STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 91-4932

)

SHIRLEE JEANETTE PEARSON, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly-designated Hearing Officer of the Division of Administrative Hearings, in Pensacola, Florida.

APPEARANCES

For Petitioner: Janine B. Myrick, Esq.

Senior Attorney

Department of Professional Regulation Division of Real Estate

P.O. Box 1900

Orlando, Florida 32802-1900 For Respondent: No appearance

STATEMENT OF THE ISSUES

The issue to be resolved in this proceeding concerns whether the Respondent's Florida real estate license should be subjected to disciplinary sanctions based upon the charge that the Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes.

PRELIMINARY STATEMENT

Pursuant to its Administrative Complaint filed on June 24, 1991, the Petitioner, Department of Professional Regulation, Division of Real Estate ("DPR"), has charged that the Respondent named above has violated Subsection 475.25(1)(b), Florida Statutes, based upon factual allegations in that Complaint, which involve a contract for sale of real estate entered into by clients of the Respondent and which involved the alleged manner or means of accounting for an escrow deposit or binder which was to have been received and deposited on behalf of the sellers in the transaction, who were the Respondent's clients, and which binder the Respondent allegedly failed to receive and account for, which failure to receive and secure the binder deposit she failed to disclose to the sellers. Based upon this factual and legal allegation and

charge, the Petitioner seeks to impose disciplinary measures on the Respondent's licensure.

The Respondent disputed the charges in the Administrative Complaint and requested and was accorded the opportunity for a Subsection 120.57(1), Florida Statutes, hearing. Thereafter, a formal hearing was duly scheduled in Pensacola, Florida.

The cause came on for hearing as noticed. The Notice of Hearing was sent to the Respondent's last known address of record. The Petitioner presented the testimony of the seller, Alex R. Harris, and real estate licensee, Ron Giles.

Additionally, the Petitioner presented the testimony of real estate broker, James P. Porter. Petitioner's exhibits 1-6 were received into evidence.

The Petitioner's counsel and witnesses and the Hearing Officer were present at the General Daniel Chappie James Building, Room 501B, 160 Governmental Center, Pensacola, Florida, on the date and time set forth in the Notice of Hearing. After approximately one-half hour elapsed beyond the time set for the commencement of the hearing, the Respondent had not yet appeared. The Hearing Officer thereupon directed the Petitioner's counsel to have Petitioner's investigator, Mr. Paul Bratton, contact the Respondent to ascertain her intentions regarding participation at the hearing and whether she intended to appear. Mr. Bratton then telephoned the Respondent and reported to the Hearing Officer and Petitioner's counsel that the Respondent asserted that she had not received notice of the hearing. The Petitioner's counsel and Mr. Bratton then telephoned the Respondent again and reported to the Hearing Officer that the Respondent had stated that she planned to attend the hearing at 1:00 p.m. that day. The Respondent was telephonically informed of the street address, room number, and location of the building where the hearing was to be conducted; and the Hearing Officer recessed the hearing until 1:00 p.m. to afford the Respondent an opportunity to appear, in accordance with the Respondent's request.

The hearing was then reconvened at 1:00 p.m. that day. After waiting an additional one-half hour, the Respondent still did not appear. The Petitioner's counsel then proceeded to present the Petitioner's case. The Petitioner's counsel was then advised by the Hearing Officer, upon the close of the Petitioner's case, that Proposed Recommended Orders would be accepted if filed within ten (10) days of the last procedural delay in the case, which ruling anticipated the possible eventuality that a continued hearing would be necessary if it proved that the Petitioner, indeed, had not received notice of the hearing. Upon the entry of that ore tenus ruling, the hearing was concluded.

The Hearing Officer thereafter entered an Order directing the Respondent to show cause, within twenty (20) days of February 10, 1992, why she had failed to appear at the properly-noticed formal hearing. That Order directed the Respondent to explain in detail any reasons and circumstances, as she knew them, regarding any alleged lack of notice of the hearing and provided that should the Respondent convince the Hearing Officer that she had not received notice of the hearing, through no fault of her own, that she would be allowed an opportunity to examine the record of testimony and evidence adduced by the Petitioner at the scheduled hearing and would be accorded a later opportunity to cross-examine the Petitioner's witnesses, as well as the opportunity to adduce her own case-in- chief. The 20-day time period, during which the Respondent was accorded the opportunity to thus preserve her rights in response to the Order to Show Cause, elapsed with no response to the Order being filed by the Respondent whatever.

Accordingly, in accordance with the Hearing Officer's ore tenus Order entered at

the close of the hearing and in accordance with the ruling contained in the above-referenced Order to Show Cause, the Proposed Recommended Order submitted by the Petitioner's counsel was timely filed; and this Recommended Order is entered based upon the testimony and evidence adduced by the Petitioner at the duly-noticed formal hearing. Specific rulings are made on the proposed findings of fact and conclusions of law submitted by the Petitioner in this Recommended Order and in the Appendix attached hereto and incorporated by reference herein.

FINDINGS OF FACT

1. The Petitioner is an agency of the State of Florida charged with licensing and regulating the practice of real estate salespersons and brokers licensed pursuant to the authority of Chapter 475, Florida Statutes, and rules promulgated pursuant thereto. The Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints pursuant to Section 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and related rules.

   
   

2. The Respondent, Shirlee Jeanette Pearson, is and at all times material hereto, a licensed real estate salesperson, having been issued Florida license number 0389549, pursuant to Chapter 475, Florida Statutes. The last license issued was as a non-active salesperson with a home address of 6124 The Oaks Lane, Pensacola, Florida 32504-7361.

   
   

3. On or about December 4, 1989, the Respondent entered into a Listing Agreement with Alexis Reginald Harris and Margaret Harris (hereinafter "Sellers"). The Listing Agreement was executed by the Sellers and the Respondent on behalf of Old South Properties, Inc. The Agreement allowed the Respondent to represent the Sellers in the prospective sale of their property to Michael Jones.

   
   

4. Subsequent to showing the property to Mr. Jones, the Respondent presented the Sellers with a Contract for Sale and Purchase dated December 6, 1989. The Contract reflected an earnest money deposit of $500.00 to be held by Old South Properties, Inc.

   
   

5. The Contract was dated December 6, 1989 and included a provision whereby Mr. Jones would obtain conventional financing. On or about December 19, 1989, the Contract was amended to allow for veterans administration financing.

   
   

6. The Contract was amended on or about January 17, 1990 to provide for a cash sale. Before agreeing to the amendments to the Contract, the Sellers demanded an additional $2,500.00 earnest money deposit. The amended Contract was initialed by the Sellers and taken by the Respondent to the prospective purchaser, Mr. Jones. Mr. Jones initialed the changes, signifying agreement to them. The Contract, as amended, reflected an earnest money deposit in the total amount of $3,000.00 to be held by Old South Properties, Inc.

   
   

7. The Contract was thus finalized and the Sellers vacated the property around the first of February, 1990 in anticipation of the closing of sale, which was scheduled for the end of February. The Respondent was aware that the Sellers had moved from the property in expectation of the sale.

   
   

8. On or about February 25, 1990, the Respondent told the Sellers that she had never actually received the additional $2,500.00 earnest money deposit called for by the January 17, 1990 amendments to the Contract. This was the first time that the Sellers became aware that the earnest money deposit had not

   been received by the Respondent. When the Respondent advised them that she had not received the earnest money deposit, as provided for in the Contract, she assured them that the closing would still occur as scheduled on February 28, 1990.

   
   

9. On February 28, 1990, the Sellers signed the necessary documents to close the sale and left town. The Respondent told the Sellers that Mr. Jones would sign the papers later on the same day.

   
   

10. The Sellers left the keys to the house with their daughter, who would remain in town, upon their departure. The Sellers advised the Respondent that Mr. Jones could obtain the keys from their daughter when the closing documents had all been signed. Subsequent to February 28, 1990, the Sellers' daughter called and advised them that the sale had not closed.

    
    

11. The Sellers thereafter retained an attorney, and a civil lawsuit was filed against Old South Properties, Inc. and the Respondent. The court in that case found that the Respondent had breached her fiduciary duty to the Sellers and awarded damages accordingly.

    
    

12. Ron Giles ("Giles") was employed as vice president and sales manager of Old South Properties, Inc. at the time the Respondent was employed there as a sales associate. Sometime in February of 1990, the Respondent went to Giles and informed him that she had acknowledged receipt of a $3,000.00 earnest money deposit on the Harris/Jones Contract, but, in fact, had only received $500.00. Giles told the Respondent to immediately contact the Sellers and advise them that the $2,500.00 earnest money deposit had not been received. The Respondent showed Giles a $2,500.00 Promissory Note that she had obtained from Mr. Jones, representing the deposit amount that she had not actually received.

    
    

13. Giles went to James Porter, the broker for Old South Properties, Inc., and advised him of the problem with the Harris/Jones Contract. Mr. Porter is now, and was at all times material to the allegations of the Complaint, the President of and the qualifying broker for Old South Properties, Inc.

    
    

14. Mr. Porter hired the Respondent as a sales associate for Old South Properties, Inc. sometime in August of 1989. Upon learning of the problem with the Harris/Jones transaction, Mr. Porter had a meeting with the Respondent; and the Respondent admitted to Mr. Porter that she had not informed the Sellers that she had not received the $2,500.00 additional earnest money deposit called for by the amended Contract.

    
    

15. When the transaction failed to close, Mr. Porter made efforts to resolve the Sellers' complaint, but was unsuccessful; and the lawsuit ensued.

    
    

16. The Sellers were awarded damages by the court, and Mr. Porter paid the Final Judgment entered against Old South Properties, Inc. and the Respondent. The Respondent then agreed to pay Mr. Porter back for the funds he expended in satisfying the judgment; however, the Respondent never actually paid Mr. Porter.

    
    

    CONCLUSIONS OF LAW

    
    

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

18. Rule 21V-24.001, Florida Administrative Code, provides that the Florida Real Estate Commission may suspend a license for a period not exceeding five (5) years; revoke the license; impose an administrative fine not to exceed

    $1,000.00 for each count or separate offense; place a license on probation, and may impose a reprimand or any or all of the foregoing penalties if it finds that a licensee has violated Subsection 475.25(1)(b), Florida Statutes.

    
    

19. Subsection 475.25(1)(b), Florida Statutes, proscribes fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction.

    
    

20. The burden of proof is on the Petitioner as to the counts and allegations in the Administrative Complaint. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 34 (Fla. 1st DCA 1977). Proceedings involving the potential revocation of licensure proceedings are deemed to be penal in nature by the courts in Florida. State Ex Rel. Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973). In such proceedings, the prosecuting agency must establish the charges at issue by clear and convincing evidence. See, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

21. The Respondent did not appear personally or by representative. Consequently, there was no contradiction of the evidence adduced by the Petitioner; and therefore, that evidence culminating in the above Findings of Fact was unchallenged. Such uncontradicted, unchallenged testimony should be accepted as proof of the contested issues. The Court of Appeals for the Third District held in Merrill Stevens Drydock Company v. G & J Instruments, Inc., 506 So.2d 30, 32 (Fla. 3d DCA 1987), as follows:

    
    

    As this court stated in Duncanson v. Service First, Inc., 157 So.2d 696, 699 (Fla. 3d DCA 1963)(footnotes and citations omitted): 'We are duty bound not to disturb the findings of fact of a trial judge in a case heard without a jury where such findings are based upon conflicting competent evidence. However, where the testimony on the pivotal issues of fact is not contradicted or impeached in any respect, and no conflicting evidence is introduced, these statements of fact cannot

    be wholly disregarded or arbitrarily rejected. Rather, the testimony should be accepted as proof of the issue which it is tendered, even though given by an interested party, so long as it consists of fact, as distinguished from opinion, and is not essentially illegal,

    inherently improbable or unreasonable, contrary to natural laws, opposed to common knowledge, or contradictory within itself.'

    
    

    The evidence offered by the Petitioner in this proceeding, indeed, was uncontradicted and unimpeached and is not inherently improbable, unreasonable nor contradictory within itself nor, in any other respect, beneath the standard of acceptability for such evidence enunciated in the Merrill Stevens opinion.

    Consequently, that testimony and evidence culminating in the above Findings of Fact is accepted.

22. Subsection 475.01(1)(d), Florida Statutes, defines a salesman as "a person who performs any act specified in the definition of 'broker', but who performs such act under the direction, control or management of another person". Thus, the duties and responsibilities of a licensed real estate salesman are no less than those of a broker.

    
    

23. The Respondent failed to fullfil her responsibilities as a licensee in view of the above Findings of Fact. Despite her knowledge, for several weeks, that she did not have the earnest money deposit in her possession, as prescribed by the Contract, she never made any timely effort to inform the Sellers of that deficiency. It was only immediately before the scheduled closing that the Respondent told the Sellers, who had been relying upon her professional conduct to protect their interests, that she had misrepresented a material fact concerning the Contract by representing that the entire deposit had been posted by the buyer and received by the Respondent when, in fact, that had not occurred. The Respondent then compounded the problem by assuring the Sellers that the closing would occur which further delayed them in otherwise protecting their rights in the matter.

    
    

24. "Culpable negligence" has been defined as "that reckless indifference to the rights of others, which is equivalent to an intentional violation of them". Jackson v. State, 100 So.2d 839, 840 (Fla. 1st DCA 1958). The Respondent's actions, as delineated above, evince culpable negligence. She failed to obtain the funds required to be obtained and held in trust by her according to the terms of the amended Contract; she did not inform the Sellers that the earnest money deposit had not been properly made; she recklessly assured that the closing would occur anyway; and finally, she failed to honor her agreement to reimburse her broker, Mr. Porter, for the funds he was forced to expend in order to satisfy the judgment rendered against his firm and the Respondent as a result of the Respondent's breach of her fiduciary duty to the Sellers.

    
    

25. "...Florida courts elevate the level of duty of a broker to that of an attorney or a banker in that the broker's relation to the public exacts the highest degree of trust and confidence." McGregor v. Florida Real Estate Commission, 99 So.2d 709, 711 (Fla. 1958); Ahern v. Florida Real Estate Commission ex rel. O'Kelley, 149 Fla. 706, 6 So.2d 857, 858 (1942). In the case at bar, the Sellers relied upon the Respondent as a professional real estate salesperson which the law holds to the same professional practice, fiduciary standard as a broker. Such reliance is to be expected when one deals with a professional licensed by the State. "The real estate business has become a highly specialized one and the real estate broker is now the confidant of the public in much the same manner as the lawyer and the banker. His relation to the public exacts the highest degree of trust and confidence and the law imposes on appellee the duty of enforcing its standards." Ahern v. Florida Real Estate Commission ex rel. O'Kelley, supra. The licensure system for realtors was designed specifically to provide the consuming public with the assurance they would deal with competent, proficient, trustworthy individuals. The Respondent's actions herein do not in any way meet the standards established for licensed real estate salespersons.

    
    

26. A trust has been defined as a right of property, real or personal, held by one party for the benefit of another. Any arrangement whereby property is transferred with intention that it be administered by a trustee for another's benefit is a trust. See, Black's Law Dictionary, 1680 (4th Ed. 1968). A trust deposit has been defined as where money or property is deposited to be kept intact and not commingled with other funds or property and is to be returned in

    kind to depositor or devoted to a particular purpose or requirement of the depositor or for payment of particular debts or obligations of the depositor. See, Black's Law Dictionary, 1513 (6th Ed. 1990). In the case at hand, the Respondent violated her responsibilities to the Sellers by misrepresenting the existence of the funds to be held in trust for their benefit. This was not a case where the funds were not kept intact or were commingled, since the Respondent never even had possession of the funds. Consequently, however, the funds could not be devoted to a particular purpose or payment of a debt or an obligation.

    
    

27. It is well settled that there need be no showing of damage to any individual or the public in general for a disciplinary action to lie pursuant to Chapter 475, Florida Statutes. The court stated in McGregor, supra, that the statute distinctly provides that a real estate broker can be disciplined for misconduct without any showing of actual damage caused by his misconduct. Unfortunately, in this case situation, there was significant damage suffered by the Sellers. They failed to ever get the $3,000.00 deposit money provided for by the amended Contract after allowing the Contract to go almost to the point of closing under the belief that the deposit money had been deposited in trust with the Respondent, who had acknowledged receipt of the entire $3,000.00 earnest money deposit. Thereafter, the sale failed to close so that the Sellers lost the benefit of their bargain with the purchaser and conceivably had lost the opportunity to make other sales had they known, by the Respondent timely informing them, prior to the Jones sale closing date, that the earnest money deposit had not been provided. They also lost the opportunity to retain all or part of the deposit as liquidated damages for the failure of the sale. There is no question that the competent, substantial evidence adduced in this case, which is uncontradicted, establishes culpable negligence on the part of the Respondent, and that significant damage was suffered by the Respondent's clients, the Sellers. Although no monetary compensation can be offered as a remedy in this forum and although a judgment and damage award in circuit court has been effected by the Sellers, a substantial penalty is warranted for the Respondent's acts or omissions because such disciplinary action can serve as a message to other licensees and the general public that this type of conduct is not sanctioned.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore, recommended that the Respondent be found guilty of having violated Subsection 475.25(1)(b), Florida Statutes, as charged in the Administrative Complaint, by being guilty of culpable negligence, that the Respondent's real estate license be suspended for a period of three (3) years, and that the Respondent be required to pay an administrative fine in the amount of $1,000.00.

RECOMMENDED this 1st day of July, 1992, in Tallahassee, Leon County, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 1st day of July, 1992.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-4932

Petitioner's Proposed Findings of Fact 1-28. Accepted.

COPIES FURNISHED:

Darlene F. Keller, Director DPR-Division of Real Estate

P.O. Box 1900

Orlando, FL 32802-1900

Jack L. McRay, Esq.

General Counsel

Department of Professional Regulation 1940 North Monroe St., Ste. 60

Tallahassee, FL 32399-0792

Janine B. Myrick, Esq. Senior Attorney

Department of Professional Regulation

Division of Real Estate

P.O. Box 1900

Orlando, FL 32802-1900

Ms. Shirlee Jeanette Pearson 6125 The Oaks Lane Pensacola, FL 32504-7361

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: 91-004932

Orders for Case No: 91-004932