DEPARTMENT OF BUSINESS AND ) PROFESSIONAL REGULATION, DIVISION ) OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )
vs. ) Case No. 99-0154
Respondent. )
A formal hearing was held at the Division of Administrative Hearings before Daniel M. Kilbride, Administrative Law Judge, on April 6, 1999, with the Judge and counsel for Petitioner in Tallahassee, Florida, and the Respondent and the court reporter appearing via video-conferencing from Orlando, Florida.
For Respondent: James H. Gillis, Esquire
James H. Gillis Associates, P.A. 8424 Pamlico Street
Whether the Respondent is guilty on six counts of charging an advance fee for the listing of time-share estates for sale, in violation of Section 721.20(4), Florida Statutes.
A Notice to Show Cause, dated May 5, 1998, alleged that Respondent committed six violations of Section 721.20(4), Florida Statutes. Through its attorney, Respondent replied to the Notice to Show Cause. The reply requested neither a formal nor an informal hearing. Thereupon, the Department of Business and Professional Regulation (Department) entered an Order Setting Informal Hearing so that Respondent could present mitigation. At that time, Respondent requested a formal hearing and this matter was referred to the Division of Administrative hearings. The matter was set for hearing and discovery ensued. Petitioner's Motion to Relinquish Jurisdiction was denied.
At the hearing, official recognition was taken of Chapters 475, 607 and 721, Florida Statutes; Chapter 61B-41,
Florida Administrative Code; and a certificate from the Florida Secretary of State certifying that Respondent was a corporation organized under the laws of Arkansas, authorized to transact business in the State of Florida. Official recognition is also taken of the Arkansas Real Estate License Law, Section 17-42-101, et seq., Arkansas Time-Share Act, Section 18-14-101, et. seq.,
Arkansas Code Annotated; and regulations promulgated pursuant thereto.
The Petitioner moved into evidence the depositions of four of the complainants: Kim Collins, Valnecia Williams, Dan Coffey and William Budai, all of whom were unavailable. The depositions were admitted into evidence, without objection.
Respondent moved into evidence the depositions of Harry Dunn and John Dunn, employees of National Resort Mart, Inc. The depositions were admitted, without objection.
At the formal hearing, Respondent withdrew the objection it made during the Collins deposition at pages 19-20.
At the request of Respondent, the time for filing post- hearing submissions was set for thirty days after the conclusion of the hearing. A transcript of the hearing was not prepared.
Petitioner filed its Proposed Recommended Order on May 5, 1999. Respondent filed its proposals on May 4, 1999. Both proposals have been given careful consideration in the preparation of this Recommended Order.
Respondent is a corporation organized under the laws of Arkansas and was authorized by the Florida Secretary of State to transact business in the State of Florida from November 1991 through December 1997.
Respondent's main office is now located in Mountain Home, Arkansas. Respondent's credit card terminals are in
Arkansas. Respondent has an escrow and operating account in Mountain Home, Arkansas.
Respondent hired Jack McClure to open and operate its Florida office. Jack McClure held a Florida real estate broker's license.
National Resort Mart conducted business from its Florida office in Kissimmee, Florida, until McClure's death in December 1997. Respondent opened and maintained escrow and operating accounts in Florida from 1992 through 1997 for its Florida business.
The Florida office was limited to the activities of time-share real estate sales. The Respondent did not list time- shares, nor collect any advance fees for listing time-shares at its Kissimmee, Florida, branch office.
Global Title Company of Naples, Florida, conducts the closings for Respondent for the majority of their Florida time- share sales.
Respondent advertised its Florida office in its direct mail brochure, sent to Florida time-share owners, with the statement: "Our Orlando office is situated only seven miles from Disney World."
Ms. Valnecia Williams of Madison, Florida, owns a time- share unit at Cypress Point Resorts in Central Florida.
Williams received a mailed "brochure" from Respondent's home office which advised her that Respondent was in the business of buying and selling time-shares.
Based on the Respondent's direct mail flyer, Williams called the Kissimmee, Florida, telephone number to find out information related to her listing. Apparently, the call was automatically switched to the home office. She received some initial information. Several weeks later she called the Respondent's Arkansas office and talked to a different salesperson.
Williams agreed to list her time-share, Cypress Pointe Resort, Unit 5206, Week 37, with Respondent on March 5, 1997, at an asking price of $12,9000 in an open listing for a period of a year. Consideration was in the form of a seven percent of gross sale of the unit, or a $750 minimum commission, to be paid to Respondent at the closing of the sale.
Respondent charged an advance fee of $439 from Ms. Williams of Madison, Florida, at the time she listed her Florida time-share period at Cypress Point Resort for sale with Respondent.
Williams authorized Scott Fisher, Respondent's salesperson in Arkansas to charge the refundable advertising and marketing fee of $439 to Williams' USAA Federal Savings Bank charge card.
Williams was not pleased with the service provided by Respondent and, on or about July 28, 1997, demanded a refund from the Respondent. Sometime within the next two months Respondent complied with the request and refunded the fee by crediting Williams' charge card with the same amount.
Kim Collins of Faith, North Carolina, owns a time-share unit at Westgate Lakes, Orlando, Florida.
Collins received brochures from Respondent's home office seeking a listing for her time-share unit in Florida, approximately one year later. Collins called Respondent at an "800" number which was automatically forwarded to Respondent's main office in Arkansas.
Eventually, Collins decided to use Respondent's services and borrowed the money from her mother to pay the advance fee and sign the listing contract.
Respondent collected an advance fee from Mr. and Mrs. Richard Collins of Faith, North Carolina, of $439 at the time they listed their Florida time-share period at Westgate Lakes, Orlando, for sale with Respondent, by mail and check to the Respondent's main office in Arkansas.
Collins' time-share has been listed for sale with Respondent since July 1, 1996.
Dan Coffey of Jacksonville, Florida, owns a time-share unit at Orange Lake in Central Florida.
Coffey received a brochure from Respondent's home office and called for more information.
Coffey agreed to list his unit for sale with Respondent on October 14, 1996, at a negotiable price of $12,900.
Respondent collected an advance fee from Mr. and Mrs. Daniel Coffey of Jacksonville, Florida, of $439 at the time they listed their Florida time-share period of Orange Lake Resort, Orlando, Florida, for sale with Respondent.
In like manner, Respondent collected an advance fee from Mr. and Mrs. Rick Rogers of Maumee, Ohio, at the time they listed their Florida time-share period with Respondent.
Respondent also collected an advance fee from Mr. and Mrs. Donald Gordon of Pensacola, Florida, at the time they listed their Florida time-share period with Respondent.
Respondent collected an advance fee from Mr. and Mrs. William Budai of Duquesne, Pennsylvania, of $539 at the time they listed their Florida time-share period at Westgate Villas, Kissimmee, Florida, for sale with Respondent.
The contract signed by each complainant was titled "Listing Agreement." The Listing Agreement between the time- share owner of the Florida unit and Respondent was for the listing of their time-share for sale for a percent of gross sale of the unit to be paid at the closing, with an advance fee payable immediately. All transactions between the owners and Respondent were made through the Respondent's home office in
Arkansas. No advance fee was collected within the boundaries of the State of Florida.
Complainants Collins and Coffey did not receive refunds of the advance fees they paid to Respondent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties pursuant to Section 120.57(1), Florida Statutes.
A Florida real estate license is required to list or sell time-share estates. See Modern Realty of Missouri v. Shivers and Associates, 705 F.Supp. 556 (S.D. Fla. 1989).
Chapter 721, Florida Statutes, governs the time-share industry in the State of Florida, and is a consumer protection statute written, "to protect the quality of Florida time-share plans and the consumers who purchase them." Section 721.02(5), Florida Statutes. (emphasis added)
Section 721.26(5)(a)1., Florida Statutes, states:
"Regulated party", for purposes of this section, means any developer, exchange company, seller, managing entity, association, association director, association officer, management firm, escrow agent, trustee, any respective assignees or agents, or any other person having duties or obligations pursuant to this chapter.
Section 475.01(1)(a), Florida Statutes, defines a real estate broker to include:
ny person or entity who undertakes to list or sell one or more time-share periods per year in one or more time-share plans on
behalf of any number of persons, except as provided in ss. 475.011 and 721.20.
Section 721.20(4), Florida Statutes, states:
Notwithstanding the provisions of s. 475.452, it is unlawful for any broker, salesperson, or broker-salesperson to collect any advance fee for the listing of any time-share estate or time-share license.
Therefore, Respondent, as a brokerage entity listing time-share estates for resale, has duties and obligations pursuant to Chapter 721, Florida Statutes, and is a "regulated party."
Chapter 607, Florida Statutes, governs corporations authorized to transact business in Florida.
Section 607.1505, Florida Statutes, "Effect of certificate of authority," states:
(2) A foreign corporation with a valid certificate of authority has the same but no greater rights and has the same but no greater privileges as, and except as otherwise provided by this act is subject to the same duties, restrictions, penalties, and liabilities now or later imposed on, a domestic corporation of like character.
Model Bus. Corp. Act Annotated (3d ed. Supp. 1997) Official Comment to Section 15.05, at 15-70, states:
Section 15.05(b), by granting to qualified foreign corporations all of the rights and privileges enjoyed by a domestic corporation, avoids discrimination that might otherwise be subject to constitutional challenge. On the other hand, Section 15.05(b) also contains a restriction or limitation; a qualified foreign corporation is subject to the same restrictions as a domestic corporation,
including the same duties, penalties, and liabilities. This latter aspect of Section 15.05(b) has declined in importance as states have eliminated unnecessary or outdated restrictions on domestic corporations and, as a consequence of Section 15.05(b), on qualified foreign corporations as well.
Fletcher Cyclopedia of the Law of Private Corporations (Perm. Ed. 1998), s. 8339, page 150, states:
[A foreign corporation] cannot exercise powers or do acts contrary to the laws of the state whose comity it thus enjoys, even though such powers or acts may be authorized by its own charter or by the laws of its own state.
Later, s. 8345 states:
A corporation may usually do in another state all those things authorized by its charter which are not expressly or impliedly prohibited by local laws or policy, including transacting lawful business and entering into contracts and agreements of every kind not prohibited to domestic corporations of like character. Id at 170.
Therefore, as a foreign corporation authorized to conduct business in Florida, and subject to the same privileges and duties as a domestic corporation, Respondent is required to comply with appropriate Florida statutes. See also Department of Banking and Finance, State of Florida vs. Credicorp, Inc., 684 So. 2d 746 (Fla. 1996), holding that Texas-based retail installment seller was required to be licensed and pay annual fees in Florida, even though they had no agents in Florida and were not registered to do business in Florida.
Respondent knew that in order to list or sell time- share estates in Florida, it had to have a Florida licensed real estate broker and that it would have to comply with Florida laws. It hired a Florida real estate broker; it registered with the Florida Secretary of State to conduct business in Florida; it opened a Florida office in Orlando; it advertised its presence in Florida; it opened bank accounts in Florida; its closings were handled by a Florida title company; and it highlighted its Florida location on its listing contract. Respondent knew, or should have known, it had to comply with Florida law for the listing and sale of Florida time-share periods.
Respondent's argument that it can collect advance listing fees because all communication between Respondent and the seller was conducted through its Arkansas office is rejected.
Respondent claims an exemption from the provisions of Section 721.70(4), Florida Statutes, under subsection 721.03(1)(a), Florida Statutes, which reads in pertinent part:
(a) With respect to time-share plans . . . located in this state which are offered for sale in other jurisdictions within the jurisdictional limits of the United States .
. . such offers shall not be subject to the provisions of ss. . . . 721.20 to the extent that such activity is regulated in the other United States jurisdiction.
Respondent goes on to argue that the State of Arkansas, where the Respondent's main office is located and from where the Respondent conducts all of its time-share listing, advertising and marketing business, has enacted both a Time-Share Law
(Arkansas Code Annotated, Section 18-14-101, et seq.) and Time- Share Regulations. These Arkansas laws and regulations regulate the business of offering and selling of time-share plans. The definition section found in the Arkansas Real Estate License Law at subsection 17-42-103(12)(K), Arkansas Code Connotated (A.C.A.), defines "Principal Broker" to "mean an individual, while acting for another for a fee, commission, or other consideration, or the expectation thereof, who:
(K) Engages in the business of charging an advance fee in connection with any contract whereby he or she undertakes to promote the sale or lease of real estate either through its listing in a publication issued for such purposes or for referral of information concerning such real estate to brokers, or both . . . .
Respondent states that unlike the State of Florida who attempts to distinguish between different classes of real estate property for differing treatments, the A.C.A. Subsection 17-42- 103(13)(A) defines "Real" to "mean and include . . . the sale or resale of time-share units."
Respondent claims that the elements of the specific offense which Petitioner has alleged include many which are not obvious from the statutory subsection itself. Namely, Petitioner must allege and prove that it has personal jurisdiction over Respondent based upon substantial contacts with the State of Florida rather than only incidental contacts--Petitioner must also allege and prove that either a broker or salesperson or broker-salesperson, collected an advance fee in the State of
Florida for listing a time-share estate or time-share license for sale or resale.
Respondent also argues that Petitioner must also allege and prove that all of these essential elements of the offense occurred in the State of Florida (i.e., on its land or in the space over its sovereign territory.) Respondent alleges that Petitioner neglected to allege or to prove that any element of the named offenses occurred within the State of Florida. See Bragg vs. State, 487 So. 2d 424 (Fla. 5th DCA 1986).
Respondent is mistaken. In order to list or sell Florida time-share estate, it must do so through a Florida broker. Modern Realty of Missouri, supra. The fact that Respondent solicited the listings through its Arkansas office does not get around the requirement that for the listing to be lawful it must go through the Florida broker. Since the listing for sale of Florida property must be conducted in Florida, Petitioner has regulatory authority over these transactions.
Although Respondent's Florida broker never physically collected the advance fees for these listings, the advance fee was due and payable as a part of the total commission at the time of any closing on the sale of one of these units.
Florida law applies to the collection of these fees for the resale of Florida time-share periods.
Respondent has violated Section 721.20(4), Florida Statutes, by collecting an advance fee for the listing of time-
share estates for sale from Florida residents and from Florida time-share owners of Florida property on six separate occasions.
Chapter 61B-41, Florida Administrative Code, determines that the penalties for specified violations of Section 721.20(4), Florida Statutes, is $10,000 per violation.
RECOMMENDED that the Department of Business and Professional Regulation, Division of Florida Land Sales, Condominiums and Mobile Homes, enter a final order that:
DONE AND ENTERED this 20th day of May, 1999, in Tallahassee, Leon County, Florida.
DANIEL M. KILBRIDE
Filed with the Clerk of the Division of Administrative Hearings this 20th day of May, 1999.
James H. Gillis, Esquire
James H. Gillis Associates, P.A. 8424 Pamlico Street
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.
