STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIVISION OF GENERAL REGULATION, )

)

Petitioner, )

)

vs. ) CASE NO. 76-829

)

WILLIAM G. GANNAWAY, )

)

Respondent. )

) DIVISION OF GENERAL REGULATION, )

)

Petitioner, )

)

vs. ) CASE NO. 76-861

)

ROY D. MATHEW, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, G. Steven Pfeiffer, held a public hearing in this case on May 28, 1976, in Tampa, Florida.

APPEARANCES

The following appearances were entered:

For Petitioner: Lawrence Winson,

Department of Business Regulation Division of General Regulation Tallahassee, Florida

For Respondents, Roy D. Mathew d/b/a Anchorline Yacht Brokerage, and William G. Gannaway:

John D. Kiernan Kiernan & Reams

St. Petersburg, Florida

On or about April 9, 1976, the Department of Business Regulation, Division of General Regulation ("Department" here- after) issued a Notice to Show Cause and Notice of Hearing to Roy D. Mathew t/a Anchorline Yacht Brokerage. Mathew was directed to Show Cause why his Yacht and Ship Broker's License Should not be Suspended or Revoked. The notice was served upon Mathew on April 15, 1976. (See: Agency Exhibit 1). On April 9, 1976, the Department issued a Notice to Show Cause and Notice of Hearing to William G. Gannaway. In the notice Gannaway was directed to Show Cause why his Yacht and Ship Salesman's License should not

be suspended or Revoked. The notice was served upon Gannaway on April 12, 1976. (See: Agency Exhibit 2). By notice dated May 12, 1976, a hearing was scheduled in each case to be conducted on May 28, 1976. (Agency Exhibit 3). In the Notices to Show Cause, it is alleged that William G. Gannaway was acting as a yacht salesman, for Roy D. Mathew, a yacht and ship broker. Gannaway allegedly negotiated the sale of a vessel owned by a Mr. McKenzie to Rev. and Mrs. Noll.

It is alleged that Gannaway made material misrepresentations of fact to the purchaser. Mathew moved to dismiss the action against him on the grounds that there were no allegations that he took part in any of the negotiations involved in the transaction, nor that he knew of any representations made by his salesman, Gannaway. The Motion was denied at the hearing, and has been carried forward with the case. The parties have agreed to a consolidation of the cases.

The Respondent called the following witnesses: Mrs. Jean Noll, one of the purchasers involved in the transaction; Dean Greger, a marine surveyor; the Reverend Joseph E. Noll, Jr., one of the purchasers in the transaction, and Audrey Coe, the owner and manager of a yacht basin. The licensees called the following witnesses: R. A. McKenzie, the seller in the subject transaction; and Roy Mathew, and William G. Gannaway. Agency Exhibits 1 - 9, and 11 - 28 were received into evidence at the hearing. Agency Exhibit 10 was offered into evidence but was not received. The parties were invited to file Memoranda of Law, and Proposed Recommended Orders. Proposed Recommended Orders have been submitted by each party.

FINDINGS OF FACT

1. Notices to Show Cause were issued by the Department against Roy D. Mathew, and William Gannaway on April 9, 1976. (See: Agency Exhibits 1 and 2). The final hearing was scheduled by notice dated May 12, 1976. (See: Agency Exhibit 3).

   
   

2. Roy D. Mathew, d/b/a Anchorline Yacht Brokerage holds Yacht and Ship Broker License No. 12433, issued by the Department on December 18, 1975. (See: Agency Exhibit 5). Mathew has at all material times held a yacht and ship broker license issued by the Department.

   
   

3. William G. Gannaway holds Yacht and Ship Salesman License No. 12657, issued by the Department on December 18, 1975. (See: Agency Exhibit 4). Gannaway has at all material times held a yacht and ship salesman license issued by the Department. Gannaway has at all material times served as a yacht and ship salesman for Roy D. Mathew and Anchorline Yacht Brokerage.

   
   

4. Prior to July, 1975, R. A. McKenzie, the owner of a yacht called The Anokone, decided to sell the yacht. The yacht was housed at Anchorline Yacht Brokerage in St. Petersburg, Florida, and McKenzie agreed to pay Anchorline a commission for selling the yacht. On or about July 8, 1975, Jean C. Noll, a resident of Jacksonville, Florida, saw the yacht, and believed that it was the sort of vessel that she and her husband had been looking for. She entered into a purchase agreement with the understanding that her husband, the Reverend Joseph E. Noll, Jr., would have the opportunity to make a personal inspection. William G. Gannaway represented Anchorline Yacht Brokerage in the transaction, and received a deposit from Mrs. Noll. (See: Agency Exhibit 6).

   
   

5. On or about July 15, 1975 Reverend Noll came to St. Petersburg from Jacksonville and inspected the yacht. Gannaway at that time advised Reverend Noll that the starboard engine on the yacht was broken down and would require extensive repairs. Reverend Noll liked the yacht, and hired the Wilkinson

   Company to conduct a survey of the yacht. Dean Greger conducted the survey on behalf of the Wilkinson Company. A very thorough inspection was performed by Greger. He made 24 recommendations respecting & repairs, some of which were significant, and some of which were minor. He was not able to conduct a sea test of the vessel because of the broken down engine. His report was issued on July 22, 1975. (See: Agency Exhibit 7). McKenzie was somewhat disturbed about the large number of discrepancies, and he offered the following alternatives to the Nolls: He would sell the boat "as is" for $15,000; he would sell the boat "as is" with a new starboard engine installed for $17,000; or he would sell the boat for $19,500 with a new engine, with him making all additional repairs up to

   $1,000 and with all remaining repairs being split evenly three ways between the Nolls, McKenzie, and Anchorline. The Nolls accepted the latter option, and a contract reflecting it was signed. (See: Agency Exhibit 28). All work was to be performed at Whistlers Yacht Service, Inc., which was located adjacent to Anchorline.

   
   

6. Shortly after July 22, 1975, it became apparent that a new replacement starboard engine could not be obtained, because the engine was no longer in production. Gannaway advised the Nolls that Whistlers indicated to him that they could replace the "shortblock" of the engine, rebuild the engine, and that they would stand by their work. Gannaway told the Nolls that he thought the rebuilt engine would carry a one year guarantee. Reverend Noll believed that the guarantee would be for no more than 90 days, and he agreed to a rebuilt engine rather than a new engine. Extensive work was performed by Whistlers Marina, and more than $2,100 was paid to Whistlers to perform the repairs. (See: Agency Exhibits 14, 22, 23, 24, 25).

   
   

7. Dean Greger conducted a supplemental survey, including a sea test of the vessel on or about August 14, 1975. Fourteen of the 24 discrepancies noted in the original report were found to have been satisfactorily corrected. It was noted that the generator, the depth sounder, the auto pilot, the signal horn, the marine air conditioning, and the docking lights were not performing properly. (See: Agency Exhibit 8). The Nolls were aware of these problems when they closed the transaction and purchased the yacht on approximately August 20, 1975. The closing took place at a Federal Credit Union in Jacksonville. No representative of Anchorline was present at the closing.

   
   

8. Following the closing the Nolls took possession of the yacht, and renamed it "Escape Hatch II". The Nolls were advised by several persons, including personnel at Whistlers Yacht Basin, and personnel at Anchorline, that they should familiarize themselves with the vessel in the immediate area prior to their taking any long excursions. The Nolls nonetheless left St. Petersburg in early September to return to Jacksonville. On this return trip the Nolls experienced many mechanical difficulties. Major repairs needed to be performed on the vessel in Ft. Myers (See: Agency Exhibit II), and minor repairs were performed in Stuart and Melbourne (See: Agency Exhibits 12 and 13). Upon return to Jacksonville major repairs were required and are continuing to be performed. (See: Agency Exhibits 16, 17, and 27). It is apparent that the starboard engine was not properly repaired, and that considerable dry rot remained on the vessel. The Nolls are presently engaged in litigation respecting their liabilities in connection with the vessel. Whistlers disclaimed any liability for making repairs, but Mrs. Coe, the general manager at Whistlers testified that she would have performed any repairs within 90 days if the vessel had been returned to the yacht basin.

   
   

9. Mr. Gannaway and Mr. Mathew had sound reason to believe that there were no discrepancies respecting the operability of the yacht other than those set

   out in the marine surveys. Mathew and Gannaway had sound reason to believe that all of the repairs required to rectify these discrepancies had been performed at Whistlers. There was no evidence offered to show that either Gannaway or Mathew intentionally misstated any facts to the Nolls, or that they knew or should have known that any statements they made to the Nolls were false. There was no evidence to establish that Mathew had any personal knowledge of any of the dealings or discussions between Gannaway and the Nolls.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action.

    
    

11. The burden of establishing that a licensee has violated the provisions of a state licensing law, and should have his license suspended or revoked lies with the Department. State ex rel. Vining v. Florida Real Estate Commission 281 So.2d 487 (Fla. 1973).

    
    

12. The Yacht and Ship Broker's Act provides that a broker or salesman may have his or her license suspended or revoked if he or she commits any of the following acts: (Florida Statutes, Section 537.06(3).)

    
    

    1. Makes a substantial and intentional misrepresentation upon which any person has relied.

    2. Makes a false warranty of a character likely to influence, persuade, induce any person with whom business is transacted under this chapter.

    3. Engages in a continued and flagrant course of misrepresentation or makes false warranties whether or not relied upon by another person.

       * * *

       (i) Resorts to fraud or dishonesty in the conduct of any transaction with his principal or other persons."

       
       

13. The Department has failed to establish that Gannaway or Mathew made any intentional misrepresentation, made any false warranty likely to influence the Nolls, engaged in any continued or flagrant course of misrepresentation, or resorted to fraud or dishonesty in the conduct of the transaction. It does, in fact, appear that the statements made by Gannaway to the Nolls which may have turned out to be incorrect, were made with a justifiable belief in their accuracy. A thorough survey was performed with respect to the yacht and it was anticipated that Whistler Yacht Basin would rectify the discrepancies noted in the survey. Gannaway had sound reason to believe that all discrepancies would be rectified.

    
    

14. The Notice to Show Cause filed against Roy D. Mathew by the Department of Business Regulation, Division of General Regulation should be dismissed.

    
    

15. The Notice to Show Cause filed against William G. Gannaway by the Department of Business Regulation, Division of General Regulation should be dismissed.

RECOMMENDED ORDER

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

RECOMMENDED:

1. That the Notice to Show Cause filed by the Department of Business Regulation, Division of General Regulation, against Roy D. Mathew be dismissed.

   
   

2. That the Notice to Show Cause filed by the Department of Business Regulation, Division of General Regulation, against William G. Gannaway be dismissed.

ENTERED this 27th day of July, 1976, in Tallahassee, Florida.

G. STEVEN PFEIFFER, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

Docket for Case No: 76-000829

Orders for Case No: 76-000829