STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, ) CASE NO. 85-0537

)

vs. )

) EDWARD K. GARVY and EDWARD K. ) GARVY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted before the undersigned designated Hearing Officer of the Division of Administrative Hearings, Ella Jane P. Davis, on May 24, 1985 in Boca Raton, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Staff Attorney

Department of Professional Regulation

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

For Respondent: Edward K. Garvy, pro se

39 Southeast First Avenue Boca Raton, Florida 33432

BACKGROUND

By Administrative Complaint, Petitioner alleges that Respondents are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction and conversion in violation of Section 475.25(1)(b), Florida Statutes; guilty of having failed to

account for and deliver funds to the person entitled thereto in violation of Section 475.25(1)(d), Florida Statutes; and for having failed to immediately place and maintain trust funds in their trust account or in some other proper depository in violation of Section 475.25(1)(k), Florida Statutes.

Respondents' Responses to Petitioner's Requests for Admissions were recognized without objection at the formal hearing and were accordingly made the Hearing Officer's Exhibit

1. A second exhibit was admitted as Hearing Officer's Exhibit 2 (Pre-hearing Stipulation). Additionally, Petitioner presented testimony of Sylvia Robledo, Rose J. Cook, and Georgianna Steward and had admitted six exhibits. Respondent Garvy presented his own testimony and had admitted two exhibits.

   
   

   Petitioner provided a transcript and timely filed a proposed recommended order. Respondents did not avail themselves of the opportunity to file proposals.

   
   

   For continuity, Responses to Requests for Admissions have been incorporated within additional findings of fact in the instant recommended order.

   
   

   To the extent proposed findings of fact have not been adopted or are inconsistent with the findings herein, they have been specifically rejected as irrelevant or not supported by the evidence. A ruling on each proposed finding of fact has thereby been made either directly or indirectly except where the proposed finding of fact was cumulative, immaterial or unnecessary.

   
   

   Based upon observation of the witnesses and their candor and demeanor while testifying, all exhibits admitted in evidence, and the proposals and arguments of counsel, the following facts are found:

   
   

   FINDINGS OF FACT

   
   

   1. Respondent Edward K. Garvy is now and was during the calendar year 1984, a licensed real estate broker having been issued license number 0030540.

      
      

   2. The last license issued to Edward K. Garvy was as a broker, c/o Edward K. Garvy, Inc., 100 East Palmetto Park Road, Boca Raton, Florida 33432.

   3. Respondent Edward K. Garvy, Inc., is now and was during the calendar year 1984, a licensed real estate corporate broker having been issued, license number 0216714, 100 East Palmetto Park Road, Boca Raton, Florida 33432.

      
      

   4. At the time alleged in the Administrative Complaint filed December 14, 1984 in this cause, Respondent Edward K. Garvy was licensed and operating as an officer and qualifying broker of Respondent Edward K. Garvy, Inc.

      
      

   5. In February, 1984, Sylvia Robledo was, with her husband, a current lessee under an original lease procured by Haggarty Realty for the original owners/lessors of the parent project, Boca Azul. The original owners/lessors were Kay Ess Realty. Mrs. Robledo attempted to renew her existing lease with Kay Ess Realty. However, since the date when the original lease had gone into effect, Kay Ess had sold all interest in the Boca Azul project to Equity Programs Investment Corp. of which Epic Realty Services is an affiliate company. Realtor Rose Cook manages Epic Realty Services.

      
      

   6. Respondent Garvy had become aware of Mrs. Robledo's attempts to renew through his daughter, a clerical employee of Kay Ess. Mrs. Cook acknowledged receiving a number of telephone messages at her office purportedly from Mr. Garvy's daughter concerning Mrs. Robledo's desire to renew the lease but did not return them and left the message that renewal leases were none of the caller's concern. She did not know the calls were from Kay Ess Realty until much later. The Robledo lease had been assigned to Mrs. Cook's office to manage in December, 1983, and was due for renewal on February 10, 1984. She testified that she had sent tenants a letter about how to renew with Epic.

      Mrs. Robledo testified she only knew to go to the Boca Azul office, which was apparently Kay Ess' office.

      
      

   7. Mrs. Cook and Epic had an exclusive "oral" listing agreement with Haggarty for new leases on the vacant properties/units in the Boca Azul project. Mrs. Cook testified that she understood it was customary for Haggarty to split commissions on new leases with procuring brokers who procured new lessees for Boca Azul through Haggarty. Other units were renting new leases at a much lower rate than the Robledos were paying ($1,050 per month) and Mrs. Cook wanted to renegotiate each renewal individually. Further, she, her company, and its affiliate had a policy of handling all renewals directly through Epic Realty Services and never paying any renewal commission directly to anyone else, even Haggarty.

      
      

   8. On February 10, 1984, Respondents prepared and obtained an agreement to lease from Sylvia Robledo, as lessee, and Equity Program Investment Corporation, as lessor, with reference to certain residential property located at 9758 Erica Court, Boca Raton, Florida. (This was the Robledos' currently leased unit). In connection therewith, Respondent received in trust a check for $1,470.00 from Sylvia Robledo, constituting $630.00 as first month's rent and $840.00 as last month's rent. The agreement reflects $840.00 per month rental.

      
      

   9. Respondents obtained the February 10 agreement without the prior knowledge or consent of the lessor, Equity Program Investment Corporation, or of Mrs. Cook for Epic Realty.

      
      

   10. Thereafter, Respondents received from Georgianna Steward, a representative of Haggarty, a letter-memorandum explaining how leases for Epic were to be prepared and the commissions figured. Miss Steward testified she "assumed" Respondent Garvy had permission from Mrs. Cook but her memory is vague on whether Mr. Garvy ever made any such representation.

       It is, accordingly, found that no such misrepresentation by Garvy occurred.

       
       

   11. No commission was to be paid on the renewal lease but that information cannot be gleaned from the face of the letter memorandum dated February 29, 1984, sent by Steward to Respondents (R-1). It specifies a $466.00 total commission of which Respondents' share would be $233.00 and Haggarty's would be $233.00.

       
       

   12. In accord with Haggarty's instructions, Respondents proceeded to send a check for $1,237.00 to Haggarty Realty, Inc., which represented the first and last months' rent collected from Robledo less a $233.00 brokerage commission to Respondents. Miss Steward was not aware of anyone at Haggarty refunding any money to Mrs. Robledo and her testimony is silent as to whether or not any money was forwarded to Epic.

       
       

   13. On or about August 6, 1984, Respondent Garvy on behalf of both Respondents signed an affidavit that they had accepted and deposited a rental check in the amount of $1,470.00 from Sylvia Robledo for rental of the above-stated property and that Respondents had retained $233.00 as a commission. Respondents also affirmed in the Affidavit (R-6) that they had sent a check for $1,237.00 to Haggarty Realty, Inc., on March 5, 1984, which represented the remainder of the rent. A copy of the face of

this check and a cover letter are in evidence (P-5 and Petitioner-4, respectively). This is also basically what Mr. Garvy's live testimony amounts to, but he added that this transmittal to Haggarty was in reliance on information contained in Miss Steward's February 29, 1984 letter stating that Haggarty was the exclusive listing agent for Epic.

1. Mr. Garvy further testified that he had deposited the

   $233.00 directly into Respondents' regular account instead of his escrow account, and that he had never reviewed his books to determine if Haggarty had cashed Respondents' check for

   $1,237.00 also drawn on the Respondents' regular operating account.

   
   

2. On or about March 6, 1984, Rose Cook was notified by its exclusive listing and selling broker, Haggarty Realty, Inc. that Respondents had obtained the agreement from Sylvia Robledo. Rose Cook immediately contacted Respondents and demanded that Respondents return the $1,470.00 to Sylvia Robledo, since the Robledo lease was a renewal upon which a commission

   would not be paid.

   
   

3. Respondents refused to negate the Robledo agreement to lease. Respondent Garvy testified that once he sent the balance to Haggarty he felt he was no longer involved. Eventually, Epic Realty Services, Inc., as affiliate company of Equity Program Investment Corporation, entered into a different lease upon similar terms which they drew with Sylvia Robledo. Mrs. Cook expressed no concern that $840.00 per month is considerably less on the renewal lease than the $1,050.00 per month on the original lease, nor any concern with any of the adjustments of deposit reflected in the February 10 agreement. No witness indicated that more than $1,470.00 should have been collected despite a contrary figure expressed in Haggarty's after-the-fact correspondence to Respondents (R-1). However, according to Mrs. Cook's testimony, Epic Realty Services, Inc. took the loss of

   $1,470.00 that was collected by Respondents. Petitioner desires the inference to be drawn that Respondents retained the entire amount. Upon the evidence presented, this inference is simply not supported.

   
   

   CONCLUSIONS OF LAW

   
   

4. The Division of Administrative Hearings has jurisdiction of the parties and the subject matter of this cause pursuant to Sections 120.57(1) and 455.225(4), Florida Statutes (1983).

   
   

5. Section 475.25(1), Florida Statutes (1983) enumerates the grounds upon which a licensee may be disciplined by the Florida Real Estate Commission. Disciplinary action may be taken if the licensee has:

   
   

   (l)(b) [B]een 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. . .

   
   

   * * *

   
   

   (l)(d) [B]een guilty of having failed to account and deliver funds to a person entitled thereto.

   
   

   * * *

   
   

   (l)(k) [F]ailed to immediately place and maintain trust funds in their trust account or, some other proper depository.

   
   

6. Here, the burden of proof is on the Petitioner. Balino v. Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977). Revocation of license proceedings are penal in nature, State ex ref. Vining v. Florida Real Estate Commission, 281 So. 2d 487 (Fla. 1973), and under such circumstances, Bowling v. Department of Insurance, 394 So. 2d 165 (Fla. 1st DCA 1981) discusses an appellate standard of competent substantial evidence, but requires the evidence weigh as substantially on a scale suitable for evidence as the penalty does on a scale of penalties. The standard of proof is that it must be clear and convincing. Reid v. Florida Real Estate Commission, 188 So. 2d 846 (Fla. 2d DCA 1966).

   
   

7. From the evidence presented, it is clear that Respondent Garvy negotiated a lease without authority of the lessor, collected an amount of money for certain payments on said lease which amounts were not authorized by the lessor, and retained a portion of the collected money as a "real estate commission," which commission had not been agreed nor authorized by the lessor. However, it appears that in each instance, Respondent Garvy believed, based on custom and usage, that he had authority to act. Indeed, a representative of Haggarty

   Realty, clothed with apparent authority, confirmed by a letter- memorandum the Respondents' initial understanding of how commissions were to be divided.

   
   

8. Since Haggarty's representation, through Miss Steward, occurred after Respondents had already negotiated the lease and had received the Robledo deposit, the law of agency will not support a conclusion that Respondents were mislead in any respect into negotiating the lease-memorandum, but clearly, one with apparent authority on behalf of the lessor did mislead Respondents as to where to send the proceeds and how to divide the commission once the lease was negotiated. Miss Steward's letter-memorandum is further strongly suggestive that even Haggarty's representatives did not immediately recognize any distinction in commission status between new and renewal leases.

   
   

9. Further, there is no clear evidence of an intent on Respondents' part to defraud anyone. Respondents procured the lessee when Mrs. Cook was unavailable and negotiated the lease at a price which eventually proved acceptable to her principal. The lessor honored the negotiation although a separate lease was eventually prepared. Respondent, had he acted alone, might have felt entitled to a 9466.00 commission but once made aware of Haggarty's "exclusive listing," he retained only half the commission. There is no clear and convincing evidence that Respondent retained anything beyond the $233.00 share of the commission Haggarty indicated was his share. There is considerable evidence that the balance was tendered to Haggarty, an apparent agent of lessor. The place for resolution of Epic's money damage problem, whether it be with Respondents: or Haggarty, is an Article V court and not this forum.

   
   

10. Respondents do admit retaining a $233.00 commission which was earned but never authorized by the proper entity after notice of non-authority and further admit that they did not follow the ministerial function of distributing the $1,470.00 from their escrow account by drawing a $233.00 escrow check payable to their regular account and a $1,237.00 escrow check payable to Epic or payable, upon representation and authority, to Haggarty. These two acts constitute minor violations of Sections 475.25(1)(d)) and (k), Florida Statutes.

RECOMMENDATION

Accordingly, it is, RECOMMENDED that Respondents be issued a reprimand and fined a total of $250.00.

DONE and ORDERED this 18th day of July, 1985 in Tallahassee, Florida.

ELLA JANE P. DAVIS

Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301 904/488-9675

Filed with the Clerk of the Division of Administrative Hearings this 18th day of July, 1985.

COPIES FURNISHED:

James H. Gillis, Esq. Staff Attorney

Department of Professional Regulation Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Edward K. Garvy

39 S.E. First Avenue

Boca Raton, Florida 33432

Salvatore A. Carpino, Esq. General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Fred M. Roche, Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida.32301

Harold Huff, Executive Director Division of Real Estate

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

Docket for Case No: 85-000537

Orders for Case No: 85-000537