STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-2598

)

PHILLIP F. NILES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on March 11, 1999, in Daytona Beach, Florida, before the Division of Administrative Hearings, by its designated Administrative Law Judge, Suzanne F. Hood.

APPEARANCES

For Petitioner: Laura McCarthy, Esquire

Department of Business and Professional Regulation

400 West Robinson Street Orlando, Florida 32802

For Respondent: Phillip F. Niles, pro se

5757 Sweetwater Boulevard Port Orange, Florida 32127

STATEMENT OF THE ISSUE

The issues are whether Respondent violated Sections 475.25(1)(a), 475.25(1)(b), 475.25(1)(d), 475.25(1)(e), and

475.25(1)(k), Florida Statutes, and if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On or about February 19, 1998, Petitioner Department of Business and Professional Regulation, Division of Real Estate (Petitioner) filed an Administrative Complaint alleging that Respondent Phillip F. Niles (Respondent) had violated Sections 475.25(1)(a), 475.25(1)(b), 475.25(1)(d), and 475.25(1)(k),

Florida Statutes. Respondent requested a formal hearing to contest these allegations on March 20, 1998. Petitioner referred this matter to the Division of Administrative Hearings on June 9, 1998.

A Notice of Hearing scheduled the case for hearing on October 28, 1998. However, the parties filed a Joint Motion to Continue and Hold Case in Abeyance on October 19, 1998. The motion states that Petitioner would present an executed proposed settlement stipulation to the Florida Real Estate Commission (FREC) in November of 1998. By order dated October 21, 1998, the undersigned granted this motion.

On December 21, 1998, Petitioner filed a copy of an order issued by FREC. The order states that FREC rejected the parties' proposed settlement stipulation. Accordingly, the undersigned issued an order dated December 28, 1998, rescheduling the hearing for March 11, 1999.

During the hearing, Petitioner presented the testimony of two witnesses and offered seven exhibits which were received into

evidence. Respondent testified on his own behalf and presented the testimony of two other witnesses. Respondent did not offer any exhibits.

The Transcript of the proceeding was filed on April 27, 1999. Petitioner filed proposed findings of fact and conclusions of law on May 27, 1999. Respondent did not file a proposed order.

On June 4, 1999, the undersigned received an ex parte communication in the form of an unexecuted Stipulation from Respondent. The document appears to be a 1998 proposed settlement agreement. The undersigned has not considered this unauthorized document in determining the findings of fact and conclusions of law set forth below.

FINDINGS OF FACT

1. Respondent Phillip F. Niles, is and was, at times material to this matter, a licensed real estate broker. His license number is 0173298.

2. Respondent's license was inactive from August 2, 1996, through March 31, 1997. It was invalid due to non-renewal from March 31, 1997 through May 28, 1997. From May 29, 1997 through August 20, 1997, Respondent was an active broker. From

   August 21, 1997 through June 10, 1998, Respondent was an inactive broker.

3. From June 11, 1998, through the date of the formal hearing, Respondent was an active individual broker. The address

   of his last license was 1700 Ridge Avenue, Holly Hill, Florida 32117.

4. Sam L. Berry owned a condominium located at 840 Center Street, Unit 101, Holly Hill, Florida (hereinafter referred to as the property). Sometime prior to April 27, 1997, Mr. Berry asked Respondent to sell the property. Mr. Berry wanted to receive

   $20,000 for the property. Mr. Berry told Respondent that he could keep any amount of the sales price in excess of $20,000.

5. Respondent placed an advertisement for the sale of the property in the newspaper. Thereafter, he prepared a Contract for Sale and Purchase (the contract) for the sale of the property with $20,000 as the sales price. The buyer's name was John Richards.

6. Meanwhile, Peggy Holloway became interested in the property after seeing Respondent's advertisement. Ms. Holloway contacted Respondent at the number referenced in the advertisement. Subsequently, she met Respondent at the property. At that time Respondent's broker's license was inactive.

7. Ms. Holloway made an offer on the property. In order to make a commission or profit on the sale, Respondent decided to sell the property to her. He changed the existing contract by marking through Mr. Richard's name and adding Ms. Holloway's name as the buyer. Respondent changed the sales price on the contract to $23,000.

8. On April 27, 1997, Ms. Holloway signed the contract as the buyer. That same day, Mr. Berry signed the contract as seller.

9. As part of the contract, and pursuant to Respondent's instructions, Ms. Holloway made a check out to Respondent, personally, in the amount of $500. Respondent assured

   Ms. Holloway that he would place the money in an escrow account. The contract stated that the $500 deposit would be held in escrow.

10. Respondent did not place Ms. Holloway's money in escrow. He cashed her check and kept the $500.

11. At all times material to the transaction Ms. Holloway believed that Respondent was a licensed real estate broker. Additionally, the contract contained language stating that Respondent was a real estate broker.

12. During subsequent conversations with Ms. Holloway about financing arrangements for the purchase of the property, Respondent appeared drunk. As a result of those conversations, Ms. Holloway became suspicious about Respondent's intentions and his competence to handle the real estate transaction.

    Ms. Holloway contacted Petitioner and learned that Respondent's license was inactive.

13. On or about May 6, 1997, Ms. Holloway telephoned Respondent. She told him that she did not want to go through

    with the contract. She demanded that Respondent return her $500 deposit. Respondent failed to return Ms. Holloway's $500 deposit.

14. Ms. Holloway then began to deal with Respondent's brother, Peter Niles, who is an attorney. Respondent's brother prepared a document for Mr. Berry to sign acknowledging receipt of the $500 deposit. Mr. Berry signed the document prepared by Respondent's brother even though Respondent never gave the $500 deposit to Mr. Berry.

15. Ms. Holloway eventually decided to deal directly with Mr. Berry. They agreed on a sale price and closed the transaction with no assistance from Respondent, his brother, or any other individual.

16. Ms. Holloway sued Respondent in the County Court of Volusia County, Florida. In Case No. 97-31586, the County Judge entered a judgment against Respondent in favor of Ms. Holloway. Respondent had not satisfied the judgment as of the date of the formal hearing.

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over this subject matter and the parties to this action pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

18. Petitioner bears the burden of proving by clear and convincing evidence that Respondent is guilty of the offenses

    alleged in all four counts of the Administrative Complaint. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987). It has met its burden.

19. Petitioner is charged with the responsibility of regulating the real estate profession, including the licensing of real estate agents and brokers pursuant to Chapters 455 and 475, Florida Statutes. Section 475.001, Florida Statutes (1997), provides as follows:

    The Legislature finds that a significant number of real property transactions are facilitated by real estate brokers and sales persons and that it is necessary to assure the minimal competence of real estate practitioners in order to protect the public from potential economic loss; therefore, the Legislature deems it necessary in the interest of the public welfare to regulate real estate brokers, salespersons, and schools in this state.

20. Section 475.01(1)(a), Florida Statutes (1997), defines broker as:

    a person who, for another, and for a compensation or valuable consideration directly or indirectly paid or promised, expressly or impliedly, or with an intent to collect or receive a compensation or valuable consideration therefor, appraises, auctions, sells, exchanges, buys, rents, or offers, attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same, including mineral rights or leases, or who advertises or holds out to the public by any oral or printed solicitation or representation that she or he is engaged in the business of appraising, auctioning, buying, selling,

    exchanging, leasing, or renting business enterprises or business opportunities or real property of others or interests therein, including mineral rights, or who takes any part in the procuring of sellers, purchasers, lessors, or lessees of business enterprises or business opportunities or the real property of another, or leases, or interest therein, including mineral rights, or who directs or assists in the procuring of prospects or in the negotiation or closing of any transaction which does, or is calculated to, result in a sale, exchange, or leasing thereof, and who receives, expects, or is promised any compensation or valuable consideration, directly or indirectly therefor; and all persons who advertise rental property information or lists. A broker renders a professional service and is a professional within the meaning of s.

    95.11(4)(a). (emphasis added)

21. Section 475.25(1), Florida Statutes, in pertinent part, allows FREC to discipline a licensee if it finds that the licensee:

    1. Has violated any provision of s. 455.227(1) or of 475.42.

    2. 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 his by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction . . . . It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage of loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public.

       * * *

       
       

       1. 1. 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 real estate commission if a civil judgment relating to the practice of the licensee's profession has been obtained against the licensee and said judgment has not been satisfied in accordance with the terms of the judgment within a reasonable time, or any secret or illegal profit, or any divisible share or portion thereof, which has come into the licensee's hands and which is not the licensee's property or which the licensee is not in law or equity entitled to retain under the circumstances. . . .

          * * *

          
          

       2. Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provision of this chapter or chapter 455.

       
       

       * * *

       
       

       (k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to her or him by any person dealing with her or him as a broker in escrow with a title company, banking institution, credit union, 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 her or him with some bank, credit union, or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized. . . .

22. Section 475.28(1), Florida Statutes, (1997), provides:

    
    

    (1) In all proceedings before the commission or courts, civil or criminal, in which the payment, receipt or expectation of a commission, compensation or valuable consideration is a necessary element of the offense, proof of the performance of the act, service or condition for which such commission, compensation or valuable consideration is required to be shown shall be prima facie evidence that such act, service or condition was performed or existed for or in expectation of the payment or receipt of a commission, compensation, or a valuable consideration. If it is material to determine whether or not a party to any action, civil or criminal, is properly licensed, the burden of proof shall be on such party. (emphasis added)

23. Petitioner is responsible for enforcing mandates against unlicensed practice of real estate found in Sections

    455.228 and 475.42(1)(a), Florida Statutes (1997).

    
    

24. Section 475.42(1)(a), Florida Statutes (1997), states that "[n]o person shall operate as a broker or salesperson without being the holder of a valid and current active license therefor."

25. In Count I of the Administrative Complaint, Petitioner alleges that Respondent is guilty of fraud, misrepresentation, concealment, dishonest dealing by trick, scheme or device, false pretenses, culpable negligence or breach of trust in a business transaction in this state in violation of Section 475.25(1)(b), Florida Statutes. Petitioner also alleges that Respondent violated a duty imposed by law in violation of that same statute.

26. Misrepresentation may be spoken or written words, or "any other conduct, which amounts to an assertion not in accordance with the truth." Nagashima v. Busck, 541 So. 2d 783 (Fla. 4th DCA 1989), citing Comment (b) to Section 525, Restatement (Second) of Torts.

27. Respondent intentionally led Ms. Holloway to believe that he had an active license as a real estate broker. He assured Ms. Holloway that he would place her money in escrow. These representations were not true. Therefore, Respondent is guilty of misrepresentation in a business transaction in violation of Section 475.25(1)(b), Florida Statutes.

28. Mr. Berry trusted Respondent to sell the property. The contract prepared by Respondent and signed by Mr. Berry erroneously stated that Respondent was a real estate broker. The contract indicated that Respondent was holding a $500 deposit in escrow. Respondent's misconduct caused Ms. Holloway to rescind the contract for the sale and purchase of the property. Respondent never gave the deposit to Mr. Berry after Respondent ceased his dealings with Ms. Holloway. Consequently, Respondent is guilty of breaching Mr. Berry's trust in violation of

    Section 475.25(1)(b), Florida Statutes.

    
    

29. Respondent also breached the trust placed in him by Ms. Holloway. She believed that he had an active license as a

    real estate broker. She trusted him to place her $500 deposit in

    escrow. Respondent converted Ms. Holloway's money to his own personal use. He refused to return the deposit to Ms. Holloway upon her oral demand or after she obtained a judgment against him. Respondent is therefore guilty of violating Section 475.25(1)(b), Florida Statutes, for breaching Ms. Holloway's trust.

30. Count II of the Administrative Complaint alleges that Respondent failed to account and deliver any money, fund, deposit, check or anything else of value upon demand by the person entitled to such accounting and delivery in violation of Section 475.25(1)(d)1., Florida Statutes.

31. Ms. Holloway was entitled to demand the return of her

    
    

    $500 deposit after she learned that Respondent did not have an active license as a real estate broker. By his own admission, Respondent failed to return the deposit to Ms. Holloway when she demanded its return on May 6, 1997. He did not return her deposit even after she obtained a civil judgment against him.

    Therefore, Respondent is guilty of violating Section 475.25(1)(d)1., Florida Statutes, by failing to return Ms. Holloway's deposit.

32. Count III of the Administrative Complaint alleges that Respondent failed to immediately deposit, upon receipt, any money, fund, deposit, check or draft into an escrow or trust account in violation of Section 475.25(1)(k), Florida Statutes.

    By his own admission, Respondent is guilty of violating that statute by failing to place Ms. Holloway's deposit in an escrow account.

33. In Count IV of the Administrative Complaint, Petitioner alleges that Respondent operated as a broker without an active, valid and current real estate broker's license in violation of Section 475.42(1)(a), Florida Statutes.

34. Persuasive evidence demonstrates that Respondent operated as a broker without a valid or current license in April and May of 1997. He expected to receive compensation for

    selling Mr. Berry's property by retaining any amount of the sales price above $20,000. Respondent placed an advertisement in the newspaper to sell the property. He prepared a contract for the sale and purchase of the property for Ms. Holloway and Mr. Berry. Respondent even placed "real estate broker" next to his name in the contract. Accordingly, Respondent is guilty of violating Sections 475.42(1)(a) and 475.25(1)(e), Florida Statutes.

35. Pursuant to Rule 61J2-24.001(3)(u), Florida Administrative Code, FREC may impose a penalty ranging from a three-year suspension to revocation for a violation of Section 475.42(1)(a), Florida Statutes.

36. Rule 61J2-24.001(3)(l), Florida Administrative Code, provides that for a violation of Section 475(1)(k), Florida Statutes, FREC may impose a penalty ranging from a minimum of a 90-day suspension and $1,000 administrative fine to revocation.

37. Rule 61J2-24.001(3), Florida Administrative Code, provides that for a violation of Section 475.25(1)(d), Florida Statutes, FREC must impose a penalty ranging from an administrative fine of $1,000 to a five-year suspension.

38. Rule 61J2-24.001(3)(c), Florida Administrative Code, provides as follows relative to the penalty for violations of Section 475.25(1)(b), Florida Statutes:

In the case of fraud, misrepresentation and dishonest dealing the usual action of the Commission shall be to impose a penalty of revocation. In the case of concealment, false promises and false pretenses, the usual action of the Commission shall be to impose a penalty of a 3 to 5 year suspension and an administrative fine of $1,000. In the case of culpable negligence and breach of trust, the usual action of the Commission shall be to impose a penalty from a $1,000 fine to a

1-year suspension.

RECOMMENDATION

Based upon the findings of fact and conclusions of law, it

is

RECOMMENDED:

That Florida Real Estate Commission enter a final order

suspending Respondent's license for a period of ten years and requiring him to pay a fine in the amount of $1,000 within one year of the date of the final order.

DONE AND ENTERED this 15th day of June, 1999, in Tallahassee, Leon County, Florida.

SUZANNE F. HOOD

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 15th day of June, 1999.

COPIES FURNISHED:

Laura McCarthy, Esquire Department of Business and

Professional Regulation

400 West Robinson Street Orlando, Florida 32802

Phillip F. Niles

5747 Sweetwater Boulevard Port Orange, Florida 32127

Phillip F. Niles Apartment 503

100 Seabreeze Avenue

Daytona Beach, Florida 32118

Herbert S. Fecker, Division Director Division of Real Estate

Department of Business and Professional Regulation

400 West Robinson Street Orlando, Florida 32802-1900

William Woodyard, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of 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: 98-002598

Orders for Case No: 98-002598