STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RECOMMENDED ORDER

As noticed, Administrative Law Judge John D. C. Newton, II, of the Division of Administrative Hearings conducted a hearing in this case on January 26, 2010, by video teleconference at sites in Fort Lauderdale and Tallahassee.

APPEARANCES

For Petitioner: Patrick James Cunningham, Esquire

Department of Business and Professional Regulation

400 West Robinson Street, Suite N801 Orlando, Florida 32801

For Respondent: Lonzie Burgess, pro se1

2925 Southwest 133 Avenue

Miramar, Florida 33027 STATEMENT OF THE ISSUES

The four count Administrative Complaint presents the following issues:

1. Whether Mr. Burgess is guilty of concealment, 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 (2007).2

2. Whether Mr. Burgess operated as a broker without being the holder of a valid and current license as a broker in violation of Section 475.42(1)(a), Florida Statutes and, therefore, in violation of Section 475.25(1)(e), Florida Statutes.

3. Whether Mr. Burgess failed to ensure his brokerage corporation had a current registration with the Department in violation of Florida Administrative Code Rule 61J2-5.019, and, therefore, in violation of Section 475.25(1), Florida Statutes.

4. Whether Mr. Burgess is failed to account or deliver to the Bells any property or assets which has come into his hands and is not his property and which he is not entitled to retain, in violation of Section 475.25(1)(d)1, Florida Statutes.

PRELIMINARY STATEMENT

In June 2009, Petitioner, Department of Business and Professional Regulation, Division of Real Estate (Department) issued a four count Administrative Complaint against Respondent, Lonzie Burgess (Mr. Burgess). On July 30, 2009, Mr. Burgess served a Request for Formal Hearing. On November 2, 2009, the Department filed the Request for Hearing and a Notice of

Withdrawal as Counsel (for Mr. Burgess) with the Division of Administrative Hearings (Division). That same day the Division issued an Initial Order asking the parties to provide suggested hearing dates and the estimated length of the final hearing.

Mr. Burgess did not respond. The Department did.

The Division noticed the final hearing for December 17, 2009. On December 4, 2009, Mr. Burgess moved to continue the final hearing to, among other reasons, provide additional time to retain counsel. The Division re-scheduled the hearing to January 26, 2010.

At the start of the final hearing, Mr. Burgess moved to continue the hearing again for purposes of retaining counsel. His motion was denied. Fla. Admin. Code R. 28-106.210.

When the hearing ended, Mr. Burgess moved to extend the time for filing proposed recommended orders. The motion was granted by order permitting the parties to file proposed orders within 30 days of the date the transcript was filed. The Transcript of the final hearing was filed on March 16, 2010.

On April 15, 2010, the Division received a package of documents relating to this case. They included three pages that appear to be a letter from Mr. Burgess to his attorney, communications to various Department employees, and a written statement that appears to be by Mr. Burgess. The Division treated these documents as an ex parte communication violating

Florida Administrative Code Rule 28-106.104. It issued a Notice of Ex Parte Communication and provided copies of the documents to all parties. The undersigned has not considered the documents in issuing this Recommended Order.

The Department presented testimony from the following witnesses: Felix Mizionznikov, Nell Bell, Willis C. Bell, and Laurence Lindner. Mr. Burgess did not testify. He presented testimony from Felix Mizionznikov.

The Department offered the following exhibits, all of which were admitted into evidence.

1. Certification Summary.

   
   

2. Exclusive Right of Sale Listing Agreement dated October 3, 2006.

3. Lease Between Kenay Horne and Willis C. and Nell F. Bell dated October 8, 2007.

4. Remedy of Rental.

   
   

5. Division of Real Estate Investigative Report.

Mr. Burgess offered no exhibits.

Both parties submitted proposed recommended orders.

FINDINGS OF FACT

Clear and convincing evidence establishes the following findings of fact:

1. The parties agree that Mr. Burgess is now, and has been at all times material to this case, a Florida licensed real estate broker, holding license number 701456.

2. Mr. Burgess's business relationship with Willis C. and Nell F. Bell (the Bells) began in 2002 and 2003. In those years he served as realtor in selling a duplex and buying a house located at 42 East Drive, North Miami Beach, Florida. Later the Bells paid Mr. Burgess $1,000 to assist with re-financing the house.

3. In the following years, Mr. Burgess borrowed money from the Bells.

4. The Bells knew little about real estate and the real estate business. They trusted and relied upon Mr. Burgess, and he knew that.

5. Mr. Burgess entered into a contract with the Bells to sell a townhouse located at 648 Northeast Second Street, Homestead, Florida. The contract is titled “Exclusive Right of Sale Listing Agreement” and dated October 3, 2006. The contract identifies Mr. Burgess as an “Authorized Listing Associate or Broker.” It gives Mr. Burgess the exclusive right to sell the Bells’ property and obligated him to market and sell the property. The contract identifies the sale price as

   $310,000.00. The contract term is October 3, 2006 to April 3, 2007.

6. The first sentence of the contract identifies the parties as the Bells (Sellers) and Mr. Burgess and World Realty (Brokers). Mr. Burgess signed it as “Authorized Listing Associate or Broker.” The signature area identifies the Brokerage Firm Name as Beachfront Realty, Inc.

7. The Bells purchased the Homestead townhouse at Mr.

   
   

   Burgess’s urging. He convinced the Bells that buying the Homestead townhouse was a good real estate investment.

8. Mr. Burgess also loaned the Bells $3,000 or $3,500 to help them purchase the property.

9. Mr. Burgess did not succeed in finding buyers for the property.

10. Mr. Burgess proposed to the Bells that they rent the property. He repeatedly offered to locate a tenant for them.

11. For some time the Bells resisted the idea because of concerns about wear and tear and possible damage to a new townhouse. Finally they agreed.

12. Mr. Burgess identified a tenant, Ms. Kenya Horne. He repeatedly told the Bells that Ms. Horne’s occupation and lease of the townhouse were dependent on approval to participate in a government rent support program.

13. Mr. Burgess prepared and the Bells executed a lease with Ms. Horne for the period beginning October 8, 2007 and ending September 30, 2008. It provided for lease payments of

    $1,300.00 per month and a security deposit of $1,300.00. Mr. Burgess signed the lease as a witness.

14. But the Bells told Mr. Burgess that they did not want Ms. Horne to take possession of the townhouse until they met and approved her.

15. Mr. Burgess agreed. He repeatedly assured the Bells that he would not give Ms. Horne possession of the property until they had met and approved of her.

16. Also Mr. Burgess repeatedly advised the Bells that Ms. Horne had not moved into the property because she could not obtain needed approval for rent assistance.

17. These assurances were false. Despite his repeated assurances and statements, Mr. Burgess gave the tenant possession of the property. She lived there four or five months.

18. During the same time period, while the tenant occupied the property, Mr. Burgess was telling the Bells that Ms. Horne had not obtained rent assistance and that renting the property to her was not going to work.

19. He never told the Bells that the tenant moved in. And he never gave the Bells any rental payments or a deposit or made any arrangements for them to receive rental payments or a deposit.

20. Uneasy about matters, the Bells traveled with Laurence Linder, a friend who was a real estate broker and insurance salesman, to Homestead to inspect the townhouse. They found that the property had been occupied and damaged.

21. The damage included holes in several walls and fire damage in the kitchen. The stove and microwave were destroyed. The carpet was damaged.

22. The Bells called Mr. Burgess from the townhouse and asked him how the property was.

23. Mr. Burgess did not know that the Bells were at the townhouse. He told them it was in fine shape.

24. When the Bells told Mr. Burgess that they were in the townhouse, he broke down and cried and admitted he had let somebody live there without telling them.

25. When the Bells confronted Mr. Burgess with his actions and the damage, Mr. Burgess admitted deceiving the Bells about the tenant and her occupation of the townhouse. He promised to make restitution for the damage.

26. Mr. Burgess signed a document titled Remedy of Rental.

    
    

    In it he agreed to do the following:

    
    

    1. Pay the City of Homestead’s final outstanding utility bill of $1,700 on or before March 14, 2008.

    2. Pay the Bells $4,600 to repair damage and an additional $2,000.

    3. Pay the Bells $5,200.00, the rental amount from October 2007 to January 2008, on or before April 11, 2008.

    4. Pay all amounts by certified or cashiers check.

       
       

27. Mr. Burgess did not make any of the payments agreed to in the Remedy of Rental.

    CONCLUSIONS OF LAW

    
    

28. Subsection 120.57(1) and Sections 120.569 and 120.60, Florida Statutes (2009), grant the Division jurisdiction over the parties and subject matter of this cause.

29. The Department must prove the alleged violations by clear and convincing evidence. Dep't of Banking & Fin., Div. of Sec. & Investor Prot. v. Osborn, 670 So. 2d 932 (Fla. 1996). Clear and convincing evidence must be credible. The memories of witnesses must be clear and not confused. The evidence must produce a firm belief that the truth of allegations has been established. Slomowiitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983). Evidence that conflicts with other evidence may be clear and convincing. The trier of fact must resolve conflicts in the evidence. G.W.B. v. J.S.W. (in Re Baby E.A.W.), 658 So. 2d 961, 967 (Fla. 1995).

    Count One

    
    

30. Count I charges a violation of section 475.25(1)(b), Florida Statutes. That statute makes concealment, dishonest dealing by trick, scheme or device, culpable negligence, or

    breach of trust in any business transaction an offense for which the Department:

    . . . 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 $5,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing. . . .

    
    

31. Mr. Burgess committed this offense. His dealings with the Bells on the rental of the townhouse were dishonest. He deliberately and repeatedly concealed important facts from them. And he breached their trust in their business transaction.

32. The Department also argues that Mr. Burgess placed the wrong folio number for the townhouse in the Multiple Listing Service. This error, it maintains, impaired selling the property and amounted to culpable negligence.

33. Clear and convincing evidence does not establish that Mr. Burgess placed the wrong folio number in the Multiple Listing Service or that placing the wrong folio number in the listing would amount to culpable negligence. The only evidence that Mr. Burgess put in the wrong folio number is the testimony of Mr. Laurence Linder about what a document reportedly said. The document was not offered into evidence.

34. Mr. Linder’s testimony is also the only evidence advanced to support the Department’s culpable negligence theory.

    Mr. Linder’s testimony is not clear and convincing for two reasons. The first is the minimal information provided about his qualifications. The second is his plain hostility to

    Mr. Burgess and the way in which he testified, acting as an adversary and an advocate rather than an impartial expert.

    Count Two

    
    

35. Count II charges a violation of Sections 475.25(1)(a) and 475.25(1)(e), Florida Statutes, by operating as a broker without holding a valid and current broker license. The Department did not present clear and convincing evidence sufficient to support a finding of fact establishing this violation.

36. The Department’s investigator testified about what he saw in the department records. The Department’s Exhibit 1 is a “certified” summary of information in the records of the Division of Real Estate, Department of Business and Professional Regulation. The investigator’s testimony was his report of what he saw recorded by others in files. The “certified” statement is an out of court statement summarizing information in documents placed in those documents by other individuals who also did not testify. The statement author and the author of the documents the statement summarizes did not testify. The Department did not present any evidence that satisfied the public record authentication provisions of Section 90.955,

    Florida Statutes (2009) or the hearsay exception of section 90.803, Florida Statutes (2009).

37. In each case the evidence is hearsay as defined in Section 90.801, Florida Statutes (2010), or testimony reporting what a hearsay document says. A finding of fact may not be based upon hearsay unless it would be admissible over objection in civil actions. § 120.57(1)(c), Fla. Stat. (2009).

38. The Department did not establish that its hearsay evidence would be admissible over objection in a civil action. Also, if Exhibit 1 was intended to be a summary of voluminous documents admissible under Section 90.956, Florida Statutes (2009), the Department did not satisfy the notice requirement of that evidence rule.

    Count Three

    
    

39. Count Three charges that Mr. Burgess violated Florida Administrative Code Rule 61J2-5.019, and, therefore, Section 475.25(1)(e), Florida Statutes, by failing to ensure that his brokerage corporation had a current registration with the Department. The Department did not prove this count for the same reasons that it failed to prove Count Two.

    Count Four

    
    

40. Count Four charges Mr. Burgess with a violation of Section 475.25(1)(d)1, Florida Statutes. This section makes it an offense to fail to account for or deliver personal property

    including money if a civil judgment has been obtained against the licensee and the judgment has to been satisfied in accordance with its terms. The Department maintains that

    Mr. Burgess failed to account for deliver rent and/or deposit payments from Ms. Horne to the Bells.

41. Putting aside the issue of whether the statute requires a civil judgment before there can be an offense, there is no evidence that Mr. Burgess received any rent or deposit money from Ms. Horne. Therefore, clear and convincing evidence does not prove that he failed to account for or deliver rent or to deposit money to the Bells.

42. Of the four counts charged, the Department proved only Count I. Under that Count, the Department proved by clear and convincing evidence that Mr. Burgess was guilty of fraud, misrepresentation, concealment and breach of trust by repeatedly, falsely assuring the Bells that Ms. Horne had not been and would not be given possession of the townhouse.

    Section 475.25, Florida Statutes (2007), makes probation, license suspension, revocation, a reprimand, and a fine not to exceed $5,000 possible penalties.3

43. The Department adopted disciplinary guidelines for violations of Section 475.25(1)(b), Florida Statutes, and Florida Administrative Code Rule 61J2-24.001(3)(c). The Rule provides: “In the case of fraud, misrepresentation and

    dishonest dealing, the usual action of the Commission shall be to impose a penalty of revocation.” The Rule permits consideration of aggravating or mitigating circumstances. Fla. Admin. Code. R 61J2-24.001(4). The rule lists examples of aggravating circumstances, although not mitigating. They are:

    (b) Aggravating or mitigating circumstances may include, but are not limited to, the following:

    1. The degree of harm to the consumer or public.

    2. The number of counts in the Administrative Complaint.

    3. The disciplinary history of the licensee.

    4. The status of the licensee at the time the offense was committed.

    5. The degree of financial hardship incurred by a licensee as a result of the imposition of a fine or suspension of the license.

    6. Violation of the provision of Chapter 475, F.S., wherein a letter of guidance as provided in Section 455.225(3), F.S., previously has been issued to the licensee.

    
    

44. The degree of harm from the one offense proven is substantial. Mr. Burgess’s “Remedy of Rental” sets it at

    $13,500. This is an aggravating circumstance to consider.

    
    

45. Although the Administrative Complaint charged four counts, only one was proven. There is no evidence that

    Mr. Burgess had a disciplinary history or letter of guidance. The Department did not prove the charges about Mr. Burgess’s license status. The lack of disciplinary history is a mitigating factor.

46. Since Mr. Burgess did not present any evidence, there is no evidence of the degree of financial hardship that would result from a fine or license suspension. Both inherently impose a hardship, however.

47. Although only one count was proven and Mr. Burgess has no history of disciplinary offenses, revocation of his license is the appropriate penalty. Mr. Burgess betrayed unsophisticated consumers he knew relied upon and trusted him. This is not a case of error, mistaken judgment, oversight, or negligence. Mr. Burgess repeatedly and deliberately lied to the Bells. His deceit and actions cost the Bells $13,500.00.

48. The Commission should also order Respondent, pursuant to Section 455.227(3), Florida Statutes, to reimburse the Department for its reasonable investigative costs in this case. "Due process considerations require, however, that Respondent be given the opportunity to examine and question the reasonableness of such costs before any are imposed." Department of Health, Board of Nursing v. Howard, No. 02-0397PL, 2002 Fla. Div. Adm. Hear. LEXIS 1310 *10 (Fla. DOAH October 30 2002)(Recommended Order).

RECCOMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law it is RECOMMENDED that the Department of Business and Professional Regulation enter its Final Order finding

Respondent, Lonzie Burgess, Guilty of Count I; dismissing Counts II, III, and IV; revoking Mr. Burgess’ license, and requiring him to reimburse the Department for reasonable investigative costs in this case.

DONE AND ENTERED this 30th day of April, 2010, in Tallahassee, Leon County, Florida.

S

JOHN D. C. NEWTON, II

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675

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

Filed with the Clerk of the Division of Administrative Hearings this 30th day of April, 2010.

ENDNOTES

1/ On March 3, 2010, Steven W. Johnson filed a Notice of Appearance as counsel for Lonzie Burgess.

2/ All references to Florida Statutes are to the 2007 statutes unless noted otherwise. The complaint does not specify the statute year, the actions or inactions involved all occurred in 2006 or 2007. “The version of a statute in effect at the time grounds for disciplinary action arise controls.” Childers v.

Dep't of Envtl. Prot., 696 So. 2d 962, 964 (Fla. 1st DCA 1997). For the offenses charged, save for a change in penalty addressed later, the 2006 and 2007 versions of the statutes are the same. Ch. 2006-210, § 3, Laws of Fla.

3/ The 2007 statutes, with the $5,000 penalty cap, apply because all of the leasing related actions occurred in or after October, 2007.

COPIES FURNISHED:

Patrick J. Cunningham, Esquire Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801 Orlando, Florida 32801

Steven W. Johnson, Esquire Steven W. Johnson, P.A.

20 North Orange Avenue, Suite 700 Orlando, Florida 32801

Lonzie Burgess

2925 Southwest 133rd Avenue Miramar, Florida 33027

Thomas W. O'Bryant, Jr., Director Division of Real Estate Department of Business and

Professional Regulation

400 West Robinson Street, Suite N801 Orlando, Florida 32802

Reginald Dixon, General Counsel Department of Business and

Professional Regulation Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit 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: 09-006008PL

Orders for Case No: 09-006008PL