Judges: WILLIAM J. KENDRICK
Agency: Department of Business and Professional Regulation
Latest Update: May 30, 1985
Summary: While no one corporation divided its property into more that fifty lots, the total scheme constituted a common promotional plan and violated law.
84-2200STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA, DEPARTMENT ) OF BUSINESS REGULATION, )
DIVISION OF FLORIDA LAND )
SALES AND CONDOMINIUMS, )
)
Petitioner, )
)
vs. ) CASE NO. 84-2200
) CITRUS GROVE ACRES, INC. and ) NORMA TRENTO, d/b/a CITRUS )
GROVE ACRES )
)
Respondents. )
) STATE OF FLORIDA, DEPARTMENT ) OF BUSINESS REGULATION, )
DIVISION OF LAND )
SALES AND CONDOMINIUMS )
)
Petitioners, )
)
vs. ) CASE NO. 84-3125
)
JAMES A. JOSS, )
)
Respondent. )
) STATE OF FLORIDA, DEPARTMENT ) OF BUSINESS REGULATION, )
DIVISION OF FLORIDA LAND )
SALES AND CONDOMINIUMS, )
)
Petitioner, )
)
vs. ) CASE NO. 84-3770
) HIGHLAND RANCH ACRES, INC., and ) STEVE MISHKIN, )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a public hearing in the above-styled cases on April 24, 1985, at Miami, Florida.
APPEARANCES
For Petitioner: Thomas A. Klein, Esquire
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
For Respondent: Scott T. Eber, Esquire
3550 Biscayne Boulevard, Suite 504
Miami, Florida 33137 PRELIMINARY STATEMENT
These proceedings raise the issue of whether Respondents are exempt from the public offering and registration requirements of Section 498.23, Florida Statutes. Respondents contend they are exempt. Petitioner contends Respondents' activities constitute a "common promotional plan" and were "adopted for the purpose of evasion of" Chapter 498, Florida Statutes.
At final hearing Petitioner offered Exhibits 1-7, and Exhibits 1-5 and the first paragraph of Exhibit 6 were received into evidence. Petitioner called Michael J. Moskowitz and William J. Norred, as witnesses. Respondents offered Exhibits 1-4; and they were received into evidence. Respondents James A. Joss, Steven M. Mishkin and Norma Trento, testified on their own behalf.
At the parties' request an extension of time was given in which to submit proposed findings of fact and conclusions of law. The parties waived the requirement set forth in Rule 28-5.402, F.A.C., that a recommended order be entered within 30 days after the hearing.
The parties have submitted proposed findings of fact and conclusions of law, and they have been reviewed and considered. To the extent that any proposed findings have not been adopted in this Recommended Order, they have been rejected far as being subordinate, cumulative, immaterial, or unnecessary, or as being contrary to the facts as found in this Recommended Order.
FINDINGS OF FACT
On September 24, 1982, Respondents, James A. Joss, Steven M. Mishkin and Norma Trento, together with Thomas Moskowitz, formed Highland Ranch Acres, Inc. (Highland Ranch), a Florida corporation, for the purpose of acquiring, subdividing and selling certain land in Section 35, Township 24 South, Range 25 East Lake County, Florida. These individuals were the sole principals and stockholders of Highland Ranch, and held, respectively, one-sixth, one-sixth, one-third and one-third of Highland Ranch's capital stock. All of the above- referenced individuals made an initial capital contribution to Highland Ranch, except Joss, who donated his time, knowledge and expertise in land sales.
The land in question, acquired from W. D. Land Company consisted of approximately 50 acres, which Highland Ranch "subdivided" into 40 parcels of 1- 1/4 acres each, and consecutively numbered 65 through 104. Highland Ranch marketed the parcels to residents and nonresidents of the State of Florida by telephone solicitation, and a follow-up brochure.
On March 3, 1983, the same principals formed Citrus Grove Acres, Inc. (Citrus Grove), a Florida corporation, for the same purposes they had formed Highland Ranch. Their respective ownership of the capital stock of Citrus Grove
was the same as it had been in Highland Ranch. Citrus Grove acquired approximately 53 acres of land from W. D. Land Company in the same section, township and range of Lake County, Florida, as those lands acquired by Highland Ranch. Citrus Grove "subdivided" these lands into 42 parcels of 1-1/4 acres each, and consecutively numbered them 105 through 146, and marketed them in the same manner the lands owned by Highland Ranch had been sold.
On June 13, 1983, the same principals formed Central Florida Highlands, Inc. (Central Florida), a Florida corporation, for the same purposes they had formed Highland Ranch and Citrus Grove. Their respective ownership of the capital stock of Central Florida was the same as it had been in Highland Ranch and Citrus Grove. Central Florida acquired approximately 15 acres of land from
W. D. Land Company in the same section, township and range of Lake County, Florida, as those lands acquired by Highland Ranch and Citrus Grove. Central Florida subdivided these lands into 12 parcels of 1-1/4 acres each, and consecutively numbered them 147 through 158, and marketed them in the same manner the lands owned by Highland Ranch and Citrus Grove had been sold.
Highland Ranch, Citrus Grove and Central Florida had the same principals, who performed the same basic duties. Joss, assisted by Mishkin, was responsible for the conception and operation of the business of the three corporations. Joss, as president, executed the purchase and sale agreements on behalf of Highland Ranch; Mishkin, as president, executed the purchase and sales agreements on behalf of Central Florida; and Trento, as president, executed the purchase and sales agreements on behalf of Citrus Grove.
The purchase and sale agreements, and the brochures mailed to the telephone prospects, except for the corporate name, were identical in each instance. The photographs in the brochures which purported to depict the lands being offered, were identical. None of the photographs depicted the subject lands but rather were of lands Respondent Joss had marketed 15 years previously through Groveland Ranch Acres, Inc.
All of the lands in question were purchased from the same seller, were located in the same section, township and range of Lake County, Florida, were subdivided into 1-1/4 acre lots which were consecutively numbered 65 through
158. The lands were located in the Green Swamp Area of Critical State Concern, were zoned agricultural and required a minimum of five acres to be eligible for a building permit, were not platted with the county, and contained no avenues of ingress and egress.
Respondents were advised by their attorney, Michael J. Moskowitz, that Chapter 498, Fla. Stat., required registration if they proposed to offer more than 50 parcels to more than 45 persons. He further advised them that if the subsequent corporation(s) had the same principals and other indicia of a common promotional plan that their activities might be deemed a common promotional plan, subjecting them to potential liabilities.
Respondent Joss concedes that the sole reason for forming Citrus Grove and Central Florida, and taking title in their names, instead of simply purchasing the additional lands in the name of Highland Ranch, the existing corporation, was to avoid the registration requirements of Chapter 498, Fla. Stat.
Highland Ranch, Citrus Grove, and Centra1 Florida did not individually convey more than 50 parcels to more than 45 purchasers. Collectively however, they did convey more than 50 parcels to more than 45 purchasers.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
Chapter 498, Fla. Stat., requires that any person offering or disposing of subdivided lands, unless exempt, must register with the Department of Business Regulation, Division of Florida Land Sales, Condominiums, and Mobile Homes, and provide a current public offering statement to a purchaser. Section 498.023, Fla.Stat., provides in pertinent part:
No person may offer or dispose of or participate in an offer or disposition of any interest in subdivided lands located in this state . . . unless such person has a valid order of registration therefor.
No person may dispose of, or participate in the disposition of any interest in
sub-divided lands unless a current public offering statement is delivered to the purchaser prior to the disposition
Respondents are "persons within the meaning of Section 498.023(1) and (2), Fla. Stat. and did "offer or dispose of, or participate in an offer or disposition" of subdivided lands in the State of Florida without a valid order of registration and without providing a current public offering statement to the purchaser(s). Accordingly, absent exemption, Respondents have violated the provisions of Section 498.023, Fla. Stat.
Respondents contend they are exempt from the registration and the public offering statement requirements of Section 498.023, Fla. Stat., since no corporation divided its property into more than 50 parcels nor disposed of any of its lands to more than 45 persons. Section 498.025(1), Fla. Stat., provides in pertinent part:
Unless the method of offer, disposition, or transfer is adopted for the purpose of evasion of this chapter, the provisions of this chapter do not apply to:
(d) A subdivision as to which the plan of disposition is to dispose to 45 or fewer persons.
Section 498.OO5(17)(b), Fla. Stat., defines "subdivision" or "subdivided lands" as:
Any land, whether contiguous or not, which
is divided or proposed to be divided into 50 or more lots, parcels, units, or interests which
are offered as part of a common promotional plan.
Petitioner asserts that Respondents are not exempt from Chapter 498 because the methods adopted by Respondents were adopted for the purpose of evading Chapter
498 and because the lands subdivided by the three corporations totaled in excess of 50 parcels, were disposed of to more than 45 persons, and constituted a common promotional plan.
Rule 7D-1.03(3), F.A.C., provides:
"Common Promotional Plan" means an offering of subdivided lands by a person or by a group of persons in a similar plan of disposition.
The Division may consider one or more of the following elements, or other elements as may be applicable, to determine whether subdivided lands are, have been or will be offered pursuant to common promotional plan: the offered properties are contiguous; the
offered properties are known, designated, or advertised as a common unit or by common name; the utilization of a common
broker or salespersonnel, common sales office or facilities, or common promotional methods; the utilization of cross-referrals of prospective purchasers between sales operations. (Emphasis supplied.)
Rule 7D-5.O1(2), F.A.C., provides:
Common promotion plan shall include, but is not limited to, any plan of disposition whereby fifty (50) or more lots, parcels
or units whether contiguous or not, are advertised and/or offered for disposition by owner, owners, or their agents. Any advertising, as defined in Sections 498.005,
F.S. which does not differentiate or distinguish the ownership of the lots, parcels or units
so offered or which does not clearly separate the disposition thereof by means of characteristics other than ownership constitutes a common offering.
Respondents' transactions constituted a "common promotional plan" and were not exempt from the registration and the public offering statement provisions of Chapter 498, Fla. Stat. By Respondents' own admission, the sole purpose of forming Central Florida and Citrus Grove, and taking title in those corporate names instead of purchasing the lands in the name of Highland Ranch, was to avoid the registration requirements of Chapter 498, Fla. Stat. Each corporation was, therefore, but a stage in an overall plan to dispose of "subdivided" lands to more than 45 persons. The exemption provided by Section 498.025(1)(d), Fla. Stat., is not available to Respondents. The methods adopted by Respondents were adopted for the purpose of evading the provisions of Chapter
498. Further, the parcels offered by Respondents were part of a common promotional plan, whereby more than 50 parcels were to be offered to more than
45 persons.
18. Respondents' testimony that they did not decide to form Citrus Grove or Central Florida until the parcels owned by the previous corporation were sold, and therefore had no intention to market more than 50 parcels to more than
45 persons, is inherently improbable and unworthy of belief. The evidence is clear that Respondents' corporate structure was adopted as a means of evading registration, that each corporation was no more than a phase of their operation, and that their intention was to market more than 50 parcels to more than 45 persons.
RECOMMENDATION
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Business Regulation, Division of Florida
Land Sales, Condominiums and Mobile Homes (Department), enter a Final Order finding Respondents, James A. Joss, Norma Trento, Steve Mishkin, Citrus Grove Acres, Inc., and Highland Ranch Acres, Inc., guilty of violating the provisions of Sections 498.023(1) and (2), Fla. Stat., and ordering that
Respondents shall not offer or dispose of, or participate in the offer or disposition of any interest in "subdivided lands," as defined by Section 498.005(17), Fla. Stat., unless the subdivided lands are registered with the Department.
Within thirty (30) days of the date of the Final Order, Respondents shall offer all purchasers of land from Highland Ranch Acres, Inc., Citrus Grove Acres, Inc., and Central Florida Highlands, Inc., an opportunity to rescind their agreement, and to receive a refund of all principal and interest paid.
The term "purchaser" as used herein shall mean any person who made any payment to Respondents for lands offered by Highland Ranch Acres, Inc., Citrus Grove Acres, Inc., and Central Florida Highlands, Inc., whether or not such person is currently making payments. The refund offer shall be in writing, and in a form approved by the Department.
After notifying purchasers of the refund offer, Respondents shall determine the total amount of refund liability, based upon purchaser(s) who elect to rescind their agreement, and notify the Department within sixty (60) days of the date of the Final Order of the name(s) of the purchaser(s) electing to rescind their agreement and the amount of refund liability for each such purchaser.
Respondents shall establish a trust or escrow account in a financial institution located within the State of Florida to assure the payment of refunds to those purchasers who elect to rescind, and to assure the conveyance of clear and marketable title to those purchasers who do not elect to rescind, transactions. Respondents shall appoint a trustee or escrow agent acceptable to the Department, who shall have such powers as are necessary to fulfill the purpose of his trust.
Respondents shall collect and deposit any and all monies paid by all purchasers of lands from Highland Ranch Acres, Inc., Citrus Grove Acres, Inc., and Central Florida Highland, Inc., into the trust or escrow account established pursuant to paragraph (4).
Respondents shall have no right, title or interest in or to the aforesaid monies until such time as those purchasers who have elected to rescind have been paid in full, clear and marketable title has been conveyed to those purchasers who have elected not to rescind, the trustee's or escrow agent's fees, if any, have been paid, and the civil penalties hereinafter imposed have been paid.
Respondents shall pay the following civil penalties to the Department, within thirty (30) days from the date of the Final Order:
Norma Trento $10,000.00
Steve Mishkin $20,000.00
James Joss $20,000.00
Highland Ranch Acres, Inc. $20,000.00
Citrus Grove Acres, Inc. $20,000 00
DONE and ENTERED this 30th day of May, 1985, at Tallahassee, Florida.
WILLIAM J. KENDRICK
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
FILED with the Clerk of the Division of Administrative Hearings this 30th day of May, 1985.
COPIES FURNISHED:
Thomas A. Klein, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
Scott T. Eber, Esquire 3550 Biscayne Boulevard
Suite 504
Miami, Florida 33137
E. James Kearney, Director Division of Florida Land
Sales, Condominiums and Mobile Homes
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
Richard B. Burroughs, Jr., Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
Docket for Case No: 84-002200
Orders for Case No: 84-002200
| Issue Date |
Document |
Summary |
|
May 30, 1985 |
Recommended Order
|
While no one corporation divided its property into more that fifty lots, the total scheme constituted a common promotional plan and violated law.
|
