The Issue Whether Respondent violated Section 112.313(6), Florida Statutes, and if so, what penalty should be recommended.
Findings Of Fact Respondent, Nancy J. Sands (Sands), served as the Welaka Town Clerk from May 28, 1993, until December 8, 1994. Welaka is a small town covering approximately one and one quarter square miles. The population is 560. While Sands was town clerk, it was not uncommon for local businesses to buy paper from the town if they ran out and needed paper immediately. Nor was it uncommon for employees of the town to make photocopies of documents for Welaka residents free of charge. The town council later voted to start charging residents for photocopies. Sands is friends with Grace Evans, a resident of Welaka, Florida. In September, 1994, Ms. Evans was at the Welaka Town Hall and saw Sands using a vacuum cleaner. Ms. Evans liked the vacuum cleaner and asked Sands where she had gotten it. Sands showed Ms. Evans a catalog from which Sands had ordered the vacuum cleaner for the town. Ms. Evans asked Sands if she could order her one. Sands agreed to place an order for Ms. Evans. There was no discussion concerning sales tax. Nor was there any thought given by either Ms. Evans or Sands concerning the payment of sales tax on the purchase of the vacuum cleaner. Based on the evidence, it is clear that neither Ms. Evans nor Sands intended to purchase the vacuum cleaner using the town's account number in order to avoid the payment of sales tax. On September 27, 1994, Sands ordered a vacuum cleaner and some accessories from the Wholesale Supply Company in Nashville, Tennessee, using the Town of Welaka's account number. The order was placed during Sands' working hours as the town clerk. Sands advised the Wholesale Supply Company that Grace Evans was the customer for whom the vacuum was being purchased because the invoice which the Wholesale Supply Company sent to the Town of Welaka stated that the customer was Grace Evans. The total price of the merchandise Sands ordered for Ms. Evans was $109.70 plus shipping and handling charges of $5.59. When Sands received the invoice, she wrote "Do not pay already mailed in" on the front of the invoice, indicating that the invoice was not to be paid by the town. The items were purchased at full price and Ms. Evans paid for the items. Ms. Evans did not pay any Florida sales tax on her vacuum cleaner purchase.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered finding that Respondent, Nancy Sands, did not violate Section 112.313(6), Florida Statutes, and dismissing the Complaint against her. DONE AND ENTERED this 18th day of February, 1998, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND 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 Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 1998. COPIES FURNISHED: Bonnie Williams Executive Director Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709 Phil Claypool General Counsel Commission on Ethics Post office Drawer 15709 Tallahassee, Florida 32317-5709 Kerrie J. Stillman Complaint Coordinator Commission on Ethics Post Office Drawer 15709 Tallahassee, Florida 32317-5709 James L. Padgett, Esquire Padgett and Morris 10 Central Avenue Crescent City, Florida 32112
The Issue Should Petitioner discipline Respondent's real estate sales- person's license for alleged conduct evidencing fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes?
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, Petitioner carries out its duties in compliance with Chapters 20, 120, 455 and 475, Florida Statutes and the rules promulgated under authority set forth in those statutes. At times relevant to the inquiry, Respondent was, and is now, a licensed Florida Real Estate salesperson. Her license number is 0591902. That license was issued in accordance with Chapter 475, Florida Statutes. At times relevant to the inquiry, Respondent worked as a licensed real estate salesperson for Ideal Real Estate Central Florida, Inc., t/a Coldwell Banker Ideal Real Estate in Orange City, Florida (Ideal). The broker for that firm was John S. Chinelli. On April 13, 1993, Respondent listed an exclusive right of sale for property owned by Jason and Kelly Foster at 2853 Sweet Springs Avenue, Deltona, Florida. That listing contemplated that Ideal would earn a real estate commission of 7 percent of the gross purchase price. The listing price in the exclusive right of sale was $69,900. In arriving at the sales price, Mr. Foster relied upon Respondent's advice. That advice included a consideration of the price received for the sale of comparable homes. The establishment of comparable prices as a means to arrive at the listing price for the Foster property involved the use of the Coldwell Banker buyer/seller presentation booklet, as well as a marketing analysis. The price $69,900 was chosen to attract those buyers who were looking for homes that cost less than $70,000. That choice was designed to garner more interest in the home. While the Foster home was being advertised, it was available through the multiple listing pool. Respondent showed the house two times between April 13, 1993, and May 14, 1993. This did not involve a showing to any prospective buyers. Other brokers or salespersons showed the house twice to prospective buyers, but no offers were generated from those showings. Subsequently, Respondent suggested to Mr. Foster that the Foster residence might be appropriate for her use. Respondent offered to buy the Foster property for $65,000. On May 14, 1993, Respondent and Mr. Foster entered into a contract for sale and purchase of the Foster residence. The purchase price was $65,000. Respondent deposited $500 into the escrow account managed by Ideal in furtherance of her interest in the property. The earnest money deposit was placed with Mr. Chinelli pending the closing of the sale. The contract called for Respondent to assume an existing mortgage of $63,556. The contract identified that the Respondent was a licensed real estate agent in Florida, but the purchase was not being made through Ideal. Under this contract, the real estate commission that had been contemplated initially would not be paid to Ideal and Respondent. When Respondent entered into a contract to buy the Foster property, she did not tell Mr. Foster that she would no longer be representing him as a real estate salesperson. The contract between Respondent and Mr. Foster called for a closing date on or before June 30, 1993. In entering into the agreement for Respondent to purchase the home, Respondent told Mr. Foster that she intended to personally occupy that property. Respondent never told Mr. Foster that she entered into the contract to purchase his home with the intent to sell the home to another person. Originally that was not her intention. Respondent held to the view that in the event that her purchase of the home was not concluded, Respondent would still represent Mr. Foster in his desire to sell the home. This is taken to mean that she would be representing Mr. Foster as a real estate salesperson. Sometime around June 20, 1993, Kai and Denise M. Hansen, husband and wife, contacted Ideal to show the Hansens property in the Deltona area. Respondent assisted the Hansens in this pursuit, acting as a real estate salesperson. There was no written agreement between Respondent or her firm signed with the Hansens to represent them in their attempt to purchase a home. Respondent showed the Hansens 8 to 12 homes in the Deltona area. The Hansens were not interested in purchasing those homes. At that point, Respondent suggested that the Hansens look at the home that she was purchasing from Mr. Foster. Respondent told the Hansens that Respondent was buying the Foster house from the Fosters who were moving out of town and that Respondent was helping the Fosters "out of a bind." Respondent told the Hansens that the home might be "too big for her anyway." Respondent told the Hansens that if she could help the Hansens out she would sell the Foster home to the Hansens if the Hansens liked that property. If a suitable home had been found through a real estate listing, other than the Foster residence, a commission would have been paid from the seller of the hypothetical house to the broker for Ideal. In that circumstance, the Hansens would not be responsible for paying a commission to the Respondent or Ideal. The properties other than the Foster property which Respondent was showing the Hansens were shown by Respondent as a sub-agent for the sellers. Respondent showed the Hansens the Foster residence during the week of June 20, 1993. On June 24, 1993, Respondent entered into a contract with the Hansens for sale and purchase of the Foster property. An addendum to that contract indicated that "this contract is contingent upon seller obtaining clear Title on 2853 Sweet Springs, Deltona, FL." The Hansens paid a $1,000 earnest money deposit toward the purchase of the Foster property. That deposit was placed in the escrow account for Ideal. That deposit was to be held until the closing date scheduled for July 16, 1993. Again, it was not contemplated that a real estate commission would be paid to Respondent and Ideal. The price arrived at between Respondent and the Hansens to purchase the Foster property was $72,500. Initially, Respondent had offered to sell the property for $73,000. The Hansens counter-offered to pay $72,000 leading to the final purchase price of $72,500. The contract between the Respondent and the Hansens called for an assumption of a mortgage in the amount of 63,500. Although Respondent had advised the Hansens that the property was being purchased from the current occupants, the Fosters, Respondent did not advise the Hansens of the price the Respondent was paying the Fosters to purchase that property. Respondent never advised the Fosters that the Hansens had sought to purchase the Foster home and that Respondent had entered into a contract with the Hansens for the Hansens to purchase that property. On June 29, 1993, the closing occurred between Respondent and the Fosters and a warranty deed was prepared noting the change in ownership. At the closing Respondent told the Fosters that she still intended to occupy the home. On July 16, 1993, the closing occurred between the Respondent and the Hansens and a warranty deed was drawn conveying the property from the Respondent to the Hansens. As established by Mark A. Carper, a real estate appraiser, the value of the Foster property on April 13, 1993 was between $65,000 and $72,500. In anticipation of moving into the Foster home, Respondent had made arrangements to move out of the residence where she had been living by giving notice that she intended to move.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That a Final Order be entered which dismisses the administrative complaint against Respondent. DONE AND ENTERED this day of July, 1997, in Tallahassee, Leon County, Florida. CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this day of July, 1997. COPIES FURNISHED: Christine M. Ryall, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street, Suite N-308 Orlando, Florida 32801-1772 William A. Parsons, Esquire Woerner & Parsons 2001 South Ridgewood Avenue South Daytona, Florida 32119 Henry M. Solares, Division Director Division of Real Estate 400 West Robinson Street, Suite N-308 Orlando, Florida 32802-1900 Lynda L. Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue Whether the Petitioners are liable for sales tax, penalties and interest as assessed by the Department of Revenue (the Department) and if so, in what amount?
Findings Of Fact The parties have stipulated to the facts stated in paragraphs 2-59.1/ The Department of Revenue is an agency of the State of Florida, pursuant to Section 20.21, Florida Statutes, and is authorized to administer the tax laws of the state, pursuant to Section 213.05, Florida Statutes. The Department was authorized to conduct an audit of each of the Petitioners and to request information to determine their liability for taxes pursuant to Chapter 212, Florida Statutes. Legendary Holding, Inc. (Holding) is a corporation organized under the laws of Florida effective October 23, 1996, and was so organized from 1999-2003. Holding's corporate address is 4100 Legendary Drive, Suite 200, Destin, Florida 32541. Holding was subject to the Internal Revenue Code of 1986 as amended and in effect (IRC) during 1999-2003 and for federal income tax purposes, Holding was a subchapter "s" corporation during this time. Holding was also subject to Chapter 212, Florida Statutes, during 1999-2003. Petitioner Harry T's, Inc. (Harry T's), is a corporation organized under the laws of Florida effective November 9, 1998, and was so organized during Harry T's Audit Period, defined as December 1, 1999 through March 31, 2003. Harry T's was a wholly-owned subsidiary of Holding. During its Audit Period, Harry T's corporate address was 4460 Legendary Drive, Suite 400, Destin, Florida. Harry T's was subject to the IRC and for federal income tax purposes was a qualified subchapter S subsidiary of the s-corporation parent, Holding. Petitioner Beachside Inn Destin, Inc. (Beachside) was a corporation organized under the laws of Florida effective March 6, 2000, and was so organized during the Beachside Audit Period, defined as May 1, 2000, through May 31, 2003. Beachside, a wholly-owned subsidiary of Holding, was administratively dissolved on October 14, 2004, for failure to file an annual report. During the Audit Period, Beachside's principle place of business was 2931 Scenic Highway 98, Destin, Florida, 32541. Its corporate address was 4460 Legendary Drive, Suite 400, Destin Florida. Beachside was subject to the IRC and for federal income tax purposes was a qualified subchapter S subsidiary of the s-corporation parent, Holding, during the Beachside Audit Period. Petitioner Legendary Restaurant Associates, Inc. (Restaurant) is a corporation organized under the laws of Florida effective October 7, 1999, and was so organized during Restaurant's Audit Period, defined as December 1, 1999, through March 31, 2003. During this time Restaurant was a wholly owned subsidiary of Holding and Restaurant's corporate address was 4460 Legendary Drive Suite 400, Destin, Florida. Restaurant was subject to the IRC and for federal income tax purposes was a wholly-owned, qualified subchapter S subsidiary of the s-corporation parent, Holding, during the Restaurant Audit Period. Legendary, Inc. (Legendary) is a corporation organized under the laws of Florida during 1999-2003, and its corporate address was also 4460 Legendary Drive, Suite 400, Destin, Florida, during this time. Legendary was also a wholly-owned subsidiary of Holding. Legendary was subject to the IRC and for federal income tax purposes, was a qualified subchapter S subsidiary of the s-corporation parent, Holding. Legendary Resorts, LLC (Resorts), is a limited liability company organized under the laws of Florida and was so organized during 2000-2003. Resorts, whose corporate address was also 4460 Legendary Drive, Suite 400, Destin, Florida, was administratively dissolved on September 16, 2005, for failure to file an annual report. Legendary entered into a cooperative business agreement (CBA) with certain subsidiaries of Holding prior to or during 1999-2003. The terms of the CBA between Legendary and these subsidiaries were identical other than the name of the "manager" subsidiary and the percentage of compensation paid to Legendary and the formula for sharing profits varied from time to time. Legendary also entered into a management agreement with certain other of Holding's subsidiaries, and the terms of these agreements were identical. FACTS RELATED TO PETITIONER HARRY T'S AUDIT Harry T's was a registered dealer who filed form DR- 15 (Sales Tax Return) with the Department for each month of Harry T's Audit Period. Harry T's used the cash basis of accounting during its Audit Period. The Department sent Harry T's a Notification of Intent to Audit Books and Records (Form DR-840) to conduct an audit of Harry T's books and records for this purpose. The Department and Harry T's entered into an Audit Agreement agreeing that a sampling method is the most effective, expedient, and adequate method in which to conduct an audit of Harry T's books and records. Gina Imm, a Department tax auditor, examined and sampled the available books and records of Harry T's to determine whether it properly collected and remitted sales and use tax in compliance with Chapter 212, Florida Statutes. Harry T's was the tenant party in a lease with Legendary for the property upon which Harry T's operated its business prior to January 1, 2000. Under the terms of the lease agreement between Harry T's and Legendary, Harry T's paid rent equal to eight percent of the gross sales to Legendary. On January 1, 2000, the lease was terminated. On January 1, 2000, Harry T's entered into a CBA with Legendary, which was effective throughout Harry T's Audit Period. Harry T's operated a business on property owned by Holdings during Harry T's Audit Period. Accounting entries were made each month during the Audit Period to record the amount of CBA compensation that was accrued by Harry T's to Legendary under the CBA. However, no rent was recorded on the income tax or accounting books of either Harry T's or Legendary during the Audit Period. Further, no amount of money labeled as CBA compensation was transferred from Harry T's to Legendary during Harry T's Audit Period and no payments labeled as "rent" were transferred from Harry T's to Legendary. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Harry T's to Legendary during the Audit Period. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was also transferred from Legendary to Harry T's. During Harry T's Audit Period cash was also transferred from Legendary to Holdings. These amounts were reflected as dividend distributions and varied in amount and time from (a) Holdings insurance and mortgage indebtedness obligations associated with the property used by Harry Ts and owned by Holding, and (b) the amounts accrued under the CBA's. Any amounts collected by Harry T's and not paid directly to third parties were distributed periodically to Holdings as corporate dividends. The Department determined that the transfers of cash from Harry T's to Legendary reflected rental consideration paid as CBA compensation, and directed the Department's auditor to assess sales tax against the amounts recorded as CBA compensation accounting entries. Harry T's paid ad valorem taxes due on the property on which Harry T's operated during each year of Harry T's Audit Period. The Department auditor assessed sales tax on the amounts of ad valorem taxes paid by Harry T's on behalf of Holding. The Department determined that Harry T's owed $58,844.02 in additional sales tax for the CBA compensation and ad valorem taxes paid, plus statutory interest and penalties. On September 5, 2003, the Department issued to Harry T's a Notice of Intent to Make Audit Changes (form DR- 1215) for Audit No. A0233016246, stating that Harry T's owed $69,249.79 in taxes, $29,422.03 in penalties, and $6,612.44 in interest for a total of $94,330.64, and that interest continued to accrue on the unpaid assessment. By letter dated October 9, 2003, Harry T's agreed to the portions of the assessment related to food and beverage, but objected to the assessment for all other amounts including the CBA fees. Harry T's paid $10,953.62 for the uncontested assessment amounts. The Department issued its Notice of Proposed Assessment (NOPA) for audit number A0233016246 on January 27, 2004. The NOPA stated that the total owed by Harry T's was $69,249.79 in taxes, $29,422.03 in penalties, and $11,831.88 for a total of $110,501.72. The NOPA reflected a payment of $10,953.62 paid for the uncontested amounts of the audit assessment, and showed a balance due of $99,548.10 as of the date of the NOPA. The Department received Harry T's formal written protest on April 23, 2004. FACTS RELATED TO RESTAURANT'S AUDIT Petitioner Restaurant was a registered dealer who filed form DR-15 (Sales and Use Tax Return) with the Department for each month of the Restaurant Audit Period. Restaurant used the cash basis of accounting. The Department sent Restaurant a Notification of Intent to Audit Books and Records (Form DR-840) to conduct an audit of Restaurant's books and records for the purposes of Chapter 212, Florida Statutes. The Department and Restaurant entered into an Audit Agreement stipulating that a sampling method is the most effective, expedient, and adequate method by which to conduct an audit of Restaurant's books and records. Gina Imm examined and sampled the available books and records of Restaurant to determine whether Restaurant properly collected and remitted sales and use tax in compliance with Chapter 212, Florida Statutes. Restaurant was the tenant party in leases for the property upon which Restaurant operated its business prior to January 1, 2000. On January 1, 2000, Restaurant terminated its leases for these properties. Restaurant entered a CBA with Legendary prior to the beginning of Restaurant's Audit Period, December 1, 1999 through March 31, 2003. The CBA between Restaurant and Legendary was effective throughout the Restaurant Audit Period. Restaurant operated the "Crystal Beach Coffee Company" and "Tony's By the Sea" on property owned by Floridian Homes of Crystal Beach, Inc. (FHCB), an unrelated third party, during the Restaurant Audit Period. Restaurant operated "Blues" on property owned by an individual, Mr. Peter H. Bos, during the Restaurant Audit Period. 37. Restaurant operated "Rutherford's 465" on property owned by Regatta Bay Investor, Ltd., a Florida limited partnership, during the Restaurant Audit Period. Accounting entries were made each month during the Restaurant Audit Period to record the amount of CBA compensation that was accrued by Restaurant to Legendary under the CBA; however, no rent was recorded on the income tax or accounting books of either Restaurant or Legendary during the Restaurant Audit Period. No amount of money labeled as CBA compensation was transferred from Restaurant to Legendary and no payments labeled as "rent" were transferred from Restaurant to Legendary. Based upon the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Restaurant to Legendary, and cash was also transferred from Legendary to Restaurant during the Restaurant Audit Period. Any amounts collected by Restaurant during the Restaurant Audit Period and not paid directly to third parties were distributed periodically to Holdings as corporate dividends. The Department determined that the transfers of cash from Restaurant to Legendary reflected rental consideration paid as CBA compensation, and directed the Department's auditor to assess sales tax against the amounts recorded as CBA compensation accounting entries. Restaurant paid ad valorem taxes due on the property on which Restaurant operated during each year of the Restaurant Audit period. The Department assessed sales tax on the amounts of ad valorem taxes paid by Restaurant on behalf of Holding. The Department determined that Restaurant owed $17,880.71 in additional sales tax for the CBA compensation and ad valorem taxes paid, plus statutory interest and penalties. On September 5, 2003, the Department issued the Restaurant a Notice of Intent to Make Audit Changes (Form DR- 1215) for audit number A0231102584, stating that Restaurant owed $26,092.10 in taxes, $8,940.31 in penalties, and $1.808.87 in interest for a total of $36,841.28. The Department noted Restaurant's payment of $8,745.53 for the portions of the assessment related to food and beverage sales, leaving a balance due as of that date of $28,095.75. The Department informed Petitioner Restaurant that interest continued to accrue on the unpaid assessment. The Department issued its NOPA for audit number A0231102584 on March 17, 2004, to Restaurant. The total owed by Restaurant as stated in the NOPA was $26,092.10 in taxes, $8,940.34 in penalties, and $3,378.99 in interest for a total of $38,411.43, less the $8,745.53 already paid, for a total balance due on that date of $29,665.90. Restaurant protested the NOPA, and the Department referred the matter to the Department's Technical Assistance and Dispute Resolution Section. On March 28, 2005, the Department issued its Notice of Decision upholding the assessment of tax for the CBA fees and ad valorem taxes paid by Restaurant, and on April 6, 2005, the Department received the Restaurant's formal written protest. FACTS RELATED TO BEACHSIDE'S AUDIT Petitioner Beachside Inn Destin, Inc. (Beachside) was a registered dealer who filed form DR-15 (Sales and Use Tax Return) with the Department for each month during the Beachside Audit period, May 1, 2000, through May 31, 2003. Beachside used the cash basis of accounting during the Beachside Audit Period. Beachside and the Department entered into an Audit Agreement stipulating that a sampling method is the most effective, expedient, and adequate method by which to conduct an audit of Beachside's books and records. Gina Imm, a Tax Auditor for the Department, examined and sampled the available books and records of Beachside to determine whether Beachside properly collected and remitted sales and use tax during the Audit Period in compliance with the requirements of Chapter 212, Florida Statutes. Legendary Resorts, LLC (Resorts) entered into an Asset Purchase Agreement with FHCB and Lester J. Butler, Timothy Fulmer and Mitt Fulmer, three of Resorts' shareholders (the Shareholders), in April 2000, for the acquisition of the Beachside Inn assets by Resorts. Subsequent to the execution of the Asset Purchase Agreement, the parties discovered that a condition precedent to the agreement, i.e., the assumption by Resorts of the major indebtedness of FHCB could not be accomplished as contemplated because it would cause the existing lender to violate its loan consideration limits with respect to the Legendary Group. After discovering this problem, Resorts entered into a Triple-net Lease dated March 1, 2000, with the Shareholders for a beachfront lot and entered into a Triple-net Lease dated March 1, 2000, with FHCB for the Beachside Inn assets that were originally the subject of the Asset Purchase Agreement. These Triple-net Leases were designed to transfer control, and the benefits and burdens of ownership, of the Beachside Inn assets to Resorts pending resolution of the financing contingency and the closing under the Asset Purchase Agreement. Beachside entered into a CBA with Legendary prior to the beginning of the Beachside Audit Period, which was effective throughout the Beachside Audit Period. Although Resorts was the party entitled to all rights, and subject to all obligations, under the Triple-net Leases and Asset Purchase Agreement, the financial accounting and cash management functions and activities during the terms of the Leases were handled by and recorded in Beachside because these leases were designed to permit the Legendary Group to take over the operations of the Beachside Inn assets pending closing and because the Legendary Group intended to place the assets in Beachside under the Asset Purchase Agreement upon the closing of the asset purchase. Resorts and Beachside operated the Beachside Inn assets on property owned by FHCB and the Shareholders during the Beachside Audit Period. Accounting entries were made each month to record the amount of CBA compensation that was accrued by Beachside to Legendary under the CBA but no rent was recorded on the income tax or accounting books of either Beachside or Legendary during the Beachside Audit Period. No money labeled as CBA compensation was transferred from Beachside or Resorts to Legendary and no payments labeled as "rent" were transferred from Beachside or Resorts to Legendary. Based on the business decisions of the Chief Financial Officer of Legendary, cash was transferred periodically from Resorts and/or Beachside to Legendary and from Legendary to Resorts and/or Beachside during the Beachside Audit Period. After Resorts and Beachside operated the Beachside Inn assets for a period of time at a material loss, Resorts was not able to arrange for suitable substitute financing to close on the purchase of the Beachside Inn assets under the Asset Purchase Agreement. Resorts, FHCB and the Shareholders reached an agreement on or about August 15, 2003 (the Termination Date), whereby Resorts terminated its rights under the Asset Purchase Agreement and the two leases. In exchange, the Shareholders transferred ownership of the beachfront lot to Resorts. Federal income tax returns for calendar years 2000, 2001, and 2002 were filed by Resorts which reflected the results of operating the Beachside Inn assets. Following the Termination Date, all of the historic accounting entries made by Beachside reflecting the operation of the Beachside Inn assets were moved from its books and records to the books and records of Resorts for administrative reasons and consistency with the legal documents. Beachside and Resorts made insurance payments on behalf of the owners of the property upon which Resorts operated its business for each year of the Beachside Audit Period. They also made payments for loans on behalf of the owners of the property and paid ad valorem taxes due on the property upon which Resorts operated for each year of the Beachside Audit Period. The Department assessed Beachside sales tax on the amounts of ad valorem taxes, insurance payments and loan payments paid by Beachside on behalf of FHCB and the Shareholders. On October 27, 2003, the Department issued Beachside a Notice of Intent to Make Audit Changes (form DR- 1215) for audit number A030582778, stating that Beachside owed $69,436.01 in taxes, $30,606.77, and $7,635.33 for a total of $107,678.11. The Department noted Beachside's payment of $8,936.01 for the portions of the assessment related to sales of good and beverage, and reflected a balance due after payment of $98,742.10, with interest continuing to accrue.2/ Beachside made an additional payment of $8,936.01 toward the balance due on the uncontested amount of the assessment. On February 19, 2004, the Department issued its Notice of Proposed Assessment for audit number A030582778, stating that the total amount owed by Beachside was $69,436.01 in taxes, $30,606.77 in penalties and $8,917.55 in interest for a total of $108,960.33, less $17,872.02 previously paid by Beachside, for a balance as of that date of $91,088.31. On April 16, 2004, Beachside protested the NOPA, and the Department referred the matter to the Department's Technical Assistance and Dispute Resolution Section. On March 28, 2005, the Department issued its Notice of Decision upholding the assessment of tax for the payment of ad valorem taxes, insurance and loans by Beachside on behalf of Holding. On April 6, 2005, the Department received the Beachside's formal written protest of audit number A030582778. ADDITIONAL FACTS In addition to the Stipulated Facts submitted by the parties, the undersigned makes the following findings based upon the stipulated exhibits submitted. With respect to the CBAs, the documents provided "the Co-Operator and Manager have agreed to enter into this Agreement for each to provide certain assets to the Business and for Manager to provide, on a cost effective basis, Management Services as required from time to time by the Business." The Agreements state that "each have various assets including fixtures, employees, contractual relationships, knowhow and real estate which they wish to combine to operate a restaurant and bar (the Business)." The CBAs do not name a physical location and do not have provisions for care and repair of the premises; for rights of access and inspection; for eminent domain or condemnation; for default; for provision of utilities or for subletting, all provisions typically seen in a commercial lease. By contrast, the Triple-Net Lease for the Beachside Inn Assets (Stipulated Exhibit 10) contains all of these provisions. The CBAs provide for payment of management services, expenses of the business, and all services and assets necessary for the operations of the business. They are clearly not limited to provision of a location. With respect to the Beachside Assets, the Triple-Net Lease (the Beachside lease) was entered after the Asset Purchase Agreement and expressly acknowledges the existence of that document. However, the Beachside lease by its terms does not provide a right of purchase at a nominal sum at the end of the lease. It provides options to extend the term of the three-year lease for five additional terms of three years each, governed by the same terms and provisions. It also provides a right to purchase the premises at any time during the term of the lease and up to six months after any extensions of the lease which shall be exercised by affecting a closing under the Asset Purchase Agreement. The Beachside Lease for the Beachside Inn assets has other provisions that are relevant to these proceedings. For example, the Beachside Inn lease defines the term "rent" as including the base rent ($100 per month) plus any state sales tax imposed "upon any and all rents or other payments provided in this lease." It provides for surrender of the premises at the expiration of the lease, including terms for removal of any trade fixtures, personal property and signs. Most importantly, the Beachside Inn lease expressly states the following: 26. a. The Lease does not create the relationship of principal and agent or of partnership or of joint venture or of any association between Landlord and Tenant, the sole relationship between the parties hereto being that of Landlord and Tenant. * * * c. This Lease and the Exhibits, if any, attached hereto and forming a part hereof, constitute the entire agreement between Landlord and Tenant affecting the Premises and there are no other agreements, either oral or written, between them other than are herein set forth. . . .
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED: That the Department of Revenue enter a final order finding that: The Department's assessment for additional sales tax, penalties and interest against Petitioner Harry T's is sustained for the portion attributable to payment of ad valorem taxes only; The Department's assessment for additional sales tax, penalties and interest against Petitioner Legendary Restaurant Associates, Inc., is sustained for the portion attributable to payment of ad valorem taxes only; and The Department's assessment for additional sales tax penalties and interest against Petitioner Beachside Inn, Inc., be sustained in its entirety. DONE AND ENTERED this 27th day of July, 2006, in Tallahassee, Leon County, Florida. S ___________________________________ LISA SHEARER NELSON 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 27th day of July, 2006.
The Issue Whether the Respondent's real estate broker's license should be suspended, revoked, or otherwise disciplined based upon alleged violations of Chapter 475, Florida Statutes.
Findings Of Fact The Respondent, Peter H. Bos, Jr., is a licensed real estate broker in the State of Florida, holding License Nos. BK 0225668 and 0189099. He is the registered broker for Bos Realty Company, Inc., and Sandestin Realty, Inc. Bos Realty, Inc., and Sandestin Realty, Inc., are registered real estate brokerage companies. The Respondent is also the Chairman of the Board and Vice President of Sandestin Corporation, Inc. ("Sandestin") . Sandestin is not a real estate brokerage company and does not engage in any real estate business regulated under Chapter 475, Florida Statutes. Sandestin is a licensed hotelier. In 1987, Sandestin ceased acting as the management company of Sandestin Resort. Sandestin Corporation instead became a company which operated a hotel. In order to obtain rooms for its hotel operation, the corporation entered into leases with various local condominium owners, including Sandestin Resort unit owners. These leases were entered into under a landlord and tenant contract and not a management contract. The landlord and tenant contract did not establish any fiduciary relationship between Sandestin Corporation, Respondent, or the landlord/unit owner. Similarly, the landlord and tenant agreement did not establish any escrow relationship between Sandestin Corporation, Respondent, or the landlord/unit owner. During this time, the leasehold agreement did contain two typographical errors. One error, committed by the law firm who drafted the agreement, placed Sandestin Realty's name over the signature block at the end of the contract. The other error was contained in an exhibit to the contract and listed Sandestin Realty in its title. All of the typographical errors were discovered and corrected by 1988. None of the errors materially effected the understanding of the parties as to who those parties were or the relationship they had. In reality none of the parties involved in the contracts containing the typographical errors noticed either fallacy. Around May 22, 1987, Margaret Irwin purchased a unit from Sandestin Realty Company, Inc. She signed a landlord and tenant agreement dated March 25, 1987, between herself, as landlord, and Sandestin Corporation, Inc., as tenant. Although Ms. Irwin was somewhat confused about the exact relationship between the parties, the contract she signed was plain on its face and unambiguous in its language that the agreement she was entering into was a leasehold agreement with her as a landlord and Sandestin Corporation as a tenant. Ms. Irwin's confusion appeared to result from assumptions that emanated from her own mind. The evidence did not establish that any representation was made either on behalf of or by Respondent that the lease agreement was other than what it purported to be. Moreover, the evidence did not establish that Ms. Irwin's confusion was caused by any actions of Respondent or any of the typographical errors which were in the agreement at the time Ms. Irwin signed it. Up until 1989, Ms. Irwin received all of the lease payments she was entitled to receive under the lease agreement. In 1989, Sandestin Corporation experienced financial difficulties. Beginning in August 1989, Sandestin Corporation, on the advice of its attorneys, did not make the agreed upon lease payments to Ms. Irwin as well as other unit owners from which it had leased units. All of the unit owners's including Ms. Irwin, were made aware of Sandestin Corporation's financial difficulties in a letter dated October, 1989. Ms. Irwin elected to terminate her lease agreement with Sandestin Corporation and demanded the back rant which was owed to her. The back rent remains unpaid to this date. In late 1989, Sandestin Corporation filed for a Chapter 11 bankruptcy. That bankruptcy is ongoing today. The unit owners who elected to continue leasing their units to Sandestin Corporation have begun to receive incremental payments on the back rent owned to them by a special order of the bankruptcy court. Importantly, all of the unit owners, including Ms. Irwin, were treated as landlord/creditors of Sandestin Corporation. The money owed to these unit owners has been treated as property of Sandestin Corporation and therefore part of the bankrupt's estate. The money was not treated as property being held by Sandestin Corporation on behalf of and as fiduciary for these various unit owners. There was absolutely no clear and convincing evidence presented of any fraud, misrepresentation, scheme, trick, or device, or breach of trust on the part of Respondent. The language of the lease agreement is plain on its face and clearly establishes a landlord and tenant contract. The agreement did not establish any fiduciary or escrow relationship. Additionally, Respondent's duties in relation to Sandestin Corporation were not those which involved any real estate duties regulated by Chapter 475, Florida Statutes. Therefore, Respondent is not guilty of violating any of the provisions of 475.25(1)(b), (d), or (k), Florida Statutes.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, the pleadings and argument of the parties, it is therefore, RECOMMENDED that the Board enter a Final Order dismissing the Administrative Complaint against Respondent. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 30th day of January 1991. DIANE CLEAVINGER 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 30th day of January 1991. APPENDIX The facts contained in paragraphs 2, 3, 4, 5, 6, 12, 13, 14, 15, 24, 26, 26, and 30, of Petitioner's Proposed Findings of Fact are adopted. The facts contained in paragraphs 1, 7, 8, 9, 10, 11, 18, 20, 21, 22, 31, 32, 33, 34, and 35 of Petitioner's Proposed Findings of Fact are subordinate. The facts contained in paragraphs 16, 17, 19, and 28, of Petitioner's Proposed Findings of Fact are immaterial. The facts contained in paragraphs 23, 25, 29, and 36 of Petitioner's Proposed Findings of Fact were not shown by the evidence. The facts in paragraphs 1, 2, 3, and 4 of Respondent's Proposed Findings of Fact are adopted. COPIES FURNISHED: Janine B. Myrick, Esquire Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 E.C. Kitchen, Esquire Post Office Box 1854 Tallahassee, Florida 32302-1854 Darlene F. Keller Division Director Division of Real Estate Department of Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Kenneth E. Easley General Counsel Department of Professional Regulation 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0792
Findings Of Fact Based upon the pleadings and responses thereto, an Order imposing sanctions for Respondent's failure to submit discovery as required by the undersigned dated October 15, 1986 and the entire record compiled herein, I hereby make the following relevant factual findings. Respondent is the developer of a condominium known as La Residence. As Presently developed, La Residence consists of sixty units. La Residence is located in Boca Raton, Florida. Respondent failed to meet the completion date for the subsequent phases of La Residence as is described in the declaration of condominium of La Residence. According to the Declaration of Condominiums for La Residence, the scheduled dates listed for construction of the subsequent phases of La Residence were June, 1982 for phase II; February, 1983 for phase III, and November, 1983 for phase IV. Amendments to the Declaration of Condominium of La Residence were recorded on June 30, 1981, March 22, 1982 and August 2, 1984. Respondent did not furnish the Division with copies of the above-referred amendments. Additionally, Respondent failed to provide purchasers of units within La Residence, copies of the above-referred amendments. Respondent failed to hold annual members meeting for the years 1981, 1982, 1983 and 1984. Respondent failed to call a members meeting to allow non-developer unit owners to elect a director after fifteen percent of the available units had been conveyed. Respondent failed to mail to unit owners, copies of the proposed annual budget for the years 1982, 1983, and 1984. Respondent failed to include the statutory reserves and the proposed annual budget as required for the years 1982, 1983 and 1984. Respondent failed to fund reserve accounts for the years 1982, 1983 and 1984. Respondent failed to provide unit owners with financial reports for fiscal years 1982, 1983 and 1984. Respondent failed to pay the developer's share of assessments due to be paid by the developer after June 30, 1982. The Declaration of Condominium for La Residence was recorded in the public records of Palm Beach County in 1981. Control of the Condominium Association was turned over to non-developer unit owners on February 16, 1985. No "turnover report" was prepared by a certified public accountant nor was such a report ever furnished to the Condominium Association by Respondent. Respondent has not provided the Condominium Association copies of all canceled checks and bank statements for the time period dating from the recordation in 1981 to January 31 1984. Respondent, or a representative on its behalf, did not appear at the hearing to refute or otherwise contest the alleged violations set forth in the Notice to Show Cause filed herein.
Recommendation Based on the foregoing Findings of Fact and Conclusions, of a Law, it is hereby RECOMMENDED Respondent pay to the Division, within thirty (30) days of issuance of the Division's Final Order, a civil penalty in the amount of ten thousand dollars ($10,000). Respondent secure the services of an independent certified public accountant who shall review the condominium records and submit a turnover review in accordance with the provisions of Section 718.301(4)(c), Florida Statutes (1985) and rule 7B-23.03(4)(5) and (6), Florida Administrative Code. Within thirty days of the Division's Final Order, it is recommended that the Division issue guidelines to Respondent to ensure that the condominium records are reviewed in accordance with the above-referenced statutory and rule provisions. Provided that monies are found to be due and owing the association based on the review, Respondent shall be directed to remit such amounts to La Residence of Boca Del Mar Condominium Association. Recommended this 23rd day of March, 1987, in Tallahassee, Florida. JAMES E. BRADWELL, 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 23rd day of March, 1987.
Findings Of Fact Peter P. Sedler, at all times material to the complaint, has been licensed as a real estate broker, holding license 0079017. He was last licensed as a broker c/o Marshall & Sedler, Inc., 7771 St. Andrews, Lake Worth, Florida 33467. Marshall & Sedler, Inc., at all times relevant to the complaint, had been registered as a Florida real estate broker, holding license 0250511, its last licensed address was 7771 St. Andrews, Lake Worth, Florida 33467. Peter P. Sedler was the qualifying broker and officer for Marshall & Sedler, Inc. On about July 3, 1987, Tom Teixeira was employed as a salesman by Cartier Realty, of 11852 42nd Road North, Royal Palm Beach, Florida. Cartier Realty had solicited, through a direct mailing, listings for property in the Royal Palm Beach area. Ms. Mary Myers, an older woman of about 70 years of age, responded to the advertisement, and gave Mr. Teixeira an open listing for real property which she owned. While Mr. Teixeira placed a Cartier Realty "For Sale" sign on the property, the sign was somehow removed shortly thereafter, and no party dealing with Ms. Myers during the months of July, August and September of 1987 would have been placed on notice that Cartier Realty had any listing on the property. Mr. Sedler had nothing to do with the disappearance of the sign. Ms. Myers had originally acquired the property from her daughter. Long before Ms. Myers gave a listing to Cartier Realty, William Kemp and his wife Gina DiPace Kemp had told Ms. Myers that they were interested in purchasing the property, which is adjacent to the home of Mr. and Mrs. Kemp. When Mr. and Mrs. Kemp first contacted Ms. Myers, she had wanted to keep the property, in the belief that she might eventually convey it back to her daughter. Mr. Teixeira brought to Ms. Myers an offer from David R. and Maureen C. Rose to purchase the land for $11,900. Ms. Myers did not accept that offer, but the Roses accepted Ms. Myers' counteroffer on July 24, 1987, to sell it for $12,300. The sale was contingent upon the buyers obtaining financing; they applied for a loan, and ordered both an appraisal and a survey. The closing was to be held by September 1, 1987. (Contract, paragraph VI.) The closing date passed, without the buyers obtaining the necessary financing, so the contract was no longer effective. On about September 8, 1987, Mr. Teixeira attempted to contact Ms. Myers. He had obtained no written extension of the contract but hoped the sale might yet close. Ms. Myers told Teixeira that she was still willing to sell the property to Mr. and Mrs. Rose. In the meantime, Mr. and Mrs. Kemp became aware that Ms. Myers wanted to sell the property, because they noticed Mr. and Mrs. Rose coming to look at the land, and had engaged them in conversation. Ms. Kemp then contacted Ms. Myers to remind her that they were still willing to purchase the property, and also to say that they would offer more than the current offer on the property. On about September 11, 1987, Ms. Kemp contacted Cartier Realty to say that she also wished to make an offer on the Myers' lot. For a reason which was never adequately explained at the hearing, Teixeira, who should have been working on behalf of the seller, refused to take the offer, even though it was for a higher price. After this rebuff by Teixeira, Ms. Kemp contacted Marshall & Sedler, Inc., in order to try to find a broker who would convey their offer to Ms. Myers and spoke with Patricia Marshall, Ms. Marshall referred her to her partner, Peter Sedler. The Kemps told Sedler that Ms. Myers had told them that she had received a $9,000 offer on the lot. Why Ms. Myers told the Kemps that the Rose offer was $9,000 is not clear, for the actual offer had been $12,300, but Sedler did not know this. There was no listing of the lot in the local board of realtors multiple listing service book, and Mr. Sedler found the address of Ms. Myers through the public records. Mr. Sedler knew from his conversations with Ms. Kemp that Cartier Realty had some involvement with an offer on the property. He called Cartier Realty and tried to speak with the broker handling the matter. He spoke with a man named Tom, who he thought was a brother of the owner of Cartier Realty, Pete Cartier. Mr. Sedler actually talked with Tom Teixeira. Sedler believed he was dealt with rudely by Teixeira, who had hung up on him. Sedler then called Pete Cartier directly to find out whether there was an outstanding contract on the property, and Cartier told Sedler that he would call Sedler back. When Cartier called Sedler, Cartier warned Sedler that he should stay out of the deal. Mr. Sedler became suspicious about Cartier Realty's failure to bring a higher offer to the attention of the seller, and on September 16, 1987, filed a complaint against Tom Cartier with the Lake Worth Board of Realtors. Mr. Sedler then traveled to Pompano Beach to meet with Ms. Myers at her home, and brought with him a contract for sale and purchase of the property, already signed by the Kemps and dated September 14, 1987. While at the door, Ms. Myers asked Peter Sedler if he was "Tom." Ms. Myers knew that she had been dealing with a "Tom" at Cartier Realty, but all her dealings were on the phone, and she did not know what Tom Teixeira looked like. Sedler replied "Yes, but you can call me Pete." Sedler merely intended the comment as humor. At that time Sedler gave Ms. Myers his pink business card and specifically identified himself as Pete Sedler of Marshall & Sedler, Inc. Mr. Sedler asked Ms. Myers if she had any paperwork, such as the prior contract for the sale of the lot which had expired on September 1, 1987, but she did not. While Sedler was with Ms. Myers, she agreed to sell the property to the Kemps for $12,500 and signed the Kemp contract. The Kemps had put the purchase price of $12,500 into the Marshall & Sedler escrow account. Three days later, on September 18, 1987, Mr. Sedler, in the company of his wife Bonnie, presented a post-dated check to Ms. Myers in the amount of $11,020, the net amount due to Ms. Myers for the lot, based on the purchase price of $12,500. When they met this second time he introduced himself again as Pete Sedler and offered Ms. Myers his card for a second time. The post-dated check was conditioned by an endorsement making it good upon a determination that the title to the lot was good. A quit claim deed to Mr. and Mrs. Kemp was executed by Ms. Myers and witnessed by Bonnie Sedler. The post-dated check was given to Ms. Myers because she was about to leave on vacation. The check was given as a sort of security for good title, in return for the quit claim deed which closed the transaction. Mr. Sedler had structured the transaction in this way because he was concerned that someone at Cartier Realty might also attempt to purchase the property from Ms. Myers on behalf of one of their clients. At that time, Mr. Sedler held the reasonable belief that no other party had a subsisting contract to purchase the property from Ms. Myers. Sedler had no reason to believe the Roses would or could pay more for the property than the Kemps offered. Ms. Myers knew that Tom Teixeira from the Cartier realty firm represented a distinct business entity from Marshall & Sedler or Pete Sedler. After a title search showed that Ms. Myers had clear title to the property, the check which Mr. Sedler had given to Ms. Myers on September 18, 1987, with the restrictive endorsement was replaced. Later Mr. and Mrs. Rose tried to close their purchase, but found they could not. Ms. Myers had failed to inform them of the sale she made to the Kemps through Mr. Sedler. Mr. Teixeira, in retribution, filed an ethics complaint about Mr. Sedler with the West Palm Beach Board of Realtors.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Administrative Complaint against Peter P. Sedler and Marshall & Sedler, Inc., be dismissed. RECOMMENDED this 14th day of March, 1991, at Tallahassee, Florida. WILLIAM R. DORSEY, JR. 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 14th day of March, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-6183 Rulings on findings proposed by the Department: 1. Rejected as unnecessary. 2 and 3. Adopted in Finding 1. 4 - 6. Adopted in Finding 2. Adopted in Finding 3. Adopted in Finding 3. Implicit in Finding 5. Adopted in Finding 5. Adopted in Finding 5. Adopted in Finding 5. Adopted in Finding 5. Adopted in Finding 6. Implicit in Finding 6. This does not mean that the contract subsisted, however. Rejected. Ms. Myers was willing to sell the property to Mr. and Mrs. Rose after the contract expired, but she was not under any obligation to do so. Adopted in Finding 7. Rejected, because there was no pending contract. Teixeira never obtained a written extension of the closing date and Ms. Myers was free to sell elsewhere. Rejected. No one could have truthfully told Sedler there was a pending contract. None existed. Rejected, because Mr. Sedler had no reason to believe that there was a subsisting contract for the sale of the property; there was none. Admission number 20 is not to the contrary. Adopted in Findings 10 and 11. Rejected. See, Findings 9 and 10. Rejected as unpersuasive. Rejected as cumulative to Finding 9. Adopted in Finding 14. Adopted in Finding 11. Rejected as unnecessary. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Frank W. Weathers, Esquire Frank W. Weathers, P.A. Post Office Box 3967 Lantana, Florida 33465-3967 Darlene F. Keller, Division Director Department of Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32801 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Richard M. Moores is President of the Corporation, Daytona Sands, Inc. (SANDS, INC). He has never been a party to these proceedings. SANDS, INC.'s principal asset in 1981 was a forty unit motel which Moores ran on a day to day basis from an office located across the street. International Time-Share Consultants (ITSC) was, in 1981, a corporation in the business of developing and marketing vacation time-share resorts. Its principals were Donald Bentzoni, Kevin Curran, and Howard Shaw. The principals of ITSC are not parties to these proceedings. A real estate broker, Jimmy Townsend, introduced Moores to Bentzoni, Curran, and Shaw. The principals of ITSC negotiated with Moores for sale of its motel by SANDS, INC. and purchase thereof by ITSC, for conversion by ITSC into a vacation time-share resort. On May 8, 1981, SANDS, INC., represented by Moores, entered into an Agreement for Deed (Joint Exhibit 1). Briefly, this Agreement for Deed provided for a single sale of the SANDS, INC. (motel real property) by payment of a fixed price of $1,450,000.00 to SANDS, INC. (principal and President Richard M. Moores.) A complicated payment arrangement was devised and drafted by SANDS, INC.'s attorney with the primary purpose of imposing obligations on ITSC for the protection of SANDS, INC. and to insure at least the payment in a timely manner of the minimum amount negotiated. Twenty-five thousand dollars ($25,000) was to be paid on or before the signing of the Agreement For Deed; fifty thousand dollars ($50,000) was to be paid at the closing; an additional twenty-five thousand dollars ($25,000) was due on or before sixty (60) days from the closing date. [The initial $100,000 in payments] Thereafter, $950,000 of the remaining balance of the purchase price to bear interest at the rate of 6 percent per annum and to be payable as follows: $10,000 per month, the first such payment being due on the 90th day from and after the closing date and subsequent payments being due at thirty (30) day intervals thereafter until the $950,000 with interest is paid in full, subject to a thirty (30) day grace period, or (2) 25 percent of the gross amount of all cash received monthly . . . from purchasers as down payments at closing on the sale of time-share interests . . . to be developed by Buyer, plus all amounts received each month by the Buyer as developer of the time-sharing project as payments on promissory notes executed by purchasers [the third party installment contract paper] . . . the first such payment being due on the 90th day from and after the closing date, and subsequent payments being due at 30-day intervals thereafter until the $950,000 with interest is paid in full, subject to a 30-day grace period. (Joint Exhibit 1, Provision I). This translates that SANDS INC. was to be paid either $10,000 per month with the first payment due 90 days after closing or 25 percent of the combination of all cash down payments of third party purchasers and payments received on third party purchasers promissory notes, whichever of the two options was greater. The Agreement For Deed does not utilize the statutory term of art, "non-disturbance agreement" but also set out that after the initial one hundred thousand dollars ($100,000) payments were made, SANDS INC. would execute a "covenant not to interfere," as long as sales of time-share units were made out of time-share unit 205 (the old 208-209 motel units). (Joint Exhibit 1, Provision II.) Specifically, the parties agreed that: At date of closing (as per 1(B) above), Seller [Daytona Sands, Inc.] shall execute as to motel units 208 and 209 [the new converted unit 205] an "agreement to release upon sale and closing of sale" in a form mutually agreeable to the parties. Said above described "agreement" shall authorize Buyer to make all desired modifications and upgrading of said rooms in order to appropriately convert the model units as desired of the time-share project. The signing of such an agreement as to those motel units shall also authorize Buyer [ITSC] hereunder to begin marketing the time-share unit weeks as to that motel unit subject to the terms of this Agreement after conversion from a motel unit to a time-share unit. (Joint Exhibit 1, pp. 8-9 Provision IV) Under the Agreement For Deed, sales additionally could be made from units ether than unit 205 (the old 208-209 motel units). SANDS INC. would execute a covenant not to interfere as to those units, provided SANDS INC. first was paid $30,000 as a release price per motel unit and as long as the sales were made in a certain sequence. Specifically, Seller shall likewise sign such above described "agreement to release upon sale and closing of sales" as to additional motel units (above and beyond 208 and 209) upon payment of a release price of $30,000 per motel unit. The parties agree that the sequence of motel units to be subject to the said "agreement" being signed by Seller upon payment of the $30,000 for each unit shall be in the following order: 104, 105, 212, 114 and 115. The signing of such "agreement" as to additional motel units shall likewise authorize Buyer to convert the motel units as above or begin marketing time-share-unit weeks as to those units. Seller, subject to this above sequence, reserves the right to establish which additional motel units, the agreement to release shall relate to from time to time upon payment of the $30,000 per unit price. In interpreting this release clause, each $30,00 reduction in the principal balance due of $950,000 (under paragraph I (D) above) shall entitle Buyer hereunder to have an additional motel unit (of Seller's choosing) subject to the initial agreed upon sequence by the subject for the next "agreement" . . . (Joint Exhibit 1, p. 9 Provision IV). Succinctly, the parties SANDS, INC. and ITSC contemplated that upon payment of each $30,000 increment, a new set of 2 motel rooms would be released (in a certain order) to ITSC by SANDS INC. through an "agreement to release upon sale and closing of sales" for ITSC to convert/renovate and sell time- share units out of. Deposits of third party purchasers' money would be used to meet the minimum increments due SANDS INC. or 25 percent of their gross could be optionally used to pay off ITSC's monetary obligations to SANDS INC. sooner. The Agreement For Deed also permitted ITSC to sell out of non-released units, provided 100 percent of the sale receipts for those units were deposited in escrow: XVI - To clarify the intent of the parties, Buyer, after closing date, shall have a right to market in escrow the time-share estates or interests of rights to use1 whether or not the "agreement" called for in paragraph IV [which provides for the release of a unit in a scheduled sequence followed by the subsequent execution of a "covenant not to interfere"--the non-disturbance clause] above has been executed as to a motel unit. (Joint Exhibit 1, Paragraph XVI page 13). On the side, SANDS, INC. (Moores) was to continue to manage the motel as a motel for a management fee paid from the motel profits pending sequential conversion/renovation of the facility into approximately 20 time-share units from its original 40 motel units. Apparently, everyone involved understood that a "show" or "model unit" would first be sold and then other units would subsequently be converted and marketed sequentially using sales money from previous unit sales. The project was undercapitalized from the beginning. ITSC had insufficient cash flow to meet its obligations to SANDS, INC. and so ITSC assigned its rights and obligations under the Agreement for Deed (Joint Exhibit 1) to Daytona Sands Beach Club. Neither SANDS, INC. nor Richard Moores were a signatory to the Assignment (Joint Exhibit 2). Daytona Sands Beach Club (CLUB) is a corporation organized specifically to fund the time-share project. CLUB's original principals were Donald Bentzoni, Kevin Curran, Howard Shaw, Bill Smith, Gladys Carter, Phyllis Cooper, Dennis Taylor, Dennis Showalter, Walter Foster and Jimmy and Ricky Townsend. With the exception of Jimmy and Ricky Townsend who together purchased a single $10,000 share and Bill Smith who pledged some other real property, each club investor contributed $10,000 so that CLUB was able to make the initial payment to SANDS, INC. On June 24, 1981, SANDS, INC. and CLUB closed with payment to SANDS, INC. of the initial $100,000.000 payment. Some CLUB principals changed over a period of time due to buying and selling of shares but at no time was SANDS INC. or Richard Moores an investor in CLUB. Everyone involved testified that ITSC stayed on as the original marketers for the time-share project pursuant to a contract with CLUB, however there appears to be no witness who has ever seen a formal, written contract between the two entities. Any contract with regard to the sale of real property must be in writing, as must any contract with or between corporate entities, and this one was not. At best, it was, from all the circumstances, an oral de facto contract for personal services of the principals of the ITSC corporation, payable by commission. However, it is also clear from the testimony of Bill Smith that ITSC principals and employees signed on conditional installment sales notes and security agreements with third-party purchasers. Apparently, anyone in CLUB or ITSC signed these contracts. Richard Moores signed none. SANDS, INC. (Moores) continued to manage the motel units. Construction for conversion/renovation to time-share units/weeks by CLUB began June 25, 1981, overseen by Bill Smith for a promised 2 percent of the sales. This "promise" was apparently made by Donald Bentzoni but whether the promise was on behalf of ITSC or CLUB is uncertain. Sales of time-share units/weeks began July 1, 1981. On August 12 or 13, 1981, Richard Moores accompanied Bill Smith, representing CLUB, to open a Sun Bank account for deposit of purchase moneys and paper from third party purchasers (called "escrow account") and an operating account, (called "special" account) but there is no record evidence that Moores was a signatory on any accounts into which monies from installment checks were placed, nor did he sign checks for operating expenses by ITSC or CLUB. Signatories on the so-called "escrow" account were Bill Smith, Howard Shaw, and Walter Foster. Bill Smith was the only signatory on the "special" account. Thereafter, CLUB used the so-called "escrow" account as a collection account until the grace period in which a third party purchaser might cancel a contract had passed, then transferred money (by 2 of the 3 signatures) to the operating account and Bill Smith alone disbursed therefrom to ITSC and others. The bank sent a notice to CLUB after every payment made by a third party purchaser. ITSC forwarded some of these payments to the bank and certainly had access to these notices from the bank to CLUB at least until Donald Bentzoni was terminated in November, 1981. Moores for SANDS, INC. had no access to these notices from the bank. Instead, he received a bank statement which reflected total monies deposited, not the number of installment contracts the bank was holding. CLUB and ITSC provided Moores with copies of each installment sales contract, but no one reported the number of contracts put into the bank account and no one otherwise indicated to Moores the identity of contracts or monies put into the bank account. In the summer and early fall of 1981 Moores had no time-share experience and was actively engaged full-time in running the motel. Because of the initial volume of contracts, numerous cancellations, and sometimes sporadic delivery of the contract copies, Moores piled-up his contract copies as they were delivered and did not maintain a personal day-to-day tally of which weeks or which units were successfully sold and which sales were cancel led within the cancellation period. Delivery of the contract copies to Moores was usually done by Trudy Showalter, bookkeeper for ITSC up until September 1, 1981, or by Bill Smith, a principal and eventually President of CLUB. Delivery was usually daily to either Moores' office or the front desk outside his inner office, but sometimes less frequently. There is no record evidence that Moores ever had anything to do with preparing a public offering statement for the time-sharing project as contemplated by both the Agreement for Deed and Section 721.07, F.S. (1981). Nor is there anything in the record to show Moores ever handled the marketing, talked to prospective third party purchasers, or participated in closings with third party purchasers. His participation in the conversion/renovation appears to have been limited to getting cars moved and cleaning up debris, which activities are reasonably attributable to hi's continued management of the motel. Sales did not meet expectations and internal dissension occurred among the principals of ITSC. Dissent likewise occurred between principals of ITSC and principals of CLUB as early as September, 1981. Sales not meeting expectations, internal conflict among the principals of ITSC, and problems with operating cash flow resulted as early as August, 1981 in Bill Smith becoming involved on a day to day basis with running the time- share project on behalf of CLUB. In September, Bill Smith became President of CLUB. When sales began on July 1, 1981, Bentzoni, Curran, and Shaw, the ITSC principals acting as ITSC, the paid marketers on behalf of CLUB, made the initial decision to sell out of all 20 projected units and not just unit 205. Thereafter, when Moores expressed concern, Donald Bentzoni apparently convinced everyone at ITSC and CLUB that Moores had given him oral permission to sell out of all 20 or at least 10 units not paid for by CLUB and not yet formally released by SANDS INC. On the basis of the published portions of Bentzoni's deposition and Bill Smith's testimony, I find this meeting of Moores and Bentzoni never truly occurred. Not until some time in August, however, did Moores realize that sales out of units other than unit 205 were being made. The undersigned finds this to be so after considering the evidence as a whole. Moores, although a licensed Florida real estate agent, had no previous time-share experience; every principal of ITSC, as well as Bill Smith (with CLUB) and several other CLUB principals did. Bentzoni was running up expenses and rationalizing it due to criticism from ITSC and CLUB principals. Moores had not been involved in active real estate sales for more than a decade. The time-share concept was very new to Florida and the statutory law had not yet congealed. 2/ Moores was off- premises most of the time, and he depended largely on Jimmy Townsend and Bill Smith to keep him informed. Moores apparently made the connection that sales were being made out of sequence just before Trudy Showalter left the project on September 1, 1981 because he then asked her how he could check up to be sure sales would not occur out of order and she explained the use of the inventory board posted in ITSC's offices and her desk inventory sheets. However, as Bill Smith explained, the inventory board intentionally indicated more sales than had actually occurred and indicated sales out of units which had not been sold and which were not being sold out of as part of ITSC's calculated marketing technique to stampede potential third party purchasers into buying on the misrepresentation that "all units are nearly sold out," when few unit-weeks had in fact actually had been sold. The undersigned finds Moores could not be expected to rely on the inventory board. Originally, the CLUB investors were supposed to receive a half-percent per month of gross sales in return for their $10,000 investment but cash flow had dried up. Alternatively, each of the investors was given a week out of unit 205, the only released unit. A non-disturbance drawn by someone associated with CLUB was signed by Moores on September, 17 1981. (Petitioner's Exhibit 2) The actions of all concerned are inconsistent with a suggestion that Moores had agreed to allow sales out of other unreleased units for which he had not been paid or a suggestion Moores had agreed to give non-disturbances (or covenants not to interfere) contrary to the provisions of the Agreement for Deed. The initial regulation of time-sharing in Florida was by rules contained in Chapter 2-23, F.A.C., issued on an emergency basis in 1976 by the Florida Attorney General. None of the Respondents, however, was put on notice by the pleadings of any violation of the earlier rules, which, oddly enough, remained in effect until December 29, 1981. There was a lot of dissatisfaction among CLUB investors with Bentzoni starting in early September. Curran left the project in July or August 1981. Shaw subsequently resigned approximately August 20, 1981, critical of the marketing methods. Following an attempted ouster of Bentzoni at a CLUB shareholders meeting, Bill Smith persuaded Bentzoni to leave as marketer approximately November 10, 1981. However, in fact, sales were being made out of sequence. Moores had not been paid the release price per unit. By the end of the first three months of sales, neither CLUB nor ITSC had paid Moores the first $10,000 payment due September 24, 1981 under the Agreement For Deed. Moores objected to the sales out of these other units, but Moores, for SANDS INC., had no other leverage besides foreclosure, and foreclosure would have scuttled the entire project. Over Thanksgiving weekend, Richard Moores, Bill Smith and Jimmy Townsend took a trip by car and listened to a series of instructional tapes on time-sharing. Moores expressed a number of concerns which he had by way of conversation with other people about what was going on with CLUB's time-share project and ITSC's marketing of it. He thereafter spoke to a formal meeting of CLUB shareholders about these same hearsay concerns. He had heard CLUB and ITSC were employing non-licensed sales persons, failing to pay withholding taxes, failing to obtain the necessary withholding and social security numbers, and selling units out of sequence. Moores admits that at this meeting he told CLUB he wanted veto power over any future marketers they hired. There is no indication CLUB voted him this power or that he ever exercised such a veto. Moores checked the Agreement for Deed and realized at that point that Provision XVI provided for sales out of non- released units as long as the units were marketed in escrow. There is conflicting testimony in that Moores says Bill Smith told him he had no standing to object and Bill Smith says that Moores orally authorized continued sales out of 10 unreleased units instead of the total 20 claimed by Bentzoni, but the uncontradicted testimony of Moores and Bill Smith was that Bill Smith never told Moores that the monies were not being escrowed even though Bill Smith had a fair knowledge of time-sharing as far back as July 1981 and knew the statute required either that funds be escrowed or in the alternative that a non-disturbance instrument be issued. Even Bill Smith admits that he told Moores sales out of a lot of improper units had cancelled. During the time Bill Smith was president of CLUB, he knew that sales were being made without the requisite non-disturbance clauses being given. During the time he handled the sales on an interim basis, Bill Smith sold thirty (30) to forty (40) units but did not escrow monies; he did not give non-disturbance instruments; he did not request that Moores give non-disturbance instruments to third party purchasers. There was never a document of equal dignity entered into by SANDS INC. or Richard Moores which would vary the clauses of the Agreement for Deed concerning conditions precedent to be fulfilled by ITSC or its Assignee, CLUB, before non-disturbances would be granted by SANDS, INC. Bill Smith and perhaps some other unnamed persons participated in sales without being licensed to sell real estate in Florida. Some of these persons may have only been bookkeeping or clerical personnel. It is unclear whether they were employed by the principals of ITSC wearing their ITSC "hat" or their CLUB "hat" or by Bill Smith on behalf of CLUB. On December 15, 1981, Bill Smith wrote Richard Moores assuring him CLUB was in full compliance with all Florida Statutes including real estate sales. (Respondent Moore's Exhibit 2). Sometime in late 1981 or early 1982, CLUB entered into an agreement (which was back-dated to August 14, 1981, the date of the first sale to a third party purchaser which had not cancelled) with Smith & Smith through Steven K. Smith. (Joint Exhibits 3 and 4) Thereby, CLUB obtained additional cash financing in exchange for third party purchasers' time-share installment contracts, presumably worth a certain retail value of unit weeks. These were contracts from which the Agreement for Deed had contemplated proceeds going to SANDS, INC. unless escrowed in a separate third party purchaser escrow account. The proceeds from all sales from all unreleased units should have been escrowed by CLUB and had not been. CLUB retained some of the cash provided by Smith & Smith and used some of it to pay toward its indebtedness to SANDS INC. under the Agreement for Deed. Neither Moores nor SANDS, INC. were signatories to any agreement between CLUB and Smith & Smith or Stephen K. Smith. Based upon the testimony of Petitioner's expert accounting witness, Jerry C. Rhodes, no individual escrow accounts for third party purchasers were maintained; no single account or separate books were kept for these monies; no clear records of any income or disbursements from either CLUB's mislabelled "escrow" or "operating" account have been maintained. It is impossible to establish a completed audit trail of the monies taken in by ITSC or CLUB. The project failed and closed down on February 6, 1982, and third party purchasers did not get their accommodations. CLUB filed no request for formal hearing pursuant to Section 120.57(1), Florida Statutes, and entered nd appearance before the Division of Administrative Hearings. Indeed, by Order of May 20, 1983, Hearing Officer Pfeiffer denied a Motion to join CLUB in these proceedings. The majority of the money from the CLUB "escrow" account at Sun Bank went to Daytona Sands Marketing Group, but Daytona Sands Marketing Group filed no response to the Order to Show Cause, did not request a hearing pursuant to Section 120.57(1), Florida Statutes, and was not represented at formal hearing.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Business Regulation enter a Final Order which: Imposes civil penalties of $10,000 upon International Time-Share Consultants, Inc., a corporation, for the misrepresentation charge and $10,000 for the failure to escrow and account for all monies during its period of involvement charge. Determines all principals of International Time-Share, Inc., are not parties to these formal proceedings pursuant to Section 120.57(1), F.S. Dismisses all charges against Daytona Sands, Inc. a corporation, and determines Richard Moores individually is not a party to these proceedings. Determines Daytona Sands Beach Club is not a party to these formal proceedings pursuant to Section 120.57(1), F.S. Determines Daytona Sands Marketing Group is not a party to these formal proceedings pursuant to Section 120.57(1), F.S. DONE and ORDERED this 22nd day of February, 1985, in Tallahassee, Florida. ELLA JANE P. DAVIS 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 22nd day of February, 1985.
Findings Of Fact The Respondent Marinatown Realty, Inc., is a corporate real estate broker, holding license number 0208680 and located at 3440 Marinatown Lane, Northwest, North Fort Myers, Florida. Marinatown Realty is a wholly owned subsidiary of Seago Group, Inc., a publicly held land development and rental corporation whose president is Thomas P. Hoolihan. In late 1977, Hoolihan met L. E. Hutchinson, the complainant in this case, through another broker for whom Hutchinson at the time was employed. In December, 1977, Hoolihan and Hutchinson discussed the marketing of two condominium projects being developed by Hoolihan and reached an oral agreement whereby Hutchinson would be paid $18,000 in salary with a 1 1/2 percent commission on all sales. When the condominium units were completed and mostly sold, the parties' employment agreement was revised in late December, 1979. Under the new agreement, Hutchinson was to receive $30,000 a year salary, commissions on the remaining condominium units that had not yet closed and any commissions on outside property listings neither owned nor controlled by Seago. In return for the $30,000 guarantee, Hutchinson was to forego commissions on future properties owned or controlled by Seago Group, Inc. During the period from 1977-1978 when Hutchinson was receiving $18,000 plus a 1 1/2 percent commission, sales were handled through Lee Hutchinson Realty, Inc., which held license number 0182945. In early 1979, Marinatown Realty was incorporated to market Seago's real estate inventory, to identify and list outside properties and to act as a management agent for purposes of renting condominium units previously sold in recent projects. When Marinatown Realty was formed, the complainant became its active broker. While employed as the broker for Marinatown and receiving $30,000 a year as a salaried employee, Hutchinson held two other broker's licenses, one as L. E. Hutchinson Realty, Inc., and another as L. E. Hutchinson. In January, 1980, Hoolihan agreed to pay a $15,000 bonus to Hutchinson in lieu of a salary increase. Since at that time sales were minimal, Hoolihan decided to pay the bonus in installments as sales occurred. Because Hutchinson left in May, 1980, he received only $10,000 of the bonus which represented moneys previously paid. On April 23, 1980, Hutchinson and Chuck Bundschu, a licensed real estate broker, negotiated and obtained a sales contract between Hancock Harbor Properties, Ltd., a wholly owned subsidiary of Seago Group, Inc., seller, and Frank Hoffer, buyer and licensed real estate broker, in which Hoffer offered to purchase approximately 3.16 acres of unimproved acreage for $500,000. Thomas P. Hoolihan, general partner of Hancock Harbor, executed the contract on behalf of the partnership. Prior to presenting the contract to Hoolihan, Bundschu, Hoffer and Hutchinson decided on a 30 percent, 40 percent 30 percent respective co- brokerage split on the $50,000 commission due on the sale of the Hancock Harbor Property. The co-brokerage fee split was typed on the bottom of the contract submitted to Hoolihan and was signed by the three brokers. The commission due to Hutchinson was made payable to L. E. Hutchinson Realty, Inc. On April 25, 1980, the contract with the original co-brokerage split was presented to Hoolihan who refused to agree to its co-brokerage split provision. In the presence of Hutchinson, Hoolihan informed Bundschu and Hoffer that he would not pay a commission to Hutchinson because he was a salaried employee of the Seago Group and not entitled to a commission on the sale of this property. Accordingly, the co-brokerage fee provision of the executed contract was never signed by the seller, Thomas P. Hoolihan. Instead, on April 25, 1980, Bundschu, Hoffer and Hoolihan agreed to a split of $20,000 to Hoffer and $15,000 to Bundschu in lieu of the split specified on the bottom of the contract. At the closing on July 18, 1980, which was held at Coastland Title Company, a closing statement was prepared which shows that real estate commissions were disbursed to Chuck Bundschu Realty, Inc. ($15,000), Marinatown Realty, Inc., ($15,000) and Hoffer's firm, Landco, Inc., ($20,000). The checks were written and disbursed following a conversation between an official of Coastland Title Company and Hoolihan in which Hoolihan informed the official that Hutchinson was a Seago employee and he would not agree to pay a $15,000 commission to him under such circumstances. On July 18, 1980, a check for $15,000 was issued by Coastland Title Company to Marinatown Realty, Inc. The $15,000 represented Hutchinson's share of the co-brokerage agreement. When received on July 18, 1980, by Billie Robinette, the broker for Marinatown Realty, the check was signed over by her to Seago Group, Inc., since in her opinion it did not represent commissions earned by Marinatown Realty. The oral agreement between Hutchinson and Hoolihan was to terminate at the end of April, 1980, or approximately five days after the Hoffer contract was presented. Hoolihan offered to renew the contract without a provision for a guaranteed salary because Marinatown Realty had been consistently losing money since its incorporation. On May 6, 1980, Hoolihan received a letter of resignation from Hutchinson and concluded that his offer had been rejected. In early May, 1980, Hoolihan received a call from Ms. Robinette, who had been employed as Hutchinson's secretary, regarding filling the open brokerage position at Marinatown Realty, Inc. Hoolihan discovered from Ms. Robinette that Hutchinson had paid himself 50 percent of the commissions due Marinatown Realty, Inc., for the management of condominium rentals. After examining the check stubs from Marinatown's bank account, Hoolihan took personal possession of all the books and records of the company and had the office locks changed. When he examined the books and records of the realty company, Hoolihan realized that his assumption that Hutchinson Realty, Inc., became inactive when Marinatown Realty, Inc. was formed in January, 1979, was erroneous and that Hutchinson had operated his own realty company, L. E. Hutchinson Realty, Inc., while employed by Marinatown Realty, Inc. Although he held multiple licenses, Hutchinson denied that a conflict ever existed between his duties to Marinatown Realty, Inc., and his own company, L. E. Hutchinson Realty, Inc. When questioned during the final hearing regarding how he decided where to list properties while he was the broker for both companies, the following exchange occurred between Hutchinson and counsel for Marinatown Realty, Inc.: Q Let me ask you, Mr. Hutchinson, how would it be decided when you were to go out and list property as to whether or not that property would be listed under Marinatown Realty or L. E. Hutchinson Realty, Inc.? Who would make that determination? A I would. Q Solely on your own? A I had no contract with anyone. I had nothing in writing to direct me where to place any business. Q So this would be solely your decision as to how you would list the property? Either Marinatown Realty or L. E. Hutchinson Realty? A If I secured the listing it was my dis- cretion as to where I listed the real estate. I had the choice of one of two companies. * * * Q If you were to list property in my hypo- thetical with Marinatown Realty, is it not a fact that they would receive, and being Marinatown Realty, would receive one half of the commission and you, as the broker, would receive the other half? A That was what I did. Q So it would certainly be beneficial to Seago to have you list as much property as you could with Marinatown Realty because they, in fact, owned the stock with Marinatown Realty, is that not true? A Yes, sir. Q When you would list property with L. E. Hutchinson Realty, Inc., would you do this with the full knowledge, consent and permission of Marinatown Realty, Inc.? A Yes, sir. Q How would you say that you gave full consent when you just testified that it was solely up to you as to how you would list property? A If I solely decided, I give my consent. I don't have anybody else to answer to. (T. pp. 108-110) During the period that Hutchinson was a broker for Marinatown Realty and L. E. Hutchinson Realty, Hutchinson believed his primary duty was toward his own company as illustrated by the following exchange between counsel for Respondent and the complainant: Q It's a fair statement to say that you, as a broker for Marinatown Realty, Inc. didn't make a whole lot of money for Marinatown Realty, did you? A I didn't run the P & L statement. Q I'm asking you as being the broker. You didn't make a lot of money for Marinatown Realty, Inc., did you? A I made as much money for them as I did for the responsibility. Q Well, did L. E. Hutchinson Realty, Inc. make a lot of money during that period of time? MR. FERNANDEZ: Objection as to relevancy, this whole line of questioning. MR. NEEL: Your Honor, it isn't. It's germaine. HEARING OFFICER: Objection overruled. THE WITNESS: I'm sorry, the question? Q Did L. E. Hutchinson Realty, Inc. make a lot of money during this period of time? A That's relative. Q In comparison to what money Marinatown Realty made? A Yes, sir, because L. E. Hutchinson Realty had a thirty thousand retainer that was coming in up until April 30th. Q From Seago? A Certainly. Q So L. E. Hutchinson Realty, Inc. made a lot more money than Marinatown Realty, Inc., didn't they? A That's the way its supposed to work. Q And, again, it was at your sole dis- cretion as to how you would list the properties; under which principal. A Yes, but I asked for a specific con- tract and never got it. (T. pp. 124-125) The Administrative Complaint in this case was filed on July 22, 1981. The preliminary investigative report compiled by Robert Corno, DPR Investigator, was filed on September 24, 1981 and the final investigative report was filed on September 30, 1981. The following is a synopsis of the investigator's findings and recommendation: That the COMPLAINANT [Hutchinson] worked for the SUBJECT [Hoolihan] and their contractual agreement was verbal. COMPLAINANT was paid on a salary/commission basis by companies of which SUBJECT is Chief Officer. That the COMPLAINANT filed civil action suit against SUBJECT in this case and it was dismissed with prejudice. That prior investigation by the DPR re- commended that no action be taken against the SUBJECT in this case. That two weeks after this investigation was undertaken, an Administrative Com- plaint was being filed by the DPR against the SUBJECT. That the existing BROKER for MARINATOWN REALTY, INC. was not involved in this case, and that since the time of the above referenced transaction, the SUBJECT has acquired his BROKER'S license #020462 which had no effect in this case. That conflicting statements by inter- viewers, namely former and present em- ployees and other agents involved in this case revealed that there is a reasonable doubt for probable cause against the SUBJECT. (Respondent's Exhibit 1) As noted by Investigator Corno, this was the second time Marinatown Realty had been investigated in relation to this case. In both instances a recommendation that no action be taken against the Respondent was apparently made. At the final hearing on December 1, 1981, counsel for the Department saw the complete investigative report, including the investigator's recommendation of a lack of probable cause, for the first time. Count II of the Administrative Complaint alleges that Hutchinson is entitled to compensation for services rendered on the following sales contracts: Seago Group, Inc. as seller, to Michael T. and Judith Marchiando as buyers, Seago Group, Inc. as seller, to John E. and Charlotte A. Ferguson as buyers, and Seago Group, Inc. as sellers, to Kenneth J. Dawson as buyer. In regard to the first transaction, the Marchiandos were personal friends of the son-in-law of Seago's major shareholder, Mr. R. Berti. Hutchinson's role in this transaction was limited to preparing the contract and mailing it to the Marchiandos for signature. Hutchinson had no part in selling this property and never met the Marchiandos. The sale of the Ferguson's arose in a manner similar to the Marchiandos. Mr. Ferguson is the manager of a Detroit company owned by Mr. Berti. Similarly, Mr. Dawson works for Mr. Berti in Detroit as an accountant. These sales were made by Mr. Berti and Hutchinson furnished administrative assistance by completing the contracts and sending them to these individuals for signature. Under the terms of the agreement between Hoolihan and Hutchinson, a commission was not due on these properties to Hutchinson since these were not outside listings and his agreement with Hoolihan did not contemplate that commissions be paid in such situations.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Administrative Complaint filed against Marinatown Realty, Inc. be dismissed. DONE and ORDERED this 28th day of April, 1982, in Tallahassee, Florida. SHARYN L. SMITH Hearing Officer Division of Administrative Hearings Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 28th day of April, 1982. COPIES FURNISHED: Xavier J. Fernandez, Esquire NUCKOLLS JOHNSON & FERNANDEZ Suite 10, 2710 Cleveland Avenue Fort Myers, Florida 33901 James A. Neel, Esquire 3440 Marinatown Lane, N.W. Fort Myers, Florida 33903 Frederick H. Wilsen, Esquire Assistant General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Samuel R. Shorstein, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Carlos B. Stafford Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
