STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, )

)

Plaintiff, )

)

vs. ) CASE NO. 77-1663

) THOMAS L. PITTMAN AND PITTMAN ) REAL ESTATE, INC., )

)

Defendants. )

)

FINDINGS OF FACT

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 January 11, 1978, in Cocoa, Florida.

The following appearances were entered: Charles E. Felix, Orlando, Florida, for the Plaintiff, Florida Real Estate Commission; and Kenneth A. Studstill, Titusville, Florida, for the Defendants, Thomas L. Pittman and Pittman Real Estate, Inc.

The Florida Real Estate Commission issued an Administrative Complaint against the Defendants on August 23, 1977. On September 12, 1977, the Defendants filed an election of rights form which constituted a petition for hearing. In accordance with the provisions of Section 120.57(1)(b)(3), the Commission requested that a hearing officer from the Division of Administrative Hearings be assigned to conduct the hearing. The final hearing was scheduled by notices dated October 19, 1977 and November 2, 1977.

At the final hearing the Commission called Gary W. Brandt, a registered real estate salesman, as its only witness. The Defendants called Virginia Laver, a former employee of Defendant Pittman Real Estate, Inc., and the Defendant Thomas L. Pittman. Hearing Officer's Exhibits 1-3, and Petitioner's Exhibits 1 and 2 were offered into evidence and were received. There were conflicts in the testimony of certain of the witnesses. In resolving these conflicts due regard has been given to the credibility of the witnesses as evidenced in part by the demeanor of the witnesses at the hearing, and in part by the extent to which the witnesses' testimony has been corroborated by other evidence.

FINDINGS OF FACT

1. The Defendant Thomas L. Pittman is a registered real estate broker who, during March, 1974, served as the President of the Defendant firm, Pittman Real Estate, Inc. During March, 1974, Gary W. Brandt, a registered real estate salesman was employed by Pittman Real Estate, Inc. Brandt served as a salesman under the direction of Thomas L. Pittman.

   
   

2. Thomas L. Pittman owned a trailer park known as Penn State Trailer Park, Inc. He desired to sell the park, and Gary W. Brandt was successful in

   locating a buyer. On or about March 18, 1974 Pittman and the buyers, the Sicilianos, signed a contract for sale and purchase. At the time of closing, the Sicilianos informed Pittman that they did not have sufficient cash to make the down payment because they had failed to sell certain property located in another state. Pittman agreed to accept $10,000 of the down payment in the form of a second mortgage on a home that the Sicilianos owned.

   
   

3. Before accepting the second mortgage in lieu of a portion of the cash down payment, Pittman informed Brandt that he needed to obtain more cash out of the transaction than he would obtain with the second mortgage. Pittman and Brandt agreed that Brandt would be entitled to a $5,000 commission. Brandt agreed to forego his immediate entitlement to a commission until the Sicilianos paid off the second mortgage, which was due approximately six months later. Brandt left the employ of Pittman Real Estate, Inc. before the Siciliano transaction closed, but he was present at the closing.

   
   

4. When the second mortgage became due, the Sicilianos were not able to pay, and Pittman agreed to extend the term of the second mortgage. Brandt, on numerous occasions, requested that Pittman pay him the $5,000, but Pittman told him that he could not because the Sicilianos had not paid him. Eventually Brandt became concerned that Pittman's obligation to him was not in writing and he asked Pittman to execute a promissory note. On or about January 31, 1975 Pittman signed a promissory note promising to pay Brandt the $5,000. The note was due on December 30, 1975. When Pittman signed the note he told Brandt that the note was conditional upon his getting the money from the Sicilianos, and that the note should be extended when it became due if the Sicilianos had not yet paid. Brandt agreed to this, but the side agreement was not in writing. When the note became due Brandt demanded payment, and when Pittman did not pay him, Brandt filed suit. In civil action number 76-261-CA in the Circuit Court in Brevard County, Florida, Brandt recovered a final judgment against Pittman for the $5,000 plus interest, costs, and an attorney's fee as provided in the note. The final judgment was entered on June 21, 1976. Brandt has not yet recovered the judgment.

   
   

5. Subsequent to the final judgment being issued, the Sicilianos paid off the second mortgage in connection with a new sale of the trailer park. Pittman did not pay Brandt out of the money that he recovered from the Sicilianos, and the final judgment in the civil action remains outstanding. Pittman did not at any time lie, or misrepresent any facts to Brandt. Until Brandt filed suit on the note, Pittman fully intended to deliver $5,000 to Brandt when the Sicilianos paid off the second mortgage. Only after Brandt broke the side agreement to extend the note when it became due if the Sicilianos had not yet paid, and sued on the note did Pittman make a different decision. Brandt now has a judgment, and if Pittman has assets from which the judgment can be satisfied, Brandt can recover his commission with all back interest.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Section 120.57(1), 120.60, Florida Statutes (1976 Supp.).

   
   

7. The burden of establishing that a licensed real estate broker has violated the Florida Real Estate Licensing Law lies with the Florida Real Estate Commission. State ex rel Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973).

8. In the Administrative Complaint, the Real Estate Commission alleges that the Defendant Pittman has failed to pay Gary W. Brandt the commission that was due him. In Paragraph 10 of the Complaint it is charged:

   
   

   "(10) That by reason of the foregoing the defendants are guilty of false promises, false pretenses, dishonest dealing or

   breach of trust in a business transaction in violation of subsection 475.25(1)(a), Florida Statutes, and therefore also guilty of violating subsection 475.25(1)(d), Florida Statutes."

   
   

   Nowhere in the Complaint are the Defendants charged with violating any other provisions of the Florida Real Estate Law, or of the Commission's rules and regulations.

   
   

9. The facts established at the hearing, as set out in the Findings of Fact above, do not constitute a violation of Section 475.25(1)(a). The statute provides:

   
   

   "(1) The registration of a registrant may be suspended for a period not exceeding 2 years, or until compliance with a lawful order imposed in the final order of suspension,

   or both, upon a finding of fact showing that the registrant has:

   
   

   1. Been guilty of fraud, misrepresentation concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence, or breach of trust in any business transaction, in this

      state or any other state, nation or territory

      ; has violated a duty imposed upon him

      by law or by the terms of a listing contract, written, oral, express or implied, in a real estate transaction; has aided, assisted, or conspired with any person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct, and has committed

      an overt act in furtherance of such Intent, design or scheme. It shall be immaterial to the guilt of the registrant that the victim, or intended victim, of the misconduct has sustained no damage or loss or the

      damage or loss has been settled and paid, after discovery of the misconduct, or whether such victim, or intended victim, thereof, was a customer or a person in confidential relation with the registrant, or was an identified member of the general public; or * * *"

      
      

      In Horne v. Florida Real Estate Commission, 163 So.2d 515 (1964) the First District Court of Appeal held that dishonest dealings between real estate brokers and real estate salesmen which do not effect members of the public at

      large would not constitute grounds for disciplinary action under the provisions of 475.25 (1)(a). The court noted that the purpose of the Florida Real Estate Law was to protect members of the public by permitting only persons with special qualifications of aptitude, ability, and integrity to engage in the real estate business. The court stated: (at pp. 517, 518)

      
      

      "An examination of the instant information discloses that the charges outlined are predicated upon factual matters pertaining solely to the internal business affairs of

      a real estate agency and the decision reached by the Real Estate Commission, if permitted to decide the matter, would usurp the role

      of the established judiciary. By analogy, to sustain the commission's position being here asserted, we would be compelled to conclude that if a husband real estate

      salesman should be charged by the commission with lying to his wife about his commission derived from a real estate transaction, a determination by the commission that the husband so fraudulently conducting himself, would subject the husband to disciplinary proceedings by the commission . . . [W]e conclude that the fraud so charged by the commission is directed to factual matters outside of the commission's jurisdiction

      and in which the general public will not be harmed or otherwise concerned."

      
      

      The provisions of Section 475.25(1)(a) have not been materially amended since the decision in Horne was handed down.

      
      

10. In Cannon v. Florida Real Estate Commission, 221 So.2d 240 (1969), the Fourth District Court of Appeal reversed an order entered by the Commission suspending the registration of a broker. The court stated: (at pp. 241,242)

    
    

    "Chapter 475, Florida Statutes, was enacted for the purpose of protecting the public

    in dealings with real estate agents.

    
    

    The role of the judiciary is usurped if the commission is permitted to decide charges which 'are predicated upon factual matters pertaining solely to the internal business affairs of a real estate agency'.

    
    

    The administrative processes of the commission should be directed at the 'dishonest and unscrupulous operator, one who cheats, swindles, or defrauds the general public in handling real estate transactions'.

    
    

    The relationship between a real estate broker and his sales personnel is

    contractural in nature. Enforcement of rights thereunder, absent fraud, concealment or dishonest acts, should be by a court of proper jurisdiction rather than by an administrative agency."

    
    

    Dicta in the Cannon decision indicates that a fraudulent transaction between a broker and a sales person could constitute grounds for revoking the license of the guilty party, contrary to the holding in Horne.

    
    

11. In the instant case, the evidence does not establish that any fraud, misrepresentation, or concealment as contemplated by Section 475.25(1)(a) was committed. The evidence establishes merely that Pittman failed to pay Brandt a commission. A promise that is merely unfulfilled is not necessarily a false promise. Brod v. Jernigan, 188 So.2d 575 (2 DCA Fla. 1966). It appears from the evidence that Pittman would not have closed on the trailer park transaction for the amount of cash that he would have realized if he were required to pay Brandt his commission at the time of closing. Accordingly, Brandt agreed to forego any immediate claim to the commission and Pittman agreed to pay him when he received certain funds from the trailer park purchasers. It appears that Pittman fully intended to do that, and that the only reason he did not pay was because Brandt in the interim filed suit on the note which Pittman had given him. There is no evidence in the record from which it could be concluded that any promise made by Pittman constituted a misrepresentation, or was false when made. The evidence would only establish that the promise was not fulfilled, and it was not fulfilled because of facts which occurred subsequent to the time the promise was made.

    
    

12. Subsequent to the decision in Cannon v. Florida Real Estate Commission, the Legislature in apparent response to the decision adopted an amendment to Section 475.25(1)(c) which would make failure of a broker to deliver a salesman's commission under some circumstances grounds for suspending the broker's license. Under the facts of this case, a violation of Section 475.25(1)(c) has not been established. Even if such a violation had been established, however, no action on the basis of the violation could be taken because the Defendants were not charged in the Administrative Complaint with violating Section 475.25(1)(c)

    
    

13. The relief sought by the Florida Real Estate Commission through its Administrative Complaint should be denied, and the Administrative Complaint should be dismissed.

RECOMMENDED ORDER

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

That a final order be entered by the Florida Real Estate Commission dismissing the complaint against the Defendants Thomas L. Pittman and Pittman Real Estate, Inc.

RECOMMENDED this 25th day of January, 1978, in Tallahassee, Florida.

G. STEVEN PFEIFFER Hearing Officer

Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304

COPIES FURNISHED:

Charles E. Felix, Esquire Florida Real Estate Commission

400 W. Robinson Avenue Orlando, Florida 32801

Kenneth A. Studstill, Esquire

P.O. Box 1257

Titusville, Florida 32780

Docket for Case No: 77-001663

Orders for Case No: 77-001663