STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 82-238

)

MARTIN MELLS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., held a formal hearing in this case on May 27, 1982, in Tampa, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Ira Weinstein, Esquire

2021 East Seventh Avenue Tampa, Florida 33605

ISSUE PRESENTED

Whether respondent's license as a real estate broker should be disciplined on charges that he failed to deliver money which he was not entitled to retain, violated a duty imposed on him by a real estate contract, and was culpably negligent in a business transaction.

BACKGROUND

By administrative complaint dated December 9, 1981, as amended, petitioner, Department of professional Regulation, Florida Real Estate Commission 1/ ("Department") charged respondent Martin Mells ("respondent") with two counts of violating Chapter 475, Florida Statutes (1979). Specifically, the Department alleged that respondent improperly retained money to which he was not entitled, was culpably negligent in a business transaction, and violated a duty imposed on him by a real estate contract. Based on these charges, the Department seeks to discipline respondent's real estate broker's license.

Respondent requested a hearing on the charges, and on February 1, 1982, the Department forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer.

At hearing, the Department called Mary Cole as its witness. Respondent testified in his own behalf and offered one exhibit into evidence.

A transcript of hearing was filed June 22, 1982. The parties submitted proposed findings of fact and conclusions of law by August 23, 1982.

Based on the evidence presented at hearing, the following facts are determined:

FINDINGS OF FACT

1. Respondent is, and at all times pertinent to the charges has been, a licensed Florida real estate broker. (Admission.)

   
   

2. In October, 1979, Mary Cole owned a house at 3713 Anna Drive, Apopka, Florida. Since she had decided to move to Miami for possibly two years, she hired respondent, a broker in Orlando, to handle renting and management of her house. They verbally agreed that the house should be rented as a "handy-man special," that the tenants would be expected to make certain repairs and improvements to the home in return for a reduced monthly rent. Specifically, they agreed that respondent would locate tenants and manage the property for a two-year period; that the tenants would pay rent of $150 a month in addition to maintaining the house, replacing drywall, paneling the interior walls with plywood on hand, tiling the bathroom and completing other necessary repairs; and that respondent would remit to Ms. Cole, monthly, $90 of the $150 rental payment he collected from the tenants. As to the remaining balance of $60, the parties disagree. (Testimony of Mells, Cole.)

   
   

3. Ms. Cole understood that respondent would spend between $36 and $40 of the 60 to pay for building materials used by the tenants in repairing and doing finishing work to the house; that he would retain only $24 as his fee for acting as the rental agent. Respondent, however, believed that the full $60 balance was to be retained as his property management fee. This conflict need not be resolved here since it is immaterial to the ultimate issue. (Testimony of Cole, Mells.)

   
   

4. They also disagree on who paid for replacement of the stove and refrigerator. When the home was rented, the stove and refrigerator were operable but Ms. Cole realized they would need replacing. The tenants eventually replaced them. Respondent contended that he reimbursed the tenants

   $105 for these items. Ms. Cole claims that the tenants told her they paid for them. Since this conflict is also immaterial, it is unnecessary to resolve it here. (Testimony of Cole, Mells.)

   
   

5. In October, 1979, respondent rented the house to tenants pursuant to his verbal agreement with Ms. Cole. The next month, he forwarded to her a check for $350, including the first and last months' rent and a $100 security deposit. In December, 1979, and continuing through November, 1980, he forwarded, each month, a $90 rental payment to Ms. Cole. Although he was regularly collecting rent payments from the tenants, he did not forward to Ms. Cole any payments in December, 1979, or January, 1980. In February, he forwarded to her a $75 payment, $15 short of the required $90. Ms. Cole tried, without success, to contact respondent about the missing payments. Then, in frustration, she contacted the tenants and told them to forward their checks directly to her. (Testimony of Cole; Mells.)

6. Respondent explains that he withheld rental payments to Ms. Cole for December, 1979, January, 1980, and part of February, 1980, in order to set aside funds to pay for needed repairs to the leaking roof of Ms. Cole's house. (He did not, however, obtain her prior authorization to withhold payments for this purpose. Respondent testified only that he wrote Ms. Cole a letter, not produced at hearing, stating that he would withhold funds for roof repairs.) In March, 1980, when he found that Ms. Cole had instructed the tenants to send the full payments directly to her, he kept rent money he had withheld because he thought she was trying to avoid paying his management fee. (Tr. P. 61.) 2/

   
   

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Florida Statutes (1981).

   
   

8. Section 475.25(1), Florida Statutes (1981), empowers the Florida Real Estate Commission to suspend or revoke a real estate broker's license, issue a reprimand, or impose a $1,000 fine if it finds a licensee has:

   
   

   (b) 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. . .

   (d) Failed to account or delivery to any person. . .at the time which has been agreed upon. . .any personal property such as money

   . . .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. . .

   
   

9. License revocation proceedings are penal in nature. Prosecuting agencies must prove their charges by clear and convincing evidence, Reid v. Florida Real Estate Commission, 188 So.2d 846 (Fla. 2d DCA 1966); Walker v. State, 322 So.2d 612 (Fla. 3d DCA 1975), by evidence which is indubitably as substantial as the penalty facing the licensee. Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981).

   
   

10. Here, the Department has convincingly proved that respondent violated Section 475.25(1)(d) in February, 1981, by failing to remit rent money (a minimum of $195) to Ms. Cole required by their agreement; this money did not belong to him and, under the circumstances, he was not entitled in law or equity to keep it. His wrongful retention of funds which he had no right to keep also constitutes a "breach of trust" in a business transaction in violation of Section 475.25(1)(b). All other charges of misconduct alleged in the administrative complaint have not been substantiated.

    
    

11. License suspension and revocation are drastic penalties which should be used only in the most serious cases of professional misconduct. Respondent's violations are not of this magnitude. No prior misconduct by him has been shown. It is concluded that his violations warrant the imposition of an administrative fine of $1,000.

    
    

12. The parties' proposed findings of fact have been carefully considered. To the extent they are incorporated herein, they are adopted. Otherwise, they

are rejected as unsupported by the necessary quantum of evidence or unnecessary to resolution of the issues presented.

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

That respondent be administrative fined $1,000 for the above two violations of Chapter 475, Florida Statutes (1981).

DONE and RECOMMENDED this 1st day of October, 1982, in Tallahassee, Florida.

R. L. CALEEN, JR. 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 1st day of October, 1982.

ENDNOTES

1/ Pursuant to Chapter 82-3, Section 6, Laws of Florida (1982), the Board of Real Estate was renamed the Florida Real Estate Commission.

2/ Pages of the transcript of hearing will be referred to as "Tr. ."

COPIES FURNISHED:

James H. Gillis, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Ira Weinstein, Esquire 2021 East Seventh Avenue Tampa, Florida 33605

Samuel R. Shorstein, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Carlos B. Stafford Executive Director Florida Real Estate

Commission

Post Office Box 1900 Orlando, Florida 32802

Docket for Case No: 82-000238

Orders for Case No: 82-000238