STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 88-4903

) FRED M. BENNETT t/a BENNETT REALTY, )

)

Respondent. )

)

RECOMMENDED ORDER

Formal hearing in the above-styled action was held on February 8, 1989, in Orlando, Florida, before Mary Clark, Hearing Officer from the Division of Administrative Hearings. The parties were represented as follows:

For Petitioner: Arthur R. Shell, Esquire

Senior Attorney

Department of Professional Regulation Division of Real Estate

400 West Robinson Orlando, Florida 32802

For Respondent: Fred M. Bennett

Post Office Box 3102 Orlando, Florida 32802 (representing himself)

BACKGROUND AND PROCEDURAL MATTERS

In an Administrative Complaint filed on May 24, 1988, the Department of Professional Regulation (DPR) charged Respondent, Fred M. Bennett (Bennett) with various violations of Chapter 475, Florida Statutes, related to his alleged mismanagement of rental monies received on behalf of two property owners.

Bennett disputed the charges and requested a formal hearing, thus initiating this proceeding.

At the hearing, DPR presented the testimony of four witnesses and ten exhibits. Bennett testified in his own behalf and submitted two exhibits.

After the hearing, DPR submitted an proposed recommended order and Bennett filed a brief summary of his case. The findings of fact proposed by DPR are addressed in the attached Appendix.

ISSUE

The central issue is whether Bennett committed the violations as alleged and, if so, what discipline is appropriate. More specifically, did he violate Section 475.25(1)(b), (d) and (k), Florida Statutes, by committing fraud,

culpable negligence or the like, by failing to account for and deliver trust funds, and by failing to properly maintain trust funds?

FINDINGS OF FACT

1. Respondent, Fred M. Bennett was, at all times relevant, licensed as a real estate broker in the State of Florida, having been issued license number 0161968 in accordance with Chapter 475, Florida Statutes.

   
   

2. Harold E. McNally is a self-employed businessman from Chillicothe, Ohio. He met Fred Bennett in 1976 or 1977 when he bought some property in Orlando. Thereafter, the relationship continued with McNally buying and selling property as an investment, and Bennett acting as agent or purchaser.

   Four of McNally's properties in Orlando, Florida were held as rentals: 3939 Spoonbill Avenue

   4525 Salvia Drive

   7806 Toledo Street

   1308 Forester Avenue

   
   

   Bennett collected the rents and sent them to McNally, after deducting his management fee. There was no written management agreement, but rather McNally leased the properties back to Bennett. Later, those leases expired and since the market was not good for sales, Bennett and McNally continued their relationships with Bennett sending the rents and deducting his fees. The rents were $450.00 and $485.00 per month and his fee was $93.00 per month in 1986.

   The rents remained the same in 1987, but the management fee was raised to

   $103.00 per month.

   
   

3. Beginning in May 1986, the rents were not sent to McNally on a regular basis. McNally attempted to contact Bennett but was unsuccessful. By July 1987, Bennett owed McNally $11,169.00 for back rents and a $400.00 deposit on one of the houses.

   
   

4. After McNally retained counsel and sent a letter informing Bennett that he was terminating the management arrangement, Bennett eventually returned the keys and (with the exception of one which he had applied to rent) transferred the tenants' deposits to McNally's new agent.

   
   

5. Bennett attempted to account for the back rents with promissory notes. McNally never acknowledged the notes and filed them. The $11,169.00 was never paid.

   
   

6. James D. Stayton is another real estate investor who dealt with Bennett. He had two properties which Bennett handled for him. Between September 20, 1984, when he acquired the property, and October 1986, when he removed the property from Bennett's control, Stayton was owed $7,447.44 in back rents. Again, Bennett signed a promissory note in this amount, but never paid on the note.

   
   

7. Bennett admits that he owes the funds but denies fraud or dishonesty and claims that his failure to pay the rents was the result of a business deal that went bad.

   
   

   Bennett Does not claim that the rents were not collected. One tenant, Patricia Sulter established that she lived in the 4525 Salvia Drive unit and

   paid her deposit and rents regularly to Bennett during the months when Bennett failed to forward the funds as agreed, to Harold E. McNally.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Section 120.57(1), Florida Statutes and Section 455.225(3), Florida Statutes

   
   

9. Section 475.25(1), Florida Statutes, provides, in pertinent part:

   
   

   475.25 Discipline.--

   (1) The commission may deny an

   application for licensure, registration, or permit or renewal thereof; may suspend a license or permit for a period not exceeding

   10 years; may revoke a license or permit; may impose an administrative fine not to exceed

   $1,000 for each count or separate offense, and may issue a reprimand, or any or all of the foregoing, if it finds that the licensee, permittee, or applicant:

   * * *

   (b) 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 or any other state, nation, or territory, has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction;...

   * * *

   (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 personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value, including a share of a real estate commission, or any secret or illegal profit, or any divisible share or portion thereof, which has come into his hands and which is not his property or which he is not in law or equity entitled to retain under the circumstances.

   * * *

   (k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company,

   banking institution, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized; ... (emphasis added.)

   
   

10. In license discipline cases such as this, the agency has the burden of proving by clear and convincing evidence that the alleged violations were committed by the Respondent. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

11. DPR provided that Fred Bennett failed to provide rental monies when due to Harold McNally and to James Stayton. This constitutes breach of trust and failure to deliver, which violates Section 475.25(1)(b) and (d), Florida Statues, above. It is unknown whether the rental receipts were properly placed and maintained in a trust or escrow account, as no evidence was adduced regarding this allegation. The violation cannot be presumed simply from Bennett's failure to yield the funds to their rightful owners.

    
    

12. Based on the disciplinary guidelines in Rule 21V-24, Florida Administrative Code, counsel for Petitioner urges the imposition of a $6,000.00 fine and six years' license suspension for the three violations. Since only two violations were proven, the recommended penalty is reduced accordingly.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that a Final Order be entered finding Fred M. Bennett guilty of violations of Section 475.25(1)(b) and (d), Florida Statutes, imposing a

$4,000.00 fine and suspending his license for four years.

DONE and ENTERED this 31st day of March, 1989, in Tallahassee, Leon County, Florida.

MARY CLARK

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 31st day of March, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4903

The following constitute specific rulings on each of the findings of fact proposed by the Petitioner:

1. Adopted in paragraph :1.

2. Adopted in paragraph #3.

3. Rejected as unsupported by the evidence.

4. & 5. Adopted in paragraph #5.

1. Adopted in paragraph 6, except for the finding that the funds were converted to Bennett's own use, which finding was not proven.

2. Adopted in paragraph #6.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esquire Department of Professional Regulation - Legal

Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

Fred M. Bennett

Post Office Box 3102 Orlando, Florida 32802

Darlene Keller, Director Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

Docket for Case No: 88-004903

Orders for Case No: 88-004903