STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 84-1263

)

DAVID WILLIAM HOUSER, )

)

Respondent. )

)

RECOMMENDED ORDER

This cause came on for formal hearing before P. Michael Ruff, Hearing Officer, on May 23, 1984, in Cocoa, Florida. The appearances were as follows:

APPEARANCES

For Petitioner: Fred Langford, Esquire

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

For Respondent: Rodney L. Russell, Esquire

415 North Magnolia Avenue Post Office Box 886 Orlando, Florida 32802

Pursuant to its administrative complaint filed herein, the Petitioner asserts that the Respondent, David William Houser, is guilty of having operated as a real estate broker or as a salesman for a person not registered as his employer in violation of Section 475.42(1)(b) in that he acted "without the prior knowledge, consent or supervision of his registered employer, Alfred H. Trafford, Trafford Realty Company." The gravaman of the administrative complaint concerns the Respondent's alleged conduct involved in engaging in a real estate transaction in which he allegedly did not act on behalf of his broker, and did not turn over to his broker the sales commission related to the sale of the commercial property involved when it was received. Thus it is contended that he transacted real estate sales business for another and not on behalf of the broker who was registered as his employer, for purposes of Section 475.42(1)(b) and Section 475.25(1)(a), Florida Statutes.

At the hearing, the Petitioner presented five witnesses and the Respondent presented five, including the testimony of the Respondent himself. The Petitioner presented three exhibits, all of which were admitted into evidence, and the Respondent presented Exhibits A through I, all of which were admitted into evidence.

At the conclusion of the proceeding, the parties requested a transcript and the right to file proposed findings of fact and conclusions of law, which were timely filed.

All proposed findings of fact, conclusions of law, and supporting arguments have been considered. To the extent that they are in accordance with the findings, conclusions and views stated herein, they are accepted. To the extent that the proposed findings, conclusions and arguments asserted are inconsistent herewith, they are rejected. Certain proposed findings and conclusions are omitted as not relevant nor as necessary to a proper determination of the material issues presented. To the extent that the testimony of various witnesses is not in accord with the findings herein, it is not credited. See, Sonny's Italian Restaurant vs. Department of Business Regulation, 414 So.2d, 1156, 1157 (Fla. 3rd DCA 1982); Sierra Club v. Orlando Utilities Commission, 436

So.2d 383 (Fla. 5th DCA 1983).

The issue concerns whether the Respondent acted in the transaction described below, solely on his own behalf, or as a salesman acting on behalf of his broker, and thus whether he has violated Section 475.42(1)(b) and Section 475.25(1)(a), Florida Statutes.

FINDINGS OF FACT

1. The Respondent, David William Houser, at times pertinent hereto, was a licensed real estate salesman registered in the employ of Alfred H. Trafford, Trafford Realty Company, a licensed real estate broker. The Petitioner is an agency of the State of Florida charged with licensing, regulating the licensure status of realtors and enforcing the disciplinary provisions of Chapter 475, Florida Statutes. The Respondent has been a licensed real estate salesman since 1975, and he has been registered with the above-named broker for seven years prior to June, 1983.

   
   

2. In February, 1983, the Respondent, on behalf of a client, Mr. Robert Carroll, began attempting to locate commercial property in the Cocoa, Florida area for purchase by Mr. Carroll. Through contacts with the Respondent at his place of business at Trafford Company, and through information received in conversations with the Respondent, Mr. Carroll became immediately aware that the Respondent was an employee of Trafford Realty Company. Mr. Trafford, the broker, knew that the Respondent was attempting to locate commercial property for Mr. Carroll and Mr. Trafford assisted, advised and discussed the search for property with the Respondent, conferring with the Respondent as to available commercial properties that might be suitable for Mr. Carroll's purposes.

   
   

3. Respondent located a parcel of property on Clearlake Road in Cocoa which was initially acceptable to Mr. Carroll. The property was not listed at the time with Trafford Realty Company. The Respondent prepared a contract (offer to purchase) which was executed by Mr. Carroll as buyer. At the time Carroll executed the offer to purchase, he gave the Respondent an earnest money deposit check in the amount of $1,000 payable to Trafford Realty Company, at the Respondent's behest. At all times relevant to this administrative complaint, Trafford Realty Company had a policy id procedure for processing of real estate sales contracts which provided that earnest money was to be deposited in the company's escrow account. The procedure required that the earnest money check and a copy of the contract be delivered by the employee who obtained the contract and check to Trafford Realty Company's general sales manager. The general sales manager was responsible for preparation of an escrow file card and for deposition of the check into the company's escrow account. After obtaining

   the contract for the Clearlake Road property signed by Mr. Carroll, the Respondent submitted the deposit check and a copy of the contract to the sales manager, in accordance with the company's established policy.

   
   

4. The owner of the Clearlake Road property thereafter rejected the contract and the Respondent thereupon continued his search for commercial property satisfactory to Mr. Carroll.

   
   

5. Shortly thereafter, the Respondent located another piece of commercial property on Fiske Boulevard in Cocoa, Florida. This property was the subject of an "open listing" of Trafford Realty Company at the time. The Respondent contacted a fellow salesman of his company, Eileen Bleyer, who held the actual listing on the Fiske Boulevard property. The Respondent told that salesman that he had a potential buyer for the property and asked her to arrange for an appointment with the owner to inspect it. This salesman, Mrs. Bleyer, knew that the Respondent was at the time employed by Trafford Realty Company just as she was, and she called the owner and scheduled an appointment for a Sunday afternoon in February, 1983. The Respondent and Mr. Carroll inspected the property that afternoon in the presence of the owner, Linda Cooper, and her agent, Tom Loomis. The Respondent informed Mr. Loomis that he was a salesman for Trafford Realty Company. The Respondent also gave Mr. Loomis his business card with the name Trafford Realty depicted thereon.

   
   

6. The Respondent ultimately negotiated a contract price for the property, on behalf of Mr. Carroll, with Mr. Loomis. Since the owner did not want to pay a real estate sales commission, the contract did not provide for the commission to be paid by the seller. Instead, Mr. Carroll, the buyer, agreed to pay a commission of $2,500. The contract provided that the $1,000 earnest money check from Mr. Carroll would be delivered to a title company which would handle the transaction.

   
   

7. Trafford Realty Company had no requirement that its salesmen have contracts reviewed by the broker before, during or after they were negotiated and executed. Neither did Trafford Realty Company have any procedures for its salesmen to report contracts to the broker which did not contain a provision for depositing earnest money in the Trafford Realty Company escrow account. In any event, at a regularly scheduled, weekly commercial sales meeting of Trafford Realty Company employees, the Respondent informed Mr. Trafford, his broker, that the Fiske Boulevard property had been sold. Further, on at least two occasions, Mr. Carroll's son left messages with Trafford Realty's receptionist when he or his father attempted to contact the Respondent concerning the status of the contract. Thus, they clearly knew that the Respondent was representing them under the auspices of Trafford Realty Company, rather than on his own. Additionally, after the contract was signed, the Respondent contacted the city of Cocoa to determine the type of zoning applicable to the property and, at his behest, the City Zoning Department personnel responded in writing to the Respondent in care of Trafford Realty Company.

   
   

8. In any event, at the closing of the transaction, Mr. Carroll refused to pay the full commission of $2,500 and indeed, never has paid any of the commission, such that the Respondent could remit all or any portion of it over to his broker or Trafford Realty Company.

   
   

9. The Respondent intended to remit to Trafford Realty Company the entire real estate sales commission after he received it from Mr. Carroll at the closing or thereafter. Mr. Carroll simply never paid any of the commission he was obligated to pay. Further, on instructions from Mr. Carroll, a mortgagor

   who owed Mr. Carroll a mortgage payment regarding certain property he was purchasing, delivered a $2,000 check payable to Mr. Carroll to the Respondent. The Respondent, however, delivered that check, unnegotiated to Mr. Carroll's attorney and obtained a receipt for it. Later that same day, Mr. Carroll's attorney called the Respondent and informed him that he could expect to receive his real estate commission the following week. During that conversation, the Respondent informed Mr. Carroll's attorney that any monies he received were to be turned over to Trafford Realty Company and he wrote a contemporaneous memorandum reiterating that statement. Since Mr. Carroll has not yet paid the real estate sales commission or any part of it, there have never been any monies due Trafford Realty Company which the Respondent had in his possession or control, such that he could misappropriate them.

   
   

   CONCLUSIONS OF LAW

   
   

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

    
    

11. The Respondent is charged in the administrative complaint with violations of Section 475.42(1)(b), Florida Statutes (1981) and Section 475.25(1)(a), Florida Statutes

    (1981). Section 475.42 (1)(b) provides;

    
    

    No person licensed as a salesman shall operate as a broker or operate as a salesman for any person not registered as his employer.

    
    

12. Section 475.25(1)(a) provides that various disciplinary sanctions including revocation, suspension, fine or reprimand may be imposed if the licensee has violated any provision of Section 475.42, Florida Statutes, or Section 455.227(1), Florida Statutes. Section 455.227(1) provides, at the only pertinent subsections, (a) and (b), that a licensee may be so disciplined by making misleading, deceptive, untrue or fraudulent representations in the practice of his profession and that he may be disciplined for intentionally violating any rule of the Board or the Department. No intentional violation of any rule of the Board or Department has been pled or proven in this proceeding. There has been no proof that the Respondent made any misleading, deceptive, untrue or fraudulent representations in the practice of his profession either.

    
    

13. The Respondent in all stages of this transaction disclosed to his broker and employer that he was attempting to obtain commercial property for Mr. Carroll, his client, and that indeed he had obtained a contract for the purchase by his client of the Fiske Boulevard property. He told his broker that the property had been sold. At all times pertinent, he had disclosed to his client, Mr. Carroll, that he was an agent for and operating on behalf of his broker and employer, Mr. Trafford and Trafford Realty Company. He disclosed such to the sellers of the property, Ms. Cooper and Mr. Loomis. He represented also that he acted on behalf of his broker, Trafford, in his dealings with the county zoning department as evidenced by the fact that he had them contact him at the Trafford Realty office, rather than at another address or telephone listing, which would likely have been the case had he attempted to engage in a fraudulent course of dealing designed to conceal the fact that he worked for Trafford Realty Company, perhaps in hopes of obtaining the entire real estate sales commission for himself.

14. The fact that he engaged in no misleading, deceptive, untrue or fraudulent conduct is buttressed by the showing that in the earlier transaction, which failed to close, regarding the Clearlake Road property, he obtained the earnest money check and a contract and dutifully deposited the check in Trafford Realty's escrow account and informed the sales manager of the transaction, as company policy required, even though Trafford had no listing on that property. He did not follow this procedure with regard to the Fiske Boulevard transaction since there was no requirement by his company that he disclose the contract when no earnest money deposit had been received for placement in his company's escrow account. There is no proof to show that he intended to defraud his broker of any commission money, had he received any, and the terms of the contract dictated that the earnest money deposit be paid directly from the buyer, Mr. Carroll, to a title company. Thus, no obligation to deposit any earnest money check into Trafford Realty's escrow account ever arose on the part of the Respondent.

    
    

15. It has simply not been demonstrated that the Respondent ever sought to mislead any of the participants in the transaction nor his broker, into believing that he was either operating other than under the auspices of Trafford Realty Company, or, in the case of his broker, that he had not secured a contract in the course of his employment with Trafford which would result in a real estate commission being made payable to Trafford, when in fact he had. Instead, he disclosed to Mr. Trafford the efforts he was making to obtain the piece of property and disclosed to Mr. Trafford the fact that the sale had been consummated. He simply never received any real estate commission which he could pay over to Trafford Realty.

    
    

16. There is simply no evidence that the Respondent failed to disclose a material fact regarding a transaction, made any misrepresentation, material or otherwise, either to the sellers or purchasers in the transaction, or to his broker or superiors at Trafford Realty Company. To be punishable a misrepresentation must be made which is material and with knowledge by the one making the misrepresentation, that it is indeed false. Thus, fraud or fraudulent representations in the practice of the Respondent's profession, as well as misleading, deceptive or untrue ones, necessarily involve the element of intent. No such nefarious intent has been demonstrated here and there has not even been any showing that a misrepresentation was made, intentionally or otherwise. See, Shelton v. Florida Real Estate Commission, 120 So.2d 191 (Fla. 2nd DCA 1960); Brod v. Jernigan, 188 So.2d 575 (Fla. 2nd DCA 1966).

    
    

17. Further, with regard to the charge concerning Section Florida Statutes, there has been no evidence to show that the Respondent operated as a salesman on behalf of any person other than Trafford Realty Company and Trafford, who was duly registered as his employer. For instance, there was no showing that Respondent operated on behalf of another real estate firm nor on behalf of himself, as the gravaman of the administrative complaint seems to allege. Indeed, at all phases off this transaction, the Respondent informed Mr. Trafford and his superiors of his efforts and progress in locating a piece of commercial-property for Mr. Carroll and consummating a sale. He informed Mr. Carroll, the sellers and others, of his employment by, and representation of, Trafford Realty Company. It was not shown that he acted in any way to lead the participants in the subject transaction to believe he was acting independently of Trafford Realty Company for reasons of pecuniary advantage or otherwise. In short, it has been demonstrated that at all relevant times the Respondent was acting under the direction, control or management of his registered broker. Thus, it has not been demonstrated that he violated the statutory authority with which he is charged in the administrative complaint.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses and the pleadings and arguments of the parties, it is, therefore

RECOMMENDED that the administrative complaint be DISMISSED in its entirety. DONE and ENTERED this 24th day of October, 1984, in Tallahassee, Florida.

P. MICHAEL RUFF, 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 24th day of October, 1984.

COPIES FURNISHED:

Fred Langford, Esquire Department of Professional

Regulation

Post Office Box 1900 Orlando, Florida 32802

Rodney L. Russell, Esquire

415 North Magnolia Avenue Post Office Box 886 Orlando, Florida 32802

Harold Huff, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Fred M. Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 84-001263

Orders for Case No: 84-001263