STATE OF FLORIDA DEPARTMENT OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) DOAH CASE NO. 85-0659

) DBR-85017RSD

CHRISTELL B. SHEFFIELD, d/b/a )

OCKLAWAHA HILLS, )

)

Respondent. )

)

RECOMMENDED ORDER

Notice was provided, and on November 6 and 7, 1985, a formal Section 120.57(1), Florida Statutes, hearing was held in this cause. The place of hearing was Palatka, Florida. Charles

1. Adams presided as the hearing officer. This recommended order is being entered following the receipt and review of the transcript of the hearing and evidence offered by the parties in the course of that hearing. The pre-hearing stipulation of the parties has also been examined in aid of the preparation of this recommended order. Finally, the parties in the person of counsel have offered proposed recommended orders, which were considered and within which the findings of fact are distinguished through an appendix attached to the recommended order.

   
   

   APPEARANCES

   
   

   For Petitioner: Thornton Williams, Esquire

   Staff Attorney Department of Business

   Regulation

   725 South Bronough Street Tallahassee, Florida 32301-1927

   For Respondent: Timothy Keyser, Esquire

   Post Office Box 9 Interlachen, Florida 32048

   
   

   ISSUES

   
   

   The issues in this matter are those raised through a notice to show cause/administrative complaint brought by the Petitioner against the Respondent alleging various violations of Chapter 498, Florida Statutes. In particular, Respondent is alleged to be a subdivider who has offered or disposed of an interest in subdivided lands or been a participant in that arrangement as described in Section 498.023(1), Florida Statutes, without registering to do so or being exempt from the requirement of registration. Further, Respondent is said to have made false and misleading statements to purchasers concerning the conduct of the sale of subdivided land as described in Section 498.051(1)(b), Florida Statutes. In addition, the Respondent is accused of offering or distributing or participation in that offering or distribution of the subdivided land without providing a public offering statement to the purchasers of the land prior to the disposition as spoken to in Section 498.023(2), Florida Statutes. Respondent does not take issue with the latter allegation, assuming the need to register to sell subdivided land or the unavailability of an exemption from the terms of Chapter 498, Florida Statutes.

   
   

   FINDINGS OF FACT

   
   

   1. Through a pre-hearing stipulation, the parties have agreed to certain evidential facts. Those facts and the matters set forth in the transcript of the proceedings, to include the testimony and tangible evidence, form the basis for fact finding in this recommended order.

      
      

   2. On June 20, 1963, D. D. Jeffords acquired 430 acres of property in Putnam County, Florida, near the town of Interlachen. This acreage is contiguous. Subsequent to the purchase, he began to develop the property as a subdivider and named the subdivision Ocklawaha Hills.

      
      

   3. Notwithstanding the fact that the property known as Ocklawaha Hills was being subdivided into fifty or more lots, parcels or interests, D. D. Jeffords did not register this. subdivision known as Ocklawaha Hills with the Petitioner, nor seek exemption from the requirement to register.

   4. D. D. Jeffords had as his ultimate goal the sale or disposition of the lots, parcels or interests in Ocklawaha Hills which were being subdivided.

      
      

   5. Although the Ocklawaha Hills land was surveyed into lots and units, the plats that involved this surveying were not recorded.

      
      

   6. After purchase and before 1970, D. D. Jeffords had commenced the sale of the lots in Ocklawaha Hills through offices in Interlachen and Palatka.

      
      

   7. On April 4, 1970, D. D. Jeffords married Christell Jeffords, the Respondent in this cause. Mrs. Jeffords, who is now known as Christell B. Sheffield, did not have any active participation in the sale of lots within Ocklawaha Hills in the early part of her marriage to D. D. Jeffords. Her participation in these matters pertained to the need to sign as the wife of D.

2. Jeffords in the event of conveyance of the lots to purchasers.

1. In 1974 D. D. Jeffords suffered a stroke which incapacitated him and he was never fully recovered from that point until his death. For this reason his wife, Christell Jeffords, began to take a more active role in the real estate business of her husband and involvement with the sale of property at Ocklawaha Hills. This included examination and signing of sales documents and making managerial decisions. To further this pursuit, D. D. Jeffords signed a power of attorney authorizing the Respondent to conduct his business, to include the disposition of the property known as Ocklawaha Hills. The power of attorney dates from August 12, 1974.

   
   

2. On May 25, 1977, D. D. Jeffords conveyed his remaining interest in Ocklawaha Hills to himself and to his wife. Christell, as husband and wife.

   
   

3. In May 1978, Petitioner undertook an investigation of the activities of the Jeffords related to the sale of property in Ocklawaha Hills. This was an effort to determine if jurisdiction existed to require the registration or the request for exemption of the activities of the Jeffords related to the disposition of the Ocklawaha Hills property. To further this investigation the Jeffords submitted answers to a questionnaire, a copy of that questionnaire being found as Petitioner's Exhibit

   4 admitted into evidence. In the course of giving those answers, it was identified that Ocklawaha Hills was constituted

   of 430 acres and that 143 parcels or lots had been offered for sale with 111 lots having been sold as of May 12, 1978. At that time it was stated that the balance of the property had not been developed. This answer to the questionnaire described the fact that the sales were being made through the provision of warranty deeds on cash sales and through the use of agreements for deeds in the sales in which the purchaser had to make further payments before being provided a warranty deed. Petitioner's Exhibit 4 also identifies the fact that the sizes of the 143 lots that were subdivided at that point were in the range of three- quarters of an acre to ten acres.

   
   

4. On October 24, 1978, the Jeffords applied to the Petitioner to have the sales or disposition of the property in Ocklawaha Hills exempt from the requirement to register as subdividers. In the course of this request for exemption, an exemption statement was prepared, a copy of which may be found as Petitioner's Exhibit 2 admitted into evidence. Although this references the total number of lots within the subdivision as being 123, in view of the statement in the questionnaire discussed in paragraph 10 and the depiction of the various lots in that questionnaire document, the number of lots in the subdivision that were developed at the point of the request for exemption is found to be 143 lots or parcels. The exemption statement shows that 114 lots had been sold or were under contract at that time. Further, it establishes that some additional eighty-seven acres of land were available for future expansion in Ocklawaha Hills. At the time that the exemption statement was made, five units were involved in the subdivision, with an additional three units contemplated as being available to be subdivided. No order of exemption from the requirements of registration has ever been given to the Jeffords or any other person who holds an interest in Ocklawaha Hills.

   
   

5. The outcome of the investigation of the activities of the Jeffords at Ocklawaha Hills led to the signing of an agreement, what is now known as a consent order, between the Jeffords and the Petitioner. A copy of that agreement is found as Petitioner's Exhibit 5 admitted into evidence. The date of the agreement is March 6, 1979. By its terms the Jeffords agreed to maintain the roads in the Ocklawaha Hills subdivision and to deposit money into an escrow account equal to the cost of one year's maintenance expense for the roads in the subdivision. This agreement allowed the sale of only those lots which had been developed and unsold in inventory at Ocklawaha Hills subdivision. Those lots were specifically identified as Lots 505, 506, 514A, 515, 519, 520A, 521, 521A, 534, and 526A. As to

   those lots, and the past activities involving the subdivision, the Petitioner indicated it would take no legal action against the Jeffords for the sale of those lots. The specifically identified lots are found within Unit 5 of the Ocklawaha Hills subdivision. The Jeffords were not to sell any further lots without registering with the Petitioner or obtaining an exemption under the terms of Chapter 478, Florida Statutes, which was the precursor to the, present Chapter 498, Florida Statutes. This agreement by its terms would not allow for the sale of lots or parcels within. Units 6, 7, and 8 of Ocklawaha Hills. In effect, the agreement which forgave any violation or failure to comply with the registration provision of Chapter 478, Florida Statutes, did not preclude the prosecution of any violation related to the future sale or disposition of property in Units 6, 7, and 8.

   
   

6. D. D. Jeffords died on December 18, 1979. Upon his death the Respondent became the owner of all parcels within Ocklawaha Hills that had not been conveyed prior to her husband's death. Respondent remarried on November 7, 1981, and became Mrs. Sheffield.

   
   

7. In accordance with the stipulation of facts by the parties, the following is a depiction of some of the lots in which the Respondent participated in the offer and disposition of or individually offered and disposed within Ocklawaha Hills subdivision. In the instances of agreement for deed, not all of

   those were Purchaser	recorded.	Lot No.	Recorded Instrument	Date Recorded	OR Book & Page
   Unit 1
   Caines		3 20	Warranty Deed Article of	4/8/83 12/12/77	432-982 354-615
   Wilkinson			Agreement Warranty	4/3/80	388-967
   c) Juliette		32	Deed Article of	10/74	313-1631
   Bostick			Agreement Warranty	9/81	405-1552
   d) Marvin		34	Deed Warranty	7/2/80	391-1780
   McClanahan			Deed

   1. Jerry

   2. James

   Unit 2

   
   

   a) David Bishop	57	Article of Agreement	12/27/77	354-1832
   b) Kenneth	58	Warranty Deed Article of	11/8/79 4/5/78	382-1596 358-1489
   Shrader		Agreement Warranty	9/14/81	409-1841
   c) David	60	Deed Article of	7/11/78	362-1677
   Bishop		Agreement	1/10/80	385-586
   d) Richard	61	Warranty Deed Warranty	6/6/85 4/12/05	468-372 465-1089
   Barber		Deed
   Unit 3
   a) Jarge	303	Article of	11/6/80	396-1516
   Travassas b) Earl	317	Agreement Warranty Deed Warranty	8/85 12/81	471-1400 413-177
   Mace c) Lewis	320	Deed Article of	3/75	317-1649
   Lower		Agreement Warranty	4/82	418-49
   		Deed
   Unit 4
   a) Victor 439		Warranty	5/14/79	375-883
   Platt b) Noal D.	Part of	Deed Article of	4/84	448-1400
   Bishop	440 Part of	Agreement Article of	9/84	455-61
   	440	Agreement
   Lewis	442 442	Article of Agreement Warranty	3/21/84 4/2/85	447-1130 465-134
   McLain		Deed

   1. Shelby

   2. Jack

   Unit 5

   
   

   a)	W.D. Cook	503A	Article of Agreement.	6/15/78	361-1715
   b) c)	Robert LeGrand Wayne	505 506	Warranty Deed Article of	2/80 4/82	387-4 417-197
   d)	Jones Willis	514	Agreement Warranty	7/26/77	348-1103
   e)	Casperson Amos	517	Deed Article of	12/77	355-169
   	Dalley		Agreement Warranty	4/81	404-206
   f)	Charles	518	Deed Warranty	3/12/79	372-121
   g)	Cochran Charles	518A	Deed Warranty	3/12/79	372-1211
   h)	Cochran Michael	519A	Deed Article of	10/20/80	396-171
   	Harrison and Sandra		Agreement Warranty	7/20/83	436-1792
   i)	Harrison Lawrence	520A	Deed Article of	9/79	380-190
   j)	Warren Thomas	521	Agreement Warranty	3/79	372-112
   	Henderson Thomas	521A	Deed Warranty	3/79	372-1-126
   	Henderson		Deed
   k) 1)	James Simpson James	522 523	Warranty Deed Warranty	9/12/77 9/12/77	350-987 350-987
   m)	Simpson James	524	Deed Warranty	9/12/77	350-987
   n)	Simpson Ralph	525	Deed Warranty	9/30/77	351-566
   o)	Fricks Ralph	526A	Deed Warranty	9/30/77	351-566
   p)	Fricks Edwin	527	Deed Article of	4/77	345-6
   	Harris	528	Agreement(3)
   q)	Ikoko	529 531	Warranty Deed(3) Warranty	7/85 9/29/77	470-686 351-454
   r)	Allan William	519	Deed Article of	1/84	444-1147
   	Bellamy		Agreement

   s) James Hardie	533	Article of Agreement	5/75	320-823
   		Warranty	6/85	468-908
   		Deed

   
   

   Unit 6

   
   

   a)	Robert Rash	2	Article of Agreement	4/17/84	448-1432
   b) c)	Robert Rash Howard	Part of Article of 3 Agreement Part of Article of		4/17/84 9/29/83	448-1434 440-434
   Eastlack		3	Agreement
   Eastlack		4 5	Article of Agreement Warranty	4/5/84 11/15/82	448-575 426-1071
   Decker f) Ritter		6	Deed Warranty	8/8/80	393-657
   Decker g) Ritter		7	Deed Warranty	11/15/82	428-1071
   Decker h) Edward		8	Deed Warranty	8/10/81	408-1385
   Powell i) George		10	Deed Article of	7/31/81	408-625
   Dixon			Agreement Warranty	6/12/85	468-905
   j) Pablo		22	Deed Article of	7/25/83	437-260
   Marrero k) Wanda		23	Agreement Warranty	1/18/84	461-1106
   Cook 1) David		34	Deed Article of	11/5/80	396-1413
   Wilson m) Marsha and		35A	Agreement Article of	7/8/81	407-643
   Preston Coltrane n) Marsha and		35B	Agreement Article of	7/8/81	407-64
   Preston Coltrane o) Wallace		36	Agreement Article of	12/29/80	398-1693
   O'Brien p) Donald		39	Agreement Article of	2/22/84	446-841
   Blount			Agreement

   1. Howard

   2. Ritter

   q) Elizabeth	9,11-13	Warranty	8/31/84	455-140
   Pickering	15-21	Deed
   	24-33
   	35-C
   	37,38
   	40,41
   	514A		9/5/85	455-415

   
   

   Unit 7

   Part of 526, parcel B and

   parcel A, section 27: parcel A, section 28.

   
   

   a) Geroge D. 1-8 Warranty 5/21/81 405-145

   Dean Deed

   Unit 8

   a) George D. 1-16 Warranty 5/21/81 405-145

   Dean Deed

   
   

8. In some of the instances reported above, the Respondent had conveyed title because of a previous agreement for deed executed by her husband before May 25, 1977, the first date of their joint ownership. Beyond that date Respondent was necessarily involved in the sales due to her joint tenancy in the property.

   
   

9. The title to property which was sold pursuant to an agreement for deed or article of agreement would only be conveyed upon the payment of the full purchase price. In the event that that price was not fully paid, the Respondent retained title to the property.

   
   

10. Following the death of D. D. Jeffords, Respondent on her own accord developed Unit 6 of Ocklawaha Hills. This occurred on or about July 17, 1980, and involved 43 lots which the Respondent subdivided within Unit 6. It can be seen in the discussion above that the Respondent was directly involved in the sale of all of those lots within Unit 6. At present the Respondent does not own any of the lots within Unit 6 or other units within Ocklawaha Hills. Unit 6 is immediately contiguous to Units 3, 4, 6 and 8 of the overall contiguous Units 1-8 within Ocklawaha Hills.

11. Before his death, D. D. Jeffords had conveyed two and a half acres within Ocklawaha Hills to his stepson, George Daryl Dean, the natural son of the Respondent. This occurred in 1975. Other property was eventually conveyed to Dean, namely Units 7 and 8. This conveyance was made by the Respondent through the Petitioner following her husband's death. As stated before, that date of conveyance was May 21, 1981, through a warranty deed. No purchase price was paid by the son to the Respondent. Although the Respondent took back a mortgage in the amount of

    $43,208.91, the appraised value of the property being conveyed, this mortgage was not as a security for any money loaned from the Respondent to her son. This rather unusual arrangement was an effort to prohibit the natural father of the son from inheriting the property in Units 7 and 8. Dean quitclaimed his interest to the Respondent in 1982 in an effort to gain a loan from a lending institution. The arrangement was never consummated and the Respondent reconveyed the property to her son on February 25, 1984, via a quitclaim deed.

    
    

12. Prior to Units 7 and 8 being conveyed from Respondent to her son, a survey was done and a plat made of Units 7 and 8 in which the lot lines were established. In this situation the son indicated to the surveyor who was at the property that he wanted to establish similar sized lots to those other units within Ocklawaha Hills. Dean asked his mother if she thought this was an acceptable technique, and she indicated that she believed that it was. The payment for the surveying related to the plats for Units 7 and 8 was made by the Respondent and reimbursed by her son. Although the son now offers lots within Units 7 and 8 of Ocklawaha Hills for sale, none of those lots have been sold. Unit 7 contains eight lots and Unit 8 contains sixteen lots.

    
    

13. In paying for the surveying for Units 7 and 8 at a time when she owned the property and in conveying the property to her son, Respondent participated in the offer or disposition of property within Units 7 and 8 and has acted in furtherance of the efforts of her son to offer that property to third parties.

    
    

14. Respondent in her testimony tried to establish that the Petitioner in the person of one of its employees who was a bureau chief within the Land Sales Division in 1978, namely Kenneth L. McDowell, had told her that it was acceptable to develop Unit 6 into any number of parcels less than fifty. In view of these representations, according to the Respondent, the development of Unit 6 into 43 lots was exempt from the requirement of Chapter 498, Florida Statutes, or its precursor,

    Chapter 478, Florida Statutes. Considering the remarks of McDowell in the course of the final hearing, together with the other facts of this case, the claim of any statement on the part of McDowell or other officials within the petitioning agency which allowed the Respondent to develop any number of lots less than fifty in Unit 6 of Ockalawaha Hills after the development of Units 1-5 is rejected and Respondent's belief in the entitlement to develop less than fifty additional lots without obtaining registration or obtaining a statutory exemption is rejected. This finding is made because any initial development of less than fifty lots is outside the jurisdiction to require registration. On the other hand, the development of additional lots beyond the initial 143 lots first developed and activities outside the scope of the settlement agreement of March 1979, be it one in number or 43 in number or fifty in number, is a continuation of a subdivider's offer and disposition and subjects the Respondent to the requirements for registration or makes it incumbent upon the Respondent to obtain an exemption from registration. To date, neither the Respondent nor anyone else associated with Ocklawaha Hills has registered any of the Units or been granted an exemption.

    
    

15. Testimony was given by persons who purchased lots within Ocklawaha Hills from the Respondent, on the subject of road conditions within the subdivision. Sandra Harrison, who made a purchase of property in Ocklawaha Hills in 1980, indicated that in the course of a telephone conversation between Harrison's husband and the Respondent, Mr. Harrison inguired about the circumstances of the roads in the subdivision, wherein, Respondent indicated that the roads were to be county roads. This statement about the roads was an inducement to the Harrisons to purchase property in Ocklawaha Hills. No indication was given to the Harrisons by the Respondent as to the date the county could take over the roads. The county has yet to assume responsibility for road maintenance in the subdivision. After the Harrisons moved onto the property in Ocklawaha Hills, Respondent indicated that she was responsible for maintenance of the roads.

    
    

16. Thomas Gordon Henderson purchased property from the Respondent in Ocklawaha Hills in 1979. He inquired about the status of the roads at that time and was told by the Respondent that the roads would be brought up to county standards and maintained by the county beyond that time. The fact of not having roads developed to county standards and maintained by the county would not dissuade Henderson from purchasing the property.

    
    

17. Robert W. LeGrand bought property from the Respondent in Ocklawaha Hills in 1980. He inquired of the Respondent before purchasing the property on the subject of the roads and was told that some person named Buckles took care of those roads. Respondent told him that the roads would be graded the following week and that the county was supposed to take them over and keep them from that point forward. LeGrand would have purchased the property regardless of whether the county maintained the roads or not.

    
    

18. Marsha Coltrane and her husband purchased property in Ocklawaha Hills from the Respondent in 1981. When the purchase was made, Respondent told the Coltranes that the roads, were going to be widened to a two-car width and that ditches were going to be provided for drainage and that the roads were going to be maintained by the county. Mrs. Coltrane indicates that she doesn't think that she would have purchased the property if she had not been told by the Respondent that the roads would be maintained by the county. Although the Articles of Agreement between the Coltranes and the Respondent which forms the basis of the purchase of the property in Ocklawaha Hills referenced a grant of easement found in Official Record Book 393, page 16, the- terms of this easement were not discussed when the property was bought. The mere mention of this easement did not alert the Coltranes to the fact that the Respondent intended to forgo responsibility to maintain the roads in Ocklawaha Hills. The easement was not attached to the Articles of Agreement as stated in the agreement. Had the Coltranes been aware of the terms of the grant of easement dating from August 1, 1980, a date approximately eleven months before the Coltranes' purchase, they would have seen that there was a disclaimer as to road maintenance on the part of the Respondent. Mrs. Coltrane subsequently learned of the existence of the disclaimer after purchasing the property.

    
    

19. Ritter Decker purchased property in Ocklawaha Hills from Respondent in 1980 but has no recollection of any representations about road maintenance.

    
    

20. An overall plat of every unit within Ocklawaha. Hills was prepared in 1982 at the behest of the Respondent.

    
    

21. Respondent did not provide a public offering

    statement to any of the purchasers when offering or disposing of her interests in the Ocklawaha property.

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter to this action in accordance with Section 120.57(1), Florida Statutes.

    
    

23. The first count of the notice to show cause alleges that:

    
    

    Respondent has offered or disposed of, or has participated in the offer or disposition of lots, parcels, units or interests in Ocklawaha Hills, situated in Putnam County, Florida a "subdivision" as the term is defined by Section 498.005(17), Florida Statutes. The offer or disposition by Respondent of, or Respondent's participation in the offer or disposition of, any interest in the aforementioned subdivision is in violation of Section 498.023(1), Florida Statutes, in that the Respondent does not hold a valid Order of Registration for the subdivision nor is the subdivision exempt pursuant to Section 498.025, Florida Statutes; . . .

    
    

24. The eight units of Ocklawaha Hills constitute a sub- division or subdivided lands as defined by Section 498.005(17), Florida Statutes. Respondent, her husband D. D. Jeffords, and her son, George Daryl Dean, are subdividers as defined by Section 498.005(16), Florida Statutes. Respondent in her involvement with Units 6, 7 and 8 of Ocklawaha Hills has offered and disposed of and participated in the offer and disposition of her interests in the subdivided lands known as Ocklawaha Hills without that land having been registered and without the benefit of any exemption from the need to register. This participation by the Respondent is a violation of Section 498.023(1), Florida Statutes, in that the activity was not pursuant to registration or under exemption envisioned by Section 498.025, Florida Statutes. Under these circumstances the Respondent has violated provisions of Chapter 498, Florida Statutes, and is subject to the imposition of a civil fine as contemplated by Section 498.049(4), Florida Statutes.

    
    

25. The Respondent's involvement with Units 6, 7, and 8 was a continuation of activities within the eight unit subdivision known as Ocklawaha Hills, in which 143 lots had been

    developed in he first five units, thereby establishing jurisdiction over the subdivision.

    
    

26. When the first fifty lots or parcels were developed any further offer or disposition of property within the subdivision was required to be pursuant to registration or an order of exemption. This would be necessary without regard for any change in ownership of the subdivision therefore, the offer or disposition of lots within Units 6, 7 and 8 would need to be based upon registration or exemption from the terms of Chapter 498, Florida Statutes. Nothing about the settlement agreement relieves Respondent of the need to register or obtain exemptions for the offer or disposition of her interest in the properties in Units 6, 7 and 8. By contrast, the agreement between the Jeffords and the Petitioner forgives any violations related to. Units 1 through 5 based upon the lack of registration or exemption from registration.

    
    

27. The second count of the notice to show cause deals with an allegation that the Respondent has violated Section 498.023(2). Florida Statutes, by failing to deliver a current public offering statement to each purchaser prior to the disposition of or participation in the disposition of interests in the subdivided land. No public offering statements were given to purchasers and this oversight was in violation of Section 498.023(2), Florida Statutes, and as a consequence the Respondent, is subject to the imposition of a civil penalty as contemplated by Section 498.049(4), Florida Statutes.

    
    

28. The third count of the notice to show cause alleges that the Respondent had directly or through an agent or employee knowingly engaged in false, deceptive, or misleading advertising, promotional or sales methods to offer or dispose of an interest in the subdivided land and therefore violated Section 498.051(1)(b), Florida statutes. This relates to the claim that the Respondent had indicated to purchasers that she would bring the roads in Ocklawaha Hills up to county standards and then submit those roads for county maintenance. The purchasers Harrison and Henderson were told by the Respondent that the roads would be county roads or be brought up to county standards and then maintained by the county, and this was an inducement to purchase. These are false and deceptive or misleading statements within the meaning of Section 498.051(1)(b), Florida Statutes, because these promises were not fulfilled while Respondent acted as a subdivider. In view of this violation, the Respondent may be ordered to cease and desist her activities or affirmative action may be taken within

the judgment of the Petitioner. That affirmative action is as described in Section 498.051(3), Florida Statutes.

is,

RECOMMENDATION

Based upon the findings of fact and conclusions of law, it

RECOMMENDED:

That a final order be entered which imposes a civil

penalty in the amount of 55,000.00 for the violation established through Count (1) and $5,000.00 for the violation established through Count (2). No recommendation is made as to the disposition of the violation under Count (3) in that the terms of Section 498.051, Florida Statutes, do not lend themselves to addressing the particular facts of this case.

DONE AND ORDERED this 27th day of January, 1986, at Tallahassee, Florida.

CHARLES C. ADAMS, 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 27th day of January, 1986.

COPIES FURNISHED:

Thornton Williams, Esquire Department of Business

Regulation

725 South Bronough Street. Tallahassee, Florida 32301

Timothy Keyser, Esquire

P. O. Box 92

Interlachen, Florida 32048

1. James Kearney, Director Division of Florida Land Sales,

   Condominiums and Mobile Homes Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

   
   

   APPENDIX

   
   

   The proposed findings of fact of the parties have been substantially adopted, with the following exceptions:

   
   

   1. At paragraph 16 of the proposed facts of the Petitioner reference to 123 lots is rejected in view of contrary findings of fact in the recommended order.

      
      

   2. Paragraph 25 of the Petitioner's proposed findings of fact is rejected as being irrelevant.

      
      

   3. The first sentence of paragraph 4 to the Respondent's proposed findings of fact is rejected as not being necessary to case resolution, as are the latter two sentences of paragraph 5.

      
      

   4. Sentence 2 to paragraph 7 of the Respondent's proposed findings of fact is rejected as being contrary to the facts found in the recommended order. The balance of the paragraph beyond that sentence is rejected as being unnecessary to the case resolution.

      
      

   5. Sentence 2 to paragraph 8 of the proposed findings of fact of the Respondent is rejected as not being necessary to the case resolution, as is the last sentence of that paragraph.

      
      

   6. The third sentence in the proposed facts found at paragraph 9 of the Respondent is rejected as being contrary to the facts in the recommended order. The final sentence within paragraph 9 of the proposed facts of the Respondent is rejected as unnecessary to case resolution.

      
      

   7. Sentence 3 at paragraph 11 within proposed findings of fact by the Respondent is rejected as being contrary to facts found in the recommended order. The balance of the sentences found in proposed paragraph 11 are rejected as being unnecessary, other than the idea of constructive notice of the grant of easement which is rejected as being contrary to facts found.

      
      

   8. The last sentence of paragraph 12 of the proposed findings of facts by the Respondent is rejected as not being necessary for case resolution.

      
      

   9. Sentence 3 of paragraph 13 of the Respondent's proposed findings of fact up to the word "but" is rejected as not being necessary. The balance of that sentence is rejected as being contrary to facts found in the recommended order as is the last sentence within paragraph 13.

      
      

   10. Sentence 1 to paragraph 14 of the proposed findings of fact of the Respondent is rejected to the extent that it says that the Coltranes formented [Sic] an investigation. The balance of the paragraph is rejected as not being necessary, with the exception of the idea expressed that an overall plat of the eight units within Ocklawaha Hills was prepared in December, 1982.

================================================================ AGENCY FINAL ORDER

================================================================

STATE OF FLORIDA DEPARTMENT OF BUSINESS REGULATION

DIVISION OF FLORIDA LAND SALES, CONDOMINIUMS AND MOBILE HOMES 725 SOUTH BRONOUGH STREET - JOHNS BUILDING

TALLAHASSEE, FLORIDA 32301-192

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

Petitioner,

1. CASE NO. 85-0659

   DOCKET NO. 85017RSD

   
   

   CHRISTELL B. SHEEFIELD d/b/a OCKLAWAHA HILLS,

   
   

   Respondent.

   /

   
   

   FINAL ORDER

   
   

   Pursuant to notice, a formal hearing was conducted in this cause on November 6th and 7th, 1985 in Palatka, Florida before the Honorable Charles C. Adams, a duly designated hearing officer of the Division of Administrative Hearings. The issues for determination were whether (1) Respondent offered or disposed of an interest in subdivided lands or had been a participant in the offer or disposition of subdivided lands as described in Section 498.023(1), Florida Statutes, without registering or being exempt from the requirement of registration; (2) Respondent made false and misleading statements to purchasers concerning the subdivided lands as described in Section 498.051(1)(b), Florida Statutes; and (3) Respondent offered or distributed or participated in the offer or distribution of the subdivided lands without providing public offering statements to the purchasers of the land prior to the disposition in violation of Section 498.023(2), Florida Statutes.

   The hearing officer entered a recommended order dated January 27, 1986. On February 17, 1986, Respondent timely filed written exceptions to the recommended order. After examining the recommended order, considering the written exceptions to the recommended order filed by Respondent, and reviewing the entire record, it is

   
   

   HEREBY ORDERED that:

   
   

   FINDINGS OF FACT

   
   

   1. The findings of fact as set forth in the recommended order are hereby adopted as the agency's findings of fact for this final order.

      
      

   2. Pursuant to the provisions of Rule 7-4.06 and 28-5.405

{3), Florida Administrative Code, a party who timely files exceptions with an agency in response to a hearing officer's recommended order shall receive an explicit ruling on each exception or proposed findings of fact as well as a brief statement of grounds for denying the exceptions or proposed findings of fact.

1. Respondent's first exception alleges that paragraph three of the hearing officer's findings of fact is contrary to the evidence and contradicted by other findings in paragraph ten and eleven. Paragraph three discusses the fact that the subdivision was never registered, which is supported by paragraph one of the pre-hearing stipulation entered into by the parties on November 5, 1985. There appears to be nothing misleading by this statement nor is there any conflict with paragraphs ten and eleven of the findings of fact of the recommended order.

   
   

   Respondent in her exceptions stated that a discretionary exemption was issued by the Division Director citing the transcript, volume 3, pages 27 and 28. To the contrary, that section of the transcript indicates that Respondent testified at the hearing that an order of exemption was never granted pursuant to the exemption application (T-III, 28) Further, there was no testimony that the Division Director ever executed a discretionary exemption on behalf of Respondent as alleged. The exceptions to the findings of fact outlined by Respondent in paragraph one are found to be without merit.

   
   

2. In paragraph two of Respondent's exceptions to the hearing officer's recommended order, Respondent characterized

   certain findings in paragraphs twelve and twenty-one as "legal interpretations of the previously discussed exemption agreement." Initially, the excerpts discussed by Respondent reference the consent agreement entered into by Respondent, D.

   1. Jeffords and the Division in this matter and does not concern any "exemption agreement." The Division has not and does not issue exemption agreements. Review, Chapter 7D-1 thru 7D-l 1, Florida Administrative Code and Chapter 498, Florida Statutes. Further, the findings by the hearing officer were based on the documents submitted into evidence and therefore were not legal conclusions.

      
      

      Respondent asserts further that it was reasonable for her to assume that she could develop additional lots as long as the number was less than fifty. This assertion turns on the credibility of the witnesses who testified at the hearing. The hearing officer was present and heard the testimony of Respondent and Kenneth L. McDowell concerning this matter, and in paragraph twenty-one of his findings of facts rejected any such reliance by Respondent. Having no ability to determine the credibility of the witnesses based on the transcript, there is no basis for a contrary interpretation. The exceptions to the findings of fact outlined by Respondent in paragraph two are therefore found to be without merit.

      
      

3. In paragraph three of Respondent's exceptions to the hearing officer's recommended order, Respondent discusses the testimony of various witnesses concerning the representations by Respondent about the future maintenance of the roads. Specifically, Respondent directs attention to paragraphs twenty- two through twenty-five. Respondent suggests that the statements made by Respondent would be insufficient for the imposition of any civil penalty or affirmative relief as would be determined to be necessary by the Division, unless there was reliance by the parties upon such statements. To the contrary, there is no such restriction on Section 498.051, Florida Statutes. The exceptions to the findings of fact outlined by Respondent in paragraph three are found to be without merit.

CONCLUSIONS OF LAW

The conclusions of law as set forth in the recommended order are hereby adopted as the agency's conclusions of law for this final order with the following modification. Paragraph four of the recommended order states that "Purchasers Harrison and Henderson were told by the Respondent that the roads would be county roads or be brought up to county standards and then

maintained by the county, and this was an inducement to purchase." The hearing officer in paragraph four of his conclusions of law found Respondent's statements to be "false and deceptive or misleading statements within the meaning of Section 498.051(1)(b), Florida Statutes, because these promises were not fulfilled while Respondent acted as a subdivider."

Initially, in the Hearing Officer's findings of fact on pages twelve and thirteen, he concluded that statements by Respondent induced purchasers Harrison and Coltrane rather than purchasers Harrison and Henderson to purchase subdivided lands from Respondent as stated in his conclusions of law.

Notwithstanding this, purchasers Harrison, Henderson, Coltrane and LeGrand were all told the statement by Respondent prior to their purchase of a lot within the subdivision. The statement by Respondent that the county was to maintain the roads at some future point in time, was false, deceptive and misleading within the meaning of Section 498.051(1)(b), Florida Statutes. It therefore does not matter whether the purchasers relied on the statements prior to entering into the purchase of a lot.

ORDER

Based upon the adopted findings of fact, conclusions of law as modified, and after a review of the complete record, IT IS ORDERED, that:

1. Petitioner pay to the Division a civil penalty in the amount of five thousand dollars ($5,000.00) for the violation established through Count I, five thousand dollars ($5,000.00) for the violation established through Count II, and five thousand dollars ($5,000.00) for the violation established through Count III.

   
   

2. The civil penalty for Count III is accessed due to the hearing officer's determination that the violation did occur. Further, it was clear that Respondent intended to bring the roads up to county standards until she determined that it would be costly. (T, V-I, pp. 110,111; Petitioner's exhibit 11, pp. 3-4) Respondent also told Michael and Sandra Harrison, Robert LeGrand, Preston and Marsha Coltrane, and Thomas Henderson that

   she would bring the roads in Ocklawaha Hills up to Putnam County standards and that the county would then begin maintenance of the roads. (T, V-I, pp. 2,35,36; V-II, pp. 78-79, p.82,83 &

   86; V-III, pp. 4-5) Christell Sheffield never brought the roads up to Putnam County road standards. (T, V-I, pp. 110-111).

3. Respondent shall remit the total amount due to the Division within thirty (30) days of rendition of the Final Order in this cause.

   
   

4. The hearing officer in its conclusions of law stated that a violation of allegation III of the Notice to Show Cause had occurred. He stated further that "[i]n view of this violation, the Respondent may be ordered to cease and desist her activities or affirmative action may be taken within the judgment of the Petitioner. That affirmative action is as described in Section 498.051(3), Florida Statutes." In his recommendations, the hearing officer stated that "[n]o recommendation is made as to the disposition of the violation under Count (3) in that the terms of Section 498.051, Florida Statutes, do not lend themselves to addressing the particular facts of this case".

   
   

   Section 498.051(3), Florida Statutes states:

   
   

   The affirmative action to be taken by a person pursuant to an order authorized by a subsection (1) may include, but is not limited to: (a) notifying any purchaser of subdivided land who has a rescission right pursuant to contract or pursuant to other provisions of this Chapter that the purchaser may elect to rescind the purchaser transaction as provided by contract or by other pro-visions of this Chapter; and (b) establishing a trust or escrow account in a financial institution located within this state to assure the payments of refunds to those purchasers who elect to rescind, or to assure the conveyance of clear and marketable title to those purchasers who do not elect to rescind, transactions. (Emphasis Added)

   
   

   Offering rescission rights in this circumstance would be inequitable because sales have occurred from 1979 to the present. (Pre-hearing Stipulation, p.6; T, V-I, p.60) Further complicating this matter is the fact that many improvements have been permanently placed on the resident's lots. Rescission would not fully and adequately reimburse these purchasers.

   
   

   Further, had Respondent properly registered with the Division prior to the development of unit six, Respondent would

   have been required to record a plat for the entire subdivision, pursuant to Section 498.027(1)(b), Florida Statutes.

   Recordation of the plat would have resulted in the roads within the sub-division having been constructed to the specifications of the county. Section 498.027(1)(e), Florida Statutes, and Rule 7D-5.022(3)(r). Therefore, due to the foregoing constraints and considerations, the only appropriate and equitable remedy is to require that Respondent perform as outlined below.

   
   

5. Within thirty (30) days from rendition of this Final Order by the Division, Respondent shall have a certified Florida engineer prepare a cost estimate under seal establishing the approximate amount of monies necessary to construct all roads in Ocklawaha Hills to the minimum Putnam County standards for acceptance of the roads into the Putnam County road maintenance system and Respondent shall provide the Division with a copy of said cost estimate.

   
   

6. Within forty-five (45) days from rendition of the Final Order by the Division, Respondent shall place the amount of money indicated by the engineer's cost estimate in an escrow account (established with a trust company, or a bank having trust powers, located within this state), for the sole purpose of assuring the construction of roads in Ocklawaha Hills in accordance with minimum Putnam County standards for acceptance of roads into the Putnam County road maintenance system or Respondent will provide an alternative assurance acceptable to the Division.

   
   

7. Respondent shall have one year from rendition of the Final Order by the Division, to construct all of the roads in the subdivision, Ocklawaha Hills, in accordance with minimum Putnam County standards for acceptance of roads into the Putnam County maintenance system. When the roads have been constructed as indicated above, Respondent shall make a good faith attempt, via appropriate Putnam County procedures, to request that the appropriate officials of Putnam County accept the roads within Ocklawaha Hills into the Putnam County road maintenance system.

   
   

8. When the roads in Ocklawaha Hills have been constructed to the standards as outlined above, Respondent shall request the appropriate information from the Putnam County engineer's office certifying to the Division that the roads have been constructed to the minimum road requirements for inclusion of the roads into the Putnam County road maintenance system.

9. If the appropriate Putnam County officials do not accept the roads in Ocklawaha Hills into its road maintenance system, then Respondent shall establish an escrow account within ninety (90) days of the date of receipt of the County's denial of the request. The escrow account will be established for the benefit of a duly incorporated property owner's association within the subdivision, Ocklawaha Hills, which association is controlled by owners of lots within the subdivision. If there is no property owner's association in existence then the escrow account shall be established for the benefit of all lot owners within Ocklawaha Hills. The sole purpose of the escrowed funds shall be to provide monies for proper maintenance of all roads within Ocklawaha Hills. The amount of money placed in the escrow account by Respondent shall be an amount which is sufficient to maintain all roads in the subdivision for five years based on a cost estimate prepared by a certified Florida engineer as to proper maintenance of all roads in Ocklawaha Hills for the five year period and Respondent shall provide the Division with a copy of said cost estimate.

   
   

10. Respondent Christell B. Sheffield shall cease and desist from any further offers or dispositions of any lots, parcels, units or interests within the subdivision known as Ocklawaha Hills until Respondent has either been provided a valid order of registration by the Division or is exempt from regulation by the Division in accordance with Chapter 498, Florida Statutes and rules promulgated pursuant thereto.

This Final Order may be appealed pursuant to Section 120.68, Florida Statutes, and Rule 9.110, Florida Rules of Appellate Procedure, by filing a Notice of Appeal conforming to the requirements of Rule 9.110(d), Florida Rules of Appellate Procedure, both with the appropriate District Court of Appeal accompanied by the appropriate filing fees and with this agency within 30 days of rendition of this Order.

DONE AND ORDERED this 22nd day of 22nd day of April, 1986.

1. James Carney, Secretary Department of Business and

Professional Regulation State of Florida

725 South Bronough Street Tallahassee, Florida 32301-1927

Copies furnished to:

Thornton J. Williams, Esquire Timothy Reyser, Esquire

Charles C. Adams, Hearing Officer

Docket for Case No: 85-000659

Orders for Case No: 85-000659