STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 94-3509

)

STEPHEN A. McLEOD, )

)

Respondent. )

)

RECOMMENDED ORDER

On January 23, 1995, a formal administrative hearing was held in this case in St. Petersburg, Florida, before J. Lawrence Johnston, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven W. Johnson Esquire

Daniel Villazon, Esquire DPR-Division of Real Estate

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

For Respondent: Stephen A. McLeod, pro se

Post Office Box 76325

St. Petersburg, Florida 33734 STATEMENT OF THE ISSUES

The issues in this case are whether the Florida Real Estate Commission should discipline the Respondent on charges set out in the three-count Administrative Complaint filed in FDPR Case No. 92-84190. Count I charges the Respondent with dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in a business transaction in this state, in violation of Section 475.25(1)(b), Fla. Stat. (1989). (For reasons not apparent or explained during the course of the hearing, the DBPR did not charge the Respondent with fraud, misrepresentation, concealment, false promises or false pretenses, all of which also are violations of Section 475.25(1)(b).) Count II charges the Respondent with operating as a broker without a valid and current license in violation of Section 475.42(1)(a), and therefore also Section 475.25(1)(e), Fla. Stat. (1989). Count III charges the Respondent with collecting money in connection with a real estate brokerage transaction other than in the name of the employer and with the express consent of the employer, in violation of Section 475.42(1)(d), and therefore also Section 475.25(1)(e), Fla. Stat. (1989).

PRELIMINARY STATEMENT

On July 26, 1993, the Petitioner, the Department of Professional Regulation, now the Department of Business and Professional Regulation (DBPR), Division of Real Estate, filed the Administrative Complaint that initiated FDPR Case No. 92-84190. The Respondent requested a formal administrative proceeding, and the Administrative Complaint was referred to the Division of Administrative Hearings (DOAH).

Initially, final hearing was scheduled for November 17, 1994. But on November 14, 1994, counsel for the Respondent filed a motion and stipulation for his withdrawal as counsel of record, and final hearing was continued.

Subsequently, final hearing was rescheduled for January 23, 1995.

At final hearing, the DBPR called four witnesses and had Petitioner's Exhibits 1 through 6 admitted in evidence. The Respondent testified in his own behalf.

At the conclusion of the evidence in the case, the DBPR ordered the preparation of a transcript of the final hearing, and the parties were given ten days from the filing of the transcript in which to file proposed recommended orders. The transcript was filed on March 6, 1995, but without objection the Respondent asked for and received an extension until April 5, 1995, to file his proposed recommended order.

Explicit rulings on the proposed findings of fact contained in the parties' proposed recommended orders may be found in the Appendix to Recommended Order, Case No. 94-3509.

FINDINGS OF FACT

1. The Respondent, Stephen A. McLeod, is holds a license that makes him eligible to act both as a real estate broker and as a real estate salesperson in the State of Florida.

   
   

2. Between February, 1989, and March 12, 1990, the Respondent operated as the broker for McLeod Realty Group, Inc., a/k/a MRG, Inc. (MRG), a real estate brokerage of which he was the sole owner and corporate officer.

   
   

3. At some point before March 12, 1990, the Respondent and MRG agreed to locate a commercial lease in Tampa, Florida, for Harold Calhoun, doing business as HC Associates.

   
   

4. Subsequently, the Respondent contacted Theodore Blauvelt concerning an open listing that a limited partnership called SB II/Fidelity Silo Bend #008 had for the lease of 30,000 square feet of space which the limited partnership owned in an industrial park in Tampa. Blauvelt was the President of a TCC Tampa Industrial #2, Inc., a Trammell Crow Company which was the general partner of the Silo Bend #008 limited partnership.

   
   

5. On March 12, 1990, the Respondent deactivated the broker license of MRG, and the Respondent went to work as a broker-salesman for another broker, Centres Commercial Realty Group, Inc. (Centres Commercial). Nonetheless, and despite the deactivation of the license under which the Respondent had been authorized to act as the broker for MRG, the Respondent and MRG continued to act as a broker separate and apart from Centres Commercial.

6. It is not clear from the evidence exactly when the Respondent and MRG initiated negotiations between HC Associates and the limited partnership and became the procuring cause of any lease that might be concluded between them. But it is found that negotiations probably were initiated after March 12, 1990. Negotiations clearly continued after March 12, 1990.

   
   

7. On or about May 7, 1990, HC Associates and the limited partnership concluded negotiations for a lease on the 30,000 square feet of space, and the limited partnership executed a Broker Commission Agreement with MRG, Inc., under which the limited partnership would pay MRG a $45,000 commission, payable half on execution of the lease and half when HC Associates occupied the leasehold space.

   
   

8. On May 9, 1990, HC Associates signed a Lease Agreement for the 30,000 square feet of space, and Blauvelt secured and delivered to the Respondent a

   $22,500 check on an account of the Crow Trammell Companies, made payable to MRG, for the first half of its commission. The Lease Agreement was fully executed when Blauvelt signed it on behalf of the lessor on May 16, 1990.

   
   

9. The May 16, 1990, Lease Agreement had a start date of June 1, 1990. However, it also provided for a $400,000 "Tenant Finish Allowance," payable

   $75,000 on May 21, $100,000 on June 1, and $225,000 on July 1, 1990.

   
   

10. On or about June 14, 1990, Blauvelt and McLeod executed a second "Lease Agreement" for the 30,000 square feet of space. They testified that Blauvelt's company lost the May 16, 1990, Lease Agreement and that they had to execute a duplicate. Calhoun was out-of-town when the question of having to execute another Lease Agreement came up, and he authorized the Respondent to take care of whatever details were necessary. He did not specifically authorize the Respondent to sign Calhoun's name, or anyone's name other than the Respondent's, to the second Lease Agreement.

    
    

11. On June 14, 1990, the Respondent signed the name Mark Thompson, purportedly as vice-president of HC Associates, as lessee on the second Lease Agreement. Blauvelt testified that he thought the Respondent had the authority to sign on behalf of HC Associates. Blauvelt did not know who Mark Thompson was.

    
    

12. Mark Thompson was not vice-president of, or in any way connected with, HC Associates. The Respondent and Calhoun testified that the Respondent knew Thompson as being in the same business as Calhoun (liquidating foreclosed assets) and that the Respondent suggested to Calhoun that Calhoun and Thompson should collaborate in the business of HC Associates. Calhoun actually never met or spoke to Thompson.

    
    

13. Although the Respondent and Blauvelt testified that the second Lease Agreement was for the sole purpose of replacing the lost first Lease Agreement, they made significant modifications. First, the start date was postponed to November 1, 1990. Second, without explanation, the provision regarding the

    $400,000 "Tenant Finish Allowance" was deleted. Nonetheless, the $400,000 was paid to Calhoun in accordance with the first Lease Agreement. Calhoun in turn paid those sums over to the Respondent, who testified that he acted as HC's "consultant" in supervising the tenant improvements.

    
    

14. In accordance with the second Lease Agreement, on November 1, 1990, Blauvelt's company paid MRG the second half of its commission under the Broker Commission Agreement. Like the check for the first half of the commission, the

    check for the second half of the commission, in the amount of $22,500, was drawn on a Trammell Crow Companies account and was made out to MRG, Inc.

    
    

15. The Respondent cashed both commission checks. He did not pay any part of the commissions over to Centres Commercial, the broker for whom he worked.

    He testified that Centres Commercial did not want any of MRG's commissions, and the DBPR did not call as a witness, or even interview, anyone from Centres Commercial to contradict the Respondent. The Respondent testified that Centres Commercial was not interested in any part of the commission for two reasons: first, it hired the Respondent as a tenant representative; second, it did not want to be liable for anything the Respondent or MRG had done before Centres Commercial hired the Respondent.

    
    

16. Although HC Associates was paid the entire $400,000 "Tenant Finish Allowance," HC Associates and the Respondent only have been able to account for approximately $82,000 as actually having gone into lease improvements. Although MRG was paid the entire $45,000 commission, it is unclear whether HC Associates ever actually occupied the leased premises.

    
    

17. The lessor has sued HC Associates, Calhoun, the Respondent, and Blauvelt for breach of the lease and on various other grounds. As of the time of the final hearing, no one knew the whereabouts of the purported Mark Thompson.

    
    

    CONCLUSIONS OF LAW

    
    

18. Section 475.25(1)(b), Fla. Stat. (1989), authorizes the Florida Real Estate Commission to discipline a licensee for dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in a business transaction in this state. (For reasons not apparent or explained during the course of the hearing, the DBPR did not charge the Respondent with fraud, misrepresentation, concealment, false promises or false pretenses, all of which also are violations of Section 475.25(1)(b).)

    
    

19. The evidence proved that the Respondent clearly was guilty of at least culpable negligence and breach of trust in a business transaction in this state in that he forged the name of Mark Thompson to the June 14, 1990, Lease Agreement, and falsely represented Thompson to be the lessee's vice-president. In addition, although it was supposed to have been a duplicate of the May 16, 1990, version of the Lease Agreement, the June 14, 1990, version was different in significant respects. (Although the evidence suggested that the Respondent may have been involved in a scheme or conspiracy to bilk the lessor and its lender, the DBPR did not level those more serious charges against the Respondent and did not try to prove them.)

    
    

20. Section 475.25(1)(e), Fla. Stat. (1989), authorizes the Florida Real Estate Commission to discipline a licensee for violating any of the provisions of Chapter 475 or any lawful order or rule made or issued under the provisions of Chapter 475 or chapter 455.

    
    

21. Section 475.42(1)(a), Fla. Stat. (1989), prohibits operating as a broker without a valid and current broker license.

    
    

22. The evidence proved that the Respondent continued to act as the broker for MRG after he had deactivated the MRG license on March 12, 1990, and begun working for Centres Commercial as a broker-salesman. He probably procured the lease between HC Associates and the Silo Bend #008 limited partnership after

    March 12, 1990. He clearly negotiated the May 16, 1990, Lease Agreement, entered into the Broker Commission Agreement, signed the June 14, 1990, Lease Agreement for the lessee, and collected commissions after March 12, 1990.

    
    

23. Section 475.42(1)(d), Fla. Stat. (1989), prohibits collecting money in connection with a real estate brokerage transaction except in the name of the employer and with the express consent of the employer.

    
    

24. As stated, the Respondent clearly collected commissions in the name of MRG, Inc., after March 12, 1990. However, his testimony was undisputed that Centres Commercial did not want the commissions to go through Centres Commercial. The law does not seem to make any reasonable provision for such a situation. As the Respondent argues, it does not seem logical or reasonable for the Respondent to be required to resign from Centres Commercial and reactivate MRG, Inc., for the sole purpose of accepting an earned commission.

    
    

25. Under Section 475.25(1), Fla. Stat. (1989), upon a finding of a violation, the Florida Real Commission: may place a licensee on probation; may suspend a license for a period not exceeding 10 years; may revoke a license; may impose an administrative fine not to exceed $1,000 for each count or separate offense; may issue a reprimand; and may take any or all of the foregoing disciplinary measures.

    
    

26. Taking into account the F.A.C. Rule Chapter 21V-24 [now codified as 61J2-24] disciplinary guidelines, the DBPR suggested in its proposed recommended order that the Respondent be: fined $1,000; suspended for four years; required to complete 30-hour broker management course; placed on probation for one year after being reinstated; and reprimanded. It is concluded that, other than the reprimand (which seems to be superfluous in light of the other discipline), the requested discipline is consistent with the disciplinary guidelines and should be granted.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Florida Real Estate Commission enter a final order: (1) finding the Respondent guilty of violating Sections 475.25(1)(b) and 475.42(1)(a), and therefore also Section 475.25(1)(e), Fla. Stat. (1989); (2) imposing a $1,000 fine on him; (3) suspending him for four years; (4) requiring him to complete 30-hour broker management course; and (5) placing him on probation for one year after being reinstated.

RECOMMENDED this 3rd day of May, 1995, in Tallahassee, Florida.

J. LAWRENCE JOHNSTON 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 3rd day of May, 1995.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-3509

To comply with the requirements of Section 120.59(2), Fla. Stat. (1993), the following rulings are made on the parties' proposed findings of fact:

Petitioner's Proposed Findings of Fact.

1. Accepted but conclusion of law, subordinate and unnecessary.

2. Accepted and incorporated to the extent not subordinate or unnecessary. 3.-6. Accepted and incorporated.

1. Accepted and incorporated. (It was not clear how much "negotiation" was required, but there were significant changes between the two versions of the Lease Agreement.)

2. Accepted and incorporated.

3. Rejected as not proven that HC never took possession; otherwise, accepted and incorporated.

4. Accepted and incorporated.

Respondent's Proposed Findings of Fact.

(For purposes of these rulings, consecutive numbers have been assigned to the unnumbered paragraphs starting on page 2 of the Respondent's proposed findings of fact.)

1. Accepted and incorporated.

2. Accepted that "tenant representation" is one way to describe it, but subordinate and unnecessary.

3. Conclusion of law.

4. First two sentences and first clause of the third sentence, accepted but subordinate and unnecessary. The rest is rejected as contrary to facts found and to the greater weight of the evidence.

5. First sentence, unintelligible. (Not a complete sentence.) The rest is rejected as contrary to facts found and to the greater weight of the evidence.

6. Rejected as contrary to facts found and to the greater weight of the evidence. (It was not clear how much "negotiation" was required; but, technically, there were "negotiations" because there were significant changes between the two versions of the Lease Agreement.)

7. Subparagraph 1: Rejected as contrary to facts found and to the greater weight of the evidence that the Respondent procured the lease before March 12, 1990; otherwise, accepted and incorporated.

   Subparagraphs 2-3: Rejected as conclusion of law.

   Subparagraph 4: First sentence, rejected as conclusion of law; second sentence, accepted and incorporated.

8. Accepted and incorporated that Centres Commercial agreed to the disbursement to MRG; otherwise, rejected as conclusion of law and argument.

9. Conclusion of law.

10. First sentence, rejected as contrary to facts found and to the greater weight of the evidence. Second sentence, accepted but subordinate and unnecessary.

11. As to fraud, irrelevant and unnecessary since fraud was not charged. Otherwise, accepted and incorporated. (However, as found, the evidence was that HC transferred the money received from Trammell Crow over to the Respondent.)

12. First sentence, conclusion of law; second sentence, irrelevant and unnecessary since fraud was not charged.

13. First sentence, rejected as contrary to facts found and to the greater weight of the evidence. (It was not the Respondent's only "mistake.") Otherwise, as to fraud, irrelevant and unnecessary since fraud was not charged.

14. Accepted and incorporated.

COPIES FURNISHED:

Steven W. Johnson, Esquire Senior Attorney

DPR-Division of Real Estate Post Office Box 1900 Orlando, Florida 32802-1900

Stephen A. McLeod Post Office Box 76325

St. Petersburg, Florida 33734

Darlene F. Keller Director, Division of

Real Estate

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

Linda Goodgame, Esquire General Counsel

Department of Business and Professional Regulation

Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the Florida Real Estate Commission written exceptions to this Recommended Order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the Florida Real Estate Commission concerning its rules on the deadline for filing exceptions to this Recommended Order.

Docket for Case No: 94-003509

Orders for Case No: 94-003509