The Issue Did the Florida Real Estate Commission (the Commission) engage in an invalid exercise of delegated legislative authority when promulgating proposed rule 61J2-10.039 (the proposed rule)? See Section 120.52(8), Florida Statutes.
Findings Of Fact A substantial number of the Association's members would be substantially affected by the proposed rule because property management is a fundamental business activity performed by the Association's members. As a percentage, 14.9 percent of the Association's members, in an in-house survey, responded that property management is one of their top three functions. The proposed rule substantially affects a substantial number of the Association's members because it would have a direct and immediate effect on the Association's members' right to earn a living in property management. The subject matter of the proposed rule is within the Association's general scope of interest and activity because of the Association's stated purpose "to serve the Realtor community by providing, promoting and delivering programs, products and services that will enhance members' skills and ability to operate their business profitably and ethically; to advance the real estate industry; and to preserve and extend the right to own, use, and transfer real property." The Association directed its rules challenge to the proposed rule which was noticed by publication in the Florida Administrative Weekly at Volume 24, Number 46, November 13, 1998. As announced in the published notice, the specific statements of authority for promulgating the proposed rule were Sections 475.05 and 475.25(1)(k), Florida Statutes. The notice referred to the law implemented by the proposed rule as Sections 455.224 and 475.25(1)(k), Florida Statutes. As noticed in the Florida Administrative Weekly, the purpose and effect of the proposed rule was as follows: The purpose and effect of the new rule is to require disclosure by a real estate broker to a landlord and tenant if the funds being delivered to the broker are to be held by a business entity or firm that is not a registered real estate broker. The disclosure would not apply to funds being held by an attorney or a title insurance company. In addition, the disclosure applies only to residential real property. The disclosure will then enable the landlord and tenant to make an informed choice about where the funds are being held in the event the funds are to be maintained by an unregulated entity. The notice in the Florida Administrative Weekly summarized the proposed rule as follows: Rule 61J2-10.039 will be a new rule. The rule will require disclosure in the event residential rental funds are to be maintained by an entity not registered as a real estate broker. The disclosure requirement would not apply if the funds are to be held by an attorney or title insurance company. The "summary of statement of estimated regulatory cost" as noticed in the Florida Administrative Weekly referred to costs as "none." That reference was followed by the following instruction: "Any person who wishes to provide information regarding the statement of estimated regulatory costs, or to provide a proposal for a lower cost singular regulatory alternative must do so in writing within 21 days of this notice." As noticed in the Florida Administrative Weekly, the full text of the proposed rule is: 61J2-10.039 Property Management Disclosure. A broker, when entrusted with funds in connection with the rental of residential real property, who is directed by the terms of a written agreement or document or by oral instructions of the parties to deposit the funds in an account maintained by a business entity or firm not registered or licensed with the Commission as a real estate broker shall inform the parties in writing of the following: that the business entity or firm is not registered or licensed with the Commission as a real estate broker and, therefore, is not subject to the escrow account requirements of Chapter 475, Part I, Florida Statutes, and is not within the jurisdiction of the Commission; and that the parties may choose to have the funds held only by a registered or licensed real estate broker. The disclosure requirements of paragraph (1) of this rule also apply to a licensed salesperson or broker-salesperson who is registered with the real estate broker and is involved in any aspect of the rental transaction. (3) The disclosure requirements of paragraph (1) of this rule shall not apply when the funds are to be deposited in an attorney's trust account or with a title insurance company. The text of the proposed rule as noticed in the Florida Administrative Weekly formed the basis for the challenge considered through the final hearing and the opportunity for post-hearing argument through proposed final orders by the parties. The proposed rule was offered for adoption in recognition that some real estate brokers engaged in the related activity of rental property management through the establishment of management companies that are separate from the brokerage activities. In particular, the Commission discovered that following brokerage activity in association with the rental of real property, through a licensed real estate company, by signing contracts between the affected parties, monies collected are placed with the management companies for future administration by those companies. The management companies are not licensed by the Commission and are outside the Commission's jurisdiction. As a consequence of the placement of the monies collected with the management company and not the brokerage firm, when the Commission's auditors went to brokers offices to audit trust accounts involved with rental property, the brokers would refuse to allow audits to be performed. The basis of refusal was premised upon the transfer of the money to the management company from the real estate brokerage company, outside the Commission's jurisdiction. In association with this practice, the Commission has received consumer complaints in which it was revealed that the consumers were unaware that they were dealing with two separate firms in the transactions related to the rental properties, the one firm being the brokerage firm and the other the management company. This transpired in a setting in which the consumers were not aware that the funds deposited were being held in the unregulated management company account. The realization of these developments led the Commission to propose the subject rule for adoption, with the expectation that consumers would be able to make an informed choice concerning the placement of the monies collected in relation to the rental properties. As proven by the Commission, audits by its investigators of the records of realtors would not increase the amount of time necessary to perform the audit function if the proposed rule was imposed on the regulated community. Instead, the time necessary to perform the audit function would be diminished. Following the presentation of the Commission's case, the Association failed to refute this proof concerning the costs to the Commission to enforce the terms of the proposed rule or to offer proof concerning costs to members of the Association to comply with the proposed rule.
The Issue Whether petitioner should take disciplinary action against respondents, or either of them, for the reasons alleged in the administrative complaint?
Findings Of Fact Respondent Eglin Realty, Inc., holds a real estate broker's license, No. M14 0024352, last renewed before the hearing on April 1, 1986. Petitioner's Exhibit No. 1. A Florida corporation, Eglin was originally licensed in 1971, (T. 47) or, at least, has been "in business since 1971." (T. 22) Seventy-two years old at the time of hearing, Eglin's president, Leon F. Bishop, has never held a real estate license but he has developed several subdivisions (T. 50) and "was buying and selling land all of [his] life." (T. 51) In 1982, Mr. Bishop, his wife and daughter owned stock in Eglin. Of 50 shares authorized and outstanding, he owned one share; his wife owned ten; and his daughter owned the remaining 39. In July of 1982 and for some time before, respondent Jerry L. Armstrong, himself in the real estate business for 25 years, believed he was registered as the "active broker" (T. 231), for Eglin Realty, Inc., and as a qualifying real estate broker for Armstrong and Associates, Inc.; and, he was "fairly certain . . . [that he] had an individual license at that time also." (T. 234) Arguably, nobody was registered as Eglin's "active broker" in July of 1982, because Eglin's real estate broker's license expired, at least by its own terms, on March 31, 1982. Apparently through oversight, Eglin had not renewed the license. Petitioner's Exhibit No. 1. For four or five (T. 24) years before, however, Mr. Armstrong had indeed been registered as Eglin's qualifying broker. On December 10, 1982, Mr. Armstrong, who is now a "broker-salesman with Coldwell-Banker Deep South Realty Corporation," (T. 230) resigned as "vice president director and active real estate broker for Eglin Realty, Inc., effective December 19, 1982," Petitioner's Exhibit No. 1, which resignation Mr. Bishop and his wife Dorothy, then Eglin's other two officers and directors, duly accepted. Id. Only the following August, after Eglin chose Joan A. Ritteman to succeed Mr. Armstrong, did Eglin learn that its license was to have expired in March of the preceding year. On October 13, 1983, Eglin made application for "late renewal," tendering a $15 late fee in addition to the $40 renewal fee. Petitioner's Exhibit No. 1. With the grant of this application, Eglin has been registered with DPR as a real estate broker, Ms. Ritteman being the firm's sole qualifying broker since then. King's Lake Property When Mr. Bishop met Dr. and Mrs. William D. Permenter at a land auction in Walton County in early 1982, he gave them a business card like the one that came in evidence as Petitioner's Exhibit No. 10. (T. 93) "Eglin Realty, Inc." appears in the center of the card above the phrase "Land and Farm Broker." The upper right corner bears the Realtor logo under the words "Reg. Real Estate Broker." The lower left corner reads "Leon Bishop President." The upper left corner has telephone numbers, and the remaining corner gives a mailing address. The Permenters mistook Mr. Bishop for a registered real estate broker, when he introduced himself. Some days after the auction, Mr. Bishop arranged to show one or both of the Permenters a large tract he owned, but failed to interest them in it. It occurred to him that they might be willing to invest instead in the 1,527-acre parcel that Hubert Alberton Bell and C. J. King, Jr. of Defuniak Springs owned jointly in Walton County, property which the owners had listed for sale with Angus Guinness Douglass, Jr. of Douglass Realty, Inc. Mr. Bishop may have learned of this parcel's availability from Mr. Douglass at the very auction at which he met the Permenters. Under the terms of the listing agreement, Douglass Realty was entitled to a ten percent commission if a sale of the whole parcel could be arranged, at $1,000 per acre, within 100 days of May 3, 1982. Petitioner's Exhibit No. 7. Before showing the Permenters the land Messrs. Bell and King hoped to sell (the King's Lake property), Mr. Bishop approached Mr. Douglass, and proposed that Douglass Realty, Inc. share with Eglin any commission arising from a sale of the King's Lake property to buyers Mr. Bishop or Eglin might procure. In a letter dated July 4, 1982, and signed by respondent Armstrong, Petitioner's Exhibits Nos. 3 and 11, Eglin's share of the anticipated commission was specified. The letter concluded: The undersigned [Jerry L. Armstrong] agrees by this letter to authorize Leon Bishop, as president of Eglin Realty, Inc., to personally deliver this agreement and to accept on my behalf, as the active licensed Florida real estate broker. Petitioner's Exhibit No. 3. Mr. Douglass felt free to deal with Mr. Bishop with regard to the commission both because of Mr. Armstrong's letter and because he knew of no "real estate law that said [he] had to ask, or say, let me see his license before I talk to him." (T. 209) At no time did Mr. Douglass speak to Mr. Armstrong about the transaction. (T. 211) Agreement as to the commission split having been reached, Mr. Bishop showed the Permenters the King's Lake property, and, in early July, Dr. Permenter offered to buy it. After "Mr. Bishop told [Dr. Permenter that his offer] had been accepted," (T. 97) the transaction closed on July 28, 1982, in a lawyer's office in Defuniak Springs. Present were the lawyer, Mr. Bishop, Mr. Douglass, Mrs. Douglass, Mrs. Permenter and the principals. In exchange for a deed in favor of Dr. William Permenter and assigns, the vendors received a purchase money mortgage in the amount of $1,275,000, together with the balance of the $1,425,000 sales price, less various transaction costs, notably a $25,000 initial payment toward a brokerage commission totalling $118,587. Eglin's Exhibit No. 3. At no time before the final hearing in the present case did Dr. Permenter ever see Mr. Armstrong. (T. 97) In accordance with a revised commission agreement dated July 6, 1982, and executed by Messrs. King, Bell, Douglass and (on behalf of Eglin) Bishop, Eglin's Exhibit No. 2, and consistently with the earlier agreement between Eglin and Douglass, Petitioner's Exhibit No. 11, Mr. Douglass drew a $10,000 commission check in favor of Eglin, keeping $15,000 as Douglas Realty, Inc.'s share of the initial commission payment. (T. 212) Also in keeping with Eglin's Exhibit No. 2, Messrs. King and Bell each executed a promissory note in favor of Eglin in the amount of $21,682, bearing interest at ten percent, payable in three annual installments. Petitioner's Exhibits Nos. 8 and 9. These notes represented the remainder of the commission owed Eglin. (The vendors also made and delivered notes payable to Douglass for unpaid commission owed Douglas Realty, Inc.) Sharing The Commission Mr. Bishop was Eglin's only salaried employee, (T. 50) and also sometimes borrowed money from the corporation. Although a monthly salary of $1,000 was authorized "[i]n the minutes," (T. 57) "[t]here was never no set amount of salary that [Mr. Bishop] would get," Id. from Eglin in 1982. Sometimes he drew no "money for a few months, and then . . . would get a large sum." (T. 57) "Whenever [he] wanted to get money from the corporation, [he] asked for it, and . . . got it." (T. 58) He "didn't make a request to Mr. Armstrong." (T. 61) His wife had authority to write checks against the Eglin account into which the $10,000 commission check delivered at the King's Lake property closing was deposited. (T. 62) After the deposit, Mr. Bishop asked his wife or daughter for some of the money, and Mrs. Bishop drew a check in her husband's favor for $5,000 or thereabouts on the Eglin account. The totality of the evidence makes it clear that this payment, whether characterized as salary or not, was compensation for his procuring Dr. Permenter as a buyer and otherwise facilitating the sale of the King's Lake property. For one thing, "[t]he only transaction [Eglin] had during that period of time was the King's Lake [property]." (T. 254) Mr. Bishop and Mr. Armstrong "had an agreement from the start that anything [Bishop] bought and sold would go through [E]glin Realty, due to the fact that there would be a commission there, and [Armstrong] would be entitled to some of the commission." (T. 250) Mr. Armstrong professed to believe that Mr. Bishop "was operating as an owner" (T. 236) when Messrs. King and Bell sold the King's Lake property. Mr. Armstrong also testified, falsely but under oath, that he, not Mr. Bishop, negotiated the commission sharing arrangement with Mr. Douglass, the implication being that he thereby earned a portion of the commission Eglin received. In any event, Mr. Armstrong believed himself entitled to a share of the King's Lake property commission. He directed that his share be applied against outstanding loans totaling $3,500 to $4,000 which Eglin had made to him. (T. 248) Ten Percent Dr. Permenter, who has abandoned the practice of medicine in order to devote more time to real estate development, acquired the King's Lake property planning to subdivide it and sell lots. First, he caused the property to be divided into several large tracts, some of which he conveyed into trust. One tract, dubbed King Lake Estates, was conveyed to a partnership Dr. and Mrs. Permenter entered into with each other. Much, if not all of this tract, was subdivided into lots. At some point, Mr. Bishop agreed to sell the lots, and to assist development in other ways. To that end, he and his daughter spent time in a trailer on the property. The Permenters agreed to pay Mr. Bishop ten percent of the sales price of any lot he sold. In keeping with this agreement, Mrs. Permenter wrote him several checks on behalf of the partnership. On August 29, 1983, Mr. Bishop and the Permenters executed a written agreement memorializing their arrangement, reciting that some 83 lots had already been sold under it, and conveying to Mr. Bishop "a $2500.00 life interest" in the Kings Lake Estates tract. Petitioner's Exhibit No. 2. A purpose of this agreement was to create a legally enforceable right in Mr. Bishop to the ten percent share of sales proceeds the Permenters were then regularly paying him as lots were sold. Mr. Bishop never had any ownership interest of any kind in any portion of the King's Lake property other than the King Lake Estates tract. When Dr. Permenter sold a Kings Lake Estates lot himself, Mr. Bishop did not receive ten percent of the proceeds. (T. 100) Notes Discounted After he began selling lots for the King Lake Estates partnership, Mr. Bishop told the Permenters he needed money, and asked if they would take the notes Messrs. King and Bell had given Eglin for the remainder of the commission, in exchange for undertaking monthly payments to Eglin. Some time remained before the next annual payments called for in the notes which King and Bell had executed in favor of Eglin when they sold the King's Lake property. The Permenters were agreeable, what with the substantial sums Dr. Permenter still owed the notes' makers. In order to transform annual payments into monthly payments, Mr. Bishop, on behalf of Eglin, endorsed the notes Messrs. King and Bell had given Eglin, in favor of Dr. and Mrs. Permenter. In return, Dr. and Mrs. Permenter executed a promissory note with specified amounts payable monthly to Eglin. It was after this had been accomplished that an investigator from the Division of Land Sales of the Florida Department of Business Regulation advised the Permenters that they were required to register their subdivision with the Department. He also informed them that Mr. Bishop was not licensed as a real estate broker, which came as a surprise to them. Apparently on the theory that the promissory notes they had received in exchange for theirs represented legally unenforceable obligations to pay real estate commissions to an unlicensed entity, Dr. and Mrs. Permenter stopped making payments on their promissory note to Eglin. When Eglin sued on the note, the Permenters filed a counter-complaint alleging that "on July 27, 1983, . . . [Eglin] was not a registered real estate broker and was not entitled to be paid fees." Petitioner's Exhibit No. 6. The litigation eventuated in an amended final judgment awarding Eglin the unpaid balance of the note. Eglin Realty, Inc. vs. William D. Permenter and Elizabeth A. Permenter, No. 85-718-CA (Fla. 1st Cir.; Mar. 30, 1987). An appeal was pending at the time of final hearing in these proceedings.
Findings Of Fact Both Respondent, Terry A. Kilgore (Kilgore), and Respondent, Karen C. Obluck (Obluck), are duly licensed Florida real estate brokers holding license numbers 0317402 and 0387822, respectively. Starting June 1, 1983, both were registered as employees of Florida Leasing Services, along with a third friend, Karen Kolander. It was understood among the parties to the employment agreement that the three friends intended to form their own brokerage company as soon as one of them obtained a broker license. Obluck got her broker license first on or about July 26, 1983, and Kilgore placed her salesman's license with Obluck on or about August 22, 1983. Obluck then attempted to qualify the new corporation the three had formed, "National Investment Properties, Inc." (emphasis added), as a corporate real estate broker. But, due in part to unfortunate technical errors in the application process and in part to Obluck's inadequate appreciation for the significance of legal technicalities, on or about August 19, 1983, Obluck instead qualified "National Investment Properties" as the corporate broker. Starting approximately August 19, 1983, the three began operating their new real estate brokerage business, sometimes using the name "National Investment Properties," as technically officially registered, but more often using the full corporate name, "National Investment Properties, Inc." (emphasis added.) But they omitted to have Kilgore's salesman's license transferred to the corporate broker license until she got her broker's license and tried to place it under the corporate broker license on March 14, 1984. Because of the technical errors in qualifying the corporate broker, the Department placed Kilgore's broker license under Obluck, an individual broker trading as National Investment Properties. By the time Obluck was notified in March, 1986, that the corporate broker had not been registered properly, Kilgore was no longer working with Obluck's company. On or before June 23, 1983, while still employed by Florida Leasing Services but anticipating the formation of the new business under the name Obluck had reserved at the time (Investment Properties of Central Florida, Inc.), Kilgore contacted fellow licensee, Robert R. Elkin (Elkin), an employee of Sun-Tan Realty, Inc. 1/ in an effort to help a client, U.S. Homes Corporation, find real property to buy. Elkin had an exclusive listing on five acres of property owned by Manor Care, Inc., and he and Kilgore negotiated a deal between the parties on June 23. On June 24, Kilgore and Elkin signed a "Cooperation Agreement Between Brokers" on the Manor Care property, providing that the two brokers involved would divide equally any brokerage commission. But when Elkin presented U.S. Homes' signed offer to his client, Manor Care rejected it, asking for more money. U.S. Homes refused to increase its offer. Kilgore passed this information on the Elkin, and the deal fell through. Kilgore then asked Elkin if he knew of any other land available for sale that might be of interest to U.S Homes. Elkin gave her the name of Dr. Michael Tedone as the owner of approximately 16 acres at County Road 581 and Skipper Road for sale at approximately $972,000. Trying to generate business, Elkin had located Tedone's name as owner of the 16 acres on microfiche records in his office and first spoke to Tedone by telephone in approximately October, 1982. Elkin asked if the property was for sale. Tedone said it was for sale for the right price, $972,000, but that it was not actually on the market. Elkin asked if Tedone would pay a commission if Elkin found a buyer. Tedone said he would but it would have to be negotiated. Elkin asked for some information about the property and asked for a survey. Elkin picked up a survey from Tedone's office and put together an information packet on the property for use in crying to find a buyer. Between October, 1982, and July, 1983, Elkin distributed the packet to a handful of builders and land developers he thought might be interested in the property or know a prospective buyer. Elkin spoke to Tedone about three more times by telephone before approximately April, 1983, confirming that the property was still for sale at $972,000. He never met Tedone and did not have any contact with him in May or June, 1983. He was never even aware that there was a co-owner of the property, a James Carlstedt. Because of what had happened on the Manor Care deal, Kilgore asked if the price was firm. Elkin replied that he had not verified the price in several months and would have to check. He said he would give her an information packet on the property and verify the price. Kilgore got part of the information packet on or about July 5, 1983, but Elkin told her that Tedone was out of town and that Elkin had not yet been able to verify the price. At this point, the evidence began to diverge sharply. The Department attempted to prove through Elkin's testimony that Elkin got Kilgore to agree to co-broker this property under the same terms as the "Cooperation Agreement Between Brokers" for the Manor Care property. He says he added the Tedone property to the list of properties covered on his copy of the agreement shortly after July 5, 1983. He also says he asked Kilgore not to show the information to U.S. Homes until he had a chance to verify the price. But, he says, Kilgore disregarded his request and, on the following Monday (three days later), Kilgore called back to say U.S. Homes was ready to sign a contract at $972,000. Elkin says he then was able to contact Tedone to relay the offer and was told that the price was too low and the Tedone wanted $70,000 an acre for the property. Elkin says he relayed this to Kilgore and that he never heard back. Kilgore, on the other hand, testified that she never agreed to co-broker the Tedone property and that Elkin never asked her not to show U.S. Homes the information on the property. She says she waited for Elkin to verify the price but that he kept making excuses why he had not been able to contact Tedone. Kilgore says finally she went to Tedone herself to get the information. She testified that she made an appointment to see Tedone and showed him the information Elkin had given her. She says Tedone's response was: "I don't know who this [Elkin and Sun-Tan] is but the information is wrong." Kilgore says Tedone never acknowledged that he knew Elkin or had any agreement with him to broker the property. Kilgore says she therefore negotiated the deal for U.S. Homes directly with Tedone and Carlstedt, completely independent of Elkin, and successful concluded negotiations on July 20, 1983. The sales price for the property was $1.1 million; the brokerage commission to National Investment Properties, Inc., was 2 1/2 percent or $27,500. Kilgore testified that she never heard from Elkin again until approximately March, 1984, after the January 9, 1984, closing of the deal, and that she assumed Elkin had abandoned the deal. The key to resolution of the sharp differences between the testimony of Elkin and Kilgore is Tedone. But, for reasons not explained, Tedone did not testify. Without Tedone's testimony to corroborate Elkin's testimony, the Department's case was insufficient to prove the truth of the facts to which Elkin testified. Elkin brought Tedone another prospective buyer in August, 1983. Tedone told him he already had a contract. Elkin did not ask for details. Instead, he began to try to locate Kilgore, who by this time was working for National Investment Properties, Inc., (National) under Obluck. He did not confront Kilgore and Obluck until approximately March, 1984. They confirmed that the property had been sold to U.S. Homes. Elkin demanded a share of the brokerage commission. Kilgore replied that he had abandoned the deal, leaving Kilgore to try to complete the deal herself, and that he was not entitled to any share of the brokerage commission. Obluck knew generally that Kilgore had negotiated a deal between U.S. Homes and Tedone and Carlstedt and that, after a short delay, the deal closed in January, 1984. But Obluck knew none of the details of what had transpired between Kilgore and Elkin. On the other hand, Kilgore knew generally that Obluck had taken steps to properly qualify National as a corporate broker. But she did not know or inquire into any of the details of the qualification process. She left National on or about August 23, 1985, long before the Department notified Obluck in March, 1986, that National was not properly registered. Kilgore, however, must take personal responsibility for failing to take any steps between August 19, 1983, and March 11, 1984, to have her salesman's license transferred from Obluck, individual broker, to National. See Finding Of Fact 1, above. The technical licensure errors made by Obluck and Kilgore, referred to in Findings Of Fact 1 and 12, above, should have come to the Department's attention before March, 1986. On March 11, 1984, Kilgore applied to place her new broker license under "National Investment Properties, Inc.," and the Department accepted the application and placed it under Obluck, trading as National Investment Properties. On March 1, 1985, Kilgore applied to change her personal mailing list, showing her employing broker as "National Investment Properties, Inc.," and the Department accepted the application. The Department did not take either of these opportunities to notify Obluck and Kilgore that the corporate broker had not been properly qualified and registered. On November 13, 1984, the Department received notification from Obluck, "doing business as National Investment Properties, Inc.," that she had lost her license. The Department simply struck through the "Inc." on the notification but did not give Obluck any explanation why. The technical licensing errors referred to in Findings Of Fact 1 and 12, above, were not intentional or intended to deceive. They were inadvertent oversights that Obluck and Kilgore would have cured if they were aware of them. When the Department notified Obluck of the oversights in March, 1986, she immediately had National properly qualified and registered as a corporate broker.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that the Florida Real Estate Commission enter a final order: (1) holding both Respondent, Karen C. Obluck, and Respondent, Terry A. Kilgore, guilty of a technical violation of Sections 475.42(1)(b) and 475.25(1)(a), Florida Statutes (1985); (2) imposing a $500 administrative fine against Respondent, Karen C. Obluck, for her violation; (3) reprimanding Respondent, Terry A. Kilgore, for her violation; and (4) dismissing all other charges. RECOMMENDED this 16th day of January, 1987, in Tallahassee, Leon County, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16th day of January, 1987.
Findings Of Fact Based upon the documentary evidence received, my observation of the witnesses while testifying and the entire record compiled herein, I hereby-make the following findings of fact: Respondent, Harry Gorman, is presently, and has been since September 1982, a licensed real estate salesman in the State of Florida (license number 0229673). Respondent is the owner of Lee County Property Exchange, Inc. Lee County Property Exchange, Inc. is organized for the primary purpose of buying and selling real estate lots. The company customarily buys a group of unimproved residential lots and sells them to "wholesalers". Ms. Mary A. Bosley responded to a mass mail advertisement provided by Lee County Property Exchange. Thereafter, on March 31, 1983, Respondent, acting for Lee County Property Exchange as purchaser,, entered into two sales contracts for the purpose of buying two unimproved residential lots with Mary A. Bosley, as seller. Ms. Bosley was represented by counsel at the signing of the contracts. The contracts provided that the purchase price for each lot would be $1,000. The transaction was to close on or before August 1, 1983. The transaction did not close as anticipated on August 1, 1983. From approximately August 22, 1983 to March 15, 1985, Respondent requested and was granted four six month extensions of the closing date. Ms. Bosley granted each extension because she wanted to sell the lots. In accordance with the terms of the contracts between Ms. Bosley and Lee County Property Exchange, two $25.00 earnest money deposits (EMD) were to be held in escrow by Lehigh Title Company, Inc. On April 21, 1983, Ms. Barbara Mast, president of Lehigh Title Company, received the two contracts with the accompanying $25.00 EMD's and "opened a file". Ms. Mast was later informed that the Bosley contracts were "on hold". on March 19, 1985, after the expiration of the final extension of closing date granted by Ms. Bosley, Mr. Burney J. Carter, Esquire, attorney for Ms. Bosley, mailed a letter to Mr. Gorman demanding return of the two $25.00 EMD's. Lehigh Title Company did not receive a request from Ms. Bosley nor Respondent that the two EMD's be taken out of escrow. Neither Respondent nor Ms. Bosley received the two $25.00 EMD's back from Lehigh Title Company. Respondent, upon speaking with a DPR investigator, did not agree to personally mail a check to Ms. Bosley, for the two $25.00 EMD's, but stated that, in his view, Ms. Bosley was entitled to return of the money and that Lehigh Title Company was responsible for sending it to her. Respondent failed to close the two transactions as purchases for economic reasons.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be issued finding the Respondent Harry G. Gorman, not guilty of the allegations contained in the Administrative Complaint. DONE and ORDERED this 29th day of January, 1986 in Tallahassee, Leon County, Florida. W. MATTHEW STEVENSON, 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 29th day of January, 1986. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire; Department of Professional Regulation 400 West Robinson Street Orlando, Florida 32801 Jack J. Pankow, Esquire P. O. Box 580 Ft. Myers, Florida 33902 Fred Roche Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff Executive Director Department of Professional Regulation Division of Real Estate 400 West Robinson Street O. Box 1900 Orlando, Florida 32802 APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner The parties were given 20 days from the date the original transcript was filed with the Division of Administrative Hearings in which to file their proposed findings. Petitioner failed to submit any proposed findings of fact within the specified time limits. Rulings on Proposed Findings of Fact Submitted by the Respondent Adopted in Findings of Fact 2, 3 and 4. Adopted in Finding of Fact 10. Partially adopted in Finding of Fact 8. The evidence was unclear as to whether the two $25.00 EMD's were in the escrow account up to the date of hearing. Adopted in Finding of Fact 7. Adopted in Finding of Fact 8. Adopted in Finding of Fact 8, (noting the obvious typographical error in Respondent's failure to include the word "not" between "has" and "made"). Partially accepted in Findings of Fact 2, 3 and 4. Respondent's assertion that "Harry Gorman was not acting in his professional capacity as a licensed real estate salesman "is rejected as a conclusion of law and as unnecessary to a resolution of this case. The Respondent, as a licensed real estate salesman, could be subject to discipline for fraud, misrepresentation and/or breach of trust in a business transaction whether or not the fraud, misrepresentation or breach of trust occurred during the course of his "real estate activities".
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Katherine Tyson is now and was at all times material hereto a licensed real estate salesperson in the State of Florida, having been issued license number 0312196 in accordance with Chapter 475, Florida Statutes. The last license issued was as a salesperson, with a mailing address of 1411 N.W. 40th Street, Miami, Florida 33142. During the period from approximately March 1992 through approximately March 1993, the Respondent and Denis Michel, acting in concert with one another in their own names and/or under the business name of Katherine Karrington & Associates, Inc., operated as, and represented themselves as, real estate brokers and/or mortgage brokers. Operating and representing themselves in this manner, the Respondent and Michel solicited persons to entrust them with funds to be used in connection with proposed real estate and/or mortgage loan transactions, as follows: Name of Person Amount of Funds Entrusted Raymonvil $ 1,828 Eline 3,550 Pierre-Louis 5,500 Roberts 2,600 Blot 2,750 Francois 2,546 $18,774 TOTAL Through and including the date of the filing of the Administrative Complaint, none of the proposed transactions for which the above funds were entrusted has been completed, and none of the funds have been returned despite numerous demands therefor. At all times material hereto, neither the Respondent, nor Denis Michel, nor Katherine Karrington & Associates, Inc. was licensed as a real estate broker or mortgage broker or lender pursuant to Chapters 475 or 494, Florida Statutes, except that the Respondent became licensed as a mortgage broker on or about February 10, 1993, approximately two months after the last of the aforementioned entrustments of funds had occurred. At various times material hereto, the Respondent was registered with the Petitioner as being the employee of licensed real estate brokers Atlas Realty & Investments, Inc., 11626 N.E. 2nd Avenue, Miami, Florida 33161-6104 (hereinafter, "Atlas") or Murray Realties of Hollywood, Inc., 2843 Hollywood Boulevard, Hollywood, Florida 33020-4226 (hereinafter, "Murray"). However, in connection with the proposed transactions referred to hereinabove in paragraph 4, neither the Respondent nor Denis Michel: disclosed the existence of the transactions to Atlas or Murray; represented themselves as acting on behalf of Atlas or Murray; and delivered or paid over any of the entrusted funds to Atlas or Murray.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Real Estate Commission issue a final order in this matter finding Respondent guilty of violations of Subsections 475.25(1)(b),(d),and (e) and 475.42(1)(a) and (d), Florida Statutes, imposing a $5,000 administrative fine, and revoking Respondent's license. DONE AND ENTERED this 27th day of December, 1993, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of December, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-3362 To comply with the requirements of Section 120.59(2), Fla. Stat. (1991), the following rulings are made on Petitioner's proposed findings of fact: Petitioner's Proposed Findings of Fact. Paragraph 1 - Adopted. Paragraph 2 - Adopted. Paragraph 3 - Adopted. Paragraph 4 - Adopted. Paragraph 5 - Adopted. Paragraph 6 - Adopted. Paragraph 7 - Adopted. Paragraph 8 - Adopted. COPIES FURNISHED: Ms. Katherine Tyson 6709 Ficus Drive Miramar, Florida 32023 Theodore R. Gay, Esquire Senior Attorney Department of Business and Professional Regulation 401 Northwest 2nd Avenue Suite N-607 Miami, Florida 33128 Jack McRay Acting General Counsel Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900
Findings Of Fact At all times relevant hereto, respondent, Michael Leon Thomas (Thomas), held real estate salesman license number 00088326 issued by petitioner, Department of Professional Regulation, Division of Real Estate (Division). He has been licensed by petitioner since at least 1981. When the events herein occurred, Thomas was registered as a salesman with Mike Lally Real Estate Company, Inc., a firm in Miami, Florida. Presently, Thomas is associated with Captain Realty, Inc. in Dania, Florida. Thomas is a full-time airline captain with a major air carrier. When not flying, he has successfully pursued a second career in real estate investments. On occasion, these endeavors have involved other airline personnel with whom he works. The complaint herein relates too one such investment endeavor involving a retired flight attendant (and her brother) who felt she did not receive all monies due on a $10,000 investment made in 1982. The origins of this story go back to the late spring or early summer of 1982 when one Waler B. Duke, Jr. (Duke), also an airline captain and then a business partner of Thomas in a corporation, signed a contract, as trustee, to purchase two small but valuable parcels of property at the corner of I-95 and Stirling Road in Dania, Florida. Thomas, who has an eye for a good investment, had initially spotted the property and, with the foresight of a clairvoyant, realized that after rezoning and certain improvements, the property could be turned over for a handsome profit. According to the contracts received in evidence as petitioner's exhibits 3 and 4, Duke, as trustee for a "Florida Limited Partnership to he formed," agreed to pay a total of $271,000 for the two parcels. The closings were to be held that fall, and eventually took place on October 19 and November 23, 1982. Like other entrepreneurs, Duke and Thomas needed capital to complete the deal. To acquire such capital, Duke and Thomas contacted various acquaintances who they thought would be interested in making a good return on an investment. One of the persons contacted by Duke was Kathleen Ireland (then Kathleen De Bellas). At that time Ireland was a non-practicing lawyer and an active flight attendant for the same airline for which Thomas worked. However, Ireland and Thomas did not know each other. With other potential investors, Ireland attended a meeting hosted by Duke in September, 1982 explaining the fundamentals of the deal. Thomas was not present at that meeting, and was unaware of the representations made by Duke to Ireland. In addition to Duke's pitch, Ireland received from him an unsigned copy of a trust agreement and various other documents concerning the matter, including a proposal containing a pro forma statement. The Duke-Thomas investment was set up in the form of a limited partnership (known as Stirling 95 Land Trust) with Thomas-Duke Enterprises, Inc. (TDI) acting as the general partner, (presumably to shield Duke's and Thomas' personal liability), and the investors assuming the role of limited partners. Each share required an investment of $10,000. After she had reviewed the material given to her by Duke, Ireland decided to make an investment, and with her brother Joseph, she committed $10,000 to the project, which represented a one-seventeenth interest in the partnership. Ireland thereafter received two copies of the "trustee and joint venture agreement," one of which she signed and returned to Duke. Other investors in the venture included at least one lawyer, an array of airline pilots, and a property manager. In all, Duke and Thomas collected $155,000 in investment capital. Just exactly what Duke said to Ireland at the meeting in September, 1982 is not of record since Duke did not testify at final hearing, and the record contains only hearsay declarations concerning these statements. However, paragraph 2.3 of the trustee agreement provided that Duke and Thomas would receive a 6 percent sales commission from the transaction, while the pro forma statement reflected the partnership would acquire the property at a cost basis of $4.00 per square foot, or a total cost of $318,506. This was approximately $47,500 more than Duke would actually pay to acquire the property under the two outstanding contracts. It is this latter amount that eventually piqued the curiosity of Ireland, and resulted in her filing a complaint with the Division of Real Estate and a lawsuit against Thomas in Broward County circuit court. What Thomas did in this case was no different than his actions on numerous other prior and subsequent deals. Because he had used his expertise in locating the property, and putting together the deal, Thomas "stepped-up" or increased the cost of the property for the limited partnership to $4.00 per square foot in order to realize an entrepreneurial fee for himself and Duke. This was a common practice in limited partnership arrangements. The fee was paid to Thomas and Duke by separate checks, was not labeled as a commission, and was not intended to be one. Indeed, their fee ($47,500) was compensation for their expertise. The only problem was Ireland claimed Duke did not disclose this fee to her prior to her investment, and she now contends she is entitled to one-seventeenth of this amount. But, even if the nondisclosure contention is true, Thomas did not authorize Duke to omit this information when he explained the deal to potential investors in September, 1982. As to the investors obtained by Thomas, they are all pleased, and were aware of the markup. In the words of one investor who testified at final hearing, Thomas was entitled to this fee for putting together the deal and allowing small investors like him to participate in such a fine investment. It is noteworthy that of all the investors, only Ireland was dissatisfied. After learning of the $47,500, Ireland contacted Thomas and requested an accounting. She told him she was unaware of the fee, and that she needed the true cost of the property to compute her cost basis for tax purposes. 2/ But her real concern was her failure to get a pro rata cut of the entrepreneurial fee. After his explanation did not satisfy her, Thomas asked the trustee's attorney to have an accountant prepare an "explanation and reconciliation" of funds he received from the Stirling 95 Land Trust. An unsigned draft copy of a report was sent to her on February 29, 1984. The accountant who purportedly prepared the report was not at final hearing, and the contents of such report are clearly hearsay and are deemed to be unreliable. In 1984, Thomas bowed out of the limited partnership because of Ireland's complaints. The partnership has continued, however, and the property was sold in December, 1985 for $11.00 per square foot, or almost a 200 percent return for the investors. This was a higher return than was forecast in the pro forma statement. When Thomas learned of Ireland's dissatisfaction in 1983 or early 1984, he offered to return her $10,000, as well as the one-seventeenth of the markup on the fee. Not wanting to give up a good return on her investment, Ireland declined the offer and is now pursuing the matter in circuit court.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Counts III and VI of the administrative complaint filed against respondent be DISMISSED, with prejudice. DONE AND ORDERED this 24th day of February, 1987, in Tallahassee, Leon County, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of February, 1987.
The Issue Should Respondent's license as Florida real estate salesperson be disciplined for the alleged violations of certain provisions of Chapter 475, Florida Statutes, as set forth in the Administrative Complaint filed herein, and, if so, what penalty should be imposed?
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant findings of fact are made: The Department is the agency of the State of Florida vested with the statutory authority to administer the disciplinary provisions of Chapter 475, Florida Statutes. Respondent, at all times relevant to this proceeding, was licensed as a real estate salesperson in the State of Florida, having been issued license number SL-0669595, and subject to the provisions of Chapter 475, Florida Statutes. At all times relevant to this proceeding, Respondent worked as a real estate salesperson in the ReMax real estate office owned by a Lydia Trotter. At all times relevant to this proceeding, Respondent worked under the control and direction of Lydia Trotter, a real estate broker. On July 30, 1999, Respondent entered into a contract with Oye Jeon to sell her a certain parcel of real estate for the purchase price of $99,000.00 and received a deposit in the amount of $30,000.00 from Oye Jeon. Respondent failed to inform Oye Jeon that he did not own the property and did not have a contract to purchase the property from Mr. McClelland, the owner of the parcel of property. Respondent paid a finder's fee in the amount of $10,000.00 to Mr. and Mrs. Song for finding a buyer (Oye Jeon) for this parcel of property. At all times relevant to this proceeding, neither Mr. Song nor Mrs. Song was licensed as a broker, broker salesperson, or salesperson under the laws of the State of Florida. Respondent did not own or have a contract to purchase the parcel of property in question from Mr. McClelland, the owner of the property, at the time Respondent entered into the contract to sell this parcel of property to Oye Jeon on July 30, 1999. Respondent eventually purchased this parcel of property from Mr. McClelland (apparently after the contract with Oye Jeon was entered into) but has never honored the contract with Oye Jeon or returned her $30,000.00 deposit. Respondent has never deposited the $30,000.00 received from Oye Jeon with his broker, Lydia Trotter.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law and a review of the Disciplinary Guidelines set out in Rule 61J2-24.001, Florida Administrative Code, it is RECOMMENDED that the Department enter a final order finding Respondent, Seyed R. Miran, guilty of violating Subsections 475.25(1)(b), (e), (h), and (k), Florida Statutes, and revoking his real estate salesperson's license. DONE AND ENTERED this 22nd day of May, 2003, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 22nd day of May, 2003. COPIES FURNISHED: James P. Harwood, Esquire Department of Business and Professional Regulation 400 West Robinson Street Suite N308 Orlando, Florida 32801-1772 Seyed R. Miran 8505 North Orleans Avenue Tampa, Florida 33604 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Nancy P. Campiglia, Acting Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Suite 802, North Orlando, Florida 32801-1772
Findings Of Fact Clarence A. Walker is a registered real estate broker who held license number 0092482 issued by the Florida Real Estate Commission. Walker was the broker in a transaction between David H. Brown, purchaser, and Phillip E. Jones, Seller. Walker received a $10,000 dollar check as earnest money from Brown. Walker deposited this money into account number 419-400 at the Peoples Bank of Lakeland, Lakeland, Florida. Walker received the check on July 1, 1976, but did not deposit it until July 7, 1976. At closing on the Brown-Jones transaction, Walker was unable to deliver the $10,000 deposited with him. According to Walker, he had used the money for his own purposes. Walker subsequently arranged to repay the money ($4,000) by giving a note secured by a mortgage on his home. Becky Elliot had an exclusive right of sale on Jones' property. Elliot asserted a claim against the commission payable by Jones to Walker. However, there was no written agreement, no oral agreement, and no custom established by prior practice which entitled Elliot to a share of the Walker commission. Walker's contract with Jones called for a $6,000 commission. Jones entered this contract after rejecting a contract presented by Elliot. Jones advised Elliot that he would accept Walker's contract and asked her to contact Walker for him. Jones may have been obligated to pay a commission to both Elliot and Walker, but there is no basis for Elliot's claim for a portion of the escrowed moneys. Walker was also broker on a transaction between West Lakeland Venture, as seller, and Bobby J. Thomas, as purchaser. Thomas paid Walker $10,000 as a deposit receipt. Thomas received the check on July 14, 1976, and deposited it on July 15, 1976, however, he deposited it so late on July 15, 1976, that it was marked received by the bank on the banking day of July 16, 1976. This check was deposited to the same account as the $10,000 in the Jones/Brown transaction. Walker acted as broker in a transaction in which Dr. L. C. Taylor offered to purchase certain real property known as Beal-Ariana-12. Walker received $500.00 from Dr. L. C. Taylor, which he deposited to account number 101-158-56 in Imperial Bank of Lakeland, Lakeland, Florida. This account was designated Walker's escrow account. With the deposit of this check, the day's ending balance was $253.40. Subsequently, Walker repaid Dr. Taylor $500.00 when his offer was rejected from account number 419-400 at Peoples Bank of Lakeland, Lakeland, Florida. This account was not designated an escrow account, it's records showed withdrawals payable to cash, and it was from this account Walker misappropriated funds sufficient to impair his ability to produce the $4,000 due on the Jones/Brown transaction less Walker's $6,000 commission. It is clear from the evidence introduced that the escrow account in the Imperial Bank and the undesignated account in Peoples Bank were both impaired as a result of Walker's misappropriation of moneys from these accounts This indicates a course of conduct in which Walker misused moneys entrusted to him in a fiduciary capacity. Walker's only defense was that his wife had committed suicide and that for a period of approximately one year he "went wild," together with his efforts to make restitution on the Brown/Jones transaction.
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that the registration of Clarence A. Walker as a real estate broker be revoked. DONE and ENTERED this 12th day of December, 1977, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 12th day of December, 1977. COPIES FURNISHED: Frederick H. Wilsen, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Clarence A. Walker 108 East Palmetto Street Lakeland, Florida 33801 Charles R. Mayer, Esquire Post Office Hex 205 Lakeland, Florida 33802 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION FLORIDA REAL ESTATE COMMISSION, An agenct of the State of Florida, Petitioner, PROGRESS DOCKET NO. 3229 POLK COUNTY DOAH NO. 77-1560 CLARENCE A. WALKER, Respondent. /
