STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2121

)

DONALD T. DEAN, )

)

Respondent. )

)

)

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1332

)

DONALD T. DEAN, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Pensacola, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton, II, on September 21, 1982. The Division of Administrative Hearings received a transcript of proceedings on October 27, 1982, and petitioner's proposed recommended order on November 12, 1982. The parties were represented by counsel:

APPEARANCES

For Petitioner: W. Douglas Moody, Jr., Esquire

119 North Monroe Street Tallahassee, Florida 32301

For Respondent: Edmund W. Holt, Esquire

3 West Garden Street Blount Building, Suite 408 Pensacola, Florida 32501

By administrative complaint dated July 29, 1981, Case No. 81-2121, petitioner alleged that respondent was, at all pertinent times, licensed as a real estate broker and employed by Adkinson Agency, Inc.; that "Robert D. Milne, Jr., and Penny Storts Milne on or before August 4, 1982, purchased 87 acres . .

. for . . . development and resale [which] came to be named Laura Lake Estates"; that "on or about August 6, 1979, Respondent and Robert D. Milne and Penny Storts Milne entered into a 'joint adventure for acquiring land' . . .

[for] the development . . . of Laura Lake Estates"; that "on or about August 28, 1979, William L. Spence and Lana Spence . . . negotiated with Respondent and executed a . . . contract for sale with Robert D. Milne, Jr. and Penny Storts Milne for the purchase of Parcel number 18 of . . . Laura Lake Estates, for . . . $8,000.00"; that Respondent "failed to timely inform [both the Spences and his employing broker] of his interest in the profits arising from the sale of all or part of . . . Laura Lake Estates"; that "Respondent represented to William L. Spence and Lana Spence that Laura Lake Estates was suitable for residential purposes when he knew or should have known that the property was not yet suitable for residential purposes and could not be used for such purposes without extensive development"; that "Respondent represented to [the Spences] that Gulf Power would be ready to run the power lines to the subject property within the first two weeks of February 1980 when Respondent knew or should have known that Gulf Power would not be able to access the subject property due to unacceptable road conditions in . . . Laura Lake Estates"; that "Respondent represented to the [Spences] that a septic tank sewerage disposal system could be installed on Parcel number 18 of Laura Lake Estates when he knew or should have known that the . . . property could not pass the required water course modification, removal of existing soil and its replacement with proper fill soils"; that "Respondent represented to [the Spences] that . . . Parcel number 18 would be drained by January 2, 1980 and its access road graded"; by virtue of all of which "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 the State of Florida in violation of Subsection 475.25(1)(b), Florida Statutes (1979)." In count two, petitioner alleges that "Respondent contracted for a share of the profits on the sale of Laura Lake Estates parcels with Miracle Strip Investments in violation of Subsection 475.25(1)(b), Florida Statutes (1979) and hence in violation of Subsection 475.25(1)(a), Florida Statutes (1979).

In a subsequent administrative complaint dated March 23, 1982, Case No. 82- 1332, petitioner alleged that William L. Spence, in "reliance upon various representations made by Respondent concerning [Laura Lake Estates] . . . entered into a contract to purchase parcel number 18 in that subdivision, from Robert and Penny Milne, and paid Respondent a $300.00 earnest money deposit which Respondent placed in escrow" that "Respondent failed to reveal to his client, William Spence, that Respondent held a financial interest in the property, and would share profits upon its sale . . . [and] was acting as an agent for Professional Realty, Inc. and its successor Miracle Strip Investments, Inc. to coordinate the development of the property" and thereby "violated Section 475.25(1)(b), Florida Statutes, in that Respondent engaged in misrepresentation, concealment, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence and breach of trust."

After the respondent disputed the allegations of these administrative complaints and asked for formal hearings, petitioner requested the assignment of a hearing officer pursuant to Section 120.57(1)(b) 3, Florida Statutes (1981).

By order entered July 19, 1982, Case No. 81-2121 and Case No. 82-1332 were consolidated for all purposes.

FINDINGS OF FACT

1. The parties stipulated that respondent Donald T. Dean held real estate broker's license No. 0020554, and was employed as a broker-salesman by Adkinson Agency, Inc., in Pensacola, Florida, at all pertinent times. Betty M. Davis was the firm's qualifying broker at all pertinent times.

   
   

2. Listed with the agency in the summer of 1979 was an 87-acre parcel located near Perdido Bay in Escambia County. Respondent Dean acted as salesman for Adkinson Agency in the sale of this parcel to Penny Storts Milne and Robert Milne, Jr., her "husband at the time" (T. 134), who acquired the already subdivided property with the intention of offering four-acre tracts for resale. After the Milnes had contracted to purchase the property, but before the transaction closed, they listed the subdivided parcels with Adkinson Agency, respondent Dean being the listing broker, for sale, subject to their obtaining good title.

   
   

3. At closing, the sellers of the 87-acre parcel conveyed not to the Milnes personally but to a corporation they controlled. Eventually, on September 21, 1979, a corporation organized specifically for the purpose, Miracle Strip Investments, Inc., took title.

   
   

4. Early on there were discussions between respondent Dean and Mrs. Milne about his participation in a joint venture to develop the property, which came to be known as Laura Lake Estates, and a proposed joint venture agreement dated August 6, 1979, was drawn up and signed by respondent and Mrs. Milne. Petitioner's Exhibit No. 4. Mr. Milne declined to sign at that time, however. Even so, respondent continued to work on development of the property. All three signed a subsequent draft of a joint venture agreement on September 21, 1979. Petitioner's Exhibit No. 3. Under the agreement, profits from the sale of the property, if any, were "to be divided equally, between" respondent and Miracle Strip Investment, Inc. The Milnes were to contribute capital and respondent was to secure various permits and oversee construction of drainage ditches, dirt roads and the like.

   
   

   FIRST RESALE PROSPECT

   
   

5. In August of 1979, in response to an advertisement in the Pensacola News Journal, William L. Spence, who had just sold his house and was looking for another place to live, telephoned respondent Dean who took him out to Laura Lake Estates. There were no houses or trailers on the property, but respondent assured Mr. Spence that he would be able to move a trailer on to the lot within six weeks.

   
   

6. A dirt road, intersected in heavy rains by a creek, ran in front of the four acres the Spences eventually chose. They deposited $300 earnest money against the agreed sales price of $8,000, on August 28, 1979. Petitioner's Exhibit No. 1. This price reflected fair market value at the time. No closing date was specified in the sales contract. Petitioner's Exhibit No. 1. On November 13, 1979, Mr. Spence applied for a permit to install a septic tank on the parcel No. 18. Respondent's Exhibit No. 3. The application was granted on December 5, 1979, with conditions. Mr. Spence inquired about obtaining electricity for a trailer he planned to place on the lot; he spoke to Mark William Creswell of Gulf Power Company, who told him it would cost $1,200 to

   $1,400 to get power to the lot. Mr. Spence put in a culvert, used a backhoe and placed fill on the lot. A well was dug, with the understanding that Mr. Spence would bear the expense if good water was found. Even though good water was

   found (at 93 feet) and a usable well was in place, Mr. Spence balked at paying; whereupon the well digger removed the casing. Mr. Spence eventually abandoned his efforts to improve the property, and on February 20, 1980, obtained a refund of the earnest money. Respondent's Exhibit No. 1. He never recovered other moneys he spent on the property.

   
   

7. Respondent did not disclose his plans or hopes to enter into a joint venture with the Milnes at the time Mr. Spence signed the sales contract. When the earnest money was refunded, Mr. Dean signed a document as "Agent and Partner." At the time of the hearing, Laura Lake Estates was still uninhabited.

   
   

   BROKER AND SALESMAN

   
   

8. Ms. Davis, respondent's broker, learned of respondent's participation in a joint venture when she found respondent's copies of the joint venture agreement and the predecessor draft in a book in his office on or about December, 31, 1979.

   
   

9. More than three months earlier, Ms. Davis had agreed to defer half the agency's commission earned on the sale of Laura Lake Estates to the Milnes, even though she paid respondent his share, as selling agent, in full. Ms. Milne explained her agreement with Ms. Davis:

   
   

   Credit Thrift had agreed earlier to give

   us half of appraised price, as far as loaning us the money, and the day before we were to go to closing they changed that and said half of appraised price or half of contract price, whichever is less. Well, that put us forty- seven thousand dollars ($47,000.00) short - if I remember correctly, and I had a few days

   to come up with that much money, so one of the things I did with Betty is, I asked her -- They had an eight thousand something dollar ($8,000.00) commission coming due, and I asked her if we could pay - I don't remember if it was four thousand ($4,000.00) or half of it, at the closing, and then we would relist the property with Adkinson Agency with Don as the sales person, and any commissions from that would be paid to her direct- ly, and once the debts were paid off on the sale of that last parcel, she would get paid the other four thousand dollars ($4,000.00), and that way she would in fact get double commissions out of

   it because she would have the original sale plus the listing of the resale. And, that was to talk her into letting us go through with or postponing the commission, plus I would just as soon have had Don as my agent anyway.

   
   

   Q And Betty Davis agreed to this arrangement?

   A Yes. There was no time frame put on it however, and she subsequently got upset about the time frame.

   Q You mean the time frame of paying off this deferred commission?

   A Yes. There was no time frame placed on it. I

   just told her, when we got the other debts paid off, which means we close enough property to pay off everybody else, then she would get her commission, prior to me getting any money.

   Q Now, did you have any understanding as to how Don Dean would be paid, his commission?

   A I did not, that was between Don and Betty.

   
   

   Respondent never disclosed his interest in the venture to Ms. Davis, even after he signed the second joint venture agreement; and even though Ms. Davis had yet to be paid the full commission due. Respondent never made any money in his capacity as a joint venturer, although he was paid commissions.

   
   

10. The findings of fact proposed in petitioner's proposed recommended order have been largely adopted in substance. To the extent they have been rejected, they have been deemed irrelevant or unsupported by the weight of the evidence.

    
    

    CONCLUSIONS OF LAW

    
    

11. Petitioner is authorized to "suspend a license for a period not exceeding 10 years . . . revoke a license . . . impose an administrative fine . . . or . . . issue a reprimand," Section 475.25(1), Florida Statutes (1981), whenever it can establish, by clear and convincing evidence, that a licensee has been "guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction in this state or any other . . . ." Section 475.25(1)(b), Florida Statutes (1981). In pertinent part, these statutory provisions are identical to the 1979 statutes.

    
    

12. The fact that respondent dealt in part for his own account does not insulate his dealings from petitioner's scrutiny. In Sellars v. Florida Real Estate Commission, 380 So.2d 1052 (Fla. 1st DCA 1980), the court said:

    
    

    A registered real estate broker may be disciplined for his dishonest conduct of business affairs for his own account, as well as for such conduct in transactions in which his only interest is as a broker.

    McKnight v. Florida Real Estate Commission,

    202 So.2d 199 (Fla. 2d DCA 1967), cert. den., 209 So.2d 672 (Fla. 1968). At 1054.

    
    

    The statute is explicit on this point, in referring to "any business transaction." Section 475.25(1)(b), Florida Statutes (1981).

    
    

13. At the formal hearing, petitioner had the burden to show by clear and convincing evidence that respondent committed acts alleged in the administrative complaint that would warrant disciplinary action. Walker v. State, 322 So.2d 612 (Fla. 3d DCA 1975); Reid v. Florida Real Estate Commission, 188 So.2d 846 (Fla. 2d DCA 1966). See The Florida Bar v. Rayman, 238 So.2d 594 (Fla. 1970). Disciplinary proceedings like the present case are potentially license revocation proceedings, since the penalty for the infraction alleged lies within the discretion of the disciplining authority, if allegations of misconduct are established at the hearing. Florida Real Estate Commission v. Webb, 367 So.2d 201 (Fla. 1979).

14. In a matter as grave as license revocation proceedings, the duty allegedly breached by the licensee must appear clearly from applicable statutes or rules or have a "substantial basis," Bowling v. Department of Insurance, 394 So.2d 165, 173 (Fla. 1st DCA 1981), in the evidence. License revocation proceedings have, indeed, been said to be "'penal' in nature." State ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487, 491 (Fla. 1973); Kozerowitz v. Florida Real Estate Commission, 289 So.2d 391 (Fla. 1974); Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1979)(reh. den. 1980).

    
    

15. The evidence does establish "concealment" by respondent in failing to disclose his status as a joint venturer to his broker while she was foregoing her share of commissions owed by the joint venture, commissions he had received his full share of. The evidence failed to establish any duty for him to disclose his interest to the Spences, however. For one thing, the joint venture was not shown to have gelled at the time the Spences signed the sales contract. His assurance to the Spences that they could move a trailer on within six weeks was not shown to be an intentional misrepresentation or otherwise an appropriate basis for disciplinary action.

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED

That Petitioner suspend respondent's license for thirty (30) days.

DONE and ENTERED this 4th day of January, 1983, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of January, 1983.

COPIES FURNISHED:

W. Douglas Moody, Jr., Esquire

119 North Monroe Street Tallahassee, Florida 32301

Edmund W. Holt, Esquire Three West Garden Street

480 Blount Building Pensacola, Florida 32501

Samuel R. Shorstein, Secretary Department of Professional

Regulation

Old Courthouse Square Building

130 North Monroe Street Tallahassee, Florida 32301

Carlos B. Stafford, Executive Director Department of Professional

Regulation, Board of Real Estate

P.O. Box 1900

Orlando, Florida 32802

William Furlow, Esquire

P.O. Box 1900

Orlando, Florida 32802

Docket for Case No: 81-002121

Orders for Case No: 81-002121