STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE No. 90-4468

)

DOROTHY K. LIVINGSTON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a formal hearing in this case on January 24, 1991, in Tampa, Florida.

APPEARANCES

For Petitioner: Janine B. Myrick, Esquire

DPR - Division of Real Estate

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

For Respondent: Jerry Gottlieb, Esquire

GOTTLIEB & GOTTLIEB, P.A.

2753 State Road 580, Suite 204

Clearwater, Florida 34621 STATEMENT OF THE ISSUES

Whether or not Respondent's real estate license should be disciplined because she allegedly engaged in conduct amounting to fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; failed to immediately place with her registered employer money entrusted to her by persons dealing with her as a real estate agent and operated as a broker or salesman without either being so licensed or not registering with her employer in violation of Subsections 475.25(1)(b), (e) and (k), Florida Statutes.

PRELIMINARY STATEMENT

By its Administrative Complaint filed August 14, 1990, Petitioner, Department of Professional Regulation, Division of Real Estate, alleges that Respondent violated Subsections 475.25(1)(b),(e) and (k), Florida Statutes, and seeks to impose disciplinary action against her based on such charges.

Respondent, Dorothy K. Livingston, has disputed the charges and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. At the hearing, Petitioner presented documentary evidence, all of which Respondent stipulated to as to its authenticity and substance. Those documents were received into evidence as Petitioner's Exhibits 1-6. Respondent testified and presented the testimony of JoAnn Kennedy and David Hurd. Respondent's Exhibits 1-4 were offered and received into evidence. Following the hearing, the parties were allowed through May 1, 1991, to submit memoranda in support of their respective positions. The parties filed proposed recommended orders which were considered in preparation of this Recommended Order. Proposed findings which are not incorporated herein are the subject of specific rulings in an Appendix.

FINDINGS OF FACT

1. Petitioner is the state licensing regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.30, Florida Statutes and Chapters 120, 455 and 475, Florida Statutes, and rules and regulations promulgated pursuant thereto.

   
   

2. During times material, Respondent was a licensed real estate salesman in Florida, having been issued license number 0319604. The last license issued Respondent was as a salesman, c/o Referral Realty Center, Inc. (herein Referral) at 8974 Seminole Boulevard, Seminole, Florida. On December 1, 1988, Respondent entered into a management agreement with Madeira Beach Yacht Club Condominium Association, Inc. (herein Madeira) to serve as property manager.

   
   

3. Respondent assumed the property manager position with Madeira in June of 1987, which was formalized by a written agreement in December 1988.

   
   

4. While acting as property manager for Madeira, Respondent handled the rental transactions of individual units for owners. In return for her services, Respondent was compensated based on a commission of 10% to 20% of the monthly rental. On at least one occasion, Respondent rented an individual unit for owners for a term greater than one year. Respondent was aware that she was renting the one unit for a term in excess of one year. Respondent signed leases for units belonging to individual owners as the rental agent or representative.

   
   

5. Respondent used the commissions that she received to defray operating expenses for her rental business such as cleaning fees for the units and for personal compensation.

   
   

6. Respondent maintained a bank account at the First Federal of Largo Savings and Loan Association entitled "Dorothy K. Livingston Rental Account" for her rental business. Deposits to that account were rental monies received from tenants from which disbursements were made to unit owners and the remaining commissions went to Respondent as compensation.

   
   

7. The rental account maintained by Respondent was neither an account with her employing real estate broker, nor was it an escrow account.

8. Respondent placed security deposits that she received from tenants in the referenced rental account that she maintained.

   
   

9. Respondent did not inform her employing broker of the receipt of security deposits nor did she discuss with her employing broker any of her activities involving rental of units for owners at Madeira. However, there is credible testimony evidencing that her broker was knowledgeable of Respondent's activities relative to her rental of units for owners.

   
   

10. During May 1989, Respondent placed her real estate license with Referral Realty Center (Referral) as her employing broker. She did so in order to receive payment for referring prospects to Referral.

    
    

11. On or about May 22, 1989, Respondent entered into an independent contractor agreement with Referral. That agreement provided in pertinent part that:

    
    

    1. Independent contractor agrees that Independent contractor will not list any real estate for sale, exchange, lease or rental... .

    2. Independent contractor agrees to refer all prospective clients, customers, buyers and sellers of which Independent contractor becomes aware to the Center... .

    3. Independent contractor agrees that so long as this Agreement is in force and effect the Independent contractor will not refer any prospective seller or buyer to another real estate broker... .

       9. Independent contractor agrees to act, and to represent that he or she is acting solely as a referral associate of the Center... .

       
       

12. While employed by Referral, Respondent also received commissions from individual unit owners at Madeira.

    
    

13. During the time when Respondent had her license listed with Referral, she also received commissions from Referral for prospects she generated while renting units for owners and acting as property manager at Madeira.

    
    

14. Respondent received a copy of a letter from attorney R. Michael Kennedy, addressed to J.L. Cleghorn of Building Managers International, Inc., dated September 5, 1989. In that letter, attorney Kennedy expressed his opinion that condominium or cooperative managers are exempted from the licensing provisions of Chapter 475, Florida Statutes, and that receipt of a percentage of rental proceeds would not be precluded even if the manager was salaried. The Kennedy letter erroneously states support for attorney Kennedy's opinion by Alexander M. Knight, Chief of the Bureau of Condominiums, and Knight so advised attorney Kennedy of that erroneous support by a subsequent letter to him. It is unclear to what extent Respondent apprised attorney Kennedy as to the specifics of her activities and to what extent she relied on his opinion prior to engaging in her property manager's rental and referral activities. (Petitioner's Exhibit 7.)

15. Respondent did not seek advice from Petitioner as to whether her activities fell within the guidelines of Chapter 475, Florida Statutes.

    
    

16. Respondent is familiar with the statutory definitions of a broker and salesman and what activities constitute brokerage and sales activities.

    
    

17. During times material, Respondent's employing broker, David Hurd, was a licensed real estate broker in Florida, and the broker of record for Referral for procuring prospects and making referrals of real estate activities.

    
    

18. Employment under an independent contractor agreement is considered employment under Chapter 475, Florida Statutes.

    
    

    CONCLUSIONS OF LAW

    
    

19. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this action pursuant to Subsection 120.57(1), Florida Statutes.

    
    

20. The parties were duly noticed pursuant to Chapter 120, Florida Statutes.

    
    

21. The Petitioner's authority is derived from Chapter 475, Florida Statutes.

    
    

22. As a real estate licensee, Respondent is subject to the disciplinary guides of Chapter 475, Florida Statutes.

    
    

23. Subsection 475.01(1)(c), provides in pertinent part that:

    
    

    (c) "Broker" means a person who, for another, and for a compensation ... directly or indirectly paid ... rents or offers, ... or negotiate the sale, ... or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same, ... or who advertises or holds out to the public by any oral or printed solicitation or representation that [s]he is engaged in the business of ... renting, ... real property of others or interest therein... .

    
    

24. On October 1, 1988, Subsection 475.011(5), became effective. This section provides an exemption, from the broker license requirement, for salaried managers engaged in renting individual units in a cooperative apartment or condominium complex for terms of less than one year. This exemption does not apply to persons receiving a commission for renting individual units.

    
    

25. Petitioner presented clear and convincing evidence that subsequent to October 1, 1988, Respondent was engaged in renting condominium units and receiving a commission for this service while not licensed as a broker.

26. Respondent's receipt of commissions is a function uniquely and exclusively within the province of a real estate broker pursuant to Section 475.42(1)(d), Florida Statutes. As Respondent received commissions from such activities, she engaged in conduct within the purview of Subsection 475.25(1)(e), Florida Statutes.

    
    

27. Petitioner presented clear and convincing evidence that Respondent rented at least one condominium unit for a period in excess of one year. As such, Respondent's activities do not fall within the exemption set forth in Subsection 475.011(5), Florida Statutes. Based thereon and in the instance where Respondent's manner of compensation were commissions, her activities are not exempt under Subsection 475.011(5), Florida Statutes. The Legislature has provided specific exemptions for enumerated individuals and professionals such as certified public accountants, attorneys, trustees, personal representatives and other fiduciaries, employees of owners, licensed brokers or sovereign entities such as public utilities or governmental agencies. Those employees however, are not exempted if they receive commission or other compensation strictly on a transactional basis or compensation in addition to the employee's salary. See State of Florida, Department of Professional Regulation v. John Erfmann, Case No. 90-234 CA (Circuit Court, Seventh Judicial Circuit in and for St. Johns County, 1990). Although Respondent, as a licensed condominium manager is subject to statutory control by the Florida Department of Business Regulation, her acceptance of rental commissions as well as a salary removes her leasing activities from regulation as a licensed condominium manager and releases the owners from any liability from her actions, and therefore establishes her as an independent contractor. Nor are Respondent's activities permissible as "community association management" as she was duly licensed by the Department of Business Regulation. This being so, and since community association management does not include the function of renting as provided for in Subsection 468.31(2), Florida Statutes, her activities here were not exempt.

    
    

28. Respondent's defense that she, in good faith, relied on the advice of counsel is herein rejected based on her failure to demonstrate that she (1) fully disclosed all relevant facts to counsel; and (2) relied in good faith on his (counsel's) advice. See United States v. Parker, 839 F.2d 1473 (11th Cir. 1988). Respondent failed to demonstrate what, if any facts, she disclosed to attorney R. Michael Kennedy.

    
    

29. Petitioner presented clear and convincing evidence that Respondent received security deposits in trust and held them in an account other than an escrow account.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that Petitioner enter a Final Order imposing an administrative fine against Respondent in the amount of $1,500.00, issue a written reprimand to her, place her license on probation for a period of one (1) year with the further condition that she complete 60 hours of continuing education.

RECOMMENDED this 31st day of May, 1991, in Tallahassee, Leon County, Florida.

JAMES E. BRADWELL

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 May, 1991.

COPIES FURNISHED:

Janine B. Myrick, Esquire

DPR - Division of Real Estate

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

Jerry Gottlieb, Esquire GOTTLIEB & GOTTLIEB, P.A.

2753 State Road 580, Suite 204

Clearwater, Florida 34621

Darlene F. Keller, Executive Director Florida Real Estate Commission

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

Jack McRay, General Counsel Department of Professional

Regulation

Northwood Centre, Suite 60 1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-004468

Orders for Case No: 90-004468