The Issue Whether the Department of Revenue properly assessed sales or use tax and local government infrastructure surtax on payments allegedly constituting "rent" that Petitioner paid to the mortgagee in accordance with an Occupancy and Indemnity Agreement and Trust Agreement.
Findings Of Fact As of August 10, 1989, the corporation known as Panama City Toyota, Inc., owned a parcel of land where it conducted a new and used car sales business. The automobile inventory and dealer registrations with Toyota, Mitsubishi, etc., were also held in the name of the corporation or in the names of its principals. On that date, Panama City Toyota, Inc., executed a note and mortgage to Omni Finance Corporation in the amount of $1,200,000. The note was guaranteed by the three corporate shareholders, Mark Gerke, Norman Wiese, and Apryl Wiese. On July 11, 1991, a new corporation was formed, A.D.E. of Panama City, Inc. (A.D.E.). Its shares came to be held by members of the David Hill family. A.D.E. was formed for the purpose of acquiring the assets of Panama City Toyota, Inc. On July 29, 1991, A.D.E. (Buyer) and Panama City Toyota, Inc. (Seller) entered into a sale/purchase agreement whereby all the assets of Panama City Toyota were to be purchased by A.D.E. Those assets included an automobile dealership owned and operated by Toyota along with real estate associated with that dealership. The owners of Toyota were concerned that approval of the transfer of the dealership licenses from Toyota to A.D.E. might be held up for a period of several weeks or might be denied. The owners of Toyota needed cash and were anxious to close the portion of the sale transaction that involved the real property. One or more owners of Toyota also expressed the concern that if the dealership transfers were not approved by the automobile manufacturers, Toyota might not be able to "unwind the transfer" of the real property and would, effectively, be out of business. Mr. Robert Dittman, the attorney who represented Toyota in its transfer of assets to A.D.E., testified by deposition that Toyota's lender required title to the real property be held by a separate entity. He explained as follows: The best of my recollection is that the transaction lender which was World Omni Financial Corporation came up with a requirement that the real estate be owned by a separate entity and that originally the parties contemplated that A.D.E. would own both the tangible personal property and intangible personal property that was being sold as well as the real estate that was being sold, and at some point in time apparently the buyer's lender came up with a requirement for whatever reason, and I'm not privy to that reason, that they wanted a separate entity-they did not want the operating entity to own the real property. In order to assure the Buyer that title to the real property could be secured upon approval of the dealership transfers and assure the Seller that the sale could be "unwound" if the dealership transfers were not approved, the attorneys for both sides hit upon the idea of an arrangement whereby Buyer would acquire title to the real property, but transfer it to a "Trustee" who would hold the land until the dealership transfers were either approved or denied. To give the Seller greater comfort, Mr. Gerke was named to serve as the initial "Trustee." The plan was for Seller to continue operations until the dealership transfers were approved, then the payment for the inventories and dealership licenses would be made and the real property would come out of the "trust" to the Buyer. Toyota's conveyance of title to the real property to a Trustee rather than to A.D.E. enabled the parties to satisfy the lender that title would be held by a separate entity, to satisfy the Buyer (A.D.E.) that title to the real property could be secured upon approval of the dealership transfers, and to satisfy the Seller, Toyota that the sale could be "unwound" if the dealership transfers were not approved. Thus, initially the trust had a purpose for its creation. A.D.E.'s former attorney, Mr. Jerry Williams, prepared the Trust Agreement for the Trust in accordance with the agreement between A.D.E. and Toyota, that the Trustee would hold title to the real property. The trust was entered into on December 31, 1991. To give the Seller greater comfort, Mark Gerke, who was shareholder in Toyota and operated the Toyota dealership, was named to serve as the initial Trustee. Also on December 31, 1991, A.D.E. and the initial Trustee of the Trust entered into an Occupancy and Indemnity Agreement. The Occupancy Agreement gave an option to purchase the property to Petitioner, the beneficiary of the trust. The Occupancy and Indemnity Agreement provided in paragraph 3 on page as follows: 3. Note Payments. During the Term, A.D.E. shall pay $12,000 per month for its right to occupy and use the Real Estate, or such greater or lesser amount as shall be required to pay all principal, interest and costs when due under the certain promisory [sic] note to be issued by Trustee as maker in favor of World Omni Financial Corp. as payee ("Note"). Such payments shall be made to the payee or holder of the Note. At all times material to this action, A.D.E. has been the sole beneficiary under the Real Estate Trust Agreement. By specific language in the Agreement, the Trust has no authority to act in any fashion nor as to any matter except as specifically authorized by the beneficiary. The beneficiary has sole authority to authorize action by the Trustee, sole authority at any time to remove the Trustee and sole authority at anytime to terminate and dismantle the Trust entirely and demand distribution of all assets to it. Not long into this arrangement, on April 30, 1992, certain questionable business practices of Seller were discovered. A.D.E. caused Mr. Gerke to resign as "Trustee" and named David Hill, II, as his successor. Mr. Hill was selected by his father, who in effect directed the operations of A.D.E and actually caused the purchase of Toyota and the creation of the various agreements involved in that purchase. David A. Hill, II, has held a majority ownership interest in the Petitioner. At this point the beneficiary and grantor essentially became one. Several months after that on October 21, 1992, the dealership transfers were approved and the second part of the deal was closed. Toyota executed a warranty deed conveying the real property to the trust. The trust no longer had a purpose and the beneficial and title interests merged. By its terms the trust terminated. However, through an oversight, formal transfer of title did not happen. Pursuant to the finalization of the sale (and on the brink of foreclosure by Omni), Buyer assumed the note and mortgage with Omni and Omni released Toyota as maker and Mr. Gerke, Mr. Wiese, and Ms. Wiese as guarantors. Because of the fact that record title was still in Trust, the assumption of the note was in the Trust's name, rather than A.D.E. Therefore, David Hill, II, signed a Note and Mortgage Assumption and Modification Agreement in his capacity "as Trustee under Real Estate Trust Agreement dated December 31, 1991." Around March 25, 1997, financing for the business was moved to SouthTrust Bank. David H. Hill, II, as Trustee under the Trust, obtained a loan from SouthTrust Bank of Alabama, N.A. (SouthTrust Bank) in the amount of $770,990.34 to refinance the purchase of the automobile dealership from Toyota. SouthTrust's attorneys, seeing that title was in a trust, required the trustee to execute an Assignment of Rents. A.D.E. provided its financial statements for the years ending December 31, 1997, and December 31, 1996, to its mortgage holder(s). The mortgage holder relied on the financial assets of A.D.E. in making the loan. The notes to A.D.E.'s financial statements for the years ending December 31, 1997, and December 31, 1996, represented as follows: NOTE 8: INVESTMENT IN SUBSIDIARY The Company has an investment in David Hill, II, Real Estate Trust, a wholly owned subsidiary. Management has elected to use the equity method of accounting for this investment. A.D.E. of Panama City, Inc.'s Equity in the investment at December 31, 1997 and 1996 is $392,836 and $356,688, respectively. Generally accepted accounting principles require that investments in majority owned subsidiaries be accounted for as consolidated subsidiaries. The effect of the departure from generally accepted accounting principles on financial position, results, operations, and cash flows has not been determined. Additionally, the notes to A.D.E.'s financial statements prepared by A.D.E.'s accountant for the years ending December 31, 1996, and December 31, 1997, included the following statement: The Company leases buildings and land for administrative offices and operations from David Hill II Real Estate Trust with terms of monthly renewals. The Company pays the maintenance and repairs for these facilities. The terms of the loan included a requirement that A.D.E. produce a lease between David H. Hill, II, Trustee, as landlord, and A.D.E., as tenant, within 45 days after closing. Additionally, David H. Hill, II, as Trustee, was the sole mortgagor of the property pursuant to the loan by SouthTrust Bank. David H. Hill, II, as Trustee, was the sole maker of the promissory note for the loan. However the funds were used in the operations of the dealership A.D.E. owned. SouthTrust Bank required A.D.E. to execute and provide the bank a resolution of the Board of Directors of A.D.E. before the bank would close the loan. On March 25, 1997, the Board of Directors of A.D.E. approved the resolution required by SouthTrust Bank (Resolution) stating, in part, as follows: WHEREAS, the Corporation agrees to and authorizes its officers to execute any and all documents necessary to secure a loan from SouthTrust Bank of Alabama, N.A., in the approximate amount of $770,990.334 (the "loan"), which will encumber the property which is owned by David H. Hill, II, Trustee under that Trust Agreement dated December 31, 1991, ("Property Owner"), and which is being leased by the Corporation from the Property Owner, (the "property"). The Property is located at 5303 West Highway 98, Panama City, Bay County, Florida . . . . In addition to the Resolution of the Board of Directors of A.D.E., SouthTrust Bank required execution of various documents in order to close the mortgage loan with David Hill, II, Trustee. David Hill, II, as Trustee, executed and delivered to SouthTrust Bank the following documents: Directions from David H. Hill, II, to Execute Documents for the loan. Affidavit of David H. Hill, II, as Trustee, dated March 25, 1997. Title Affidavit executed by David H. Hill, II, Trustee. Again David H. Hill, II, followed his father's instructions in obtaining the SouthTrust Loan and executing the documents for the loan. He never read the trust documents. Likewise he never read the loan documents. Indeed all of the transactions involving A.D.E. or the Trust were directed and instituted by Mr. Hill's father. The Trust never functioned independently of the beneficiary or the Hill family, its stockholders At all times since the transfer of title into the Trust, A.D.E. has made all payments on all debts secured by the property. All such payments were made directly to the lenders and did not pass through the Trust. The Trust, in fact, never had a bank account, never obtained an Employer Identification Number, and never filed (nor was ever required to file) a tax return. All insurance premiums and all real estate ad valorem taxes were paid directly by A.D.E. It is also undisputed that the Internal Revenue Service forms 1120S filed by A.D.E. reflecting income in 1992- 1995 claimed a deduction for rent paid by A.D.E. to the Trustee for the Trust Assets consisting of real property. However, the deductions were matched by the income reported on K-1s to the shareholders of A.D.E. and on various tax returns. The notes to A.D.E.'s financial statements prepared by A.D.E.'s accountant for the years ending December 31, 1997 through December 31, 1999, included the following statement: The Company leases buildings and land from the David Hill II Real Estate Trust. A.D.E. of Panama City, Inc. is the grantor of the trust. Based on all these facts, the evidence established that the Trust for at least tax purposes does not have a separate identity from its beneficiary A.D.E. The Trust is not in the business of renting or leasing property, no matter how much the Trust settlor's and A.D.E. played fast and loose with formal title records. Therefore, the payments of the mortgage by A.D.E. do not constitute rent and are not subject to tax.
Recommendation Based upon the findings of fact and conclusions of law, it is RECOMMENDED: That the Department of Revenue enter a final order finding the payments Petitioner made to its mortgagee are not taxable as rent. DONE AND ENTERED this 2nd day of April, 2001, in Tallahassee, Leon County, Florida. DIANE CLEAVINGER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 2nd day of April, 2001. COPIES FURNISHED: H. Cranston Pope, Esquire Post Office Box 1609 Panama City, Florida 32402-1609 J. Clifton Cox, Esquire Office of the Attorney General The Capitol, Tax Section Tallahassee, Florida 32399-1050 Linda Lettera, General Counsel Department of Revenue 204 Carlton Building Tallahassee, Florida 32314-6668 James Zingale, Executive Director Department of Revenue 104 Carlton Building Tallahassee, Florida 32399-1000
Findings Of Fact Based upon my observation of the witnesses and their demeanor while testifying, I make the following: The Defendant, Leroy Wilson, is a registered real estate broker with the Commission and during January 1, 1975 to November 5, 1975, Defendant was registered as trading as Overpass Real Estate. On April 27, 1975, Defendant was the owner of residential property located at 291 N.W. 29th Terrace, Ft. Lauderdale, Florida. On April 28, 2/ Robert English and his wife Mazie English in response to a "for sale" sign posted at 291 N.W. 29th Terrace, Ft. Lauderdale, Florida, went to the real estate brokerage office maintained by the Defendant at room 201 Romark Building, 3521 West Broward Boulevard, Ft. Lauderdale, Florida. Defendant and Mr. and Mrs. English discussed and negotiated a deposit receipt contract dated April 28, 1975, between the Englishes as purchasers and Defendant as seller for the purchase and sale of property owned by Defendant located at 291 N.W. 29th Terrace. Mrs. English testified that they put up an earnest money deposit of $300 acknowledged by Defendant, however, Defendant executed the deposit receipt contract reflecting an earnest money deposit of $600. (See FREC Exhibit number 2). Mrs. English testified that part of the terms of the contract was that she would apply for a mortgage loan but when it was determined that her daughter who was to participate with her in the purchase, was not able to stay with her, she and her husband decided not to apply for a mortgage loan. She explained to Defendant and he agreed to return the $300 deposit that she had submitted along with the deposit receipt contract. When the Englishes demanded the return of their deposit, Defendant advised them that "it was the law that the deposit must be kept for 6 weeks, and thereafter, he would have to keep the deposit another ten days." After the expiration of the six week period, the Englishes called the Defendant's office and was advised that he no longer lived there and other efforts by the Englishes to contact the Defendant were fruitless. Thereafter on or about August 20, 1975, the Englishes filed a complaint with the Commission. Approximately two days after the Commission initiated its investigation, the Defendant returned the $300 deposit to the Englishes. (See FREC Exhibit number 3). N.B. Wolf an employee of Gulf Atlantic Mortgage Brokers testified that she was familiar with the document received into evidence as Exhibit number 2 which is the deposit receipt contract entered into by the Defendant and the Englishes. She testified that she did not recall ever having taken a credit application for the Englishes to apply for a mortgage loan. Roy E. Conner, the operations officer for Plantation First National Bank testified that he caused to be gathered the bank records as they relate to the escrow account maintained by the Defendant at that bank. An examination of those bank records revealed that the Defendant's escrow bank account maintained at Plantation First National Bank had a shortage of $5 as of September 16 and that on August 14, his escrow bank account showed a balance of $65 when it should have reflected a balance of $300 in earnest money deposits. See FREC Exhibit number 4 received into evidence. Pruyn investigated Defendant's brokerage office on September 16, at 2951 N.W. Avenue, Ft. Lauderdale, Florida. Based on an official inspection, Pruyn noted a number of inadequacies in that there were no letterheads, no desks, no chairs, no business mail, no diary of witnesses or any official sign as required and set forth in Commission Rule 21V-10.07 and 10.09, Florida Administrative Code and Section 475.22, Florida Statutes. See FREC Exhibit number 5 received into evidence. As previously stated, the Defendant did not appear at the hearing nor did he have a representative present to present any defense to the charges made by the Commission in the administrative complaint.
The Issue The issue in this case is whether Respondents, Yvonne Joiner Mediate and Royal Realty Management, Inc., committed the offenses alleged in an Administrative Complaint issued against Respondents on or about November 18, 1998.
Findings Of Fact Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the "Division"), is an agency of the State of Florida. The Division is charged with the responsibility for, among other things, regulating the practice of persons holding real estate brokers' and real estate sales persons' licenses in Florida. Section 20.165, and Chapters 455 and 475, Florida Statutes. Respondent, Yvonne Joiner Mediate, is now, and at all times relevant to this matter was, licensed as a real estate broker in Florida. Respondent, Royal Realty & Management, Inc. (hereinafter referred to as "Royal Realty"), is now, and at all times relevant to this matter was, a corporation registered as a real estate broker in Florida. Royal Realty's license number is 0255570. Royal Realty's last reported address is 1885 U.S. 19, Post Office Box 788, Monticello, Florida 32344. Until December 31, 1998, Ms. Mediate was the active, qualifying broker for, and an officer of, Royal Realty. Since December 31, 1998, Ms. Mediate has been an inactive broker. On or about May 15, 1994, Clifford Brown entered into a Contract for Sale and Purchase (hereinafter referred to as the "Purchase Contract"), with Ralph and Dawn Chapman, agreeing to purchase certain real property from the Chapmans. Consistent with the Purchase Contract, Mr. Brown remitted a $1,000.00 deposit with Ms. Mediate and Royal Realty. The Purchase Contract was contingent upon Mr. Brown's obtaining financing for the balance of the purchase price through a third-party loan. Closing on the Purchase Contract was originally scheduled for June 15, 1994. The date for closing was subsequently extended to June 30, 1994. Mr. Brown ultimately failed to obtain the required third-party loan. As a consequence, closing on the Purchase Contract did not take place. Even though Mr. Brown had defaulted on the Purchase Contract, neither party took any action to cancel the Purchase Contract immediately. In October 1994 Mr. Brown had still not obtained financing. Therefore, Respondents, without Mr. Brown's consent, disbursed part of the $1,000.00 deposit to the Chapman's and part to a title insurance company. When Mr. Brown requested the return of his deposit, Ms. Mediate informed him that he had forfeited the deposit because he had failed to obtain a third-party loan. On or about January 28, 1998, more than three years after disbursing the deposit, Ms. Mediate notified the Division that there was a dispute over whom Mr. Brown's deposit should be disbursed to. On or about November 18, 1998, an Administrative Complaint was issued against Respondents. Respondents were both charged with violating Sections 475.25(1)(e) (by failing to institute one of the procedures specified in Section 475.25(1)(d)1, Florida Statutes in violation of Rule 61J2- 10.032(1), Florida Administrative Code), and (k), Florida Statutes.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered by Petitioner finding that Respondents have violated Sections 475.25(1)(e) and (k), Florida Statutes, as alleged in the Administrative Complaint issued against Respondents. It is further RECOMMENDED that Respondent Yvonne Joiner Mediate be placed on probation for a period of one year from the entry of the final order; that she be required to successfully complete a seven hour escrow management course for real estate brokers; and that she be required to pay an administrative fine of $1,000.00. It is further RECOMMENDED that Respondent Royal Realty & Management, Inc., be issued a written reprimand. DONE AND ENTERED this 28th day of June, 1999, in Tallahassee, Leon County, Florida. LARRY J. SARTIN Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 1999. COPIES FURNISHED: Daniel Villazon, Chief Attorney Division of Real Estate Department of Business and Professional Regulation Hurston North Tower, Suite N308 400 West Robinson Street Orlando, Florida 32801-1772 Yvonne Mediate U.S. Highway 19, South Post Office Box 788 Monticello, Florida 32344 Herbert S. Fecker, Division Director Division of Real Estate Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 William Woodyard, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Northwood Centre Tallahassee, Florida 32933-1920
The Issue The issue in this case is whether respondent's real estate license should be disciplined for the reasons given in the administrative complaint filed on March 9, 1994.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: At all times relevant hereto, respondent, Jennifer Dawn Jewels, held real estate salesperson license number 0380700 issued by petitioner, Department of Business and Professional Regulation, Division of Real Estate (Division). When the events herein occurred, respondent was employed as a salesperson at Jennifer Jewels Real Estate, Inc., 2865 Plummers Cove Road, Jacksonville, Florida. On September 30, 1993, respondent's license became involuntary inactive and invalid due to non-renewal. It remained in that status until February 22, 1994, when respondent late-renewed her license as voluntary inactive. On October 20, 1993, Sandra Bryant, a broker/salesperson with Prudential Network Realty in Jacksonville, Florida, prepared a deposit receipt and purchase and sale agreement on behalf of David and Kathryn Pierce for a residence located at 12085 Dividing Oaks Trail, East, Jacksonville, Florida. The contract was presented to respondent, who was the listing agent for the sellers, Robert and Janet Kreis. The contract was eventually accepted on October 25, 1993, after a counteroffer was prepared and submitted by respondent. Respondent admits that she handled the transaction on behalf of the sellers and received a commission for her services. This occurred when she did not have an active license. On September 17, 1993, respondent solicited and obtained a listing agreement for a residence located at 938 West Satsuma Circle, Jacksonville, Florida. The property was listed in the multiple listing service maintained by the local board of realtors. Based on that listing, Sandra Mannis, a real estate salesperson with Prudential Network Realty in Jacksonville, Florida made an appointment to show the property. When Mannis showed the property on January 20, 1994, she executed a rejection of subagency and sent it to respondent, who signed the document as an agent for the seller. At that time, respondent did not hold an active license. Paragraph 10.b. of the complaint also alleges that on November 19, 1993, respondent "solicited and obtained a listing agreement from Thomas A. and Judith Ann Boyles for the sale of property located at 12343 Silent Brook Trail, N., Jacksonville, Florida." There is, however, no evidence to support this charge. At hearing, respondent acknowledged that her license lapsed in September 1993, but said this was inadvertent and unintentional. Later, after learning her license had not been renewed, she took 14 hours of courses in order to reactivate her license. Respondent pointed out that during an eighteen month period, the firm had $23 million in closings, and contended these transactions are the only "bad" sales out of that total. On August 16, 1994, respondent was reprimanded, placed on one year probation, fined $500 and ordered to take a 45 hour post-licensure education course for "culpable negligence; improper use of Realtor identification or designation; operat(ing) as a salesperson without being holder of a valid and current license as a salesperson; (and) advertis(ing) property or services which is misleading in form or content." Other than that proceeding, there is no evidence that she has been the subject of any other disciplinary action during her fourteen year tenure as a licensee. Finally, it is noted that neither the consumers or the public suffered harm by virtue of respondent's conduct.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that petitioner enter a final order finding respondent guilty of violating Section 475.42(1)(a), Florida Statutes, on two occasions and that her license be suspended for one year. DONE AND ENTERED this 14th day of August, 1995, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of August, 1995. APPENDIX TO RECOMMENDED ORDER, CASE NO. 94-3952 Petitioner: Petitioner's proposed findings have generally been accepted, with certain modifications. COPIES FURNISHED: Janine B. Myrick, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0792 Ms. Jennifer D. Jewels 110 Coral Fish Lane East Jupiter, Florida 33477 Darlene F. Keller, Director Division of Real Estate P. O. Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0792
The Issue Whether the Respondents' real estate licenses in Florida should be disciplined based upon the charge that the Respondents are guilty of failing to maintain the required entrance sign on or about the entrance to the principal office in violation of Subsection 475.22, Florida Statutes and Rule 21V-10.024, Florida Administrative Code and are therefore in violation of Subsection 475.25(1)(e), Florida Statutes. Whether the Respondents' real estate licenses in Florida should be disciplined based upon the charge that Respondents are guilty of failing to register a branch office in violation of Subsection 475.24, Florida Statutes, and Rule 21V-10.023, Florida Administrative Code, and therefore are in violation of Subsection 475.25(1)(e), Florida Statutes. Whether the Respondents' real estate licenses in Florida should be disciplined based upon the charge that the Respondent Max S. Long, Jr., is guilty of failing to be a signatory on all escrow accounts in violation of Rule 21V-14.010, Florida Administrative Code and therefore is in violation of Subsection 475.25(1)(e), Florida Statutes. Whether the Respondents' real estate licenses in Florida should be disciplined based upon the charge that the Respondents' are guilty of failing to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(k), Florida Statutes. Whether the Respondents' real estate licenses in Florida should be disciplined based upon the charge that Respondents' are guilty of culpable negligence or breach of trust in any business transaction in violation of Subsection 475.25(1)(b), Florida Statutes.
Findings Of Fact Based upon all of the evidence, the following findings of fact are determined: 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 Max S. Long, Jr. was at all times material hereto a licensed real estate broker in the State of Florida having been issued license numbers 0253744, 0253742, and 0258199 in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker for Stonegate Realty, Inc., 2325 Ulmerton Road, Clearwater, Florida 34620 and Queens Harbour Realty, Inc., 711 San Pablo Road North, Jacksonville, Florida 32225. Respondent Long has been a licensed salesperson since 1974 and a licensed broker since 1978. The Respondent Stonegate Property Management Corporation was at all times material hereto a corporation registered as a real estate broker in the State of Florida having been issued license number 0240617 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 2325 Ulmerton Road, Clearwater, Florida 34620. The Respondent Stonegate Realty, Inc. was at all times material hereto a corporation registered as a real estate broker in the State of Florida, having been issued license number 0182660 in accordance with Chapter 475, Florida Statutes. The last licensed issued was at the address of 2325 Ulmerton Road, Clearwater, Florida 24620. The Respondent Queens Harbour Realty, Inc., is now and was at all times material hereto a corporation registered as a real estate broker in the State of Florida, having been issued license number 0257554 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 711 San Pablo Road North, Jacksonville, Florida 32225. On or about October 17, 1989, DPR investigator Marjorie G. Maye (hereinafter Maye) conducted an inspection and audit of Respondents' offices and escrow accounts in Clearwater. Maye discovered that the Respondents did not display an office entrance sign for the corporations. Since the inspection Respondents have erected the proper sign which has been displayed continuously since that date. Respondents were operating an unregistered branch office located at 13280 Broadhurst Loop S.W., Ft. Myers, Florida. Respondents did not register the office because the salesperson was an employee of the developer and sold only property at that project. Since the inspection Respondents have properly registered the branch office. At the time of the inspection and audit Respondent Long was not a signatory on Respondents' escrow accounts. Since the inspection, Respondent Long has been added as a signatory to the escrow accounts. At the time of the audit Respondents' escrow account titled Queens Harbour Realty - Escrow account number 0089798317 maintained at C & S Bank of Pinellas County on September 30, 1989, had a current liability of $54,010.66, a reconciled bank balance of $8,537.99 thus indicating a shortage of approximately $45,472.67. Ultimately, the Respondents reduced the shortage to zero and the accounts balanced. At the time of the inspection and audit, Ed Perry, CPA, was employed by Respondent Queens Harbour in the accounting department and was in charge of the Queens Harbour Realty - Escrow account which was maintained out of Clearwater, Florida. George Patterson and Ed Perry, CPAs, and other individuals were signatories on this escrow account. The escrow accounts were used for deposits on real estate sales and leases. The funds were disbursed at sale or upon termination of the lease. Some of the funds received by Respondents were not required to be held in escrow. Eventually the deposits from several projects were placed in the escrow accounts. Disbursements were made from the escrow accounts even though the funds were not required to be deposited in the escrow account. This resulted in confusion as to the exact amounts of funds required to be maintained in the escrow accounts and which funds were available for distribution. Shortages in the escrow accounts were a result of intercompany loans and disbursements, as well as, from the co-mingling of funds. These were made at the direction of George Patterson. On or about October 13, 1989, Ed Perry, CPA and George Patterson, supervisor of the accounting department, signed a $6,000.00 check from Respondents' escrow account which was used for the purchase of a vehicle for Queens Harbour Yacht and Country Club. When this error was discovered the $6,000.00 was re-deposited to the escrow account. Respondent Long, became the broker for Stonegate Realty at the request of his cousin, Fred Bullard, the President of the Bullard Group, and a majority shareholder in Queens Harbour Realty, Inc. He was not aware of and did not sign any of the checks representing the inter-company loans or for the purchase of the vehicle. He derived no benefit from these loans. Respondent Max S. Long, Jr. understood at all times material to the allegations in the Administrative Complaint that an escrow account is one used to hold funds belonging to third parties and that he, as the real estate broker, acted in a fiduciary capacity to those third parties. Respondent Long relied completely on the corporation's in-house accountants to properly prepare the accounting for the escrow funds. Since the DPR investigation, there have been no shortages in the escrow account, monthly reconciliation reports are prepared and signed by Respondent Long, and the escrow accounts are routinely reviewed by Respondent Long. Respondent Long has had no prior disciplinary proceedings before the Commission.
Recommendation Having considered the foregoing Findings of Fact and Conclusions of Law, and the evidence of the record, including the contents of the several exhibits received into evidence, it is, therefore: RECOMMENDED that the Respondents be found guilty of having violated Subsections 475.25(1)(b), (e) and (k), Florida Statutes, (1989), as charged in the Administrative Complaint. It is further RECOMMENDED that Respondents shall jointly pay a penalty of $500 and that Respondent Long's real estate licenses be suspended for a period of one year, followed by a one year period of probation upon such conditions as the Florida Real Estate Commission shall reasonably impose. DONE and ENTERED this 21st day of August, 1991, in Tallahassee, Florida. DANIEL M. KILBRIDE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of August, 1991. APPENDIX TO RECOMMENDED ORDER 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. Accepted in substance: paragraphs 15, 16, 17, 18, 19, 20. 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, Respondents' proposed findings of fact. Accepted in substance: paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 41, 42. Rejected as irrelevant: 9, 13, 40. COPIES FURNISHED: Janine B. Myrick, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32802 Kelli Hanley Crabb, Esquire Post Office Box 4110 St. Petersburg, Florida 33743 Darlene F. Keller Division Director 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801 Jack L. McRay General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Upon consideration of the oral and documentary evidence adduced at the hearing the following facts were found: At all times material to these proceedings, Respondent was licensed by the State of Florida as a real estate salesman having been issued license No. 0325539. On September 24, 1984, at Respondent's request, Petitioner placed Respondent's license in an inactive status and on the day of the hearing Respondent's license was still in an inactive status. During the latter part of June or July, 1983, Respondent and his wife Merie Klink talked to George Anna Davis (Davis) in regard to renting or selling her home. Legally described as: Lot 15, Block G, Geneva Heights, as per Plat Book 2, Page 122 of the Public Records of Sarasota County, Florida. The mailing address of the Davis' property is 1804 Edmondson Road, Nokomis, Florida 33555. As a result of this conversation, Davis decided to sell rather than to rent her home and entered into a multiple listing with Venice Area Multiple Listing Service, Inc., with Respondent's broker, Ronald W. Morrison of Century 21 First Realty of Venice, Inc., as the listing Realtor, which was accepted on August 8, 1983. On October 11, 1983, Jan Leather and Janet Adams submitted an offer on the property to Davis which she refused. Davis then made a counter-offer which was refused by Jan Leather and Janet Adams. At the time of the hearing, Davis did not recollect the offer or counter-offer being made. During the term of the listing Respondent mowed the grass, made minor repairs, and generally kept the Davis property clean without any compensation from Davis. On November 2, 1983, Respondent received an offer on the Davis property from Andrew G. Szilay and Lillian Green Szilay (Szilay). The Szilay offer provided for a total purchase price of $23,000, payable $3,000 in cash and $20,000 by note secured by a purchase money mortgage based on 30 year amortization with interest at the rate of 11 percent per annum to balloon in 3 years. There was no provision for the assumption of the John Falls mortgage in the sum of $3,500 by the Szilays and the Szilays assumed that this mortgage would be paid off by Davis at closing and that they would get a clear title. The Szilay offer was communicated to Davis by Respondent on November 2, 1983 and Davis informed Respondent that she needed to talk to her son before making a decision. Respondent called Davis again on November 3, 1983 but she had not made a decision and asked that Respondent call her back on Sunday morning, November 6, 1983 and that she would have made a decision on the offer by that time. During this conversation, Respondent reminded Davis that she had to accept the Szilay offer by noon, November 7, 1983 or it would be withdrawn. On November 4, 1983, Respondent received an offer on the Davis property from Walter E. Armstrong and Lula Mae Armstrong (Armstrong). The Armstrong offer provided for a $22,500 purchase price, payable $5,000 cash, assumption of the John Falls' mortgage in the sum of $3,500 by Armstrong and a $14,000 note secured by a purchase money mortgage to Davis with interest at the rate of 10 percent per annum to balloon in 5 years. Respondent attempted to contact Davis on November 4, and 5, 1983, but was unable to contact Davis until Sunday, November 6, 1983, and at that time informed Davis of the Armstrong offer. The record is clear that Respondent received and informed Davis of the Szilay offer before receiving the Armstrong offer. During the telephone conversation on Sunday, November 6, 1983, Respondent informed Davis of the Armstrong offer and asked Davis to write down the details of both offers so that Respondent could discuss the advantages and disadvantages of each offer with Davis. After some discussion Davis could not make up her mind and asked Respondent to call her back later. Upon calling Davis back later that Sunday, November 6, 1983, Davis advised the Respondent that she preferred the Szilay offer because of the 11 percent interest and the three year balloon feature, as opposed to the 10 percent interest and five year balloon feature of the Armstrong offer. Respondent instructed Davis to send a telegram accepting the Szilay offer. On that same day, Respondent advised Louise Levering the real estate salesperson who was handling the Armstrong offer, that Davis preferred the Szilay offer and why Davis preferred it and that Davis was going to accept the Szilay offer. Later that same day, Armstrong made a counter-offer increasing the interest rate to 11 percent and with the note to balloon at 3 years. The Armstrong counter-offer was communicated by Leverling to Respondent who in turn communicated the Armstrong counter-offer to Davis on the same day (November 6, 1983) which was later confirmed in writing. Again, the Respondent asked Davis to write down the details of each offer and counter-offer and Respondent explained the comparative features of them to Davis. One of the things pointed out to Davis, by Respondent, was that the Szilay offer would require Davis to satisfy the John Falls' mortgage in the sum of $3,500, producing no cash to Davis at the closing, while the Armstrong offer would give her substantial cash at closings which she wanted. At this point, since no telegram had been sent, Davis decided to accept the Armstrong offer instead of the Szilay offer and advised Respondent that she would send a telegram to that effect on Monday, November 7, 1983. On Monday, November 7, 1983, a telephone call to the Century 21 office confirmed that a telegram had been received from Davis accepting the Szilay offer. The telegram was later reduced to writing. Respondent then called Davis to see if there was a mistake and Davis advised Respondent that she had gotten confused. Again Respondent explained both offers to Davis and she agreed that the Armstrong offer would be better for her. On November 8, 1983, Respondent received a telegram from Davis accepting the Armstrong offer. The Armstrong contract was mailed to Davis for signature on November 9, 1983. Norwood Gay the Attorney closing the transaction, corresponded with Davis on November 18, 1983, and in accordance with that correspondence, Davis executed a closing statement, a warranty deed, and an owner's affidavit and forwarded the documents to Norwood Gay for the closing. The transaction closed in a routine manner with exception that an inspection of the improvements on the property revealed visible evidence of wood destroying organism known as dry-rot in various locations around the house. The Respondent notified Davis of this prior to closing, and Davis authorized a repair escrow of $500. The closing took place on December 5, 1983 and Norwood Gay forwarded to Davis the net check less escrow and the other closing documents. Norwood Gay later sent Davis the net of the repair escrow, which she accepted. While Davis in a letter to Petitioner implies that respondent dropped the price of the home by $1,500 and sold it to a close friend, the Armstrongs, the testimony of both the Respondent and his wife and the Armstrongs that they had not known each other before this transaction and had only met the morning of the hearing, went unrebutted. Also, the evidence shows that there was only $500 difference in the purchase price of the two offers. While Davis had previously listed her house with another agency to be sold "as is", the record is clear that this matter was discussed with Davis by the Respondent and that Davis understood that the property would be listed as needing "tender loving care" (TLC). The Respondent received $441.15 as a listing commission on the Armstrong sale. Had the Szilay offer been closed rather than the Armstrong offer, the Respondent would have received approximately $377.00 as a listing commission. The record is clear that Respondent discussed the advantages and disadvantage of both the Szilay and Armstrong offers prior to Davis making a final decision to accept the Armstrong offer. There was no credible evidence that Davis was pressured by the Respondent to accept the Armstrong offer or that the Respondent informed Davis that the Szilays: (a) were unreliable; (b) not financially able to handle the payments, or (c) that they had withdrawn their offer.
Recommendation Based upon the findings of fact and conclusions of laws recited herein, it is RECOMMENDED that the Commission enter a final order finding the Respondent not guilty of the violations as charged in Count I and Count II of the Administrative Complaint and that Count I and Count II of the Administrative Complaint be DISMISSED. Respectfully submitted and entered this 12th day of July, 1985, in Tallahassee, Leon County, Florida. WILLIAM R. CAVE 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 12th day of July, 1985. COPIES FURNISHED: Arthur Shell, Esquire 400 West Robinson Street Orlando, Florida 32802 William R. Hereford, Esquire 1233 South Tamiami Trail Sarasota, Florida 33579 Mr. Harold Huff Executive Director Department of Professional Regulation Division of Real Estate Post Office Box 1900 400 West Robinson Street Orlando, Florida 32801 Mr. 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, Fl 32301
The Issue Whether the Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction contrary to Section 475.25(1)(b), Florida Statutes, and Whether the Respondent is guilty of failure to account or deliver real estate brokerage books and records and other personal property in violation of Section 475.25(1)(d), Florida Statutes.
Findings Of Fact The Petitioner is a state agency charged by statute with the regulation of real estate salespersons and brokers. The Respondent, Robert Joseph Gumbrewicz, at all times relevant to this complaint, held real estate salesperson license number 0576053. On or about March 31, 1992, the Respondent bought Buy Owner Realty of Jacksonville, Inc. (Buy Owner) from James Weiss, a licensed real estate broker. Phyllis Sellers was employed by Respondent as the corporation's broker of record. Phyllis Sellers notified U.S. Title that she had become broker of record for Buy Owner. Buy Owner had incurred debts while owned by Weiss. A debt owed by Buy Owner to a copier company was not paid, and the company obtained a judgment against Buy Owner. The company then executed on its judgment and froze, on April 28, 1993, the operating account of Buy Owner, Account Number 5084900-134, at First Bank of Jacksonville. On April 27, 1993, the Respondent issued a check in the amount of $350 on Buy Owner's Account Number 5084900-134 at First Bank of Jacksonville to Phyllis Sellers as partial payment of a commission which she had already earned. Buy Owner had already earned its commission in this transaction and had already transferred its money from its trust account to its operating account. On April 27, 1993, Phyllis Sellers deposited the check from Respondent on Buy Owner's Account 5084900-134 into her bank account. On April 29, 1993, the check was presented to First Bank of Jacksonville for payment. This check was not paid because the account had been frozen pursuant to court order. There was no evidence presented that the Respondent knew, at the time he issued the check, that the account was going to be frozen. There were funds sufficient to pay the check in the account when it was issued. Immediately following receipt of the check, Sellers went on vacation. Upon her return, she found that the office of Buy Owner had been closed, and the records of the business were not present on the former business premises. Sellers attempted to contact the Respondent, but he would not return her calls. Hearsay evidence was received that the Respondent had removed the records of the office and was maintaining them in his garage at his home; however, there was no direct evidence of what happened to the records. The Respondent, in a response to admissions filed by Petitioner, denied taking the records.
Recommendation Based upon the consideration of the facts found and the conclusions of law reached, it is, RECOMMENDED: That the Department of Business and Professional Regulation enter a final order which dismisses the Administrative Comoplaint against the Respondent. DONE and ENTERED this 29th day of July, 1994, in Tallahassee, Florida. STEPHEN F. DEAN, 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 29th day of July, 1994. COPIES FURNISHED: Steven W. Johnson, Esquire DPR - Division of Real Estate 400 West Robinson Street, #N-308 Orlando, FL 32801 Robert J. Gumbrewicz, Esquire 808 Elmwood Street Orange Park, FL 32073 Darlene F. Keller, Division Director DPR - Division of Real Estate 400 West Robinson Street, #N-308 Orlando, FL 32801 Jack McRay, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, FL 32399-0792
