The Issue As stipulated by the parties and as reflected in the Amended Administrative Complaint dated September 28, 1992 the issues for resolution are whether Respondent misrepresented property for sale at auction or made false promises concerning the use, value or condition of such property; whether this conduct demonstrates bad faith or dishonesty; whether Respondent failed to appropriately conduct and maintain control of the auction; and whether the Respondent used false bidders, cappers or shills. (Joint Prehearing Statement filed 9/28/92) If those violations occurred, an appropriate penalty must be determined.
Findings Of Fact Respondent, Ronald Ray Kool, Sr., (Kool) has been licensed continually as an auctioneer in the State of Florida since approximately 1988, having been issued license number AU 0000510. He is the registered owner of the business, A-Plus Auctions, which is issued license number AB 0000071. On July 9, 1990, Respondent contracted with Dr. Florence Alexander for the conduct of an auction at the Ebon Center, in Titusville, Florida. The contract was renegotiated, and a subsequent written contract was entered between the parties on July 26, 1990, for the auction to be held on July 28, 1990. The latter contract provided that the auction was a reserve auction, that is, minimum bids were provided by Dr. Alexander for the items offered for sale. Prior to the auction, on July 27, 1990, some items originally included in the list for the auction were sold by Ebon Galleries, and numerous other items were substituted. This was satisfactory to Kool as the potential commission on the substitute items was considerably larger. This transaction constituted an oral amendment by the parties. As advertised, the auction commenced at 10:00 a.m., July 28, 1990 at the Ebon Center in Titusville. The goods for sale were on display and available for inspection by the bidders prior to, and during the auction in a large warehouse area where the auction was being held. The items were mostly oriental pots, vases, lamps, ceramic figures, mugs, frames, and other decorator pieces and bric-a-brac. There were approximately 200-250 bidders. As they entered the auction area all bidders were given a perforated card to fill out. The lower portion included their name, address, phone number and assigned bidder identification number. This was detached and given to the auction clerk. The top portion was retained by the bidder and included the assigned bidder number and this text: EVERYTHING MUST BE PAID IN FULL ON THE DAY OF THE AUCTION regardless of when it is picked up. Everything will be sold "as is, where is", with no guarantees of any kind, regardless of statement of condition made from the auction block. Buyers shall rely entirely on their own inspection and information Every effort is made to "guard" merchandise throughout the auction; however, the bidder becomes solely responsible for all items purchased by him immediately following his winning bid. Therefore, he is advised to further guard his items at his own discretion. The Bidder is responsible for knowing which items he is bidding on. If he is unsure, he should inquire or not bid. When you become the winning bidder at auction you have effected a contract and will be expected to pay for items in which you were evidenced to be the successful bidder. Auctioneer will not honor "mistakes". The Auctioneer reserves the right to accept bids in any increment he feels is in the best interest of his client, the seller. The Auctioneer reserves the right to reject the bidding of any person whose conduct, auctions, or adverse comments he feels are not in the best interest of the seller. (Petitioner's Ex. #14, deposition of Kool, ex. 6 to deposition) At the commencement of the auction Kool announced various ground rules or terms of the auction, including the fact that this was not an absolute auction, that bidders had an obligation to inspect merchandise because they were responsible for what they bought and that there was a ten percent buyer's premium on the sales. "Buyer's premium" is a surcharge on the bid price, which surcharge is received by the auctioneer, along with his commission from the seller. Kool also introduced his employees and informed the gathered bidders that he and his employees would bid if they wished and the bidders would know when employees were bidding. Kool and his employees were assigned bidder numbers 502 through 509. The male employees wore gray slacks and gray shirts with "A-Plus Auctions" embroidered on the shirts. The women employees wore blue dresses with "A-Plus Auctions" inscribed. The employees were up front working behind the table and in front of the auctioneer. When they bid, they raised their hands like anyone else. Max Algase and Herbert Michaels arrived at the auction just as the introduction was being completed. Max Algase was assigned bidder number 569 and received the card described above. Max Algase describes himself as a "liquidator"; he buys and sells merchandise, including entire stores or chains of stores and occasionally attends auctions. Herbert Michaels is a good friend and sometimes business associate of Algase. Michaels is on disability retirement from Zayre's Department Stores, where he was merchandise manager for twenty years and was responsible for twenty-eight stores' apparel, comprising $85 million in sales. At some point during the auction, Shirley Thompson (now Shirley Thompson Effron) sat down next to the two men and introduced herself. The three individuals decided to form a partnership, each putting up a third for the purchases at the auction, and then reselling the items later in a shop that they would open for that purpose. Algase considered the venture "a lark" rather than a serious business deal. (Transcript, p. 51) So many purchases were made by bidder number 569 (Algase, or Liquidators III, the ad hoc partnership) that during the course of the auction, the computer program utilized by Kool ran out of data space for that number, and another number, 626, was assigned. During the auction the seller, Dr. Alexander obtained bidder number 604 and she purchased three items. When Kool recognized her as a purchaser, he turned the auction block over to another auctioneer and confronted Dr. Alexander, telling her that it was inappropriate for her to bid. The items she had purchased were put back up for sale. Towards the end of the auction, Dr. Alexander approached Kool and asked about placing some racks of clothing up for sale. He agreed, reluctantly, because clothing sales are time-consuming, and the racks of clothes were wheeled out to the warehouse floor. The clothes were in two categories, one group was a large number of heavy woolen items, coats, capes, jackets, suits and the like; the other, smaller group was mostly lightweight dresses, bathing suits and similar items. Kool announced the clothes would be placed for sale and invited the bidders to go look at them. About five or ten minutes later bidding started on the items, "bidders choice". That means the individual who bid highest would get the first choice of the multiple items. The reserve, or lowest bid acceptable, was $75.00 each. After ten or fifteen minutes, only a few items had been sold and Kool told Dr. Alexander to remove them from the floor. She and her father wheeled the racks back into the front showroom of the building. One of the participants interested in the clothing was Herbert Michaels. He inspected the racks, felt and touched the clothing and convinced Algase that the items were well worth $35.00 a piece. The partners bought the woolen items for $35.00 each, and the lighter items at $10.00 each. All three partners have a different version of how the sale took place. Herbert Michaels claims that Kool, while off the auction block, negotiated the sale with Max Algase and Shirley Thompson Effron; Max Algase claims that after the woolen items were offered at "bidders choice", they were offered from the block at "bidder take all", and he won the bid at $35.00 apiece. Shirley Thompson Effron claims that after the clothing was removed from the floor, Dr. Alexander approached their group and negotiated the sale with Max Algase. The latter version is consistent with Kool's testimony and that of his other witnesses and is credited. The latter version is also consistent with a tally sheet identified by Kool as a paper brought to him by Dr. Alexander approving the transaction. (Petitioner's Ex. 14, Kool deposition, exhibit 6 to the deposition) During the clothing deal, Algase, Herbert Michaels and Shirley Thompson Effron went to the showroom while Kool's employees counted the items. There were 550 woolen items and 88 lighter items, with a total cost of $19,250.00 for the former and $880.00 for the latter. The counts are reflected on the tally sheet given to Kool. Algase paid for these and other items purchased at the auction with a check. Later, he made arrangements with Mrs. Kool to substitute cash and he did so on Tuesday of the following week, when he had all of the clothing loaded into large trucks for removal from the Ebon Center. The Liquidators III venture was not successful. Few of the items were resold as they had hoped. The relationship between Shirley Thompson Effron and Max Algase deteriorated and he is suing her husband's corporation. On November 7, 1990, Shirley Thompson Effron, as secretary of the partnership, and at the insistence of Max Algase, sent a letter to Ron Kool complaining that they bargained for, and bought, coats, but that more than half of the items were dresses, suits or skirts. The letter demanded "full restitution immediately". (Petitioner's Ex. 11) In March 1991, Algase complained to the Department of Professional Regulation, and Investigator Bobby Hunter conducted interviews and gathered documents, including the records maintained by A-Plus Auctions for the July 1990 auction. Those records reflect the bidder number 500 for many items, with a "0" final settlement price. That is a number assigned by Mrs. Kool, a licensed auctioneer and the business manager for the company, to account for items which were offered for sale but did not reach the minimum bid set by the seller, Dr. Alexander. Bidder numbers assigned to A-Plus employees show purchases of several items, mostly small, less than $10.00, the largest amount being $40.00. The records also reflect that the 550 woolen items bought by Algase and his partners are described as "coats" on the final settlement printout. This description was assigned by an employee of A-Plus Auctions when the items were offered for sale. There is no credible evidence that Kool described the items from the auction block as only coats. Rather, he described woolen clothing, including alpaca coats from Central or South America. Herbert Michaels conceded that he knew the items were not all coats before the sale was made because he had inspected the racks on the floor. He found capes as well as coats, and tops to ensembles. (Transcript, p. 34) Several expert auctioneers testified on behalf of the parties, one on behalf of Petitioner and two for the Respondent, with a combined experience of 62 years in auctioneering. Their opinions did not vary substantially. They expressed concern with the fact that the owner, Dr. Alexander, managed to bid on several lots, but they agreed that Kool handled the problem properly after he discovered it. They also agreed that side deals like the one involving the clothing deprive the general public of an opportunity to participate, but they are not illegal so long as records are kept and funds, including the commission, are disbursed and accounted for. The experts described the practice, more common in the past than now, of "dropping on the house number". An auctioneer can falsely raise bids by acknowledging a phony bid. If the phony bid is not raised, the auctioneer is stuck with it and announces the sale to a "house number", not associated with any real bidder, but in the words of R. L. Huntsinger, bid by "Mr. Wall", "Mr. Floor", "Mr. Ceiling", etc. The appearance of the number 500 without a bidder identified, in Kool's records of the auction, raised the suspicion that this illegal practice was used. Respondent and his witnesses adequately explained why the number was used, however, to account for items that did not reach the reserve minimum bid. Even Petitioner's expert conceded that he could not say that the practice was used in this case. (Transcript, p. 180) Petitioner's expert also opined that any errors committed by Respondent were due to lack of knowledge and not because of an intent to defraud the public or the seller. (Transcript, p. 193) The weight of evidence, taking into consideration the demeanor and credibility of the witnesses, fails to support a finding that Respondent Kool committed the violations alleged. He did not misrepresent the property being sold. The clothing was described as such, and not as only "coats". The complainants, sophisticated and experienced business people, had an opportunity to inspect the items and knew what they were buying. There is no evidence of bad faith or dishonesty and the evidence presented by Respondent effectively forecloses a finding that he used or permitted the use of false bidders. Although Max Algase was not required to re-register when he was assigned a subsequent number, the records produced at hearing confirm the testimony of Mrs. Kool that Algase was bidder number 626. The auction on July 28, 1990 was an all-day affair with a high volume of goods to be moved. As principal auctioneer, Kool was in charge and maintained control. He hired experienced, competent employees and utilized only licensed auctioneers in calling the bids. Certain tasks were appropriately delegated to his wife, also a licensed auctioneer. Recordkeeping was thorough and substantially accurate. While Respondent regrets that the seller, Dr. Alexander, was given a bidder number and managed to bid, her participation, as concluded below, is not prohibited.
Recommendation Based on the foregoing, it is, hereby, RECOMMENDED: That a final order be entered finding no violation by Respondent and dismissing the amended administrative complaint. DONE AND RECOMMENDED this 24th day of May, 1993, in Tallahassee, Leon County, Florida. MARY CLARK 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 24th day of May, 1993. APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-3112 The following are specific rulings on the findings of fact proposed by the parties: Petitioner's Proposed Findings 1.-2. Adopted in paragraph 1. Adopted in paragraph 2. Rejected as irrelevant. Included in paragraph 3. Rejected as irrelevant. Adopted in paragraph 4. Rejected as irrelevant (see paragraph 3.) Rejected as irrelevant. Included in paragraph 9. Adopted in paragraph 8. 12.-14. Rejected as unnecessary. The clothing was not described at auction as only coats. Rejected as contrary to the weight of evidence. (see 12-14, above) Rejected as unnecessary. Adopted in paragraph 11. 18.-19. Adopted in paragraph 12. Rejected as unnecessary, but addressed by implication in paragraph 21. Adopted in paragraph 13. Adopted in paragraph 14. Adopted in paragraph 13. and 14. Addressed in paragraph 21, but the implication of illegality is rejected as contrary to the law and rules. Rejected as irrelevant. Adopted in paragraph 16. Rejected as unnecessary. Adopted in summary in paragraph 16. Rejected as contrary to the weight of evidence. 30.-31. Rejected as irrelevant, and contrary to the weight of evidence. Adopted in paragraph 17. Rejected as contrary to the weight of evidence and a misstatement of the expert's testimony. The witness was responding to a hypothetical question. 34.-35. Adopted in paragraph 6. 36. Addressed in paragraphs 21. and 26. 37.-44. Rejected as unnecessary. 45. Adopted in paragraph 10. 46.-50. Rejected as immaterial. 51. Rejected as contrary to the weight of evidence. "Control" also means delegation to competent staff. See Rule 21BB-5.001(2), F.A.C. 52.-55. Rejected as irrelevant. These proposed facts do not relate to any alleged violation of statute or rule. Respondent's Proposed Facts 1.-3. Adopted in paragraph 1. 4. Adopted in paragraph 2. 5.-6. Adopted in paragraph 4. 7. Adopted in paragraph 5. 8. Adopted in paragraph 7. 9. Adopted in paragraph 2. and 6. 10. Adopted in paragraph 4. 11. Adopted in paragraph 5. 12. Adopted in paragraph 6. 13. Adopted in paragraph 19. 14. Adopted in paragraph 10. 15. Adopted in paragraph 11. 16. Adopted in paragraph 8. 17. Adopted in paragraph 15. 18. Adopted in paragraph 12. 19. Adopted in paragraph 15. Rejected as unnecessary. Adopted in paragraph 26. Rejected as unnecessary; included by implication in paragraph 24. COPIES FURNISHED: Anthony Cammarata, Senior Attorney Department of Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0792 Joseph E. Miniclier, Esquire 1970 Michigan Avenue Building E Cocoa, Florida 32924-8248 Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0792 Suzanne Lee, Executive Director Department of Professional Regulation Board of Auctioneers 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-0792
The Issue The issue is whether Rule 5J-10.001, Florida Administrative Code, constitutes an invalid exercise of delegated legislative authority, pursuant to Section 120.52(8), Florida Statutes.
Findings Of Fact Pursuant to Sections 559.801(2) and 559.813(2), Florida Statutes, Respondent has exclusive administrative jurisdiction over the Sale of Business Opportunities Act, Chapter 559, Part VIII, Florida Statutes, and shares judicial enforcement over the Act with the Florida Department of Legal Affairs and the applicable office of the state attorney. (Unless stated otherwise, all references to "Sections" shall be to Florida Statutes, all references to the "Act" shall be to the Sale of Business Opportunities Act, and all references to "Rules" shall be to the Florida Administrative Code.) The Act governs the sale or lease of certain business opportunities in Florida. Sections 559.803 and 559.804 respectively require sellers of covered business opportunities to provide timely disclosures to prospective purchasers and to file annual disclosure statements with Respondent prior to advertising or offering covered business opportunities for sale. More relevant to this case, Section 559.801 sets forth the definitions that establish the coverage of the Act: 559.801 Definitions.--For the purpose of ss. 559.80-559.815, the term: (1)(a) "Business opportunity" means the sale or lease of any products, equipment, supplies, or services which are sold or leased to a purchaser to enable the purchaser to start a business for which the purchaser is required to pay an initial fee or sum of money which exceeds $500 to the seller, and in which the seller represents: That the seller or person or entity affiliated with or referred by the seller will provide locations or assist the purchaser in finding locations for the use or operation of vending machines, racks, display cases, currency or card operated equipment, or other similar devices or currency-operated amusement machines or devices on premises neither owned nor leased by the purchaser or seller; That the seller will purchase any or all products made, produced, fabricated, grown, bred, or modified by the purchaser using in whole or in part the supplies, services, or chattels sold to the purchaser; That the seller guarantees that the purchaser will derive income from the business opportunity which exceeds the price paid or rent charged for the business opportunity or that the seller will refund all or part of the price paid or rent charged for the business opportunity, or will repurchase any of the products, equipment, supplies, or chattels supplied by the seller, if the purchaser is unsatisfied with the business opportunity; or That the seller will provide a sales program or marketing program that will enable the purchaser to derive income from the business opportunity, except that this paragraph does not apply to the sale of a sales program or marketing program made in conjunction with the licensing of a trademark or service mark that is registered under the laws of any state or of the United States if the seller requires use of the trademark or service mark in the sales agreement. For the purpose of subparagraph 1., the term "assist the purchaser in finding locations" means, but is not limited to, supplying the purchaser with names of locator companies, contracting with the purchaser to provide assistance or supply names, or collecting a fee on behalf of or for a locator company. "Business opportunity" does not include: The sale of ongoing businesses when the owner of those businesses sells and intends to sell only those business opportunities so long as those business opportunities to be sold are no more than five in number; The not-for-profit sale of sales demonstration equipment, materials, or samples for a price that does not exceed $500 or any sales training course offered by the seller the cost of which does not exceed $500; or The sale or lease of laundry and drycleaning equipment. "Department" means the Department of Agriculture and Consumer Services. "Purchaser" includes a lessee. "Seller" includes a lessor. An important question in this case is the extent to which the Act addresses affiliates of a seller. In fact, the Act does so only once. In describing the various disclosure requirements imposed upon a "seller," Section 559.803 mentions an affiliate in Section 559.803(1), which requires the disclosure of "the name of any parent or affiliated company that will engage in business transactions with the purchasers or who takes responsibility for statements made by the seller." In describing the annual filings, Section 559.805 does not mention "affiliates." Nor do the main enforcement provisions of the Act mention "affiliates." Section 559.809 prohibits 14 specified acts by "sellers". Section 559.813(2)(a) specifies five violations by "a seller or any of the seller's principal officers or agents" that may result in the penalties set forth in Section 559.813(2)(b). In connection with the sale or lease of business opportunities, Respondent has adopted three rules at Chapter 5J-10, Florida Administrative Code. Petitioners have challenged, in its entirety, Rule 5J-10.001, which supplies several definitions. Rule 5J-10.001 states: 5J-10.001 Definitions. The definitions contained in Section 559.801, Florida Statutes, and the following apply: “Initial Fee or sum of money,” as used in Section 559.801(1)(a), F.S., shall include the total funds paid by the purchaser to the seller, including all monies paid for deposits, down payments, prepaid rents, equipment costs, materials, samples, products, training, services or inventory purchases. “Material change” shall include any fact, circumstance, or set of conditions which has a substantial likelihood of influencing a purchaser or a reasonable prospective purchaser in the making of a significant decision relating to a named business opportunity or which has any significant financial impact on a purchaser or prospective purchaser. “Sales program or marketing program” means: A written or oral procedure or plan provided by the seller to a purchaser of a business opportunity concerning products, equipment, supplies, services or training that the seller represents will be provided on how to sell or market the product or service; or Where the seller provides to the purchaser the following devices, techniques, training or materials which will assist the purchaser in deriving income from the business opportunity: Sales or display equipment or merchandising devices; Specific sales or marketing techniques; or Sales, marketing or advertising materials which are intended for use by the purchaser to influence a consumer to purchase a product or service. “Seller” includes any person who has an ownership interest of 10% or greater in an entity which sells or leases business opportunities. Specific Authority 570.07(23) FS. Law Implemented 559.801, 559.803, 559.805 FS. History–New 11-15-94, Amended 6-4-95. Respondent adopted Rule 5J-10.001 effective November 15, 1994, and amended it effective June 4, 1995. The specific authority cited for the rule, Section 570.07(23), provides only that Respondent "shall have and exercise the following functions, powers, and duties: To adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of law conferring duties upon it." However, in 1997, the Legislature adopted Section 559.813(8), which broadens Respondent's rulemaking authority under the Act by providing: "The department has the authority to adopt rules pursuant to chapter 120 to implement this part." In defining "seller" in Rule 5J-10.001(4), Respondent relied on the Federal Trade Commission (FTC) regulations at 16 Code of Federal Regulation (CFR) Part 436 (collectively, the "Franchise Rule"). In particular, Respondent relied on 16 CFR 436.2, explaining in a response to an interrogatory that Rule 5J-10.001(4) "was intended to clarify the identity of persons sufficiently affiliated with the sale of a business opportunity by virtue of their share ownership (16 C.F.R. 436.2) upon whom a duty should be imposed to make the required statutory disclosures in the sale of a business opportunity." In 16 CFR Sections 436.2(a)(1)(i) and (ii), the FTC identifies two types of franchises covered under the FTC Act: the package and product franchise and the business opportunity. As the name implies, the business opportunity described in 16 CFR Section 436.2(a)(1)(ii) bears the closer resemblance to the Act. Under 16 CFR Section 436.2(a), both types of franchises require an arrangement and, more importantly, "any continuing commercial relationship." For the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(A) requires that a franchisee offer, sell, or distribute to a person other than the franchisor goods or services that are supplied by the franchisor, supplied by a third person with whom the franchisor requires the franchisee to do business, or supplied by an affiliate of the franchisor with whom the franchisee is advised by the franchisor to do business. In addition, for the business opportunity, 16 CFR Section 436.2(a)(1)(ii)(B) requires that the franchisor secure for the franchisee retail outlets or accounts, locations or sites for product sales displays (such as vending machines or rack displays), or the services of a person to secure these retail outlets, accounts, locations or sites. Also, 16 CFR Section 436.2(i) defines an "affiliated person" as a person that "directly or indirectly controls, or is controlled by, or is under common control with, a franchisor"; that "directly or indirectly owns, controls, or holds with power to vote, 10 percent or more of the outstanding voting securities of a franchisor"; or that "has, in common with a franchisor, one or more partners, officers, directors, trustees, branch managers, or other persons occupying similar status or performing similar functions." However, the definitions in 16 CFR Section 436.2 apply only to terms "used in this part," and 16 CFR Part 436 does not cover enforcement and liability issues--only disclosures and definitions, including coverage definitions. In fact, the sole purpose of the affiliate definition in 16 CFR Section 436.2 is to explain the disclosure requirements set forth in 16 CFR Sections 436.1(a)(7) (total funds required to be paid to franchisor or its affiliates), 436.1(a)(8) (recurring funds required to be paid to franchisor or its affiliates), 436.1(a)(9) (names of affiliates with which franchisee is required or advised to do business), 436.1(a)(11) (basis for calculating actual revenue to be received by franchisor or its affiliates), 436.1(a)(12) (financing conditions offered by franchisor or its affiliates), and 436.1(a)(14) (extent to which franchisee--or, if a corporate, franchisee's affiliates--to participate directly in the franchised operation). Nowhere in the Franchise Rule does the affiliate definition broaden the scope of the persons liable for violations of the federal law. On July 26, 2002, Respondent filed an Administrative Complaint against Petitioners and three allegedly related corporations and transmitted the matter to the Division of Administrative Hearings (DOAH) for a formal hearing. This proceeding was designated DOAH Case No. 02-3374. At the same time, Respondent imposed an Immediate Final Cease and Desist Order ordering that Petitioners and three allegedly related corporations discontinue the sale of business opportunities in Florida. (The First District Court of Appeal later stayed the enforcement of this order.) On October 11, 2002, Respondent served an Amended Administrative Complaint. The undersigned Administrative Law Judge completed the hearing in DOAH Case No. 02-3374 on November 25, 2002. As of the date of this final order, the parties have not yet filed their proposed recommended orders. In the Administrative Complaint, Amended Administrative Complaint, and Immediate Final Cease and Desist Order, Respondent relies on Rules 5J-10.001(3) and (4), but not Rules 5J-10.001(1) and (2). With respect to Rule 5J-10.001(3) ("Sales or Marketing Program Rule"), Respondent alleges that the business opportunities are covered by the Act because of the presence of a "sales program or marketing program." With respect to Rule 5J-10.001(4) ("Seller Rule"), Respondent alleges that Petitioners are liable as owners of one or more named corporations that are "sellers" who have violated the Act. With respect to Rules 5J-10.001(1) and (2), respectively, the regulatory definitions of an "initial fee or sum of money" or "material change" play no significant role in DOAH Case No. 02-3374. For this reason, Petitioners are not substantially affected by these rules, and the Conclusions of Law below determine that Petitioners lack standing to challenge Rules 5J-10.001(1) and (2), which are not further discussed in this final order.
Findings Of Fact At all times material hereto Ralph Thomas West was a licensed real estate salesman with license number 0364011, and Charles De Menzes was a licensed real estate broker with license number 0174324. De Menzes was operating as qualifying broker and officer of De Menzes Realty, Inc., 2116 East Silver Springs Boulevard, Ocala, Florida, license number 0208877. De Menzes Realty, Inc. was a corporation licensed as a broker in Florida. From approximately September 3, 1981 to approximately June 14; 1984; West was licensed and operating as a real estate salesman in the employ of De Menzes Realty, Inc. On March 31, 1984, West obtained an exclusive right of sale listing contract from James M. and Grace Bell for the sale of certain real property. The listing contract was for six months, ending on September 30, 1984, and specified that the listing would be placed with Multiple Listing Service. West had the Bells sign the listing contract, gave them a copy, and returned to De Menzes Realty where he signed the listing and then placed it on the secretary's desk for presentation to, and signature by, De Menzes. Standard office practice was that all listings were placed in a file folder after the salesman and De Menzes had signed them, other required authorization forms were placed in the file and it was returned to the salesman who was then responsible for having all required forms in the file·assigned. The salesman then was supposed to return the file to the secretary who would place the listing with the Multiple Listing Service (MLS). De Menzes told his salesmen that they were responsible for following up on the file and making sure the listing had been placed with MLS. De Menzes does not routinely follow up on listings to insure that salesmen carry out these responsibilities, and he took no action on the Bell listing after executing the exclusive listing. After De Menzes signed the Bell listing, it was placed in a file folder along with Key Box Authorization and Notice to Sellers forms which had to be signed by the Bells. West gave these forms to the Bells on April 1, 1984, and they signed them on that date. They also gave West a key to their property and he placed a lock box on the property door. On April 7, 1984, an auction of the Bell property was held by Max Heubner, who was a licensed real estate salesman working in the employ of De Menzes Realty, Inc. as an auctioneer. Huebner arranged for the auctions himself, including the advertising, and conducted them himself. He did not seek or obtain De Menzes' approval to hold auctions. Huebner would routinely give De Menzes a copy of his auction fliers so that De Menzes would be aware that an auction was being held in case someone called the office about it. The Bell property was not sold as a result of this auction. The Bell listing was never placed in MLS. West did show the property to two people following the auction but never followed up to be sure the listing was entered in MLS. After West left the employ of De Menzes Realty, Inc., on or about June 14, 1984, no efforts were undertaken by De Menzes Realty to sell the Bell property. De Menzes Realty, Inc. and Charles De Menzes were unaware of the Bell listing until early July, 1984, when Grace Bell called the office to inquire about progress in selling the property. Gail Barbee, broker- salesperson at De Menzes Realty, told Grace Bell that there was no listing on file with De Menzes Realty, Inc., and no listing of their property had ever been placed with MLS. Barbee sent Bell a new listing contract on July 19, 1984, but the Bells decided not to reexecute another listing. On October 4, 1984, Barbee returned pictures of the property, as well as a key which Bell had sent her in response to Barbee's letter in July. In early May, 1985, West was going through his briefcase and found the entire Bell listing file; including the original listing contract. This was not a file which he prepared on the subject property but was the actual office file prepared on this listing by personnel of De Menzes Realty, Inc. West had placed the file in his briefcase by mistake and did not realize he had it until May, 1985. He subsequently submitted this file to Petitioner on May 30, 1985. The file had been in his sole possession for approximately a year, during which time he had completely forgotten about the listing, and had left the employ of De Menzes Realty.
Recommendation Based upon the foregoing it is recommended that Respondents, Charles De Menzes and De Menzes Realty, Inc., each be reprimanded. DONE and ENTERED this 16th day of October, 1985, at Tallahassee, Florida. DONALD D. CONN, 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 16th day of October, 1985. APPENDIX Rulings on Petitioner's Proposed Findings of Fact: 1. Adopted in Finding of Fact 1. 2. Adopted in Finding of Fact 1. 3. Adopted in Finding of Fact 1. 4. Adopted in Finding of Fact 1. 5. Adopted in Finding of Fact 3. 6. Adopted in Finding of Fact 3. 7. Adopted in Finding of Fact 4. 8. Adopted in Finding of Fact 5. 9. Adopted in Finding of Fact 6 and 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 6. Adopted in Finding of Fact 6 and 7. Adopted in Finding of Fact 3 and 4. Rulings on Respondent's Proposed Findings of Fact: Rejected as irrelevant and unnecessary. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 3. Adopted in Finding of Fact 3 and 4. Adopted in Finding of Fact 4. Adopted in Finding of Fact 5. Adopted in Finding of Fact 6. Adopted in Finding of Fact 2. Adopted in Finding of Fact 7. Adopted in Finding of Fact 7. Adopted in Finding of Fact 6 and 7. Adopted in Finding of Fact 7. Rejected as irrelevant and unnecessary. Adopted in Finding of Fact 8. Rejected as irrelevant. Adopted in Finding of Fact 8. COPIES FURNISHED: James H. Gillis, Esquire Department of Professional Regulation 400 West Robinson Street Orlando, FL 32801 Harvey R. Klein, Esquire 333 N.W. 3rd Avenue Ocala, FL 32670 Fred Roche, Secretary Department of Professional Regulation 130 North Monroe Street Tallahassee, FL 32301 Salvatore A. Carpino, Esquire Department of Professional Regulation 130 North Monroe Street Tallahassee, FL 32301 Harold Huff, Executive Director Division of Real Estate 400 West Robinson Street Orlando, FL 32801
Findings Of Fact Petitioner is a state governmental licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints relative to real estate transactions. (Official recognition of Florida Statutes, TR 6-7) Respondent is now and was at times material hereto, a licensed real estate broker in Florida, having been issued License No. 0149408. The last license to Respondent was as a broker, t/a Marathon Realty at Post Office Box 2386, Marathon Shores, Florida 33052. (Petitioner'S Exhibit 1) On or about May 2, 1985, Respondent solicited and obtained a sales contract entered into by Emily Cathy Cronnon, as purchaser, and W. J. and Delores Sarver , as sellers, for the purchase and sale of certain residential property (contract for sale). (Petitioner'S Exhibit 2) The sales transaction was scheduled to close on or about July 1, 1985, but the transaction did not close. On or about December 2, 1985, the purchaser and sellers terminated the sales contract. (Petitioner'S Exhibit 3) On or about May 13, 1985, the Respondent allowed Emily Cathy Cronnon and her live-in boyfriend, Billy Hull, to take possession and occupy the property with the knowledge and consent of seller W. J. Sarver. In this regard, W. J. Sarver denies giving permission to Ms. Cronnon to occupy the property prior to closing. However, it is found herein and the testimony of Billy Hull and Respondent substantiate the fact that Emily Cronnon and Billy Hull visited Respondent's office during early May, 1985, to find out whether they could move into the Sarver property with their furnishings prior to closing. Initially, Ms. Diabo advised Cannon and Hull that she was not at liberty to permit them to move in. However, she told them that if they liked, they could phone Mr. Server and get his permission. This was done and it is found that Mr. Sarver gave his permission to Respondent to allow Ms. Cronnon and Billy Hull to occupy the premises prior to closing, provided they turned the utilities off and then had the same turned on in their name. This was done, and the contract purchaser (Cronnon) and her boyfriend, Billy Hull, moved in prior to the time that the transaction closed. Respondent received a $500 rental payment from the purchaser on August 19, 1985. (Respondent's Exhibits 1 and 2) Respondent deposited said check in an appropriate bank account and waited eleven (11) days for that check to clear. On August 30, 1985, she wrote a $500 check to the Sarvers indicating that the same was rental payment to them for the use of their property by Cronnon and Hull. Respondent customarily waits at least ten (10) days for any check to clear before she writes a check drawn on those same funds.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED: That the Administrative Complaint filed herein be DISMISSED. RECOMMENDED this 9th day of July, 1987, in Tallahassee, Leon County, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 9th day of July, 1987. APPENDIX Rulings on Petitioner's proposed findings: 1. Accepted as modified. 7. Rejected based on credible evidence herein which reveals that Emily Cathy Cronnon and her live-in boyfriend, Billy Hull, took possession and occupied the property with the prior knowledge and consent of seller, W. J. Sarver. Rejected based on credible evidence which reveals that Respondent did not conceal the rent payment, but rather deposited the rent payment until the funds cleared her bank and she immediately thereafter transmitted the proceeds to the Sarvers. Rejected as irrelevant and unnecessary to decide the issues posed. Rejected as a conclusion and not a finding of fact. Respondent's proposed findings and conclusions are largely a brief in the form of resolutions of credibility, conflicts, recommendations as to how those conflicts should be resolved, and conclusions in the form of ultimate findings of fact. As such, they are not specifically addressed in the Appendix, but were carefully considered and reviewed by the under signed in preparation of the Recommended Order. COPIES FURNISHED: JAMES H. GILLIS, ESQUIRE SENIOR ATTORNEY DIVISION OF REAL ESTATE POST OFFICE BOX 1900 ORLANDO, FLORIDA 32802 MICHAEL H. DAVIDSON, ESQUIRE WATSON & CLARK POST OFFICE BOX 11959 FORT LAUDERDALE, FLORIDA 33339 HAROLD HUFF, EXECUTIVE DIVISION OF REAL ESTATE POST OFFICE BOX 1900 ORLANDO, FLORIDA 32502 HONORABLE VAN B. 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
Recommendation Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the administrative complaint filed against H. Ernest Morris, Sr. be DISMISSED with prejudice. DONE and ENTERED this 3rd day of May, 1984, in Tallahassee, Florida. DONALD R. ALEXANDER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of May, 1984. COPIES FURNISHED: Tina Hipple, Esquire P. O. Box 1900 Orlando, Florida 32802 Carmine M. Bravo, Esquire 1450 State Road 434 Longwood, Florida 32750 Steven H. Coover, Esquire P. O. Drawer H Sanford, Florida 32771 Fred M. Roche, Secretary 130 North Monroe Street Tallahassee, Florida 32301 Mr. Harold R. Huff, Director Division of Real Estate 400 West Robinson Street Orlando, Florida 32801 ================================================================= AGENCY FINAL ORDER ================================================================= STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION Petitioner, vs. CASE NO. 0034049 DOAH NO. 83-3273 H. ERNEST MORRIS, SR. Respondent. /
The Issue The issues in this case are whether Respondent violated Sections 475.25(1)(a),(b), and (e) and 475.42(1)(a),(b), and (d), Florida Statutes (1997), by operating as a broker without holding a valid broker's license, operating as a broker while licensed as a salesperson, collecting money except in the name of his employer, and committing misrepresentation, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust; and, if so, what, if any, penalty should be imposed. (All Chapter and Section references are to Florida Statutes (1997) unless otherwise stated.)
Findings Of Fact Petitioner is the state agency responsible for the regulation and discipline of real estate licensees in the state. Respondent is licensed in the state as a salesperson pursuant to license number 0575377. The last license issued was issued as an involuntary inactive salesperson at 361 Godfrey Road Southeast, Palm Bay, Florida 32909. After March 31, 1995, Respondent's license as a salesperson became inactive after Respondent did not renew it. Between March 1994 and January 1997, Respondent was employed as a salesperson by Prestige Homes of Brevard, Inc. ("Prestige"). Prestige is a Florida corporation wholly owned by Mr. Mark Pagliarulo and Mr. John Wales. Prestige is engaged in the business of residential construction. Mr. G. Wayne Carter was the sponsoring broker for Respondent from March 1994 through January 1997. Mr. Carter was licensed in the state as a broker until his license was revoked in 1998. Between March 1994 and January 1997, Prestige paid Respondent a sales commission of three percent of the sales price of each home constructed by Prestige and sold by Respondent. Prestige paid Respondent a weekly draw against commissions earned by Respondent. Mr. Carter, the sponsoring broker for Respondent, had no knowledge of the payments received by Respondent. Respondent did not deposit any sales commissions to Mr. Carter's escrow account. Respondent participated in various activities that violate relevant provisions in Sections 475.25 and 475.42. Respondent collected $1,100 from Marcia Pitts for a sprinkler system, a $1,000 initializing fee from Linda and David Grogan, and a $1,000 "design fee" from Mrs. Robert Leudesdorf. Respondent converted the foregoing sums to his personal use without the knowledge of his employers at Prestige and without the knowledge of Respondent's broker. Respondent operated as a broker without a valid broker's license, while licensed as a salesperson, and collected money for himself rather than for his broker or his employer. Respondent routinely designed variations on a "custom" home design without his employers' knowledge. Respondent then charged the purchasers approximately $1,000 for the plan changes. Respondent routinely deducted the $1,000 fee from the contract price Prestige charged the customer and converted the $1,000 fee directly to his personal use. Respondent failed to disclose to the purchasers that he was not acting on behalf of Prestige. The purchasers believed they were dealing with Prestige. The omission and failure to disclose amounted to a misrepresentation, false pretense, and breach of trust in a real estate transaction. For a time, Respondent's employers at Prestige condoned Respondent's "free lance" activities. Respondent's employers reduced Respondent's draws against commissions by the amount of the "free lance" fees converted by Respondent. After Respondent failed to discontinue his "free lance" activities, however, Prestige terminated Respondent's employment.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Commission enter a final order finding Respondent guilty of violating Sections 475.25(1)(a),(b), and (e) and 475.42(1)(a),(b), and (d), and revoking Respondent's license. DONE AND ENTERED this 31st day of March, 1999, in Tallahassee, Leon County, Florida. DANIEL MANRY 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 31st day of March, 1999. COPIES FURNISHED: Steven Johnson, Esquire Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Steven Michael Wallace 361 Godfrey Road Palm Bay, Florida 32909 James Kimbler, Acting Division Director Division of Real Estate Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 William Woodyard, Acting General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
The Issue The issue to be resolved herein concerns whether the Petitioners are entitled to an award of attorney's fees in this proceeding. Embodied in that general issue are questions concerning whether the Petitioners are the prevailing parties; whether they meet the definition of "small business" parties, including the net worth amounts, enumerated in Section 57.111, Florida Statutes, as well as whether the disciplinary proceeding against both Petitioners was "substantially justified". See Section 57.111(3)(e) , Florida Statutes.
Findings Of Fact The Respondent is an agency of the State of Florida charged with licensing and regulating the practices of real estate salesmen and brokers by the various provisions of Chapter 475, Florida Statutes. Included within those duties is the duty to investigate conduct by realtors allegedly in violation of Chapter 475 and related rules and to prosecute administrative penal proceedings for which probable cause is found as a result of such investigations. At times pertinent hereto, both Ms. Maxwell and Ms. Cosyns, (then Pauline Sealey) were licensed realtors working as independent contractors for Mariner Properties, Inc. and V.I.P. Realty Inc. The complete file of the underlying proceeding DOAH Case No. 86-0140, was stipulated into evidence. That file included the Administrative Complaint filed against these Respondents and the Recommended and Final Order, which Final Order adopted the Recommended Order. The findings of fact in that Recommended Order are incorporated by reference and adopted herein. During the Petitioner's case, counsel for Petitioner voluntarily reduced the attorney's fees bills for both Petitioners such that Ms. Maxwell's bill is the total amount of $2,695.50 and Ms. Cosyns' bill is $17,200, rather than the original amounts submitted in the affidavit. Respondent acknowledged in its proposed Final Order that the fees and costs submitted by the Respondent were thus reasonable. The testimony the Petitioners presented through depositions, transcripts of which were admitted into evidence into this proceeding, was unrefuted. That testimony demonstrates that both Ms. Cosyns and Ms. Maxwell were prevailing parties in the administrative proceeding referenced herein brought by the Respondent, Department of Professional Regulation. They were individually named as Respondents in the Administrative Complaint whereby their professional licenses were subjected to possible suspension or revocation for alleged wrong doing on their part. There is no dispute that they were exonerated in that proceeding and are thus prevailing parties within the meaning of Section 57.111, Florida Statutes. The Petitioners are also "small business parties". In that connection, they both were independently licensed Real Estate professionals during times pertinent to the underlying proceeding and were acting in the capacity of independent contractors for all the activities with which the administrative complaint was concerned. Each established that her net worth is below the limit provided by Section 57.111 as an element of the definition of "small business party". The reasonableness of the fees having been established in the manner found-above and the Petitioners having established that they meet the definitional requirements of prevailing small business parties, there remains to be determined the issue of whether the proceedings against the two Petitioners were "substantially justified", that is, whether the proceeding had a "reasonable basis in law and fact at the time it was initiated by a State agency." See Section 57.111(3)(e), Florida Statutes. The facts concerning each Petitioner's case regarding the three counts of the Administrative Complaint relating to them are as found in the Recommended Order incorporated by reference herein. Respondent Maxwell was charged in the complaint with having worked in conjunction with an office manager, Mr. Hurbanis of V.I.P. Realty, in conspiring with him to submit a fraudulent real estate sales contract to a lending institution for purposes of financing. This allegedly involved submitting a contract to the lending institution with an inflated purchase price in order to secure one hundred percent financing, the scheme being more particularly described in that portion of the findings of fact in the Recommended Order related to Jean Maxwell. In fact, Ms. Maxwell did not work in the realty office as charged in the Administrative Complaint, but rather was employed by Mariner Properties, which may have been a related company. The contract in question, although alleged to be fraudulent was, in fact, a bona fide contract which was a legitimate part of the Real Estate transaction submitted to the bank for financing purposes, about which the bank was kept fully advised. All details of the transaction were disclosed to the lender. Maxwell was specifically charged with concealing the true contract from the lender in order to enhance the percentage of the purchase price that the bank would finance, done by allegedly inflating the purchase price in a second contract submitted to the bank. It was established in the disciplinary proceeding that no such concealment ever took place. In fact, Ms. Maxwell was purchasing a lot from her own employer, Mariner Properties. Two contracts were indeed prepared for the purchase of Lot 69, a single family lot on Sanibel Island. In fact, however, the difference of $42,875 and $49,500 in the stated purchase price, as depicted on the two contracts, was the result of continuing negotiations between Ms. Maxwell and the seller, who was also her employer. The difference in the two prices depicted on the contracts was the result of, in effect, a set-off to the benefit of Ms. Maxwell, representing certain employee discounts and real estate commission due from the employer and seller to Ms. Maxwell, the purchaser. As Petitioners' composite Exhibit 5 reflects, the lender involved, North First Bank of Ft. Myers, Florida, was fully apprised of all the details concerning this transaction at the time it was entered into and the loan commitment extended and closed. Mr. Allan Barnes, the Assistant Vice President of North First Bank revealed, in the letter contained in this exhibit in evidence, that there was no concealment or misrepresentation of the facts to his institution by Ms. Maxwell. This letter is dated April 18, 1984. The other related letter in that exhibit, of May 2, 1984 from attorney Oertel to attorney Frederick H. Wilson of the Respondent agency, thus constitutes notice to the agency well before the complaint was filed, that no concealment or misrepresentation to the lender involved had occurred and the charges were requested to be dismissed. In spite of the fact that the agency was on notice of this turn of events well before the filing of the Administrative Complaint, it proceeded to file the complaint and to prosecute it all the way up to the date of hearing, requiring Ms. Maxwell's attorney to attend the hearing to defend her interests. At the hearing, counsel for the Department acknowledged that there was no basis for prosecuting Ms. Maxwell and voluntarily dismissed the complaint as to her. The Respondent's witness, Investigator Harris, in his deposition taken September 11, 1984, acknowledged that he did not discuss any details concerning the investigation, with attorney Frederick Wilson, who prepared the complaint, nor did he confer with him by telephone or correspondence before the filing of the complaint. Therefore, the complaint was prepared solely on the basis of the investigative report. The investigative report came into evidence as Respondent's Exhibit 1. It reveals that Mr. A. J. Davis the president of Mariner Group and Mariner Properties, who was Jean Maxwell's employer and the owner of the lot in question, signed one contract and his Executive Vice President signed the other. In spite of this, the investigative report does not reveal that the investigator conferred with either Ms. Maxwell, or the sellers concerning this transaction. He conducted a general interview of A.J. Davis concerning the alleged "problem" in his office of "double contracting," but asked him no questions and received no comment about the Jean Maxwell transaction whatever. Nor did the investigator confer with Mr. Allen Barnes or any other representative of North First Bank. If the investigation had been more complete and thorough, he would have learned from Mr. Barnes, if from no one else, that the bank had knowledge of both contracts and all details of the transaction underlying them and there had been no concealment or misrepresentation of the facts regarding the transaction by Ms. Maxwell. This information was learned by attorney Oertel as early as April 18, 1984 by Mr. Barnes' letter, referenced above, and it was communicated to the agency by Mr. Oertel on May 2, 1984. Nevertheless, the complaint was filed and prosecuted through to hearing. Therefore, the prosecution and filing of the Administrative Complaint were clearly not substantially justified. If the Department had properly investigated the matter it would have discovered the true nature of the transaction as being a completely bona fide real estate arrangement. Former Respondent, Pauline Sealy Cosyns was charged with two counts, III and V, in the Administrative Complaint at issue. One count alleged, in essence, that Ms. Sealey had engaged in a similar fraudulent contract situation regarding the sale of her residence to a Mr. and Mrs. Thomas Floyd. The evidence in that proceedings revealed no concealment of any sales contract occurred whatever with regard to the lending institution or anyone else. The facts as revealed at hearing showed Ms. Cosyns and the Floyds, through continuing negotiations after the original sales contract was entered into, amended that contract and executed a second one, in order to allow Ms. Cosyns to take back a second mortgage from the Floyds. This was necessary because Mr. Floyd, an author, was short of the necessary down payment pursuant to the terms of the original contract, because his annual royalty payment from his publishers had not been received as the time approached for closing. The second contract was executed to allow for a second mortgage in favor of the seller, Ms. Cosyns, in order to make up the amount owed by the Floyds on the purchase price agreed upon, above the first mortgage amount. The testimony and evidence in the disciplinary proceeding revealed unequivocally that the lending institution, Amerifirst Mortgage Company, was fully apprised of the situation and of the reason for the two contractual agreements. The $24,000 second mortgage in question is even depicted on the closing statement issued by that bank. There was simply no concealment and no effort to conceal any facts concerning this transaction from the lender or from anyone else. The investigation conducted was deficient because the investigator failed to discuss this transaction with the lender or with the purchasers. He discussed the matter with Ms. Sealy-Cosyns and his own deposition testimony reveals, as does his investigative report, that he did not feel that he got a complete account of the transaction from her. She testified in her deposition, taken prior to the instant proceeding, that she indeed did not disclose all facts of the transaction to him because she was concerned that he was attempting to apprehend her in some "legal impropriety". Therefore, she was reluctant to be entirely candid. The fact remains, however, that had he conducted a complete investigation by conferring with the lender and the purchasers, he would have known immediately, long before the Administrative Complaint was filed and the matter prosecuted, that there was absolutely no basis for any probable cause finding that wrong-doing had occurred in terms of Section 475.25(1)(b), Florida Statutes. Thus, the facts concerning the prosecution as to Count III against Pauline Sealy-Cosyns, as more particularly delineated in the findings of fact in the previous Recommended Order, reveal not only that Ms. Cosyns was totally exonerated in the referenced proceeding, but that there was no substantial basis for prosecuting her as to this count at all. Concerning Count V against Ms. Cosyns, it was established through the evidence at the hearing in the disciplinary case that she was merely the listing agent and did not have any part to play in the drafting of the contract nor the presenting of it to the lender. Because there was no evidence adduced to show that she had any complicity or direct involvement in any fraudulent conduct with regard to the transaction involved in Count V of the Administrative Complaint at issue she was exonerated as to that count as well. It is noteworthy here that a statement was made by counsel for the agency, appearing at pages 20 and 21 of the transcript of the proceeding involving the Administrative Complaint, which indicates that the agency, based upon its review of certain documents regarding Counts III and V, before hearing, felt that indeed there might not be a disputed issue of material fact as to Mrs. Cosyns. The agency, although acknowledging that a review of the documents caused it to have reason to believe that it was unnecessary to proceed further against Ms. Cosyns nevertheless did not voluntarily dismiss those counts and proceeded through hearing. Be that as it may, the investigation revealed that Ms. Cosyns acknowledged that she knew that there were two contractual documents involved, but the investigation also revealed that Ms. Cosyns was only the listing agent. The selling agent was Mr. Parks. The investigation revealed through interviews with Ms. Cosyns, Mr. Parks and Mr. Hurbanis, the office Manager of V.I.P. Realty, that Ms. Cosyns, as listing agent, was merely present when the offer from the buyers was communicated to the office manager, Mr. Hurbanis, and ultimately to the sellers, the Cottrells. There was no reason for the investigator to believe that Ms. Cosyns had anything to do with the drafting of the contracts nor with the communication of them to the lending institution involved. That was done by either Mr. Parks or Mr. Hurbanis or by the buyers. The investigation (as revealed in the investigative report) does not show who communicated the contract in question to the lender. The investigation was simply incomplete. If the investigator had conferred with the buyers, the sellers and especially the lender, he could have ascertained-whether the lender was aware of all the facts concerning this transaction and whether there was any reason to believe that Ms. Cosyns had anything to do with the arrangement and the details of the transaction. It was ultimately established, by unrefuted evidence at hearing, that indeed Ms. Cosyns did not have anything to do with the transaction, nor the manner in which it was disclosed to the lender. The fact that she was aware that two contracts had been prepared did not give a reasonable basis for the investigator to conclude that she had engaged in any wrong-doing. The report of his interviews with Ms. Cosyns, Mr. Hurbanis and Mr. Parks, as well as Donna Ross, does not indicate that he had a reasonable basis to conclude that Ms. Cosyns had engaged in any fraudulent conduct with regard to the transaction, including the conveyance of a bogus contract to the lending institution involved, nor for that matter, that Mr. Hurbanis or Mr. Parks engaged in such conduct. In order to ascertain a reasonable basis for concluding whether Ms. Cosyns was involved in any wrongful conduct, he would have had to obtain more information than he did from these people or confer with the lender, the buyer or the seller, or all of these approaches, before he could have a reasonable basis to recommend to the prosecuting agency that an Administrative Complaint be filed against her concerning this transaction. In fact, he did not do so, but the Administrative Complaint was filed and prosecuted through hearing anyway, causing her to incur the above-referenced attorney's fees. It thus has not been demonstrated that there was any substantial basis for the filing and prosecution of Count V of the Administrative Complaint against Ms. Cosyn. Thus she is entitled to the attorneys fees referenced above with regard to the prosecution of the Administrative Complaint in question.
