STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 89-2228

)

KATHI L. KITTS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, J. Stephen Menton, held a formal hearing in this case on August 11, 1989 in Miami, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Senior Attorney

Department of Professional Regulation Division of Real Estate, Legal Section

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

For Respondent: George E. Barket, Esquire, and

Louis Arslanian, Esquire 2935 Southwest Third Avenue Miami, Florida 33129

STATEMENT OF THE ISSUES

The issue in this case is whether the real estate license issued to the Respondent, Kathi L. Kitts, should be revoked or otherwise penalized based upon the acts alleged in the Administrative Complaint.

PRELIMINARY STATEMENT

On March 23, 1989, the Petitioner, Florida Department of Professional Regulation, Division of Real Estate, filed an Administrative Complaint charging Respondent, Kathi L. Kitts, a licensed real estate broker, was engaging in the real estate brokerage business without a valid and current license during the period between September 1, 1988 through October 20, 1988. Petitioner contends that Respondent violated Sections 475.42(1)(a) and 475.25(1)(e) , Florida Statutes (1987).

At the hearing, the Petitioner presented the testimony of the Respondent and Kenneth G. Rehm, an investigator with the Florida Division of Real Estate. The Petitioner offered five (5) exhibits, all of which were received into evidence. The Respondent cross-examined the Petitioner's witnesses and offered seven (7) exhibits, all of which were received into evidence.

At the request of Petitioner, official recognition has been taken pursuant to Rule 22I-6.020, Florida Administrative Code, of Sections 20.30 and Chapters 120, 455 and 475, Florida Statutes (1987).

A transcript of the hearing was filed on August 31, 1989 and each of the parties timely filed proposed findings of fact and conclusions of law in accordance with the schedule agreed upon at the conclusion of the hearing. A ruling on each of the proposed findings of fact submitted by the parties is included in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I make the following findings of fact:

1. Brickell Grove Realty Corporation ("Brickell Grove") is a licensed real estate brokerage corporation in Florida having been issued license number 0245921. From at least May 1988 through September 1, 1988, the sole qualifying broker for Brickell Grove was Frederick Morrison, Jr. (Morrison). At some point in mid to late 1988, (the exact date was not established by competent substantial evidence) Morrison was hospitalized with a terminal illness and his subsequent involvement in the real estate brokerage business was limited. Morrison died on September 1, 1988.

   
   

2. Respondent, Kathi L. Kitts (formerly known as Kathi L. Abassi), was licensed by Petitioner as a salesman with Brickell Grove beginning on or about August 13, 1986.

   
   

3. Respondent completed the required course for a real estate broker's license in April of 1988. On September 19, 1988, she passed the state exam required to obtain a broker's license.

   
   

4. The evidence did not establish when Respondent first filed an application for a broker's license. After passing the exam in September of 1988, Respondent submitted an application which she thought would enable her to become the sole qualifying broker for Brickell Grove. The evidence did not establish the date that application was submitted. That application was not signed by the qualifying broker of Brickell Grove and/or the owner so it could not serve to qualify Respondent as the sole qualifying broker for Brickell Grove.

   
   

5. On October 1, 1988, Petitioner issued Respondent a broker/salesman license as an employee of Brickell Grove. That broker/salesman license was revoked in November of 1988 when it was discovered that the corporate registration of Brickell Grove was cancelled effective September 30, 1988 as a result of the death of Morrison and the non-renewal of the corporate license. The exact date of the revocation was not established by competent substantial evidence but it was apparently on or after November 1, 1988. Prior to receiving the revocation notice, Respondent was advised by an investigator employed by

   Petitioner that her application to become the qualifying broker was deficient because it was not signed by the owner or broker.

   
   

6. On October 20, 1988, Respondent filed another application to become licensed as the qualifying broker for Brickell Grove and to change the name on her license from Kathi Abassi to Kathi Kitts. This second application contained the signature of the owner of Brickell Grove.

   
   

7. On November 4, 1988, Respondent sent a letter to the Division of Real Estate indicating that Mr. Morrison was seriously ill and that it was urgent that her application to be the active broker for Brickell Grove be approved as quickly as possible. Respondent did not, however, discover that Mr. Morrison had died on September 1, 1988, until sometime in the middle of November when she was advised by Petitioner's investigator.

   
   

8. Petitioner approved Respondent's second application to become the qualifying broker for Brickell Grove on November 22, 1988. The approved broker's license was backdated to establish an effective date of October 20, 1988.

   
   

9. Effective October 20, 1988, the corporate registration of Brickell Grove Realty Corporation was reinstated upon the Respondent becoming its sole qualifying broker.

   
   

10. Respondent admitted that at least during the time period from September 1, 1988 through October 20, 1988, she operated as a salesman in the office of Brickell Grove Realty without any supervision from another broker in the office. However, no competent substantial evidence was offered to establish the nature or extent of business conducted by that office or by Respondent during this time period. Respondent did not open bank accounts or advertise as a broker until after October 20, 1988.

    
    

11. While Respondent contends that she thought Mr. Morrison was continuing to carry on as the active broker for Brickell Grove during the time period he was hospitalized and continuing through November (after his death), she admitted that she only saw him on occasion and could not recall when he was last in the office. The limited contact between Respondent and the licensed broker for Brickell Grove is reflected by her lack of knowledge of his death until almost two months after it occurred.

    
    

12. While there is hearsay testimony that Mr. Morrison was in the hospital for several months prior to his death and that his involvement with Brickell Grove Realty during the several months preceding his death was limited, or nonexistent, no competent substantial evidence was offered to establish the nature or extent of the business conducted by Respondent without the benefit of supervision by a licensed broker during the time period prior to September 1, 1988.

    
    

13. Petitioner had previously initiated an investigation into unlicensed practice by one of the owners of Brickell Grove, Mahmoud Abassi (Respondent's former husband) in July of 1986. That investigation resulted in an August 29, 1986 affidavit executed by Mahmoud Abassi to cease and desist unlicensed real estate brokerage activity. However, no competent substantial evidence was offered to prove any involvement by Respondent in the activities which led to the execution of that affidavit nor was any evidence offered to show that Mahmoud Abassi was actually running Brickell Grove at any point subsequent to the execution of the affidavit. Moreover, no competent substantial evidence was

    offered as to Respondent's activities and/or supervision during the period from the execution of the affidavit until September 1, 1988.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, this proceeding pursuant to Section 120.57(1), Florida Statutes (1987)

    
    

15. The Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto, as they relate to the imposition of licensure standards and standards for the practice of the real estate profession in its various forms in the State of Florida.

    
    

16. In a disciplinary action such as this proceeding, the burden is upon the Petitioner to establish the facts upon which its allegations of misconduct are based. The Petitioner must prove its allegations by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

17. Disciplinary action with respect to a professional license is limited to offenses or facts alleged in the administrative complaint. Sternberg v. Department of Professional Regulation, Board of Medical Examiners, 465 So.2d 1324, 1325 (Fla. 1st DCA 1985).

    
    

18. The Administrative Complaint charges Respondent with one (1) count of violating Subsection 475.42(1)(a), Florida Statutes and therefore with having violated Subsection 475.25(1)(e), Florida Statutes. Subsection 475.42(1)(a) Florida Statutes provides:

    
    

    1. Violations.

       (a) No person shall operate as a broker or salesman without being the holder of a valid and current license therefor.

       
       

19. Section 475.25(1), Florida Statutes, provides that the Florida Real Estate Commission may take appropriate disciplinary action against a licensee if it finds that the licensee:

    
    

    (e) Has violated any provision of this chapter or any lawful order or rule made or issued under the provision of this chapter (475) or chapter 455, Florida Statutes;

    
    

20. Rule 21V-24.001, Florida Administrative Code, provides for a minimum penalty of a reprimand and/or a fine up to $1,000 per count and a maximum penalty of up to 8 years suspension or revocation for a violation of Section 475.25(1)

21. Rule 21V-5.018, Florida Administrative Code provides:

    
    

    In the event that a corporation has but one active broker, and such broker dies, resigns or is otherwise removed from his position as the active broker, then in such event such vacancy shall be filled within a reasonable time.

    
    

22. The registration of a corporation and all if its salesman are automatically cancelled in accordance with Section 475.15, Florida Statutes and Rule 21V-5.018, Florida Administrative Code if the corporation fails to appoint another broker within a reasonable time. In this case, the Respondent's initial application to become the broker was made within one month of Morrison's death. (The date that initial application was filed was not established, but a salesman's license was issued on October 1, 1988, as a result of that application). While that initial application was deficient and was apparently made at a time when Respondent was unaware that the qualifying broker had died, Respondent was not aware that the application was deficient until sometime in October when she was informed of this fact by Petitioner's investigator.

    
    

23. By her own admission, Respondent engaged in the real estate brokerage business from at least September 1, 1988, through October 20, 1988 without any supervision by a qualifying broker of Brickell Grove. It appears likely, from the testimony and the evidence of record that the Respondent operated for some period prior to September 1, 1988 as a real estate salesman with little if any supervision by a registered broker and for a good portion of the time she did not know even the whereabouts of her registered broker. In fact, it was almost two months after Morrison's death before Respondent became aware of the event. Unfortunately, the evidence does not establish the nature or extent of activities engaged in by Respondent during this period and Petitioner has failed to prove in this case the extent to which Respondent was acting as a broker and/or lacked supervision prior to September 1, 1988. In any event, the Administrative Complaint in this case does not delineate any violations by Respondent prior to September 1, 1988. Thus, the only pertinent time frame for purposes of this proceeding is September 1, 1988 through October 20, 1988.

    
    

24. The only evidence of Respondent's activities was her own admission that she was acting without supervision from September 1, 1988, to October 20, 1988. However, this admission is mitigated because at some point in September she filed an application to become the broker for Brickell Grove and was issued a license as a broker/salesman on October 1. While the initial application was deficient, prompt efforts were made to correct the deficiency within a short time after it was brought to Respondent's attention and the broker/salesman license issued to her on October 1, 1988 was not revoked until after the back- dated effective date of her current broker's license. Thus, she held some form of broker's license (even if the first was issued in error) throughout the month of October. As a result, Petitioner has not carried its burden of proof regarding the allegations in the Complaint that Respondent was practicing as a broker without a license from October 1 to October 20, 1988. However, because the Respondent was operating as a salesman from September 1 to September 30, 1988, without being under the direct control or management of a broker and without a broker's license, she was in violation of Section 475.42(1) during that time period. This violation must be viewed in conjunction with Rule 21V- 5.018, Florida Administrative Code, which provides a "reasonable" time to substitute a new broker after the death of the qualifying broker. While Respondent should not be deemed in violation of the statute immediately upon

    Morrison's death, Respondent's lack of knowledge regarding Morrison's death until two months after it occurred militates against a broad reading of the grace period under Rule 21V-5.018. Therefore, the undersigned has concluded that Respondent should be deemed to have been in violation of Section 475.42 from September 14 to October 1, 1988. Finally, it should be noted that the Petitioner has not alleged or proved any violations by Respondent prior to September 1, 1988.

    
    

25. The allegations in the Administrative Complaint regarding Mahmoud Abassi's control and involvement with Brickell by her within the pertinent time frame. While those allegations, if proven, may provide a basis for disciplinary action against the corporate license, Petitioner has failed to establish their relevancy in this proceeding. More importantly, as noted above, those allegations have not been proven in this action.

    
    

26. The Administrative Complaint does not allege that Respondent misrepresented any of her qualifications to obtain a broker's license and/or that she did not meet the qualifications to practice as a broker as set forth in Section 475.17, Florida Statutes.

    
    

27. Respondent argues that Petitioner should be estopped from taking disciplinary action against Respondent's license because Petitioner's investigator was aware of the facts alleged in the Administrative Complaint prior to the time Respondent received her broker's license. However, at the time the license was issued, the investigation into this case was not complete and the investigator was still in the process of gathering the facts surrounding Morrison's involvement with Brickell Grove and Respondent's role in the company. The Petitioner was not in a position to deny Respondent her license until the investigation was completed. 1/

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Professional Regulation, Florida Real

Estate Commission, enter a Final Order finding Respondent, Kathi Kitts, guilty of operating as a broker without a license during the period from September 14, 1988, to October 1, 1988, reprimanding her and placing her on probation for one year.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 15th day of December 1989.

J. STEPHEN MENTON 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 15th day of December, 1989.

ENDNOTE

1/ While Respondent has cited no case authority to support her estoppel argument, there is some precedent holding that acts of professional misconduct committed prior to licensure cannot serve as a basis for disciplinary action. Taylor v. Department of Professional Regulation, Board of Medical Examiners 534 502d 782 (Florida 1st DCA 1988). However, that theory is inapplicable where, as here the licensee held a license from the regulatory agency and was therefore subject to disciplinary action at the time the alleged offenses were committed and has simply upgraded her licensure status.

APPENDIX Case Number 89-2228

The parties have submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Petitioner's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1. Adopted in substance in the Conclusions of Law.

2. Adopted in substance in Findings of Fact 2.

3. Adopted in substance in Findings of Fact 9.

4. Adopted in substance in Findings of Fact 2.

5. Adopted in substance in Findings of Fact 5.

6. Adopted in substance in Findings of Fact 10.

7. The first sentence is rejected as not supported by competent substantial evidence. The second sentence is adopted in Findings of Fact 1. The third sentence is rejected as a conclusion of law rather than a finding of fact. The fourth sentence is rejected as not supported by competent substantial evidence.

8. Adopted in substance in Findings of Fact 14.

9. Rejected as irrelevant.

10. Subordinate to Findings of Fact 14.

11. The first sentence is rejected as unsupported by competent substantial evidence. The second and third sentences are subordinate to Findings of Fact 12.

12. Adopted in substance in Findings of Fact 5.

13. Adopted in substance in Findings of Fact 10.

The Respondent's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1. Adopted in substance in the Conclusions of Law.

2. Adopted in substance in Findings of Fact 2.

3. Adopted in substance in Findings of Fact 2.

4. The first sentence is rejected as not supported by competent substantial evidence. The second sentence is adopted in Findings of Fact 1. The third sentence is rejected as a conclusion of law rather than a finding of fact. The fourth sentence is rejected as not supported by competent substantial evidence.

5. Subordinate to Findings of Fact 12. Respondent's lack of knowledge regarding Morrison's condition reflects a lack of supervision during that period prior to Respondent obtaining her broker's license.

6. Subordinate to Findings of Fact 4 and 12.

7. Subordinate to Findings of Fact 5. The Department did not "accept" Respondent's initial application for purposes of issuing a broker's license.

8. Adopted in substance in Findings of Fact 11.

9. Adopted in substance in Findings of Fact 5.

10. Subordinate to Findings of Fact 5. The day on which "Respondent should have received her broker's license" was not established.

    
    

11. Adopted in substance in Findings of Fact 9.

12. Rejected as irrelevant.

13. Adopted in substance in Findings of Fact 14.

14. Rejected as irrelevant.

15. Rejected as irrelevant.

16. Rejected as irrelevant.

17. Rejected as irrelevant.

18. Rejected as irrelevant.

19. Subordinate to Findings of Fact 10. The evidence did not establish that the corporate registration of Brickell Grove should have been accomplished on October 1, 1989.

COPIES FURNISHED:

James H. Gillis, Esquire Florida Department of Professional Regulation Division of Real Estate Legal Section

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

George E. Barket, Esquire Louis Arslanian, Esquire 2935 Southwest 3rd Avenue Miami, Florida 33129

Kenneth Easley General Counsel

Department of Professional Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0792

Darlene F. Keller Division Director

Department of Professional Regulation

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION

FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,

Petitioner,

vs. CASE NO. 0161667

DOAH CASE NO. 89-2228

KATHI L. KITTS,

Respondent.

/

FINAL ORDER

On January 16, 1990, the Florida Real Estate Commission heard this case to issue a Final Order.

Hearing Officer Stephen Menton of the Division of Administrative Hearings presided over a formal hearing on August 11, 1989. On December 15, 1989, he issued a Recommended Order, which is adopted by the Florida Real Estate Commission as to all Findings of Fact and Conclusions of Law. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

However, upon a complete review of the record, the Florida Real Estate Commission finds that the Recommended Penalty should be rejected, in part, for the following reason: The penalty of probation was one not authorized by statute at the time the violation occurred.

Therefore, for the reason cited above, the Commission ORDERS that Kathi L. Kitts be reprimanded.

This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s. 120.68, Florida Statutes, and to Rule 9.110, Florida Rules of Appellate Procedure.

Within 30 days of the filing date of this Order, review proceedings nay be instituted by filing a Notice of Appeal with the Clerk of the Department of Professional Regulation at 400 West Robinson Street, Suite 309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.

DONE AND ORDERED this 16th day of January, 1990 in Orlando, Florida.

Darlene F. Keller, Director Division of Real Estate

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: George Barket, Esquire, Louis Arslanian, Esquire, 2935 Southwest 3rd Avenue, Miami, Fl 33129; to Hearing Officer Stephen Menton, Division of Administrative Hearings, 1230 Apalachee Highway, Tallahassee, Fl 32399-1550; and to James Gillis, Esquire, DPR, Post Office Box 1900, Orlando, Fl 32802, this 26th day of January, 1990.

Director

Docket for Case No: 89-002228

Orders for Case No: 89-002228