STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,
Petitioner,
vs.
MARY LAWHON AND SHELL POINT REALTY, INC.,
Respondents.
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) Case No. 02-4164
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RECOMMENDED ORDER
Upon due notice, a disputed-fact hearing was held on January 30, 2003, in Tallahassee, Florida by Ella Jane P. Davis, a duly-assigned Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Christopher J. DeCosta, Esquire
Department of Business and Professional Regulation
400 West Robinson Street, Suite N802 Hurston Building, North Tower Orlando, Florida 32801-1772
For Respondent: Joseph R. Boyd, Esquire
Boyd, Lindsey & Branch, P.A. 1407 Piedmont Drive, East Post Office Box 14267
Tallahassee, Florida 32317-4267
STATEMENT OF THE ISSUES
Respondents are charged with misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in violation of Section 475.25(1)(b), Florida Statutes; failure to account or deliver funds in violation of Section 475.25(1)(d), Florida Statutes; and failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement is properly authorized, in violation of Section 475.25(1)(k), Florida Statutes, as more specifically set out in the following Conclusions of Law.
PRELIMINARY STATEMENT
Respondents disputed the allegations of the Administrative Complaint and timely requested a disputed-fact hearing. The case was referred to the Division of Administrative Hearings on or about October 25, 2002.
On December 9, 2002, Petitioner's Motion to Take Deposition of Wendy Freed and Gerd Petrik for discovery and use at trial was granted. On December 10, 2002, the hearing was continued from January 8, 2003, to January 30, 2003. On January 3, 2003, Petitioner's Motion in Limine was denied.
At hearing, Petitioner presented the oral testimony of Lorra Shepard, Scott Gaby, Jack D. Davis, Jr., and John Hentz,
and had Exhibits P1, P5, P7A-P7C, and P8-P11 admitted in evidence. Exhibits P9 and P10 are transcripts of the depositions of Wendy Freed and Gerd Petrik, respectively.
At the close of Petitioner's case, Respondents moved for dismissal. The motion was taken under advisement for resolution in this Recommended Order.
Respondents presented the oral testimony of Kay Alward, Michael Weltman, and Brian Plant, and Respondent Lawhon testified on her own behalf. Respondents had five exhibits admitted in evidence. Exhibit R3 was the deposition of Chris Alward, who became "unavailable," as defined by the Florida Evidence Code, during the course of the proceedings.
The corrected Transcript of proceedings was filed February 25, 2003, making the Recommended Order due March 27, 2003. The parties filed Proposed Recommended Orders within 10 days of the filing of the flawed Transcript, which had been
filed February 12, 2003. Both timely-filed proposals have been considered in preparation of this Recommended Order. The delay in the entry of this Recommended Order has been due to the health of the undersigned, and does not reflect unfavorably on the parties' diligence.
The parties' written Pre-hearing Stipulation was expanded by them orally at the hearing, and has been utilized as appropriate, but not reproduced exactly. Whenever the parties'
stipulations or a proposed finding of fact has not been accepted, it is due to a determination of the credibility and weight of the evidence.1/ Stylistic changes in the interest of space and good grammar have also been made.
FINDINGS OF FACT
Petitioner is the state agency charged with the responsibility and duty to prosecute administrative complaints, pursuant to Section 20.165 and Chapters 120, 455, and 475, Florida Statutes.
At all times material, Respondent Mary Lawhon was a licensed Florida real estate broker, issued license numbers 607847 and 3028674 in accordance with Chapter 475, Florida Statutes.
Respondent Shell Point Realty, Inc., is, and at all times material was, a corporation registered as a Florida real estate broker having been issued license number 1005003 in accordance with Chapter 475, Florida Statutes.
At all times material, Respondent Mary Lawhon was licensed and operating as qualifying broker and officer of Respondent Shell Point Realty, Inc.
Neither Respondent has previously been prosecuted for license violations, although an Agency investigator's administrative fine of $100.00 for a minor technical violation was imposed several years ago.
Between 1996 and 2002, Respondents were paid real estate commissions for the purchase or sale of several Wakulla County properties by Gerd Petrik, or his business, Stone Real Estate Holdings, Inc. For each of these transactions, there was a contract, whereby Respondents' real estate brokerage commission was based on the price of each property as disclosed before sale in the written listing agreement with the seller(s).
Mr. Petrik is a foreign national residing in the United States on an investment visa. He lives in Sarasota, Florida. He "owns" several corporations,2/ and, through them, he owns at least 40 properties in the Panhandle of Florida, including a golf course and six rental houses in Wakulla County. One of these rental houses is located at 111 Razorback Road in Crawfordville. Mr. Petrik, or a corporation in which he is majority stockholder, owner-financed, by mortgage, one of the buildings from which Ms. Lawhon conducts Shell Point Realty, Inc.'s business.
As an outgrowth of their real estate sales transactions, Mr. Petrik came to respect and value Ms. Lawhon's real estate skills and business acumen. He also appreciated her position and prestige in the community as the former Wakulla County Administrator. Until the incidents giving rise to this case occurred, Mr. Petrik found Ms. Lawhon to be professional and competent in real estate matters and honest and truthful.
Mr. Petrik admits that he has lost no money as a result of the incidents giving rise to this license disciplinary proceeding.
There has never been a written contract imposing any duty on Respondents to Mr. Petrik with regard to his six rental houses in Wakulla County, or with regard to the 111 Razorback Road property in particular. Having reconciled the witnesses' respective testimonies to the degree possible, and having assessed their respective versions upon credibility factors, it is found that Respondents were never retained or expected by Mr. Petrik to rent, lease, or manage any of his six rental houses in Wakulla County, including the 111 Razorback Road property.
Respondents also did not advertise any rental properties, solicit any renters, put up any "for rent" signs, or charge any real estate or management fees to Mr. Petrik or his businesses in connection with the rentals of Mr. Petrik's properties.
However, with an eye to promoting further profitable real estate sales dealings with Mr. Petrik, Ms. Lawhon gratuitously facilitated Mr. Petrik's renting his Wakulla County houses. To this end, she regularly communicated by telephone and fax with Mr. Petrik's business manager, Wendy Freed,
concerning showing the properties, rent to be charged, and creation or signing of leases.
At all times material, Wendy Freed worked in
Mr. Petrik's office in Sarasota, as business manager for Stone Management Inc., one of Mr. Petrik's corporations. Stone Management, Inc., owns Stone Real Estate Holdings, Inc.
Ms. Freed believed that Stone Real Estate Holdings, Inc., owned
111 Razorback Road, Crawfordville.
Apparently no one involved in this case knew that in October 2001, 111 Razorback Road was owned by Newhouse, Inc.3/ The evidence is not clear who or what entity owned the property in March 2002.
Regardless of which entity actually owned any of the rental houses, Ms. Freed, Ms. Lawhon, and Mr. Petrik all believed Ms. Freed had Mr. Petrik's complete authority to handle the rentals and to manage everything in connection with the six Wakulla County rental houses, including 111 Razorback Road.
Ms. Freed possesses no real estate or other professional licenses. Her entire training for management or leasing of real estate has been "on the job" training with
Mr. Petrik. As of October 2001, she possessed only about a year and a half of such training. She keeps track of multiple rentals and other property management factors without any modern
property management software. She uses only an Excel spreadsheet.
Despite Ms. Freed's testimony to the contrary, it is found that Ms. Lawhon is credible that Ms. Lawhon only collected rent money for Mr. Petrik, or for any of Mr. Petrik's businesses, upon Ms. Freed's specific request, until the incidents giving rise to this case; that all leases for
Mr. Petrik's rental properties were usually prepared by
Ms. Freed, although on occasion, Ms. Lawhon had prepared a lease for Ms. Freed to use, based on the Tallahassee Board of Realtors' Standard Form; and that usually, after one of
Mr. Petrik's houses had been leased, Ms. Freed dealt directly with the lessee, unless she dealt with the lessee through Mr. or Mrs. Alward.
At all times material, Kay Alward and Chris Alward, husband and wife, were employed by Mr. Petrik. They were not sure whether they were paid through Stone Management, Stone Real Estate Holdings, Inc., or Stone Management Enterprises.
Mrs. Alward had been Mr. Petrik's housekeeper, and Mr. Alward had been his gardener, in Sarasota. Mr. Alward had also personally invested in Wakulla County real estate. For awhile, the Alwards assisted Ms. Freed in managing Mr. Petrik's properties in Wakulla County, by traveling to and from Wakulla County. Ultimately, they moved to Wakulla County to live and
manage his properties. During the material period of time, they employed a man named "Greg" to steam clean decks, fix toilets, and be a general handyman for Mr. Petrick's Wakulla County rental properties.
Before returning to Sarasota on one occasion,
Mr. Alward left with Ms. Lawhon a key for 111 Razorback Road. She understood from him that workmen might need the key to get into the house for repairs and cleaning.
Sometime thereafter, on or about October 12, 2001, Lorra Shepard, a local Certified Public Accountant, walked into Respondents' real estate office, because a friend of hers worked there, and asked if they had any rentals. She was shown the 111 Razorback Road property. She asked Ms. Lawhon if she could rent it, and Ms. Lawhon told her the lessor wanted $675.00 per month. Ms. Shepard asked if they could come down on the price.
Ms. Lawhon testified that she telephoned Ms. Freed on October 12, 2001, and asked Ms. Freed to lower the rent for
Ms. Shepard; that Ms. Freed agreed to lower the rent to $635.00 per month and agreed to draw the lease; that she, Ms. Lawhon, relayed this information to Ms. Shepard; that Ms. Shepard agreed to rent the house at that price; and that Ms. Lawhon then telephoned Ms. Freed again with this information and finally faxed written information about Ms. Shepard to Ms. Freed, so
that Ms. Freed could draft the lease and collect subsequent rents. This testimony is credible.4/
Ms. Lawhon and Ms. Shepard concur that Ms. Shepard moved into 111 Razorback Road on October 15, 2001, and that day, Ms. Lawhon accepted a $450.00 cash deposit from Ms. Shepard and provided Ms. Shepard with a signed receipt, setting out the monthly rent of $635.00 per month, and signing the receipt with Ms. Lawhon's own name.
Ms. Shepard is clear that at no time did Ms. Lawhon tell her 111 Razorback Road was Ms. Lawhon's house or suggest that Ms. Shepard hide her occupancy. Rather, Ms. Shepard confirms Ms. Lawhon's testimony that Ms. Lawhon told her that the lessor would be sending a lease and that the lessor was Mr. Petrik.
Ms. Shepard's testimony also suggests that in
October 2001, she thought Ms. Lawhon was saying that Ms. Lawhon would deliver the lease and that when Ms. Shepard signed the lease, she and Ms. Lawhon, together, would work out whether rent would be paid on the 15th or 31st of each month.
Even if it were credible that Ms. Freed had told
Ms. Lawhon to retain the $450.00 cash deposit, and this portion of Ms. Lawhon's testimony does not ring entirely true, there is no evidence that Ms. Lawhon timely placed the $450.00 cash in an escrow or trust account. It also was not remitted directly to
Mr. Petrik or Ms. Freed in October 2001. On the other hand, there is no evidence that it was deposited into any account in Respondents' name(s). It is unclear from Ms. Lawhon's hearing testimony what, exactly, happened to the $450.00 cash deposit, but she admitted to the Agency investigator in June 2002 that she had put it in a file and forgotten about it, and this explanation is accepted.
At no time material did Ms. Freed or Ms. Lawhon prepare a lease for 111 Razorback Road. At no time material did either of them send or deliver a lease to Ms. Shepard.
Ms. Shepard testified credibly that several times between October 2001 and March 2002, Ms. Lawhon told Ms. Shepard that she, Ms. Lawhon, still had no lease and would call the lessor again. Ms. Lawhon did not address this aspect of Ms. Shepard's testimony in her own testimony. Ms. Lawhon testified that she thought Ms. Freed would deal directly with Ms. Shepard about all aspects of the lease and collecting rent. She also admitted that she had never discussed 111 Razorback Road with Ms. Freed in any of their frequent telephone conversations between October 15, 2001 and March 2002. Upon this evidence and Finding of Fact 24, it is found, contrary to Ms. Lawhon's hearing testimony, that Ms. Lawhon was, in fact, expecting to receive a lease from Ms. Freed and planned to then deliver that lease to
Ms. Shepard for execution, but Ms. Lawhon never followed up on Ms. Shepard's request for a lease.
Having no lease to guide her, Ms. Shepard did not make out checks for rent in thirty-day increments, beginning in October or November 2001. Instead, she contemporaneously made out a check dated December 21, 2001, for $1,905.00, to "Petrick" for the rent. She contemporaneously made out a check dated December 26, 2001, for $317.50, to "Petrick" for the rent. She contemporaneously made out a check dated February 7, 2002, for
$952.00, to "Petrick" for the rent. She expected Ms. Lawhon to pick up these checks, but no one picked them up. Accordingly, Ms. Shepard just left these three checks, totaling $3,174.50, in her office desk drawer and went about her business until
March 26, 2002.
Mrs. Alward ran some advertisements for Mr. Petrik's rental houses in December 2001. Ms. Lawhon testified that she told Mrs. Alward in December 2001 not to advertise 111 Razorback Road because it was rented. Mrs. Alward was not asked to confirm or deny that conversation occurred, and Mrs. Alward's testimony at hearing does not specifically rule out that she advertised 111 Razorback Road. However, Mr. Alward's deposition and the testimony of Mr. Weltman reveal that in January 2002, the Alwards were managing all rental arrangements by referral to Ms. Freed.
In January or February 2002, a maintenance person steam-cleaned the deck at 111 Razorback Road. The maintenance person was never seen by Ms. Shepard, but the maintenance person clearly knew someone was occupying the house because s/he left a note for Ms. Shepard to confine her dogs so the steam cleaning could be done the next day. Ms. Shepard assumed the steam cleaning was done at Ms. Lawhon's direction, but she did not contact Ms. Lawhon about it. Ms. Lawhon did not arrange this service and knew nothing about it. Based on the testimony of Ms. Freed, Mr. and Mrs. Alward, and Mr. Weltman, it is probable "Greg" did this steam cleaning at the Alwards' direction, but Ms. Freed takes no responsibility for it.
Upon Findings of Fact 28-29, it is only reasonable to assume that the Alwards had notice that 111 Razorback Road was rented and occupied as of December 2001-January 2002, and their knowledge as of those dates can be imputed to Ms. Freed.
On March 26, 2002, Ms. Shepard personally delivered to Ms. Lawhon the three rent checks she had previously written to "Petrick," on December 21, 2001, December 26, 2001, and February 7, 2002, totaling $3,174.50.5/
Ms. Shepard then returned to her office, and on March 29, 2002, she delivered to Ms. Lawhon a last check for
$317.50, dated March 26, 2002, and payable to "Stone Real Estate Holdings."
The undisputed evidence reveals that on March 29, 2002, Ms. Lawhon signed the first three checks as "Petrik" and deposited them under the stamped endorsement of "Shell Point Realty," into Shell Point Realty, Inc.'s, operating account. She did not deposit them into an escrow account for Mr. Petrik or into Respondents' trust account.
The March 29, 2002, deposit complied with Agency rules, in that it was made "immediately" (within three business days or less) of Respondents' receipt of the funds. It did not comply with Agency rules in that it was not deposited in a trust, escrow, or other specifically designated account for
Mr. Petrik's benefit. Mr. Petrik and Ms. Freed maintain that Ms. Lawhon was not authorized to endorse the checks with
Mr. Petrik's name.
The average daily balance of Respondents' operating account at the time Ms. Lawhon deposited Ms. Shepard's first three rent checks was over $54,000.00. There appears to be no financial motivation for Respondents to play fast and loose with the relatively minor amounts of money involved in this case.
At hearing, Ms. Lawhon had several explanations for her handling Ms. Shepard's first three checks as she did: that she thought she had received permission for this procedure in a phone conversation with Ms. Freed on March 26, 2002; that
Mr. Petrik had allowed herself or Mr. Alward to sign closing and
disclosure documents (but not negotiable instruments or checks) for him in the past, as a matter of convenience; and that she was afraid because Ms. Shepard's checks were stale and incorrectly made out (to "Petrick" instead of "Petrik," and not to "Stone Real Estate Holdings"), they also might not be any good. She testified that her thinking was that she should run Ms. Shepard's local checks through her own local bank to be sure they were valid. She maintained that she had intended to run the checks through Respondents' trust account but deposited them into the wrong account by accident.
Although Respondents' telephone records show communication with Ms. Freed's telephone on March 26, 2002, it is noted that Ms. Lawhon's explanation that she had received permission from Ms. Freed that day was never put forth prior to her testimony at the disputed-fact hearing. (See Findings of Fact 44-45 and 51-52.)
March 29, 2002, was a Friday. On Monday, April 1, 2002, Ms. Lawhon telephoned her bank and verified that
Ms. Shepard's three checks had cleared. That same day,
Ms. Lawhon used an overnight delivery service to send Ms. Freed Shell Point Realty, Inc.'s, check for $2,355.00, made out to "Stone Real Estate Holdings." The April 1, 2002, Shell Point Realty, Inc., check specified, on its memo line, that it covered "$635/mo. Jan. 02-April 15 + 450 dep." This amount would have
been correct at $635 per month for only three months' rent (January-March 2002) plus a $450.00 deposit. However, it was the wrong amount, considering the 75-day period of October 15, 2001 to January 1, 2002. This check also was $819.50 short of the total amount of Ms. Shepard's first three checks, which Ms. Lawhon had received and negotiated in the names of Petrik/Shell Point Realty, Inc.
Ms. Lawhon's testimony did not address when she sent Ms. Shepard's March 26, 2002, check for $317.50, which had been correctly made out to "Stone Real Estate Holdings," to
Ms. Freed. Ms. Freed believed she had received this check a week after the April 1, 2002, mailing. However, because this fourth check, received by Ms. Lawhon on March 29, 2002, is also referenced on the memo line of the April 1, 2002, Shell Point Realty, Inc., check, it may be inferred that Ms. Shepard's last check also was sent to Ms. Freed in Ms. Lawhon's April 1, 2002, overnight package.
Ms. Lawhon was overwrought on April 1, 2002. She had received a telephone call to come to Louisiana to care for her grandchildren because her daughter-in-law was terminally ill. The last thing she did before leaving Crawfordville, Florida, on that date was to calculate the rents, make out the Shell Point Realty, Inc., check, and send the two checks by overnight delivery to Ms. Freed.
Except for returning for less than 24 hours covering part of the following Saturday and Sunday, April 6-7, 2002, to play piano in her church on Sunday, Ms. Lawhon did not return to Florida until Friday, April 12, 2002.
April 12, 2002, was Ms. Lawhon's first day in the Shell Point Realty, Inc., office since April 1, 2002. That afternoon, she received a phone call from Mr. Petrik's attorney. She told him her reasons for signing Ms. Shepard's three stale checks as "Petrik" and depositing them. He said he did not think that Ms. Freed had received the whole amount owed by
Ms. Shepard. Ms. Lawhon asked him to give her until Monday to recalculate and figure out what had happened.
On Monday, April 14, 2002, Ms. Lawhon telephoned Mr. Petrik's attorney and admitted that she had miscalculated
the rental amounts collected on March 26-29, 2002, and that she would be sending Mr. Petrik the balance owed. At the attorney's suggestion, she wrote a letter of apology to Mr. Petrik.
Ms. Lawhon's April 15, 2002, letter to Mr. Petrik reads, in pertinent part:
I hardly know where to begin except to say to you 'I offer my most humble apology concerning the checks from Lorra Shepard.'
. . . Since the checks were so old, I signed the back and deposited three of them to make sure they would clear the bank.
There was no intention to mislead any one [sic] or to take the money.
I had sent the completed lease without her signature and the deposit to your office in December. I assumed you received the lease and would follow through with notification to Ms. Shepard about payment and signature of lease. Your office apparently did not receive my letter and I failed to follow up until I got a call from Wendy a few weeks ago telling me that your office had not received any rent payments.
Since the checks were so old and I had signed closing papers, applications for permits, etc. for you in the past, I signed the checks and deposited them in the Shell Point Realty account. On the date that I found out that they had cleared, I ran by the office on my way out of town to write out the check to Stone Real Estate Holdings and figured the wrong amount. Enclosed is check # 3459 for the balance of the rent and Check # 3463 for the deposit . . . .
(Emphasis supplied)
The emphasized portions of her letter, concerning transmittal to Ms. Freed of the $450.00 deposit, contradict each other, and the information in Ms. Lawhon's letter about her sending a blank lease to Ms. Freed in Sarasota in October 2001, is contrary to Ms. Lawhon's testimony at the disputed-fact hearing and contrary to part of Ms. Freed's deposition testimony. It is further noted that Ms. Lawhon did not mention in this April 15, 2002, letter to Mr. Petrik that she had received permission from Ms. Freed in March 2002 to endorse and deposit the first three checks.
It is undisputed that Ms. Lawhon mailed to Ms. Freed a Shell Point Realty, Inc., operating account check for $820.00,
dated April 14, 2002, made out to "Stone Real Estate Holdings." This was intended to make up the difference as calculated from Ms. Shepard's first three checks. (See Finding of Fact 38.)
It also is undisputed that on April 15, 2002, Ms. Lawhon mailed to Ms. Freed a Shell Point Realty, Inc.,
operating account check for $450.00, of the same date, made out to "Stone Real Estate Holdings." Apparently, this reflected the amount of the cash deposit Ms. Shepard had given Ms. Lawhon on October 15, 2001.
Ms. Lawhon's explanation at the disputed-fact hearing for sending two checks on April 15, 2002, was that she had miscalculated again.
With the last check, Respondents satisfied all of what was owed to Mr. Petrik and cleared any discrepancies in their professional accounts within 30 days, as required by Agency Rule.
The Agency's June 2002 audit of Respondents' accounts for the material period of time found them to be substantially in compliance with all regulations and general bookkeeping standards for real estate personnel.
Ms. Lawhon did not represent to the Agency investigator in June 2002 that she had been given permission by Ms. Freed on March 26, 2002, to sign three of Ms. Shepard's checks with Mr. Petrik's name, but otherwise, her admissions to
the investigator are consistent with her explanation at the disputed-fact hearing that Mr. Petrik had allowed people to sign documents (not negotiable instruments or checks) for him in the past as a matter of convenience, and that she was afraid because Ms. Shepard's three checks were stale and incorrectly made out, they also might not be any good. (See Finding of Fact 36.)
Telephone bills show there was communication between Respondents and Ms. Freed on March 26, 2002. However, due to what appears to be Ms. Lawhon's recent fabrication that she received oral permission from Ms. Freed on March 26, 2002, to endorse Mr. Petrik's name on Ms. Shepard's first three checks, the portion of her testimony claiming that Ms. Freed gave her permission to endorse those checks in Mr. Petrik's name is not credible.
Ms. Lawhon's April 15, 2002, letter (see Finding of Fact 44) constitutes an admission, as well as a statement inconsistent with her testimony at the disputed-fact hearing, in that her letter stated that she did not realize that she had "failed to follow up" concerning the 111 Razorback Road rental until she received a phone call from Ms. Freed.
It is significant that Ms. Lawhon's letter states Ms. Freed called Ms. Lawhon first. There is no direct evidence
as to why Ms. Shepard chose March 26, 2002, to deliver her three stale checks to Ms. Lawhon or why she made the last check
payable to "Stone Real Estate Holdings," the Petrik corporation with which Respondents had an on-going commission sales relationship, but it may be inferred therefrom that it was on March 26, 2002, that Ms. Freed inquired of Ms. Lawhon why she was not receiving rental checks and why she had no lease if the
111 Razorback Road property were occupied.
Ms. Freed testified that Respondents failed to remit any of Mr. Petrik's funds due until Ms. Freed first contacted Ms. Lawhon and requested the rent proceeds, and that when contacted by Ms. Freed, Ms. Lawhon initially told Ms. Freed that she had placed Ms. Shepard in 111 Razorback Road in January 2002. The Agency suggests that this representation to Ms. Freed by Ms. Lawhon, together with Ms. Lawhon's remitting only
$2,355.00 on April 1, 2002, with the January to March memo on that check, amounts to Respondents' intentional misrepresentation of the amount due Mr. Petrik.
Ms. Freed also testified that she later discovered from Ms. Shepard that, in fact, Ms. Shepard had been in possession of 111 Razorback Road since October 2001, and, therefore, Ms. Freed realized that the total amount due
Mr. Petrik was higher than the amount represented and remitted by Ms. Lawhon on April 1, 2002. On this basis, the Agency asserts that Respondents remitted the additional funds on
April 15, 2002, only after Ms. Freed had confronted Ms. Lawhon concerning her misrepresentation.
Unfortunately, Ms. Freed's version of events is not entirely credible for the following reasons: Ms. Freed testified that she knew 111 Razorback was vacant in October 2001, but did not know from October 2001 to March 2002 that it was occupied/rented. She also testified that during this period she made no effort to rent that house. This suggests that either she was not doing her job or she knew on some level in October 2001 that the property was already rented. Ms. Lawhon's notification to Mrs. Alward that it was rented in December 2001 is unrefuted, and Mr. Alward testified that approximately January 2002, he and his wife had notified Ms. Freed that someone was living in the house. Against all this, Ms. Freed testified that she had learned of the occupancy of 111 Razorback Road from the Alwards in March 2002 and from Ms. Lawhon. She further testified that when she first talked to Ms. Lawhon in March, Ms. Lawhon said she had previously sent Ms. Freed her own check and would have to determine if that check had cleared.6/ Finally, Ms. Shepard is very clear that when Ms. Freed contacted her, Ms. Freed did not dispute the $635.00 (as opposed to
$675.00) per month rental amount.7/ While Ms. Freed's accepting the lesser amount is not absolute proof, it is, with all the other evidence, an indicator that she had previously approved
that amount when Ms. Lawhon telephoned her in October 2001. Given the somewhat naïve and confused property management process in Sarasota, including Ms. Freed's ignorance that Newhouse, Inc. actually held title to the property, Ms. Freed's assessment of an intentional misrepresentation by Respondents is not persuasive.
It is undisputed that Ms. Lawhon did not correct the discrepancy of $1,270.00 until April 15, 2002, after
Mr. Petrik's lawyer (not Ms. Freed) contacted her, but she did resolve the issue by the next business day after she was alerted that there might be an error.
As to the issues of whether or not Ms. Lawhon made a willful oral misrepresentation to Ms. Freed on March 26, 2002, or on the April 1, 2002, Shell Point Realty, Inc., check as to how long Ms. Shepard had occupied 111 Razorback Road or was willfully withholding funds on April 1, 2002, it is more significant that from the very beginning of this series of events on October 15, 2001, Ms. Lawhon told Ms. Shepard to make out her checks to Mr. Petrik and that none of Ms. Shepard's checks were ever in Respondents' possession until March 26, 2002. Therefore, together with Ms. Lawhon's overwrought state of mind on April 1, 2002, it is not clear whether there was a willful misrepresentation, a misunderstanding, a miscommunication, or a miscalculation with regard to the first
transmittal of only part of the rental funds on April 1, 2002, and the time line is not so clear that Ms. Freed's and the Agency's sinister construction of Ms. Lawhon's communications and calculations can be the only construction.
Without the Agency's sinister construction of events, there is only clear and convincing evidence that Ms. Lawhon undertook, without expectation of a direct real estate commission, to rent 111 Razorback Road for Mr. Petrik, regardless of what entity actually held title thereto. In doing so, she undertook a fiduciary relationship with him and
Ms. Shepard. In this capacity, she received a $450.00 cash deposit, which she retained for over five months without clear authority to retain it, and she did not timely deposit it in a trust or other appropriate account for Mr. Petrik's benefit.
She did not follow up on getting a lease executed by the parties, which, based on hers and Ms. Freed's prior course of dealing, Ms. Freed could have reasonably expected and which Ms. Shepard clearly did expect. When Ms. Freed inquired about the matter in March 2002, Ms. Lawhon, to her credit, tried to resolve the matter quickly and appropriately. However, in the course of resolving it, she did not get an executed lease as expected; she endorsed checks made out to Mr. Petrik without clear authority to do so; she did not deposit funds from those checks into an appropriate account; and she repeatedly
miscalculated amounts due and remitted incorrect amounts to
Mr. Petrik, via Ms. Freed. She also did not discover her errors on her own, but had to be alerted by the lawyer on April 12, 2002. While I detect no dishonest intent, nor any intent to permanently convert any funds to her personal use, the fact that Ms. Lawhon ultimately transmitted to Mr. Petrik the full amount due is not particularly to her credit, since her actions--or lack of action--had the effect of depriving Mr. Petrik of the use of a portion of those funds for nearly six months.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter herein, pursuant to Section 120.57(1) and 455.225(5), Florida Statutes.
The duty to go forward and prove each part of the Administrative Complaint by clear and convincing evidence is upon Petitioner Agency. Department of Banking and Finance v. Osborne Stern & Co., 670 So. 2d 932 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
The "clear and convincing" standard requires:
[T]hat the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must of such a weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the
truth of the allegation is to be established . . . .
Slomowitz v. Walker, 429 So. 2d 797 (Fla. 4th DCA 1983)
Respondent Mary Lawhon is charged under Count I of the Administrative Complaint with violating Section 475.25(1)(b), Florida Statutes. Respondent Shell Point Realty, Inc., is charged similarly in Count IV. Respondent Lawhon is charged, in Count II, with violating Section 475.25(1)(d)1., Florida Statutes. Count V similarly charges Respondent Shell Point Realty, Inc. Count III charges Respondent Lawhon with violating Section 475.25(1)(k), Florida Statutes. Count VI similarly charges Respondent Shell Point Realty, Inc.
The Commission proposes a two-year suspension of
Ms. Lawhon's real estate license and a $3,000.00 fine from her. It seeks only to reprimand Shell Point Realty, Inc.
Section 475.01, Florida Statutes, defines the activities of a real estate licensee.
As used in this part:
"Broker" means 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). Where the term "appraise" or "appraising" appears in the definition of the term "broker," it specifically excludes those appraisal services which must be performed only by a state-licensed or state- certified appraiser, and those appraisal services which may be performed by a registered assistant appraiser as defined in part II. The term "broker" also includes any person who is a general partner, officer, or director of a partnership or corporation which acts as a broker. The term "broker" also includes any person or entity who undertakes to list or sell one or more timeshare periods per year in one or more timeshare plans on behalf of any number of persons, except as provided in
ss. 475.011 and 721.20.
With regard to Counts I and IV, Section 475.25(1)(b), Florida Statutes (2002), states:
The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:
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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 her or him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. 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 or 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.
With regard to Counts II and V, Section 475.25(1)(d)1., Florida Statutes, states:
The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:
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(d)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 a 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. . . .
With regard to Counts III and VI, Section 475.25(1)(k), Florida Statutes (2002), states:
The commission may deny an application for licensure, registration, or permit, or renewal thereof; may place a licensee, registrant, or permittee on probation; may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:
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(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; or has failed, if a salesperson, to immediately place with her or his registered employer any money, fund, deposit, check, or draft entrusted to her or him by any person dealing with her or him as agent of the registered employer. The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made.
In their Proposed Recommended Order, Respondents propose that dismissal of all charges is appropriate because of the proof adduced in their case that title to 111 Razorback Road
was held, in October 2001, by Newhouse, Inc. Respondents contend that failure to prove that Mr. Petrik or one of the "Stone" companies owned the property in the terms alleged in the Administrative Complaint entitles them to a dismissal of all charges. Respondents do not contend that Mr. Petrik, through his business manager Ms. Freed, was not entitled to the proceeds of the rental of the property. Respondents' proposal is treated as a Motion to Dismiss and is denied.
At the close of Petitioner's case in chief, Respondents moved to dismiss all charges for a variety of reasons stated in the record. This motion is denied, except as set forth in the following Conclusions of Law.
A real estate licensee may be disciplined for a violation of Section 475.25(1)(b), Florida Statutes, in his own personal business affairs. La Rossa v. Department of Business and Professional Regulation, 474 So. 2d 322, 324 (Fla. 3d DCA 1985). Under the above-referenced section, a licensee can be disciplined for actions that are not broker activities as defined by Section 475.01, Florida Statutes, because the Real Estate Commission reserves the right to consider issues of character when evaluating the fitness of a licensee to continue to practice. See McKnight v. Florida Real Estate Commission, 202 So. 2d 199, 200 (Fla. 2d DCA 1967).
Chapter 475, Florida Statutes, defines broker activities as those activities enumerated in Section 475.01, Florida Statutes, performed "for compensation or valuable consideration, directly or indirectly paid, expressly or impliedly, or with an intent to collect or receive a compensation or valuable consideration." Section 475.01(1)(a), Florida Statutes.
In this case, although there was not an express management agreement, or specific compensation promised or contracted for, it is clear that Respondents were performing the activities of a real estate broker. Respondents undertook their activities in anticipation of future advantageous business dealings with Mr. Petrik. All parties involved understood that Respondents did whatever was requested of them with regard to Mr. Petrik's rental properties in order to ensure Mr. Petrik's future business, for which future business a commission would be paid.
The Florida Supreme Court has held it to be public policy that one may breach a trust even if the victim sustains no harm from the fiduciary's actions. See Connelly v. Special Road District No. 5, 126 So. 794, 799 (Fla. 1930). Additionally, Chapter 475.25(1)(b), Florida Statutes, clearly states:
It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; . . . .
While it may be immaterial as to whether a complainant has sustained substantial loss or damage, that factor is relevant in considering the credibility of the testimony of the witnesses and their motivations both during the acts upon which the charges are alleged and in testifying.
Also worthy of consideration here is the speed with which Respondents corrected their errors. The attempt to remit all the money represented by the checks received March 26-29, 2002, was made "immediately" (in this case within three days or less), per Rule 61J2-14.010, Florida Administrative Code. All errors with regard to monies received were corrected and Shell Point Realty, Inc.'s, accounts were balanced and "clean" within
30 days of March 26, 2002, per Rule 61J2-14.012(3), Florida Administrative Code.
In spite of Ms. Lawhon's questionable volitional acts, this record is not clear and convincing that this respected broker, with an excellent reputation and an operating account in excess of $54,000.00, ever formed the intent to deprive
Mr. Petrik of $3,942.00 (the total rents and deposit), $1,270.00 (the amount remitted by her on April 15, 2002, due to recalculation), or $450.00 (the misplaced cash deposit).
Furthermore, in place of "trick, scheme, or device," or even "culpable negligence," what leaps out from the foregoing Findings of Fact is a case of simple negligence or dereliction of duty.
Counts I, II, IV, and V have not been clearly and convincingly proven and should be dismissed.
That does not, however, excuse Respondents' holding
$450.00 cash for nearly six months without depositing it to a proper account, the unauthorized negotiation of Ms. Shepard's three checks to Mr. Petrik on March 29, 2002, to the wrong account, or Respondents' failure to remit all the monies received March 26, 2002, in a timely fashion. It is of considerable concern that Respondents did not catch their errors but had to have them pointed out to them by Mr. Petrik's lawyer.
Petitioner has proven by clear and convincing evidence that Respondents are guilty of Counts III and VI of the Administrative Complaint, charging violations of Section 475.25(1)(k), Florida Statutes, by failing to immediately, upon receipt, place funds entrusted to them in the real estate brokerage escrow account or some other proper depository, failing to maintain said funds in the trust account until disbursement was properly authorized, and failing to properly disburse them.
Chapter 61J2-24.001, Florida Administrative Code (2002), sets guidelines for proven violations.
For a violation of Section 475.25(1)(k), Florida Statutes, the guidelines, without aggravating or mitigating factors provide,
A minimum of a 90 day suspension and
$1,000 fine up to revocation.
Rule 61J2-24.001(4), Florida Administrative Code, provides for the consideration of aggravating and mitigating factors, and lists eight factors, all of which have been considered. It has also been considered that Respondents have endured a substantial ordeal in defense of an Administrative Complaint which bandied about inapplicable words like "forgery" and misstated the date the Agency knew Ms. Lawhon received
Ms. Shepard's first three checks. However, the instant case in no wise equates with Department of Business and Professional Regulation v. Prado, DOAH Case No. 96-0038 (R.O. May 5, 1996;
F.O. July 16, 1996), cited by Respondents. It is clear that Ms. Lawhon was under enormous stress during a family medical crisis when some of these events occurred, particularly the deposit to the wrong account on March 29, 2002. It is highly unlikely that such a set of circumstances will ever present itself to Ms. Lawhon again, and no threat from her to the public on that score is perceived, but this set of circumstances cannot
be treated simply as a case of "no good deed going unpunished," as Ms. Lawhon has attempted to paint it. Ms. Lawhon's "after- thought" of specific permission to endorse three checks should not be rewarded.
Respondents propose that for a violation of Section 475.25(1)(k), Florida Statutes, alone, considering mitigating factors, an appropriate penalty would be a $1,000.00 fine and eight hours of continuing education. However, the duration of Ms. Lawhon's simple negligence was approximately five months, and that seems an appropriate period of suspension. A $1,000.00 fine for this single violation is reasonable. A reprimand for Shell Point Realty, Inc. is reasonable.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that the Florida Real Estate Commission enter a final order which:
Finds Respondents Mary Lawhon and Shell Point Realty, Inc., guilty of Section 475.25(1)(k), Florida Statutes, Counts III and VI, respectively, of the Administrative Complaint;
Provides as a penalty for Mary Lawhon the payment of a
$1,000.00 fine and five months' suspension of her licenses;
Provides as a penalty for Shell Point Realty, Inc., a reprimand; and
Dismisses Counts I, II, IV, and V of the Administrative Complaint.
DONE AND ENTERED this 21st day of April, 2003, in Tallahassee, Leon County, Florida.
ELLA JANE P. DAVIS
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 21st day of April, 2003.
ENDNOTES
1/ A trier of fact may believe or disbelieve all or any part of the evidence or the testimony of any witness. I have assessed all elements of the live witnesses' testimony, including but not limited to their candor and demeanor. A trier of facts' ability to judge credibility based on transcriptions of depositions is certainly less than that of one permitted to view and hear all witnesses testify live, but the following traditional considerations remain available:
Did the witness seem to have an opportunity to see and know the things about which the witness testified?
Did the witness seem to have an accurate memory?
Was the witness honest and straightforward in answering the attorneys' questions?
Did the witness have some interest in how the case should be decided or in how the circumstances under consideration might be perceived by others?
Does the witness' testimony agree with the other testimony and other evidence in the case?
Was the testimony of the witness reasonable when considered in light of all the evidence in the case and in light of an ordinarily prudent person's experience and common sense?
Has the witness been offered or received any money, preferred treatment or other benefit in order to get the witness to testify?
Had any pressure or threat been used against the witness that affected the truth of the witness' testimony?
Did the witness at some other time make a statement that is inconsistent with the testimony the witness gave in court?
Was it proven that the general reputation of the witness for telling the truth and being honest was good or bad?
2/ Clearly and legally, no single individual "owns" a corporation. However, this phraseology is intended to show that, regardless of the degree of his investment or the offices held in each corporation by Mr. Petrik, he controls each entity's day-to-day business.
3/ Apparently, Mr. Petrik was President of Newhouse, Inc. at some point in time. This corporation was not proven to be his alter ego as were the other businesses, however Mr. Petrik's and Ms. Freed's testimony establishes that he personally authorized her to manage 111 Razorback Road for him, irrespective of title interest. Respondents contend that failure to prove, in the terms alleged in the Administrative Complaint, that Mr. Petrik or one of the "Stone" companies owned the property, entitles them to a dismissal of all charges. Respondents do not contend that Mr. Petrik was not entitled to the proceeds of the rental of the property.
4/ Ms. Freed denied that Ms. Lawhon ever called her in October 2001 about Ms. Shepard's rental of 111 Razorback Road.
Ms. Freed also stated that she never even knew that 111 Razorback Road had been rented until March 2002. However, Ms. Shepard confirmed that Ms. Lawhon told her in October 2001 that a rent of $635.00 per month had been authorized by the lessor, and Ms. Shepard began making out her rent checks to
Petrik (sometimes misspelled). Also, Respondents' long distance telephone bills confirm telephone communication and fax from Respondents' office to Ms. Freed's telephone number on
October 12 and October 15, 2001. While this long distance communication could have related to other business dealings between Respondents and Mr. Petrik in the same period of time, there is no affirmative evidence to that effect.
5/ Contrary to the allegations of the Administrative Complaint, Petitioner Agency was at all times aware that Respondents did not receive Ms. Shepard's four checks until sometime between March 26-29, 2002.
6/ Based on this testimony, it is possible that at some point, Ms. Lawhon believed she had remitted at least the $450.00 deposit and the lease as set out in her after-the-fact letter to Mr. Petrik, or even that she had Ms. Freed's permission to determine if any checks cleared, but it does not constitute affirmative authority to endorse checks made out to Mr. Petrik. (See Findings of Fact 37, 44-45, and 51-52.)
7/ "The rest of the story" is that Ms. Freed sent a lease to Ms. Shepard after Ms. Shepard had moved out, "to satisfy the accountants." Then Ms. Freed and Ms. Shepard got into a dispute over the $450.00 deposit, but Ms. Freed did return Ms. Shepard's full $450.00 deposit.
COPIES FURNISHED:
Joseph R. Boyd, Esquire Boyd, Lindsey & Branch, P.A. 1407 Piedmont Drive, East Post Office Box 14267
Tallahassee, Florida 32317-4267
Christopher J. DeCosta, Esquire Department of Business and
Professional Regulation
400 West Robinson Street, Suite N802 Hurston Building, North Tower Orlando, Florida 32801-1772
Nancy P. Campiglia, Acting Director Division of Real Estate
Department of Business and Professional Regulation
400 West Robinson Street Suite 802, North Orlando, Florida 32801
Hardy L. Roberts, III, General Counsel Department of Business and
Professional Regulation 1940 North Monroe Street
Tallahassee, Florida 32399-2202
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.
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 26, 2003 | Agency Final Order | |
| Apr. 21, 2003 | Recommended Order | Real estate broker guilty of depositing to wrong account and improperly holding/disbursing rent monies; not guilty of charges of trick, scheme, device, etc. Case of simple vs. culpable negligence. Analysis of credibilty factors lengthy. |
