STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 88-0995F

) MIKE W. TROWBRIDGE, BARBARA ) HARVEY CAGE and THE VACATION ) SHOPPE, INC., )

)

Respondent. )

)

FINAL ORDER

A hearing was held in this case in Ft. Myers, Florida, on July 20, 1988 before Arnold H. Pollock, Hearing Officer. The issue for consideration was whether Respondent, The Vacation Shoppe, Inc., should be awarded attorneys fees and costs as a result of the Final Order in DOAH Case No. 87-2515 which dismissed the Administrative Complaint previously filed therein.

APPEARANCES

For the Division Arthur R. Shell, Jr., Esquire of Real Estate: Senior Attorney

Division of Real Estate

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

For The Vacation Jack P. Pankow, Esquire Shoppe, Inc.: 2082 First Street

Post Office Box 580

Ft. Myers, Florida 33902 BACKGROUND INFORMATION

On December 4, 1987, the undersigned issued a Recommended Order in DOAH Case No. 87-2515 relating to these parties in which it was concluded that the Department of Professional Regulation, (DPR), had failed to establish the allegations contained in its Administrative Complaint filed in that case against the Respondents Mike W. Trowbridge, Barbara Harvey Cage, and The Vacation Shoppe, Inc., (TVS), and recommended that the Administrative Complaint against all three be dismissed. Thereafter, on January 19, 1988, the Florida Real Estate Commission entered its Final Order adopting the Undersigned's Findings of Fact and Conclusions of Law and dismissed the Complaint against the Respondents.

On February 29, 1988, counsel for the Respondents, on behalf of the Respondent, The Vacation Shoppe, Inc., filed an Application for Attorney's Fees

in a "reasonable" amount, and costs. DPR moved to dismiss the application, and on March 30, 1988 the undersigned entered an Order Denying Application for Attorney's Fees on the basis that the application had failed to comply with the requirements of Rule 221-6.35, Florida Administrative Code (Small Business Parties' Attorney's Fees and Costs). The Order of denial was without prejudice, and on April 27, 1988, counsel for The Vacation Shoppe, Inc., filed an Amended Application for Attorney's Fees herein.

Counsel for DPR again moved to dismiss but this time the motion was denied and the matter was set for hearing by the undersigned on June 30, 1988.

However, Petitioner's ore tenus Motion for Continuance was granted by the undersigned and ratified in writing by Order of July 5, 1988, which set the matter for hearing on July 20, 1988. The hearing took place as scheduled.

At the hearing, The Vacation Shoppe, Inc. presented the testimony of Robert Henderson, Esquire, an attorney. DPR presented the testimony of John E. Harris, an investigator, and Pilar Montes, a Commissioner with the Florida Real Estate Commission.

No transcript of proceedings was furnished and neither party submitted Proposed Findings of Fact.

FINDINGS OF FACT

1. At all times pertinent to this hearing, The Vacation Shoppe, Inc., was a real estate brokerage corporation licensed by the State of Florida and the Florida Real Estate Commission was the agency responsible for regulating the practice of real estate in Florida.

   
   

2. On or about April 7, 1987, the Florida Real Estate Commission filed an Administrative Complaint against Mike W. Trowbridge and Barbara Harvey Cage, registered real estate brokers, and The Vacation Shoppe, Inc., a registered real estate brokerage corporation, alleging that the three Respondents had unlawfully shared real estate commissions with non-licensed personnel. A formal hearing on the matter was held before the undersigned, a Hearing Officer with the Division of Administrative Hearings, who on December 4, 1987 entered an Order finding that DPR had failed to establish the alleged violations and recommending that the complaint against all Respondents be dismissed. This was done by the Florida Real Estate Commission by its Final Order of January 19, 1988.

   
   

3. The filing of the Administrative Complaint was brought about by a complaint filed with the Commission by an individual by the name of Gerald Hartman who, on October 31, 1986, introduced DPR's investigator, Mr. Harris, to a Mr. and Mrs. Paquette. The Paquettes, formerly managers of a resort condominium and employed by IRPM, a management company, indicated they had been paid $10.00 in cash for each apartment they rented for the Respondent, The Vacation Shoppe, by Keith Trowbridge, the owner of IRPM. The Paquettes indicated that when Keith Trowbridge brought the last payment in cash for Mrs. Paquette and another employee, he stated that due to a complaint filed against him by Mr. Hartman, he could no longer pay the rental commissions by check as he had previously done. The Paquettes were not licensed real estate professionals.

   
   

4. When Mr. Harris received this information, he contacted Respondent Cage at the office of The Vacation Shoppe, Inc. where she gave him rental forms verifying Mrs. Paquette had arranged certain rentals for TVS. Mr. Harris assumed the Paquettes and the other manager had been employed by TVS and contends Respondent Cage did not correct this assumption when he made the

   connection, but he did not attempt to verify their status. By the same token, Mr. Harris assumed Keith Trowbridge owned TVS at the time the questioned payments were made. The evidence indicates, however, that Keith Trowbridge had no priority interest in TVS and made his payments to the Paquettes as he did as a continuation of a long-Standing practice to reward employees of his company, IPRM. Keith Trowbridge may well have had some hidden interest in TVS, but no evidence was presented to establish this fact. Mr. Harris stated at this hearing, "It was common knowledge that Keith Trowbridge owned TVS. No one denied that." while no one may have denied it to Mr. Harris, a strong denial was presented at the hearing on the original complaint and no evidence was presented to contest the denial. Based on the above information, Mr. Harris concluded the evidence showed that Mike Trowbridge and Barbara Cage, both employees of TVS, were guilty of paying commissions to non-licensed people even though Mrs.

   Paguette had indicated that Keith Trowbridge, not Mike Trowbridge, had made the payments He relied on his belief, contrary to the evidence, that Keith Trowbridge owned TVS; his understanding that Keith Trowbridge had previously surrendered his real estate license in another matter arising out of a complaint filed by Mr. Hartman; and his knowledge that Barbara Cage had agreed to a prior consent order regarding the payment by her of unauthorized commissions.

   
   

5. Mr. Harris' Reports of Investigation were referred to the Probable Cause Panel of the Florida Real Estate Commission for consideration of possible action. Ms. Pilar Montes, a Commissioner, was a member of that Panel and reviewed the investigative files relating to this case both before the Panel convened and again at the meeting. Ms. Montes was led to the conclusion that the three Respondents here were guilty of the violation alleged by what she perceived as evidence they were making the unauthorized payments. One of the items which she considered was the Cease and Desist Order signed by Respondent Cage. In Ms. Montes' words, "if she was not guilty, why did she sign the Order?" Mrs. Montes did not independently investigate the facts but concedes that the fact Respondent Cage signed the Cease and Desist Order in a prior case had some effect on her conclusion that she was also guilty in the instant case. She also considered the statements of the Paquettes and Ms. Minor, the other lady paid by Keith Trowbridge, and though they indicated the money was paid by Keith Trowbridge, Ms. Montes believed he was "involved" with TVS. The Report of Investigation of Mike Trowbride indicates in the investigator's summary of his interview with Keith Trowbridge that Keith Trowbridge is the owner of The Vacation Shoppe. There is no independent evidence of that but Ms. Montes relied on it as a member of the Probable Cause Panel. As she clearly stated at the hearing, "It's not our job to go beyond the report."

   
   

6. Ms. Montes cannot say if she would have reached a different conclusion on voting Probable Cause had she known that Keith Trowbridge was not an owner or director of TVS. She also did not consider the fact that both Mike Trowbridge and Barbara Cage had indicated they did not know what Keith Trowbridge was doing. She and, apparently the remaining Panel members relied wholly on a report of investigation which was, it appears, inaccurate and misleading, based on unsupported assumptions and unjustified conclusions.

   
   

7. When the Administrative Complaint was filed and served on the Respondents, they contacted attorney Jack P. Pankow who represented all three at the formal hearing herein. Mr. Pankow billed The Vacation Shoppe a fee of

   $3,542.50 plus reimbursement for the cost of the transcript of $303.75. The fee and transcript cost was paid by the billee, TVS. Mr. Pankow billed for 28 and 1/4 hours at an hourly rate of $125.00 per hour which has been his standard hourly fee for the past 5 years.

8. Robert Henderson, an attorney who has practiced in a general trial practice in Lee County since 1972 reviewed Mr. Pankow's file in this case for reasonableness. The file was made up of several sections including the pleadings filed by all parties, memoranda prepared by Mr. Pankow, 18 letters from Mr. Pankow to various individuals, a telephone log relevant to this case, a substantial legal research file, a production and discovery sub-file containing information on the various witnesses, a transcript of the formal hearing, and time sheets prepared by Mr. Pankow which indicated that as of the filing of the Motion for Attorney's Fees, counsel had expended more than 28 hours on this matter.

   
   

9. Mr. Henderson has known Mr. Pankow from practice with and against him for approximately 12 or 13 years. The rate of $125.00 per hour is standard for middle level attorneys and is reasonable. Mr. Henderson is of the opinion that considering the nature and complexity of this case there was nothing to justify charging more than the standard hourly rate and the time spent on the case was reasonable.

   
   

10. Inquiry of records of the Division of Real Estate reveals that as of July 20, 1988, searching only through the letter "H", The Vacation Shoppe has over 100 licensees affiliated with it. No information was presented as to whether these licensees were employees or independent contractors. TVS indicates it has only 5 employees. The agency did not present any evidence to indicate the actual relationship of the licensees to the corporation. No evidence was Presented as to compensation methods or arrangements, hours, working conditions, liability for tax or any other indicia of relationship. Since a real estate broker, absent a salary or draw agreement or the accomplishment of some commission-earning activity, does not normally become liable for compensation to a licensee whose license is listed with it, it is clear that the licensees are not employees.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings. Section 57.111, Florida Statutes, (1987).

    
    

12. The instant hearing was initiated under the Florida Equal Access to Justice Act, Section 57.111, Florida Statutes, wherein, at Section 57.111(4)(a), it states:

    
    

    "Unless otherwise provided by law, an award of attorneys fees and costs shall be made to a prevailing small business party in any adjudicatory proceeding or administrative proceeding pursuant to Chapter 120 initiated by a state agency, unless the actions of the

    agency were substantially unjustified or special circumstances exist which would make the award unjust."

    
    

13. As to the burden of proof in an action of this nature, the applicant bears the burden of proving it is a small business party and that it prevailed in the original action. Once that showing is made, the burden shifts to the agency to demonstrate that its actions were substantially justified or that

    special circumstances exist which would make an award unjust. Gentele v. Department of Professional Regulation, Board of Optomety, 9 FALR 310, 327 (DOAH June 20, 1986)

    
    

14. A "small business party" is defined at Section 57.111(3)(d) of the act as either "a sole proprietor of an unincorporated business" or "a partnership or corporation. Here the department claims that because The Vacation Shoppe, Inc., has well over 100 licensees affiliated with it, it does not qualify as a "small business Party" within the meaning of the act. It having been found that the licensees in question are not employees" of The Vacation Shoppe, Inc., it is concluded, therefore, that the applicant is a "small business Party" eligible to apply for attorney's fees and costs under the terms of the Act. In any case, the crucial time for determination of status, as well as substantial justification, is the time the action was initiated by the State agency. (Section 57.111(3)(e)). The agency's evidence that The Vacation Shoppe, Inc. had more than 100 employees as of the date of the fee hearing is irrelevant.

    
    

15. The issue then remains as to whether the agency's initiation of the original disciplinary action against the Respondents was "substantially justified." Section 57.111(3)(e) of the Act states'

    
    

    "A proceeding is substantially justified if it had a reasonable basis in law and fact at the time

    it was initiated by a state agency."

    
    

16. In the instant case, the agency's investigator, a retired police officer with more than 20 years investigatory experience submitted two reports which appear to be rife with hearsay, innuendo, and conclusions not fully supported by competent evidence. Allegations were made by discharged employees with obvious hostility toward Keith Trowbridge, which were not verified but were accepted as fact if not denied. Something as basic and easily checked as actual ownership of The Vacation Shoppe, Inc., was not verified by a simple check of state records.

    
    

17. These misleading reports were then furnished to the Commission's Probable Cause Panel and accepted as fact. At least one member of the Panel then assumed that because Ms. Cage had agreed to a Consent Order regarding other incidents similar to those alleged here, she was guilty of continuing misconduct when the evidence of record showed that she had made no payments herself and had, in fact, advised the managers that the prior procedure would be stopped. In any case, the agency failed to present sufficient competent evidence of substantial justification. Ms. Montes' testimony as to what she considered as a member of the Probable Cause Panel is not indicative of the sufficiency of the evidence considered by the Panel. At the least, the transcript of the Panel proceedings, as they pertain to this case, should have been introduced here so that the trier of fact could determine if the agency had met its burden to establish substantial justification for its prosecution. On the present state of the evidence, it must be concluded it did not.

    
    

18. Since the applicant is an appropriate applicant under the Act, since the prosecution was not substantially justified, and since the attorney's fees and costs claimed were reasonable and necessary to defend against the Administrative Complaint, it is, therefore:

ORDERED that the Department of Professional Regulation, Division of Real Estate, pay attorney's fees of $3,542.50 and costs of $303.75 to the Petitioner, The Vacation Shoppe, Inc.

DONE and ORDERED this 24th day of August, 1988, in Tallahassee, Florida.

ARNOLD H. POLLOCK

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of August, 1983.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esquire Senior Attorney

Division of Real Estate

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

Jack P. Pankow, Esquire 2082 First Street

Post Office Box 580

Ft. Myers, Florida 33902

Darlene F. Keller

Acting Executive Director DPR, Division of Real Estate Post Office Box 1900

400 West Robinson Street Orlando, Florida 32801

Docket for Case No: 88-000995F

Orders for Case No: 88-000995F