STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) Case No. 01-3119

)

NOREEN FOLEY DJOKIC and )

JEANETTE TEUFEL, )

)

Respondents. )

)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing by videoconference in Tallahassee and West Palm Beach, Florida, on October 22, 2001.

APPEARANCES

For Petitioner: Robyn M. Severs, Senior Attorney

Department of Business and Professional Regulation

Division of Real Estate

400 West Robinson Street Suite N308

Orlando, Florida 32802

For Respondent: Walter H. Djokic

McIntosh Sawran

625 North Flagler Drive Suite 502

West Palm Beach, Florida 33401-4025

STATEMENT OF THE ISSUES

The issues are whether Respondents are guilty of the failure to account or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes; the failure to place immediately with the registered employer any funds entrusted to them as agents of the registered employer, in violation of Section 475.25(1)(k), Florida Statutes, and Rule 61J2-14.009, Florida Administrative Code; or culpable negligence or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

PRELIMINARY STATEMENT

By Administrative Complaint dated August 19, 1999, Petitioner alleged that, at all material times, Respondent Djokic was a licensed Florida real estate broker, holding license number 0444033, and Respondent Teufel was a licensed Florida real estate salesperson, holding license number 0339134.

The Administrative Complaint alleges that, on November 30, 1998, HA Cumber, Inc., as seller, and N. and M. Ali, as buyers, entered into a contract for the sale and purchase of real property. The Administrative Complaint alleges that Respondents acted as transaction brokers for Ocean & Intracoastal Properties and Bob Montgomery, as broker.

The Administrative Complaint alleges that Mr. Montgomery terminated the employment of Respondents on December 2, 1998,

but, on December 22, 1998, Respondents attended the Cumber-Ali closing, which took place at First American Title Company.

The Administrative Complaint alleges that it was unclear if Respondents were authorized to attend the closing. However, First American Title Company allegedly gave Respondents a $7050 commission check. The Administrative Complaint alleges that Mr. Montgomery informed First American Title Company, just prior to closing, that it could give the commission check to Respondent Djokic.

The Administrative Complaint alleges that, after the closing, Respondents and Mr. Montgomery disagreed as to the commissions that he owed them. Respondent Djokic allegedly gave the related real estate files and commission check to Respondents' counsel, pursuant to his advice. Respondent's counsel allegedly contacted Mr. Montgomery and advised that he would release the check and files upon receipt of the commissions that Mr. Montgomery owed Respondents.

Instead of paying the commissions, on December 30, 1998, Mr. Montgomery allegedly filed an Affidavit of Missing Check with First American Title Company, and First American Title Company issued him a second commission check in the amount of

$7,050. The next day, Mr. Montgomery allegedly disbursed commission checks to Respondents, and Respondents' counsel

allegedly returned the files to Mr. Montgomery on January 4, 1999.

Count I of the Administrative Complaint alleges that Respondent Djokic is guilty of the failure to account or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes.

Count II alleges that Respondent Djokic is guilty of the failure to immediately place with the registered employer any money, fund, deposit, check or draft entrusted to her as agent of the registered employer, in violation of Section 475.25(1)(k), Florida Statutes, and Rule 61J2-14.009, Florida Administrative Code, and thus in violation of Section 475.25(1)(e), Florida Statutes.

Count III alleges that Respondent Djokic is guilty of culpable negligence or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

Count IV alleges that Respondent Teufel is guilty of the failure to account or deliver funds, in violation of Section 475.25(1)(d)1, Florida Statutes.

Count V alleges that Respondent Teufel is guilty of the failure to immediately place with the registered employer any money, fund, deposit, check or draft entrusted to her as agent of the registered employer, in violation of Section 475.25(1)(k), Florida Statutes, and Rule 61J2-14.009, Florida

Administrative Code, and thus in violation of Section 475.25(1)(e), Florida Statutes.

Count VI alleges that Respondent Teufel is guilty of culpable negligence or breach of trust in any business transaction, in violation of Section 475.25(1)(b), Florida Statutes.

At the hearing, Petitioner called two witnesses and offered into evidence 12 exhibits: Petitioner Exhibits 1-12.

Respondent called three witnesses and offered into evidence one exhibit: Respondent Exhibit 1. All exhibits were admitted.

The court reporter filed the transcript on November 8, 2001.

FINDINGS OF FACT

1. At all material times, Respondent Djokic has been a licensed real estate broker in Florida, holding license number 0444033, and Respondent Teufel has been a licensed real estate salesperson in Florida, holding license number SL-0339134.

2. From January 1, 1998, through December 2, 1998, Bob Montgomery Real Estate, Inc., employed Respondent Djokic as a real estate broker and Respondent Teufel as a real estate salesperson. From December 8, 1998, through the present, Respondents have been employed by Illustrated Properties Real Estate, Inc., which is not affiliated with Bob Montgomery Real Estate, Inc.

3. At the time of their termination from Bob Montgomery Real Estate, Inc., Respondents had been working on a pending transaction known as the Cumber-Ali transaction. Respondents were the contacts for Mr. and Mrs. Ali, who were in a contractual relationship with Bob Montgomery Real Estate, Inc. No one else at Bob Montgomery Real Estate, Inc., was familiar with any details of this transaction, including even the date of the closing.

4. On the day that Respondents were terminated, Elayne Gooding, the administrative manager of Bob Montgomery Real Estate, Inc., directed Respondents to handle the Cumber-Ali transaction on behalf of Bob Montgomery Real Estate, Inc., which thereafter had nothing to do with the transaction.

   Mr. Montgomery also agreed with this arrangement. Ms. Gooding and Mr. Montgomery intended for Respondents to attend the closing and pick up the commission check payable to Bob Montgomery Real Estate, Inc., and deliver the check to

   Ms. Gooding or Mr. Montgomery.

   
   

5. On December 22, 1998, Respondents attended the Cumber- Ali closing. Pursuant to authorization received from

   Mr. Montgomery, the representative of the closing agent, First American Title Company, delivered the $7050 commission check payable to Bob Montgomery Real Estate, Inc., to Respondents.

6. Immediately after the closing, Respondents telephoned Ms. Gooding and informed her that they had the check. They asked if Ms. Gooding could cut their check so that they could exchange checks, but Ms. Gooding explained that she could not cut their check until after she had deposited the commission check.

7. Based on the experience of another similarly terminated employee and the manner in which Mr. Montgomery had handled their termination, Respondents were justifiably concerned that Mr. Montgomery would not pay them their share of the commission. Respondents contacted the husband of Respondent Djokic, who is an attorney, and, on his advice, placed with him the check and their copies of materials from the Cumber-Ali file and another file, whose originals were in the office of Bob Montgomery Real Estate, Inc. On his advice, Respondents authorized Mr. Djokic to contact Bob Montgomery Real Estate, Inc., and predicate the delivery of the commission check upon the payment of the sums due Respondents.

8. At no time did either Respondent remove original file materials from the office of Bob Montgomery Real Estate, Inc. Respondents maintained copies of materials from two files, but nothing suggests that this act was outside the ordinary course of their dealings as employees of Bob Montgomery Real Estate, Inc.

9. On December 30, 1998, Mr. Montgomery delivered to First American Title Company an affidavit attesting that, without his authorization, Respondents attended the Cumber-Ali closing and accepted delivery of the $7050 commission check. The affidavit does not mention that Respondents attended the closing and accepted delivery of the commission check with the proper authorization of Ms. Gooding, who had previously authorized other recently terminated employees to do the same thing.

10. The following day, First American Title Company delivered another $7050 check to Bob Montgomery Real Estate, Inc. Bob Montgomery Real Estate, Inc., then mailed Respondents their checks, and, on January 4, 1999, Bob Montgomery Real Estate, Inc., received the original commission check and copies of materials from two files.

11. Petitioner has proved by clear and convincing evidence that Respondents failed to deliver the commission check within the agreed time. Respondents testified that Ms. Gooding had agreed that she would exchange checks with them, but

    Ms. Gooding's testimony to the contrary is credited. To her credit, Ms. Gooding admitted that she had authorized Respondents to proceed with the closing and had authorized other recently terminated employees to do the same with closings on which they had been working. Nothing suggests, however, that Ms. Gooding would agree to an exchange procedure that implicitly undermines

    the absolute claim of the broker to its commission. Respondents wrongfully withheld from Bob Montgomery Real Estate, Inc., the commission check payable to it, and they did so with the knowledge that Bob Montgomery Real Estate, Inc., in no way consented to the withholding of this check. Concerns about whether Bob Montgomery Real Estate, Inc., would pay Respondents the amounts due them and reliance on advice of counsel do not alter the fact that Respondents violated their agreement to deliver the commission check immediately after the closing.

12. Petitioner has failed to prove by clear and convincing evidence that either Respondent failed to place with her registered employer any money or check entrusted to her. Well prior to the closing, Mr. Montgomery had abruptly terminated the employer-employee relationship between his company and Respondents.

13. Petitioner has failed to prove by clear and convincing evidence that either Respondent is guilty of culpable negligence or breach of trust in any business relationship. These allegations require more proof than the mere failure to perform strictly in accordance to the agreement into which Respondents entered with Ms. Gooding and, through her, their former employer. Due to their justifiable concern that Bob Montgomery Real Estate, Inc., would not pay them all that they were due, Respondents sought and followed legal advice. These mitigating

    facts preclude a finding of culpable negligence or breach of trust.

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the subject matter. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)

15. Section 475.25(1)(d)1 provides that Petitioner may impose discipline for the failure

    to account or deliver to any person, including a licensee under this chapter, at a 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, [or] check . . ., including a share of a real estate commission . . ..

    
    

16. Section 475.25(1)(d)1 also provides a licensee with an option to present conflicting claims to the Florida Real Estate Commission for an escrow disbursement order, but these provisions are irrelevant to this case.

17. Section 475.25(1)(k) provides that Petitioner may impose discipline for the failure, "if a salesperson, to immediately place with her or his registered employer any money, fund, deposit, [or] check . . . entrusted to her or him by any

    person dealing with her or him as agent of the registered employer."

18. Rule 61J2-14.009 provides: "Every salesperson who receives any deposit . . . shall deliver the same to the broker or employer no later than the end of the next business day

    . . .."

    
    

19. Section 475.25(1)(b) provides that Petitioner may impose discipline for "culpable negligence, or breach of trust in any business transaction."

20. Petitioner must prove the material allegations by clear and convincing evidence. Department of Banking and Finance v. Osborne Stern and Company, Inc., 670 So. 2d 932 (Fla. 1996) and Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

21. Petitioner has proved by clear and convincing evidence that Respondents failed to deliver the commission check by the agreed time. Transferring the commission check to their attorney and reliance upon his legal advice do not substitute for delivering the check to Bob Montgomery Real Estate, Inc., promptly after the closing, as Respondents had agreed to do. Bob Montgomery Real Estate, Inc., was entitled to prompt, unconditional delivery of the check; if it failed to pay Respondents all sums due them, they could bring a legal action to recover damages.

22. Petitioner has failed to prove by clear and convincing evidence that either Respondent failed to place immediately with their registered employer any money or check entrusted with her for delivery to the employer. Respondents were not in an employee-employer relationship with Bob Montgomery Real Estate, Inc., at the time of the closing.

23. Petitioner has failed to prove by clear and convincing evidence that either Respondent is guilty of culpable negligence or breach of trust in any business relationship. These more serious allegations require more proof than the proof required of the allegation that Respondents failed to deliver the commission check, as and when agreed. Respondents' reasonable concerns about the final settlement with Bob Montgomery Real Estate, Inc., and, more importantly, their prompt recourse to legal counsel and reliance on their attorney's advice preclude a finding of culpable negligence or breach of trust.

24. Rule 61J2-24.001 provides that the penalty range for a violation of Section 475.25(1)(d)1 is a $1000 fine to five years' suspension. The high side of the range is higher than the normal penalty imposed for culpable negligence or breach of trust and, thus, invites mitigation on the grounds that Bob Montgomery Real Estate, Inc., was never in danger of losing any funds and Respondents reasonably sought the advice of counsel and reasonably relied on the legal advice that they obtained.

Under the circumstances, the suitable penalty is a reprimand and continuing education in real estate ethics.

RECOMMENDATION

It is

RECOMMENDED that the Florida Real Estate Commission enter a final order finding each Respondent guilty of violating Section 475.25(1)(d)1, Florida Statutes, and issuing a letter of reprimand and requiring each of them to attend three hours of continuing education in ethics within 90 days after the issuance of the final order.

DONE AND ENTERED this 8th day of February, 2002, in Tallahassee, Leon County, Florida.

ROBERT E. MEALE

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 8th day of February, 2002.

COPIES FURNISHED:

Dean Saunders, Chairperson Florida Real Estate Commission

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

Hardy L. Roberts, III, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

Jack Hiney, Deputy Division Director Division of Real Estate

Department of Business and Profession Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0792

Robyn M. Severs, Senior Attorney Department of Business and

Professional Regulation Division of Real Estate

400 West Robinson Street Suite N308

Orlando, Florida 32802

Walter H. Djokic McIntosh Sawran

625 North Flagler Drive Suite 502

West Palm Beach, Florida 33401-4025

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 must be filed with the agency that will issue the final order in this case.

Docket for Case No: 01-003119

Orders for Case No: 01-003119