The Issue Whether the application of Ronald J. Palamara (“Palamara”) for licensure as a yacht and ship broker under Chapter 326, Florida Statutes, should be granted or denied.
Findings Of Fact The Petitioner was previously a licensed yacht and ship broker in Florida, holding Yacht Broker License No.324. On April 28, 1999, the Petitioner’s prior license expired. The Petitioner reapplied for a Yacht Broker license on February 24, 2000. Robert Badger (Badger), at that time an investigator with the Division, investigated the application for form pursuant to Rule 61B-60.003(2), Florida Administrative Code, and found that there were no problems with the form of the application. Badger also reviewed the application for moral character of the applicant pursuant to Rule 61B-60.003(3), Florida Administrative Code. On the application, the Petitioner indicated that he had a criminal background, but failed to disclose the nature of the criminal background on the application. In a letter from the Division addressed to the Petitioner, additional information was requested regarding his criminal background. The Petitioner replied in a letter that he had been convicted of a misdemeanor for resisting an officer without violence. The Petitioner also disclosed on the application that he had a civil Final Judgment against him in the matter of Chinnock Marine, Inc. v. Barthelemy & Palamara, Case No. 98- 19512 (Fla. 17th Cir. 1999). He did not fully disclose the details relating to events that led to the judgment. Instead, he stated on the application that the claims were “unfounded” and that Chinnock Marine “misled the court.” The subject application is dated February 22, 2000. On that application, the Petitioner was specifically required to disclose any “pending” civil suits involving a yacht. At the time of his application, another civil matter was pending against the Petitioner in World Class Yachts v. Palamara, Case No. 99-12923 (Fla. 17th Cir. 2001), which was filed on July 22, 1999. The Petitioner failed to disclose the pending World Class Yachts civil suit.2 Subsequent to the filing of the subject application, a non-final order was entered against the Petitioner finding that he was in default and rendering judgment for World Class Yachts in the amount of $157,500. The Petitioner took an interlocutory appeal of the circuit court’s non-final order of default to the Florida Fourth District Court of Appeal. The Fourth District Court of Appeal affirmed the trial court's order of default. Palamara v. World Class Yachts, Case No. 4D01-3260 (Fla. 4th DCA 2001). The Petitioner admits that the World Class Yachts case relates to a yacht. Although the circuit court had not entered a Final Judgment against the Petitioner in the amount of $157,500.00 at the time of the hearing in this case, the World Class Yachts civil litigation involving a yacht should have been disclosed on the application pursuant to Rule 61B-60.003(3)(a)6, Florida Administrative Code. In both Chinnock Marine and World Class Yachts, the Petitioner has moved to vacate the default judgments, alleging that he was not properly served. The Petitioner has worked in the yacht brokerage business in South Florida for many years. He has never had any disciplinary action taken against his license. In the community in which he lives and works he enjoys a reputation for being a person of integrity, honesty, and good moral character.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is recommended that a Final Order be issued in this case granting the license sought by the Petitioner. DONE AND ENTERED this 3rd day of September, 2002, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH 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 3rd day of September, 2002.
The Issue Whether or not the corporate names Sarasota Yacht Club on Coon Key, Inc., and Sarasota Yacht Club, Inc., are deceptively similar to each other and, if so, whether or not pertinent rules and regulations of the Department of State require the latter chartered corporation to amend its Articles of Incorporation and registration to reflect a new name due to a "bad faith" name reservation by Respondent, Sarasota Yacht Club, Inc.
Findings Of Fact Based upon the testimony adduced at the hearing, the documentary evidence received and the entire record compiled herein, the following relevant facts are found. Documents on file in the Division of Corporations, Department of State, reveal that the Articles of Incorporation for the Sarasota Yacht Club, 1/ a Florida corporation not for profit, were granted by the Circuit Court of Sarasota County, Florida, on June 30, 1926. (See Exhibit A of the Stipulation received herein as the parties' Joint Exhibit 1.) Sarasota Yacht Club came under the jurisdiction of the Division of Corporations of the Department of State (Respondent) on April 18, 1963, with the filing of certain amendments to the Articles of Incorporation (Exhibit B of Joint Exhibit 1). The Sarasota Yacht Club was dissolved on September 3, 1976, for failure to file its Annual Report for 1974 and subsequent years. Notices mailed by Respondent, Division of Corporations, to the Sarasota Yacht Club were directed to 1100 Ringling Boulevard, an address which was erroneously given on the 1973 Annual Report of Sarasota Yacht Club, whose correct address is 1100 John Ringling Boulevard. (Exhibit C of Joint Exhibit 1.) The postmaster of Sarasota, Florida, upon inquiry by the Department, indicated that mail addressed to the Sarasota Yacht Club at 1100 Ringling Boulevard would not automatically be forwarded to 1100 John Ringling Boulevard, Sarasota, Florida. (Joint Exhibit 1 and testimony of John W. Arnold, the manager of Sarasota Yacht Club on Coon Key, Inc., during the calendar years 1975 through 1979.) On July 9, 1979, Martin J. McGuire, Ethel May McGuire and William Kecht filed Articles of Incorporation under the name Sarasota Yacht Club, Inc., which corporation was granted Charter No. 748001. (Exhibit D of Joint Exhibit 1.) Sarasota Yacht Club reinstated its Charter under the name of The Sarasota Yacht Club on Coon Key, Inc., on September 24, 1979, with the original Charter No. 705493. (Exhibit E of Joint Exhibit 1.) Sarasota Yacht Club, Inc., Charter No. 748001, failed to file its Annual Report prior to July 1, 1980, and was involuntarily dissolved December 8, 1980, and failing reinstatement of Charter No. 748001, pursuant to Chapter 10- 1.09, Florida Administrative Code, the name Sarasota Yacht Club will become available for reissuance on December 8, 1981. (Joint Exhibit 1.) Sarasota Yacht Club on Coon Key, Inc., Charter No. 705493, has attempted to reserve the name Sarasota Yacht Club so that it may be restored to the use of its name granted on June 30, 1926, however, the Respondent, Department of State, Division of Corporations, will not process said name reservation until December 8, 1981. (Exhibit F of Joint Exhibit 1.) During the years 1975 through 1979, when Messr. Arnold was manager of Sarasota Yacht Club, the Club continued to do business with various State agencies and regularly renewed various licenses with the Department of Natural Resources; gasoline dealers; special fuel certificates; Department of Business Regulation, Division of Hotels and Restaurants; Internal Revenue Service special tax stamps and licenses issued by the City of Sarasota, including the Health Department. Also, during this period, the Club received various letters which were not properly addressed, such as John Ringling Causeway, Ringling Causeway, etc. As stated herein, Sarasota Yacht Club, Inc., Charter No. 748001, was formed on July 3, 1979, for the express purpose of encouraging boating and yachting to provide entertainment food, refreshments and social activities for its members and guests. Accordingly, the purpose for which that club was formed is the identical purpose for which Petitioner was originally formed and continues to operate since 1926. Also, both corporations operate in the same locality, Sarasota, Florida. Respondent, Sarasota Yacht Club, Inc., however, has not conducted any business in furtherance of its corporate purpose other than the chartering of the corporation. Martin McGuire, one of the incorporators of Respondent, Sarasota Yacht Club, Inc., was a former member of Petitioner. His membership was terminated for reasons unknown to the Hearing Officer, during 1979. On July 12, 1979, Norman Jacobson, an attorney licensed to practice in Florida received a phone call from Martin McGuire. Attorney Jacobson has known attorney Martin McGuire for more than thirty-five (35) years. Attorney Jacobson attended law school with Martin J. McGuire at John Marshall Law School, Chicago, Illinois. During the July 12, 1979, conversation, attorney McGuire related to attorney Jacobson, certain alleged problems that Sarasota Yacht Club, Inc., was experiencing including personal, financial and tax liabilities which could affect the Club (Petitioner) if made known to the public. This conversation took place subsequent to the time when attorney McGuire had been expelled as a member of Petitioner. According to Jacobson, attorney McGuire agreed to dissolve Corporate Charter No. 748001 provided Petitioner do the following: l. Reinstate his membership in good standing; Guarantee his continued membership in good standing; and Agree to certain unspecified changes in Petitioner's by-laws. Attorney Jacobson advised attorney McGuire that those concessions could not and would not be made if his recommendation to the Club's membership were adopted. Attorney Jacobson considered McGuire's demands to be a form of blackmail. Attorney Jacobson reported to the Club (Petitioner) the details of the conversation and discussions that he had with attorney McGuire as outlined above and the Club unanimously agreed to maintain its original decision to cancel attorney McGuire's membership. Messr. Brady, a former practicing attorney and also an employee of the Department of Justice, Federal Bureau of Investigation, is familiar with Petitioner's history. Messr. Brady recounted that the Club was formed during 1926, and its stature has continuously grown. The Club presently boasts of a membership in excess of 500 and regularly sponsors regattas and other sailing events. The Club is sponsoring its third annual sailing regatta this month and one of its female members is a finalist in this year's Adams Cup Race.
Recommendation Upon consideration of the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED: That the corporate name Sarasota Yacht Club, Inc., be found deceptively similar to Sarasota Yacht Club on Coon Key, Inc., and that approval for use of the name Sarasota Yacht Club, Inc., be withdrawn by the Secretary of State. 2/ RECOMMENDED this 16th day of November, 1981, in Tallahassee, Florida. JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 16 day of November, 1981.
Findings Of Fact Respondent Cherylyn Stoppler, at all times pertinent hereto, was licensed as a real estate saleswoman in the State Of Florida, holding license No. 0467803. Her last and current license was issued authorizing practice at Escambia Realty, Inc., 310 South Pace Boulevard, Pensacola, Florida 32501. Respondent Dorothy Diane Owens, at all times pertinent hereto, was a licensed real estate broker in the State of Florida, holding license No. 0380831. Respondent Escambia Realty, Inc., at all times pertinent hereto, was a licensed corporate real estate brokerage holding license No. 0232503. Its address is 310 South Pace Boulevard, Pensacola, Florida 32501. The Petitioner is an agency of the State of Florida charged with enforcing the provisions of Chapter 475, Florida Statutes, related to the licensure of real estate brokers and salesmen, the real estate professional practice standards embodied in that chapter and with prosecuting alleged violators of those standards. On April 13, 1986, Kenneth and Linda Williams, also known as Linda Brewer, requested that Cherylyn Stoppler show them rental property consisting of a single family residence located at 6853 Lake Charlene Drive in Pensacola. They had observed the Respondent corporate broker's sign on the front of that premises, advertising it for rental. Respondent Stoppler, Respondent Owens and the Escambia Realty, Inc. represented the owners of the property. Kenneth and Linda Williams examined the property and decided that they wanted to rent it. In their discussion with Cherylyn Stoppler concerning the terms of the rental arrangement, they requested that they be allowed to paint the premises and that the garage door be repaired. Respondent Stoppler agreed to this and indicated the owners would supply two gallons of paint and the prospective tenants, the Williamses, could do the painting with the owners ensuring repair of the garage door. Respondent Stoppler and the Williamses agreed to those terms and to the rental amount of $625 per month. They also agreed to pay Respondent Stoppler a $400 deposit, on behalf of the owners. Ms. Stoppler informed the Williamses that if they did not consummate the lease arrangement, upon which they had verbally agreed, the $400 would be retained and remitted over to the owners of the property. The Williamses agreed to this arrangement. The Williamses and Ms. Stoppler returned to Ms. Stoppler's office and she noted these terms on a lease agreement form with the additional term that the owner would steam clean the carpet in the house. The lease terms also provided that the premises would be used by no more than two adults and "zero" children, but the lease agreement has the "zero" stricken through indicating that that term was to be deleted. The striking of the zero on the term concerning the number of children to occupy the premises appears to have been executed with the same pen, inasmuch as the ink is the same color as the rest of Mrs. Stoppler's handwritten terms on the lease form. In any event, the Williamses were anxious to return to their home in Louisiana directly from the Respondent's office that same afternoon and to accommodate them Ms. Stoppler agreed to mail the lease form to them to be executed, urging them to send it back immediately. When they left the premises that day, Respondent Stoppler removed her firm's sign from the front of the premises and also told the Williamses that the property would be off the market as of that day, hence her admonishment to them to waste no time in returning the executed lease since the property would be off the market during the interim on the strength of the verbal agreement. The Williamses did not inform Ms. Stoppler that Mr. Williams had two children who might visit them from time to time or live with them at the premises. The Williamses returned to Louisiana and the lease was mailed to them by Ms. Stoppler. The Williamses decided not to execute the lease and to not consummate the rental arrangement. They informed Ms. Stoppler of this by phone on April 24, 1986, as well as communicating on that day with Respondent Owens. They indicated they did not desire to rent the premises and one reason given was that they felt that the two children were precluded by the lease terms from living on the premises for any period of time with them. In fact, the Williamses had never mentioned that they had any children and had sought to negotiate a reduction in the rent when they originally discussed the matter with Ms. Stoppler on the basis that only the two of them would live in the premises. The terms and conditions of the rental arrangement were those given to Ms. Stoppler by the Williamses themselves. When they conferred with Ms. Owens and Ms. Stoppler, they were again informed that the $400 would be retained and transmitted to the owners, to which they did not then object. In fact, they never did make any demand upon the Respondents for return of the $400 which was actually communicated to the Respondents. There is a letter in evidence (Petitioner's Exhibit 6) which the Respondents never received, as is shown by the certified mail receipt card and by Respondents' and Ms. Celano's testimony. The Williamses objected to consummating the lease because they contended that Ms. Stoppler had assured them that they could 1ive in the premises rent- free from the beginning of the lease, April 26, until May 1, during the time in which they would be painting the house and instead they were being charged $84 for those days. Mrs. Williams' testimony is somewhat equivocal in this regard in that she exhibited an incomplete memory regarding certain critical dates in the transaction, for example, the date she allegedly called Mrs. Stoppler to inform her of their refusal of the rental and the date she believed the lease was to commence. Mrs. Stoppler's testimony was corroborated by that of Ms. Owens, and was not refuted by the Williamses. It is accepted over that of Mrs. Williams in establishing that indeed the lease period and the rental there for was to commence on April 26. The Respondents' testimony shows that the house was off the rental market from April 13, when the verbal agreement with Ms. Williams was entered into and the sign was removed from the property and that both Respondents informed Mrs. Williams on two occasions that the $400 was not refundable but would be remitted to the owners of the property. The Respondents also established that Escambia Realty, Inc. followed a consistent policy of retaining deposit monies and remitting them to the owners without refund to prospective tenants when the tenants agreed to lease the premises after being informed that the deposit would be retained and the property taken off the market, when such tenants elect of their own volition to negate a lease or rental agreement. The Williamses additionally maintained that they did not want to consummate the lease arrangement because, in their view, the Respondents and the owners would not permit any children unrestrictedly visit or to live on the premises. That was established not to be the case. They also objected because they would not be allowed to live in the premises rent-free for several days during the time in which they were painting the premises. Additional objections involved various inconsequential technical deficiencies, such as misspellings, in the content of the lease. The employment position Mr. Williams was to have taken in the Pensacola area, and which was in large measure their reason for moving to Pensacola and renting the subject premises, failed to materialize. Ultimately, however, the Williamses moved to Pensacola and rented a different house at the lower rate of $600 per month. In short, the complaining witnesses contend that they did not want to execute the lease because of the problem of the $84 prorated rent required of them by the Respondents and the owners for the days when they thought they would live rent-free while painting the premises, because they felt that Mr. Williams' children by a previous marriage were precluded from unrestricted visits at the rental premises and because they felt that the proffered lease did not contain the proper initial date of tenancy. Thus, the Williamses breached the agreement because the Respondents refused to "correct" the lease according to the Williamses' desires. Those desires were not communicated to the Respondents until, at the very earliest, the phone conversations of April 24, 1986, some twelve days after the verbal agreement to rent the premises to the Williamses had been entered into and the $400 deposited with the Respondents on behalf of the owners. During that time, and longer, the property was taken off the rental market and the Respondents and the owners forbore the opportunity to secure other tenants. The Williamses themselves acknowledged that the letter by which they sought return of the $400 deposit was never actually received by the Respondents. Further, Ms. Williams in the telephone conversation on April 24, 1986, acknowledged that the owners were entitled to the $400 deposit. Even so, Ms. Owens waited approximately 25 days before remitting the funds over to the owners. Thus, no dispute as to the deposit was ever communicated to the Respondents, and the Respondents never misrepresented to either Mr. or Mrs. Williams the manner of disbursement of the deposit funds. It is noteworthy that Mrs. Williams is a licensed realtor herself and had some experience in similar real estate transactions. The Respondents carried out their portion of the bargain. Finally, it has been demonstrated that Respondent Owens is a well- respected real estate practitioner in the Pensacola area, having served as an officer and director of her local board of realtors and having been accorded a number of honors and certifications in connection with her professional performance as a realtor and her securing of advanced training in the field of real estate brokerage. Ms. Stoppler is relatively new to the profession, but neither she nor Ms. Owens have been shown to have ever engaged in any questionable practice or conduct in the course of their practice and neither have been shown to have been the subject of any other complaint of any nature resulting from a real estate transaction.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore RECOMMENDED that the Administrative Complaint against Respondents Cherylyn Stoppler, Dorothy Diane Owens and Escambia Realty, Inc. be dismissed in its entirety. DONE and ORDERED this 28th day of 1987, in Tallahassee, Florida. P. MICHAEL RUFF 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 28th day of May, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3982 Petitioner's Proposed Findings of Fact: 1-4. Accepted. Rejected as a recitation of testimony and not a Finding of Fact. Rejected as to its material import. 7-9. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. 10-11. Accepted. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Accepted. Rejected as a recitation of testimony and not a Finding of Fact. Also rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Accepted. Rejected as to its material import. 17-18. Accepted. 19. Rejected as to its material import. 20-21. Accepted. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Rejected as a recitation of testimony and not a Finding of Fact. Also rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Rejected as to its material import. Rejected as a recitation of testimony and not a Finding of Fact. Also rejected as to its material import. Accepted, but rejected as to its material import. Accepted. Rejected as to its material import. 29-30. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. 31. Accepted, but not as to its material import. 32-35. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. Rejected as to its material import. Accepted, but not to the effect that a demand for refund was made. Rejected as to its material import and as not in accord with the credible testimony and evidence adduced. 39-41. Rejected. Respondents' Proposed Findings of Fact: Specific rulings are not separately made here because Respondents' Proposed Findings of Fact are inseparably entwined with legal argument and recitations of, and arguments concerning, the weight and credibility of testimony and evidence. COPIES FURNISHED: Arthur R. Shell, Jr., Esquire Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Cherylyn Stoppler Dorothy Diane Owens Escambia Realty, Inc. 310 South Pace Boulevard Pensacola, Florida 32501 Van Poole, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Joseph A. Sole, Esquire General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32399-0750 Harold Huff, Executive Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802
Findings Of Fact At all times material hereto, Respondent, Ralph B. Snyder, Jr. ("Respondent"), was a licensed real estate broker having been issued license No. 0082998. Respondent was the qualifying broker for Home Hunters V, Inc., a corporate real estate broker having been issued license No. 0221795, with a principal business address of 2829 Okeechobee Boulevard, West Palm Beach, Florida. In September, 1981, Respondent registered Home Hunters V, Inc., as a real estate brokerage corporation, with himself as qualifying broker. The office remained open until April, 1982. Respondent was not present in the West Palm Beach office of Home Hunters V on a full-time basis because, in addition to that business, he was involved in a construction business on Sanibel Island, Florida. In late September or early October, 1981, Respondent hired Greg Howle to manage the Home Hunters V office in West Palm Beach. At all times material hereto, Howle was not registered as either a broker or salesman. Respondent's business, insofar as here pertinent, consisted of maintaining card files of rental properties available in the West Palm Beach area, and advertising availability of those properties for the owners. When a prospective tenant came to Respondent's office in response to advertisements or otherwise, those tenants would sign an agreement with Home Hunters V, Inc., and, after payment of a $60 fee, would be furnished information concerning available properties in the area that generally conformed to the types of properties prospective tenants were seeking. The standard procedure in Respondent's office was that the prospective tenants would first meet with Greg Howle, the office manager, who would have them execute the agreement with Home Hunters V, Inc., collect the $60 fee from them, and then refer prospective tenants to other office employees. Among these other office employees were Ilana Frank, a licensed real estate salesperson who began employment with Respondent in late September or early October, 1981, and Sheryl Kimball, an unlicensed employee, who was employed by Respondent on or about October 16, 1981, and continued as an employee until about November 29, 1981. Respondent testified that Ms. Kimball was hired as a receptionist and, in addition, performed general clerical responsibilities in the office, including greeting potential customers and referring them to licensed salespersons. The record in this cause establishes that Ms. Kimball did, on at least two occasions, speak with persons on the telephone concerning sales, and on both of those occasions she was reprimanded by Respondent for acting outside the scope of her employment. Ms. Kimball was never directed by Respondent to negotiate the rental of any real property nor does this record establish that Respondent knew of Ms. Kimball's engaging in any such activity. Respondent testified that Ms. Kimball was paid $150 per week for her services, and, in addition, was compensated for any overtime work she might have performed. Ms. Kimball testified, however, that she was paid $150 per week together with $3.00 for each contract she negotiated. However, Ms. Kimball could identify only one such contract on which she worked. With regard to that contract, which involved a customer named Paul Palmero, Respondent never received any funds, and the record in this cause does not reflect that any services were ever performed for Mr. Palmero. Further, the entire Palmero transaction was conducted in the presence of another of Respondent's employees, Ilana Frank, who, as indicated above, was a licensed salesperson. Accordingly, there is insufficient credible evidence of record in this cause to establish that Sheryl Kimball ever negotiated the rental of real property or interest therein; procured lessees of the real property of others; or performed any of the acts of a broker or salesman as alleged in the Administrative Complaint. Further, the record in this cause contains no evidence establishing the amounts actually paid to Ms. Kimball during the six-week period in which she was employed by Respondent. In reaching this conclusion, the Hearing Officer has taken into account the testimony and interests of both Ms. Kimball and Respondent in the outcome of this proceeding in attempting to reconcile the direct conflicts in their testimony. Ms. Kimball was discharged from Respondent's employ after having received two reprimands and having been accused of misappropriating funds. Thereafter, Ms. Kimball filed a complaint against Respondent with the Florida Real Estate Commission. Conversely, Respondent obviously has an interest in retaining his license as a broker. When viewed as a whole, it is concluded that facts of record in this cause with respect to Counts I and II are qualitatively and quantitatively insufficient to establish the factual allegations contained therein. Count III of the Administrative Complaint alleges that Respondent ". . . inserted or caused to be inserted fraudulent, false, deceptive or misleading advertisements in the Post and Evening Times newspaper of West Palm Beach, Florida." The same count further alleges that those advertisements were fraudulent, false, deceptive or misleading ". . . in that the content thereof stated to the public that respondents had available for lease through their firm various rental units at stated prices when in fact rental units of the advertised type were not available through their firm at the stated price." There is no evidence of record in this proceeding that would in any way establish the facts alleged in Count III of the Administrative Complaint. In fact, the only evidence of record on this issue is the testimony of Ms. Kimball that she observed Mr. Howle, the office manager, copying listings from Fort Myers newspapers for use in the West Palm Beach area. However, Ms. Kimball conceded that she did not know if any such ads were ever placed in the West Palm Beach newspaper. No such advertisements were introduced into evidence in this proceeding from which any comparison to any of the listings available through Respondents could be made to determine whether the ads were fraudulent, false, deceptive, or misleading. County IV of the Administrative Complaint charges the Respondent with having solicited and accepted money as advance rental fees with knowledge that rental units of the type and price desired by potential tenants were not available through Respondent's firm, and with making false representations as to the availability of rental units. Again, there is no evidence of record in this cause to establish a single, identifiable instance in which Respondent either individually or through its employees represented that rental units were available of a type and price that were not in fact so available.
Findings Of Fact Respondent Heidt Neil "Cap" Fendig, Jr., and his corporate alter ego, Go Fish, Inc., do business under the name Golden Isles Charter Company. Aside from operating the marina he leases on St. Simons Island, Georgia, Mr. Fendig hires out as a captain (for $175 a day), arranges charters, and acts as a yacht broker in Georgia. When Kirby J. Bourgeois acquired the Westwind, a 55-foot "Ocean Super Sportfisherman," the man to whom the boat had previously belonged recommended respondent to Mr. Bourgeois, an Oklahoman who knew little about boats, as somebody who could assist him. When Messrs. Fendig and Bourgeois met on October 5 or 6, 1990, respondent agreed to register the Westwind in the name of a corporation (Mandela Corp.) Mr. Bourgeois specified, and to equip the boat in accordance with Coast Guard requirements. Later he took Mr. Bourgeois out on "training trips." For each of these services, respondent prepared invoices which Mr. Bourgeois paid in due course. Around Thanksgiving of 1990, Mr. Fendig acted as the Westwind's captain on a cruise Mr. Bourgeois took to the Bahamas. They left the boat docked in Marsh Harbor. In January of 1991, Mr. Bourgeois told Mr. Fendig on the telephone that he wanted to sell the Westwind. At that time, if not before, Mr. Fendig mailed Mr. Bourgeois a packet of information about selling boats, which included a form yacht brokerage agreement. Instead of signing the yacht brokerage agreement, Mr. Bourgeois decided to show the Westwind at the Third Annual Brokerage Yacht Show in Miami Beach, one of the alternatives Mr. Fendig had suggested. Mr. Fendig, who had once inquired of petitioner DBR about obtaining a Florida yacht broker's license, and been told he was ineligible because he lived and worked out of state, advised Mr. Bourgeois that he was not licensed in Florida and could not act as a yacht broker in Florida. From conversations he had with petitioner's employees at the time he discussed obtaining a Florida license, Mr. Fendig understood that Florida law permitted him to accompany and assist yacht owners in the sale or purchase of yachts in Florida so long as he did not buy or sell as an owner's agent. Mr. Fendig agreed to bring the Westwind over from Marsh Harbor for the show, which began on February 14, 1991, a Thursday. On January 23 or 24, 1991, respondent sent Mr. Bourgeois a facsimile transmission, described as confirmation of a telephone conversation, in which he wrote: "As per your instructions, I will transport the boat to the Miami show and look for your arrival in Miami at [sic] sometime during the show." Petitioner's Exhibit No. 4. Although Mr. Bourgeois had informed respondent "that he would not be able to be there the first day" (T.24), Mr. Fendig arrived before the show began. He also filled out a form application and a contract for exhibit space, Petitioner's Exhibit No. 3, which, together with the application fee, had reached Yachting Provisions, Inc. in Ft. Lauderdale, on February 1, 1991. Mr. Bourgeois, whose name did not appear on the application and contract, later reimbursed him the fee. Reportedly delayed by a snowstorm, Mr. Bourgeois did not reach Miami before Saturday evening. Until Mr. Bourgeois arrived, Mr. Fendig stayed with the boat, moored at slip 221 on Collins Avenue. Available to anybody who visited the Westwind while he was on board were copies of his business card, which included the words "YACHT SALES-YACHT MANAGEMENT." Petitioner's Exhibit No. 6. Also available to show goers (including those to whom respondent never spoke) were one page fliers describing the Westwind and concluding: "Asking $350,000 Looking for serious offers contact H. N. "Cap" Fendig, Golden Isles Yacht Sales & Charter Co. 912 638-7717 St. Simons Island, Ga." Petitioner's Exhibit No. 5. Respondent had asked his brother to make up this flier. Like other paid captains, respondent told anybody who inquired the owner's asking price. When, on the first day of the boat show, investigators in petitioner's employ posed as potential buyers, Mr. Fendig told them they would have to speak to the owner, who would be arriving later in the show. He told "everybody that, if they wanted to make an offer, the owner was coming and they could drop by later in the show and . . . talk to him." T. 36. While at the boat show, Mr. Fendig slept on the boat, which was an economic benefit for him, at the same time it afforded the vessel a measure of security, which was an economic benefit for the owner. Mr. Bourgeois paid him for bringing the boat to Miami Beach, but not for the time he spent there. He had wanted to go to the boat show for his own purposes, in any event. The yacht show closed on Monday without the Westwind's changing hands. Mr. Bourgeois still owned the Westwind on March 11, 1991, when he signed a yacht brokerage agreement with respondent Fendig. Petitioner's Exhibit No. 7. Before that time Mr. Fendig had no agreement for or expectation of any compensation on account either of the Westwind's sale or of his efforts to accomplish a sale (other than bringing the boat to Miami, for which he received a fixed amount.)
Recommendation It is, accordingly recommended that petitioner dismiss the notice to show cause. RECOMMENDED this 5th day of December, 1991, in Tallahassee, Florida. ROBERT T. BENTON, II 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 5th day of December, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-3108 Petitioner's proposed findings of facts Nos. 1, 2, 3, 4, 5, 8, 9, 11, 12, 13, and 14 have been adopted, in substance, insofar as material. With respect to petitioner's proposed finding of fact No. 6, he was off and on the boat during the last two days. Before Mr. Bourgeois' arrival, it had been necessary to stay with the boat for security reasons. With respect to petitioner's proposed finding of fact No. 7, the proof did not show that anybody asked the owner's name, address or phone number. Respondent testified he did not distribute this information because it "wasn't necessary, because the owner was going to be there." T.36. With respect to petitioner's proposed finding of fact No. 10, the taking of evidence had closed and respondent was making legal argument. With respect to petitioner's proposed finding of fact No. 15, respondent (who appeared pro se) answered a speculative question about what "could" happen. COPIES FURNISHED: Thomas Bell, Esquire Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1007 H. N. "Cap" Fendig 205 Marina Drive St. Simons Island, GA 31522 Henry M. Solares, Director Florida Land Sales, Condominiums and Mobile Homes 725 South Bronough Street Tallahassee, FL 32399-1000 Donald D. Conn, General Counsel Department of Business Regulation 725 South Bronough Street Tallahassee, FL 32399-1000
Findings Of Fact At all times pertinent to the issues herein, the Petitioner was the state government licensing and regulatory agency charged with the responsibility to prosecute Administrative Complaints alleging misconduct by practitioners of the real estate profession in this state. The Florida Real Estate Commission is the state agency responsible for licensing real estate sales persons and brokers in Florida and for regulating the real estate profession in this state. By Administrative complaint dated May 1, 1992, Respondent and Nicholas G. Patsios were charged with various violations of Section 475.25(1), Florida Statute. At the time, Respondent was a licensed real estate salesperson at Gulf Beaches Realty, Inc. (Gulf Beaches) in Holmes Beach. Gulf Beaches was licensed as a real estate broker for which Mr. Patsios was the qualifying broker. However, Respondent was actually the owner of Gulf Beaches and registered as an officer of the corporation. On January 16, 1992, an investigator for the Department had attempted to audit Gulf Beaches' escrow account but could not do so because the records were not in order. This was the impetus for the investigation into the operation which resulted in the filing of the Administrative Complaint. Respondent actually operated the brokerage, and in the Administrative Complaint was alleged to have been registered as an officer of a brokerage corporation while licensed as a salesperson. She was also charged with having operated as a broker while licensed as a salesperson. By Final Order dated August 18, 1992, the Florida Real Estate Commission found Respondent guilty of the alleged misconduct, fined her $100.00, reprimanded her and placed her on probation for one year conditioned, inter alia, upon her not violating any other provisions of Chapter 475. On May 21, 1993, the Department again charged Respondent with violations of Chapter 475, alleging that she: (1) continued to operate as a broker while licensed as a salesperson; (2) operated as a broker without holding a valid broker's license and (3) violated an order of the Commission. Though the matter was referred to the Division of Administrative Hearings, Respondent failed to respond to the Administrative Complaint, and pursuant to a motion to relinquish jurisdiction, the matter was returned to the Commission. Thereafter, by Final Order dated November 7, 1993, the Commission revoked Respondent's license as a salesperson. In the interim between that action and the filing of the instant Administrative Complaint, Peggy Jean Lasser, a licensed broker, became the qualifying broker for Gulf Beaches. She allowed Respondent, the owner of the brokerage, to control its operations, including interfacing with clients. When the Commission initiated action against Ms. Lasser for that infraction, she did not dispute the allegations, and as a result, by Final Order of the Commission dated August 15, 1995, her license was suspended for two years. Ms. Lasser immediately ceased operating as the broker for Gulf Beaches. To the best of her knowledge, however, Gulf Beaches is still operating as a real estate office without a broker, and Respondent is still operating as a salesperson without a broker. On July 29, 1996, George Sinden, an investigator for the Department, went to Gulf Beaches' office accompanied by another investigator. He found the door to the office open and Respondent seated at a desk beside the door. She was alone in the office. There were office machines present and it appeared to Sinden that the office was operating as a real estate office. During his visit, Mr. Sinden could find no one with a valid license as a broker or salesperson. Respondent indicated she was trying to find a broker to qualify the company. She admitted she was currently operating a real estate business. Respondent also indicated she had four rentals which she was managing and for which she was depositing funds into a trust account for the owners. She also claimed to have an escrow account with over $2,000 in it. Sinden found that Respondent was not complying with the Commission's monthly reconciliation requirements and he could not determine to whom the funds in the escrow account belonged. Respondent claims this money was deposit money placed by a prospective purchaser in a sale between two parties, both of whom trusted her to hold the funds. She claims she was to receive a 5 percent fee. Records of Secretary of State's office showed Ms. Lasser as the only officer of Gulf Beaches. However, she no longer holds a valid broker's license. Respondent indicated she was the sole owner of Gulf Beaches. She claimed when Sinden interviewed her and at the hearing, where she again admitted the matters set forth above and in the Complaint, that she has not take in any new business since Ms. Lasser left. Respondent admits that she has attempted to divest herself of her clients but claims that because the Complaints filed against her by the Department have damaged her reputation, no broker will work with her or her business since the action in 1992. Respondent either cannot or will not accept the fact that she is operating illegally. Her primary concern seems to be the fact that this business is her way of making a living. She is 80 years old and seeks only to operate for two more years, at which time she will "meet her maker." The evidence is clear that since 1992, and before, Respondent has been the owner of Gulf Beaches. From the departure of Mr. Patsios to the incumbency of Ms. Lasser, and after the departure of that individual up to the present, Respondent has operated the corporation without a broker. It is also clear that since November 1993, Respondent has operated as a salesperson without a valid license.
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 finding Respondent guilty of the misconduct alleged in the Administrative Complaint and, consistent with the provisions of Section 455.228, Florida Statutes, impose an administrative fine in the amount of $2,500.00. DONE and ENTERED this 3rd day of September, 1996, in Tallahassee, Florida. ARNOLD H. POLLOCK, 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 3rd day of September, 1996. COPIES FURNISHED: Steven D. Fieldman, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street, N308 Post Office Box 1900 Orlando, Florida 32802-1900 Geraldine Ruesel, pro se 5351 Gulf Drive Holmes Beach, Florida 34217 Lynda Goodgame, General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792 Henry M. Solares, Division Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900
Findings Of Fact Mr. Harry A. Bayly, Jr., a real estate salesman, obtained a listing for the Sails Motel in 1975, while he was employed by respondent Donald M. Mlinarich, a real estate broker. Mr. Perz, at that time co-owner with his wife of the Sails Motel, showed Mr. Bayly a piece of paper on which he had written figures which he claimed represented gross income earned and expenses incurred on account of the Sails Motel. At the same time, Mr. Perz told Mr. Bayly that the figures on the piece of paper did not agree with federal income tax returns, or with state sales tax returns which Mr. Perz had filed. Mr. Perz told Mr. Bayly that income from the motel was understated on the tax returns, but that the figures he alleged were accurate could be substantiated by examining the motel's registration slips. The discrepancy between the gross income figure reported for tax purposes for 1974 and the gross income figure Mr. Perz gave Mr. Bayly for 1974 was twenty thousand dollars ($20,000.00). Mr. Bayly did not tell Mr. Mlinarich about the double bookkeeping at the Sails Motel. Mr. Charles George was also a real estate salesman in Mr. Mlinarich's office. Mr. George procured a purchaser for the Sails Motel, one Anton K. P. Loetschert, who signed a duly witnessed agreement to buy the motel. Before the transaction closed, however, Mr. Loetschert appeared at the Sails Motel, accompanied by an accountant, and asked to see the motel's books. Learning for the first time of the dual bookkeeping, Mr. Loetschert indicated his unwillingness to go through with the purchase. Even though the deal fell through, the broker's office obtained five thousand dollars ($5,000.00) in satisfaction of its claim for commission on the sale. Mr. Mlinarich caused half of this sum to be paid to Mr. George, in accordance with a standing agreement between Mr. Mlinarich and each of his employees. Under the same standing agreement, Mr. Bayly, because he had secured the listing, had presented Mr. Loetschert's offer, and had otherwise assisted in the transaction, was entitled to one fifth of any commission, or one thousand dollars ($1,000.00). By letter dated September 23, 1975, Mr. Bayly demanded this sum, but Mr. Mlinarich refused payment at that time, on the advice of counsel. In addition to the circumstances surrounding the Sails Motel transaction, Mr. Mlinarich related the following facts to his lawyer which were proven to be true at the hearing: On at least two occasions, Mr. Bayly added provisions to listing contracts of which he did not inform Mr. Mlinarich, so that Mr. Mlinarich was lead to believe and did believe that the property owners involved had agreed to pay a broker's fee if the property were sold within 180 days of listing, while in actuality the owners contractual obligations were subject to termination earlier, and were in fact terminated early. Mr. Bayly accomplished this by writing additional contract clauses in his own hand on the sellers' copies of the contracts, while taking care that his handwriting did not appear on the realtor's carbon copies. Mr. Mlinarich and the other salesmen in his office advertised the properties and took other steps in the mistaken belief that the property owners were legally bound for the full 180 days. Mr. Mlinarich's lawyer advised him that he had a claim against Mr. Bayly for damages in excess of one thousand dollars ($1,000.00) and told Mr. Mlinarich he need not pay Mr. Bayly his share of the commission settlement, for that reason. Shortly after Mr. Mlinarich learned that Mr. Loetschert wanted his earnest money back, he advised Mr. George Illi, an investigator for the Florida Real Estate Commission, of the details of the Sails Motel transaction. Mr. Mlinarich kept Mr. Illi posted as matters developed, through and including the time of the dispute between over payment of the one thousand dollars ($1,000.00). Altogether, Mr. Mlinarich spoke to Mr. Illi, on the telephone and in person, between five and ten times. He kept Mr. Illi fully apprised of every detail, including his lawyer's advice to pay Bayly. When the administrative complaint was filed against Mr. Mlinarich, he caused Mr. Bayly to be paid one thousand dollars ($1,000.00) in full satisfaction of Mr. Bayly's claim.
Recommendation It is strongly recommended that no disciplinary action be taken against respondent. DONE and ENTERED this 15th day of April, 1977, in Tallahassee, Florida. ROBERT T. BENTON, II Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Charles E. Felix, Esquire Florida Real Estate Commission 2699 Lee Road Winter Park, Florida 32789 Emerson L. Parker, Esquire 3835 Central Avenue Post Office Box 15339 St. Petersburg, Florida 33733
The Issue The issues are whether Respondent has violated Florida Administrative Code Rule 61J2-14.010(1) and section 475.25(1)(e) and (k), Florida Statutes, by failing to place immediately into escrow a security deposit of $5482; violated section 475.25(1)(u) by not being involved with the daily operations of Advantage International Realty, Inc. (AIR), by being hired to qualify AIR and receiving payment from AIR, and failing to direct, control or manage Jennifer Briceno, a sales associate employed by Respondent, while she provided real estate services to two individuals; and violated section 475.25(1)(d)1. by failing to refund $5308 upon demand by Mr. Mansour and Ms. Haddad on December 20, 2011. If so, an additional issue is the penalty that should be imposed.
Findings Of Fact At all material times, Respondent has been a licensed real estate broker, holding license numbers 69234 and 3093422. He has never been disciplined. Licensed as a sales associate since 2000, Respondent served as a sales associate with three brokers. Licensed as a real estate broker in 2002, Respondent served as a broker associate with two brokers until, in August 2002, Respondent served as the broker for his first real estate brokerage. He served as a broker for two brokerages, much of the time simultaneously, from 2002-05 and 2007-09. For the last five months of 2008, Respondent worked as a broker sales associate for a third brokerage, and, from 2009-11, Respondent was registered as a sole proprietorship broker. From November 14, 2011, through January 6, 2012, Respondent served as the broker for AIR. On November 7, 2011, Respondent was listed as a director of AIR with the Department of State, Division of Corporations. AIR became licensed as a Florida real estate brokerage on November 14, 2011, holding license number 104302. Respondent was the qualifying broker of AIR from November 14, 2011, to January 6, 2012. No longer a brokerage after Respondent resigned as its qualifying broker, AIR resumed operations as a brokerage on March 1, 2012, when Jennifer Briceno served as the qualifying broker. She served in this capacity until March 4, 2013, at which point Petitioner suspended the licenses of AIR and Ms. Briceno by separate emergency orders. Ms. Briceno was first licensed as a sales associate in 2008. She served as a sales associate with an unrelated corporation in Tamarac, Florida from May 28, 2008, to October 24, 2011. Her license was inactive until November 14, 2011, on which date she became a sales associate with AIR. On February 17, 2012, she became licensed as a broker and served as a broker associate with AIR until March 1, 2012, at which time she served as its qualifying broker. As noted in paragraph four, from January 6 to March 1, 2012, AIR's brokerage license became invalid due to the lack of a qualifying broker. As noted in paragraph five, Ms. Briceno served at AIR as a sales associate from January 6, 2012, and then as a broker associate from February 17, 2012, until March 1, 2012--an eight-week period during which AIR's brokerage license was invalid due to its lack of a qualifying broker. On November 7, 2011, Respondent was listed as a director of AIR with the Department of State, Division of Corporations. At no time was Respondent ever a signatory on the operating account of AIR. Jackie and Sam Haddad and Morris Mansour are residents of Canada and friends. They decided that they wanted to enter into a lease of a residence in Fort Lauderdale for a vacation during the winter of 2011-12. They agreed that Mr. and Ms. Haddad would occupy the residence for two months, and Mr. Mansour would occupy the residence for the ensuing two months. For the sake of simplicity, they agreed that Mr. Mansour would take in his name the lease for the entire four months, which was to run from December 15, 2011, through April 15, 2012. Ms. Haddad found the subject property on the Internet and got in touch with Ms. Briceno at an unspecified point in time. At some point, Ms. Briceno sent to Mr. Mansour a blank Agreement to Enter into a Lease and asked him to complete, sign, and return the form to her with a check for the entire rent. Mr. Mansour objected to paying the entire rent and asked that he be allowed to pay half at that time and half upon occupancy. Ms. Briceno agreed. Accordingly, on November 12, 2011, Mr. Mansour wired $5500 to AIR and faxed to Ms. Briceno a completed Agreement to Enter into a Lease. AIR did not have an escrow account. Although there was a listing broker for the rental property, Ms. Briceno did not give the deposit check to her. Nor did Ms. Briceno present the funds to AIR's qualifying broker. It appears that Ms. Briceno conducted this real estate business and received the funds prior to AIR's obtaining a qualifying broker. In any event, it appears that Ms. Briceno deposited the funds in AIR's operating account. However, on November 12, 2011, Ms. Briceno faxed the signed Agreement to Enter into a Lease to a sales associate of the listing broker. The net of $5482 posted on AIR's general operating account on November 16. On the same day, AIR's bank statement shows a "counter debit" of $5010. From November 16 through the end of January 2012, this account never had sufficient funds to repay the $5500 or net $5482. After receiving the offer to lease from Ms. Briceno, the sales associate of the listing broker spoke with the owner and learned that the cost of short-term insurance precluded a lease for less than one year. By email dated December 1, the sales associate informed Ms. Briceno that the owner would not accept the offer. After not hearing from Ms. Briceno for some time, Ms. Haddad and Mr. Mansour tried to reach Ms. Briceno, but repeated calls to her business and cellphone numbers went unreturned. Mr. Mansour, who intended to occupy the subject property first, finally contacted the sales associate of the listing broker and learned that the offer had not been accepted. At some point, Darwin Briceno, Ms. Briceno's husband, became involved. By email to Ms. Mansour dated November 29, 2011, Mr. Briceno sent a release covering a refund of $5308, net wire fees and an application fee. On December 8, Ms. Haddad sent an email to someone at AIR stating that they were still waiting for their refund of $5308. Getting no response and having learned Respondent's name in the interim Ms. Haddad re- sent the December 8 email to the administrator of AIR-- attention: Respondent--and warned that they would retain counsel if they did not hear from Respondent within 24 hours. No one heard from Respondent, who cashed AIR checks on January 31 and May 1 in the amounts of $1610 and $3225, respectively. On February 24, 2012, Mr. Briceno sent Mr. Mansour an AIR check in the amount of $5308, but it bounced. The Haddads and Mr. Mansour have never recovered any of their deposit. During the investigation, Respondent admitted to Petitioner's investigator that he was not involved with the day- to-day operation of AIR, and he did not know anything about how AIR had handled the money that Mr. Mansour had sent. Respondent specifically admitted that he was a "broker for hire" at AIR, meaning that he had rented his broker's license to qualify AIR as a real estate brokerage. Respondent's lack of involvement in the business of AIR is confirmed by Karrell Brett, whom Mr. Briceno hired, on behalf of AIR, as a sales associate, as of December 9, 2011, Ms. Brett interviewed with Mr. Briceno, not Respondent. While employed by AIR, Ms. Brett did not know Respondent and believed her broker was Mr. Briceno. Although Ms. Brett decided on her own to advise her clients to deposit any escrow funds with a title company, she never received any instruction from Respondent to deposit escrow funds with a title company. Respondent never made any attempt to supervise any sales associate or other employee of AIR in the conduct of real estate business on behalf of the corporation that Respondent had qualified as a real estate brokerage. Respondent had been the qualifying broker for two days when the deposit was posted to AIR's account; he was responsible for AIR's failure to account for this money from the point of deposit forward until his resignation. Likewise, Respondent had been the qualifying broker for about six weeks when he received the latter of Ms. Haddad's emails demanding a refund of the deposit. Respondent did not ensure that AIR refunded the deposit at that time.
Recommendation It is RECOMMENDED that the Florida Real Estate Commission enter a final order finding Respondent guilty of Counts 2, 3, and 4, dismissing Count 1 as duplicative of Count 2, and revoking Respondent's real estate broker's license. DONE AND ENTERED this 10th day of September, 2013, in Tallahassee, Leon County, Florida. S ROBERT E. MEALE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 10th day of September, 2013. COPIES FURNISHED: Nancy Pico Campiglia, Esquire Your Towne Law, P.A. 5465 Lake Jessamine Drive Orlando, Florida 32839 Daniel Brackett, Esquire Department of Business and Professional Regulation Suite 42 1940 North Monroe Street Tallahassee, Florida 32399 J. Layne Smith, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792 Darla Furst, Chair Real Estate Commission Department of Business and Professional Regulation 400 West Robinson Street, N801 Orlando, Florida 32801
The Issue Whether Petitioner owes sales and use tax (plus penalties and interest) to the Department of Revenue (Department), as alleged in the Department's November 1, 1999, Notice of Decision.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made to supplement and clarify the Stipulations of Fact set forth in the parties' Joint Pre-Hearing Stipulation: 1/ Mr. Wiviott is a very successful, "hands-on" entrepreneur who presently owns approximately five or six businesses. Since 1958, when he and his brother opened a carpet store in Milwaukee, Mr. Wiviott has owned approximately 30 different businesses (including nine restaurants and a yacht service business), many of which he has sold "for literally millions of dollars of profit." Approximately two-thirds of the businesses that he has owned he has "started from scratch." There have been instances where Mr. Wiviott has invested in businesses that were in industries in which, at the time of his investment, he had no prior experience. In these instances, he overcame his lack of experience by being "extremely industrious" and doing "research." When Mr. Wiviott has needed to consider a "feminine viewpoint" in making a business decision, he has used Mrs. Wiviott, his wife of 43 years, as a "sounding board." For the past 35 years, William Becker has been Mr. Wiviott's accountant. In 1991 or 1992, Mr. Wiviott purchased two "brand new" boats as business investments. The boats were sold to Mr. Wiviott together as a package. Mr. Wiviott paid a total of $1.1 million for the two boats. The larger of the boats was a 63-foot sport fisherman. Although unfinished, it was seaworthy. Mr. Wiviott named this boat the "Choice One." Mr. Wiviott named the other boat, a 56-foot sport fisherman, the "Choice Too." Mr. Wiviott accepted delivery of the Choice One and Choice Too in the Bahamas. He did not pay any sales tax on his purchase of the boats. After accepting delivery, Mr. Wiviott brought the boats to Fort Lauderdale. In 1993, Mr. Wiviott explored the possibility of entering (for the first time) the yacht charter business. He spoke to various people involved in the industry, including two charter brokers (Bob Offer and Bob Saxon) and a charter yacht owner (Bernie Little). He also had discussions with Mr. Becker. Together, he and Mr. Becker made cost and revenue projections. He ultimately made a "value judgment" to go into the business. Mr. Wiviott retained the services of Mr. Offer to help him find a suitable yacht for the business. One of the yachts that Mr. Offer showed Mr. Wiviott was the Fifty-One, a Washington State-built, Fort Lauderdale- based "mega" yacht owned by an Italian national, Dr. Moretti. The Fifty-One's interior design made it particularly well suited for chartering. It had four levels, including a sky deck/lounge equipped with a complete kitchen (to complement the galley located on the bottom level). There were five staterooms that could comfortably accommodate ten charter guests. Each of the regular staterooms had its own head. The master stateroom had "his and her" heads. There was also a stateroom for the captain, as well as quarters for six other crew members (the number needed to properly service a charter party). The Fifty-One had not been well maintained during the time it had been owned by Dr. Moretti. Although Dr. Moretti had made the Fifty-One available for charter, the yacht had a poor reputation among charter brokers and, as a result, it just "sat at the dock," unchartered, while under Dr. Moretti's ownership. In October of 1993, Mr. Wiviott offered to purchase the Fifty-One from Dr. Moretti for $5.1 million, subject to a satisfactory marine survey and sea trial. Dr. Moretti initially rejected the offer, but subsequently agreed to sell the Fifty- One at Mr. Wiviott's offering price (which was considerably less than the $9 million that Dr. Moretti had paid for the Fifty-One a year and a half earlier). Before the deal was consummated, Mr. Wiviott contracted with a marine survey company, Patton Marine, Inc. (Patton), to perform a thorough inspection of the Fifty-One. Patton performed an extensive pre-purchase survey of the Fifty-One, which included various sea trials and other tests (conducted in Fort Lauderdale and off the Fort Lauderdale coast). The survey revealed that the Fifty-One had various "deficiencies." Most of these "deficiencies" were "small items" and were remedied before the sale was finalized. The most serious of the remaining "deficiencies" was the excessive amount of interior vibration. Notwithstanding the known "deficiencies" that remained, Mr. Wiviott thought that, at $5.1 million, the Fifty- One was a good buy. At worst, he believed, he "could make a pretty good profit" by reselling the Fifty-One. Mr. Wiviott retained Robb Maass, whom Mr. Wiviott was told was the "top marine attorney in the [Fort Lauderdale] area," to assist him in forming a Florida corporation which would purchase the Fifty-One and operate a yacht charter business. With Mr. Maass' assistance, B. W. Marine, Inc. (Petitioner) was organized under the laws of the State of Florida, effective January 20, 1994, with Mr. Wiviott as its sole officer, director, and shareholder. Petitioner's principal corporate address was, at the time of incorporation, and has remained, 757 Southeast 17th Street, #389, Fort Lauderdale, Florida 33316. On January 28, 1994, shortly after Petitioner's incorporation, Petitioner closed on the purchase of the Fifty- One. No Florida or other state sales tax was paid on the purchase. The newly purchased yacht (which had been registered in the Cayman Islands by the previous owner, Dr. Moretti) was immediately registered with the United States Coast Guard, and it thereafter began to fly an American flag. Based upon on Mr. Maass’ advice, Petitioner also took steps to obtain a "certificate of documentation with appropriate endorsement for employment in the coastwise trade" for the Fifty-One. It was not until the following year, however, that the United States Congress (passing a bill introduced by Florida Congressman E. Clay Shaw, Jr.) authorized the Secretary of Transportation to issue such a "certificate of documentation." 2/ After taking delivery of the yacht in the Bahamas, Petitioner imported the Fifty-One into Florida. It did so because Mr. Wiviott wanted the Fifty-One to be marketed in the south Florida area and to have access to the exceptional yacht repair and maintenance facilities that were available there. The South Florida area is where the "mega" yacht charter brokers (who, in most instances, effectively "make[] the decision [as to] which boat a charter client is going to use") are concentrated and where the reputation (or, as Mr. Wiviott put it in his hearing testimony, the "aura" or illusion") of a "mega" yacht is established (in part, by the owner, captain, and crew "pander[ing]" to the broker community during showings of the yacht). It is therefore important for a "mega" yacht available for charter to have a presence in the south Florida area so that it can seen by, and shown to, the "mega" charter brokers who are concentrated there. Although most "mega" yachts are marketed in Florida, "the chartering experience [generally occurs] elsewhere," in such places as New England (in the summer) and the Caribbean and Mediterranean (in the winter). Aware of this, Mr. Wiviott, at the time that the Fifty-One was imported into Florida, had no expectation that that the Fifty-One would be used exclusively for charters in Florida waters. Mr. Wiviott wanted the Fifty-One to be imported into Florida without Petitioner having to pay any use tax. Mr. Maass advised Mr. Wiviott that Petitioner would not have to pay Florida use tax if it registered with the Department as a "dealer" and used the Fifty-One "only . . . for bare boat charter[s]." Mr. Maass cautioned Mr. Wiviott that "[t]here could be no personal recreational use, no personal use aboard the boat whatsoever." Before importing the Fifty-One into Florida, Petitioner registered with the Department as a "dealer" that would be engaging in "bare boat" charter operations in Florida. Mark Newcomer was the first captain of the Fifty-One under Petitioner's ownership. Mr. Wiviott considered Captain Newcomer to be, not a "charter captain," but a "yard captain," that is, a captain "who specializes in repairs, maintenance and upgrades of yachts." Captain Newcomer was hired by Petitioner "to take delivery [of the Fifty-One] and to oversee the renovation and retrofit[ting] of the yacht." He was responsible for ensuring that the Fifty-One was brought up to American Bureau of Shipping (ABS) standards. Obtaining certification that the Fifty-One met ABS standards was an "essential part" of any campaign to effectively "market[] the boat" for charter. Mr. Wiviott did not have any intention of continuing Captain Newcomer's employment with Petitioner following completion of "the renovation and retrofit[ting] of the yacht." Captain Newcomer brought the Fifty-One into Florida on or about February 1 or 2, 1994, and docked it at a Fort Lauderdale marina (either Pier 66 Marina or the Bahia Mar Marina). On February 3, 1994, Captain Newcomer moved the Fifty- One to the Bradford Marine Shipyard (Bradford Marine), a Department-registered Fort Lauderdale repair facility able to service boats up to 150 feet in length. The Fifty-One underwent repairs and improvements at Bradford Marine until February 12, 1994, by which time the work that had to be done with it out of the water had been completed. At Bradford Marine, Petitioner had to pay a 20 to 30 percent "surcharge on all outside vendors that c[a]me in." On February 13, 1994, Captain Newcomer moved the Fifty-One to the Bahia Mar Marina (Bahia Mar), a more cost- effective location, to do (with the help of others) the remaining repair and improvement work on the yacht (which could be done with the yacht in the water). Because Captain Newcomer was "very good friends" with the dockmaster at the Bahia Mar, he and those he supervised were allowed to perform work on the Fifty-One (involving the use of noise-generating power tools) that would have otherwise been prohibited. The Fifty-One remained at the Bahia Mar until March 14, 1994, undergoing repairs and improvements. On March 15, 1994, Captain Newcomer, accompanied by Mr. and Mrs. Wiviott (and with less than a full crew), took the Fifty-One on a cruise to the Jockey Club, a "private club" that was part of a "condominium complex resort" located in Miami. He did so pursuant to the instructions of Mr. Wiviott, with whom he spoke to on a daily basis regarding the repair and improvement work that was being done on the Fifty-One under his (Captain Newcomer's) supervision. Mr. Wiviott wanted "to take the boat out to stretch it out [and to] see the progress that Captain Newcomer was making." Furthermore, Mr. Wiviott thought that it was important for Petitioner's charter business for the Fifty- One "to be seen." Near the Jockey Club, the Fifty-One ran aground "in the mud," where it "sat . . . for about eight hours until the tide came back in." After the Fifty-One arrived at the Jockey Club, divers "g[o]t under the boat and clean[ed] the prop[eller]s [and] clean[ed] the drivetrain." The Fifty-One remained docked at the Jockey Club for three days. On March 17, 1994, the Fifty-One returned to the Bahia Mar to undergo further repairs and improvements. By mid-April of 1994, the work necessary to bring the Fifty-One up to ABS standards had been completed. Petitioner therefore applied for, and on April 19, 1994, was issued, an ABS "Class Certificate." The Fort Lauderdale Charter Broker's Boat Show (1994 Boat Show) was held at Pier 66 Marina (Pier 66) from April 14, 1994 to April 20, 1994. The Fifty-One was one of the boats entered in the 1994 Boat Show, and it remained at Pier 66 for the entire show. Mr. Wiviott was aboard throughout the event to show the boat to charter brokers and others. Captain Newcomer helped Mr. Wiviott show the boat. Food and drinks were served. Fresh flowers adorned the boat. The crew wore their dress uniforms. After the end of each day's session, Mr. Wiviott stayed aboard the Fifty-One overnight in lieu of spending company money to rent a hotel room. Following the 1994 Boat Show, from April 20, 1994 until April 28, 1994, the Fifty-one was taken on a "shakedown" cruise to Key West and back to Fort Lauderdale, during which it was run at various speeds and systems were "overloaded" to determine whether they worked properly. At the time of the cruise, the Fifty-One was not equipped with all of the staff and other accoutrements necessary to provide the "five star service" that those who charter "mega" yachts pay to receive. During the cruise, the boat docked at the Ocean Reef Club, an exclusive private resort community in Key Largo; the Galleon Marina, a public facility in Key West; Fisher Island; and the Jockey Club. There were a "few breakdowns" during the cruise, including a "crane breakdown" at the Ocean Reef Club. With the help of vendors, the necessary repairs were made. Aboard during the cruise, in addition to Captain Newcomer and a partial crew, was Mr. and Mrs. Wiviott; Mr. Wiviott's brother, Howard Wiviott; Howard's wife; Mr. Becker, whose firm provided Petitioner with accounting services (primarily through the efforts of Stacey Torchon, one of its accountants); and Mr. Becker's wife. There was no marine surveyor, no representative of a registered repair facility, and no "mega" yacht charter broker aboard during the cruise. 3/ Mr. Becker and his wife did not remain aboard for the entire cruise. They disembarked in Key Largo on April 23, 1994. During the time that he was aboard, Mr. Becker spoke to Captain Newcomer and the crew about the financial and accounting procedures that needed to be followed in conducting Petitioner's charter operations, information that Mr. Becker could have provided by telephone from his California office. (Stacey Torchon, who was "more involved [than Mr. Becker] in the day-to-day operations" of Petitioner, never met personally with any Fifty-One crew member; rather, she communicated with the crew by telephone.) While they were aboard, Mr. Becker and the other guests Mr. Wiviott had invited to take part in the cruise (referred to, collectively, hereinafter as the "Invited Guests") ate, relaxed, and enjoyed the hospitality and ambiance. The Invited Guests' presence on the Fifty-One during the "shakedown" cruise was not solely for the purpose of furthering Petitioner's charter business. Mr. Wiviott was motivated by personal reasons in inviting them aboard. The assertion (made by Petitioner in its Proposed Recommended Order) that one of the purposes of the "shakedown" cruise was to determine, through the feedback given by the Invited Guests, "whether the Petitioner was delivering the chartering experience in terms of comfort, ambiance and service that people willing to spen[d] $50,000 per week would expect" simply does not ring true. Mr. Wiviott knew full well that the Fifty-One, with a "yard captain" at the helm and less than a full crew, was not equipped to provide such service. He did not need to take the "Fifty-One" on a lengthy cruise with family and friends to find this out. Had Mr. Wiviott really wanted to learn if the Fifty-One offered a "chartering experience" for which someone would be willing to pay $50,000.00, he would have asked "mega" yacht charter brokers, not family and friends, to come aboard the Fifty-One for a cruise and give him their feedback. On April 28, 1994, following the "shakedown" cruise, the Fifty-One returned to the Bahia Mar, where, in the ensuing days, defects discovered during the "shakedown" cruise were remedied. By May 7, 1994, the Fifty-One was ready for charter. The Fifty-One, at that time, was not the only vessel in Petitioner's fleet. Shortly after acquiring the Fifty-One, Petitioner had purchased (in Florida) the Choice One and Choice Too 4/ from Mr. Wiviott. Petitioner paid Mr. Wiviott $1,138,804.28 for the Choice One. Inasmuch as the purchase was made under Petitioner's sales tax exemption certificate (that Petitioner had obtained from the Department based upon its representation that it intended to use the Fifty-One exclusively for "bare boat" charter operations in Florida), no Florida sales tax was paid. At the time of the purchase, Mr. Wiviott envisioned that Petitioner would use the Choice One as a "chase boat" for the Fifty-One (from which charterers and guests could fish). The Choice One, however, was never used by Petitioner for this purpose because it turned out that it was not feasible to do so. The Choice One wound up sitting at the dock in Fort Lauderdale, leaving only "to be stretched" or moved to another docking facility by its captain (initially Steven Ernst and then later Carl Roberts). Before its sale by Petitioner in 1995, the Choice One was chartered on only one occasion, during which time it remained at the dock in Fort Lauderdale (positioned so that those aboard could view a passing "boat parade"). The Fifty-One was chartered on a more frequent basis. Of the 15 charters of the Fifty-One during the Audit Period, however, only two (the Gerardo Cabrera and Jean Foss charters) were in Florida waters. The Gerardo Cabrera charter was the first charter of the Fifty-One following the completion of the "renovation and retrofit[ting] of the yacht." It started in Fort Lauderdale on May 18, 1994, and ended in Fort Lauderdale on May 21, 1994. The captain of the Fifty-One for the Gerardo Cabrera charter was Jon Cheney, who had replaced Captain Newcomer on May 7, 1994. The charter agreement between Petitioner (as the "Owner") and Mr. Cabrera (as the "Charterer") was dated May 13, 1994, and read, in pertinent part, as follows: In consideration of the covenants hereinafter contained, the Owner agrees to let and the Charter[er] agrees to hire the Yacht from noon on the 18th of May 1994 to noon on the 21st of May 1994 for the total sum of $18,000.00 + expenses + 6% FSST ($1,080 Dollars) of which amount $18,000 + $1,080 + $5,000 (ADVANCE toward expenses) for a total of $24,080 shall be paid on the signing of this Agreement . . . . The Owner agrees to deliver the Yacht at Bahia Mar Yachting Centre, Ft. Laud. on the 18th day of May 1994 in full commission and working order, outfitted as a yacht of her size, type and accommodations, with full equipment, inclusive of that required by law, and fully furnished, including galley and dining utensils and blankets; staunch, clean and in good condition throughout and ready for service; and agrees to allow demurrage pro rata to the Charterer for any delay in delivery. . . . The owner's insurance policy does not cover Charterer's protection and indemnity during the term of the Charter. . . . * * * The Charterer agrees to accept the yacht delivered as hereinbefore provided and to pay all running expenses during the term of the charter. The Charterer, his agents and employees have no right or power to permit or suffer the creation of any maritime liens against the yacht, except the crew's wages and salvage. The Charterer agrees to indemnify the Owner for any charges or losses in connection therewith, including reasonable attorney's fees. * * * The Charter[er] agrees to redeliver the yacht . . . to the Owner at Bahia Mar Yachting Centre, Ft. Lauderdale, FL . . . . The Charter[er] agrees that the yacht shall be employed exclusively as a pleasure vessel for the sole and proper use of himself, his family, guests and servants during the term of this charter and shall not transport merchandise or carry passengers for pay, or engage in any trade nor in any way violate the Revenue Laws of the United States, or any other Government within the jurisdiction of which the yacht may be at any time, and shall comply with law in all other respects. * * * 11. It is mutually agreed that full authority regarding the operation and management of the yacht is hereby transferred to the Charter[er] for the term thereof. In the event, however, that the Charterer wishes to utilize the services of a Captain and/or crew members in connection with the operation and management of the yacht, whether said Captain and/or crew members are furnished by the Owner or by the Charterer, it is agreed that said Captain and/or Crew members are agents and employees of the Charterer and not of the Owner. In the further event that local United States Coast Guard or other regulations require the Owner exclusively to provide a Captain and/or crew, or the Owner wishes to provide his own Captain and/or crew, the Owner agrees to provide a Captain who is competent not only in coastwise piloting but in deep sea navigation, and to provide a proper crew. The Captain shall in no way be the agent of the Owner, except that he shall handle clearance and the normal running of the yacht subject to the limitations of this charter party. The Captain shall receive orders from the Charterer as to ports to be called at and the general course of the voyage, but the Captain shall be responsible for the safe navigation of the yacht, and the Charterer shall abide by his judgment as to sailing, weather, anchorages, and pertinent matters. The Charterer assumes total control and liability as if the Charterer were the owner of the yacht during the term of the charter. . . . This agreement, by "industry standard," is "considered a 'bare boat' charter agreement." On May 13, 1994, Mr. Cabrera (as "Employer") also entered into a separate "Yacht Employment Agreement" with Captain Cheney (as "Yacht Captain"). It provided as follows: WHEREAS, Charterer has under charter the yacht FIFTY ONE pursuant to his bare boat charter party agreement wherein it is Employer's obligation to furnish the said yacht with a competent master and crew; and WHEREAS, Yacht Captain is a competent master, having over two years' experience in the coastal and inland waters of FLORIDA and THE BAHAMAS and is able to furnish a crew for the management and navigation of the said yacht; and WHEREAS, the parties desire to reduce their agreement to written term; NOW THEREFORE in consideration of the premises and of the agreements hereinafter contained, it is agreed as follows: Employer hereby hires yacht Captain as the Master of the said yacht to act as such Master as long as the yacht is under charter to Employer. Yacht Captain agrees to furnish 6 crew men to assist in operating and navigating the said yacht. The Captain and crew, if any, shall be properly uniformed. The crew to comprise the following: [left blank] Yacht Captain shall be paid for his services and the services of his crew a total sum of TEN DOLLARS AND OTHER GOOD AND VALUABLE CONSIDERATION and Employer shall furnish the Yacht Captain and his crew, quarters and food, during the term of this Agreement. The term of this Agreement shall commence on the 18th day of MAY 1994, or at such time that the yacht shall be ready to sail pursuant to the bare boat charter party agreement with the Owner and shall terminate on the 21st day of MAY, 1994, unless sooner terminated by the termination of the yacht party agreement for any reason whatsoever. In the event that the yacht charter party agreement is sooner terminated, the Master and crew will receive a pro-rated share of the agreed compensation for their services. After collecting from Mr. Cabrera all the monies Mr. Cabrera owed under both the charter agreement and the "Yacht Employment Agreement," Rikki Davis (the broker representing Mr. Cabrera) handed these monies over to Mr. Offer (the broker representing Petitioner). (It is commonplace in the "mega" yacht chartering industry "to have the amount paid for the use of the vessel under [a] bare boat charter agreement and amount for the captain and crew paid together by the charterer as a lump sum."). Mr. Offer, in turn, forwarded the monies he was given by Ms. Davis to Petitioner. The Gerardo Cabrera charter was the only charter that took place before the captain and crew of the Fifty-One became employees of Papa's Yacht Services, Inc. (Papa's), Petitioner's sister corporation, which, like Petitioner, was incorporated in Florida and has maintained a Florida corporate address from its inception. Papa's was formed solely for the purpose of enabling Petitioner to be in "compliance [with] the bare boat charter concept." Papa's dealings with Petitioner was Papa's sole source of revenue. Petitioner paid Papa's a "management fee" for providing a captain and crew for the Fifty-One. Although the Fifty-One's captain and crew had become Papa's employees, Petitioner continued to pay for their health insurance and provide them with free room and board on the Fifty-One at all times during the Audit Period, except when the Fifty-One was under charter and the charterers provided the captain and crew with room and board. Having a full-time captain and crew aboard a "mega" yacht available for charter, even when the yacht is not under charter, is essential to conduct successful charter operations. The captain and crew must be available, on the vessel, to host the "mega" yacht charter brokers who come aboard between charters (sometimes with little or no advance notice) and to perform those everyday tasks necessary to maintain the vessel. To attract and keep qualified onboard personnel, it is necessary to provide them with, as part of their compensation package, free room and board on the "mega" yacht. Doing so is the "standard in the industry." The Fifty-One was chartered by Jean Foss from December 27, 1995 to January 3, 1996, approximately a year and a half after Papa's had become the employer of the Fifty-One's captain and crew. Ms. Foss cruised to the Bahamas during the charter. The charter originated and concluded in Fort Lauderdale. "[T]he only reason [the Fifty-One] was in Florida [for the charter was] because [Ms. Foss] wouldn't fly to the Bahamas." The charter agreement between Petitioner (as the "Owner") and Mr. Foss (as the "Charterer") was similar to the charter agreement into which Mr. Cabrera and Petitioner had entered. It was dated August 15, 1995, and read, in pertinent part, as follows: TERM, HIRE & PAYMENTS: In consideration of the covenants hereinafter contained, the OWNER agrees to let and the CHARTERER agrees to hire the Yacht for the term from 12 noon . . . on the 27th day of December, 1995 to 12 noon . . . on the 3rd day January, 1996 for the total sum of $44,800 + All Expenses of which amount $22,400.00 shall be paid on the signing of this AGREEMENT and the balance thereof as follows: remaining 50% deposit (US$22,400.00) and Florida State Sales Tax of 6% US$2,668 for a total sum of $25,088.00 due by 24 November, 1995. DELIVERY. The OWNER agrees to deliver the yacht to CHARTERER at Fort Lauderdale, Florida at 12 noon . . . on the 27th day of December, 1995, in full commission and in proper working order, outfitted as a yacht of her size, type, and accommodations, with safety equipment required by law, and fully furnished, including gallery and dining utensils and blankets; staunch, clean and in good condition throughout and ready for service, and agrees to allow demurrage pro rata to the CHARTERER for any delay in delivery. . . . * * * 5. RUNNING EXPENSES. The Charterer agrees to accept the yacht as delivered as hereinbefore provided and to pay all shipboard expenses during the term of the charter period. * * * 8. RE-DELIVERY and INDEMNIFICATION. The CHARTERER agrees to redeliver the yacht, her equipment, and furnishings, free and clear and of any indebtedness for CHARTERER's account at the expiration of this charter, to the OWNER at Fort Lauderdale, Florida at 12:00 noon on the 3rd day of January, 1996 in as good condition as when delivery was taken, ordinary wear and tear and any loss or damage for which the OWNER is covered by his own insurance, and CHARTERER's insurance (if any) set forth in Paragraph 3 of this AGREEMENT, excepted. . . . * * * 10. RESTRICTED USE. The CHARTERER agrees that the yacht shall be employed exclusively as a pleasure vessel for the sole and proper use of himself, his family, passengers and servants, during the term of this charter, and shall not transport merchandise, or carry passengers for hire, or engage in any trade, nor any way violate the Revenue Laws of the United States, or any other Government within the jurisdiction of which the yacht may be at any time, and shall comply with the laws in all other respects. * * * 12. CHARTERER'S AUTHORITY OVER CREW. It is mutually agreed that full authority regarding the operation and management of the yacht is hereby transferred to the CHARTERER for the term thereof. In the event, however, that the CHARTERER wished to utilize the services of a captain and/or crew members in connection with the operation and management of the yacht, whether said captain and/or crew members are furnished by the OWNER or by the CHARTERER, it is agreed that said captain and/or crew members are agents and employees of the CHARTERER and not of the OWNER. In the further event that local United States Coast Guard or other regulations require the OWNER exclusively to provide a captain and/or crew, or the OWNER agrees to provide a proper captain who is competent not only to coastwise piloting, but in deep sea navigation, and to provide crew, the captain shall in no way be the agent of the OWNER, except that he shall handle clearance and the normal running of the yacht subject to ports to be called at, and the general course of the voyage. The captain shall be responsible for the safe navigation of the yacht, and the CHARTERER shall abide by his judgment as to sailing, weather, anchorages, and pertinent matters. The captain and crew shall be selected by the CHARTERER with the approval of the OWNER or the OWNER's Agent. CHARTERER is aware that he has a choice of captains. CHARTERER has full right to terminate the captain and/or crew; however, replacements shall be hired as under Paragraph 12 of this AGREEMENT. . . . Ms. Foss also entered into a "Yacht Services Agreement." The agreement, dated August 16, 1995, was with Papa's, which agreed to provide a seven person crew for the Fifty-One for the charter period (December 27, 1995, through January 3, 1996). Ms. Foss, in turn, agreed to pay Papa's $11,200.00 for such crew services and, in addition, to provide the captain (Arthur "Butch" Vogelsang) and crew with food and quarters aboard the Fifty-One during the charter period. Petitioner collected and remitted to the Department the sales tax owed by Mr. Cabrera and Ms. Foss on their rentals of the Fifty-One. No Florida sales tax was due on any of the other 13 charters of the Fifty-One during the Audit Period because they all took place outside Florida. In the case of 11 of these 13 other charters, like in the Jean Foss charter, the charterer entered into a charter agreement with Petitioner for the rental of the Fifty-One, as well as a separate agreement with Papa's for employment of a captain and crew for a fee (that "represent[ed] the actual cost [to Papa's] of the crew"). Typically, the total amount due under both agreements was sent to Petitioner, and Mr. Becker's firm (which also provided accounting services to Papa's) "moved the [portion of the] funds" due Papa's to Papa's bank account. Two charterers during the Audit Period (Mutual of Omaha Marketing Company and Prince Faisal Aziz of Saudi Arabia) refused Mr. Wiviott's request that they enter into two separate agreements, one (with Petitioner) for the rental of the Fifty- One and another (with Papa's) for employment of a captain and crew. Instead, they insisted on signing a single document, a Mediterranean Yacht Brokers Agreement (or MYBA Agreement), wherein Petitioner agreed to provide both the Fifty-One and a captain and crew. Not wanting to lose the business, Mr. Wiviott, on behalf of Petitioner, entered into these MYBA Agreements, notwithstanding that he had been instructed by Mr. Maass "not [to] take MYBA contracts." The MYBA Agreement between Petitioner (as "Owner") and Mutual of Omaha Marketing Company (as "Charterer") was dated December 16, 1995, and provided that: the "charter period" would begin 12:00 noon on March 3, 1996, and end 12:00 noon on March 17, 1996; the "cruising area" would be the Caribbean; the "port of delivery" would be Guadeloupe; the "port of re- delivery" would be Grenada; the crew would consist of a captain and six other crew members; the charter fee would be $48,000.00 per week for a total (for 2 weeks) of $96,000.00; the "Advance Provisioning Allowance" would be $48,000.00; and the "delivery/re-delivery fee" would be $6,857.00. In addition, it contained the following "clauses," among others: CLAUSE 1 AGREEMENT TO LET AND HIRE The OWNER agrees to let the Yacht to the Charterer and not to enter into any other Agreement . . . for the Charter of the Yacht for the [s]ame period. The CHARTERER agrees to hire the Yacht and shall pay the Charter Fee, the Security Deposit, the Advance Provisioning Allowance and any other agreed charges in cleared funds, on or before the dates and to the Account specified in this Agreement. * * * CLAUSE 6 CREW The OWNER shall provide a suitably qualified Captain acceptable to the insurers of the Yacht and a suitably experienced Crew, properly uniformed, fed and insured. The OWNER shall ensure that no member of the Crew shall carry or use any illegal drugs on board the Yacht or keep any firearms on board (other than those declared on the manifest) and shall ensure that the Captain and Crew comply with the laws and regulations of any country into whose waters the yacht shall enter during the course of this Agreement. The MYBA Agreement between Petitioner (as "Owner") and Prince Aziz (as "Charterer") was dated March 19, 1996, and provided that: the "charter period" would begin 12:00 noon on April 2, 1996, and end 12:00 noon on April 9, 1996; the "cruising area" would be the Caribbean; St. Maarten would be the "port of delivery" and "the port of re-delivery"; the crew would consist of a captain and six other crew members; the charter fee would be $50,000.00; and the "Advance Provisioning Allowance" would be $10,000.00. It contained the following additional provisions, among others: 30. AGREEMENT TO LET The OWNER shall let the yacht for the charter period and agrees not to enter into any other agreement for the charter of the yacht for the same period, and agrees not to sell the yacht before completion of the charter period, unless otherwise agreed by the Charterer. * * * 32. CREW The Owner shall provide a properly qualified Captain approved by the insurers of the yacht and a properly qualified crew, uniformed and insured. . . . Upon the advice of Mr. Maass, Petitioner assigned to Papa's its MYBA Agreements with Mutual of Omaha Marketing Company and Prince Aziz. It also entered into "Bareboat Charter Agreements" with Papa's for the rental of the Fifty-One for the same periods covered by the MYBA Agreements (notwithstanding that the MYBA Agreements expressly prohibited Petitioner from doing so). According to what Mr. Maass told Mr. Wiviott, by Petitioner taking such action, "the MYBA contract[s] could be accepted without violating the requirement that [Petitioner] engage only in bare boat chartering." The written assignment of the MYBA Agreement with Mutual of Omaha Marketing Company was dated December 16, 1995, the same date as the MYBA Agreement, and read, in pertinent part, as follows: BW Marine owns the vessel "Fifty-One," a 125 foot motoryacht, bearing official number 1020419 (the "Vessel"); BW Marine entered into a Yacht Charter Party Agreement dated December 16, 199[5] (the "Charter") between BW Marine and Mutual of Omaha Marketing Company (Charterer"); BW Marine desires to assign to Papa's Yacht Services, and Papa's Yacht Services agrees to accept, all BW Marine's right, title, and interest in and to the Charter; NOW THEREFORE, in consideration of the premises, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: Assignment BW Marine assigns to Papa's Yacht Services all its right, title, and interest in and to the Charter. Papa's Yacht Services accepts the assignment and assumes all obligations of BW Marine under the Charter. Payment For administrative convenience, Charterer shall pay BW Marine the charter hire under the Charter. BW Marine, in turn, shall remit the surplus of these funds over the lease amount due from Papa's Yacht Services to BW Marine under that certain Bare Boat Charter Agreement between the parties of even date herewith. . . . Mutual of Omaha Marketing Company was not a signatory to this written assignment (and no other document offered into evidence reflects that Mutual of Omaha Marketing Company consented to the assignment). 5/ The written assignment of the MYBA Agreement with Prince Aziz was dated March 19, 1996, the same date as the MYBA Agreement. It was identical to the December 16, 1995, written assignment of the MYBA Agreement with Mutual of Omaha Marketing Company (with the exception of the dates contained therein). Prince Aziz was not a signatory to this written assignment (and no other document offered into evidence reflects that Prince Aziz consented to the assignment). The first "Bareboat Charter Agreement" between Petitioner (as "Owner") and Papa's (as "Charterer") was dated December 16, 1995, and provided, in pertinent part, as follows: Owner owns the vessel "Fifty-One," a 125 foot motorcoach bearing official number 1020419 (the "Vessel"); and Charterer desires to charter the Vessel from Owner and Owner is willing to make the Vessel available to Charterer for such purpose, subject to the terms and conditions contained herein. NOW THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: Term Owner agrees to let and Charterer to hire, the Vessel for a term commencing March 3, 1996, and ending March 17, 1996. Payment Charterer shall pay Owner charter hire of One Hundred Two Thousand Eight Hundred Fifty Seven Dollars ($102,857.00), plus state sales tax, if applicable. Control The Vessel is chartered on a bare boat or demise basis. Owner hereby transfers to Charterer full authority regarding the operation and management of the Vessel for the charter term. Charterer is solely responsible for retaining a master and crew. Guest Limitation When the Vessel is underway, the number of persons on board the Vessel, other than the master and crew, shall be limited to the Charterer (or the Charterer's representative, if Charterer is a corporation) and twelve (12) guests. * * * Delivery Owner agrees to deliver the Vessel at Guadeloupe. Redelivery Charterer shall redeliver the Vessel to Owner at Granada at the end of the charter term, in as good condition as when delivery was taken, ordinary wear and tear excepted. . . . * * * 9. Expenses Charterer shall pay all running expenses during the term of the charter. Charterer shall pay for routine maintenance and repair of the Vessel during the charter term. * * * 12. Non-Assignment Charterer agrees not to assign this Agreement or subcharter the Vessel without the consent of the Owner in writing, which Owner may withhold in Owner's sole discretion. . . . The second "Bareboat Charter Agreement" between Petitioner and Papa's was dated March 19, 1996, and was identical to the first "Bareboat Charter Agreement" between them (with the exception of the charter period, charter cost, and delivery/redelivery locations). The evidence is insufficient to support a finding that Papa's ever entered into a sub-charter agreement with either Mutual of Omaha Marketing Company or Prince Aziz. Both Mutual of Omaha Marketing Company and Prince Aziz paid Petitioner the entire charter fee prescribed under their respective MYBA Agreements. They did not make any payments to Papa's. Petitioner paid Papa’s a “management fee” for providing the captain and crew during these charters. On one of the 15 charters during the Audit Period, Mr. Wiviott was aboard the Fifty-One as a guest of the charterer, the Choice Meat Co., Inc., a company that he and his son, Greg Wiviott, owned. Choice Meat Co., Inc., paid the "going charter rate" for the rental, but no broker's commission because "there was no broker to pay." There were occasions during the Audit Period, when the Fifty-One was not under charter, that Mr. Wiviott, members of his family (including his wife; children; grandchildren; his bother, Howard; and Howard's wife), and his friends used the Fifty-One outside Florida for non-business-related, personal purposes, sometimes for "one or two weeks at a time." For instance, in June of 1994 (after the Gerardo Cabrera charter and before the next charter, which began on July 21, 1994), when the Fifty-One was in New England, the Wiviott family was aboard for approximately "a couple of weeks." At the end of that summer, just before the Fifty-One returned from New England to Fort Lauderdale, the family again used the Fifty-One, this time "for a week or so." In November of 1994, around the Thanksgiving holiday, the Fifty-One traveled to the Caribbean so that the family could use it there for recreational purposes. The Fifty-One remained in the Caribbean for ten to 14 days with the family aboard. After the Wiviott children and grandchildren got off, the Fifty- One went on to the Virgin Islands, where Mr. and Mrs. Wiviott's friends came aboard and were entertained by the Wiviotts. In January of 1995, some time "shortly after the 1st," when the Fifty-One was in St. Maarten (where it was based for the winter), the Wiviott family once again spent time aboard the Fifty-One. The foregoing instances of out-of-state, non-charter, non-business-related use of the Fifty-One by the Wiviott family occurred when Captain Cheney was in command of the vessel. The Wiviott family continued to make such use of the Fifty-One during the time Captain Elario was captain. When Captain Elario took over the Fifty-One in St. Lucia (from Paul Canvaghn, who had been captain for only a day or two), Mr. and Mrs. Wiviott were aboard the vessel. They remained on board for approximately a week as the Fifty-One cruised the Caribbean. During that week, Mrs. Wiviott swam, laid in the sun, relaxed, and ate meals prepared by the Fifty- One's chef. She did not perform any tasks designed to further Petitioner's charter business. Subsequently, while Captain Elario was still captain, Mr. and Mrs. Wiviott took a non-charter, non-business-related trip on the Fifty-One to the Bahamas. Also during the time Captain Elario was captain, when the Fifty-One was in Hilton Head, South Carolina, Mr. Wiviott's brother, Howard, and Howard's wife, came aboard, and they remained on the yacht as it traveled to Norfolk, Virginia. Howard and his wife did not perform any tasks designed to further Petitioner's charter business while aboard the Fifty- One. Mr. and Mrs. Wiviott's daughter, along with her two young children, stayed overnight on the Fifty-One when, while under Captain Elario's supervision, it was docked at the Capital Marina in Washington, D.C. During the daughter's and children's stay, there was a party celebrating the youngest child's birthday. Indicative of the amount of time that Mr. and Mrs. Wiviott spent aboard the Fifty-One were the clothing and other personal items that (as a convenience) they stored (in a locker) on the Fifty-One (so that they would not have to bring these items with them each time they boarded the vessel). (These items were moved from the locker to another area on the Fifty- One, when necessary, to accommodate charterers using the stateroom in which the locker was located). Whenever the Fifty-One returned to Florida, it underwent needed repairs and maintenance. It also cruised the waters of the south Florida area, docking at various facilities. It did so not only "to be stretched," but to gain additional exposure among "mega" yacht charter brokers. In addition, while in Florida, the Fifty-One was stocked with supplies and provisions (including rack of lamb, veal, lobster tails, baked goods, gourmet foods, specialty items, wines, bath and beauty products, and party supplies) to be available for use by those on board when the Fifty-One was outside Florida, including not only charterers (such as Mutual of Omaha Marketing Company and Prince Aziz) and their guests, but also Mr. Wiviott, his family, and friends (when they were on board the Fifty-One for non-business-related, personal purposes). The Fifty-One, while in Florida, was also provided with fuel for charter, as well as non-charter, non-business related, trips outside Florida. Petitioner's charter business proved to be unprofitable. Expenses far exceeded revenues. (Petitioner, however, was able to sell the Fifty-One for more than the purchase price it had paid, receiving approximately $5.7 million, excluding commissions, for the Fifty-One in February of 2000.) By letter dated October 11, 1996, the Department informed Petitioner that it was going to audit Petitioner's "books and records" for the Audit Period. Petitioner was selected for audit because it had reported only a relatively small amount of taxable charter revenue on the Florida sales and use tax returns it filed during the Audit Period. The Department's "audit findings" were that the Fifty-One "was purchased for [a] dual purpose, for leasing and to be used by the shareholder" and therefore "the vessel and other purchases [made by Petitioner during the Audit Period under its sales tax exemption certificate, including its purchase of the Choice One] are taxable at the cost price." Based upon these audit findings, the Department issued a Notice of Intent to Make Audit Changes, in which it advised Petitioner that Petitioner owed $430,047.95 in sales and use taxes, $215,023.97 in penalties, and $169,672.70 in interest through July 18, 1997, for a total of $814,744.62, "plus additional interest of $141.39 per day . . . from 07/18/97 through the date [of] payment." By letter dated April 22, 1998, Petitioner protested the Department's proposed assessment. On November 1, 1999, the Department issued its Notice of Decision sustaining the proposed assessment and announcing that, as of October 6, 1999, Petitioner owed the Department $929,270.52, with "interest continu[ing] to accrue at $141.39 per day until the postmarked date of payment." Petitioner subsequently filed a Petition for Chapter 120 Administrative Hearing on the Department's proposed action.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department enter a final order sustaining its assessment against Petitioner in its entirety. DONE AND ENTERED this 26th day of October, 2001, in Tallahassee, Leon County, Florida. STUART M. LERNER 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 26th day of October, 2001.
Findings Of Fact The claim imposed by the Department of Revenue stems from an audit conducted by Mr. George Thomas Lloyd, Jr., an employee of the Department of Revenue. Mr. Lloyd examined the books of the corporation and the receipts for items purchased and compiled a ledger of particular items which, in Mr. Lloyd's opinion, were not parts of the ship and upon which a use tax was due. At the hearing on this case this ledger was introduced as Joint Exhibit No. 1. It is a composite exhibit consisting of 157 pages. This ledger reflects purchases in the amount of $1,953,426.13 upon which the Department of Revenue claims tax is due. The total tax claimed by the Department of Revenue is $72,630.19 for taxes, penalties, and interest through February 16, 1976. The Petitioner is a Norwegian corporation with principal offices located in Oslo, Norway, and an office in Miami at Biscayne Boulevard. Petitioner owns three cruise vessels of Norwegian ownership and registration which sail out of the port of Miami, Florida to ports in the Caribbean. These cruises last several days. The parties have agreed that the Petitioner is in the exclusive business of transporting passengers and goods in foreign commerce. Mr. Lloyd, who conducted the audit above mentioned, testified that he prepared Joint Exhibit No. 1 by evaluating the items described in the corporation's records and used his own independent judgment in a determination as to whether those items were, or were not, parts of a vessel. If he determined they in fact were not parts of the vessel, he concluded that a use tax was owed to the State on the purchase price of those items. Mr. Lloyd stated that his determination as to whether a particular item was indeed a part of a ship was based on his independent judgment which was largely a question of whether the item was physically attached to the vessel. The individual items are far too numerous to describe in any detail herein, but they range from napkins, stirrers, postage meters, paper products, grinding wheels, coffee pots, towels, party favors, games, sandpaper, repairs to a shotgun, movie rentals, hardware items, batteries, flowers, bug spray. The items in question were delivered to Petitioner's warehouse on Dodge Island, Miami, Florida for lading on board one of Petitioner's three cruise vessels. The cruise vessels tie up next to the warehouse where the goods are stored and from time to time these goods are brought aboard each of the vessels. The items in question are all used aboard each vessel during the vessels' passenger cruises. The only time the cruise vessels spend within the territorial limits of Florida are for a period of time on Saturday of each week for the purpose of embarking and disembarking passengers for each weekly cruise. These articles, somewhat above described, are all used in connection with the ship's operation which is the conduct of weekly pleasure cruises from Miami to the Caribbean. The question of whether a particular item is a part of a vessel is one of definition and common sense. The auditor, Mr. Lloyd, appeared to accept a definition similar to what one would use in determining whether or not an item was a fixture in regard to realty. However, there are all types of vessels and it appears to this Hearing Officer that what may be a part of one type of vessel would have no function on another. There is really no relationship between what may be considered a part of real estate and what may be considered a part of a ship. There also appears to be no logic behind a definition which limits "parts of a ship" to those items which are physically attached to the vessel. Most would agree that pumps are parts of a ship; even though they may not be attached and can be easily removed, they are necessary in keeping a vessel afloat. Similarly, a compass and other navigational equipment may be removed, but that would hardly make them any less a part of a ship. As the Petitioner points out in its Memorandum, the most logical approach to a finding as what is truly a part of a vessel must ultimately hinge on the nature of the vessel, and a broad definition of seaworthiness. What are clearly parts of some ships have no purpose on others. A cargo freighter would need hoists and cranes which are not required on a tug. Each type of vessel uses equipment suited to that ship's purpose and type of cargo. While a tanker may be in the business of transporting oil, a very specialized cargo, a cruise ship is in business of transporting people and catering to their needs and entertainment. Therefore the equipment of a cruise ship would appear more frivolous to those accustomed to ships transporting basic raw materials. Both vessels, however, are in the shipping business. Since the parts of a ship must be defined as those items which serve a useful purpose to the operation of the ship, the decision then depends not on the nature of the item, but of the vessel. An oil tanker might conceivably have equipment or parts which are so specialized that they could serve no other useful purpose except aboard that type of vessel. The cruise ships in question in this case, however, use equipment which are apparently commonplace and equally useful on land as on sea. What items may properly be considered parts of a cruise ship depend on how those items relate to the operation of the vessel. While the equipment of an oil tanker would hardly be expected to be directed toward mirth; likewise, it is unreasonable for the equipment of a cruise ship to be limited to the bare necessities of a spartan voyage. As the testimony on behalf of Petitioner indicated, all the items listed on Joint Exhibit No. 1 do serve a purpose aboard the vessel and all items were purchased for use aboard the company's three vessels. It is therefore concluded that all the items listed on that schedule are in fact parts of the vessels owned by the Petitioner. The Petitioner has raised several other issues in its defense to tax assessment of the Department of Revenue. Among other things the Petitioner claims that the items in question are not stored for use in Florida. The facts above indicated that the items were purchased by the corporation and no sales or use tax has yet been paid upon them. The items are stored at the Dodge Island Warehouse owned by the Petitioner and are from time to time placed aboard vessels operated by the Petitioner corporation. From the facts presented at this hearing, the ships only spend several hours in the port of Miami each Saturday of every week. The items, therefore, are principally used while the vessels in question are on the high seas or in foreign ports. Except for this period of time on each Saturday when the vessels are in port, these items are used while the vessels are in engaged in foreign commerce.
Recommendation For reasons that the items in question are parts of the vessels and that they are used and consumed outside the state of Florida the tax assessed by the Department of Revenue should be disallowed. ENTERED this 20th day of October, 1976, in Tallahassee, Florida. KENNETH G. OERTEL, Director Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Daniel G. LaPorte, Esquire 150 Southeast Second Avenue Miami, Florida 33131 E. Wilson Crump II, Esquire Assistant Attorney General Department of Legal Affairs Tax Division, Northwood Mall Tallahassee, Florida 32303 Ed Straughn, Executive Director Department of Revenue Carlton Building Tallahassee, Florida 32304 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF REVENUE KLOSTERS REDERI A/S, d/b/a NORWEGIAN CARIBBEAN LINES, Petitioner, vs. CASE NO. 76-428 DEPARTMENT OF REVENUE OF THE STATE OF FLORIDA, Respondent. /
