Judges: K. N. AYERS
Agency: Department of Business and Professional Regulation
Latest Update: Sep. 07, 1982
Summary: Respondent acted as business broker, not real estate broker while license suspended. Recommend restoring Respondent's license.
82-1028STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )
)
Petitioner, )
)
vs. ) CASE NO. 82-1028
)
DUANE MUMFORD, )
)
Respondent. )
) DUANE MUMFORD, )
)
Petitioner, )
)
vs. ) CASE NO. 82-1056
)
DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a consolidated public hearing in the above-styled cases on 1 June 1982, at Orlando, Florida.
APPEARANCES
For the Board of Bruce D. Lamb, Esquire
Real Estate: Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32301
For Duane Mumford: Kenneth M. Meer, Esquire
Post Office Drawer B Winter Park, Florida 32790
By Administrative Complaint dated 22 March 1982, the Department of Professional Regulation, Board of Real Estate, Petitioner in Case No. 82-1028, seeks to revoke, suspend or otherwise discipline the real estate broker's license of Duane T. Mumford, Respondent. As grounds therefor it is alleged that Respondent acted as a broker in a real estate transaction while his license was suspended. In Case No. 82-1056 Petitioner Mumford seeks to compel the Department of Professional Regulation, Board of Real Estate (now the Florida Real Estate Commission), Respondent, to reinstate his license as the term of the suspension has been completed. Since the denial of reinstatement is based on the allegations in the Administrative Complaint, both cases turn on the
allegations that Mumford acted as a real estate broker while his license was suspended.
Petitioner called five witnesses; five witnesses, including Respondent, testified on behalf of Respondent; and 23 exhibits were admitted into evidence. The facts are largely undisputed. The sole issue is whether Mumford acted as a real estate broker while his license was suspended in the sale of KOA Kamp- Ground, Orange City, Florida, and in placing advertisements as contended by the Department of Professional Regulation.
Proposed findings submitted by the parties and not included herein were not supported by the evidence or were deemed immaterial to the results reached.
FINDINGS OF FACT
Duane T. Mumford was licensed as a real estate broker by the Florida Real Estate Commission and remained so licensed until 15 September 1980 when his license was suspended by Board of Real Estate Order of that date. The Amended Final Order (Exhibit 6) provided the suspension of Mumford's license for two years or until Mumford's criminal probation was lifted, whichever first occurred, would commence 20 days after the 15 September 1980 date of this order.
Respondent was advised by his attorney, and this advice was confirmed by Closing Order of the Probable Cause Panel (Exhibit 12), that he had an additional 30-day period in which to appeal the order of suspension; and that his suspension would not be effective until that time expired. Accordingly, he was told he could continue to operate under the authority of his license until 4 November 1980.
Respondent placed advertisements as a real estate broker in the Sentinel Star on 18-19 October 1980 and in the Deland Pennysaver on 30 October 1980. No evidence was presented that he held himself out as a real estate broker after 30 October 1980.
In the undated, unsigned but certified Closing Order (Exhibit 12) which was admitted into evidence without objection and for the purpose of showing that Petitioner had taken final agency action on the complaint involving advertising as a real estate broker on 9 October 1980 while his license was suspended, Petitioner held that Respondent's advertising did not constitute a violation of Section 475.42(1)(a). This action was confirmed in Department of Professional Regulation's letter of December 16, 1980 (part of Exhibit 12), to be final agency action by the Board.
On January 16, 1981, Mumford placed an ad in the Wall Street Journal (Florida edition) in which he advertised an apartment complex for sale in Amarillo, Texas, and identified himself as a commercial business broker. Due to an error on the part of the Journal, the ad was placed in the Florida real estate section rather than the Texas section as specified by Mumford.
On October 19, 1981, the recommendation of the Massachusetts Probation Department was accepted and Mumford was discharged from his probation by the Massachusetts court (Exhibit 13). This event would trigger the lifting of his suspension of license under the terms of the Amended Final Order entered September 15, 1980 (Exhibit 6), absent any other alleged infraction by Mumford.
Prior to the suspension of his license Mumford, while in the firm of Mauney and Mumford, Inc., obtained an open listing on KOA Kamp-Ground, Orange
City, Florida. He prepared and had printed a brochure on this property (Exhibit
8) in which various financial statements were presented to show the investment potential of the property. When Respondent's license was suspended, the firm broke up and the listings were shared by Mauney and Mumford.
Subsequent to September 15, 1980, Mumford has remained in close contact with his attorney with respect to activities he could perform, first as a real estate broker and, after November 4, 1980, as a business broker. In accordance with the advise from his attorney, Mumford placed no advertisements as a real estate broker after October 1980 and, in all of his activities pertaining to the sale of commercial property, held himself out as a business broker.
According to Mumford's testimony, which was unrebutted, he devoted most of his efforts while a real estate broker, to the sale of commercial property where his training and experience in accounting and taxation was more valuable. Following the suspension of his real estate license, he held himself out as a business broker. People with whom he had dealt as a real estate broker and with whom he subsequently dealt as a business broker, did not generally recognize any difference in the functions Mumford performed; and many did not realize he was purporting to act as a business broker despite his use of the title "Business Broker" on documents he prepared.
As a result of an ad placed by Mumford on the Orange City KOA Kamp- Ground, a client of Don Gallagher Realty called about the property and arrangements were made for the buyer to see the Orange City KOA Kamp-Ground. This visit led to the consummation of a contract (Exhibit 9) for the sale and purchase of the site and related equipment. This contract contained three addenda which included, inter alia, a four-page inventory of personal property an assignment of the KOA Kamp-Ground franchise; and agreement on the part of sellers not to open another campground for the period of two years within a 50- mile radius; an agreement on the part of sellers to remain on premises for up to
30 days to assist the buyer to commence operation; and provisions for payings the commissions to the listing broker, Mumford, and the selling broker, Gallagher. Mumford signed Exhibit 9 as "Business Broker."
Before the closing of this property on 2 February 1981, all parties were aware that Mumford's real estate license was suspended and that he was purporting to participate in the deal as a business broker. Gallagher called the Florida Real Estate Commission to ascertain that it was proper for him to continue with the closing as the buying broker with Mumford as the selling broker.
Prior to the closing, brokerage agreements (Exhibits 10 and 16) were prepared by Mumford and Gallagher, respectively, and executed by all parties. Exhibit 10 modified addendum 2 to Exhibit 9 to clarify Mumford's status as a business broker and provided the brokerage fee be paid to Mumford over a three- year period. Exhibit 16 provided for the brokerage fee to be paid to Gallagher over a three-year period at $900 per month. Exhibit 10 provided for Mumford's commission to commence 37 months after the closing. There was insufficient cash down payment in this sale to pay the sales commission at closing. Accordingly, all parties agreed to the delayed payment provisions.
In consideration of his waiting three years to start receiving his commission, Mumford entered into an oral agreement with the sellers whereby they agreed to pay him an additional $2,500.
The sale price for this transaction was $675,000. In 1980 the land was carried on the tax rolls of Volusia County at $141,600 and the buildings at
$41,830. In 1981 these tax rolls showed $141,600 for the land and $71,242 for the buildings. To compute the value of the Kamp-Ground as an ongoing business, Respondent used the figures from the Kamp-Ground income tax return for 1979 to arrive at the cash available from cash flow to pay interest, retire debt and leave a profit for the buyers. This resulted in an estimated value for "good will" of approximately $200,000. The value of the mobile homes not attached to realty was placed at $10,000; a value was placed on the agreement for sellers to remain for 30 days to assist buyers and not to compete for two years; on the KOA franchise; on the store inventory of $5,000; and on the value of the other personal property. The total of these values as determined by Mumford was
$288,000, from which he computed his fee of $28,800.
An experienced business broker called by Respondent as an expert witness opined that the non-real property value of the Kamp-Ground exceeded
$300,000. An accountant also called by Respondent as an expert witness opined that the methodology used by Respondent to establish the value of the ongoing portion of the Orange City KOA Kamp-Ground business met acceptable accounting principles and that he concurred in the value of "good will" and other non-real property assets of the Orange City KOA Kamp-Ground enterprise as determined by Mumford.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Section 475.17, Florida Statutes, establishes qualifications for practice as a real estate licensee or registrant. This provides in pertinent part:
If the applicant has been denied registration . . . or his regis- tration . . . has been revoked or suspended . . . or if the applicant has been guilty of conduct or prac- tices . . . which would have been grounds for revoking or suspending his license had the applicant been registered, the applicant shall be deemed not to be qualified. . . .
Section 475.42(1)(a), Florida Statutes, provides:
No person shall operate as a broker or salesman without being the holder
of a valid and current license therefor.
This is the provision of the statute Respondent is charged with violating and which violation would also be a violation of Section 475.25(1)(a). Section
475.181 provides that the Board shall refuse to certify any applicant who has violated any of the provisions of F.S. 475.42.
At the time the Florida Real Estate Commission received notification that Respondent's criminal probation had been lifted, information had been received, and was being investigated, that Respondent had committed acts for
which, if he was found guilty, could lead to revocation or suspension of his license as a broker, viz, that he had operated as a broker while his registration was suspended. That complaint actually resulted in the Administrative Complaint of 22 March upon which these proceedings were initiated. Under these circumstance, the denial of Respondent's re-registration was proper.
Prior to January 1, 1982, individuals engaged in the activity of dealing in business enterprises or business opportunities for another for compensation were not covered by the provisions of Chapter 475. However, those selling businesses which comprised real property as well as the business enterprise, or ongoing business, could not have their compensation computed on any part of the value of real estate. Rockmatt Corporation v. Erlich, 294 So.2d
412 (Fla. 3rd DCA 1974). If Respondent acted as a business broker and not as a real estate broker, he was entitled to a commission based on the value of the business exclusive of the real estate included therewith.
From the foregoing it is concluded that in the sale of Orange City KOA Kamp-Ground Respondent acted as a business broker and none of his commission was computed based upon the value of the real property involved in the sale. All parties were aware of Respondent's status at the time of closing and that he had performed brokerage services which entitled him to a commission.
With respect to the advertisements placed by Respondent as a real estate broker in the Sentinel Star and Deland Pennysaver on or before 30 October 1980, that issue was settled by Closing Order (Exhibit 12). The certified copy of that Closing Order introduced into evidence shows the original was never signed by the Chairman of the Probable Cause panel; however, the December 16, 1980, letter attached to Exhibit 12 states the panel and the Department both found disciplinary proceedings were not warranted and the case was dismissed. A review of the Closing Order clearly indicates that the dismissal of the complaint was predicated upon the legal opinion of Mumford's lawyer, which was concurred in by the Board, that a licensee whose license has been suspended may continue to engage in real estate activities for an additional 30 days from the effective date of his suspension, regardless of whether he appeals the suspension. Whether this legal advice is correct is not necessary to determine at this time. It is sufficient to say that Petitioner is estopped to say Mumford's advertising through October 1980 was in violation of Section 475.25(1)(a). The Closing Order constituted final agency action and hence estoppel by judgment or collateral estoppel. Florida Department of Health and Rehabilitative Services v. Vernon, 379 So.2d 683 (Fla. 2d DCA 1980)
While the possibility of equitable estoppel also exists, this was not pleaded and no evidence was presented that Mumford's October 1980 advertising was placed in reliance on Petitioner's advice that he could continue to operate as a broker for an additional 30 days after the effective date of his suspension. cf. Reo v. Hobbs, 368 So.2d 367 (Fla. 1 DCA 1979)
In Respondent's advertising of the Texas apartment building which appeared in the Wall Street Journal on January 16, 1981, he clearly identified himself as a business broker. Since such an ad could have been placed by anyone without violating Section 475.42(1)(a), it could also be placed by Respondent.
From the foregoing it is concluded that Petitioner is estopped from again charging Duane T. Mumford with violation of Section 475.25(1)(a), Florida Statutes, for placing advertisement in the Sentinel Star and the Deland Pennysaver in October 1980; that he did not violate any laws in placing the ad
as a business broker in the Wall Street Journal on 16 January 1981, and that he did not act as a real estate broker in the sale of the Orange City KOA Kamp- Ground. It is, therefore,
RECOMMENDED that the Administrative Complaint be dismissed and Duane T. Mumford's registration as a real estate broker be reissued.
ENTERED this 29th day of June, 1982, at Tallahassee, Florida.
K. N. AYERS, 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 29th day of June, 1982.
COPIES FURNISHED:
Bruce D. Lamb, Esquire Jeffrey A. Miller, Esquire Department of Professional Assistant Attorney General
Regulation Department of Legal Affairs
130 North Monroe Street The Capitol
Tallahassee, Florida 32301 Tallahassee, Florida 32301
Kenneth M. Meer, Esquire Post Office Drawer B Winter Park, Florida 32790
Frederick H. Wilsen, Esquire Department of Professional
Regulation
130 North Monroe Street Tallahassee, Florida 32301
C. B. Stafford, Executive Director Florida Real Estate Commission Post Office Box 1900
Orlando, Florida 32802
Samuel R. Shorstein, Secretary Department of Professional
Regulation
130 North Monroe Street Tallahassee, Florida 32301
Docket for Case No: 82-001028
Orders for Case No: 82-001028
| Issue Date |
Document |
Summary |
|
Aug. 18, 1982 |
Agency Final Order
|
|
|
Jun. 29, 1982 |
Recommended Order
|
Respondent acted as business broker, not real estate broker while license suspended. Recommend restoring Respondent's license.
|
