STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) Case No. 85-0008

) CENTRAL FLORIDA INVESTMENTS, INC., )

)

Respondent. )

) DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) Case No. 85-0009

) INVESTMENT INDUSTRIES OF FLORIDA, ) INC., )

)

Respondent. )

) DEPARTMENT OF BUSINESS REGULATION, ) DIVISION OF FLORIDA LAND SALES, ) CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) Case No. 85-0010

)

DAVID A. SIEGEL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice; these consolidated cases were heard on January 7, 1986 in Fort Lauderdale; Florida; before Donald D. Conn; a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented by:

APPEARANCE

Petitioner: Thomas A. Klein; Esquire

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Respondent: Leonard Lubart; Esquire

Michael Marder, Esquire

12000 Biscayne Boulevard, Suite 204

Miami, Florida 33181

Petitioner has filed Notices to Show Cause against Respondents charging that they offered and disposed of, or participated in the offer and disposition of subdivided lands without being registered, without a valid exemption from registration and without an approved reservation program in violation of Section 498.023(1), Florida Statutes. Respondents are also charged with violating Section 498.023(2), Florida Statutes, by engaging in this activity without a current public offering statement.

At the hearing Petitioner introduced nine (9) exhibits and called four (4) witnesses; Respondents introduced one (1) exhibit and called two (2) witnesses. A transcript of the hearing was filed on February 19, 1986. The parties requested and were allowed additional time until March 25, 1986 to submit post hearing proposed findings of fact and a ruling on each timely filed proposed finding is included in the Appendix to this Recommended Order.

At the conclusion of Petitioner's case in chief, Respondents moved for a directed verdict. A ruling on the motion was reserved to allow review of the evidence submitted by Petitioner and to incorporate a ruling on the motion in this Recommended Order pursuant to Rules 221-6.16(3) and 28-5.205, Florida Administrative Code. After considering this matter, Respondents' motion is hereby denied.

FINDINGS OF FACT

1. Respondent David A. Siegel (Siegel) formed a wholly owned corporation known as Central Florida Investments, Inc., (CFI) in approximately 1970. Thereafter, CFI acquired Investment Industries of Florida, Inc., (IIF) in approximately 1980. Siegel is President of both CFI and IIF and owns one-hundred percent of the stock in both corporations.

2. On or about September 8, 1980, IIF purchased property in Lake County which was divided into Tract A and Tract B. Tract A consisted of approximately 120 acres, was subdivided into 49 lots, and was sold to individual purchasers by Paul W. Cotton and Paul A. Buzzella; real estate salesmen working for Siegel and IIF. Sales in Tract A occurred in 1980 and 1981 to approximately forty purchasers, and only one lot in Tract A was sold after December 1, 1981. The last sale in Tract A took place in February, 1983, was a referral, and did not involve Cotton or Buzzella.

   
   

3. Paul W. Cotton formed First Orlando Properties (FOP) on or about September 17, 1981. On or about December 1, 1981 Cotton purchased six lots from IIF and Siegel in Tract B for the purpose of resale to individual purchasers. Tract B consisted of approximately 200 acres, subdivided into 48 lots. Based on the testimony of Cotton and Siegel, it is evident that Siegel had agreed to sell all of Tract B to Cotton in eight, six lot installments. This arrangement was for the financial convenience of Cotton, but an inference is drawn that Respondents benefited from Cotton's sales activity in Tract B through the periodic execution of each additional installment. After his purchase of the first installment consisting of six lots on or about December 1, 1981, Cotton sold no more lots in Tract A.

   
   

4. Cotton admits that he "pre-sold" several lots in Tract B prior to FOP acquiring its interest in these lots on December 1, 1981 and while he was still selling lots in Tract A for Siegel and IIF.

   
   

5. The Agreement of Purchase and Sale for six lots in Tract B which Cotton received on or about December 1, 1981 incorrectly indicates that CFI was the property owner and seller. Siegel executed the Agreement on behalf of CFI. This was an error which Siegel admits since Tract B was actually owned by his other company, IIF. The same error as to the seller was made in the Agreements for each additional six lot installment executed on or about February 1, 1982, April 1, 1982, August 15, 1982, September 1, 1982, October 6, 1982, December 1, 1982, and April 1, 1983. Siegel has agreed to take whatever action is necessary to correct any title problems which purchasers in Tract B may have as a result of this error.

   
   

6. Respondents did not register the land in question located in Lake County with Petitioner at any time material hereto, nor is there evidence that purchasers were afforded a reasonable opportunity to examine a public offering statement concerning such land prior to its sale.

7. There were less than fifty (50) lots each in Tracts A and B at all times material hereto, and these tracts are contiguous. Cotton sold lots in both tracts, and pre-sold approximately thirty-six lots in Tract B while he was selling lots in Tract A and before he acquired any interest in Tract B. There were also several purchasers in common in both tracts.

8. There were less than forty-five (45) purchasers each in Tracts A and B, but combining the purchasers in each tract there were more than forty-five (45) purchasers of the land in question in this case located in Lake County.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.

   
   

10. Petitioner has charged Respondents with violating Sections 498.023(1) and (2), Florida Statutes, which provide:

    
    

    498.023 Prohibitions on dispositions of interests in subdivided lands.--Unless the subdivided lands are exempt or the transaction is exempt pursuant to S. 498.025:

    
    

    1. No person may offer or dispose of, or participate in an offer or disposition of, any interest in subdivided lands located in this state, nor may any person offer or dispose of, or participate in an offer or disposition of, any interest in subdivided lands located without this state to persons in this state, nor may any person within this state offer or dispose of, or participate within this state in an offer of disposition of, any interest in subdivided lands located without this state to persons located without this state, unless such person has a valid order of registration there f or .

       
       

    2. No person may dispose of, or participate in the disposition of, any interest in subdivided lands unless a current public offering statement is delivered to the purchaser prior to the disposition, the purchaser is afforded a reasonable opportunity to examine the public offering statement prior to the disposition, and the contract and public offering statement used contain a provision which authorizes the purchaser to cancel the agreement without cause until midnight of the seventh day after execution by the purchaser.

    
    

11. In pertinent part, Section 498.025(1)(d), Florida Statutes, provides an exemption from the above-cited statute for,

    "A subdivision as to which the plan of disposition is to dispose to 45 or fewer persons," unless there is evidence that the method of offer, disposition or transfer is adopted for the purpose of evasion of Chapter 498, Florida Statutes.

    
    

12. In order to determine whether Sections 498.023(1) and,

    1. apply to Respondents, or whether Respondents qualify for exemption under Section 498.025(1)(d), we must look to the definition of "subdivision" or "subdivided lands" at Section 498.005(17); Florida Statutes, since these key terms are used in each of the above-cited statutes:

       
       

       "Subdivision" or "subdivided lands" means:

       1. Any contiguous land which is divided for the purpose of disposition into 50 or more lots, parcels, units, or interests or_ (b) 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 a part of a common promotional plan. (Emphasis supplied.)

    
    

13. The application of subsection (a), above, to Respondents has been established. Tracts A and B are contiguous and were in the common ownership of Siegel and IIF at times material hereto: they were divided into a total of fifty or more lots for the purpose of disposition, and in fact more than a total of fifty lots were sold to a total of more than forty-five purchasers.

    
    

14. Respondents argue that the subdivision of Tract B and sales therein should not be held against them since the disposition of Tract B to Cotton and FOP was begun on or about December 1, 1981 through eight purchase agreements executed between that date and April 1, 1983. Respondents argument is not persuasive for the following reasons:

    
    

    1. Sales of lots in Tract B were made prior to December 1, 1981 by Respondents' salesmen Cotton and Buzzela.

       
       

    2. The installment nature of the transaction between Respondents and Cotton extending over sixteen (16) months leads to the inference that Respondents benefited from Cotton's sales activity in Tract B through the periodic execution of each additional installment.

    3. Respondents Siegel and IIF maintained ownership of portions of Tract l until the last installment was sold to Cotton and FOP on or about April 1, 1983.

       
       

    4. Respondents Siegel and IIF knew of the subdividing of Tract B into 48 lots when they agreed to sell Tract B to Cotton and FOP in eight installments of six lots each. Since there were 49 lots in Tract A, Respondents knew and participated in the subdividing of the land in question into 97 lots.

15 It does appear that Respondent CFI had no involvement in this matter other than being incorrectly shown as seller by Siegel, its President, on his transactions with Cotton and FOP. Siegel admits this error and has agreed to take whatever actions are necessary to correct this error and cure any resulting title problems.

1. The evidence also establishes the application of subsection (b) of Section 498.005(17), above, to the facts in this case since Petitioner has proven the existence of a "common promotional plan" involving sales in Tracts A and B. Petitioner has defined "common promotional plan" in Rule 7D-1.03(3), Florida Administrative Code, to mean:

   
   

   . . . an offering of sub-divided 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 sales personnel, common sales office or facilities, or common promotional methods the utilization of cross-referrals of prospective purchasers between sales operations. "Emphasis Supplied)

   
   

2. It is clear that the two tracts are contiguous and that Paul W. Cotton sold lots in both tracts. It is also clear that he pre-sold lots in Tracts B before he acquired any interest in Tract B and while he was actively engaged in sales in Tract A for

   Respondents Siegel and IIF. This activity constitutes a cross referral of prospective purchasers from lots in Tract A to Tract B.

   
   

3. In addition, Petitioner has adopted Rule 7D-5.01(2), Florida Administrative Code, which places the burden of showing that a common promotional plan does not exist on the owners of lots or their agents, such as Respondents herein. Respondents have not sustained this burden and to the contrary Petitioner has established that a common promotional plan did exist.

   
   

4. In adopting these rules, Petitioner has set forth its interpretation of a statute it is charged with implementing and enforcing, and as such this interpretation is entitled to great weight. Department of Insurance v. S.E. Volusia Hospital District, 438 So.2d 815 (Fla. 1st DCA 1983). An agency is afforded a wide discretion in the interpretation of a statute which it administers and will not be overturned on appeal unless clearly erroneous. The court will defer to any interpretation within the range of possible interpretations. Natelson v. Department of Insurance, 454 So.2d 31 (Fla. 1st DCA 1984); Sans Souci v. Division of Land Sales, 421 So. 2d 623 (Fla. 1st DCA 1982). In E. I. Dupont de Nemous & Company v. Collins, 432 U.S. 46,55, 97 S.Ct. 2229,2234, 53 L.Ed. 100 (1977), the court stated:

   
   

   A reviewing court is to be guided by the "venerable principle that the construction of a statute by those charged with its execution should be followed unless there are compelling indications that it is wrong."

   
   

5. Based upon the above-cited statutory, and rule provisions it is concluded that Petitioner has established that Respondents Siegel and IIF (Case Nos. 85-0009 and 85-0010) have violated Sections 498.023(1) and(2), Florida Statutes; by disposing of their interest in subdivided lands, as defined in Section 498.005(17), in a prohibited manner.

   
   

6. Finally, Respondents' contention that they are exempt from Petitioner's regulation under Section 498.025(1)(d), Florida Statutes, is rejected. It is a general rule of statutory construction that exceptions to statutes are strictly construed against those claiming exemption. This rule is particularly applicable where the statute promotes the public welfare, or where, in general, the law itself is entitled to a liberal construction. Fla.Jur. 2d, STATUTES, S. 199. The legislative intent in enacting Chapter 498 is expressed in Section 498.003, Florida Statutes. That intent is generally to protect the public and the land sales industry from false, misleading and fraudulent

methods in the conduct or disposition of any interest in subdivided land. The Legislature further expressed its intent that the remedial portions of the chapter are to be liberally construed. As previously concluded, there was a common promotional plan of distribution herein which resulted in the distribution of lots to more than forty-five purchasers and therefore this exemption does not apply.

RECOMMENDATION

Based upon the foregoing, it is recommended that Petitioner enter a Final Order which:

1. Dismisses all charges in Case No. 85-0008 against Respondent Central Florida Investments, Inc.

   
   

2. Imposes an administrative fine of $5000 each against Respondents Investment Industries of Florida, Inc. and David A. Siegel in Case Nos. 85-0009 and 85-0010 for a total fine of S10, 000.

   
   

3. Requires Respondents to correct, within ninety (90) days, any title problems which purchasers in Tract B may have as a result of the matters set forth in Finding of Fact 5.

   
   

4. Requires Respondents to cease and desist from offering or disposing of any interest in subdivided land which is subject to this proceeding until a valid order of registration is obtained.

DONE and ENTERED this 21st day of April, 1986, at Tallahassee, Florida.

DONALD D. CONN, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Filed with the Clerk of the Division of Administrative Hearings Filed with the Clerk of the Division of Administrative Hearings this 21st day of April, 1986.

COPIES FURNISHED:

Thomas A. Klein, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

Leonard Lubart, Esquire Michael Marder, Esquire 12000 Biscayne Boulevard

Suite 204

North Miami, Florida 33181

James Kearney, Secretary Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

APPENDIX

Rulings on Petitioner's Proposed Findings of Fact:

1. Adopted in Finding of Fact 1.

2. Although the evidence is consistent with this proposed finding, it is not adopted since it is unnecessary.

3. Adopted in Finding of Fact 2, 3.

4. Rejected in part in Finding of Fact 2, and adopted in part in Finding of Fact 3.

5. Adopted in part in Finding of Fact 3, 4, but rejected in part in Finding of Fact 7 and as otherwise not based on competent substantial evidence.

6. Adopted in part in Finding of Fact 2, but otherwise rejected as irrelevant and unnecessary.

7. Rejected as irrelevant, not based on competent substantial evidence, and as a conclusion of law rather than a finding of fact

8. Adopted in part in Finding of Fact 3, 7, 8.

Rulings on Respondents' Proposed Finding of Fact:

(Respondent has not numbered its proposed findings of fact, and therefore in order to make a ruling on proposed findings of fact paragraphs on pages 3 through 20 under the heading Findings of Fact have been consecutively numbered.)

1. Adopted in Finding of Fact 2.

2. Adopted in Finding of Fact 1.

3. Adopted in Finding of Fact 5.

4. Rejected as a conclusion of law

5. Adopted in Finding of Fact 2.

6. Adopted in Finding of Fact 3.

7. Adopted in part in Finding of Fact 7, but otherwise rejected as simply a statement of position.

8, 9. Rejected as simply a summary of testimony.

1. Adopted in part in Finding of Fact 2, but rejected in part in Finding of Fact 3.

2. Rejected as simply a statement of position

3. Adopted in Finding of Fact 2.

4. Rejected as irrelevant and unnecessary.

14, 15. Adopted in part and rejected in part in Finding of Fact 3.

16. Adopted in Finding of Fact 2, 3.

17-30. Rejected as simply the party's summation of testimony and evidence, as conclusions of law and otherwise not based on competent substantial evidence.

1. Adopted in Finding of Fact 7

2. Adopted and rejected in Finding of Fact 8.

33, 34. Rejected as simply an excerpt of testimony.

1. Rejected in part in Finding of Fact 8

2. Rejected as not a proposed finding of fact.

Docket for Case No: 85-000008

Orders for Case No: 85-000008