STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 88-2407

)

YOLANDA JEAN RAMSEY d/b/a )

RAMSEY REALTY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on November 21, 1989, in Tampa, Florida.

APPEARANCES

For Petitioner: Stephen W. Johnson, Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondent: Salvatore A. Carpino, Esquire

One Urban Centre, Suite 750 4830 West Kennedy Boulevard Tampa, Florida 33609

STATEMENT OF THE ISSUES

The issue is whether respondent's license as a real estate broker should be disciplined for the reasons stated in the amended administrative complaint.

PRELIMINARY STATEMENT

By an administrative complaint filed on April 12, 1988, petitioner, Department of Professional Regulation, Division of Real Estate, charged that respondent, Yolanda Jean Ramsey d/b/a Ramsey Realty, licensed as a real estate broker, had violated Subsections 475.25(1)(b) and (d), Florida Statutes (1985). More specifically, the complaint alleged that respondent failed and refused to pay a $77,000 real estate commission to a salesman in 1986, that the salesman later obtained a judgment against respondent in November 1986, and that respondent has never satisfied that judgment. The complaint alleged further that this conduct constituted a violation of subsection 475.25(1)(d), which makes it unlawful for a licensee to fail to pay a commission, and subsection 475.25(1)(b), which makes unlawful the acts of fraud, misrepresentation, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, and breach of trust in a business transaction. On October 14, 1988, petitioner

filed an amended administrative complaint containing essentially the same allegations except for minor changes. Respondent disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes (1987). The matter was referred by petitioner to the Division of Administrative Hearings on May 16, 1988, with a request that a hearing officer be assigned to conduct a formal hearing.

By notice of hearing dated June 10, 1988, a final hearing was scheduled on July 20, 1988 in Tampa, Florida. At respondent's request, the matter was rescheduled to October 13, 1988, and again to November 30, 1988 in St.

Petersburg, Florida. A joint motion to reschedule the hearing was later granted, and the matter was rescheduled to February 2, 1989. On January 4, 1989, the case was transferred from Hearing Officer Diane D. Tremor to the undersigned. Thereafter, and at the request of the the parties, the matter was held in abeyance until it was eventually rescheduled to November 21, 1989 in St. Petersburg, Florida.

At final hearing petitioner presented the testimony of Sandra A. Hawley and her son, James E. Monette, Jr. It also offered petitioner's exhibits 1-3. All exhibits were received in evidence. Respondent testified on her own behalf and presented the testimony of Robert Diaz and Constance Jessup. Also, she offered respondent's exhibits 1-3. All exhibits were received in evidence. Finally, respondent's motion to dismiss was denied prior to the taking of testimony at hearing.

There is no transcript of hearing. Proposed findings of fact and conclusion of law were filed by petitioner on December 8, 1989. None were filed by respondent. A ruling on each proposed finding has been made in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. At all times relevant hereto, respondent, Yolanda Jean Ramsey, was a licensed real estate broker having been issued license number 0012364 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). When the events herein occurred, respondent operated a real estate firm under the name of Ramsey Realty located at 19940 Gulf Boulevard, Indian Shores, Florida. Her husband, Drew Ramsey, was a condominium developer but he was not a licensed realtor.

   
   

2. Sandra A. Hawley (Hawley) was a licensed salesperson for Ramsey Realty from April 1981 until she was terminated by respondent on January 6, 1982. She was employed by respondent pursuant to an oral agreement and was to receive a 3% commission on all closed sales. This description of Hawley's compensation arrangement was not contradicted by respondent. Drew Ramsey was then developing several condominium projects in Pinellas County, and Hawley's sales activities were focused on the sale of those condominiums through Ramsey Realty.

   
   

3. Hawley was described by respondent as being the best salesperson in the firm. From April 1981 through December 1981, Hawley recalled that her W-2 statement reflected $76,000 in commissions actually received. By the time she was terminated, Hawley represented that she had either closed on units or had firm contracts on other units to earn an additional $279,000 in commissions. Although respondent did not agree she owed Hawley any money due to various

   setoffs, the $279,000 figure was not credibly contradicted, particularly since respondent's records relating to those sales were allegedly destroyed or lost by respondent at about the time certain civil litigation was begun by Hawley.

   
   

4. On January 6, 1982, respondent was terminated by respondent for cause. According to respondent, Hawley was delinquent in making payments to her husband for several condominium units Hawley had bought for investment purposes, and on one occasion, Hawley had not turned over to Ramsey Realty a deposit on a resale of a unit. She was also accused of bouncing checks.

   
   

5. After she left Ramsey Realty, Hawley made demand for commissions still owed. Between January and June 1982 she was paid approximately $40,000 by respondent but received nothing after that. She eventually sued respondent in circuit court for the unpaid commissions and obtained a final judgment against respondent on December 10, 1987 for $76,000 plus interest, or a total of

   $118,618.88. To date, Hawley has been unable to obtain payment of the judgment. At hearing respondent acknowledged that a judgment pertaining to Hawley's unpaid commissions was entered against her and that no appeal of that judgment was taken. According to Ramsey, she has refused to pay Hawley based upon her attorney's advice.

   
   

6. Respondent's principal defense against paying the commissions is that Hawley allegedly owes her and her husband substantial amounts of money which offset the earned commissions. Testimony at hearing revealed that these matters have been the subject of extensive and lengthy civil litigation between Hawley and the Ramseys. Hawley represented that she has prevailed in all court actions, and this was not contradicted by respondent. However, none of the judgments and mandates (if an appeal was taken) were made a part of this record.

   
   

7. The principal offset relates to a lease-purchase agreement entered into by Hawley and her son, James Monette, Jr., and Drew Ramsey in June 1981 whereby Hawley and her son agreed to lease, with an option to purchase, a restaurant/bar known as The End Zone located on Dale Mabry Avenue in Tampa, Florida. On June 18, 1981 Hawley and her son executed a promissory note in the amount of $170,000 payable to Drew Ramsey and to be secured "by an assignment of commissions of even date herewith". The note also provided that "certain commissions earned by Sandra A. Hawley as a real estate salesperson for Ramsey Realty ... shall be applied as prepayments on account hereof." This was confirmed in a letter sent by Hawley to respondent on June 18, 1981. The letter authorized Ramsey to "pay one-half of all commissions which I have earned or will earn from working as a real estate person for Ramsey Realty to Drew Ramsey on account of the indebtedness under the Note until it is paid in full." The letter further provided that if Drew felt "insecure" about the note, Yolanda was authorized to "assign such greater percentage of (her) commissions to Drew Ramsey on account of the indebtedness until it is paid in full."

   
   

8. Hawley admitted signing the promissory note but pointed out that she had earned enough commissions to easily pay off the note. She contended that the transaction was a ploy to allow Ramsey to retain all of her commissions and thereby deprive her of adequate capital to successfully operate the restaurant. Hawley further asserted that the transaction was later declared null and void in one of the civil actions between the parties because of certain fraudulent representations made by Drew in inducing her to enter into the agreement. However, the final judgment, which is the best evidence of the outcome of the suit, is not of record.

9. On October 1, 1981, an agreement and promissory note was executed by Hawley wherein she promised to pay Drew Ramsey and his partner, George Karpay,

   $58,162.90 plus 18% interest for monthly payments owed Ramsey and Karpay on five condominium units Hawley had previously purchased from them. The note was secured by Hawley's commissions earned at Ramsey Realty. Hawley acknowledged that the signature on the documents was her own but contended that the documents had been altered after she signed them.

   
   

10. On October 1, 1981, Hawley also executed an assignment of commissions whereby she agreed to authorize Ramsey Realty to disburse all commissions earned to Drew Ramsey and Karpay until the promissory note described in finding of fact

    9 was satisfied. Again, Hawley acknowledged that the signature appeared to be her own but she contended the document was altered after it was signed.

    
    

11. According to respondent, the commissions earned by Hawley were not held in the firm's escrow account. Instead, while Hawley was still an employee, such moneys were disbursed by the title company at closing directly to Ramsey Realty, and then Ramsey wrote a check to Hawley as commission compensation. After Hawley was terminated, the manner in which Ramsey received Hawley's earned commissions and their subsequent disposition are not of record. However, respondent represented, without contradiction, that they were not held in the firm's escrow account.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

    
    

13. To sustain the charges against respondent, the Division must prove by clear and convincing evidence that the allegations in the amended complaint are true. See, e.g., Evans Packing Co. v. Department of Agriculture and Consumer Services, 14 FLW 2326, 2327 (Fla. 1st DCA, October 3, 1987).

    
    

14. Subsection 475.25(1), Florida Statutes, authorizes the Division to take disciplinary action against a licensee whenever she:

    
    

    Has been 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 ...

    * * *

    (d) Has failed to account or deliver to any person, including a licensee under this chapter, at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any

    ... share of a real estate commission ...

    
    

15. Because the amended complaint alleges only that respondent failed to pay a real estate commission and to satisfy a civil judgment, the sole issue is whether those omissions on the part of Ramsey constitute a violation of subsections 475.25(1)(b) and (d).

16. Although most of petitioner's proposed order is devoted to the restaurant lease-purchase agreement, and whether respondent's role in that transaction violated the law, this misses the mark altogether. Contrary to petitioner's suggestion, respondent was not charged with having engaged in an illicit transaction with Hawley. Indeed, the two-page amended complaint is narrowly drawn and alleges only that Hawley "performed real estate brokerage acts and services for which (she) became entitled to payment of commission," that respondent "failed and refused to pay a share of real estate commissions or otherwise compensate in full the money owing to (Hawley)," and that Hawley "obtained a civil judgment against the Respondent for the unpaid real estate shares in the total amount of $77,000.00 plus interest, which judgment the Respondent has failed and refused to satisfy." Therefore, any alleged misconduct that may have occurred in connection with the lease-purchase of a restaurant and the assignment of commissions is irrelevant to this controversy. 1/ Moreover, the lease-purchase and assignments were executed by respondent's husband, who is not a licensed realtor, and the documents do not indicate that Yolanda Ramsey was a direct party to those transactions. Therefore, only the narrow issue stated in the preceding paragraph will be addressed. For reasons different than those advanced by petitioner, it is concluded that a violation of the law has occurred.

    
    

17. Taking the charges in reverse order, it is noted first that a violation of subsection 475.25(1)(d) can only occur if a licensee fails to account or deliver to any person money or other property that has been placed in trust or escrow with a licensee who is not involved in the transaction itself. Fleischman v. Department of Professional Regulation, Florida Real Estate Commission, 441 So.2d 1121, 1123 (Fla. 3d DCA 1983). Under the rationale of Fleischman, the reach of subsection (d) is confined to "unjustified refusals to account for or return property received in trust or `escrow' by a real estate licensee in his professional capacity." Id. at 1123. The troublesome aspect of this case occurs because Hawley's real estate sales and pending contracts at the time she was terminated generated the commissions in dispute, and although these moneys were "held" by respondent, there is no evidence that they were held in respondent's escrow account. Therefore, even though respondent was not technically a party to the other transactions, and thus she qualifies to that extent as a "stakeholder or third party not involved in the transaction itself", the necessary finding that "the property (was) received in trust or `escrow' by a real estate licensee in his professional capacity" is not present. Fleischman at 1123. Even so, the case of Golub v. Department of Professional Regulation, Florida Real Estate Commission, 450 So.2d 229 (Fla. 5th DCA 1984) provides that disciplinary action may lie against a licensee for non-escrowed property under certain circumstances. In Golub, a salesman who was terminated from employment with a real estate firm claimed he was owed commissions. The broker, however, refused to pay those moneys contending there were setoffs to the amount owed.

    In reversing a Division final order finding the broker guilty of violating subsection 475.25(1)(d), the court majority relied upon the reasoning in Fleischman and held that a broker could not be disciplined for failing to account and deliver non-escrowed property to a licensee. However, the court held that:

    
    

    Once there is a judicial determination that a broker is not entitled to retain non-escrowed property then the statute is authority to discipline the broker for a failure to account and deliver the property to any person, including a salesman, who is entitled to its possession. Id. at 231

    In this case, the evidence shows that the salesperson (Hawley) obtained a judicial determination that the broker (respondent) was not entitled to retain the non-escrowed property (commissions). Under these unique circumstances, respondent is subject to being disciplined under subsection 475.25(1)(d).

    Therefore, it is concluded that respondent has violated the foregoing section by failing to account and deliver to Hawley the $76,000 (plus interest) owed Hawley as sales commissions.

    
    

18. The complaint next charges that Ramsey violated all of the elements in subsection 475.25(1)(b) by her failure to pay commissions owed and to satisfy a civil judgment. In its proposed order, petitioner suggests that these violations occurred in the following manner:

    
    

    "The Respondent did not deal fairly, honestly and with candor in her transaction with Mrs. Hawley.

    The Respondent deceptively used her position as a real estate licensee to take advantage of her employee which is precisely the type of conduct Chapter 475, Florida Statutes was enacted to thwart.

    The Respondents (sic) violated the trust engendered in her status as licensees (sic) and should, accordingly, be disciplined.

    The Respondents' (sic) behavior in the transaction evinced a pattern of false promises, concealment and negligence in her practice of real estate."

    (pages 8-9, proposed recommended order)

    
    

    As noted earlier, the transaction which petitioner alludes to is irrelevant to this proceeding and thus this reasoning is of no assistance.

    
    

19. Golub suggests, but does not specifically say, that as long as a licensee acted in good faith in retaining moneys claimed to be owed by a salesperson, the terms of subsection 475.25(1)(b) would not come into play. Therefore, the only theory under which disciplinary action would lie, at least within the parameters of this complaint, would be on the ground respondent failed to pay commissions to a former employee after a judicial determination that such commissions were owed had been obtained. After reviewing the conduct proscribed by subsection 475.25(1)(b), it is concluded that the failure by respondent to pay a civil judgment would not constitute a violation of the statute. This is particularly true since the terms of the statute must be strictly construed in favor of the licensee, and a failure to satisfy a judgment could be attributed to many considerations other than fraud, misrepresentation, culpable negligence and the like. Therefore, this charge must fail.

    
    

20. Rule 21V-24.001, Florida Administrative Code (1987) provides a range of disciplinary guidelines from which disciplinary penalties will be imposed upon licensees guilty of violating chapter 475. In its proposed order, petitioner has suggested that respondent's license be suspended for a two year period "or until the Respondent satisfies the judgment obtained by Sandra Hawley against her." The latter condition is not authorized under subsection 475.25(1) nor referred to in the guidelines and thus will be disregarded. For a single violation of subsection 475.25(1)(d), the rule calls for a penalty of "up to 5 years suspension." Given the absence of any aggravating or mitigating

circumstances presented by the parties, a three year suspension of respondent's license is appropriate.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondent be found guilty of violating subsection

475.25(1)(d) and that her broker's license be suspended for three years. The

other charge should be dismissed.

DONE AND ORDERED this 14th day of December, 1989, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of December, 1989.

ENDNOTE

1/ The lease-purchase agreement and assignments of commissions came into issue only after respondent contended these agreements constituted a setoff to Hawley's claims. However, the debt was to the husband and not respondent, and perhaps because of this, Hawley prevailed in her civil action.

APPENDIX

Petitioner:

1. Substantially adopted in finding of fact 1.

2. Partially adopted in findings of fact 1 and 2.

3. Partially adopted in findings of fact 2, 4 and 9.

4. Partially adopted in findings of fact 7 and 8. 5-6. Partially adopted in finding of fact 7.

7-11. Rejected as being irrelevant.

12. Substantially adopted in finding of fact 5.

Note - Where a finding has been partially used, the remainder has been rejected as being irrelevant, unnecessary, cumulative or contrary to the more credible evidence.

COPIES FURNISHED:

Stephen W. Johnson, Esquire Post Office Box 1900 Orlando, Florida 32802

Salvatore A. Carpino, Esquire One Urban Centre, Suite 750 4830 West Kennedy Boulevard Tampa, Florida 33609

Darlene Keller, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Kenneth E. Easley, Esquire

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-0792

Docket for Case No: 88-002407

Orders for Case No: 88-002407