Business Regulation, Division of Real Estate v. Nicholas Musashe, case no. 91-4463.
During the relevant period, Musashe owned a business, Apartment Locator Specialists, with a principal office in Orlando, Florida.
As stipulated by the parties, Nicholas A. Musashe is a "small business party", as provided in Section 57.111(3)(d), F.S.
The underlying agency proceeding was based on a document sent to the Governor's office and forwarded to the Department of Professional Regulation on October 29, 1990.
The document is a one-page copy of a newsletter from Apartment Locator Specialists. Portions of the newsletter are underlined, and at the bottom there is this handwritten notation: "Why are these people allowed to go on month after month breaking real estate laws? Are they brokers or not? This is a formal complaint! [signature illegible] 'Republican'." (p. 10, Investigative Report)
The newsletter includes this text:
To keep you posted on our lucky drawings -- Robin DeMorse at Summer Place Apartments posted a whopping $100 and Pam Hyde at Monterey Crossings once again received a check for $50 in asking those clients they were unable to help to call us at Apartment Locator Specialists. Remember these numbers --
657-8282, 345-1000 and in Kissimmee 846-8808. These numbers could mean cash to you next month. Apartment Locator's helper of the month is Melodi Hanson of the Villas. Her name was drawn for always calling us to let our consultants know when a client rented or stopped by. A $50 gift certificate at the Florida Mall was her choice for that extra shopping spree. Thanks for being so considerate, Melodi.
(page 10, investigation file)
According to the Investigative Report, interviews were conducted between January 28 and February 5, 1991, and included Nicholas Musashe and the women mentioned in the newsletter.
Musashe denied compensating unlicensed individuals for making referrals, but said that the drawings were "thank you rewards" for calling his office.
Melodi Hanson, Pam Hyde and Robin DeMorse are each unlicensed employees of their respective apartment complexes. They confirmed that their names were drawn at random and that each time they called Apartment Locator Specialists their names were entered for the drawing.
Apartment Locator Specialists had contracts with the respective apartment complexes and received a commission when their referrals rented an apartment. The apartment complex employees were encouraged to call Apartment Locator Specialists to report on the outcome of the referral.
Each of the three women signed an affidavit stating she was not operating as a licensee as defined in Chapter 475, F.S., and would not so operate in the future without complying with the requirements of law.
The investigative report form lists these alleged violations: "475.25(1)(e) Violation of a rule; Rule 21V-10.019 lotteries". There are two uniform complaint forms in the investigative file. One lists the same violations as on the investigative report form; the other lists, "475.42(1)(a) - unlicensed activity".
An administrative complaint was drafted and was presented to the Florida Real Estate Commission Probable Cause Panel on February 19, 1991. The panel found cause and voted to proceed with administrative action in accordance with the proposed administrative complaint.
The administrative complaint, dated February 20, 1991, makes factual allegations based on the investigation described above. Two counts of violations are alleged:
COUNT I
Based upon the foregoing, the Respondent 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 in violation of Subsection 475.25(1)(b), Florida Statutes.
COUNT II
Based upon the foregoing, the Respondent is guilty of having employed persons as a salesman [sic] who were not the holders of a valid and current license as a salesman in violation of Subsection 475.42(1)(c), Florida Statutes and therefore in violation of Subsection 475.25(1)(e), Florida Statutes.
The case was referred to the Division of Administrative Hearings (DOAH) and was set for hearing. It was later continued and was placed in abeyance while the parties presented a stipulation to FREC. By this time Musashe had informed the agency attorney that he had sold his business and was pursuing other business interests.
FREC rejected the stipulation on December 3, 1991, after Respondent Musashe made substantial changes in the standard stipulation text.
Shortly thereafter, Musashe retained William M. Furlow, Esquire, and the case was again set for hearing by DOAH.
On July 7, 1992, Musashe, through counsel, filed his motion to dismiss the administrative complaint.
The motion to dismiss argued the agency's burden of proving the charges by clear and convincing evidence. It argued that Count I was unsupported by any allegations in the complaint or by any actual facts. The motion also argued that Count II was not supported by the allegations; that winning a drawing did not establish an employment relationship; that the women who were employed by the apartment complexes were exempt from Chapter 475, F.S., pursuant to Section 475.011(4), F.S.; and that a FREC legal advisor had issued an opinion that the type of referral business conducted by Apartment Locator Specialists did not require licensure.
The motion also pointed out that although Section 475.25(1)(h), F.S., prohibits paying a fee to a nonlicensed person for referral of business, the administrative complaint did not include that charge. Moreover, since the apartment complex employees were exempt from Chapter 475, it would not have been a violation to give them a fee. And finally, they were not given a fee, but rather a chance to win a prize, not for referrals, but for mere informational telephone calls.
The administrative complaint recites facts which are substantially consistent with the facts outlined in the motion to dismiss. For example, paragraph 8 of the complaint states:
8. The Respondent admitted that each time an employee of a contracted leasing office calls his office, that individual's name is put into a fish bowl, from which the drawing is held. The Respondent stated that the name is entered whether or not the client rents the apartment.
The parties agreed to further abeyance of the proceeding before DOAH and to presentation of the motion to dismiss directly to the FREC.
On August 18, 1992, FREC granted Respondent's motion and the administrative complaint was dismissed. The Final Order was entered on September 2, 1992.
As stipulated by the parties, Nicholas A. Musashe incurred reasonable and necessary legal fees in the amount of $6,756.25, and costs in the amount of
$858.62, for a total of $7,614.87.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Section 57.111(4)(b), F.S., and Section 120.57(1), F.S.
Section 57.111(4)(a), F.S., provides:
(4)(a) Unless otherwise provided by law, an award of attorney's fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to Chapter 120 initiated by a state agency, unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.
A proceeding is "substantially justified" if it had a reasonable basis in law and fact at the time it was initiated by a state agency. Section 57.111(3)(e), F.S.
The underlying proceeding was initiated when the administrative complaint was filed and Nicholas Musashe was given his election of rights form. See Subsection 57.111(3)(b)3., F.S.
At that point, the investigation was completed and all of the facts were before the agency.
From those facts, and particularly from the facts recited in the administrative complaint itself, the proceeding against Nicholas Musashe was not "substantially justified".
Count I of the Administrative Complaint charges Musashe with "...fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction in violation of Subsection 475.25(1)(b), F.S.
As noted in the motion to dismiss, there is not the slightest evidence of that violation either in the actual facts or the facts alleged in the administrative complaint.
The allegations of Count II are similarly unsupported. Count II cites a violation of Sections 475.42(1)(c), and 475.25(1)(e), which provide:
475.42 Violations and penalties.--
(1) VIOLATIONS.--
(c) No broker shall employ, or continue in employment, any person as a salesperson who is not the holder of a valid and current license as salesperson; but a license as salesperson may be issued to a person licensed as an active broker, upon request and surrender of the license as broker, without a fee in addition to that paid for the issuance of the broker's active license.
475.25 Discipline.--
(1) The commission may deny an application
for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:
* * *
(e) Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.
The facts available at the time the complaint was initiated, and recited within the complaint, do not support any notion that Musashe "employed" the women who received the prizes or that they were acting as "salespersons", as those terms are defined in Sections 475.01(1)(d) and (2), F.S.
That the agency was confused as to what violation was committed, if any, is apparent from the outset of the investigation when the report forms and uniform complaint forms listed various violations, including Rule 21V-10.019,
F.A.C. That rule declares certain lottery schemes to endanger the public interest. Those schemes apply to the sale of property, and not to the type of drawings conducted by Apartment Locator Specialists.
As addressed in the motion to dismiss, Section 475.25(1)(h), F.S. prohibits paying a fee to an unlicensed person for referrals of real estate business, clients, prospects or customers. This violation was not charged in the complaint and was not at issue in the proceeding under consideration.
It is unclear whether, as argued by counsel for the agency, FREC was motivated to dismiss the complaint because Musashe had sold his business and was no longer engaged in the complained of activity. Musashe's letter informing the agency's lawyer of the sale was dated September 1991, well before the parties attempted, but were unsuccessful in, settlement.
It is more likely that after Musashe's counsel filed his motion to dismiss, the agency realized the utter futility of proceeding on that particular complaint, that the complaint failed to state a violation of Chapter 475, and that it should be properly abandoned.
The agency, itself, wisely determined that its complaint was not substantially justified, and the action was dropped.
There is no evidence in this record of "special circumstances" which would make an award unjust, and Petitioner should be compensated for the fees and costs he incurred.
Based on the foregoing, Petitioner is awarded fees and costs, as requested, in the total amount of $7,614.87.
DONE AND ORDERED this 19th day of February, 1993, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 19th day of February, 1993.
APPENDIX TO FINAL ORDER, DOAH CASE NO. 92-6544F
The following constitute rulings on the findings of fact proposed by the parties.
4.-5. Adopted in paragraph 8.
8.-9. Adopted in substance in paragraphs 10 and 11.
12.-13. Adopted in part in paragraph 15. The record does not support a finding that the dismissal was an "amicable settlement" and was granted because the agency did not contest it. If FREC simply wanted to drop the case, it could have accepted the parties' earlier stipulation, even with the changes by Musashe.
William M. Furlow, Esquire
P.O. Box 1877
James H. Gillis, Esquire DPR-Div. of Real Estate
400 W. Robinson St., Ste. N-308 Orlando, FL 32801-1772
Darlene F. Keller, Director DPR-Div. of Real Estate
P.O. Box 1900
Jack McRay, General Counsel Dept. of Professional Regulation 1940 N. Monroe Street, Suite 60
A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rule of Appellate Procedure. Such proceedings are commenced by filing one copy of a notice of appeal with the Agency Clerk of the Division of Administrative Hearings and a second copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the appellate district where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
