STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-2877

)

SHERRY ANN LEE, )

)

Respondent. )

) DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-5416

)

STEPHEN E. LEE and )

C. MIST REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in these cases on October 22, 1999, by video teleconference at sites in Tallahassee and West Palm Beach, Florida, before Errol H. Powell, a designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Laura McCarthy, Esquire

Florida Department of Business and Professional Regulation

Division of Real Estate Post Office Box 1900

Orlando, Florida 32802-1900

For Respondents: Sherry Ann Lee, pro se

251 Cordova Road

West Palm Beach, Florida 33401

Stephen E. Lee, pro se

2130 Sherwood Forest Boulevard Suite 13

West Palm Beach, Florida 33415

C. Mist Realty, Inc. c/o Sharon E. Lee

3525 South Ocean Boulevard Suite 109

South Palm Beach, Florida 33480

C. Mist Realty, Inc. c/o Sharon E. Lee

3175 South Congress Avenue Suite 106

Palm Springs, Florida 33461 STATEMENT OF THE ISSUE

The issue for determination is whether Respondents committed the offenses set forth in the Administrative Complaint and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On May 20, 1998, the Department of Business and Professional Regulation, Division of Real Estate (Petitioner) filed an Administrative Complaint against Sherry Ann Lee (Respondent SA Lee), Respondent Stephen E. Lee (Respondent SE

Lee), and C. Mist Realty, Inc. (Respondent Realty). Petitioner charged Respondent SA Lee with the following: Count I-- violating Subsection 475.25(1)(b), Florida Statutes, by being guilty of misrepresentation, culpable negligence, or breach of trust in any business transaction; and Count II--violating Subsection 475.25(1)(d), Florida Statutes, by being guilty of failure to account or deliver funds. Petitioner charged Respondent SE Lee with the following: Count III--violating Subsection 475.25(1)(e), Florida Statutes, by being guilty of having failed to properly supervise the activities of his licensees as required by Subsection 475.01(1)(d), Florida Statutes. Petitioner charged Respondent Realty with the following: Count IV--violating Subsection 475.25(1)(d)1, Florida Statutes, by being guilty of failure to account or deliver funds. Respondents disputed the allegations of fact of the Administrative Complaint and requested a hearing. These matters were referred to the Division of Administrative Hearings (DOAH) for hearing. By Order dated January 11, 1999, these matters were consolidated before DOAH.

At hearing, the Petitioner presented the testimony of four witnesses and entered 14 exhibits (Petitioner's Exhibits numbered 1-14) into evidence. Respondents testified on their own behalf and entered one exhibit (Respondent's Exhibit numbered 1) into evidence, which was permitted to be late-filed.

At post-hearing, Petitioner filed a Notice of Objection to Disclosure Form and Unity of Title. Respondents filed the Disclosure Form and Unity of Title, which are two separate documents, on May 12, 2000, subsequent to the hearing. The Disclosure Form is the same document as Petitioner's Exhibit numbered 7, and Respondents were not permitted by the undersigned to late-file the document; therefore, the Disclosure Form filed by Respondents is not accepted. However, the Unity Title was permitted by the undersigned to be late-filed as Respondents' Exhibit numbered 1; therefore, this document is accepted by the undersigned.

A transcript of the hearing was ordered. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript.

The Transcript, consisting of one volume, was filed on March 24, 2000. The parties were granted an extension of time to file their post-hearing submissions. The parties timely filed their post-hearing submissions on May 15, 2000. The parties' post-hearing submissions were considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto, SA Lee was licensed by the State of Florida as a real estate salesperson, having been

   issued license number SL-0640485 on July 15, 1996. Further, Respondent SA Lee was a real estate salesperson in association with Respondent Realty, a real estate broker corporation.

2. At all times material hereto, Respondent SE Lee was licensed by the State of Florida as a real estate broker, having been issued license number BK-0594787. Further, Respondent SE Lee was the qualifying broker and officer of Respondent Realty.

3. At all times material hereto, Respondent Realty was licensed by the State of Florida as a real estate broker corporation, having been issued license number CQ-0272573.

4. In 1996, Brian Mulally (buyer) wanted to buy certain residential property located at 4397 Vicliff Road, West Palm Beach, Florida. Maryann Duchesne and Margaret Reppucci were the sellers of the property.

5. Medallion Realty was the listing broker for the property. Paula Castro was the real estate salesperson representing Medallion Realty. The sellers authorized Medallion Realty and Ms. Castro to represent them, to be their agents in the sale of their property.

6. Respondent SA Lee, as sales agent for Respondent Realty, notified the buyer that she was not representing him. The buyer knew at all times that Respondent SA Lee was not his representative in the purchase of the property. In a "Disclosure" document dated September 4, 1996, the buyer

   acknowledged that Respondent SA Lee was not representing him and that the sellers were compensating Respondent SA Lee.1

7. The sellers did not authorize Respondent SA Lee to represent them in the sale of their property and were not aware of the Disclosure document. Respondent SA Lee and Respondent Realty were not representing the sellers or the buyer. However, an inference is drawn and a finding of fact is made that Respondent SA Lee and Respondent Realty were working together with Medallion Realty in the sale of the property and that Respondent SA Lee and Respondent Realty were sub-agents of Medallion Realty.2

8. The buyer and sellers executed a Contract for Sale and Purchase (Contract) of the property, with the buyer executing the Contract on September 30, 1996, and the sellers on October 1, 1996. The effective date of the Contract was October 1, 1996. The Contract provided, among other things, that Respondent Realty would hold deposits in escrow; that the buyer's first deposit would be $100; that the buyer's second deposit of $1,900 would be made within five days of October 1, 1996; that, within five days of October 1, 1996, the buyer would make application for a mortgage loan; that, within 15 days of October 1, 1996, the buyer would obtain a written commitment for a mortgage loan; that the closing date was October 31, 1996; and

   that Medallion Realty and Respondent Realty were the listing broker and cooperating broker, respectively.

9. The buyer was to obtain the money for the second deposit from a family member. He had planned a trip around the time of the execution of the Contract, during which he would obtain the money for the second deposit.

10. When the buyer returned from his trip, he did not have the money for the second deposit. The buyer informed Respondent SA Lee of his failure to return with the money for the second deposit.

11. Shortly thereafter, Respondent SA Lee and Ms. Castro had a telephone conversation regarding the property. During their conversation, Respondent SA Lee informed Ms. Castro that the buyer had not made the second deposit but that he was still going to obtain the money for the second deposit. The disclosure to the sellers' agent, Ms. Castro, of the buyer's failure to remit the second deposit was before the due date for the deposit, which was on or before October 6, 1996.

12. Ms. Castro continued to make inquiries to Respondent SA Lee as to the payment of the second deposit by the buyer. Respondent SA Lee informed Ms. Castro that she was trying to get the deposit from the buyer who was advising her (Respondent SA Lee) that he was getting the money for the deposit. Ms. Castro

    was continuously aware that the buyer had not remitted the second deposit to Respondent SA Lee.

13. Respondent SA Lee and Ms. Castro wanted the real estate transaction to proceed.

14. Respondent SA Lee's communication with the sellers was through Ms. Castro. Respondent SA Lee did not have access to a telephone number for the sellers.

15. The sellers obtained the services of a closing agent, who was also their attorney. On or about October 11, 1996, approximately five days after the due date for the second deposit, the sellers' attorney, acting as closing agent, contacted Ms. Castro regarding the second deposit. Ms. Castro informed the sellers' attorney that she would contact Respondent SA Lee and get back with her (the sellers' attorney).

16. On or about October 15, 1996, approximately nine days after the due date for the second deposit, the sellers' attorney, in her role as the closing agent, contacted Respondent SA Lee and requested an escrow letter regarding the second deposit. Obtaining the escrow letter would allow the beginning of the preparation of the closing documents. Respondent SA Lee informed the sellers' attorney that she would contact Ms. Castro and that Ms. Castro would in turn contact the sellers' attorney. Respondent SA Lee contacted Ms. Castro.

17. No escrow letter was forwarded to the sellers' closing agent because no second deposit had been made by the buyer. Even without the escrow letter, the closing agent began the preparation of the closing documents.

18. Thereafter, the sellers' attorney, acting as closing agent, contacted Respondent SA Lee several times regarding the remittance of the second deposit, but Respondent SA Lee never gave the sellers' closing agent a forthright response; Respondent SA Lee never informed the sellers' closing agent that the buyer had not remitted the second deposit.3 Respondent continued to communicate with Ms. Castro regarding the second deposit. The sellers' closing agent was not informed until around October 28 or 29, 1996, that the buyer had not remitted the second deposit.

19. Other problems, regarding the real estate transaction, in addition to the remittance of the second deposit, erupted between the buyer and the sellers. At that time Ms. Castro allowed the sellers' attorney to step-in and handle all matters regarding the transaction. The evidence indicates that this change occurred sometime between October 15 and October 30, 1996. When the sellers' attorney began to handle all matters regarding the real estate transaction, Respondent SA Lee should have, but did not, inform the sellers' attorney that the buyer had not remitted the money for the second deposit.

20. The second deposit was eventually remitted by the buyer on or about October 30, 1996. The buyer forwarded the money directly to the sellers' attorney per Respondent SA Lee's instructions.

21. For several reasons, including the buyer's failure to timely remit the second deposit, the closing did not occur on October 31, 1996, as provided in the Contract. The closing on the property occurred on November 27, 1996.

22. Sometime after the closing of the real estate transaction, Respondent SE Lee ceased to be the qualifying broker for Respondent Realty. Sharon E. Lee became the qualifying broker and officer for Respondent Realty.

23. No evidence was presented by the Department of Business and Professional Regulation, Division of Real Estate (Petitioner) as to Respondent SE Lee's failure to properly supervise the activities of Respondent SA Lee or Respondent Realty.

24. No evidence was presented as to whether Respondent SA Lee or Respondent Realty had a history of disciplinary action

    taken against them.

    
    

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the

    parties thereto pursuant to Section 120.569 and Subsection 120.57(1), Florida Statutes.

26. License revocation proceedings are penal in nature.

    
    

    The burden of proof is on Petitioner to establish by clear and convincing evidence the truthfulness of the allegations in the Administrative Complaint. Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932 (Fla. 1996); and Ferris v.

    Turlington, 510 So. 2d 292 (Fla. 1987).

    
    

27. Section 475.25, Florida Statutes (1995), provides in pertinent part:

    1. The commission may deny an application for licensure, . . . or renewal thereof; may place a licensee . . . on probation; may suspend a license . . . for a period not exceeding 10 years; may revoke a license

       . . .; 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 . . .:

       
       

       * * *

       
       

       (b) Has been guilty of fraud, misrepresentation, . . . culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory; . . . It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential

       relation with the licensee or was an identified member of the general public.

       
       

       * * *

       
       

       1. 1. Has failed 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, mortgage, conveyance, lease, or other document or thing of value, including a share of a real estate commission if a civil judgment relating to the practice of the licensee's profession has been obtained against the licensee and said judgment has not been satisfied in accordance with the terms of the judgment within a reasonable time, 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. . . .

          
          

       2. 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.

       
       

28. A licensee is charged with knowing the practice act that governs his/her license. Wallen v. Florida Department of Professional Regulation, Division of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990).

29. Petitioner failed to demonstrate that Respondent SE Lee violated Subsection 475.25(1)(e), Florida Statutes (1995).

    Moreover, Petitioner did not argue in its Proposed Recommended Order that Respondent SE Lee violated the said Subsection.

30. Misrepresentation includes the element of intent.

    
    

    Intent may be proven by circumstantial evidence. Walker v. Department of Business and Professional Regulation, Division of

    Real Estate, 705 So. 2d 652, 654 (Fla. 5th DCA 1998), citing Ellis v. State, 425 So. 2d 201 (Fla. 5th DCA 1983). Wrongful intent can be established by showing that Respondent SA Lee was reckless or careless as to the truth of the matter asserted.

    Ocean Bank of Miami v. Inv.-Uni Inv. Corp., 599 So. 2d 694, 697 (Fla. 3d DCA 1992).

31. Petitioner demonstrated that Respondent SA Lee violated Subsections 475.25(1)(b) and (d)1, Florida Statutes (1995). Respondent SA Lee knew and notified Ms. Castro that the buyer had not remitted the second deposit and kept Ms. Castro informed as to the status of the second deposit. However, when the sellers' attorney took over control of the real estate transaction, Respondent SA Lee should have informed the sellers' attorney of the failure to remit the second deposit, but she (Respondent SA Lee) did not.

32. Petitioner demonstrated that Respondent Realty violated Subsection 475.25(1)(d)1, Florida Statutes (1995). Respondent SA Lee was the salesperson for Respondent Realty. Respondent SA Lee was representing Respondent Realty in the real

    estate transaction. As Respondent SA Lee has been determined to have violated Subsection 475.25(1)(d)1, Florida Statutes (1995), Respondent Realty has also violated the said Subsection.

33. Regarding penalty, Subsection 475.25(1), Florida Statutes, provides for any or all of the following: an administrative fine not to exceed $1,000; suspension not to exceed 10 years; revocation of license; a reprimand; and probation. Furthermore, Rule 61J2-24.001(3)(f), Florida Administrative Code, provides the following range of penalties for the following violations: (a) for a violation of Subsection 475.25(1)(b), as to misrepresentation, the penalty is revocation; (b) for a violation of Subsection 475.25(1)(b), as to negligence or breach of trust, the penalty ranges from an administrative fine of $1,000 to a licensure suspension of one year; and (c) for a violation of Subsection 475.25(1)(d)1, the penalty ranges from an administrative fine of $1,000 to a licensure suspension of five years. In addition to the those penalties, Rule 61J2-24.001(2), Florida Administrative Code, provides that the licensee may be placed on probation for a period of time and under such conditions as determined by the Florida Real Estate Commission.

34. Deviation from the penalties prescribed in the aforementioned rules is permitted for mitigating circumstances. Rule 61J2-24.001(4), Florida Administrative Code. Neither

Respondent SA Lee nor Respondent Realty has a history of disciplinary action by Petitioner. Further, the evidence demonstrates that Respondent SA Lee kept Ms. Castro, the sellers' agent, informed of the status of the buyer's remittance of the money for the second deposit. Only when the sellers' attorney took over control of the real estate transaction, did Respondent SA Lee cease to provide the sellers' agent, who was now the sellers' attorney, with the status of the second deposit. Moreover, the evidence demonstrates that all parties, regardless of the problems, exhibited a willingness for the transaction to proceed to completion; and, therefore, neither Ms. Castro nor the sellers' attorney acted immediately to terminate the transaction upon learning of the buyer's failure to remit the money for the second deposit.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Business and Professional Regulation, Division of Real Estate enter a final order and therein:

1. Dismiss Count III against Stephen E. Lee.

   
   

2. Find Sherry Ann Lee guilty of Counts I and II.

   
   

3. Find C. Mist Realty, Inc. guilty of Count IV.

4. Impose upon Sherry Ann Lee an administrative fine of

   
   

   $1,000, payable under the terms and conditions deemed appropriate, and the completion of a 45-hour post-licensure course.

5. Reprimand C. Mist Realty, Inc.

DONE AND ENTERED this 16th day of June, 2000, in Tallahassee, Leon County, Florida.

ERROL H. POWELL

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 16th day of June, 2000.

ENDNOTES

1/ The Disclosure document used by Respondent SA Lee was an obsolete document. Petitioner imposed a penalty for the use of the obsolete document. The issue of the use of the obsolete document is not a part of these proceedings.

2/ "Sub-agent" is the terminology used by Respondents. The evidence presented does not indicate that a different terminology should be used.

3/ Based upon the proof required, the evidence is insufficient to make a finding of fact that Respondent SA Lee informed the sellers' counsel that the buyer had remitted the second deposit.

COPIES FURNISHED:

Laura McCarthy, Esquire

Florida Department of Business and Professional Regulation

Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Sherry Ann Lee

251 Cordova Road

West Palm Beach, Florida 33401

Stephen E. Lee

2130 Sherwood Forest Boulevard Suite 13

West Palm Beach, Florida 33415

C. Mist Realty, Inc. c/o Sharon E. Lee

3525 South Ocean Boulevard Suite 109

South Palm Beach, Florida 33480

C. Mist Realty, Inc. c/o Sharon E. Lee Suite 106

3175 South Congress Avenue Palm Springs, Florida 33461

Herbert S. Fecker, Director Division of Real Estate Department of Business and

Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399

Barbara D. Auger, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of 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: 98-002877

Orders for Case No: 98-002877