The Issue The petition that initiated this proceeding challenged the taxes, interest, and penalties assessed against Petitioner by Respondent following an audit and identified the following four issues: Issue One. Does the sale of obsolete games at the "annual game sale" qualify for exemption from sales tax as an occasional or isolated sale? Issue Two. Are the purchases of video games exempt from Florida sales and use tax as sales for resales? Issue Three. Are the purchases of plush exempt from Florida sales and use tax as sales for resale or, alternatively, does taxation of the vending revenues and taxation of purchases of plush represent an inequitable double taxation? Issue Four. Should penalties be assessed based upon the facts and circumstances [of this proceeding].
Findings Of Fact Petitioner is an Illinois Corporation headquartered in Texas and licensed to do business in Florida. Petitioner owns and operates video and arcade game amusement centers, hereafter referred to as centers. Petitioner sells to center customers the opportunity to play the games in the centers. Petitioner purchases the games from sources outside itself; it does not manufacture the games it makes available in its centers. Petitioner paid sales tax upon the purchase of machines purchased in Florida and use tax upon the purchase of machines outside Florida and imported for use inside Florida. The Florida Department of Revenue (DOR) is the State of Florida agency charged with the enforcement of Chapter 212, Florida Statutes, Tax on Sales, Use and Other Transactions, the Transit Surtax, and the Infrastructure Surtax -- the state and local taxes at issue in this case. The DOR audited Petitioner for the period December 1, 1986 through November 30, 1991, hereafter referred to as the audit period. During the audit period, Petitioner operated 12 centers in the State of Florida. For purposes of the instant litigation, references to the centers will mean only the centers located in Florida. The audit determined that Petitioner owed $51,593.37 in sales and use tax, $440.81 in transit surtax, and $1,459.80 in infrastructure surtax. Each of the sums assessed included penalty and interest accrued as of September 13, 1994. In accordance with section 120.575(3), Florida Statutes, Petitioner paid $32,280 as follows: a. sales and use tax $22,411 b. interest 8,575 c. charter transit surtax 234 d. interest 64 e. infrastructure surtax 750 f. interest 246 The centers make available three types of games. The games are activated either by a coin or a token that is purchased at the center. Video games include pinball machines and electronic games which do not dispense coupons, tickets or prizes. Redemption games include skeeball, hoop shot and water race which dispense coupons or tickets which the player earns according to his or her skill. Merchandise games include electronic cranes which the operator or player maneuvers to retrieve a prize directly from the machine. Merchandise games do not dispense coupons or tickets. The tickets earned in the course of playing redemption games can be exchanged for prizes displayed at the centers. The prizes obtained directly from the merchandise games and exchanged following receipt from redemption games are termed "plush." Plush may be obtained only by seizing it in a redemption game or by redeeming coupons earned during the play of redemption games; it may not be purchased directly for cash. A merchandise game does not dispense an item of plush upon the insertion of a coin or token and activation of the crane's arm -- acquisition of plush requires a certain level of skill on the player's part. A redemption game does not dispense an item of plush upon the insertion of a coin or token and the push of a button -- acquisition of tickets requires a certain level of sill on the player's part. Petitioner purchases plush in bulk and distributes it to the various centers. Each of the centers sells some of its games to individual buyers. Petitioner's headquarters coordinates the sale. For each of the years in the audit period, the centers sold games at various dates. Petitioner characterizes as its "annual sale" the period November 1 through January 10 when most of the sales took place. The specific dates for the sales that took place during the audit period follow; numbers in square brackets indicate the number of sales on a particular date if there is more than one. a. December 1986 through July 1987 -- no information available -- but more than one sale was made during this time. b. November 1987: 2, 5, 7, 10, 17, 18[2], 20, 22, 25, 28[3] c. December 1987: 2, 4, 7, 15, 18, 23 d. November 1988: 4, 5, 7[2], 9, 10, 11, 17, 18, 20[2], 21[2], 25, 26, 28, 29 e. December 1988: 6, 7, 8, 10[2], 12[2], 16, 21, 22, 23[2], 24 f. January 1989: 3, 6, 7[4], 9, 12 g. November 1989: 6, 15, 16[2], 20 h. December 1989: 1, 6, 10, 22, 29[3], 31 January 1990: 26 March 1990: 26 April 1990: 26 l. June 1990: 12 m. November 1990: 3, 9, 13[2], 14, 16, 19, 24, 26 n. December 1990: 1, 2, 7, 20 January 1991: 8 May 1991: at least 1 q. November 1991: 4, 9, 10, 14, 15, 21 Petitioner did not provide its machine vendors resale certificates upon Petitioner's purchase of the games. Petitioner did not provide its plush vendors resale certificates upon Petitioner's purchase of plush. Petitioner did not apply for a refund of sales tax paid upon its purchase of games in Florida.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent enter a final order that adopts the findings of fact and the conclusions of law contained herein. The assessments against Petitioner should be sustained to the extent the assessments are consistent with the findings of fact and the conclusions of law contained in this Recommended Order. DONE AND ENTERED this 28th day of June, 1996, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON, 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 28th day of June, 1996.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the administrative complaint filed against H. Ernest Morris, Sr. be DISMISSED with prejudice. DONE and ENTERED this 3rd day of May, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER 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 3rd day of May, 1984. COPIES FURNISHED: Tina Hipple, Esquire P. O. Box 1900 Orlando, Florida 32802 Carmine M. Bravo, Esquire 1450 State Road 434 Longwood, Florida 32750 Steven H. Coover, Esquire P. O. Drawer H Sanford, Florida 32771 Fred M. Roche, Secretary 130 North Monroe Street Tallahassee, Florida 32301 Mr. Harold R. Huff, Director Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION Petitioner, vs. CASE NO. 0034049 DOAH NO. 83-3273 H. ERNEST MORRIS, SR. Respondent. /
Findings Of Fact Petitioner is a franchised truck dealer for three manufacturers, including Respondent. The parties entered into a three-year franchise agreement on September 17, 1986, which agreement took effect on September 15, 1986 (Dealer Agreement). Under the Dealer Agreement, Petitioner is assigned a 12-county area that includes Polk County, Florida. In March, 1987, John Drakesmith entered into negotiations with R. N. Heintzelman for the purchase of all of the stock of Petitioner. The negotiations culminated in the execution on July 8, 1988, of an Agreement for Purchase, Sale and Redemption of Stock in Heintzelman's Truck Center, Inc. (Stock Purchase Agreement). The transaction was closed on the same day, and Mr. Drakesmith, as the new owner of Petitioner, assumed the management of Petitioner's business at that time. The Dealer Agreement provides that, to the extent permitted by local law, Respondent may terminate the agreement prior to its expiration date in the event of "[a]ny change... in the ownership or active management of [Petitioner] from that indicated [as described above], without the prior written consent of [Respondent]." The Dealer Agreement provides that, to the extent permitted by local law, Respondent may terminate the agreement prior to its expiration date in the event of "[a]ny actual or attempted assignment of this Agreement or any right or obligation hereunder." Around the end of May, 1987, one of Respondent's regional sales managers learned of the negotiations between Mr. Drakesmith and Mr. Heintzelman. On June 24, 1987, J. L. Brown, Respondent's director of dealer relations, telephoned Mr. Drakesmith at his Ford truck dealership in Cleveland to discuss his impending purchase of the stock of Petitioner. Mr. Drakesmith confirmed that a sale was taking place. Mr. Brown indicated that he and some other representatives of Respondent were going to be in Cleveland and would like to meet Mr. Drakesmith. They tentatively agreed to meet on July 2, 1987. By letter dated June 24, 1987, Mr. Brown confirmed the conversation of the same day. The letter informed Mr. Drakesmith that the Dealer Agreement "is a personal service agreement which can not be transferred or assigned." Accompanying the letter was an application package for a Western Star franchise. On July 2, 1987, Mr. Brown, Dennis Trittin, Respondent's parts and service representative, Mr. Roland Smith, Respondent's regional sales manager for the region including Florida, and Richard Dean, Respondent's Great Lakes regional sales manager, met with Mr. Drakesmith at his Cleveland dealership. Respondent's representatives told Mr. Drakesmith that they were looking forward to his marketing their product more aggressively than Mr. Heintzelman had in the past. They discussed Mr. Drakesmith's possible interest in handling Western Star trucks in his Cleveland dealership. Mr. Brown left Mr. Drakesmith with another copy of the application package. Following the July 2 meeting, Mr. Drakesmith concluded that Respondent was very favorably disposed toward having him as a dealer, although he recognized that he had not yet been formally approved. By letter dated July 8, 1987, Mr. Brown confirmed their July 2 discussion of Mr. Drakesmith's "interest in representing the Western Star product line in Orlando and possibly Cleveland." He added that he was looking forward to receiving the completed documentation "in order to formally complete the application process for the Orlando Dealership." Mr. Drakesmith mailed the completed application, together with some but not all materials, to Respondent on July 13, 1987. The materials were mailed to Respondent at the address shown in the application as that to which the application should be mailed. Respondent had moved from that address over one year earlier. When the application package was returned to Petitioner a few days later as undeliverable, Mr. Drakesmith had it remailed promptly to Respondent's correct address. The remailed package was never received by Respondent or, if received, lost prior to its delivery to Mr. Brown, who never received it. Two or three weeks after the closing, Mr. Smith visited Mr. Drakesmith at Petitioner's dealership. At the time, Mr. Heintzelman and his former general manager, Harry Gates, were both gone. The purpose of the visit was for Mr. Smith and Mr. Drakesmith to get acquainted with each other. Sometime after his visit and before September 15, 1987, Mr. Smith told Mr. Brown by telephone that Mr. Drakesmith had taken over Petitioner and was operating the dealership. Between Mr. Smith's visit in late July and September 15, 1987, Mr. Drakesmith had one or two telephone conversations with Mr. Smith concerning pending orders for trucks that Petitioner had submitted and sales in general. At no time during the visit or telephone calls did Mr. Smith mention the receipt, nonreceipt, or approval of Mr. Drakesmith's application. In August, 1987, Respondent received an expression of interest from a third party for a dealership including the Polk County area. At the time, Respondent had no dealers in Florida except for a dealer in Jacksonville and Petitioner. By letter dated September 15, 1987, Mr. Brown gave Mr. Heintzelman, addressed at Petitioner's dealership, notice of the termination of the Dealer Agreement, effective 90 days from the date of the receipt of the letter. The grounds for the termination were that Petitioner had breached the Dealer Agreement by assigning or attempting to assign the agreement and changing its active management or selling or otherwise changing its ownership without Respondent's prior written consent. The letter also stated that Petitioner had violated Florida statutory law by changing its executive management or ownership or assigning the agreement without first giving Respondent written notice and without providing Respondent with the opportunity and information necessary to evaluate and, if appropriate, object to the new owner, manager, or assignee. Copies of the letter were provided to Mr. Drakesmith and the Florida Department of Highway Safety and Motor Vehicles (Department). Mr. Drakesmith telephoned Mr. Brown on or about September 17 to object to the termination. Mr. Brown explained that he had felt that Mr. Drakesmith had lost interest in the Western Star franchise because he had not bothered to submit his application. When Mr. Drakesmith replied that he had sent it in, Mr. Brown said that he had not received it and suggested that Mr. Drakesmith resubmit it. On September 22, Mr. Drakesmith resubmitted the application materials that he had mailed on July 13 and remailed a few days later. After additional materials were requested and provided, Mr. Brown offered Petitioner a new dealer agreement with the same territory as in the Dealer Agreement, except that Polk County would be replaced by two less profitable counties. By letter dated September 22, 1987, the Department informed Petitioner of its receipt of a copy of the September 15 letter and informed Petitioner of its right to protest the proposed cancellation. The letter called Petitioner's attention to Section 320.641(3), Florida Statutes, which was cited in full. The letter also contained a copy of Sections 320.60-320.70, Florida Statutes. The letter informed Petitioner that it had 90 days from the date of the September 15 letter within which to file with the Department a "verified (notarized) complaint" for a determination of an unfair cancellation of the Dealer Agreement. By letter dated October 23, 1987, Petitioner notified the Department of its protest of the intended cancellation. The letter was signed by Mr. Drakesmith as president of Petitioner. The letter bore only the signature of Mr. Drakesmith, which was not notarized. The letter did not contain any information beneath Mr. Drakesmith's signature and title. As a result of a conversation between Henry C. Noxtine of the Department and Mr. Drakesmith, Mr. Drakesmith learned that his October 23 letter did not meet the verification requirement. Lacking the original letter, Mr. Drakesmith had an employee of Petitioner, Eileen C. Mercer, retype the letter and add in the lower right-hand corner of the second page the notation, "Signed before me this Oct. 29, 1987." She then signed beneath the notation and added her notary's stamp showing that her commission expires August 28, 1990. The record does not reflect whether Ms. Mercer applied her notary's seal to the letter. However, at no time did Ms. Mercer require Mr. Drakesmith to swear or affirm that the information in the October 23 letter was true and correct. Following the above-described additions, the letter was promptly resubmitted to the Department. By letter dated November 24, 1987, the Department transmitted the file to the Division of Administrative Hearings on the sole issue of the propriety of the cancellation of Dealer Agreement. The Department's transmittal letter, a copy of which was sent to and received by Mr. Drakesmith, noted that the Department had received a "verified" complaint from Petitioner. Mr. Drakesmith personally performs the duties of a general manager at Petitioner's dealership. Mr. Drakesmith is of good moral character. At no time has Respondent filed a verified complaint for a determination of Mr. Drakesmith's moral character.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered dismissing the complaint of Petitioner for lack of subject-matter jurisdiction. ENTERED this 15th day of July, 1988, in Tallahassee, Florida. ROBERT E. MEALE 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 15th day of July, 1988. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 87-5308 Treatment Accorded Petitioner's Findings 1-2. Adopted in substance. Adopted, except that the last sentence is rejected as contrary to the evidence. Adopted, except that the Stock Purchase Agreement was signed on July 8, 1987, and by other parties as well. Adopted in substance. Rejected as irrelevant and legal argument. 7-9. Adopted. 10-11. Adopted in substance. 12-13. Adopted. Adopted, except that reliance is irrelevant. Adopted in substance. 16,18. Adopted. 17. Rejected as irrelevant. Treatment Accorded Respondent's Findings 1,3,4. Adopted. 2. Rejected as irrelevant. Adopted in substance. Rejected as irrelevant. Adopted. 8,14,16. Rejected as irrelevant. 15. Adopted in substance. 17,18. Adopted. 19-21. Rejected as irrelevant. 22-23. Adopted. Adopted in substance. However, the materials that Mr. Drakesmith sent to Respondent and when he sent them is irrelevant. Rejected as recitation of testimony and cumulative. Adopted, except that second sentence is rejected as irrelevant. Rejected as irrelevant. 28,29. Adopted in substance. 30-32. Rejected as irrelevant. Adopted. Adopted in substance. 35-37. Rejected as irrelevant. Adopted, except that last 17 words are rejected as irrelevant. Adopted, except that the cause offered for the Issuance of the termination notice is against the greater weight of the evidence. 40-44. Adopted. Rejected as irrelevant. Adopted in substance. Rejected as unclear. Adopted, except that the last 16 words are rejected as legal argument. 49-51. Adopted in substance. 52-57. Rejected as irrelevant. COPIES FURNISHED: Joseph E. Foster, Esquire Akerman, Senterfitt & Eidson Post Office Box 231 Orlando, Florida 32802 Dean Bunch, Esquire Rumberger, Kirk, Caldwell, Cabaniss, Burke & Wechlser, P.A. 101 North Monroe Street, Suite 900 Tallahassee, Florida 32301 Enoch John Whitney General Counsel Department of Highway Safety and Motor Vehicles Neil Kirkman Building Tallahassee, Florida 32399-0500
The Issue The issue in this case is whether Respondent failed to execute a written agreement with the owner of property to be auctioned and, if so, what penalty should be imposed.
Findings Of Fact Respondent is a licensed auctioneer, holding license number AU 0000415. Respondent and Danny Mitchell are coworkers at a County mosquito control agency. Mr. Mitchell and his wife Joan were selling their house and moving out of town. Wanting to sell their personal possessions fast, they agreed that Mr. Mitchell would contact Respondent and ask him about conducting an auction. In late March 1993, Respondent visited the Mitchells at their home to view the property to be auctioned. Based on the number and quality of the property available for auction, Respondent realized that the auction would not raise much money. He estimated the value of the property to be auctioned at $1200 to $2000. Respondent did not require the Mitchells to sign a contract right away. Because of the friendship between Mr. Mitchell and Respondent, Respondent allowed the Mitchells to sell or give away items without Respondent's approval prior to the auction, and they sold $525 worth of items in the interim. Even the auction date was left open. The Mitchells did not want the auction to take place until they were closing on the sale of their house. For the next three months, the Mitchells sold and gave away what property they could. Then, without much notice, they told Respondent that they wanted the auction to take place. The Mitchells and Respondent agreed that the auction would take place July 24, 1993. Respondent discussed with Mr. Mitchell the need for advertising, which would come out of the Mitchells' share of the proceeds. The Mitchells agreed on fairly modest advertising. Respondent never obtained a written contract in the days prior to the auction. Although he was in frequent contact with Mr. Mitchell at work, there was some awkwardness in presenting the contract to him because Mr. Mitchell does not read or write. Respondent instead agreed to meet the Mitchells at their house on the morning of the auction, and he intended to present them a contract at that time to sign. Respondent appeared at their house at the agreed-upon time with a contract to be signed. However, he did not insist that they read and sign the contract because, as Respondent arrived, the Mitchells were rushing out of the house to take care of other matters. Consistent with their intent all along, the last instructions that the Mitchells gave Respondent was that he had to sell everything so the new homeowners could get into the house and the Mitchells would not have to move anything. Only about ten bidders appeared for the auction. Bidding was low. Respondent wanted to stop the auction, but had no way to contact the Mitchells, who did not try to contact him that day. Recalling the final instructions about selling everything, Respondent continued with the auction. After about an hour and a half, the auction ended with everything sold. Respondent claims that he received $499.50 in sale proceeds. It is unnecessary to determine whether this testimony should be credited. Respondent did not hear from the Mitchells for two weeks after the auction. One day, Mr. Mitchell returned to work from his vacation and asked for his money. Bringing the money the next day to work, Respondent gave the Mitchells a check for $200 with a settlement sheet itemizing the expenses. Upon the insistence of Mrs. Mitchell for documentation of the auction sales, Respondent later provided the Mitchells with copies of the clerking tickets. The estimated value of the auctioned property exceeded $500.
Recommendation It is RECOMMENDED that the Board of Auctioneers enter a final order reprimanding Respondent. ENTERED on July 28, 1995, in Tallahassee, Florida. ROBERT E. MEALE 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 on July 28, 1995. COPIES FURNISHED: Linda Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Susan Foster, Executive Director Board of Auctioneers Northwood Centre 1940 North Monroe Street Tallahassee, FL 32399-0792 Charles F. Tunnicliff, Chief Attorney Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792 Bruce C. Scott 2424 McGregor Boulevard Ft. Myers, FL 33901
Conclusions This matter came before the Department for entry of a Final Order upon submission of an Order Closing File and Relinquishing Jurisdiction by R. Bruce McKibben, Administrative Law Judge of the Division of Administrative Hearings, pursuant to Respondent’s Notice of Stipulation and Agreement, a copy of which is attached and incorporated by reference in this order. The Department hereby adopts the Order Closing File and Relinquishing Jurisdiction as its Final Order in this matter. Accordingly, it is hereby ORDERED that this case is CLOSED. Filed July 5, 2012 12:18 PM Division of Administrative Hearings DONE AND ORDERED this Be) day of June, 2012, in Tallahassee, Leon County, ~ lt Chief Bureau of Issuance Oversight Division of Motorist Services Department of Highway Safety and Motor Vehicles Neil Kirkman Building, Room A338 Tallahassee, Florida 32399 Florida. Filed with the Clerk of the Division of Motorist Services this QA_ day of May, 2012. Tink Nalini Vinayak, Dealer Yicense Administrator NOTICE OF APPEAL RIGHTS Judicial review of this order may be had pursuant to section 120.68, Florida Statutes, in the District Court of Appeal for the First District, State of Florida, or in any other district court of appeal of this state in an appellate district where a party resides. In order to initiate such review, one copy of the notice of appeal must be filed with the Department and the other copy of the notice of appeal, together with the filing fee, must be filed with the court within thirty days of the filing date of this order as set out above, pursuant to Rules of Appellate Procedure. JB/jde Copies furnished: Dwight J. Davis, Esquire King & Spalding, LLP 1180 Peachtree Street Northeast Atlanta, Georgia 30309 i) Todd R. Legon, Esquire Legon Ponce & Fodiman, P.A. 1111 Brickell Avenue, Suite 2150 Miami, Florida 33131 William J. Denius, Esquire Kilgore, Pearlman, Stamp, Ornstein & Squires, P.A. Post Office Box 1913 Orlando, Florida 32801 William E. Williams, Esquire Gray Robinson, P.A. 301 South Bronough Street, Suite 600 Tallahassee, Florida 32301 R. Bruce McKibben Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 Nalini Vinayak Dealer License Administrator
The Issue Whether Respondent, a real estate broker, committed the offenses alleged in the Administrative Complaint dated February 16, 2010, and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular Section 20.165 and Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto. At all times relevant to this proceeding, Respondent was licensed in the State of Florida as a real estate broker, having been issued license BK-575099. Respondent is registered as a sole proprietor broker, trading as Atlantic Auction Realty. On February 21, 2008, Respondent, acting through his company, entered into a contract (auction contract) with David Mover to auction a townhouse owned by Mr. Mover located at 8626 S.W. 94th Street, Miami, Florida (the subject property). Mr. Mover had been trying to sell the subject property for approximately two years. In March 2007, Mr. Mover became unable to make the mortgage payments on the subject property. On February 21, 2008, the Circuit Court in and for Dade County, Florida, entered a Final Judgment of Mortgage Foreclosure (Judgment of Foreclosure) against the subject property in favor of Washington Mutual Bank, the holder of the first mortgage. The amount of the judgment was $245,727.25. The Judgment of Foreclosure ordered that the property be sold at public sale on April 24, 2008. At the time of the auction, there was a second mortgage on the subject property owned by a trust. The approximate amount of the second mortgage was $120,000.00. The trust was a defendant in the foreclosure proceedings. Prior to the auction conducted by Respondent, the trustee of the trust indicated a possible willingness on the part of the trust to accept less than the balance owed on the second mortgage if the property were sold by private auction, as opposed to the public auction ordered by the Judgment of Foreclosure. However, the subject auction occurred prior to the trustee’s making a commitment to take less than the balance owed on the second mortgage. The price listed on the auction contract was $350,000.00. The minimum amount Mr. Mover wanted for the townhouse was $370,000.00, which would have been sufficient to satisfy the Judgment of Foreclosure and the second mortgage. Mr. Mover never agreed to accept less than $370,000.00 for the subject property.2 Mr. Mover understood that the $350,000.00 figure was a starting point for the auction.3 This was not an absolute auction. Mr. Mover had the right to refuse a bid less than $350,000.00. The auction contract contained the following provision in paragraph 3: 3. 10% BUYER’S PREMIUM will be added to the Buyer’s Bid and be the Auctioneer’s total commission. The auction contract provided that the auction would be on March 20, 2008. Respondent prepared a flyer that announced the terms of the auction. Prospective bidders were notified by the flyer that a 10% deposit would be required the day of the sale and that there would be a buyer’s premium of 10% of the bid. Prospective bidders were required to have a cashier’s check in the amount of $10,000.00. The “Auction Terms and Conditions” included the following provisions: Bidder Registration. The auction is open to the public and your attendance is welcomed. To register, you must display a cashier’s check in the amount as set forth in each property description. Upon being declared the top bidder, the cashier’s check will be applied as a partial deposit, and the deposit must be increased to equal (10%) [sic] of each contract price. Please be advised there are no exceptions. . . . Contract and Deposit. Bids may not be retracted once accepted by the auctioneer. Upon being declared top bidder, the cashier’s check will be applied as a partial deposit. . . . The auction was conducted in the driveway of the subject property. Mr. Mover waited in the upper area of the subject property during the auction. Mr. Gordon opened the bidding at the base bid (the bid amount prior to tacking on the buyer’s premium) of $285,000.00, but agreed to up the base bid to $300,000.00 when Respondent agreed to reduce the buyer’s premium to $10,000.00 from 10% of the base bid amount ($28,500.00 for a base bid of $285,000.00 or $30,000.00 for a base bid of $300,000.00). Respondent went upstairs and wrote down the amount of the bid and told Mr. Mover that he would reduce the buyer’s premium to $10,000.00 if Mr. Mover would accept that price. Mr. Mover refused to accept that bid. Mr. Mover believed that the auction had failed to sell the property. After talking with Mr. Mover, Respondent concluded the auction by declaring Mr. Gordon, bidding on behalf of himself and his wife, the winning bidder at the auction. Mr. Gordon’s base bid was in the amount of $300,000.00 plus a buyer’s premium in the amount of $10,000.00, bringing the total bid to $310,000.00. After being declared the winning bidder, Mr. Gordon gave to the Respondent the $10,000.00 cashier’s check he had brought to the auction. Mr. Gordon signed a document styled “Contract for Sale and Purchase at Auction” (Purchase Contract), which reflected a total selling price of $310,000.00 (this figure included the buyer’s premium) and a requirement that the closing date be on or before April 19, 2008. The Purchase Contract contained the following provision relating to the Buyer’s Premium: 8. BUYER’S PREMIUM – WHEN EARNED: it is understood and agreed by the Seller and the Buyer that the Buyer’s Premium is paid to the Auctioneer at the time of the Auction Sale and is the sole property of the Auctioneer, and he is entitled to this money as his fee at the time of said payment. Respondent told Mr. Gordon that he would cash the check Mr. Gordon gave to him on March 20, 2008, after Mr. and Mrs. Gordon had an executed contract signed by both parties. Respondent cashed Mr. Gordon’s check on March 21, 2008. Respondent never presented the Purchase Contract to Mr. Mover, and the transaction never closed. The Gordons were unable to secure financing because they had no contract. Mr. Gordon has made repeated demands for the return of the proceeds from the check he gave to Respondent. Respondent has refused those demands.4 Respondent was aware of the foreclosure proceeding before he conducted the auction. Respondent did not disclose the foreclosure proceeding to Mr. Gordon prior to the auction. After the auction, Mr. Mover filed for bankruptcy. Mr. Gordon filed no claim in that proceeding.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Division of Real Estate find Respondent guilty of the violations alleged in Counts I and II of the Administrative Complaint. For the violation found in Count I, it is recommended that the final order impose against Respondent an administrative fine in the amount of $1,000.00 and that it revoke his broker’s license. For the violation found in Count II, it is recommended that the final order impose an administrative fine in the amount of $250.00 and that it revoke his broker’s license. DONE AND ENTERED this 14th day of July, 2010, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of July, 2010
Findings Of Fact On September 19, 1974 Eleanor Van Treese, as agent for Futrell Company, obtained a listing on a residence located at 12250 S. W. 67th Avenue in Miami, Florida from Newton J. Mulford and Elizabeth N. Mulford, the record owners of said property. A copy of this sales management agreement was admitted into evidence as Exhibit number 1. Thereon was shown one existing mortgage with Coral Gables Federal, with a balance of approximately $47,500. At the time the Mulfords executed Exhibit number 1, a second mortgage in the amount of some $25,000 was also recorded against this property and foreclosure proceedings had been instituted. The holder of the second mortgage was James V. O'Connor. George Bender, a Miami attorney, was aware that foreclosure proceedings had been instituted against this property prior to the time that Futrell obtained the listing agreement. He called Mulford to inquire about purchasing the property, but apparently his offer was not high enough to interest Mulford. After the Futrell sign was placed in front of the house, Mrs. Capps met Mrs. George Bender at a social affair. When Mrs. Bender learned that Mrs. Capps was a real estate salesperson working for Futrell Company, she asked if she would show her the Mulford house. In late November or early December Mrs. Bender was shown the house and thereafter her husband also was shown the premises. On January 2, 1975 a final judgment of foreclosure was entered in the Circuit Court of the Eleventh Judicial District of Florida. Therein the court found that James V. O'Connor was the holder of a second mortgage on the premises in the principal sum of $25,000 together with interest accrued thereon from August 15, 1970 in the amount of $12,976.34. The court also awarded O'Connor $500 as a reasonable attorney's fee. The judgment further provided that the defendant, O'Connor, or any of the parties to the suit, may become bidders for purchase of the premises at the forthcoming sale thereof; and that the court would retain jurisdiction of the cause for the purpose of entertaining a Motion for Deficiency Judgment and "settle all other questions under the proceedings not settled by this order." O'Connor thereafter called Eleanor Van Treese to advise her that he had obtained the foreclosure order and that he would bid on the property when the judicial sale was held on the 15th of January. He further advised that he was anxious to turn over the property and get his money out of it. Mrs. Van Treese telephoned Mary Capps on January 10, 1975 to advise her of the information she had received from O'Connor. Not understanding the legal implication thereof Mrs. Capps decided that she should come to Mrs. Van Treese's house and the two of them talk to O'Connor regarding the property. This was done; and, with the two salespersons on the telephone with O'Connor, he read to them the judgment that he had obtained; advised them that he would be bidding on the property on January 15th and expected to purchase same; and that he would consider offers to purchase the property from him. Mrs. Capps, that same evening, called Mrs. Bender to advise that O'Connor was going to bid on the property on January 15th and was interested in selling the property. When Mr. Bender came home, Mrs. Bender and he discussed the purchase of the property and decided to submit an offer. Mrs. Bender so advised Mrs. Capps. The following morning, on Saturday, January 11th, Mr. and Mrs. Bender sent to the Futrell Company office and Mrs. Capps typed an offer to Purchase the property which the Benders executed. This was the deposit receipt and sales purchase agreement dated January 11, 1975 admitted into evidence as Exhibit number 2. While at the office Mr. Bender called another attorney, William A. Friedlander, who he considered to be more knowledgeable in real estate transactions than himself, for legal advice in the premises. Friedlander advised him that it was proper to submit an offer to O'Connor although O'Connor did not have present title and was therefore unable to execute a valid deed for the property until after he purchased the property at the foreclosure sale. Friedlander considered the contract would be based upon a condition subsequent, viz: the acquisition of title by O'Connor, and such contract would be enforceable. Friedlander was also aware that several judgments had been entered against Mulford and that Mulford would be unable to execute a contract and deliver clear title at the amount Bender was offering. This was so because the sum of first mortgage, second mortgage, real estate commission, and other judgments that had been entered against Mulford exceeded the amount Bender was offering to pay for the residence. He advised Bender that, if the foreclosure suit had joined all necessary parties, the deed obtained by O'Connor at the foreclosure sale would be good and O'Connor would be able to give a good and merchantable title. He further advised Bender that a contract with Mulford would have been futile due to the amount of the offer and unworkable due to the short period of time before the foreclosure sale in which to obtain the cash necessary to provide Mulford sufficient funds to pay off all his creditors and the mortgages. At the time the Benders executed the contract for the purchase of the residence in question it was their intention that the offer be presented only to O'Connor. Mary Capps presented this offer by the Benders (Exhibit 2) to O'Connor who accepted same on January 11, 1975. The $6,000 earnest money deposit was delivered by Mrs. Capps to the Secretary of the Futrell Company for deposit in the Futrell Escrow Account. No evidence was presented that the earnest money deposit has ever been refunded to the Benders or that they have requested this earnest money deposit to be refunded. Mr. and Mrs. Mulford were not advised of the existence of the offer to purchase dated January 11, 1975 until long after O'Connor purchased the property at the foreclosure sale.
