Findings Of Fact Petitioner is a dealer in heavy construction equipment and has been since its incorporation on August 1, 1946. Among petitioner's competitors are Dewind Machinery Company, Florida Equipment Company of Jacksonville, Florida- Georgia Tractor Company, Inc., Great Southern Equipment Company, Inc., Pilot Equipment Company, Inc., Ring Power Corporation and Joseph L. Rozier Machinery Company. Like its competitors, petitioner frequently leases equipment to its customers, giving them an option to purchase, rather than selling them the equipment outright. Petitioner's exhibit No. 1 reflects one such transaction. On April 19, 1973, petitioner quoted Houdaille Duval Wright Company (Houdaille) a purchase price of twenty-two thousand dollars ($22,000.00) plus sale's tax, and monthly rent of fourteen hundred dollars ($1,400.00) plus sales tax on a diesel powered, self-propelled vibratory roller. After negotiations between petitioner and Houdaille, the purchase price dropped to seventeen thousand dollars ($17,000.00), but the monthly rental remained unchanged. Houdaille agreed to lease the vibratory roller from petitioner on these terms. With respect to its option to purchase, Houdaille specified that: 100 percent of all rentals to apply towards purchase price of $17,000.00 less 10 percent discount on remaining outstanding balance at time of purchase. Interest to accrue at a rate 7 1/2 percent simple. Houdaille made lease payments for nine months, totaling twelve thousand six hundred dollars ($12,600.00), before electing to exercise its option to purchase. In calculating the amount of money Houdaille was to pay to close out the transaction, petitioner began by treating the payments Houdaille had made under the lease as if they had been payments made in repayment of a loan, outstanding for the period of the lease, in the amount of seventeen thousand dollars ($17,000.00), at 7 1/2 percent per annum. Petitioner allocated portions of each lease payment to principal and to interest, calculated on the declining principal balance, aggregating eleven thousand nine hundred ten dollars and fifty-four cents ($11,910.54) to principal, and six hundred eighty-nine dollars and fourty-six cents ($689.46) to interest. Petitioner then calculated the 10 percent discount by multiplying one tenth times the difference between the original price ($17,000.00) and the amount aggregated to principal ($11,910.54), which yielded five hundred eight dollars and ninety-five cents ($508.95). This figure was subtracted from the original contract price ($17,000.00) to ascertain the' discounted price ($16,491.05) against which the lease payments were credited in their entirety ($12,600.00), yielding the figure three thousand eight hundred ninety-one dollars and five cents ($3,891.05), on which petitioner calculated 4 percent sales tax. In addition, petitioner required Houdaille, in exercising its option to purchase, to pay six hundred eighty-nine dollars and forty-six cents ($689.46), the aggregate amount of lease payments petitioner had allocated to interest. In every respect pertinent to the dispute between petitioner and respondent, this transaction between petitioner and Houdaille is typical of the transactions on which contested portions of the tax assessments were based. The same is true of petitioner's lease and sale of a truck crane to Poston Bridge & Iron, Inc. (Poston), the transaction reflected in exhibit No. 2 (although petitioner's agreement with Poston did not involve a discount.) The terms of the lease purchase agreement, as stated on respondent's exhibit No. 2, were: Option Price $124,855.00 with 100 percent of paid rentals to apply to purchase price less interest at 8.5 percent simple. After making lease payments totalling twenty-six thousand dollars ($26,000.00), Poston exercised its option to purchase. At this point the lease payments were recast as installment sales payments, portions being allocated to principal and interest accordingly. Respondent collected sales tax on the amount of money Poston paid in exchange for title, after electing to purchase, less the aggregate amount of lease payments petitioner had allocated to interest. Petitioner has been entering into lease purchase agreements of this kind with various customers since 1946 or 1947, and, when customers exercised purchase options, petitioner ordinarily calculated sales tax in the manner it employed in connection with the sale of the vibratory roller to Houdaille, and the truck crane to Poston. In at least one instance, however, petitioner calculated sales tax as 4 percent of all the money a customer, Misener Marine Construction, Inc., paid when exercising its option to purchase a truck crane, including portions of lease payments petitioner had allocated to interest. On the lease payments themselves, petitioner regularly collected 4 percent sales tax which it regularly remitted to respondent. For federal income tax purposes, petitioner treated payments from customers under a lease purchase agreement as lease payments for every tax year in which the option to purchase was not exercised. For the tax year in which the option to purchase was exercised, the lease payments were treated as payments under an installment sale contract, for federal income tax purposes. When respondent audited petitioner's rentals for the period May 1, 1970, to April 30, 1973, and earlier when respondent performed a general audit of petitioner's books for the period July 1, 1959, to February 28, 1962, no mention was mace of petitioner's sales tax treatment of lease purchase agreements under which lessees had exercised purchase options. Before the audit which eventuated in the assessments now in controversy, however, the auditors were given a copy of a letter from L. N. Hansen to Thomas D. Aitken dated December 9, 1974. Mr. Hansen was formerly director of respondent's sales and use tax division. In the fall of 1974, he was one of a group or "board" of respondent's employees who considered questions arising under the tax laws and formulated policy for respondent. His letter to Mr. Aitken, which came in evidence as, petitioner's exhibit No. 5, was written on behalf of respondent after its substance was discussed at a meeting of respondent's policy group. It pertains to lease purchase agreements entered into by Joseph L. Rozier Machinery Co. (Rozier). Mr. Hansen's letter stated that Rozier was "not correct in reducing the taxable sales price by the rental payments and thereafter adding an interest charge which, if it was incurred at all, was incurred prior to the time of sale." Petitioner's exhibit No. 5, p. 1. The foregoing findings of fact should be read in conjunction with the statement required by Stucky's of Eastman, Georgia vs. Department of Transportation, 340 So.2d 119 (Fla. 1st DCA 1976), which appears as an appendix to the order.
Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That respondent abandon the uncollected portions of its deficiency assessments. DONE and ENTERED this 31st day of August, 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 APPENDIX Petitioner's proposed findings of fact Nos. 1, 4-8, and 10 have been adopted, in substance, insofar as relevant. Petitioner's proposed finding of fact No. 2 is irrelevant insofar as it differs from petitioner's proposed finding of fact No. 7, and for that reason has not been adopted where it differs from petitioner's proposed finding of fact No. 7. Petitioner's proposed finding of fact No. 3 has not been adopted because it is not relevant. Petitioner's proposed finding of fact No. 9 has not been adopted because what motivated respondent's employees is not relevant and because it was not proven what would have happened "[b]ut for the Hansen letter." Petitioner's proposed findings of fact Nos. 11 and 12 have not been adopted because they are irrelevant. Petitioner's proposed finding of fact No. 13 has not been adopted as such because it is actually a proposed conclusion of law. The first paragraph of respondent's proposed findings of fact has been adopted, in substance, except that exercise of the purchase option may be said to relate back to the beginning of the contract. Significantly, respondent proposes as a finding of fact that the "amount termed 'Interest' . . . is payable for the use of the money during the rental/lease period." Paragraphs two through seven, nine and ten of respondent's proposed findings of fact have been adopted, in substance, insofar as relevant. The eighth paragraph of respondent's proposed findings of fact has not been adopted; it is actually a proposed conclusion of law. COPIES FURNISHED: Mr. Daniel S. Dearing, Esquire Post Office Box 1118 424 North Calhoun Street Tallahassee, Florida 32302 Ms. Patricia S. Turner, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304
The Issue In relation to DOAH Case No. 05-0515, does the case involve the sale of securities as described in Chapter 517, Florida Statutes (2002), that would confer jurisdiction upon OFR to proceed to a hearing on the merits of the Administrative Complaint that forms the basis for DOAH Case No. 05-0515, and to what extent, if any, the named Respondents have been involved with the sale of securities sufficient to declare jurisdiction over their activities? Preliminary to that determination is the related issue concerning the possible pre-emption of OFR's regulatory authority by virtue of the regulatory action previously taken by the State of Florida, Department of Business and Professional Regulation, Division of Land Sales, Condominiums and Mobile Homes (DBPR) under authority set forth in Chapter 721, Florida Statutes (2002)? Argument has also been set forth concerning the significance of court cases as they might influence OFR's ability to declare their regulatory authority in this instance.
Findings Of Fact * * * 2. RESPONDENT is the 'creating developer' of the Universal Luxury Lease Plan, a personal property 'timeshare plan' as those terms are defined in sections 721.05(9)(a) and 721.05(37), Florida Statutes, located in the city of Sanford, Florida. * * * On or about July 10, 2003, DIVISION was made aware of a newspaper advertisement for Universal Luxury Lease Plan. This advertisement, promoted the purchase of a timeshare interest in the Universal Luxury Lease Plan as an investment that offered purchasers a 10 percent per year return on their investment. On July 25, 2003, DIVISION'S investigators were given an application package containing the Universal Luxury Lease Plan Enrollment Forms, CD-ROM, Public Offering Statement, Contracts and Motor Coach Brochures. The application package stated that it was advertising material being used for the purposes of soliciting timeshare interests. It described a component of the timeshare plan called the 'Affinity Rental Program' and stated that the program will typically produce a monthly income of 10 percent of the lease-hold ownership interest.
Recommendation Based upon the consideration of the facts found and the conclusions of law reached, it is RECOMMENDED: That an order be entered by OFR finding jurisdiction to proceed with the Administrative Complaint in DOAH Case No. 05- 0515 on its merits. DONE AND ENTERED this 6th day of January, 2006, in Tallahassee, Leon County, Florida. S CHARLES C. ADAMS 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 6th day of January, 2006.
Findings Of Fact Based upon my observations of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. By its one-count Administrative Complaint filed herein on April 3, 1980, the Petitioner, Department of Professional Regulation, Board of Real Estate, alleged that the Respondent, William O'Brien, violated Section 475.25(1)(d), Florida Statutes (1979), due to his failure to deliver a security deposit to a property owner and that Respondent thereafter tendered a protion of the deposit in the form of a check which, when presented for payment, was not honored due to insufficient funds. During times material, Respondent was licensed by Petitioner and is the holder of Florida Real Estate License No. 168869. Gary ;Heide is the owner of the duplex apartment situated at 2407 Northeast 33rd avenue, Fort Lauderdale, Florida. The pertinent facts surrounding the allegations herein are, for the most part, simple and undisputed. The subject premises had been leased by owner Heide to Maurice L. LaReau. LaReau had leased the premises for approximately eleven (11) months when he found a residence that he intended to purchase and was therefore desirous of subletting the subject property with the owner's permission in an acceptable manner such that he would not incur any losses due to his vacating the premises prior to the expiration of the lease term. He, therefore, approached owner Heide and advised him of his intentions. According to LaReau, Heide gave him "carte blanche" authority to find a tenant to sublease the apartment but that he would appreciate it if he would "screen" the sub-lessee. Heide suggested that LaReau place an ad in the newspaper to secure a tenant and he also made known to LaReau his overall objective of not sustaining any loss of rents due to a vacancy in the apartment. During that conversation Heide also advised LaReau that he would be leaving for a vacation in Germany shortly. When LaReau leased the subject premises from Heide he entered a twelve (12) month lease and paid a $900.00 fee which included the first and last month's rent plus a security deposit. During times material, Respondent was the registered corporate broker for Exclusively Rentals and Management Company (Exclusively). Through the efforts of Respondent and Exclusively, Gregory A. Costa, III, was secured as a tenant to sublet the subject property from Maurice LaReau on or about October 8, 1977. Respondent had been approached by owner Heide to manage the subject property while Respondent was visiting an apartment complex adjacent to the Heide property on which Exclusively had the managing contract. According to the agreed terms for the subletting of the Heide property from LaReau to Costa, Costa agreed upon an occupancy date of October 15, 1977, for a total rental of $150.00 plus payment for the twelfth month rent for a fee of $300.00; a security deposit of $300.00 and a $150.00 commission to Exclusively for a total of $900.00. This amount was paid to tenant Maurice LaRaeau. Exclusively retained the agreed upon commission which represented on- half the monthly rental, or a fee of $150.00 See Respondent's Exhibit 1. Additionally, Messer. LaReau signed an agreement representing that the subletting was done with owner Heide's knowledge and was in accordance with his instructions. (Respondent's Exhibit 2). Upon returning from Germany, owner Heide became upset that LaReau had sublet the premises to Costa and contended that the subletting was only to have been done through the aid and assistance of another rental management firm know as Home Finders Real Estate Brokers. Heide contended that Audrey Lester was the only agent connected with that firm who had the authority to accept tenants or sub-lessees in his absence. Heide, therefore, contended that he was entitled to recoup from Respondent, through its corporate entity, Exclusively Rentals and Management Company, the entire $900.00 in addition to a continued retention of the $900.00 deposit which had been paid by the tenant, LaReau. Although Heide contended that he never used Exclusively to rent or otherwise secure tenants for any of his apartments, he acknowledged that he signed a new lease and accepted Costa as a tenant for the subject property. Heide's other complaint with Respondent is that a check dated November 10, 1977, in the amount of $150.00 and signed by Michael J. Cochran was not honored when presented for payment due to insufficient funds. An examination of that check does not reveal that it was returned by the bank upon which it was drawn or that it was even presented for payment as testified to by Messer. Heide (see Petitioner's Exhibit D). Respondent was approached by owner Heide to act as an agent to secure tenants for his property as vacancies occurred while Respondent was visiting an adjoining rental property through which Respondent's agency represented, the Ocean Gardens Apartment building. Heide also visited Respondent's office building prior to the subject incident (TR. 37 of the June 3, 1981, hearing). Respondent did not sustain any loss of rents due to the subletting of the subject property from LaReau to Costa through the efforts of Respondent and/or Exclusively Rentals and Management. Respondent credibly testified that there were ample monies in the account of Exclusively to pay the $150.00 check drawn by that firm to owner Heide in November of 1977, had it, in fact, been presented for payment. Respondent severed his relations with Exclusively and advised all of the associates of that severance during December of 1977. 2/
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby, RECOMMENDED: 1. That the Administrative Complaint filed herein be DISMISSED. DONE AND ORDERED in Tallahassee, Leon County, Florida, this 23rd day of July, 1981. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of July, 1981.
Findings Of Fact At all times material hereto, Respondent has been a licensed real estate salesman with license number 0364554. On or about August 13, 1982, Richard J. and Gav Greco entered into a lease purchase agreement with James C. and Phyllis Waid for residential property located at 1685 Markham Woods Road, Longwood, Florida. The purchase price of the Waid property was $190,000 towards which the Grecos made a $10,000 non-refundable deposit and agreed to pay a monthly rental of $1000. On or about November 14, 1982, the Grecos executed an Agreement with Respondent and his wife by which the Grecos assigned all rights and privileges relating to the lease and purchase of the residence at 1685 Markham Woods Road to the Alvarados. The consideration to be given for this Agreement was a payment of $10,000 by the Alvarados to the Grecos, with $5000 payable upon signing of the Agreement and $5000 payable within six months. The Alvarados, as assignees, agreed to abide by all provisions of the lease purchase agreement and were to make their first $1000 monthly lease payment to the Waids on December 4, 1982. Respondent gave Richard J. Greco a check in the amount of $5000 dated November 14, 1982 and requested that he hold the check for a couple of days before depositing it. Greco complied with the request, but was advised on December 3, 1982 that Respondent's $5000 check had been returned unused by Respondent's bank due to the fact that Respondent's account had been closed. Respondent has never paid the Grecos any part of the $10,000 due them under the assignment executed November 14, 1982. Respondent made no monthly lease payments on the property to the Waids. By letter dated February 25, 1983, James C. Waid notified the Grecos and the Alvarados that the lease purchase agreement was in default and that the $10,000 deposit paid by the Grecos was being forfeited because the rent was in arrears. The Grecos paid the Waids an additional $4000 on March 1, 1983, which represented the unpaid lease payments, for a general release from all obligations under the lease purchase agreement. Respondent and his wife executed a promissory note on March 1, 1983 whereby they agreed to pay the Grecos $10,000 on or before March 16, 1983, but no payments have ever been made pursuant to this promissory note. The Grecos brought suit against Respondent and his wife for damages arising out of this transaction, and obtained a Final Judgment on June 30, 1983 in Case No. 83-1191-CA-03-P, Circuit Court in and for Seminole County, in the amount of $15,101.28. The Grecos have not been able to execute this Final Judgment and therefore no payments on this judgment have been made to them by the Respondent or his wife. At the time of this transaction, the Alvarados were family friends of the Grecos. Richard J. Greco entered into this transaction with Respondent primarily because of the personal acquaintance and not because Respondent was a licensed real estate salesman. However, Greco knew that Respondent was licensed and therefore assumed that he was a man of integrity who would deal fairly with him in this real estate transaction.
Recommendation Based upon the foregoing, it is recommended that a Final order be issued suspending Respondent's license for a Period of one (1) Year. DONE and ENTERED this 26th day of August, 1985, in Tallahassee, Florida. DONALD D. CONN, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Fl. 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of August, 1985. COPIES FURNISHED: Susan Hartmann, Esquire Department of Professional Regulation Division of Real Estate 400 W. Robinson St. Orlando, Fl. 32802 Ignacio J. Alvarado 5166 Glasgow Avenue Orlando, Fl. 32819 Harold Huff Executive Director Division of Real Estate 400 W. Robinson Street Orlando, Fl. 32802 Salvatore A. Carpino General Counsel Department of Professional Regulation 130 N. Monroe St. Tallahassee, Fl. 32301 Fred Roche, Secretary Department of Professional Regulation 130 N. Monroe St. Tallahassee, Fl. 32301
The Issue Whether the equipment purchase and lease agreement to which Paul Richards and Florida Seafood Centers, Inc., became parties is an "investment contract" and so a security, within the meaning of Section 517.021, Florida Statutes (1985)? If so, whether it was exempt from registration requirements under Section 517.061(11)(a), Florida Statutes (1985)? If not, whether respondent Ogle solicited an offer, or offered or attempted to dispose of any interest in the agreement for value?
Findings Of Fact William Carl Webster had an idea, but no money. In fact, the business he and his wife owned, Cap'n Carl's Seafood Company, was in bankruptcy. No stranger to the seafood business, wholesale or retail, he had been involved for some twelve years. He came to believe he could profit by adopting a technique he noticed purveyors of pizza and milk used: the "impulse freezer," a topless display freezer rolled into the middle of a grocery store aisle to attract customers' attention. The "concept" was to sell frozen seafood wholesale to licensed food retailers. Webster believed it would be a simple matter of establishing the accounts, installing the freezers, and arranging with a reputable Tampa Bay fish house to deliver "custom packed" seafood. Overhead would be minimal, or so Mr. Webster told Barry Louis Harris, with whom he had played baseball in high school, and from whom he borrowed three thousand dollars for the new venture. None of this money was left by the time Mr. Webster dropped in on Jerry Russell Ogle, an account executive in the Fort Walton Beach office of A. G. Edwards & Sons, Inc., to discuss the ins and outs of going public, in late April of 1984. Mr. Ogle recommended against going public but expressed a willingness to help for a fee. Both Florida Seafood Centers, Inc., and Florida Seafood Brokers, Inc., came into existence on April 24, 1984. Articles of incorporation drawn by Messrs Webster and Harris, with the help of a kit, were filed that day. Jerry Ogle is registered with petitioner as a securities dealer. One of Mr. Ogle's customers, Paul Richards, had been a builder and developer before he moved to Florida from Ohio. As he sold properties in Ohio, he deposited the proceeds in his account at the Fort Walton Beach office of A. G. Edwards & Son. Since Mr. Richards had expressed an interest in investing in a small business, Mr. Ogle thought some of this money might be available for the enterprise on which Messrs Webster and Harris had embarked. Before taking Mr. Richards to lunch at the Harborlight, Mr. Ogle sought and obtained the oral approval of the A. G. Edwards' branch manager to work as a "marketing consultant" for Florida Seafood Centers, Inc. At lunch, he mentioned Florida Seafood Centers, Inc., and gave a "capsule form" account of the business to Mr. Richards. Mr. Richards expressed interest, and Mr. Ogle arranged a second luncheon meeting a week or two later. Messrs Richards, Webster, Harris and Ogle gathered in Mr. Ogle's office, before setting out for lunch at the High Tide. Mr. Ogle told Mr. Richards he thought that Mr. Webster's idea was a good one, but it was Mr. Webster who presented the idea in detail. Although remarking that he might be "digging a hole and throwing money into it," Mr. Richards decided to purchase 25 freezers from Florida Seafood Centers, Inc. On May 23, 1984, he signed an equipment purchase and lease agreement, but negotiations continued and the final agreement was executed on May 24, 1984, in Mr. Ogle's office. At this meeting, Mr. Richards drew a check for $10,000.00 on his A. G. Edwards & Sons, Inc. Total Assets Account, Mr. Ogle witnessed the equipment lease agreement Messrs Richards and Webster signed, and Mr. Ogle wrote, at the bottom of the agreement, "Rec'd $10,000 5-24-84 JRO." Respondent's Exhibit No. 1 Under the equipment purchase and lease agreement, Mr. Richards purchased freezers to lease to Florida Seafood Centers, Inc. In exchange, he was to receive "one half of the net profit of [each] freezer . . . not [to] exceed $800.00 per month for each freezer." Respondent's Exhibit No. 1. As per Ogle's suggestion, he was also to get "1 percent of gross sales revenue of Florida Seafood Centers," Id., all payments to begin after a 180-day "grace period." Mr. Richards' only obligation under the parties' agreement was to pay $1,500.00 for each freezer, or $37,500.00 in all. He had the option to choose among available locations, but had no responsibilities for installation or operation of the freezers or for the sale of seafood. His role was that of a passive investor. Mr. Richards was the only person in Florida who invested in this way, although two of the Alabamians who invested also had houses in Florida. Mr. Richards understood he was the initial investor, but knew others would be approached. The equipment purchase and lease agreement was never registered as a security. Mr. Harris took Mr. Richards' $10,000.00 check to a Barnett Bank branch and opened a bank account for Florida Seafood Centers, Inc., by depositing the check less $2,000.00 cash the bank disbursed and Mr. Webster took to cover expenses already incurred. The first check drawn on Florida Seafood Centers, Inc.'s first bank account was for $500.00 in favor of Mr. Ogle, dated May 28, 1984. Mr. Ogle had told Mr. Webster he expected to be paid for his time and Mr. Webster had agreed, before Mr. Richards signed the equipment lease agreement, to pay Mr. Ogle something if he was ever in a position to do so. At the hearing, they testified the payments to Mr. Ogle - $2,000 in cash from the proceeds of Mr. Richards' second and final check to Florida Seafood Brokers, Inc., dated June 4, 1984, in addition to the $500 check - were for his services as a "marketing consultant." Mr. Ogle never told Mr. Richards he had any sort of agreement with Florida Seafood Brokers, Inc. or Mr. Webster, and Mr. Richards was aware of none before investing in the enterprise. Mr. Ogle did know that bankruptcy had befallen Cap'n Carl's Seafood Company. Mr. Richards never received any payments or sales reports. Some freezers were placed in Piggly Wiggly stores in Birmingham, among other places, without, however, Mr. Richards' advice or assistance, as far as the record shows. Such sales of fish as Messrs Webster and Harris made were in amounts too small to make deliveries of custom-packed seafood economic, so they were obliged to repack the seafood themselves, which entailed renting space and bringing it up to health department standards, all at considerable, unanticipated expense. Eventually the business failed.
Findings Of Fact In June, 1975 Randall J. Conley, attempting to set his son and daughter-in-law up in business, arranged for them, with his help, to purchase Roger Sparks' business known as Sparky's Pizza. By Exhibit 6 dated June 17, 1975 the owner and lessor of the premises executed, with Randall M. Conley and his wife Sandra, a Consent to Assignment whereby the lease between the lessor and Mr. Spaghetti and Roger Sparks was assigned to the younger Conley and his wife and the previous lessees were released from further liability under the five year lease they had executed on April 30, 1974. (Exhibit 10) By Collateral Assignment Note dated 6-2-75 Randall J. Conley, Randall M. Conley and Sandra Conley obligated themselves to pay the Florida Center Bank $9750 over a five-year period and pledged the equipment and fixtures in the pizza business as security therefor. In October, 1975 Sandra, who had been operating the business, left for another job preparatory to separating from her husband. The business closed on November 1, 1975 and Defendant learned that the lessees were delinquent in the rent and payments on the chattel mortgage. Thereafter he attempted to sell the business. In November, 1975 Charles Hicks, the owner of a small fast-food chain, while looking for a site for a franchisee, saw the empty Sparky's Pizza and ascertained that information on occupying the property could be obtained from Defendant. He called Defendant's office and was told the rent was $260 per month. Arrangements were made for Defendant to show him the property the same afternoon. On November 25, 1975 Defendant showed Hicks and his putative franchisee, Ronald Beasley, the property. After being assured that the rental included the equipment and fixtures they agreed to accept an assignment of the lease if the lessor agreed and to bind the transaction Hicks gave Defendant a check for $200 made payable, at the request of Defendant, to Randall J. Conley. No written agreement was executed by the parties at this time. The check stated on its face that it was a deposit on lease of building here involved. The following day Defendant called Hicks and told him that the lessor had agreed with the assignment and that he should bring a check for $7,000 to pay for the equipment, plus a check for the rent. Hicks objected to the purchase of the equipment and demanded return of his $200 deposit. Defendant refused to return the money and Hicks immediately tried to stop payment on the check. When he did so he learned that his check had been cashed by Defendant as soon as the bank opened that morning, November 26. After Hicks was unsuccessful in getting his deposit returned he reported the incident to the FREC and the complaint here under consideration was filed. Defendant contends that he was operating as the owner of the lease and not in his capacity as a broker; that the consent to assignment of the lease did not result in an assignment; that by executing the collateral installment note he was part owner of the business; that when his daughter-in-law left and the business folded he acquired the leasehold by abandonment; and that he was entitled to retain Hicks' deposit of $200 as liquidated damages. One witness called by Defendant testified that the bank's policy on chattel mortgage loans was that they would only make such loans to the owners of the business. However, he acknowledged that he did not handle the loan here involved and never saw any documents showing Randall J. Conley having an interest in the leased premises, the equipment and fixtures for which was the subject of the loan represented by Exhibit 9. Defendant had advertised the sale of the lease in the newspaper and therein indicated the assignee of the lease would be required to assume payments on the equipment. Neither Hicks nor Beasley ever saw any such advertisement.
The Issue Whether Respondent, Royal Arms Villas Condominium, Inc., discriminated against Petitioners, Eric and Nora Gross, in violation of the Florida Fair Housing Act.
Findings Of Fact Petitioners are a married couple, living in a rental home at 209 Yorkshire Court, Naples, Florida (rental unit). Petitioners have two children and two grandchildren; however, none of these relatives live in Petitioners’ rental unit. Mr. Gross was diagnosed with stage four hodgkin’s lymphoma in 2002. Mr. Gross has been in remission since 2003. Mr. Gross was declared disabled by the Social Security Administration in 2003. Petitioners have lived in this rental unit since August 2006. A Florida residential lease agreement with the property owners, Joan and Charles Forton, was entered on August 8, 2006.3/ This lease was for a 12-month period, from September 1, 2006, through August 31, 2007. At the end of this period, the lease became a month-to-month lease and continued for years without anyone commenting on it. In 2012, Respondent inquired about a dog that was seen with Petitioners. After providing supporting documentation to Respondent, Petitioners were allowed to keep Mr. Gross’ service dog, Evie. Respondent is a Florida not-for-profit corporation. There are 62 units, and the owner of each unit owns a 1/62 individual share in the common elements. Since its inception, Respondent has, through its members (property owners), approved its articles of incorporation, bylaws, and related condominium powers, and amended its declaration of condominium in accordance with Florida law. Ms. Orrino is currently vice-president of Respondent’s Board of Directors (Board). Ms. Orrino has been on the Board since 2009 and has served in every executive position, including Board president. Ms. Orrino owns two condominiums within Respondent’s domain, but does not reside in either. In 2012 or 2013, Respondent experienced a severe financial crisis, and a new property management company was engaged. This company brought to the attention of Respondent’s Board that it had not been approving leases as required by its Declaration of Condominium.4/ As a result of this information, the Board became more pro-active in its responsibilities, and required all renters to submit a lease each year for the Board’s approval. Petitioners felt they were being singled out by Respondent to provide a new lease. The timing of Respondent’s request made it appear as if Respondent was unhappy about Petitioners keeping Evie. Petitioners then filed a grievance with HUD.5/ HUD enlisted the Commission to handle the grievance, and Mr. Burkes served as the Commission’s facilitator between Petitioners and Respondent. On October 24, 2013, Petitioners executed a Conciliation Agreement (Agreement) with Respondent and the Commission. The terms of the Agreement include: NOW, THEREFORE, it is mutually agreed between the parties as follows: Respondent agrees: To grant Complainants’ request for a reasonable accommodation to keep Eric Gross’s emotional support/service dog (known as “Evie”) in the condominium unit even though it exceeds the height and weight limits for dogs in the community. That their sole remedy for Complainants’ breach of the provisions contained in subparagraphs (a) through (g) below, in addition to the attorney’s fees and costs provision of paragraph 10 of this Agreement, shall be the removal of the Complainants’ dog. Complainants agree: That they will not permit the dog to be on common areas of the association property, except to transport the dog into or out of Complainants’ vehicle, to and from Complainants’ unit, and to take the dog through the backyard of the unit to walk it across the street off association property. That if the dog is outside of the condominium unit, they will at all times keep the dog on a leash and will at all times maintain control of the dog. That if their dog accidentally defecates on association property, they will immediately collect and dispose of the waste. That they are personally responsible and liable for any accidents or damages/injuries done by the dog and that they will indemnify and hold the Respondent harmless and defend Respondent for such claims that may or may not arise against Respondent. That they will not allow the dog to be a nuisance in the community or disrupt the peaceful enjoyment of other residents. A nuisance will specifically include, but is not limited to, loud barking and any show of aggressive behavior, including, but not limited to, aggressive barking, growling or showing of teeth regardless of whether the dog is inside or outside of the unit. That they will abide by all community rules and regulations of Respondent with which all residents are required to comply, including but not limited to submitting to the required pre-lease/lease renewal interview, and completing a lease renewal application and providing his updated information to Respondents and submitting to Respondent a newly executed lease compliant with Florida law and the Declaration of Condominium. The pre-lease/lease renewal interview will be conducted at Complainants’ unit at a time and date agreeable to the parties but not to exceed 30 days from the date of this agreement. If Complainants’ current dog “Evie” should die or otherwise cease to reside in the unit, Complainants agree to replace the dog, if at all, with a dog that is in full compliance with the association’s Declaration of Condominium or Rules and regulations in force at that time and will allow the dog to be inspected by Respondent for approval. Respondent agrees to ensure, to the best of their abilities, that their policies, performance and conduct shall continue to demonstrate a firm commitment to the Florida Civil Rights Act of 1992, as amended, Sections 760.20-37, Florida Statutes, (2012), and the Civil Rights Act of the United States (42 U.S.C. 1981 and 1982 and 3601 et.seq). [sic] Respondent agrees that it, its Board members, employees, agents and representatives shall continue to comply with Title VIII of the Civil Rights Act of 1968, as amended by The Fair Housing Act, which provides that Respondents shall not make, print or publish any notice, statement of advertisement with respect to the rental or sale of a dwelling that indicates any preference, limitation or discrimination based on race, color, religion, national origin, sex, disability or familial status. Respondent also agrees to continue to comply with Title VIII of the Civil Rights Act of 1968, as amended by The Fair Housing Act, which prohibits Respondents from maintaining, implementing and effectuating, directly or indirectly, any policy or practice, which causes any discrimination or restriction on the bases of race, color, religion, national origin, sex, disability or familial status. Respondents also agree to continue to comply with Section 504 of the 1973 Rehabilitation Act. It is understood that this Agreement does not constitute a judgment on the part of the Commission that Respondents did nor did not violate the Fair Housing Act of 1983, as amended, Section 760.20-37, Florida Statutes (2011). The Commission does not waive its rights to process any additional complaints against the Respondent, including a complaint filed by a member of the Commission. It is understood that this Agreement does not constitute an admission on the part of the Respondent that they violated the Fair Housing Act of 1983, as amended, or Section 504 of the 1973 Rehabilitation Act. Complainants agree to waive and release and do hereby waive and release Respondent from any and all claims, including claims for court costs and attorney fees, against Respondent, with respect to any matters which were or might have been alleged in the complaint filed with the Commission or with the United States Secretary of Housing and Urban Development, and agree not to institute a lawsuit based on the issues alleged in this complaint under any applicable ordinance or statute in any court of appropriate jurisdiction as of the date of this Agreement. Said waiver and release are subject to Respondent’s performance of the premises and representations contained herein. The Commission agrees that it will cease processing the above-mentioned Complaint filed by Complainants and shall dismiss with prejudice said complaint based upon the terms of this Agreement. Respondent agrees to waive and release any and all claims, including claims for court costs and attorney fees, against Complainants with respect to any matters which were or might have been alleged in the complaint filed with the Commission or with the United States Secretary of Housing and Urban Development, and agree not to institute a lawsuit based on the issues alleged in these complaints under any applicable ordinance or statute in any court of appropriate jurisdiction as of the date of this Agreement. Said waiver and release are subject to Complainants’ performance of the premises and representations contained herein. The parties agree in any action to interpret or enforce this agreement the prevailing party is entitled to the recovery from the non-prevailing party its reasonable attorney’s fees and costs, including attorney’s fees and costs of any appeal. FURTHER, the Parties hereby agree that: This Agreement may be used as evidence in any judicial, administrative or other forum in which any of the parties allege a breach of this Agreement. Execution of this Agreement may be via facsimile, scanned copy (emailed), or copies reproduced and shall be treated as an original. This Conciliation Agreement may be executed in counterparts. IN WITNESS WHEREOF, the parties have caused this Conciliation Agreement to be duly executed on the last applicable date, the term of the agreement being from the last applicable date below for so long as any of the rights or obligations described here in continue to exist. Eric Gross and Nora Gross signed the Agreement on October 24, 2013. Ms. Orrino, as President of Respondent, signed the Agreement on September 9. The Commission’s facilitator, Mr. Burkes, signed the Agreement on October 24. The Commission’s housing manager, Regina Owens, signed the Agreement on October 30, and its executive director, Michelle Wilson, signed the Agreement on November 4. The effective date of the Agreement is November 4, the last day it was signed by a party, and the clock started running for compliance. Petitioners failed to abide by the Agreement in the following ways: Petitioners failed to submit an updated lease agreement that conformed to Respondent’s rules and regulations. Petitioners failed to submit to the required pre- lease/lease renewal interview within 30 days of signing the Agreement. Petitioners failed to complete a lease renewal application. Petitioners failed to provide updated information to Respondent. It is abundantly clear that Eric Gross and Ms. Orrino do not get along. However, that personal interaction does not excuse non-compliance with an Agreement that the parties voluntarily entered. Each party to the Agreement had obligations to perform. Respondent attempted to assist Petitioners with their compliance by extending the time in which to comply, and at one point, waving the interview requirement. Petitioners simply failed to comply with the Agreement. Petitioners failed to present any credible evidence that other residents in the community were treated differently. Mr. Gross insisted that the Agreement had sections that Petitioners did not agree to. Mr. Burkes was unable to shed any light on the Agreement or the alleged improprieties that Mr. Gross so adamantly insisted were present.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by the Florida Commission on Human Relations dismissing the Petition for Relief filed by Petitioners in its entirety. DONE AND ENTERED this 17th day of March, 2015, in Tallahassee, Leon County, Florida. S LYNNE A. QUIMBY-PENNOCK 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 17th day of March, 2015.
Findings Of Fact From on or about December 13, 1976, up to and including the date of the hearing, Robert C. Duff was the holder of license no. 13-87, series 1-COP, held with the State of Florida, Division of Beverage. This license was held for purposes of trading as Bob's Bait and Tackle and the business was located at 2211 Hwy 231, N/O Panama City, Bay County, Florida. Mr. Duff wanted to transfer the license and the Division of Beverage was in the process of investigating this request for license transfer in December, 1976. In the course of this investigation it was revealed that Robert C. Duff did not own the premises upon which his business was located. Mr. Duff did not try to conceal the fact that he did not own the licensed premises. Moreover, Mr. Duff and a Mr. Charles Hoskins, President of Better Brands, Inc., told of a discussion between them and the investigating agent of the Division of Beverage at the time Duff received his license, in which the agent was told that Duff did not actually own the property. This licensing was in 1968. In fact, Hoskins has been leasing the licensed premises to Duff since 1968 for a lease rental amount ranging from $200.00 to $250.00. That lease agreement was still in effect at the time of the hearing. One final comment on the statement of ownership pertains to Petitioner's Exhibit #2 admitted into evidence at the hearing. This is an affidavit signed by Robert Duff showing him to be the owner of the licensed premises. This affidavit was executed at the time of the license application in November, 1968. Duff claims he was unaware that he signed such an affidavit and points to the fact that the reviewing agent, with the knowledge of his lack of ownership in 1968, recommended the approval of the license application and the license was issued. Charles Hoskins owns the premises upon which the license is operated in his personal name, and there was no showing that any other principals were involved in the ownership of the property, either directly or indirectly. Charles Hoskins was from 1968, through and including the date of the hearing, the President of Better Brands, Inc., which holds license no. 13-233, J-DBW with the State of Florida, Division of Beverage. This license is a license for a distributor. In addition, Hoskins from the beginning date and up to and including the date of the hearing has held between 10 percent and 20 percent of the stock owned by Better Brands, Inc. Both Robert C. Duff and Better Brands, Inc., have been charged with violations of s. 561.42(1), F.S. which states in pertinent part: "No licensed manufacturer or distributor of any of the beverages herein referred to shall have any financial interest, directly or indirectly, in the establishment or business of any vendor licensed under the Beverage Law." The facts of this case do not reveal that Better Brands, Inc., as a licensed distributor has any financial interest, directly or indirectly in the establishment or business of Robert C. Duff, a vendor licensed under the Beverage Law. Robert C. Duff and Better Brands, Inc., have also been charged with a violation of Rule 7A-4.18, F.A.C., which states: "Rental between vendor and distributor prohibited. It shall be considered a violation of section 561.42, Florida Statutes, for any distributor to rent any property to a licensed vendor or from a licensed vendor if said property is used, in whole or part as a part of the licensed premises of said vendor or if said property is used in any manner with said vendor's place of business." The facts in this matter do not show that Better Brands, Inc., rented any property to Robert C. Duff, the licensed vendor.
Recommendation It is recommended that the charge against Robert C. Duff, Respondent, be dismissed this 15th day of July, 1977. CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Charles Collett, Esquire Division of Beverage 725 South Bronough Street The Johns Building Tallahassee, Florida 32304 Franklin R. Harrison, Esquire 406 Magnolia Avenue Panama City, Florida 32401
Findings Of Fact Respondent Cherylyn Stoppler, at all times pertinent hereto, was licensed as a real estate saleswoman in the State Of Florida, holding license No. 0467803. Her last and current license was issued authorizing practice at Escambia Realty, Inc., 310 South Pace Boulevard, Pensacola, Florida 32501. Respondent Dorothy Diane Owens, at all times pertinent hereto, was a licensed real estate broker in the State of Florida, holding license No. 0380831. Respondent Escambia Realty, Inc., at all times pertinent hereto, was a licensed corporate real estate brokerage holding license No. 0232503. Its address is 310 South Pace Boulevard, Pensacola, Florida 32501. The Petitioner is an agency of the State of Florida charged with enforcing the provisions of Chapter 475, Florida Statutes, related to the licensure of real estate brokers and salesmen, the real estate professional practice standards embodied in that chapter and with prosecuting alleged violators of those standards. On April 13, 1986, Kenneth and Linda Williams, also known as Linda Brewer, requested that Cherylyn Stoppler show them rental property consisting of a single family residence located at 6853 Lake Charlene Drive in Pensacola. They had observed the Respondent corporate broker's sign on the front of that premises, advertising it for rental. Respondent Stoppler, Respondent Owens and the Escambia Realty, Inc. represented the owners of the property. Kenneth and Linda Williams examined the property and decided that they wanted to rent it. In their discussion with Cherylyn Stoppler concerning the terms of the rental arrangement, they requested that they be allowed to paint the premises and that the garage door be repaired. Respondent Stoppler agreed to this and indicated the owners would supply two gallons of paint and the prospective tenants, the Williamses, could do the painting with the owners ensuring repair of the garage door. Respondent Stoppler and the Williamses agreed to those terms and to the rental amount of $625 per month. They also agreed to pay Respondent Stoppler a $400 deposit, on behalf of the owners. Ms. Stoppler informed the Williamses that if they did not consummate the lease arrangement, upon which they had verbally agreed, the $400 would be retained and remitted over to the owners of the property. The Williamses agreed to this arrangement. The Williamses and Ms. Stoppler returned to Ms. Stoppler's office and she noted these terms on a lease agreement form with the additional term that the owner would steam clean the carpet in the house. The lease terms also provided that the premises would be used by no more than two adults and "zero" children, but the lease agreement has the "zero" stricken through indicating that that term was to be deleted. The striking of the zero on the term concerning the number of children to occupy the premises appears to have been executed with the same pen, inasmuch as the ink is the same color as the rest of Mrs. Stoppler's handwritten terms on the lease form. In any event, the Williamses were anxious to return to their home in Louisiana directly from the Respondent's office that same afternoon and to accommodate them Ms. Stoppler agreed to mail the lease form to them to be executed, urging them to send it back immediately. When they left the premises that day, Respondent Stoppler removed her firm's sign from the front of the premises and also told the Williamses that the property would be off the market as of that day, hence her admonishment to them to waste no time in returning the executed lease since the property would be off the market during the interim on the strength of the verbal agreement. The Williamses did not inform Ms. Stoppler that Mr. Williams had two children who might visit them from time to time or live with them at the premises. The Williamses returned to Louisiana and the lease was mailed to them by Ms. Stoppler. The Williamses decided not to execute the lease and to not consummate the rental arrangement. They informed Ms. Stoppler of this by phone on April 24, 1986, as well as communicating on that day with Respondent Owens. They indicated they did not desire to rent the premises and one reason given was that they felt that the two children were precluded by the lease terms from living on the premises for any period of time with them. In fact, the Williamses had never mentioned that they had any children and had sought to negotiate a reduction in the rent when they originally discussed the matter with Ms. Stoppler on the basis that only the two of them would live in the premises. The terms and conditions of the rental arrangement were those given to Ms. Stoppler by the Williamses themselves. When they conferred with Ms. Owens and Ms. Stoppler, they were again informed that the $400 would be retained and transmitted to the owners, to which they did not then object. In fact, they never did make any demand upon the Respondents for return of the $400 which was actually communicated to the Respondents. There is a letter in evidence (Petitioner's Exhibit 6) which the Respondents never received, as is shown by the certified mail receipt card and by Respondents' and Ms. Celano's testimony. The Williamses objected to consummating the lease because they contended that Ms. Stoppler had assured them that they could 1ive in the premises rent- free from the beginning of the lease, April 26, until May 1, during the time in which they would be painting the house and instead they were being charged $84 for those days. Mrs. Williams' testimony is somewhat equivocal in this regard in that she exhibited an incomplete memory regarding certain critical dates in the transaction, for example, the date she allegedly called Mrs. Stoppler to inform her of their refusal of the rental and the date she believed the lease was to commence. Mrs. Stoppler's testimony was corroborated by that of Ms. Owens, and was not refuted by the Williamses. It is accepted over that of Mrs. Williams in establishing that indeed the lease period and the rental there for was to commence on April 26. The Respondents' testimony shows that the house was off the rental market from April 13, when the verbal agreement with Ms. Williams was entered into and the sign was removed from the property and that both Respondents informed Mrs. Williams on two occasions that the $400 was not refundable but would be remitted to the owners of the property. The Respondents also established that Escambia Realty, Inc. followed a consistent policy of retaining deposit monies and remitting them to the owners without refund to prospective tenants when the tenants agreed to lease the premises after being informed that the deposit would be retained and the property taken off the market, when such tenants elect of their own volition to negate a lease or rental agreement. The Williamses additionally maintained that they did not want to consummate the lease arrangement because, in their view, the Respondents and the owners would not permit any children unrestrictedly visit or to live on the premises. That was established not to be the case. They also objected because they would not be allowed to live in the premises rent-free for several days during the time in which they were painting the premises. Additional objections involved various inconsequential technical deficiencies, such as misspellings, in the content of the lease. The employment position Mr. Williams was to have taken in the Pensacola area, and which was in large measure their reason for moving to Pensacola and renting the subject premises, failed to materialize. Ultimately, however, the Williamses moved to Pensacola and rented a different house at the lower rate of $600 per month. In short, the complaining witnesses contend that they did not want to execute the lease because of the problem of the $84 prorated rent required of them by the Respondents and the owners for the days when they thought they would live rent-free while painting the premises, because they felt that Mr. Williams' children by a previous marriage were precluded from unrestricted visits at the rental premises and because they felt that the proffered lease did not contain the proper initial date of tenancy. Thus, the Williamses breached the agreement because the Respondents refused to "correct" the lease according to the Williamses' desires. Those desires were not communicated to the Respondents until, at the very earliest, the phone conversations of April 24, 1986, some twelve days after the verbal agreement to rent the premises to the Williamses had been entered into and the $400 deposited with the Respondents on behalf of the owners. During that time, and longer, the property was taken off the rental market and the Respondents and the owners forbore the opportunity to secure other tenants. The Williamses themselves acknowledged that the letter by which they sought return of the $400 deposit was never actually received by the Respondents. Further, Ms. Williams in the telephone conversation on April 24, 1986, acknowledged that the owners were entitled to the $400 deposit. Even so, Ms. Owens waited approximately 25 days before remitting the funds over to the owners. Thus, no dispute as to the deposit was ever communicated to the Respondents, and the Respondents never misrepresented to either Mr. or Mrs. Williams the manner of disbursement of the deposit funds. It is noteworthy that Mrs. Williams is a licensed realtor herself and had some experience in similar real estate transactions. The Respondents carried out their portion of the bargain. Finally, it has been demonstrated that Respondent Owens is a well- respected real estate practitioner in the Pensacola area, having served as an officer and director of her local board of realtors and having been accorded a number of honors and certifications in connection with her professional performance as a realtor and her securing of advanced training in the field of real estate brokerage. Ms. Stoppler is relatively new to the profession, but neither she nor Ms. Owens have been shown to have ever engaged in any questionable practice or conduct in the course of their practice and neither have been shown to have been the subject of any other complaint of any nature resulting from a real estate transaction.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the Administrative Complaint against Respondents Cherylyn Stoppler, Dorothy Diane Owens and Escambia Realty, Inc. be dismissed in its entirety. DONE and ORDERED this 28th day of 1987, in Tallahassee, Florida. P. MICHAEL RUFF Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3982 Petitioner's Proposed Findings of Fact: 1-4. Accepted. Rejected as a recitation of testimony and not a Finding of Fact. Rejected as to its material import. 7-9. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. 10-11. Accepted. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Accepted. Rejected as a recitation of testimony and not a Finding of Fact. Also rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Accepted. Rejected as to its material import. 17-18. Accepted. 19. Rejected as to its material import. 20-21. Accepted. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Rejected as a recitation of testimony and not a Finding of Fact. Also rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Rejected as to its material import. Rejected as a recitation of testimony and not a Finding of Fact. Also rejected as to its material import. Accepted, but rejected as to its material import. Accepted. Rejected as to its material import. 29-30. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. 31. Accepted, but not as to its material import. 32-35. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Rejected as to its material import. Accepted, but not to the effect that a demand for refund was made. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. 39-41. Rejected. Respondents' Proposed Findings of Fact: Specific rulings are not separately made here because Respondents' Proposed Findings of Fact are inseparably entwined with legal argument and recitations of, and arguments concerning, the weight and credibility of testimony and evidence. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Cherylyn Stoppler Dorothy Diane Owens Escambia Realty, Inc. 310 South Pace Boulevard Pensacola, Florida 32501 Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Joseph A. Sole, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Harold Huff, Executive Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
The Issue Whether or not the actions of the petitioner in amending its lease agreement resulted in increased costs which are reimbursable by the Department of Health and Rehabilitative Services through an interim rate request.
Findings Of Fact Hallandale is a licensed nursing home facility located in Hallandale, Florida, and at all times material hereto, Hallandale was certified to and was participating in the Florida Medicaid Program. The participation was subject to a standard nursing home provider agreement entered into by the parties. Pursuant to the agreement, Hallandale provides nursing care for Medicaid recipients and receives as payment the recognized rate of Medicaid reimbursement established for Hallandale by HRS in accordance with the applicable state and federal laws, regulations, and guidelines. The agreement may be cancelled by either party after giving thirty (30) days notice. In 1971, Hallandale entered into a lease agreement with the owners of the nursing home facility and began operating the nursing home. The lease called for a payment of $84.00 per month, per bed, had no escalation clause, and would not expire until 1986. At the time the lease was negotiated, the owners had been operating the nursing home themselves at a loss. To avoid bankruptcy or having to sell the property at a loss, the owners leased the property to Hallandale. However, within seven or eight years the owners began to put pressure on Hallandale to renegotiate the lease because the owners did not think they were getting a fair return on their investment. In 1981, the owners and Hallandale entered into negotiations to amend the terms of the lease to provide an increased rental rate and an extension of the lease term. The negotiations were not successful, and finally, by letter dated July 6, 1983, the owners issued the following ultimatum: "Although the lease has a renegotiation clause six months prior to expiration, we must renegotiate the terms and conditions of this lease immediately. The partnership has made a decision that we will definitely not renew or extend your lease unless we can come to some satisfactory arrangement regarding terms and conditions, effective immediately." On December 13, 1983, Hallandale and the owners entered into an amendment to the original lease. The amendment increased the lease payments and extended the lease until August of 1998. The amended lease provided for a minimum rental of $110 per month, per bed, as of September 1, 1983, with increases in the rental every year thereafter. Saul Lerner has been president of Hallandale since 1975 and has been associated with the facility since it was first leased in 1971. Mr. Lerner is an astute businessman who has been involved in a variety of businesses for forty years. He was chiefly responsible for renegotiating the lease with the owners. Although the lease was renegotiated due to the owners' threats to sell the facility, 1/ Mr. Lerner did not merely accede to the owners' demands. There were several offers and counteroffers made before the final agreement was reached, and the renegotiated lease provided for a considerably lower rental rate than that demanded by the owners. Prior to entering into the lease amendment Mr. Lerner consulted with people in the industry, had a MAI appraisal performed, discussed the situation with James Beymer, a real estate broker specializing in nursing home and health related facilities, consulted with his accountants who had been in the health care field for 13 years, and talked with Sebastian Gomez of the Department of Health and Rehabilitative Services. Mr. Lerner consulted with his business associates, and the pros and cons of renegotiating the lease were carefully considered. Hallandale's determination to renegotiate the lease in 1983 was a reasonable and prudent business decision. By agreeing to increased rental payments for the three years that remained on the original lease, Hallandale gained an additional 12 years to operate the facility. This permitted Hallandale to project its costs and plan for the future. It could make additions and improvements to the building, buy new equipment, and provide for stability in staffing. On the other hand, had Hallandale refused to renegotiate the lease, it faced an uncertain future. There was a strong possibility that the owners would not be willing to renew the lease when it expired, which would result in Hallandale's losing the equipment and improvements it had put into the building. In addition, the owners were threatening to sell the property, and even though Hallandale had the right of first refusal, it would have had difficulty in obtaining the money required to purchase the property. Further, Hallandale realized that even if the owners would be willing to negotiate a new lease in 1986, Hallandale would not have the same leverage or bargaining power in 1986 as it had in 1983. Hallandale has participated in the Medicaid program continuously since 1971. At the time of the hearing the facility had 142 patients, of which 45 were Medicaid patients. 2/ Hallandale has never refused a Medicaid patient, and some of the patients have been there 8 or 9 years. The Medicaid patients are treated the same as the private patients, to such a degree that no one knows which patients are Medicaid patients. Although the agreement with HRS allows a provider to leave the Medicaid program with 30 days notice, Hallandale has no intention to ever discontinue participation in the Medicaid program. The extended term of the renegotiated lease is not only advantageous to Hallandale, it is also beneficial to Hallandale's patients, including Medicaid patients. It secures continuity of care for the patients and ensures that the patients will not have to be moved to a new facility in 1986. The transfer from one facility to another can be a very traumatic event for an elderly person; some patients have died within weeks of a transfer. Further, the patients benefit immediately because the extended term of the lease allows Hallandale to make improvements to the facility and buy equipment that it would not have been able to do without the security of a long term lease. The lease payments called for by the new lease are not out of line with lease payments made by similar institutions. Mr. Lerner looked at other lease payments being made in the community and found that $110 per bed per month was not an exorbitant amount. James Beymer leased nursing home facilities that were not as nice as the Hallandale facility for $138 per bed per month $166 per bed per month, and $225 per bed per month. Had Hallandale purchased the facility for $3 million, the price asked by the owners, the cost per month per bed would have been over twice the amount of the lease payment. 3/ Lease payments are included in a facility's "fixed costs." The fixed costs also include depreciation, real estate taxes and insurance. The state places a cap on reimbursement rates for fixed costs. In June 1983, prior to the renegotiation of the lease, Hallandale's fixed costs were $4.61 per patient day; under the renegotiated lease, the fixed costs would be $5.16 per patient day. Thus, even with the higher lease payment, the fixed costs are considerably under the state cap of $12.50 per patient day. A provider's reimbursement rate is determined by HRS from a cost report submitted by a provider. The rate is a prospective per diem rate. If, during the prospective period, the provider incurs an increase in costs, the provider has a right to submit an interim rate request to HRS. The Department uses the same principles to determine whether costs submitted in an interim rate request should be allowed as in determining whether costs submitted in a cost report should be allowed. Lease payments are allowable expenses under the Medicaid program subject to the Medicaid cost reimbursement principles. In calculating Hallandale's per diem rate, HRS allowed Hallandale $84 per month lease cost for each Medicaid patient in the facility based on the 1971 lease. Prior to executing the new lease, Hallandale contacted HRS to inquire if the new lease cost would be allowable and was informed that the new costs would probably not be allowable. On November 9, 1983, Hallandale submitted an interim rate request to cover the increased cost of the new lease payments. The interim rate request was procedurally correct. By letter dated May 30, 1984, HRS denied the interim rate request because "...the lease cost was negotiated for investment related reasons and is not related to patient care." On June 25, 1984, Hallandale filed its petition for a formal administrative hearing.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the interim rate increase requested by Hallandale be granted. DONE and ORDERED this 26th day of April, 1985, in Tallahassee, Leon County, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of April, 1985.
