The Issue Whether Respondents committed the offenses set forth in the Administrative Complaint and, if so, the penalties that should be imposed.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints related to the real estate profession pursuant to the laws of the State of Florida. Respondent Valyne Batchelor is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0311190 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Batchelor was in care of Adventure Properties, Inc., 10800 N. Military Trail, Palm Beach Gardens, Florida 33410. Respondent Adventure Properties, Inc. was at all times pertinent to this proceeding a corporation registered as a real estate broker in the State of Florida having been issued license number 0238654 in accordance with Chapter 475, Florida Statutes. The last license issued to Respondent Adventure Properties, Inc., was at the address of 10800 N. Military Trail, Palm Beach Gardens, Florida 33410. At all times pertinent hereto, Respondent Batchelor was licensed and operating as a qualifying broker and officer of Respondent Adventure Properties, Inc. At all times pertinent hereto, Respondent Batchelor was a one-half owner of Dream Home Builders of Royal Palm Beach, Inc. (Dream Home). Joel B. Wingate was in the land clearing business and had done work prior to September 1988 for Dream Home and Dream Home's subsidiary, Redi Concrete. On September 18, 1988, Dream Home, the owner of a house located at 5510 Royal Palm Beach Boulevard, Royal Palm Beach, Florida, entered into a contract to sell that house to Joel B. Wingate, his wife, Eva C. Wingate, and his mother, Sarah F. Wingate. The contract reflected that the purchase price of the property was $87,400. The contract reflected that the sum of $4,400 was received by Adventure Properties as a deposit. The balance of the purchase price was to be paid by a first mortgage in the amount of $69,900 to be obtained by the Buyers from a lending institution and by a second mortgage in favor of Seller in the amount of $13,100 that was to be amortized over a period of 30 years with a balloon payment at the end of 5 years. Respondent Batchelor executed the contract on behalf of Adventure Properties and on behalf of Dream Home. In addition, Respondent Batchelor signed a statement on the face of the contract which acknowledged receipt of the deposit that was to have been held in escrow. The sum of $4,400 was not paid over to Respondent Adventure Properties or to Respondent Batchelor by the Wingates at the time the contract was executed and there never was a deposit made into the escrow account of Adventure Properties. Instead, Mr. Wingate agreed to pay the sum of $4,400.00 prior to the closing from sums he would earn from work he was performing for Redi Concrete. All parties pertinent to this transaction, including the bank that financed the first mortgage, knew that the Wingates had not paid that sum. The Wingates applied for financing with Security First Federal for financing of the first mortgage. The application for the loan was in the name of Sarah F. Wingate because of Joel Wingate's poor credit. On September 17, 1988, a "Good Faith Estimate of Settlement Charges" was prepared by Security First Federal which estimated that the settlement charges that would be due from the Wingates at closing would equal $4,328.30. On September 19, 1988, the Wingates, as buyer, and Dream Home, as seller, executed an addendum to the contract which provided that the Seller would pay up to $4,400 in closing costs and that the amount of the second mortgage would be increased from the sum of $13,100 to the sum of $17,500. The addendum provided, in pertinent part, as follows: Seller to pay up to $4,400 in closing costs. Buyer agrees to give seller a second mortgage in the amount of $17,500. Said Mortgage to be for a term of one year from date of contract and is to be paid as follows: Buyer agrees to do work for Redi Concrete, Inc. consisting of clearing, digging of necessary fill, building and compact ion of house pads according to Palm Beach County Building Codes, all grading and trash removal at contract price of $2,450 per lot. Of this amount $1,250 is to be applied to second mortgage until mortgage is paid in full. Additionally, any unused portion of the $4,400 allowance for closing costs not used for that purpose is to be applied to the second mortgage of $17,500. If any portion of this agreement is not kept, Redi Concrete, Inc. reserves the option to impose interest at the rate of 10% per annum against any unpaid amount of second mortgage. The fact that the amount of closing costs Dream Homes agreed to pay on behalf of the Wingates ($4,400) was identical to the amount that the Wingates were supposed to pay as a deposit ($4,400) was coincidence. Respondent Batchelor executed the addendum to the contract in her capacity as an officer of Dream Home. There was no attempt on the part of Respondents to deceive the Wingates, who had agreed to this method of financing the purchase. On October 24, 1990, the transaction closed. The buyers executed the first mortgage in favor of Security First Federal Savings and Loan Association in the principal amount of $69,900, and a second purchase money mortgage in favor of Dream Home in the principal amount of $13,100. (There was no explanation as to why the second mortgage that was executed at the closing was for $13,100 instead of for $17,500. Dream Home's letter of October 27, 1988, to the Wingates, signed by Ms. Batchelor, refers to a revised second mortgage that should be executed by the Wingates and recorded. There was no evidence that the revised second mortgage was, in fact, delivered to the Wingates or executed by them.) The second mortgage note required monthly payments commencing November 24, 1988, with a balloon payment of $12,965.22 due on October 24, 1991. The Wingates were aware of the manner in which their purchase of this property was financed. There was insufficient evidence to establish that Respondents dealt with the Wingates in anything other than an honest, straightforward manner. The unusual owner financing involved in this transaction was an attempt to accommodate the buyers. There was no intent by Respondents to deceive the Wingates, Dream Home, Security First Federal, or any other party pertinent to these proceedings. There was insufficient evidence to establish that the Wingates, Dream Home, Security First Federal, or any other party pertinent to these proceedings was, in fact, deceived or tricked by any act of Respondents. The Wingates moved into the premises prior to the closing of the transaction. Ms. Batchelor did not give the Wingates permission to move into the house prior to closing and she did not personally inform the Wingates that they would have to pay rent if they moved in prior to closing. Ms. Batchelor had been told by her business associate, Mr. Vander Meer, that the Wingates would pay a per diem rental fee until the closing. On October 27, 1990, Ms. Batchelor, on behalf of Dream Home, advised the Wingates that they were being charged a rental fee of $27.54 per day that they had occupancy prior to the closing. For the 36 days the Wingates were in the house prior to closing, the total rental claimed came to $920.52. The Wingates disputed the amount claimed for rent and had not, as of the date of the formal hearing, paid that amount. There was no evidence that Respondents were attempting to deceive, trick, or defraud the Wingates in any manner by claiming rent for the period between the time the Wingates moved in to the house and the time of the closing. By letter dated September 20, 1989, Ms. Batchelor, on behalf of Dream Home, notified the Wingates that the second mortgage balloon payment was $12,795.52 and that, according to her records, would become due on May 1, 1990. Although this statement of the due date is inconsistent with the instrument executed by the Wingates, there was no evidence that this statement was anything other than a mistake. The Wingates have defaulted on the first and the second mortgages. When Petitioner's investigator, Sharon Thayer, conducted an office inspection and escrow audit of Respondents' offices on March 13, 1990, Respondents did not have an enclosed room within which negotiations and closings of real estate transactions could be conducted and carried on with privacy. The negotiations between the buyers and sellers in the Wingate transaction were, however, conducted in private. Buyers were prompted to file a complaint against Respondents approximately one year after the closing when an unidentified bank officer told them they may have committed a fraud. Without knowledge or complicity of Respondents, Sarah F. Wingate falsified her loan application with Security First Federal Savings and Loan Association. Respondents received no commission in regard to the Wingate transaction. Respondents moved their offices and have corrected the deficiency related to the absence of an enclosed, private area.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order which finds that Respondent violated the provisions of Rule 21V-10.002, Florida Administrative Code, and consequently, Section 475.25(1)(e), Florida Statutes, which finds that Respondents violated the provisions of Section 475.25(1)(b), Florida Statutes, and which provides for the issuance of a letter of reprimand to said Respondents for such violations and the assessment of an administrative fine against Respondents in the amount of $500.00. DONE AND ENTERED this 3rd day of December, 1990, in Tallahassee, Leon County, Florida. CLAUDE B. ARRINGTON Hearing Officer The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of December, 1990. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 90-3587 The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner. The proposed findings of fact in paragraphs 1-15 and 19-22 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 16 are rejected as being unsubstantiated by the evidence. The entry on line 501 of the copy of the closing statement introduced as Petitioner's Exhibit 8 is too faint to read. However, the copy of the closing statement included as part of Joint Exhibit 1 reflects that the entry on line 501 is the figure $4,400 and not the figure of $4,100 reflected in Petitioner's proposed finding. The proposed findings of fact in paragraph 17 are rejected as being unnecessary to the conclusions reached. The proposed findings of fact in paragraph 18 are rejected as being contrary to the greater weight of the evidence. Although the proposed findings correctly reflect Ms. Batchelor's statement to Petitioner's investigator, that statement was made several months after the transaction and before Ms. Batchelor had had the opportunity to review her files. Other evidence regarding the addendum is found to be more credible as reflected by the findings made. The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent. The proposed findings of fact in paragraphs 1-21 are adopted in material part by the Recommended Order. The proposed findings of fact in paragraph 22 are rejected as being unnecessary to the conclusions reached. COPIES FURNISHED: James H. Gillis, Esquire Senior Attorney Florida Department of Professional Regulation Division of Real Estate 400 West Robinson Street Suite N-308 Post Office Box 1900 Orlando, Florida 32802 Lawrence Maxwell Fuchs, Esquire Fuchs and Jones, P.A. 590 Royal Palm Beach Boulevard Royal Palm Beach, Florida 33411 Darlene F. Keller Division Director 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 my observation of the witnesses and their demeanor while testifying, the documentary evidence received and the entire record compiled herein, I hereby make the following findings of fact: Phyllis I. Reaves is now and was at all times material to these proceedings, a licensed real estate salesman in the State of Florida having been issued license number 0351816. Annette J. Ruffin is now and was at all times material to these proceedings, a licensed real estate broker having been issued license number 0076385. From May 2, 1983 to October 18, 1984, Respondent Phyllis I. Reaves was licensed and operating as a real estate salesman in the employ of Respondent Annette J. Ruffin, as broker, c/o International Investment Development Center, Belleair, Florida or Century 21 A Little Bit Country, Brandon, Florida. At all time material hereto, Respondent Phyllis I. Reaves was a licensed mortgage broker in the State of Florida. DOAH CASE NO. 85-1008/1138. COUNT I No evidence was presented concerning the allegations in Count I.. COUNT II No evidence was presented concerning the factual allegations of Count II. COUNT III No evidence was presented concerning the allegations of Count III. COUNT IV On June 10, 1983, Respondent Reaves entered into a real estate sales contract with Emmett K. Singleton, as seller to purchase certain real estate through the use of a land trust. The sales contract listed a total purchase price of $67,000. C-21 A Little Bit Country was listed on the contract as escrow agent of the binder deposit. The property had an existing first mortgage of approximately $33,854. Respondent Reaves agreed to assume the new mortgage and requested that Mr. Singleton obtain a second mortgage in the principal amount of $26,400. Reaves agreed to assume this second mortgage amount while allowing Mr. Singleton to keep the proceeds. Mr. Singleton agreed that the balance of the sales price would be paid via a purchase money mortgage to Respondent Reaves in the principal amount of $9,643.99. Respondent Phyllis I. Reaves executed a Hold Harmless and Indemnity Agreement which read as follows: "Phyllis Reaves does agree to hold Emmett K. Singleton harmless and does idemnify him against any future liability or losses related to the mortgage on subject property at 1912 Hastings Drive, Clearwater, Florida." The sales transaction closed on July 7, 1983, and Respondent Reaves received a real estate brokerage commission in the amount of $1,955. The contract provided that the "listing agent agrees to pay C-21 A Little Bit Country cooperating agent 3.5% of the total purchase price on closing." The purchase money mortgage note was actually signed by Michael R. Fisher, as trustee, and not by Respondent Reaves. Respondent Reaves requested that Mr. Singleton give her the mortgage payment booklets and she would assume and pay off the existing and second mortgages. Singleton trusted Reaves and relied upon her statements that she would do as she promised. Respondent Reaves failed to assume and pay the notes and mortgages and thereby caused the seller to become delinquent with the lenders. After closing, Respondent Reaves, acting as the owner, obtained tenants for the property and collected rental payments. Respondent Reaves solicited and obtained $3,000 in connection with a lease/option agreement. The lease/option agreement provided that the sales price of the home would be $78,000 in three years. The rent would remain at $495 per month for three (3) years. The agreement further provided that $3,000 per year would be paid for three (3) years which would reflect a total down payment of $9,000. This down payment was considered the "option consideration." The agreement provided that one third of the option money would be returned if the option were not exercised. The tenants paid Respondent Reaves a total of $3,000 of the option consideration. The renters became concerned when they began to receive notices from Freedom Mortgage Company stating that certain mortgages on the home were overdue. The renters did not exercise the option to buy the home. The renter requested, but did not receive, $1,000 of the $3,000 option consideration back from Respondent Reaves. COUNT V On July 6, 1983, Respondent Reaves entered into a real estate sales contract with Stephen B. Barnes, as seller, to purchase certain real estate through the use of a land trust. The property was not listed", but a broker from Tam-Bay Realty approached Barnes and stated that he had a buyer. The purchase and sale agreement provided for a total purchase price of $91,000. The agreement listed "C-21 A Little Bit Country" as escrow-agent for the binder deposit. In addition, the purchase and sales agreement provided that: "Listing agent Tam-Bay agrees to pay C-21 A Little Bit Country cooperating agent 3.5% of the total purchase price on closing." The seller agreed that he would allow Respondent Reaves to assume the existing mortgage of approximately $52,990. Mr. Barnes then agreed to obtain a second mortgage in the amount of $18,925. The seller agreed that the balance of the sales price would be paid via a purchase money mortgage in the principal amount of $16,670.91 to be paid by Respondent Reaves. In addition, Mr. Barnes obtained a home improvement loan in the amount of $4,900. According to the agreements between Respondent Reaves and Mr. Barnes, Mr. Barnes was to keep the money obtained by the second mortgage and the home improvement loan. Respondent Reaves agreed to assume the existing mortgage, the second mortgage and the home improvement loan. Respondent Reaves advised Mr. Barnes to state to the lender that the purpose of the loans were for home improvements. Respondent Reaves executed a hold harmless and indemnity agreement which stated as follows: "Phyllis Reaves does agree to hold Stephen. B. Barnes harmless and does indemnify him against any future liability or losses related to the mortgages on property at 13222 - 88 Place North, Seminole, Florida." The sales transaction closed on August 10, 1983, and Respondent Reaves received a real estate brokerage commission in the amount of $2,513.45 and a mortgage brokerage fee of $946.25. Respondent Reaves failed to assume and pay the notes and mortgages and thereby caused the seller to become delinquent with the lenders. COUNT VI On September 3, 1983 Respondent Reaves entered into a real estate sales contract with Floyd and Christine Erwin, as sellers, to purchase certain real estate through the use of a land trust. The contract concerned Floyd and Christine Erwins' home located at 2805 Candlewood Drive in Clearwater, Florida. The purchase and sale agreement provided for a total purchase price of $53,000. The agreement listed C-21 A Little Bit Country as escrow agent for the binder deposit. The agreement further provided that the "listing agent agrees to pay C-21 A Little Bit Country cooperating agent 3.5% of the total purchase price on closing." Respondent Reaves agreed to assume the existing mortgages of $16,766.29 and $17,457.94. In addition, the sellers agreed to obtain a new mortgage in the principal amount of $4,900 and a $1,500 personal loan. Upon the advice of Respondent Reaves, the sellers stated to the lender that the purpose of the loans were for home improvements. Respondent Reaves and the sellers agreed that the sellers would keep the money obtained by the loans and that Respondent Reaves would assume the mortgages and make all of the required loan payments. The sellers agreed that the balance of the sales price was to be paid via a purchase money mortgage, payable by Respondent Reaves, in the principal amount of $12,375.77. Respondent Reaves executed a hold harmless and indemnity agreement which stated as follows: "Phyllis Reaves does agree to hold Floyd S. Erwin and Christine E. Erwin harmless and does indemnify them against any future liability or losses related to mortgages or liens on the subject property at 2805 Candlewood Drive, Clearwater, Florida." Floyd and Christine Erwin's home was listed with a broker, and the Erwins understood that Reaves was not their agent. Respondent Reaves told the Erwins that she was representing "some investors." The purchase money mortgage note was actually signed by "Michael R. Fisher, as trustee and not personally." Respondent Reaves made some payments on the purchase money mortgage note which was signed by Michael Fisher. The sales transaction closed on September 23, 1983, and Respondent Reaves received a real estate brokerage commission in the amount of $1,555.50. Respondent Reaves failed to assume and pay the mortgages and notes. Respondent Reaves has not made the payments due on the mortgages and notes and has caused the Erwins to become delinquent with their lenders. COUNT VII The evidence presented concerning Count VII consisted solely of documentary evidence. For reasons enumerated in the Conclusions of Law section, infra, the documents alone are insufficient to establish the basis of any offense. Therefore, a discussion of those documents would serve no useful purpose. COUNT VIII On October 16, 1983, Respondent Reaves entered into a real estate sales contract with Patricia and William Willis as sellers, to purchase certain real estate through the use of land trust. The contract concerned the Willis' home located at 417 North Missouri Avenue, Clearwater, Florida. The purchase and sale agreement provided for a total purchase price of $54,000. The agreement listed C-21 A Little Bit Country as escrow agent for the binder deposit. The agreement further provided that the listing agent ". . . agrees to pay C-21 A Little Bit Country cooperating agent 3.5% of the total purchase price on closing." Respondent Reaves and the Willis' agreed that Respondent would assume the existing mortgage of $15,396.52. The sellers agreed to obtain the new mortgage in the principal amount of $34,100. The sellers agreed that the balance of the sales price would be paid via a purchase money mortgage in the principal amount of $8,898.45 to be paid by Respondent Reaves. Respondent Reaves agreed to assume the existing mortgage and the new mortgage in the amount of $34,100 and make all of the required loan payments. Respondent Reaves advised the Willis' to state to the lender that the purpose of the $34,100 mortgage loan was for home improvements. The Willis' applied for the loan but refused to state that the purpose of the loan was for home improvements. Respondent Reaves executed a hold harmless agreement which stated as follows: "Phyllis Reaves does agree to hold Patricia L. Carrah, a/k/a Patricia L. Willis and William Willis harmless and does idemnify them against any future liability for losses related to any mortgages or liens on the subject property " The sales transaction closed on November 23, 1983 and Respondent Phyllis Reaves received a real estate brokerage commission in the amount of $3,213 and a mortgage brokerage fee of $2,216. Respondent Reaves failed to assume the notes and mortgages and thereby caused the sellers to become delinquent with their lenders. COUNT IX No evidence was presented concerning the allegations of Count IX. COUNT X No evidence was presented concerning the allegations of Count X. COUNT XI No evidence was presented concerning the factual allegations of Count XI. COUNT XII No evidence was presented concerning the factual allegations of Count XII. COUNT XIII No evidence was presented concerning the factual allegations of Count XIII. No evidence was presented concerning the factual allegations of Count XIV. COUNT XV on January 13, 1984, Respondent Reaves entered into a real estate sales contract with Clifford and Virginia Miner, as sellers, to purchase certain real estate through the use of a land trust. The contract concerned the Miner's home located at 1247 Burma Avenue, Clearwater, Florida. The purchase and sale agreement provided for a total purchase price of $62,000. The agreement listed "C-21 A Little Bit Country" as escrow agent for the binder deposit. In addition, the agreement provided that the listing agent ". . . agrees to pay C-21 A Little Bit Country cooperating agent 3.5% of the total purchase price on closing." Respondent Reaves and the sellers agreed that Respondent Reaves would assume the existing mortgage of $34,424.82. Respondent Reaves advised the sellers to obtain a $20,000 second mortgage that she would also assume. The sellers were to obtain the mortgage and keep the money as their equity, and Respondent Reaves was to assume the mortgage and make the payments. The sellers agreed that the balance of the sales price was to be paid via a purchase money mortgage in the principal amount of $6,865.33, payable by Respondent Reaves. Respondent Reaves promised the sellers that she would make all the required loan payments and assume the mortgages. Respondent Reaves executed a hold harmless agreement which stated as follows: "Phyllis Reaves does agree to hold Clifford S. Miner and Virginia N. Miner, his wife, harmless and does idemnify them against any future liability or losses related to any mortgages or liens on the subject property . . . ." The purchase money mortgage note was actually signed by Michael R. Fisher, "as trustee and not personally." Respondent Reaves told Mr. Miner that the hold harmless agreement provided additional assurance that she would personally assume all of the mortgage and loans. The sales transaction closed on January 31, 1984, and Respondent Phyllis Reaves received a real estate brokerage commission in the amount of $1,823.25 and a mortgage brokerage fee of $949.48. Respondent Reaves failed to assume and pay the notes and caused the Miners to become delinquent with their lenders, requiring them to "catch up" on the delinquent loan. COUNTS XVI, XVII AND XVIII. The evidence presented concerning Count XVI, XVII and XVIII consisted solely of documentary evidence. For reasons enumerated in the Conclusions of Law section of this Recommended Order, the documents alone are insufficient to establish the basis of any offense. Therefore, a discussion of those documents would serve no useful purpose. COUNT XIX During the later part of 1984, an investigator, representing the Department of Professional Regulation, went to speak to Mrs. Ruffin at her "Little Bit of Country" office concerning this case. The investigator requested that he be provided with the records from all of Respondent Reaves' transactions. Respondent Ruffin stated that she was unaware of the particular real estate transactions in question, but that she would check and provide the records at a later date because she was in the process of moving the location of her office. After subpoena was served, Respondent's counsel provided one of the documents in question. COUNT XX Respondent Ruffin employed Respondent Reaves as a salesman. Respondent Ruffin thought of Respondent Reaves as "an independent contractor." Respondent Reaves decided on her own hours and took care of her own transportation. Respondent Ruffin and Respondent Reaves were on an 85%-15% split fee arrangement. Respondent Ruffin knew that Reaves was interested in "buying a lot of property." Respondent Ruffin was basically aware of the method that Respondent Reaves was using to obtain property. Respondent Ruffin did not feel that the method was wrong, however, she did ask Respondent Reaves to leave employment after she received many calls complaining about Respondent Reaves and information that Respondent was in a "tight financial situation." Respondent Ruffin admitted that she had very little time to provide assistance or guidance to Respondent Reaves. DOAH CASE NO. 85-2454 COUNT I There was no evidence presented concerning the factual allegations of Count I. COUNT II There was no evidence concerning the factual allegations of Count II. COUNT III On October 2, 1984, an investigator, representing the Department of Professional Regulation, went to speak with Respondent Ruffin at her office. The investigator requested certain records relating to Respondent Reaves' transactions concerning the charges herein. Respondent Ruffin stated that she was unaware of the particular real estate transactions in question, but that she would check and provide the records at a later date because she was then in the process of moving her office. After a subpoena was served, Respondent Ruffin's attorney provided one of the documents in question. COUNT IV There was no evidence presented concerning the factual allegations of Count IV of DOAH Case No. 85-2454.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is: RECOMMENDED that Respondent Phyllis I. Reaves' license as a real estate salesman be revoked; and, RECOMMENDED that Respondent Annette J. Ruffin be issued a written reprimand and assessed an administrative fine of $500.00. DONE and ORDERED this 27th day of March, 1986, in Tallahassee, Florida. W. MATTHEW STEVENSON, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 27th day of March, 1986. APPENDIX The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case. Rulings on Proposed Findings of Fact Submitted by the Petitioner Adopted in Finding of Fact 1. Adopted in Findings of Fact 2 and 3. Adopted in Findings of Fact 8 and 11. Adopted in Finding of Fact 10. Adopted in Finding of Fact 10. Adopted in Finding of Fact 12. Adopted in Findings of Fact 15 and 16. Partially adopted in Finding of Fact 17. Matters not included therein are rejected as subordinate and/or unnecessary. Adopted in Finding of Fact 18. Adopted in Finding of Fact 20. Adopted in Findings of Fact 20 and 21. Adopted in Finding of Fact 23. Adopted in Finding of Fact 24. Adopted in Finding of Fact 26. Adopted in Findings of Fact 26 and 27. Adopted in Findings of Fact 31 and 32. Adopted in Finding of Fact 34. Adopted in Findings of Fact 37 and 38. Adopted in Findings of Fact 36 and 38. Adopted in Finding of Fact 40. Adopted in Finding of Fact 47. Adopted in Finding of Fact 49. Adopted in Findings of Fact 49 and 50. Adopted in Finding of Fact 55. Rejected as not supported by competent, substantial evidence. Rejected as not supported by competent, substantial evidence. Rejected as not supported by competent, substantial evidence. Rejected as not supported by competent, substantial evidence. Adopted in Finding of Fact 57. Adopted in Finding of Fact 58. COPIES FURNISHED: James H. Gillis, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32801 Gerald Nelson, Esquire 4950 West Kennedy Boulevard Tampa, Florida 33809 E. A. Goodale, Esquire 14320 Indian Rocks Road Largo, Florida 33540 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Salvatore A. Carpino, General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Harold Huff, Executive Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact Petitioner is a 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 20.30, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Paul F. Savich is now and was at all times material hereto a licensed real estate broker in the State of Florida having been issued license number 0077390 in accordance with Chapter 475, Florida Statutes. Respondent, Ernest M. Haefele, is a licensed real estate broker, having been issued license number 0517821 in accordance with Chapter 475, Florida Statutes. On October 1, 1984, the Respondents, purchasers in their individual capacities, entered into a contract for deed to a tract at the Tropical Acres Subdivision, with Tropical Sites, Inc., and Angie S. Crosby and Eugene T. Crosby, at a sales price of $9,046.50. Said amount to be paid at the rate of $90 per month until paid. Pursuant to the agreement, the Respondents agreed not to assign the agreement without the permission of Tropical Sites, Inc. A closing was held on May 8, 1990, and the Respondents transferred possession of the tract by assignment of contract to Leroy H. and Charlotte Beard. A mobile home on the real property was part of the purchase price for a total sales price of $39,000.00 The agreement called for a down payment of $2,000 to the Respondent Savich. The Beards also signed a mortgage note in favor of the Respondents Savich and Haffele, for $37,000. The note was payable at the rate of $373.15 per month. Upon payment in full, Respondents were obligated to deliver a good and sufficient deed to the property to the purchasers. At the closing, Respondent Haefele was not present. The Beards received two documents at closing, a contract for sale and one other document, but did not receive a copy of the original agreement for deed, a disclosure statement, or a title to the trailer on the tract. In addition, Respondent Savich did not seek permission of Tropical Sites, Inc., prior to the closing. Prior to the closing, the Beards moved onto the property, and subsequently began making monthly payments of $373.15 to Respondent Savich. The Beards had purchased two or three pieces of property in the past, but had always gone through a bank. In relation to this agreement, they understood the nature of the transaction at the time of the closing. In early 1991, Mr. Beard made a telephone inquiry to the County property appraiser's office as to the status of the property for homestead exemption purposes. He was advised that Tropical Sites, Inc. was the current owner of the tract, and that he was not eligible for homestead exemption. The Beards did not apply for homestead exemption at the appraiser's office. In August 1991, the Beards stopped making payments to the Respondents on the advice of their attorney, but continued to reside on the premises until December 1991. In November 1991, an attorney acting on behalf of the Beards made a demand upon Respondent Paul F. Savich for the return of the $2,000.00 deposit. The Respondents did not return the $2,000.00 deposit or otherwise pay the money claimed by the Beards. In his dealings with the Beards, Respondent Savich did not withhold information, lie or mislead the purchasers. They simply were unhappy with the agreement, and decided to get out of it when they recognized that they would not receive title to the mobile home and property until the note was paid in full. In early 1992, the Beards quitclaimed their interest to the property to Respondent Savich's former wife, and they were released from their obligations under the note.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Counts I and II of the Administrative Complaint filed against Respondents Paul F. Savich and Earnest M. Haefele be DISMISSED. DONE AND ENTERED this 30th day of November, 1992, in Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE 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 November, 1992. APPENDIX The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties. Petitioner's proposed findings of fact: Adopted in substance: paragraphs 1,2,3,4,5,6,7(in part),8,9(in part)10,11,12,13 Rejected as against the greater weight of evidence: paragraphs 7(in part: the $2,000 was a down payment, not an earnest money deposit), 9(in part: the Beards moved on to the property prior to closing. Respondent's proposed findings of fact: Respondent submitted a proposed order with unnumbered paragraphs which partially recounted the testimony of several of the witnesses and combined facts and conclusions of law. Therefore, a separate ruling on Respondent's proposals are not possible. COPIES FURNISHED: Steven W. Johnson, Esquire Senior Attorney DPR - Division of Real Estate 400 W. Robinson Street #N-308 Orlando, FL 32801-1772 J. Stanford Lifsey, Esquire 101 E. Kennedy Blvd., Ste. 1465 Tampa, Florida 33602 Darlene F. Keller Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Kenneth Easley General Counsel Department of Professional Regulation Northwood Centre 1940 North Monroe Street Suite 60 Tallahassee, Florida 32399-0750
The Issue At issue herein is whether respondents' real estate licenses should be disciplined for-the alleged violations set forth in the administrative complaint. Based upon all of the evidence, the following facts are determined:
Findings Of Fact At all times relevant hereto, respondent, Juan Rios, was a licensed real estate broker having been issued license number 0155126 by petitioner, Department of Professional Regulation, Division of Real Estate. Respondent, Victoria R. Rios, is a licensed real estate broker-salesman having been issued license number 0331183 by petitioner. The Rios are husband and wife and presently reside at 855 80th Street, #1, Miami Beach, Florida. On December 13, 1982, Juan Rios obtained a six-month multiple listing agreement to sell a house located in Hacienda Estates at 11451 S.W. 33rd Lane, Miami, Florida. The agreement was executed by Rios "As Realtor" and by the property owner, Mercedes Garcia. At Mercedes' request, the Rios placed an initial sales price of $145,000 on the home. On December 15, a similar agreement was executed by Rios and Garcia on condominium unit 9B, Laguna Club Condominium, 10710 N. W. 7th Street, Miami, Florida. That property was also owned by Garcia. Although the agreement introduced into evidence does not contain Rios' signature, at final hearing Juan Rios acknowledged that he had executed such an agreement. The listing agreements provided that if the properties were leased during the term of the agreements, the listing realtor would receive a brokerage fee of 10% for such leasing. The agreement also provided that the realtors were not responsible for vandalism, theft or damage of any nature to the property. Garcia is a native and resident of Venezuela, where she owns a radio station. The two properties in question were previously owned by her father. When the father died, apparently sometime in 1982, Mercedes inherited the house and condominium. The Rios were friends of the father, and agreed to list and manage the properties as a favor to the deceased. Mercedes left the country after the agreements were signed, and has apparently not returned. Although she is the complainant who initiated this matter, she did not appear at final hearing. The house at 11451 S. W. 33rd Lane had been vandalized prior to the listing agreement being signed. According to documents introduced into evidence, the property has also been the subject of subsequent vandalisms, the nature and extent of which are unknown. A tenant was eventually procured by Mercedes' aunt in February, 1983 at a monthly rate of $800. The tenant, a Mrs. Ramirez, paid some $4,800 in rents and deposits before she was killed at the home in June, 1983. The Rios spent some $2,644.36 of the $4,800 on repairs to the vandalism and for general maintenance. They also retained a 10% commission for their services, or $480. That left $1,675.64 owed to Mercedes. No lease was apparently ever signed by Ramirez, or at least none was given to the Rios by the relative who procured the tenant. The home was eventually sold to Mercedes' aunt for $85,000.1 None of the rental monies were placed in the Rios' trust account. The condominium unit was rented in June, 1983. The tenant, Oscar Ruiz, had answered an advertisement run by the Rios in a local newspaper. Although Ruiz executed a lease to rent the unit at a monthly rate of $500, the Rios did not have a copy of same, and claimed none was kept in their records. According to the Rios, Ruiz continued to rent the unit through April, 1984, or for eleven months. Total monies collected by the Rios from Ruiz, including a $500 security deposit, were $6,000, of which $3,364.86 was spent for maintenance, utilities, two mortgage payments, and a $500 payment to the owner (Mercedes). An additional $40.33 was spent on a plumbing bill, and $600 was retained as a commission by the Rios. This left $2,724.53 owed to Mercedes. None of the rental monies were placed in the Rios' trust account. In the spring of 1984, Mercedes retained the services of an attorney in Miami to seek her monies due from the Rios. Up to then, she had received no income or accounting on the two properties. The attorney wrote the Rios on several occasions beginning in April 1984, asking for a copy of the lease on the condominium unit, the security deposit, an accounting of the funds, and all other documents relating to the two, properties. He received his first reply from the Rios on May 3, 1984 who advised him that they had attempted to reach Mercedes by telephone on numerous occasions but that she would never return their calls. They explained that rental proceeds had been used to repair vandalism damage and structural defects. When the attorney did not receive the satisfaction that he desired, he filed a civil action against the Rios on October 10, 1984. On October 26, 1984 the Rios sent Mercedes a letter containing an accounting on the two properties reflecting that she was owed $4,400.17 by the Rios. To pay this, they sent a $140 "official check," and a promissory note for the balance to be paid off in 40 monthly installments at 10% interest. They explained that their real estate business had closed, and due to financial problems, they were unable to pay off the monies due any sooner. They also asked that she instruct her attorney to drop the suit. Mercedes rejected this offer and has continued to pursue the civil action. It is still pending in Dade County Circuit Court. At final hearing, the Rios characterized their involvement with Mercedes as a "professional mistake," and one undertaken out of friendship for Mercedes' father. They acknowledged they did not use a trust account on the transactions and that they had used the $4,400 in rental money due Mercedes for their own use. They considered the excess rent proceeds to be compensation for other "services" performed by them on behalf of Mercedes. However, there is no evidence of any such agreement between the parties reflecting that understanding.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is Recommended that Juan and Victoria Rios be found guilty as charged in Counts II and III, and be found guilty of culpable negligence and breach of trust in Count I. It is further recommended that Juan Rios' license be suspended for one year and that Victoria Rios' license be suspended for three months. DONE and ORDERED this 20th day of January, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of January, 1986
The Issue By a four count Administrative Complaint, Petitioner alleges that Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Section 475.25(1)(b), F.S.; guilty of having failed to account and deliver advance fees in violation of Section 475.452, F.S. and therefore in violation of Section 475.25(1)(e), F.S.; guilty of having failed to maintain trust funds ($22,066.25) in the trust account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), F.S.; and having violated the provisions of a prior Final Order of the Florida Real Estate Commission in violation of Section 475.25(1)(e), F.S. BACKGROUND, PROCEDURE, AND PRELIMINARY STATEMENT All of the allegations of the Administrative Complaint herein arise from Respondent's performance under a prior settlement Stipulation and resultant Final Order of the Florida Real Estate Commission, requiring, among other matters, restitution by Kevin S. Hawkins, Respondent herein. Although the Department of Professional Regulation (DPR) initiated the instant proceeding by the above-referenced four count Administrative Complaint which had been referred to the Division of Administrative Hearings for evidentiary hearing pursuant to Section 120.57(1), F.S., DPR then moved to relinquish jurisdiction to the Florida Real Estate Commission upon grounds that the Stipulation in the prior case covered the contingency of non-performance of the required restitution and further provided, under such circumstances, for Respondent's appearance by informal hearing before the Commission. The prior Hearing Officer on the case denied that motion by an order entered June 2, 1988. At formal hearing, DPR renewed its motion to relinquish jurisdiction which the undersigned took under advisement for resolution within this Recommended Order. The motion is here denied and the reasons there for are addressed within the Conclusions of Law, infra. At formal hearing, Respondent's responses to Petitioner's Request for Admissions were recognized without objection. In anticipation that there might be no transcript, these admissions were admitted as Petitioner's Exhibit 1, for clarity of the record. Petitioner presented the oral testimony of Respondent Kevin S. Hawkins, James Mitchell, and Frederick Wilsen, and had eight exhibits admitted into evidence. Respondent presented the oral testimony of Margaret Tripp and Grant Bartells and testified on his own behalf. Respondent had four exhibits marked for identification, none of which were admitted in evidence. A transcript of the proceedings has been provided, and each party has submitted proposed findings of fact and conclusions of law outside the 10 day period stipulated/imposed at formal hearing. Because each party's proposals were late-filed and since each party filed formal proposals prior to completion of this Recommended Order, the respective proposals have been considered by the undersigned and the findings of fact therein are ruled upon in the Appendix to this Recommended Order, pursuant to Section 120.59(2), F.S. Likewise, the undersigned has not sua sponte struck Petitioner's proposals due to their submittal on the wrong size paper, in violation of Rule 22I-6.003(8), F.A.C.
Findings Of Fact Petitioner Department of Professional Regulation, Division of Real Estate 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 20.30 and Chapters 120, 455, and 475, F.S., and the rules promulgated pursuant thereto. Respondent is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0200419 in accordance with Chapter 475, F.S. The last license issued to Respondent was issued as a nonactive broker with a home address of P.O. Box 650488, Vero Beach, Florida 32965. The Florida Real Estate Commission rendered a Final Order filed April 24, 1987 which adopted a Stipulation entered into by the Respondent and the Commission. The Stipulation was drafted by Respondent's prior attorney and Mr. Mitchell, who at that time was the attorney for the Department of Professional Regulation, Division of Real Estate (DPR). The Stipulation terminated prosecution of Respondent on several cases by the DPR. Mr. Mitchell acknowledged that as DPR attorney he was the prime draftsman of the Stipulation, and that the restitution contemplated therein was a pro rata return of all time share auction monies held by Respondent or Resort Condominium Resales, a company owned and controlled by the Respondent, which company had also been named as a Respondent in the previous cases resulting in the Stipulation, but that full repayment to each investor of all monies invested by him/her with Respondent or with Respondent's company was never contemplated by the terms of the Stipulation. The Stipulation, in pertinent part being paragraph 7 provided as follows: Respondents agree to make restitution to all owners entitled to restitution of those advance fees being maintained by the Respondents. The Respondents shall make restitution within six (6) months of the filing of the Final Order of the Stipulation. Should restitution not be made as agreed herein, the Respondent shall appear before the Florida Real Estate Commission at a Section 120.57(2), F.S. informal hearing for the violation of failing to abide by a lawful order of the Commission pursuant to Section 475.25(1)(e), F.S. The Stipulation contained no mention of any specific amount of restitution to be made and the DPR staff in general had no prior experience with the handling of time share auction cases of similar nature, so in order to facilitate and ensure the Respondent's compliance with the Stipulation/Final Order, DPR provided an investigator, Grant Bartells, to monitor the Respondent's efforts at compliance. DPR and its several attorneys interpreted the Stipulation/Final Order to require that a bank account of several commingled funds totalling upwards of $300,000 should be reduced to a zero balance by October 25, 1987. Contrariwise, Respondent and the DPR investigator, Bartells, interpreted it to mean that by that date all restitution checks should be mailed out to those persons who had been determined by Respondent and Bartells to be owed any restitution. Mr. Bartells and an associate travelled to Respondent's office in Vero Beach and spent several days going over his books. Respondent provided Margaret Tripp to assist them in their review of his affairs. Approximately, May 31, 1987, the sum of $211,357.81 was agreed between Bartells and his associate and Respondent to be the opening or beginning balance of funds available from auction proceeds for purposes of the agreed pro rata restitution of advance fees. In reaching this amount, Bartells subtracted the amounts owed by Respondent for the expenses attendant upon holding two time share auctions he had held previously. The Administrative Complaint herein does not address this use of the funds, and, indeed, Mr. Mitchell and Mr. Wilsen conceded that it was appropriate for Bartells and the Respondent to have made such a deduction before commencing the restitution process. The Respondent issued or caused to be issued between June 22, 1987 and July 28, 1987 approximately 715 checks as pro rata restitution to investors. Before this was done, the DPR investigators checked, reviewed, and audited the amounts. Although this check, review, and audit were not of the same quality as a certified public accountant might have performed, and although Mr. Bartells relied in large part on the cooperation and candor of Respondent and Miss Tripp to show him the account these monies were from and to explain the amounts, nature, and sources of those monies, Bartells' methods were in accord with DPR standard operating procedure for analogous cases. On or about June 22, 1987, the Respondent also issued or caused to be issued and delivered check #1136 in the amount of $21,647.25 made payable to Resort Condominium Resales. On or about June 26, 1987, the Respondent also issued or caused to be issued and delivered check #1137 in the amount of $419.00 also made payable to Resort Condominium Resales. Before making these payments/withdrawals against the $211,357.81 res established by consent and cooperation between the DPR investigators and Respondent, the Respondent represented orally to Mr. Bartells that the amounts reflected in the two checks were earned commissions and asked what he should do with them. It was Respondent's position that these amounts had been inadvertently and improperly commingled in the restitution account as part of the $211,357.81 when they should not have been because they were never part of the time share auction deposit proceeds (advance monies). Mr. Bartells responded, "If you had a deal and a contract and it is completed; both parties are satisfied, I don't see how anybody can tell you you can't take your commissions but you never should have put them in there." Mr. Bartells readily admitted that he had no actual, explicit authority delegated by DPR or the Commission to render legal opinions, but every element of this case bespeaks his apparent authority to bind the agency in all matters regarding the restitution process. In reliance on Mr. Bartells' statement and apparent authority, Respondent paid to his company the two checks totalling $22,066.25. Except for the testimony of Mr. Mitchell that in drafting the original Stipulation he did not contemplate that any monies would be taken out of the escrow account or otherwise retained for Respondent's use, there is no record evidence to suggest that the total $22,066.25 was not earned commissions as represented by Respondent. At the time of entering into the Stipulation, no one totalled what was in the Respondent's existing account which started at upwards of $600,000, and in the course of drafting the Stipulation, there was never any discussion as to the amount of money remaining in the account. In the course of the restitution process, the monitor for DPR, Mr. Bartells, relied largely on Respondent's representations, and no one from DPR reviewed any underlying documentation of the amounts and accounts voluntarily offered up by Respondent. No one at DPR seems to have questioned how $600,000 became $300,000, and the further reduction to a starting figure of $211,357.81 was both contemplated by the original Stipulation and was retroactively authorized by Mitchell's and Wilsen's testimony at formal hearing. Although Mr. Mitchell conceded that the Respondent would be entitled to any commissions the Respondent had earned, Mitchell did not find the Respondent's representations to be credible. Because the prior cases against Respondent which had been settled by the Stipulation/Final Order had included counts involving failure to account for funds, Mitchell did not believe that the two check amounts Respondent paid to his company were, in fact, Respondent's earned commissions on purchase money. However, Respondent's testimony that he created the $211,357.81 reimbursement account in question after the Stipulation/Final Order was entered into and accidently commingled the funds then in his haste to comply with the Stipulation/Final Order is credible and unrefuted. The foregoing finding in no way reflects unfavorably on Mr. Mitchell's credibility, but never having audited or had hands-on experience with the specific monies, as did Bartells and Respondent, Mitchell's impressions alone cannot refute the fact evidence of the other witnesses. Mitchell merely felt that these amounts constituted advance monies which were covered by the restitution Stipulation, but there is no clear, affirmative proof that such is, in fact, the case. At some point before or after October 24, 1987 (six months after the Final Order), Respondent learned that some of the checks which he had sent to parties who had been determined to be entitled to pro rata restitution had not cleared the bank. Some checks were returned to Respondent as unclaimed mail; some were not returned but nonetheless never were cashed. As of February 23, 1988, the balance in the account established for restitution remained at $10,079.33, so Respondent, in responding to DPR inquiries, requested the assistance of the DPR by two letters of that date. The tone of these letters suggests nothing other than an effort on Respondent's part to comply with the spirit of the Stipulation and Final Order. For instance, in one letter he states: Please find my statement regarding compliance with paragraph 7e. Current balance is 10,079.33. I'll await directions as how you want me to handle these funds. Enclosed you'll find the restitution records your [sic] asked for. In the other letter, the Respondent states: All checks were mailed & some did not get delivered. I complied with the stipulation to the best of my ability. I would like to turn the remaining funds over to the state and be done with this matter, as I am know [sic] longer acting as a salesman or broker, and have found employment elsewhere. The Stipulation is silent as to what Respondent should do under the circumstances. Mr. Mitchell acknowledged that no discussions preliminary to the drafting of the Stipulation either covered or anticipated that mailed checks might be returned to the Respondent. Respondent telephoned the Commission requesting information as to what to do with the $10,079.33 and was given no definitive answer. Respondent did not request an informal hearing before the Commission because he believed he had made complete pro rata restitution under the terms of the Stipulation/Final Order (see Findings of Fact 6-8, supra), and because he feared that under the terms of the Stipulation/Final Order making a request for an informal hearing before the Commission would constitute an admission that he had "violated" the Stipulation by "failing to abide by a lawful order of the Commission." Frederick Wilsen, Senior DPR attorney, described himself as "in a quandary" over what to do when he received the Respondent's letters since an informal hearing before the Commission had not been requested and since the account was not reduced to zero. Therefore, the Administrative Complaint herein was initiated.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is recommended that the Florida Real Estate Commission enter a Final Order dismissing the four counts of the Administrative Complaint against Respondent and including an advisory paragraph, as is appropriate within its agency expertise, setting forth a method for Respondent to follow in disbursing the $10,079.33 balance of the account. DONE and RECOMMENDED this 19th day of December, 1988, at Tallahassee, Florida. ELLA JANE P. DAVIS, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of December, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-2272 The following constitute specific rulings upon the parties' respective proposed findings of fact (PFOF) pursuant to Section 120.59(2), F.S. Petitioner's PFOF 1-11 Accepted, but not necessarily adopted. Where not adopted, the proposals have been modified to eliminate subordinate and unnecessary material. 12-13 Address mixed questions of law and fact as set forth in the COL of the Recommended Order, and are rejected in part as conclusions of law (COL), not findings of ultimate fact. To the extent they may contain any assertion of fact over law they are rejected as not supported by the greater weight of the record evidence as a whole. See all FOF and COL. Respondent's PFOF 1 Covered in the introductory material. 2-3 Accepted. 4-6 Accepted except where subordinate and unnecessary. Addresses a mixed question of law and fact as set forth in the RO's COL, and is rejected in part as a COL, not a finding of ultimate fact. To the extent it contains assertions of fact over law, it is accepted as modified within the Recommended Order (RO) so as to conform to the greater weight of the credible record as a whole. Accepted as modified in FOF 11 to reflect an ambiguity in the record. Rejected as a COL or mere argument of counsel; also cumulative Rejected as a COL; covered in the COL of the RO. 11-15, and 17-20 Except where accepted within the RO, these proposals are rejected as subordinate, unnecessary, and/or cumulative. 16 Accepted. 21-22 Rejected as merely argument of counsel or recitation of testimony. COPIES FURNISHED: Darlene F. Keller, Executive Director Florida Real Estate Commission 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 James H. Gillis, Esquire 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 John Joseph McHugh, Esquire 333-17th Street, Suite U Vero Beach, Florida 32960 Bruce D. Lamb, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 =================================================================
The Issue The issue to be resolved herein concerns whether the Petitioners are entitled to an award of attorney's fees in this proceeding. Embodied in that general issue are questions concerning whether the Petitioners are the prevailing parties; whether they meet the definition of "small business" parties, including the net worth amounts, enumerated in Section 57.111, Florida Statutes, as well as whether the disciplinary proceeding against both Petitioners was "substantially justified". See Section 57.111(3)(e) , Florida Statutes.
Findings Of Fact The Respondent is an agency of the State of Florida charged with licensing and regulating the practices of real estate salesmen and brokers by the various provisions of Chapter 475, Florida Statutes. Included within those duties is the duty to investigate conduct by realtors allegedly in violation of Chapter 475 and related rules and to prosecute administrative penal proceedings for which probable cause is found as a result of such investigations. At times pertinent hereto, both Ms. Maxwell and Ms. Cosyns, (then Pauline Sealey) were licensed realtors working as independent contractors for Mariner Properties, Inc. and V.I.P. Realty Inc. The complete file of the underlying proceeding DOAH Case No. 86-0140, was stipulated into evidence. That file included the Administrative Complaint filed against these Respondents and the Recommended and Final Order, which Final Order adopted the Recommended Order. The findings of fact in that Recommended Order are incorporated by reference and adopted herein. During the Petitioner's case, counsel for Petitioner voluntarily reduced the attorney's fees bills for both Petitioners such that Ms. Maxwell's bill is the total amount of $2,695.50 and Ms. Cosyns' bill is $17,200, rather than the original amounts submitted in the affidavit. Respondent acknowledged in its proposed Final Order that the fees and costs submitted by the Respondent were thus reasonable. The testimony the Petitioners presented through depositions, transcripts of which were admitted into evidence into this proceeding, was unrefuted. That testimony demonstrates that both Ms. Cosyns and Ms. Maxwell were prevailing parties in the administrative proceeding referenced herein brought by the Respondent, Department of Professional Regulation. They were individually named as Respondents in the Administrative Complaint whereby their professional licenses were subjected to possible suspension or revocation for alleged wrong doing on their part. There is no dispute that they were exonerated in that proceeding and are thus prevailing parties within the meaning of Section 57.111, Florida Statutes. The Petitioners are also "small business parties". In that connection, they both were independently licensed Real Estate professionals during times pertinent to the underlying proceeding and were acting in the capacity of independent contractors for all the activities with which the administrative complaint was concerned. Each established that her net worth is below the limit provided by Section 57.111 as an element of the definition of "small business party". The reasonableness of the fees having been established in the manner found-above and the Petitioners having established that they meet the definitional requirements of prevailing small business parties, there remains to be determined the issue of whether the proceedings against the two Petitioners were "substantially justified", that is, whether the proceeding had a "reasonable basis in law and fact at the time it was initiated by a State agency." See Section 57.111(3)(e), Florida Statutes. The facts concerning each Petitioner's case regarding the three counts of the Administrative Complaint relating to them are as found in the Recommended Order incorporated by reference herein. Respondent Maxwell was charged in the complaint with having worked in conjunction with an office manager, Mr. Hurbanis of V.I.P. Realty, in conspiring with him to submit a fraudulent real estate sales contract to a lending institution for purposes of financing. This allegedly involved submitting a contract to the lending institution with an inflated purchase price in order to secure one hundred percent financing, the scheme being more particularly described in that portion of the findings of fact in the Recommended Order related to Jean Maxwell. In fact, Ms. Maxwell did not work in the realty office as charged in the Administrative Complaint, but rather was employed by Mariner Properties, which may have been a related company. The contract in question, although alleged to be fraudulent was, in fact, a bona fide contract which was a legitimate part of the Real Estate transaction submitted to the bank for financing purposes, about which the bank was kept fully advised. All details of the transaction were disclosed to the lender. Maxwell was specifically charged with concealing the true contract from the lender in order to enhance the percentage of the purchase price that the bank would finance, done by allegedly inflating the purchase price in a second contract submitted to the bank. It was established in the disciplinary proceeding that no such concealment ever took place. In fact, Ms. Maxwell was purchasing a lot from her own employer, Mariner Properties. Two contracts were indeed prepared for the purchase of Lot 69, a single family lot on Sanibel Island. In fact, however, the difference of $42,875 and $49,500 in the stated purchase price, as depicted on the two contracts, was the result of continuing negotiations between Ms. Maxwell and the seller, who was also her employer. The difference in the two prices depicted on the contracts was the result of, in effect, a set-off to the benefit of Ms. Maxwell, representing certain employee discounts and real estate commission due from the employer and seller to Ms. Maxwell, the purchaser. As Petitioners' composite Exhibit 5 reflects, the lender involved, North First Bank of Ft. Myers, Florida, was fully apprised of all the details concerning this transaction at the time it was entered into and the loan commitment extended and closed. Mr. Allan Barnes, the Assistant Vice President of North First Bank revealed, in the letter contained in this exhibit in evidence, that there was no concealment or misrepresentation of the facts to his institution by Ms. Maxwell. This letter is dated April 18, 1984. The other related letter in that exhibit, of May 2, 1984 from attorney Oertel to attorney Frederick H. Wilson of the Respondent agency, thus constitutes notice to the agency well before the complaint was filed, that no concealment or misrepresentation to the lender involved had occurred and the charges were requested to be dismissed. In spite of the fact that the agency was on notice of this turn of events well before the filing of the Administrative Complaint, it proceeded to file the complaint and to prosecute it all the way up to the date of hearing, requiring Ms. Maxwell's attorney to attend the hearing to defend her interests. At the hearing, counsel for the Department acknowledged that there was no basis for prosecuting Ms. Maxwell and voluntarily dismissed the complaint as to her. The Respondent's witness, Investigator Harris, in his deposition taken September 11, 1984, acknowledged that he did not discuss any details concerning the investigation, with attorney Frederick Wilson, who prepared the complaint, nor did he confer with him by telephone or correspondence before the filing of the complaint. Therefore, the complaint was prepared solely on the basis of the investigative report. The investigative report came into evidence as Respondent's Exhibit 1. It reveals that Mr. A. J. Davis the president of Mariner Group and Mariner Properties, who was Jean Maxwell's employer and the owner of the lot in question, signed one contract and his Executive Vice President signed the other. In spite of this, the investigative report does not reveal that the investigator conferred with either Ms. Maxwell, or the sellers concerning this transaction. He conducted a general interview of A.J. Davis concerning the alleged "problem" in his office of "double contracting," but asked him no questions and received no comment about the Jean Maxwell transaction whatever. Nor did the investigator confer with Mr. Allen Barnes or any other representative of North First Bank. If the investigation had been more complete and thorough, he would have learned from Mr. Barnes, if from no one else, that the bank had knowledge of both contracts and all details of the transaction underlying them and there had been no concealment or misrepresentation of the facts regarding the transaction by Ms. Maxwell. This information was learned by attorney Oertel as early as April 18, 1984 by Mr. Barnes' letter, referenced above, and it was communicated to the agency by Mr. Oertel on May 2, 1984. Nevertheless, the complaint was filed and prosecuted through to hearing. Therefore, the prosecution and filing of the Administrative Complaint were clearly not substantially justified. If the Department had properly investigated the matter it would have discovered the true nature of the transaction as being a completely bona fide real estate arrangement. Former Respondent, Pauline Sealy Cosyns was charged with two counts, III and V, in the Administrative Complaint at issue. One count alleged, in essence, that Ms. Sealey had engaged in a similar fraudulent contract situation regarding the sale of her residence to a Mr. and Mrs. Thomas Floyd. The evidence in that proceedings revealed no concealment of any sales contract occurred whatever with regard to the lending institution or anyone else. The facts as revealed at hearing showed Ms. Cosyns and the Floyds, through continuing negotiations after the original sales contract was entered into, amended that contract and executed a second one, in order to allow Ms. Cosyns to take back a second mortgage from the Floyds. This was necessary because Mr. Floyd, an author, was short of the necessary down payment pursuant to the terms of the original contract, because his annual royalty payment from his publishers had not been received as the time approached for closing. The second contract was executed to allow for a second mortgage in favor of the seller, Ms. Cosyns, in order to make up the amount owed by the Floyds on the purchase price agreed upon, above the first mortgage amount. The testimony and evidence in the disciplinary proceeding revealed unequivocally that the lending institution, Amerifirst Mortgage Company, was fully apprised of the situation and of the reason for the two contractual agreements. The $24,000 second mortgage in question is even depicted on the closing statement issued by that bank. There was simply no concealment and no effort to conceal any facts concerning this transaction from the lender or from anyone else. The investigation conducted was deficient because the investigator failed to discuss this transaction with the lender or with the purchasers. He discussed the matter with Ms. Sealy-Cosyns and his own deposition testimony reveals, as does his investigative report, that he did not feel that he got a complete account of the transaction from her. She testified in her deposition, taken prior to the instant proceeding, that she indeed did not disclose all facts of the transaction to him because she was concerned that he was attempting to apprehend her in some "legal impropriety". Therefore, she was reluctant to be entirely candid. The fact remains, however, that had he conducted a complete investigation by conferring with the lender and the purchasers, he would have known immediately, long before the Administrative Complaint was filed and the matter prosecuted, that there was absolutely no basis for any probable cause finding that wrong-doing had occurred in terms of Section 475.25(1)(b), Florida Statutes. Thus, the facts concerning the prosecution as to Count III against Pauline Sealy-Cosyns, as more particularly delineated in the findings of fact in the previous Recommended Order, reveal not only that Ms. Cosyns was totally exonerated in the referenced proceeding, but that there was no substantial basis for prosecuting her as to this count at all. Concerning Count V against Ms. Cosyns, it was established through the evidence at the hearing in the disciplinary case that she was merely the listing agent and did not have any part to play in the drafting of the contract nor the presenting of it to the lender. Because there was no evidence adduced to show that she had any complicity or direct involvement in any fraudulent conduct with regard to the transaction involved in Count V of the Administrative Complaint at issue she was exonerated as to that count as well. It is noteworthy here that a statement was made by counsel for the agency, appearing at pages 20 and 21 of the transcript of the proceeding involving the Administrative Complaint, which indicates that the agency, based upon its review of certain documents regarding Counts III and V, before hearing, felt that indeed there might not be a disputed issue of material fact as to Mrs. Cosyns. The agency, although acknowledging that a review of the documents caused it to have reason to believe that it was unnecessary to proceed further against Ms. Cosyns nevertheless did not voluntarily dismiss those counts and proceeded through hearing. Be that as it may, the investigation revealed that Ms. Cosyns acknowledged that she knew that there were two contractual documents involved, but the investigation also revealed that Ms. Cosyns was only the listing agent. The selling agent was Mr. Parks. The investigation revealed through interviews with Ms. Cosyns, Mr. Parks and Mr. Hurbanis, the office Manager of V.I.P. Realty, that Ms. Cosyns, as listing agent, was merely present when the offer from the buyers was communicated to the office manager, Mr. Hurbanis, and ultimately to the sellers, the Cottrells. There was no reason for the investigator to believe that Ms. Cosyns had anything to do with the drafting of the contracts nor with the communication of them to the lending institution involved. That was done by either Mr. Parks or Mr. Hurbanis or by the buyers. The investigation (as revealed in the investigative report) does not show who communicated the contract in question to the lender. The investigation was simply incomplete. If the investigator had conferred with the buyers, the sellers and especially the lender, he could have ascertained-whether the lender was aware of all the facts concerning this transaction and whether there was any reason to believe that Ms. Cosyns had anything to do with the arrangement and the details of the transaction. It was ultimately established, by unrefuted evidence at hearing, that indeed Ms. Cosyns did not have anything to do with the transaction, nor the manner in which it was disclosed to the lender. The fact that she was aware that two contracts had been prepared did not give a reasonable basis for the investigator to conclude that she had engaged in any wrong-doing. The report of his interviews with Ms. Cosyns, Mr. Hurbanis and Mr. Parks, as well as Donna Ross, does not indicate that he had a reasonable basis to conclude that Ms. Cosyns had engaged in any fraudulent conduct with regard to the transaction, including the conveyance of a bogus contract to the lending institution involved, nor for that matter, that Mr. Hurbanis or Mr. Parks engaged in such conduct. In order to ascertain a reasonable basis for concluding whether Ms. Cosyns was involved in any wrongful conduct, he would have had to obtain more information than he did from these people or confer with the lender, the buyer or the seller, or all of these approaches, before he could have a reasonable basis to recommend to the prosecuting agency that an Administrative Complaint be filed against her concerning this transaction. In fact, he did not do so, but the Administrative Complaint was filed and prosecuted through hearing anyway, causing her to incur the above-referenced attorney's fees. It thus has not been demonstrated that there was any substantial basis for the filing and prosecution of Count V of the Administrative Complaint against Ms. Cosyn. Thus she is entitled to the attorneys fees referenced above with regard to the prosecution of the Administrative Complaint in question.
