The Issue Pursuant to chapter 287, Florida Statutes, and section 255.25, Florida Statutes,1/ the Department of Management Services (DMS) released an Invitation to Negotiate for a contract to provide tenant broker and real estate consulting services to the State of Florida under Invitation to Negotiate No. DMS-12/13-007 (ITN). After evaluating the replies, negotiating with five vendors, and holding public meetings, DMS posted a notice of intent to award a contract to CBRE, Inc. (CBRE) and Vertical Integration, Inc. (Vertical). At issue in this proceeding is whether DMS’s intended decision to award a contract for tenant broker and real estate consulting services to CBRE and Vertical is contrary to DMS’s governing statutes, its rules or policies, or the ITN’s specifications, or was otherwise clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based on the demeanor and credibility of the witnesses and other evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: Background5/ DMS released Invitation to Negotiate No. DMS-12/13-007 on March 18, 2013, and released a revised version of the ITN on May 14, 2013, for the selection of a company to provide tenant broker and real estate consulting services to the State of Florida. Thirteen vendors responded to the ITN. The replies were evaluated by five people: Bryan Bradner, Deputy Director of REDM of DMS; Beth Sparkman, Bureau Chief of Leasing of DMS; Rosalyn (“Roz”) Ingram, Chief of Procurement, Land and Leasing of the Department of Corrections; Clark Rogers, Purchasing and Facilities Manager of the Department of Revenue; and Janice Ellison, Section Lead in the Land Asset Management Section of the Department of Environmental Protection. Five vendors advanced to the negotiation stage: Cushman (score of 87), JLL (score of 87), CBRE (score of 87), Vertical (score of 89), and DTZ (score of 86). DTZ is not a party to this proceeding. The negotiation team consisted of Beth Sparkman, Bryan Bradner, and Roz Ingram. Janice Ellison participated as a subject matter expert. DMS held a first round of negotiations and then held a public meeting on July 16, 2013. DMS held a second round of negotiations and then held a second public meeting on August 1, 2013. A recording of this meeting is not available, but minutes were taken. Also on August 1, 2013, DMS posted Addendum 8, the Request for Best and Final Offers. This Addendum contained the notice that “Failure to file a protest within the time prescribed in section 120.57(3) . . . shall constitute a waiver of proceedings under chapter 120 of the Florida Statutes.” The vendors each submitted a BAFO. DMS held a final public meeting on August 14, 2013, at which the negotiation team discussed the recommendation of award. All three members of the negotiation team recommended Vertical as one of the two vendors to receive the award. For the second company, two of the three negotiation team members recommended CBRE and one negotiation team member recommended JLL. DMS prepared a memorandum, dated August 14, 2013, describing the negotiation team’s recommendation of award. The memorandum comprises the following sections: Introduction; The Services; Procurement Process (subsections for Evaluations and Negotiations); Best value (subsections for Selection Criteria, Technical Analysis, Price Analysis, and Negotiation Team’s Recommendation); and Conclusion. Attached to the memorandum as Attachment A was a memorandum dated April 30, 2013, appointing the evaluation and negotiation committees, and attached as Attachment B was a spreadsheet comparing the vendors’ BAFOs. DMS posted the Notice of Intent to Award to CBRE and Vertical on August 16, 2013. Cushman and JLL timely filed notices of intent to protest the Intent to Award. On August 29, 2013, JLL timely filed a formal protest to the Intent to Award. On August 30, 2013, Cushman timely filed a formal protest to the Intent to Award. An opportunity to resolve the protests was held on September 9, 2013, and an impasse was eventually reached. On October 10, 2013, DMS forwarded the formal protest petitions to DOAH. An Order consolidating JLL’s protest and Cushman’s protest was entered on October 15, 2013. Scope of Real Estate Services in the ITN Prior to the statutory authority of DMS to procure real estate brokerage services, agencies used their own staff to negotiate private property leases. Section 255.25(h), Florida Statutes, arose out of the legislature’s desire for trained real estate professionals to assist the State of Florida with its private leasing needs. The statutorily mandated use of tenant brokers by agencies has saved the state an estimated $46 million dollars. The primary purpose of the ITN was to re-procure the expiring tenant broker contracts to assist state agencies in private sector leasing transactions. Once under contract, the selected vendors compete with each other for the opportunity to act on behalf of individual agencies as their tenant broker, but there is no guarantee particular vendors will get any business. The core of the services sought in the ITN was lease transactions. The ITN also sought to provide a contract vehicle to allow vendors to provide real estate consulting services, including strategies for long and short-term leases, space planning, and space management as part of the negotiation for private leases. As part of providing real estate consulting services, vendors would also perform independent market analyses (IMAs) and broker opinions of value (BOVs) or broker price opinions (BPOs). In almost all instances, this would be provided at no charge as part of the other work performed for a commissionable transaction under the resulting contract. However, the resulting contract was designed to allow agencies to ask for an IMA or BOV to be performed independently from a commissionable transaction. In addition to the primary leasing transactions, the contract would also allow state agencies to use the vendors for other services such as the acquisition and disposition of land and/or buildings. These services would be performed according to a Scope of Work prepared by the individual agency, with compensation at either the hourly rates (set as ceiling rates in the ITN), set fees for the service/project, or at the percentage commission rate negotiated between the vendor and the individual agency. However, these services were ancillary to the main purpose of the contract, which was private leasing. In Florida, most state agencies are not authorized to hold title to land. However, the Department of Environmental Protection (DEP) serves as staff for the Board of Trustees of the Internal Improvement Trust Fund (“Board”), which holds title to land owned by the State of Florida. In that capacity, DEP buys and sells land and other properties on behalf of the Board. DEP recently began using the current DMS tenant broker contract for acquisitions and dispositions. The process was cumbersome under the current contract, so DEP asked to participate in the ITN in order to make the contract more suitable for their purposes. The ITN was revised to include DEP’s proposed changes, and DMS had Ms. Ellison serve first as an evaluator and later as a subject matter expert. At hearing, Ms. Ellison testified that she was able to participate fully, that her input was taken seriously, and that the proposed contract adequately addressed DEP’s concerns. While DEP anticipated that under the proposed contract it would use more BOVs than it had previously, there was no guarantee that DEP would use the proposed contract. DEP is not obligated to use the contract and maintains the ability to procure its own tenant brokers. Additionally, administration and leadership changes may cause a switch of using in-house agency employees instead of tenant brokers to perform real estate acquisition and disposition services. Specifics of the ITN The ITN directed vendors to submit a reply with the following sections: a cover letter; completed attachments; pass/fail requirements; Reply Evaluation Criteria; and a price sheet. The Reply Evaluation Criteria included Part A (Qualifications) and Part B (Business Plan). Qualifications were worth 40 points, the Business Plan was worth 50 points, and the proposed pricing was worth 10 points. For the Business Plan, the ITN requested a detailed narrative description of how the vendors planned to meet DMS’s needs as set forth in section 3.01, Scope of Work. The ITN requested that vendors describe and identify the current and planned resources and employees to be assigned to the project and how the resources would be deployed. Section 3.01, Scope of Work, states that the primary objective of the ITN is to “identify brokers to assist and represent the Department and other state agencies in private sector leasing transactions.” The ITN states that the contractor will provide state agencies and other eligible users with real estate transaction and management services, which include “document creation and management, lease negotiation and renegotiation, facility planning, construction oversight, and lease closeout, agency real estate business strategies, pricing models related to relocation services, project management services, acquisition services, and strategic consulting.” Id. The ITN also specifies: Other real estate consulting services such as property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales or those identified in the reply or negotiation process and made part of the Contract (e.g., financial services, facilities management services, lease v. buy analyses). The ITN lists the following duties the contractor will perform: Act as the state’s tenant broker, to competitively solicit, negotiate and develop private sector lease agreements; Monitor landlord build-out on behalf of state agencies; Provide space management services, using required space utilization standards; Provide tenant representation services for state agencies and other eligible users during the term of a lease; Identify and evaluate as directed strategic opportunities for reducing occupancy costs through consolidation, relocation, reconfiguration, capital investment, selling and/or the building or acquisition of space; Assist with property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding property, property auctions and direct sales; and Provide requested related real estate consulting services. The ITN set the commission percentage for new leases at 4 percent for years 1-10 and 2 percent for each year over 10 years; 2 percent for lease renewals, extensions, or modifications; and 2 percent for warehouse or storage space leases. Id. For “other services,” the ITN states: With respect to all other services (e.g., space management services, general real estate consulting services, property acquisitions, dispositions, general property consulting, property analysis and promotions, property marketing, property negotiation, competitive bidding or property, property auctions and direct sales), compensation will be as outlined in an agency prepared Scope of Work and will be quoted based on hourly rates (set as ceiling rates in this ITN), set fees for the service/project or by percentage commission rate as offered and negotiated by the broker and the using agency. The ITN also required that vendors specify the number of credit hours to be given annually to DMS. Each vendor gives a certain number of credit hours at the start of each year under the contract. The state earns additional credit hours as the vendors perform transactions. DMS manages the pool of accumulated credit hours and gives them to individual agencies to use on a case-by-case basis as payment for individual projects. These credit hours are commonly allocated to pay for IMAs and BOVs that are not part of commissionable transactions. With the exception of one legislatively mandated project, DMS has never exhausted its pool of credit hours. The ITN further specified that IMAs and BOVs must be offered at no cost when performed as part of a commissionable transaction. Historically, most IMAs and BOVs are performed as part of a commissionable transaction. They have only been performed separately from a commissionable transaction a handful of times under the current contract, and many of these were still provided at no cost through the allocation of free credit hours available to the agencies. Therefore, most IMAs and BOVs to be performed under the proposed contract will likely be at no cost. The ITN states that points to be awarded under the price criterion will be awarded based on the number of annual credit hours offered and the commission rate paid per transaction per hour of commission received. The ITN further provides that DMS will evaluate and rank replies in order to establish a competitive range of replies reasonably susceptible to award, and then the team will proceed to negotiations. Regarding negotiations, the ITN states: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent’s demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the section criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. The ITN also states: At the conclusion of negotiations, the Department will issue a written request for best and final offer(s) (BAFOs) to one or more of the Respondents with which the negotiation team has conducted negotiations. At a minimum, based upon the negotiation process, the BAFOs must contain: A revised Statement of Work; All negotiated terms and conditions to be included in Contract; and A final cost offer. The Respondent’s BAFO will be delivered to the negotiation team for review. Thereafter, the negotiation team will meet in a public meeting to determine which offer constitutes the best value to the state based upon the selection criteria. The Department does not anticipate reopening negotiations after receiving BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the State. The ITN and draft contract permit subcontractors to perform under the contract and provide an avenue for a contractor to add subcontractors by submitting a written request to DMS’s contract manager with particular information. Best and Final Offers After the conclusion of negotiations, the negotiation team requested each vendor to submit a BAFO, to be filled out in accordance with the RBAFO format. The RBAFO noted that each vendor would get a set percentage commission for leasing transactions, but asked vendors to submit their prices for IMAs, BOVs, and BPOs performed outside a commissionable transaction and to submit the number of annual credit hours vendors would give DMS at the start of the new contract. In an effort to increase potential savings to the state, DMS lowered the percentage rates of the commissions for lease transactions in the RBAFO below the rates initially set in the ITN. By selecting only two vendors instead of three, the additional potential volume for each vendor on the contract could support the lower commission rates being requested of tenant brokers. The state would ultimately save money due to the impact of the reduced commissions on the overall economic structure of each lease. Beth Sparkman, Bureau Chief of Leasing of DMS, expounded on the rationale for reducing the number of vendors under the new contract to two: The Court: To me, it’s counterintuitive that having fewer vendors would result in more favorable pricing for the state of Florida; and yet you said that was the anticipated result of reducing the number of vendors from three to two – The Witness: Correct. The Court: -- for the new contract. I’m unclear. Tell me the basis for the team’s anticipation that having fewer vendors would result in better pricing. The Witness: When the original ITN was released, it had the same percentages in there that are under the current contract. And I’ll talk, for context, new leases, which right now is at 4 percent. So the discussion was – and 4 percent is typical of the industry. That’s typical for what the industry pays across the board. So the desire was to reduce the commission, to reduce those commission amounts to drive that percentage down. So we went out with the first BAFO that had a range that said for leases that cost between zero – and I can’t remember – zero and a half million, what would your percentage be? Thinking that when we had a tiered arrangement, those percentages would come down. They really didn’t. So when we sat down as a team and discussed: Well, why didn’t they – and you know, because typical is 4 percent. So we came back and said: Well, if we reduce the percentage on new leases to 3.25 but restrict the reward to two vendors, each vendor has the potential to make as much money as they would have made at 4 percent, but the savings would be rolled back into the state. Each of the five vendors invited to negotiate submitted a BAFO, agreeing as part of their submissions to comply with the terms and conditions of the draft of the proposed contract and agreeing to the lowered set percentage commission rates in the RBAFO. The RBAFO listed selection criteria by which the vendors would be chosen, to further refine the broad criteria listed in the ITN. The RBAFO listed the following nine items as selection criteria: performance measures (if necessary), sliding scale/cap, IMA set fee, broker’s opinion of value, balance of line (can be quoted per hour or lump sum), contract concerns, credit hours (both annual and per deal hour), hourly rates, and vendor experience and capability. CBRE’s BAFO submission followed the format indicated in the RBAFO, but CBRE included an additional section giving its proposed commission rates for acquisitions and dispositions of land. These rates were also submitted by other vendors at other parts of the procurement process, but CBRE was the only vendor to include such rates as part of its BAFO submission. DMS considered this addition a minor irregularity that it waived. In its BAFO submission, Cushman offered a three-tiered approach to its pricing for IMAs and BOVs. For the first tier, Cushman offered to perform IMAs and BOVs for free as part of a commissionable transaction. This is redundant, as the ITN required all vendors to perform IMAs and BOVs at no cost when part of a commissionable transaction. For the second tier, Cushman offered to perform IMAs and BOVs at no cost when the user agency has previously hired Cushman on tenant representative work. Ms. Sparkman testified that this provision was unclear, as Cushman did not define the scope of this provision or what amount of work qualified the agency for free services. For the third tier, Cushman offered to perform IMAs and BOVs for $240 when not part of a commissionable transaction for an agency with which it had never done business. Best Value Determination The five BAFOs were sent to the negotiation team for review on August 8, 2013, and on August 14, 2013, the team met in a public meeting to discuss the BAFOs, consider the selection criteria, discuss the team’s award recommendation, and draft a written award recommendation memorandum. During the August 14, 2013, meeting the team determined that CBRE and Vertical represented the best value to the state, by a majority vote for CBRE and by a unanimous vote for Vertical. Ms. Sparkman stated at the meeting that, from her perspective, CBRE and Vertical represented a better value than the other vendors because they were more forward thinking in their long term business strategies for managing Florida’s portfolio. Also at this meeting, Ms. Sparkman noted that CBRE’s prices for IMAs and BOVs were somewhat high but that she would attempt to convince CBRE to lower its prices during the contract execution phase. This was part of an attempt to equalize costs to ensure user agencies selected vendors based on individual needs rather than cost. However, CBRE represented the best value to the state regardless of whether its pricing changed. At hearing, Ms. Sparkman testified that if CBRE had refused to lower its pricing, DMS would still have signed a contract with them based on the pricing submitted in its BAFO. Ms. Sparkman also stated at the public meeting that if she were unable to come to contract with both CBRE and Vertical, she would arrange for another public meeting to select a third vendor with whom to proceed to the contract execution phase. This statement did not refer to DMS selecting a third vendor to replace CBRE should CBRE refuse to lower its price, but rather reflected the possibility that during the contract execution phase, DMS and either one of the vendors could potentially be unable to sign a contract because the vendor was unwilling to execute the written terms and conditions. The “contract negotiations” referenced during the public meeting are the remaining processes to be worked out during the contract execution phase and are distinct and separate from the negotiation phase. At hearing, Ms. Sparkman testified that in the past, vendors have refused to sign a contract because their legal counsel was unwilling to sign off on what the business representatives agreed to. Thus, if either CBRE or Vertical refused to sign the contract altogether, DMS would potentially have selected a third-place vendor in order to have a second vendor on the contract, according to Ms. Sparkman. International experience weighed in favor of CBRE and Vertical, according to team member comments made at the public meeting. Although the phrase “international experience” was not specifically listed in the selection criteria of the ITN or RBAFO, many vendors highlighted their international experience as part of the general category of vendor experience. Vendor experience and capability is specified in both the ITN and RBAFO as part of the selection criteria. Ms. Sparkman testified that international experience is indicative of high quality general vendor experience because international real estate market trends change more rapidly than domestic market trends. None of the negotiation team members recommended Cushman for a contract award, and in fact, Cushman's name was not even discussed at the award meeting. The Award Memorandum Also during the August 14, 2013, public meeting the negotiation team prepared a memorandum setting forth the negotiation team’s best value recommendation of CBRE and Vertical, and many of its reasons for the recommendation. There was no requirement that the memorandum list every single reason that went into the decision. For example, the memorandum did not state that the team found CBRE and Vertical’s focus on long term strategies more impressive than Cushman’s focus on past performance under the current contract. The award memorandum included a “Selection Criteria” section which simply repeated the nine selection criteria that had been previously identified in the RBAFO. The memorandum then went on to include a section labeled “B. Technical Analysis” that stated: Analysis of pricing is provided in section C below. As to the remaining selection criteria items, the Team identified the following key elements for the service to be provided: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. The selection criteria provided above were used by the Team to make its best value recommendation. Ms. Sparkman testified that while the choice of wording may have been imprecise, the items listed in the Technical Analysis section were simply elaborations of the selection criteria in the ITN and RBAFO, and not new criteria. The first four are subsumed within vendor experience and capability, and the fifth was specifically listed in the RBAFO. Indeed, Cushman’s Senior Managing Director testified at hearing that Cushman had addressed the first four items in their presentation to DMS during the negotiation phase to demonstrate why Cushman should be chosen for the contract. The memorandum failed to note that CBRE had included non-solicited information in its BAFO regarding proposed rates for the acquisition and disposition of land. However, the negotiation team considered CBRE’s inclusion of these proposed rates a minor irregularity that could be waived in accordance with the ITN and addressed in the contract execution phase, since those rates were for ancillary services, and there was no guaranteed work to be done for DEP under that fee structure. The memorandum included a chart, identified as Attachment B, that compared the proposed number of credit hours and some of the pricing for IMAs and BOVs submitted by the vendors in their BAFOs. The chart listed Cushman’s price for IMAs and BOVs as $240 and failed to include all the information regarding the three-tiered approach to IMAs and BOVs Cushman listed in its BAFO. However, Ms. Sparkman testified that the chart was meant to be a side-by-side basic summary that compared similar information, not an exhaustive listing. The Cushman Protest Negotiations After Award of the Contract Cushman alleges that DMS’s selection of CBRE violates the ITN specifications because DMS selected CBRE with the intent of conducting further negotiations regarding price, which provided CBRE with an unfair advantage. Cushman further argues that the procedure of awarding to one vendor and then possibly adding another vendor if contract negotiations fail violates Florida’s statutes and the ITN. Amended Pet. ¶¶ 23, 28 & 31. Section 2.14 of the ITN specifically reserved DMS's right to reopen negotiations after receipt of BAFOs if it believed such was in the best interests of the state. Specifically, section 2.14 A. provides: The highest ranked Respondent(s) will be invited to negotiate a Contract. Respondents are cautioned to propose their best possible offers in their initial Reply as failing to do so may result in not being selected to proceed to negotiations. If necessary, the Department will request revisions to the approach submitted by the top-rated Respondent(s) until it is satisfied that the contract model will serve the state’s needs and is determined to provide the best value to the state. The statements made by Ms. Sparkman at the August 14, 2013, public meeting and in the award memorandum, that DMS would attempt to reduce CBRE's prices for ancillary services during the contract execution process were not contrary to the ITN or unfair to the other vendors. Both Ms. Sparkman and Mr. Bradner, the two negotiation team members who voted to award to CBRE, testified that they recommended CBRE as providing the best value even considering its arguably higher prices for ancillary services. Ms. Sparkman further confirmed that even if CBRE refused to lower its prices during the contract execution phase, DMS would still sign the contract, as CBRE's proposal would still represent the best value to the state. The anticipated efforts to obtain lower prices from CBRE were simply an attempt to obtain an even better best value for the state. Ms. Sparkman also testified that section 2.14 F. allowed continued negotiations, even though it was silent as to timeframe. Paragraph F states: In submitting a Reply a Respondent agrees to be bound to the terms of Section 5 – General Contract Conditions (PUR 1000) and Section 4 – Special Contract Conditions. Respondents should assume those terms will apply to the final contract, but the Department reserves the right to negotiate different terms and related price adjustments if the Department determines that it provides the best value to the state. Ms. Sparkman also cited section 2.14 I. as authority for reopening negotiations following receipt of the BAFO’s. That section provides: The Department does not anticipate reopening negotiations after receiving the BAFOs, but reserves the right to do so if it believes doing so will be in the best interests of the state. Ms. Sparkman’s statement that if DMS failed, for any reason, to successfully contract with either of the two vendors selected, it would consider pulling in another vendor, is not inconsistent with the clear language of the ITN. Selection Criteria Cushman alleges that DMS used criteria to determine the awards that were not listed in the ITN or the RBAFO. Amended Pet. ¶ 25. Section 2.14 E of the ITN established broad selection criteria, stating: The focus of the negotiations will be on achieving the solution that provides the best value to the state based upon the selection criteria and the requirements of this solicitation. The selection criteria include, but are not limited to, the Respondent's demonstrated ability to effectively provide the services, technical proposal and price. The Department reserves the right to utilize subject matter experts, subject matter advisors and multi-agency or legislative advisors to assist the negotiation team with finalizing the selection criteria. The negotiation process will also include negotiation of the terms and conditions of the Contract. (emphasis added). Following the negotiations, and with the assistance of its subject matter expert, the negotiation team provided in the RBAFO additional clarity as to the selection criteria, and identified the "Basis of Award/Selection Criteria" as follows: Performance Measures (if necessary) Sliding scale/cap IMA set fee Broker's opinion of value Balance of line (can be quoted per hour or lump sum) Contract concerns Credit hours (both annual and per deal hour) Hourly rates Vendor experience and capability The foregoing selection criteria, as well as the selection criteria stated initially in the ITN, make clear that pricing was only one of the criteria upon which the award was to be made. Indeed, Cushman's representative, Larry Richey, acknowledged during his testimony that criteria such as "Performance Measures," "Contract Concerns," and "Vendor Experience and Capability" did not refer to pricing, but rather to the expected quality of the vendor's performance if awarded the contract. As the principal draftsman of the ITN and DMS's lead negotiator, Ms. Sparkman explained that the RBAFO's statement of the selection criteria was intended to provide greater detail to the broad selection criteria identified in the ITN, and was used by the negotiation team in making its best value determination. Ms. Sparkman further testified that the best value determination resulted from the negotiation team's lengthy and extensive evaluation of the vendors' initial written replies to the ITN, review of the vendors' qualifications and comprehensive business plans, participation in approximately two and a half hours of oral presentations by each vendor (including a question and answer session with regard to the proposed implementation and management of the contracts), and a review of the vendors' BAFOs. Applying the selection criteria contained in the ITN and the RBAFO, the negotiation team selected Vertical for several reasons, including its performance indicators, employees with ADA certification, computer programs and employee training not offered by other vendors, its presence in Florida, and the strength of its business plan and presentation. Similarly, the negotiation team selected CBRE for an award based on the strength of its ITN Reply, its broad look at long-term strategies, its key performance indicators, the experience and knowledge of its staff, the comprehensiveness of its proposal and business plan, size of its firm, and creative ideas such as use of a scorecard in transactions. Ms. Sparkman observed that both Vertical and CBRE specifically identified the CBRE staff who would manage the state's business and daily transactions, while it was not clear from Cushman's ITN reply and related submissions who would actually be working on the account. Cushman likewise did not discuss out-of-state leases and how such leases were going to be handled, which was a significant concern because DMS considered out-of-state leases to be particularly complex. Ms. Sparkman also noted that with respect to the vendors' business plans, both Vertical and CBRE focused primarily on strategic realignment and plans for the future, whereas Cushman discussed their current transactions at length, but did not demonstrate forward thinking to the negotiation team. Cushman's reply to the ITN also included various discrepancies noted at the final hearing. While Cushman's ITN reply identifies a Tallahassee office, Cushman does not in fact have a Tallahassee office, but instead listed its subcontractor’s office.6/ Additionally, two of the business references presented in Cushman's ITN Reply appear not in fact to be for Cushman, but instead for its subcontractor, Daniel Wagnon, as Cushman's name was clearly typed in above Mr. Wagnon's name after the references were written. Finally, Cushman failed to provide in its ITN Reply the required subcontractor disclosure information for at least one of its "Project Management Partners," Ajax Construction. Based on all of the above, DMS's decision to award contracts to Vertical and CBRE as providing the best value to the state was not arbitrary, capricious, clearly erroneous, or contrary to competition. Simply stated, and as the negotiation team determined, the submissions by Vertical and CBRE were more comprehensive and reasonably found to offer better value to the state than Cushman's submission. Indeed the negotiation team did not even mention Cushman as a potential contract awardee, but instead identified only Vertical, CBRE and JLL in their deliberations as to best value. Cushman's argument that DMS award memorandum improperly relies on the following as "key elements" related to services does not alter this analysis: Long term strategies Key performance indicators Management of the portfolio Top ranked vendors had comprehensive business plans Pricing on the BOV and IMAs. While Ms. Sparkman acknowledged that the choice of language in the memorandum could have been better, it is clear that the foregoing are indeed "elements" of the selection criteria stated in the ITN and RBAFO, as the first four elements plainly relate to the vendors' ability to effectively provide the services, their technical proposal, performance measures, and vendor experience and capability, while the last element relates to the pricing portion of the criteria. Cushman also argues that the award memorandum failed to inform the final decision-maker that Cushman offered IMAs and BOVs at no charge when Cushman was engaged in a commissionable transaction or was performing other work for an agency under the contract. As a result, Cushman asserts, the Deputy Secretary was provided with inaccurate information relating to price. Cushman's argument that the award process was flawed because the pricing chart attached to the award memorandum did not accurately reflect Cushman's proposed pricing is without merit. As Ms. Sparkman testified, the chart was prepared by the negotiation team to provide for the decision-maker an apples-to- apples broad summary comparison of the vendor's proposed pricing for the proposed ancillary services. The chart was not intended to identify all variations or conditions for potential different pricing as proposed by Cushman.7/ Best Value Determination Cushman contends that the negotiation team’s decision to award a contract to CBRE did not result in the best value to the state. Amended Pet. ¶¶ 26, 28 & 29. Cushman further argues that DMS did not meaningfully consider differences in proposed pricing. The failure to consider price for potential ancillary services, Cushman argues, was contrary to competition as it gave an unfair advantage to CBRE whose prices were higher than Cushman’s prices in all but one category. Although pricing for the potential ancillary services was relevant, the ITN's initial scoring criteria made clear that DMS was primarily focused on evaluating the experience and capability of the vendors to provide the proposed services. For this reason, the ITN's initial scoring criteria awarded 90 percent of the points based upon the qualifications and business plan of the vendors, and only 10 percent of the points based on the pricing for potential ancillary services. The negotiation team members testified that this same focus on qualifications and the vendors' business plan continued during the negotiation phase and award decision, although without reliance on the mathematical scoring process utilized during the initial evaluation phase. Nothing in the ITN specifications altered this focus, and the negotiations were directed to gaining a greater understanding of the vendors' proposed services, the qualifications and bios of individuals who would actually do the work, vendors' approach to the work and parameters the vendors would use to evaluate their performance. Pricing remained of relatively minor significance primarily because the RBAFO established a uniform lease commission rate for all vendors, effectively removing pricing as a means to differentiate between the vendors. As a result, vendors were required to quote pricing only for certain potential ancillary services, including IMAs and BOVs, and the number of free credit hours to be provided to the state. Pricing for these potential ancillary services was not considered particularly important, since historically these services were seldom used, and the ITN required all vendors to provide IMAs and BOVs free of charge when related to a commissionable transaction (thereby greatly reducing the impact of any "free" IMA or BOV services). For these reasons, the negotiation team considered the potential ancillary services and pricing for these services not to be significant in the award decision and only incidental to the core purpose and mission of the intended contract, to wit, leasing and leasing commissions. As a result, the negotiation team referred to these potential ancillary services as "balance of line" items which were nominal and added little value to the contract. Notwithstanding Cushman's argument that it should have been awarded the contract because it offered the lowest pricing for these ancillary services, its prices were not in fact the lowest offered by the vendors. Indeed JLL offered to provide all IMA and BOV services (with no preconditions) at no cost. Cushman's pricing for the ancillary services also was not materially different than CBRE's pricing. CBRE's consulting services rates are comparable, if not lower, than Cushman's rates, and the difference between Cushman's and CBRE's proposed charges for IMAs and BOVs is only a few hundred dollars. When considered in terms of the anticipated number of times the ancillary services will be requested (rarely, based on the prior contract), the total "extra" amount to be spent for CBRE's services would be at most a few thousand dollars. The negotiation team reasonably considered this to be insignificant in comparison to the multimillion dollar leasing work which was the core purpose of the intended contract.8/ Because pricing for the potential ancillary services was of lesser significance to DMS's award decision, Cushman's position that DMS should have awarded Cushman a contract based upon its pricing for ancillary services is not consistent with the ITN and does not render DMS's intended awards to Vertical and CBRE arbitrary, capricious, clearly erroneous or contrary to competition. To the contrary, DMS articulated a rational, reasonable and logical explanation for the award. CBRE’s Proposal Non-Responsive to ITN and RBAFO? Cushman alleges that CBRE’s BAFO was not responsive to the ITN and the RBAFO because CBRE included a set rate for acquisitions and dispositions in its proposal. Amended Pet. 30. Since CBRE's BAFO materially deviated from the ITN's specifications, CBRE’s proposal should have been deemed non- responsive and therefore rejected, Cushman argues. The ITN originally requested pricing related only to credit hours as the ITN set the rates for leases. The ITN stated that “other services” would be determined on a case-by- case basis as negotiated by the agencies. However, as part of the ITN process, DMS discussed with the vendors the potential for them to assist the state in the sale and acquisition of property, and what commission rates might be charged for this work. For this reason, CBRE included proposed commission rates for acquisition and disposition services in its BAFO. DMS considered the inclusion of potential rates for acquisitions and dispositions to be a minor irregularity which did not render CBRE's BAFO non-responsive. This determination is consistent with the terms of the ITN, which at section 2.14(g) states "[t]he Department reserves the right to waive minor irregularities in replies." The form PUR 1001 incorporated by reference into the ITN likewise reserves to DMS the right to waive minor irregularities and states: 16. Minor Irregularities/Right to Reject. The Buyer reserves the right to accept or reject any and all bids, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if the Buyer determines that doing so will serve the state's best interests. The Buyer may reject any response not submitted in the manner specified by the solicitation documents. Consistent with the above-cited provisions, the negotiation team noted at its August 14, 2013, meeting that CBRE's inclusion of the proposed rates was not material, and that during the contract execution process, DMS would either exclude the proposed rates from the contract, or possibly include such as a cap for these services. Both of these alternatives were available to DMS given CBRE's commitment to follow the terms of the draft contract, which specifically stated that fees for acquisitions and dispositions would be negotiated on a case-by-case basis. Finally, CBRE's inclusion of proposed commission rates for acquisitions and dispositions did not give CBRE an advantage over the other vendors, or impair the competition, because Cushman and JLL also submitted, as part of their ITN responses, proposed commission rates for the acquisition and disposition of property. Do the ITN Specifications Violate Section 255.25? Cushman's final argument is that the ITN specifications, and the proposed contract, violate section 255.25(3)(h)5., Florida Statutes, which states that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract and may not be supplemented or modified by the state agency using the contract." Cushman's argument has two components. First, Cushman argues that the specifications included at Tab 5, page 13 of the ITN violate the statute by providing: "With respect to all other [ancillary] services, . . . , compensation shall be as outlined in an agency prepared Scope of Work and will be quoted based on an hourly rate (set as ceiling rates in this ITN), set fees for the service/project or by a percentage commission rate as offered and negotiated by the using agency.” Cushman also argues that the language in the award memorandum stating that the BOV rates are "caps" and "may be negotiated down by agencies prior to individual transactions," violates the statute. This latter reference to "caps" correlates to the "ceiling rates" stated in the above quoted ITN specification. Section 120.57(3)(b), Florida Statutes, requires vendors to file a protest to an ITN’s terms, conditions, or specifications within 72 hours of the release of the ITN or amendment; failure to protest constitutes a waiver of such arguments. DMS included this language with the release of the ITN and each amendment, so Cushman was on notice of its protest rights. Cushman's challenge to the ITN specifications as violating section 255.25 is untimely and has been waived. Having been fully informed of this specification since May 14, 2013, when the revised ITN was published, Cushman could not wait until the ITN process was completed some four months later, and then argue that the ITN specifications do not comply with section 255.25 and must be changed. Such argument plainly constitutes a specifications challenge, and such a challenge is now time-barred. Even were Cushman’s challenge not time-barred, it would still fail. Section 255.25 requires only that "[a]ll terms relating to the compensation of the real estate consultant or tenant broker shall be specified in the term contract," and not that all terms identifying the compensation be specified. The challenged ITN specification, actually added via Addendum 2 at the request of DEP and its subject matter expert, does specify the approved methods by which the state could compensate the vendor, which DMS determined would best be determined on a case-by-case basis. By stating the approved methods which can be used by the state agencies, the ITN specifications and term contract did specify the terms "relating to" the compensation of the vendor, i.e., an hourly rate (set as ceiling rates in the ITN), set fees for the service/project, or a percentage commission rate. DMS established these terms because the exact compensation would best be determined by the state agency on a case-by-case basis in a Statement of Work utilizing one of the specified compensation methods.9/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That a final order be entered denying the petition of Cushman & Wakefield of Florida, Inc., and affirming the Notice of Intent to Award to CBRE, Inc., and Vertical Integration, Inc. DONE AND ENTERED this 24th day of January, 2014, in Tallahassee, Leon County, Florida. S W. DAVID WATKINS 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 24th day of January, 2014.
Findings Of Fact At all times pertinent to the matters involved herein; Petitioner held Florida real estate salesman's license number 0403224. Her license was listed with Century 21 ACR Equities; Inc., 4222 W. Fairfield Drive, Pensacola; on May 25; 1983. On March 4, 1985, Respondent listed her license with Century 21; Five Flags Properties; Inc., in Pensacola, without terminating her listing with ACR Equities. On March 22, 1985, Five Flags terminated her listing with that firm and on April 30; 1985, ACR Equities terminated her listing with that firm. On May 14; 1985; Respondent applied for a change of status to list her license with Old South Properties; Inc., in Pensacola. That firm terminated the association on July 9, 1985. On March 19; 1985; Emmison Lewis and his wife; Lillie Mae signed a handwritten sales agreement prepared by Respondent for the purchase of a piece of property located in Escambia County; for $33,000.00. The Lewises gave her a deposit of $500.00 by check made payable to Respondent and which bears her endorsement on the back. This check was made payable to Respondent because she asked that it be made that way. Several days later; Respondent came back to the Lewises and asked for an additional $1,500.00 deposit. This was given her, along with a rental payment of $310.00; in a $2,000.00 check on March 29, 1985. Respondent gave the Lewises the balance back in cash along with a receipt reflecting the payment of the $1,500.00. On that same date; Respondent had the Lewises sign a typed copy of the sales agreement which reflected that both the $500.00 deposit and the additional $1,500.00 were due on closing. This typed copy was backdated to March 19; 1985. Both the handwritten and typed copies of the sales agreement bear the signature of the Respondent as a witness. The sale was never closed and the Lewises have never received any of the $2;000.00 deposit back. On about four different occasions, Mr. Lewis contacted Respondent requesting that she refund their money and she promised to do so, but never did. They did, however, receive the $310.00 rent payment back in cash approximately two weeks later. On April 26, 1985, James E. Webster and his wife Pearlie signed a sales agreement as the purchasers of real estate with Respondent. This property had a purchase price of $31,900.00. At the time of signing, Mr. Webster gave Respondent $150.00 in cash and a check drawn by his wife on their joint account for $400.00. Due to Mrs. Webster's change of mind, the Websters did not close on the property. They requested a refund of their deposit and Respondent gave the Websters a check for $400.00 which was subsequently dishonored by the bank because of insufficient funds. The Websters called Respondent at home several times, but she was always out. Calls to the broker with whom her license was placed were unsuccessful. Finally, however, Respondent refunded the $400.00 to the Websters in cash. Respondent had listed her license with ACR Equities in May, 1983. At no time while Respondent had her license with Mr. Bickel's firm did she ever turn over to him as broker either the $2.000.00 she received from the Lewises or the $550.00 she received from the Websters. Mr. Bickel, the broker, was not aware of these contracts and did not question her about them. He terminated the placement of her license with his firm because he found out that in early March 1985, she had placed her license with another firm., Both sales agreements for the Lewises and that for the Websters had the firm name of ACR Equities printed on them as broker.
Recommendation Based on the foregoing findings of fact and conclusions of law; it is RECOMMENDED that Respondent's license as a real estate salesman in Florida be revoked. DONE and ORDERED this 23rd day of May, 1986, in Tallahassee; Florida. ARNOLD H. POLLOCK, 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 23rd day of May, 1986. COPIES FURNISHED: Arthur R. Shell, Esquire p. O. Box 1900 Orlando, Florida 32802 Ralph Armstead; Esquire P. O. Box 2629 Orlando; Florida 32802
The Issue In this disciplinary proceeding, the issues are, first, whether Respondent, a certified real estate appraiser, committed various disciplinable offenses in connection with three residential appraisals; and second, if Respondent is guilty of any charges, whether she should be punished therefor.
Findings Of Fact The Florida Real Estate Appraisal Board ("Board") is the state agency charged with regulating real estate appraisers who are, or want to become, licensed to render appraisal services in the State of Florida. The Department of Business and Professional Regulation ("Department") is the state agency responsible for investigating and prosecuting complaints against such appraisers. At all times relevant to this proceeding, Elsa Cartaya ("Cartaya") was a Florida-certified residential real estate appraiser. Her conduct as an appraiser in connection with the matters presently at issue falls squarely within the Board's regulatory jurisdiction. Case No. 04-1680 In the Administrative Complaint that initiated DOAH Case No. 04-1680, the Department charged Cartaya with numerous statutory violations relating to her appraisal of a residence located at 930 East Ninth Place, Hialeah, Florida (the "Hialeah Property"). Specifically, the Department made the following allegations against Cartaya:1 Respondent developed and communicated an appraisal report (Report) for the property commonly known as 930 E. 9 Place, Hialeah, Florida 33010. A copy of the report is attached hereto and incorporated herein as Administrative Complaint Exhibit 1. On the Report, Respondent represents that: she signed it on July 27, 2000, the Report is effective as of July 27, 2000. On or about October 26, 2001, Respondent provided a "Report History" to Petitioner's investigator. A copy of the report history is attached hereto and incorporated herein as Administrative Complaint Exhibit 2. On the Report History, Respondent admits that she completed the report on August 7, 2000. On Report, Respondent represents that there were no prior sales of subject property within one year of the appraisal. Respondent knew that a purchase and sale transaction on subject property closed on July 28, 2000. Respondent knew that the July 28, 2000, transaction had a contract sales price of $82,000. A copy of the closing statement is attached hereto as Administrative Complaint Exhibit 3. Respondent knowingly refused to disclose the July 28, 2000, sale on Report. On [the] Report, Respondent represented that the current owner of subject property was Hornedo Lopez. Hornedo Lopez did not become the title- owner until on or about July 28, 2000, but before August 7, 2000. On [the] Report, Respondent represents that quality of construction of subject property is "CBS/AVG." The public records reflect that subject property is of mixed construction, CBS and poured concrete. On [the] Report, Respondent represents: "The income approach was not derived due to lack of accurately verifiable data for the mostly owner occupied area." The multiple listing brochures indicate as follows: for comparable one: "Main House 3/2 one apartment 1/1 (Rents $425) and 2 efficiencies each at $325. Live rent free with great income or bring your big family." A copy of the brochure for comparable one is attached hereto and incorporated herein as Administrative Complaint Exhibit 4. for comparable three: "Great Rental . . . two 2/1 two 1/1 and one studio. Total rental income is $2,225/month if all rented." A copy of the brochure for comparable three is attached and incorporated as Administrative Complaint Exhibit 5. On or about October 23, 2001, Petitioner's investigator inspected Respondent's work file for Report. The investigation revealed that Respondent failed to maintain a true copy of Report in the work file. On [the] Report, Respondent failed to analyze the difference between comparable one's listing price, $145,000, and the sale price, $180.000. On [the] Report History, Respondent admits to having received a request for appraisal of subject property indicting a contract price of $195,000. On [the] Report History, Respondent admits that the multiple listing brochure for subject property listed the property for $119,900, as a FANNIE MAE foreclosure. On [the] Report History, Respondent also admits that she had a multiple listing brochure in the file, listing subject property for $92,000. On [the] Report History, Respondent admits that she did not report the listings in Report. On [the] Report History, Respondent admits knowledge that comparable three was "rebuilt as a 2/1 with two 1/1 & 1 studio receiving income although zoned residential." On [the] Report, Respondent failed or refused to explain or adjust for comparable three's zoning violations. On the foregoing allegations, the Department charged Cartaya under four counts, as follows: COUNT I Based upon the foregoing, Respondent is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest conduct, culpable negligence, or breach of trust in any business transaction in violation of Section 475.624(2), Florida Statutes.[2] COUNT II Based upon the foregoing, Respondent is guilty of having failed to use reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes. COUNT III Based upon the foregoing, Respondent has violated a standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice in violation of Section 475.624(14), Florida Statutes. COUNT IV Based upon the foregoing, Respondent is guilty of having accepted an appraisal assignment if the employment itself is contingent upon the appraiser reporting a predetermined result, analysis, or opinion, or if the fee to be paid for the performance of the appraisal assignment is contingent upon the opinion, conclusion, or valuation reached upon the consequent resulting from the appraisal assignment in violation of Section 475.624(17), Florida Statutes.[3] In her Answer and Affirmative Defenses, Cartaya admitted the allegations set forth in paragraphs 5-9, 11, 13-15, 17-19, and 23-25 of the Amended Complaint. Based on Cartaya's admissions, the undersigned finds these undisputed allegations to be true. Additional findings are necessary, however, to make sense of these particular admissions and to determine whether Cartaya committed the offenses of which she stands accused. In April 2000, Southeast Financial Corporation ("Southeast") asked Cartaya to prepare an appraisal of the Hialeah Property for Southeast's use in underwriting a mortgage loan, the proceeds of which would be applied by the prospective mortgagor(s) towards the $205,000 purchase price that he/she/they had agreed to pay Hornedo Lopez ("Hornedo") for the residence in question.4 In preparing the appraisal, Cartaya discovered that the putative seller, Hornedo, was actually not the record owner of the Hialeah Property. Rather, title was held in the name of the Federal National Mortgage Association ("Fannie Mae"). The Hialeah Property was "in foreclosure." Cartaya informed her contact at Southeast, Marianella Lopez ("Marianella"), about this problem. Marianella explained that Hornedo was in the process of closing a sale with Fannie Mae and would resell the Hialeah Property to a new buyer soon after acquiring the deed thereto. Cartaya told Marianella that, to complete the appraisal, she (Cartaya) would need to be provided a copy of the closing statement documenting the transfer of title from Fannie Mae to Hornedo. No further work was done on the appraisal for several months. Then, on July 25, 2000, Marianella ordered another appraisal of the Hialeah Property, this time for Southeast's use in evaluating a mortgage loan to Jose Granados ("Granados"), who was under contract to purchase the subject residence from Hornedo for $195,000. Once again, Cartaya quickly discovered that Fannie Mae, not Hornedo, was the record owner of the Hialeah Property. Once again, Cartaya immediately informed Marianella about the situation. Marianella responded on July 26, 2000, telling Cartaya that the Fannie Mae-Hornedo transaction was scheduled to close on July 28, 2000. On July 27, 2000, Marianella faxed to Cartaya a copy of the Settlement Statement that had been prepared for the Fannie Mae sale to Hornedo. The Settlement Statement, which confirmed that the intended closing date was indeed July 28, 2000, showed that Hornedo was under contract to pay $82,000 for the Hialeah Property——the property which he would then sell to Granados for $195,000, if all the pending transactions closed as planned. Upon receipt of this Settlement Statement, Cartaya proceeded to complete the appraisal. In the resulting Appraisal Report, which was finished on August 7, 2000,5 Cartaya estimated that the market value of the Hialeah Property, as of July 27, 2000, was $195,000. The Department failed to prove by clear and convincing evidence that the house at the Hialeah Property was, in fact, constructed from CBS and poured concrete, as alleged.6 At the time Cartaya gave the Department a copy of her workfile for this appraisal assignment, the workfile did not contain a copy of the competed Appraisal Report.7 (The workfile did, however, include a working draft of the Appraisal Report.) The allegation, set forth in paragraph 21 of the Administrative Complaint, that Cartaya "failed to analyze the difference between comparable one's listing price, $145,000, and the sale price, $180,000," was not proved by clear and convincing evidence. First, there is no nonhearsay evidence in the record that "comparable one" was, in fact, listed at $145,000 and subsequently sold for $180,000. Instead, the Department offered a printout of data from the Multiple Listing Service ("MLS"), which printout was included in Cartaya's workfile. The MLS document shows a listing price of $145,550 for "comparable one" and a sales price of $180,000 for the property——but it is clearly hearsay as proof of these matters,8 and no predicate was laid for the introduction of such hearsay pursuant to a recognized exception to the hearsay rule (including Section 475.28(2)). Further, the MLS data do not supplement or explain other nonhearsay evidence.9 At best, the MLS document, which is dated July 25, 2000, establishes that Cartaya was on notice that "comparable one" might have sold for more than the asking price, but Cartaya has not been charged with overlooking MLS data. Second, in any event, in her Report History, Cartaya stated that she had analyzed the putative asking price/sales price differential with respect to "comparable one" and concluded that there was no need to make adjustments for this because available data relating to other sales persuaded her that such differentials were typical in the relevant market. Cartaya's declaration in this regard was not persuasively rebutted. Since the evidence fails persuasively to establish that Cartaya's conclusion concerning the immateriality of the putative asking price/sales price differential as a factor bearing on the value of "comparable one" was wrong; and, further, because the record lacks clear and convincing evidence that an appraiser must, in her appraisal report, not only disclose such information, even when deemed irrelevant to the appraisal, but also expound upon the grounds for rejecting the data as irrelevant, Cartaya cannot be faulted for declining to explicate her analysis of the supposed price differential in the Appraisal Report. The evidence is insufficient to prove, clearly and convincingly, that Cartaya "failed or refused to explain or adjust for "comparable three"'s zoning violations." This allegation depends upon the validity of its embedded assumption that there were, in fact, "zoning violations."10 There is, however, no convincing evidence of such violations in the instant record. Specifically, no copy of any zoning code was offered as evidence, nor was any convincing nonhearsay proof regarding the factual condition of "comparable three" offered. Cartaya cannot be found guilty of failing or refusing to explain or adjust for an underlying condition (here, alleged "zoning violations") absent convincing proof of the underlying condition's existence-in-fact. Case No. 04-1148 In the Administrative Complaint that initiated DOAH Case No. 04-1148, the Department charged Cartaya with numerous statutory violations relating to her appraisals of residences located at 1729 Northwest 18th Street, Miami, Florida ("1729 NW 18th St") and 18032 Northwest 48th Place, Miami, Florida ("18032 NW 48th Place"). These appraisals will be examined in turn. With regard to 1729 NW 18th St, the Department alleged as follows: On or about April 29, 1999, Respondent developed and communicated a Uniform Residential Appraisal Report for the property commonly known as 1729 NW 18th Street, Miami, Florida. A copy of the report is attached hereto and incorporated herein as Administrative Complaint Exhibit 1. On or about March 18, 2001, David B. C. Yeomans, Jr., A.S.A., and Mark A. Cannon, A.S.A., performed a field review of the report. A copy of the review is attached hereto and incorporated herein as Administrative Complaint Exhibit 2. The review revealed that unlike it states in the Report, the subject property’s zoning was not "Legal," but "legal noncomforming (Grandfathered use)." The review further revealed that Respondent failed to report that if the improvements sustain extensive damage or demolishment or require renovation which exceeds 50% of the depreciated value, it is likely that a variance would be necessary to build a new dwelling. The review further revealed that Respondent failed to report that subject property has two underground gas meters. The review further revealed that unlike Respondent states in Report, subject property’s street has gutters and storm sewers along it. The review further revealed that subject property is a part of a "sub-market" within its own neighborhood due to its construction date of 1925. Respondent applied three comparables built in 1951, 1953, and 1948, respectively, all of which reflect a different market, without adjustment. Respondent applied comparables which have much larger lots than the subject, which is of a non-conforming, grandfathered use. Respondent failed to adjust for quality of construction even though subject is frame and all three comparables are of concrete block stucco construction. Respondent failed to note on the Report that comparables 1 and 2 had river frontage. Respondent failed to adjust comparables 1 and 2 for river frontage. The review revealed that at the time of the Report there were at least five sales more closely comparable to Subject than those which Respondent applied. On the foregoing allegations, the Department brought the following three counts against Cartaya: COUNT I Based upon the foregoing, Respondent is guilty of having failed to use reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes. COUNT II Based upon the foregoing, Respondent has violated a standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice in violation of Section 475.624(14), Florida Statutes. COUNT III Based upon the foregoing, Respondent is guilty of culpable negligence in a business transaction in violation of Section 475.624(2), Florida Statutes. Cartaya admitted the allegations set forth in paragraph 4 of the Administrative Complaint. Those undisputed allegations, accordingly, are accepted as true. The rest of the allegations about this property were based upon a Residential Appraisal Field Review Report (the "Yeomans Report") that David B.C. Yeomans, Jr. prepared in March 2001 for his client Fannie Mae. The Yeomans Report is in evidence as Petitioner's Exhibit 2, and Mr. Yeomans testified at hearing. Mr. Yeomans disagreed with Cartaya's opinion of value regarding 1729 NW 18th St, concluding that the property's market value as of April 29, 1999, had been at the low end of the $95,000-to-$115,000 range, and not $135,000 as Cartaya had opined. The fact-findings that follow are organized according to the numbered paragraphs of the Administrative Complaint. Paragraphs 6 and 7. The form that Cartaya used for her Appraisal Report regarding 1729 NW 18th St contains the following line: Zoning compliance Legal Legal nonconforming (Grandfathered use) Illegal No zoning Cartaya checked the "legal" box. Mr. Yeomans maintains that she should have checked the box for "legal nonconforming" use because, he argues, the property's frontage and lot size are smaller than the minimums for these values as prescribed in the City of Miami's zoning code. The Department failed, however, to prove that Cartaya checked the wrong zoning compliance box. There is no convincing nonhearsay evidence regarding either the frontage or the lot size of 1729 NW 18th St.11 Thus, there are no facts against which to apply the allegedly applicable zoning code provisions. Moreover, and more important, the Department failed to introduce into evidence any provisions of Miami's zoning code. Instead, the Department elicited testimony from Mr. Yeomans regarding his understanding of the contents of the zoning code. While Mr. Yeomans' testimony about the contents of the zoning code is technically not hearsay (because the out-of-court statements, namely the purported code provisions, consisted of non-assertive declarations12 that were not offered for the "truth" of the code's provisions13), such testimony is nevertheless not clear and convincing evidence of the zoning code's terms.14 And finally, in any event, Cartaya's alleged "mistake" (which allegation was not proved) was immaterial because, as Mr. Yeomans conceded at hearing, in testimony the undersigned credits as true, the alleged "fact" (again, not proved) that 1729 NW 18th St constituted a grandfathered use would have no effect on the property's market value. Paragraphs 8 and 9. The Yeomans Report asserts that "[b]ased on a physical inspection as of March 17, 2001[,] it appears that the site has two underground gas meters and there were gutters and storm sewers along the subject's street." It is undisputed that Cartaya's Appraisal Report made no mention of underground gas meters or storm water disposal systems. While the Department alleged that Cartaya's silence regarding these matters constituted disciplinable "failures," it offered no convincing proof that Cartaya defaulted on her obligations in any way respecting these items. There was no convincing evidence that these matters were material, affected the property's value, or should have been noted pursuant to some cognizable standard of care. Paragraphs 10 and 11. The contention here is that Cartaya chose as comparables several homes that, though relatively old (average age: 48 years), were not as old as the residence at 1729 NW 18th St (74 years). Mr. Yeomans asserted that older homes should have been used as comparables, and several such homes are identified in the Yeomans Report. The undersigned is persuaded that Mr. Yeomans' opinion of value with respect to 1729 NW 18th St is probably more accurate than Cartaya's. If this were a case where the value of 1729 NW 18th St were at issue, e.g. a taking under eminent domain, then Mr. Yeomans' opinion might well be credited as against Cartaya's opinion in making the ultimate factual determination. The issue in this case is not the value of 1729 NW 18th St, however, but whether Cartaya committed disciplinable offenses in appraising the property. The fact that two appraisers have different opinions regarding the market value of a property does not mean that one of them engaged in misconduct in forming his or her opinion. Based on the evidence presented, the undersigned is not convinced that Cartaya engaged in wrongdoing in connection with her appraisal of 1729 NW 18th St, even if her analysis appears to be somewhat less sophisticated than Mr. Yeomans'. Paragraphs 12 through 16. The allegations in these paragraphs constitute variations on the theme just addressed, namely that, for one reason or another, Cartaya chose inappropriate comparables. For the same reasons given in the preceding discussion, the undersigned is not convinced, based on the evidence presented, that Cartaya engaged in wrongdoing in connection with her appraisal of 1729 NW 18th St, even if he is inclined to agree that Mr. Yeomans' opinion of value is the better founded of the two. With regard to 18032 NW 48th Place, the Department alleged as follows: On or about August 9, 1999, Respondent prepared and communicated a Uniform Residential Appraisal Report for the Property commonly known as 18032 NW 48th Place, Miami, Florida, 33055. (Report) A copy of the Report is attached hereto and incorporated herein as Administrative Complaint Exhibit 3. On the Report, Respondent incorrectly stated that the property is in a FEMA Zone X flood area. In fact, the property is in an AE Zone. In Report, Respondent states: "Above sales were approximately adjusted per market derived value influencing dissimilarities as noted." Respondent failed to state in Report, that comparables 1 and 3 have in-law quarters. In [the] Report, Respondent represented comparable 1 had one bath, where in fact it has at least two. In [the] Report, Respondent failed to state that comparable 1 has two in-law quarters. In [the] Report, Respondent stated that comparable 3 is a two-bath house with an additional bath in the in-law quarters. On the foregoing allegations, the Department brought the following three counts against Cartaya: COUNT IV Based upon the foregoing, Respondent has violated a standard for the development or communication of a real estate appraisal or other provision of the Uniform Standards of Professional Appraisal Practice in violation of Section 475.624(14), Florida Statutes. COUNT V Based upon the foregoing, Respondent is guilty of having failed to use reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes. COUNT VI Based upon the foregoing, Respondent is guilty of culpable negligence in a business transaction in violation of Section 475.624(2), Florida Statutes. Cartaya admitted the allegations set forth in paragraphs 18 and 20 of the Administrative Complaint. Those undisputed allegations, accordingly, are accepted as true. The rest of the allegations about this property were based upon a Residential Appraisal Field Review Report (the "Marmin Report") that Frank L. Marmin prepared in May 2001 for his client Fannie Mae. The Marmin Report is in evidence as Petitioner's Exhibit 5. Mr. Marmin did not testify at hearing, although his supervisor, Mark A. Cannon, did. Mr. Marmin disagreed with Cartaya's opinion of value regarding 18032 NW 48th Place, concluding that the property's market value as of August 9, 1999, had been $100,000, and not $128,000 as Cartaya had opined. The fact-findings that follow are organized according to the numbered paragraphs of the Administrative Complaint. Paragraph 19. Cartaya admitted that she erred in noting that the property is located in FEMA Flood Zone "X," when in fact (she agrees) the property is in FEMA Flood Zone "AE." She did, however, include a flood zone map with her appraisal that showed the correct flood zone designation. Cartaya's mistake was obviously unintentional——and no more blameworthy than a typographical error. Further, even the Department's expert witness conceded that this minor error had no effect on the appraiser's opinion of value. Paragraphs 20 through 24. The Department asserts that two of Cartaya's comparables were not comparable for one reason or another. The Department failed clearly and convincingly to prove that its allegations of fact concerning the two comparables in question are true. Thus, the Department failed to establish its allegations to the requisite degree of certainty. Ultimate Factual Determinations Having examined the entire record; weighed, interpreted, and judged the credibility of the evidence; drawn (or refused to draw) permissible factual inferences; resolved conflicting accounts of what occurred; and applied the applicable law to the facts, it is determined that: Applying the law governing violations arising under Section 475.624(2), Florida Statutes, to the historical facts established in the record by clear and convincing evidence, it is found as a matter of ultimate fact that Cartaya did not commit culpable negligence in connection with the appraisals at issue. Applying the law governing violations arising under Section 475.624(15), Florida Statutes, to the historical facts established in the record by clear and convincing evidence, it is found as a matter of ultimate fact that Cartaya did not fail to exercise reasonable diligence in developing the appraisals at issue. Applying the law governing violations arising under Section 475.624(14), Florida Statutes, to the historical facts established in the record by clear and convincing evidence, it is found as a matter of ultimate fact that, in connection with the Appraisal Report relating to the Hialeah Property, Cartaya did commit one unintentional violation of Standards Rule 2- 2(b)(vi) of Uniform Standards of Professional Appraisal Practice and two unintentional violations of Standards Rule 2-2(b)(ix).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Board enter a final order finding that: As to Case No. 04-1148, Cartaya is not guilty on Counts I through VI, inclusive; As to Case No. 04-1680, Cartaya is not guilty on Counts I, II, and IV; she is, however, guilty, under Count III, of one unintentional violation of Standards Rule 2-2(b)(vi) and two unintentional violations of Standards Rule 2-2(b)(ix). As punishment for the violations established, Cartaya's certificate should be suspended for 30 calendar days, and she should be placed on probation for a period of one year, a condition of such probation being the successful completion of a continuing education course in USPAP. In addition, Cartaya should be ordered to pay an administrative fine of $500. DONE AND ENTERED this 10th day of November, 2004, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 10th day of November, 2004.
Findings Of Fact During all times material to the Complaint Respondent Genaro O. DiDiego was licensed as a real estate broker under Chapter 475, Florida Statutes. From May 1, 1976 until February 7, 1977, Mr. DiDiego did business under the trade name "Lauderdale Realty" in the Miami Beach Area. In the spring of 1976 Ms. Arlene Channing through a salesman, Anita Kandel, employed by Lauderdale Realty met the Respondent. Ms. Channing was naive about the real estate business and any related transactions. After their initial meeting the Respondent attempted to interest Ms. Channing in a variety of business ventures. Eventually she became involved in two. One was the Choice Chemical Company loan and the other was the Qualk Building purchase. On May 10, 1976, Ms. Channing loaned Mr. DiDiego $30,000.00 for his purchase of stock in the Choice Chemical Company. This loan was to be secured by a note and mortgage from Mr. DiDiego to Ms. Channing in the principal sum of $30,000.00 with interest at 10 percent until the principal was paid. The note and mortgage were due and payable within 18 months. Specifically, the security was 50 percent of the outstanding stock of Choice Chemical Corporation and also Lauderdale Realty's lots and telephone land operation. The security was to be held in escrow by Gerald S. Berkell, who at that time was counsel to Mr. DiDiego. In fact no such security was ever delivered into escrow. From the facts and circumstances of the transactions between Ms. Channing and Mr. DiDiego, it is found that Mr. DiDiego never intended to secure the $30,000.00 loan. That security was a material inducement to Ms. Channing for the loan. The principal sum of the loan, $30,000.00, was deposited into the account of Lauderdale Realty, account number 60-943-7 at County National Bank of North Miami Beach. Subsequently on April 18, 1978, Ms. Channing filed an action in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida, against Mr. DiDiego for the unlawful conversion of her $30,000.00. On June 19, 1978, a final judgement by default was entered against Mr. DiDiego in the amount of $30,000.00 plus legal interest. The Qualk Building purchase concerned a building represented to Ms. Channing to cost $700,000.00. Mr. DiDiego induced her to invest $150,000.00 in the purchase of the Qualk Building. To effect the purchase, Mr. DiDiego and Ms. Channing entered into a limited partnership agreement in which Mr. DiDiego would be the general partner, investing $1,000.00 and Ms. Channing would be a limited partner, investing $150,000.00. Subsequently Ms. Channing deposited $150,000.00 into the Lauderdale Realty escrow account. Her check dated June 18, 1976, in the amount of $150,000.00 was deposited in Account number 60-944-8 for Lauderdale Realty. In fact, the total purchase price for the Qualk building was $585,000.00. The building was however encumbered by first and second mortgages totaling $535,855.90. The total amount therefore required to close was less than $33,000.00. These facts were known to Respondent but were not disclosed to Ms. Channing. From the facts and circumstances of this transaction, it is found that the facts were misrepresented to Ms. Channing for the purpose of inducing her to part with her $150,000.00. Ms. Channing never received any accounting for her investment and she subsequently brought an action in the Circuit Court of the Eleventh Judicial Circuit in and for Dade County, Florida. On July 8, 1977, final judgment was entered against Respondent, Genaro O. DiDiego in the amount of $150,000.00 less $32,662.84, which were actually applied to the purchase price of the Qualk building, and less $9,780.00 which represents a portion of the income of the Qualk Building paid by Respondent to Ms. Channing. In entering its final judgment, the Court found that Respondent breached His fiduciary duty to Ms. Channing. This judgment has never been satisfied.
Recommendation In light of the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED That the license of Genaro O. DiDiego as a real estate broker be revoked by the Board of Real Estate, Department of Professional Regulation. DONE and RECOMMENDED this 3rd day of November, 1980, in Tallahassee, Florida. MICHAEL P. DODSON Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of November, 1980. COPIES FURNISHED: Tina Hipple, Esquire Staff Attorney Department of Professional Regulation 2009 Apalachee parkway Tallahassee, Florida 32301 C. B. Stafford Board Executive Director Board of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Genaro O. DiDiego 3745 N.E. 171st Street North Miami Beach, Florida 33160
Findings Of Fact The testimony revealed that during late December, 1975, Land Re-Sale Service, Inc., a Florida Corporation, filed application with the Florida Real Estate Commission seeking registration as a corporate real estate broker. The application revealed that Defendant Frank Viruet (FREC Progress Docket 2856) was to become the Active Firm Member Broker, and Vice President of the company; that Carol Bauman was to become Secretary-Treasurer and Director of the company; that Lee Klein was to become President and Director of the company. Testimony shows that Carol Bauman is the wife of Defendant Bernard Bauman (Progress Docket 2857); that Lee Klein is the sister of Carol Bauman and that Jeffrey Bauman (FREC Progress Docket 2858) is the son of Bernard Bauman. Subsequent to filing said corporate application For registration with the Commission, evidence reveals that the name was changed to Noble Realty Corporation and shortly thereafter to Deed Realty, Inc. and that along with each change, a new application For corporate registration was later filed with the commission. It was noted that the stated officers and active firm members broker remain as stated in the initial corporate application For registration. Thus, it can be concluded For all legal purposes that the above corporate entities are one and the same. Count I of the Administrative Complaint filed herein, reveals that according to the certificate filed with the Commission's chairman dated December 3, which was offered into evidence by Plaintiff and admitted, during the period November 1, 1975 to the date of said certificate, i.e., December 3, 1976, which covers all dates material to the complaint herein, no registration was issued to or held by either of said corporations, Land Re-Sale Service, Inc., Noble Realty Corporation or Deed Realty, Inc. This was further confirmed by the testimony of Bernard Bauman who was to have become a salesman associated with the above entities and by Frank Viruet, who was to have become the active firm member broker For the above entities. Approximately December 2, 1975, Land Re-Sale Service, Inc. entered into a written lease For office premises known as Room 212, Nankin Building, 16499 N.E. 19th Avenue, North Miami Beach, Florida For the period January 1 through December 31, 1976 (A copy of the lease was entered into evidence by stipulation.) The unrebutted testimony of Plaintiff Reagan reveals that he observed during his investigation of this cause a building directory on the ground entrance floor to the Nankin Building displaying the name Noble Realty, Inc., Room 212 and a similar display on the building directory which was located on the second floor. Plaintiff's witness Peter King, a representative of and For Southern Bell Telephone Company testified that on December 27, 1975, three phones were installed in Room 212 of the Nankin Building in the name of Land Re-Sale Service, Inc. and that from January 2 to January 16, approximately 575 calls were made from the stated phones all during evening hours to out-of-state numbers. Jeffrey Bauman admitted to having made phone calls to out-of-state numbers For purposes of soliciting real estate sales listings, but failed to recall specifically the number of calls nor did he have records to substantiate this fact. Bernard Bauman testified that from such solicitations, approximately 4 listings were obtained accompanied by an advance fee of $375.00 For each listing. When he was advised by the Commission's Investigator that the operation they were conducting was in violation of the licensing law by reason that no registration had been issued to the company and that all who are engaged in real estate activities therein were in violation of the license law (Chapter 475, F.S.) the premises were closed and all real estate activities ceased. This was further confirmed and unrebutted by plaintiff Reagan. As to Count II, the evidence established that, as stated above, the Defendants Bernard and Jeffrey Bauman had solicited real estate sales listings with representations to out-of-state property owners that listings would in fact be published and disseminated to brokers nationwide. Both Jeffrey and Bernard Bauman admitted that their listings were never published or otherwise disseminated to brokers. Bernard Bauman's testimony reveals that no monies received were returned to senders. There is no evidence introduced to show that Defendant Jeffrey Bauman knew, at the time of soliciting, that no bona fide efFort would be made to sell the property so listed with Noble Realty Corporation. As to Count III, plaintiff alleges that the above acts as set Forth above established a course of conduct by defendant upon which his revocation or registration should issue.
The Issue At issue herein is whether respondents' real estate licenses should be disciplined for-the alleged violations set forth in the administrative complaint. Based upon all of the evidence, the following facts are determined:
Findings Of Fact At all times relevant hereto, respondent, Juan Rios, was a licensed real estate broker having been issued license number 0155126 by petitioner, Department of Professional Regulation, Division of Real Estate. Respondent, Victoria R. Rios, is a licensed real estate broker-salesman having been issued license number 0331183 by petitioner. The Rios are husband and wife and presently reside at 855 80th Street, #1, Miami Beach, Florida. On December 13, 1982, Juan Rios obtained a six-month multiple listing agreement to sell a house located in Hacienda Estates at 11451 S.W. 33rd Lane, Miami, Florida. The agreement was executed by Rios "As Realtor" and by the property owner, Mercedes Garcia. At Mercedes' request, the Rios placed an initial sales price of $145,000 on the home. On December 15, a similar agreement was executed by Rios and Garcia on condominium unit 9B, Laguna Club Condominium, 10710 N. W. 7th Street, Miami, Florida. That property was also owned by Garcia. Although the agreement introduced into evidence does not contain Rios' signature, at final hearing Juan Rios acknowledged that he had executed such an agreement. The listing agreements provided that if the properties were leased during the term of the agreements, the listing realtor would receive a brokerage fee of 10% for such leasing. The agreement also provided that the realtors were not responsible for vandalism, theft or damage of any nature to the property. Garcia is a native and resident of Venezuela, where she owns a radio station. The two properties in question were previously owned by her father. When the father died, apparently sometime in 1982, Mercedes inherited the house and condominium. The Rios were friends of the father, and agreed to list and manage the properties as a favor to the deceased. Mercedes left the country after the agreements were signed, and has apparently not returned. Although she is the complainant who initiated this matter, she did not appear at final hearing. The house at 11451 S. W. 33rd Lane had been vandalized prior to the listing agreement being signed. According to documents introduced into evidence, the property has also been the subject of subsequent vandalisms, the nature and extent of which are unknown. A tenant was eventually procured by Mercedes' aunt in February, 1983 at a monthly rate of $800. The tenant, a Mrs. Ramirez, paid some $4,800 in rents and deposits before she was killed at the home in June, 1983. The Rios spent some $2,644.36 of the $4,800 on repairs to the vandalism and for general maintenance. They also retained a 10% commission for their services, or $480. That left $1,675.64 owed to Mercedes. No lease was apparently ever signed by Ramirez, or at least none was given to the Rios by the relative who procured the tenant. The home was eventually sold to Mercedes' aunt for $85,000.1 None of the rental monies were placed in the Rios' trust account. The condominium unit was rented in June, 1983. The tenant, Oscar Ruiz, had answered an advertisement run by the Rios in a local newspaper. Although Ruiz executed a lease to rent the unit at a monthly rate of $500, the Rios did not have a copy of same, and claimed none was kept in their records. According to the Rios, Ruiz continued to rent the unit through April, 1984, or for eleven months. Total monies collected by the Rios from Ruiz, including a $500 security deposit, were $6,000, of which $3,364.86 was spent for maintenance, utilities, two mortgage payments, and a $500 payment to the owner (Mercedes). An additional $40.33 was spent on a plumbing bill, and $600 was retained as a commission by the Rios. This left $2,724.53 owed to Mercedes. None of the rental monies were placed in the Rios' trust account. In the spring of 1984, Mercedes retained the services of an attorney in Miami to seek her monies due from the Rios. Up to then, she had received no income or accounting on the two properties. The attorney wrote the Rios on several occasions beginning in April 1984, asking for a copy of the lease on the condominium unit, the security deposit, an accounting of the funds, and all other documents relating to the two, properties. He received his first reply from the Rios on May 3, 1984 who advised him that they had attempted to reach Mercedes by telephone on numerous occasions but that she would never return their calls. They explained that rental proceeds had been used to repair vandalism damage and structural defects. When the attorney did not receive the satisfaction that he desired, he filed a civil action against the Rios on October 10, 1984. On October 26, 1984 the Rios sent Mercedes a letter containing an accounting on the two properties reflecting that she was owed $4,400.17 by the Rios. To pay this, they sent a $140 "official check," and a promissory note for the balance to be paid off in 40 monthly installments at 10% interest. They explained that their real estate business had closed, and due to financial problems, they were unable to pay off the monies due any sooner. They also asked that she instruct her attorney to drop the suit. Mercedes rejected this offer and has continued to pursue the civil action. It is still pending in Dade County Circuit Court. At final hearing, the Rios characterized their involvement with Mercedes as a "professional mistake," and one undertaken out of friendship for Mercedes' father. They acknowledged they did not use a trust account on the transactions and that they had used the $4,400 in rental money due Mercedes for their own use. They considered the excess rent proceeds to be compensation for other "services" performed by them on behalf of Mercedes. However, there is no evidence of any such agreement between the parties reflecting that understanding.
Recommendation Based on the foregoing findings of fact and conclusions of law, it is Recommended that Juan and Victoria Rios be found guilty as charged in Counts II and III, and be found guilty of culpable negligence and breach of trust in Count I. It is further recommended that Juan Rios' license be suspended for one year and that Victoria Rios' license be suspended for three months. DONE and ORDERED this 20th day of January, 1986, in Tallahassee, Florida. DONALD R. ALEXANDER, Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of January, 1986
The Issue The issue in this matter is whether the Florida Real Estate Commission may deny Petitioner’s application for a license as a real estate sales associate, and, if so, whether it is appropriate to do so based on the underlying facts.
Findings Of Fact The Commission is the state agency charged with licensing real estate sales associates in Florida. See § 475.161, Fla. Stat. On January 21, 2016, Petitioner applied to the Commission for a license as a real estate sales associate. In her application, Petitioner dutifully divulged that on December 12, 2002, the Commission revoked her real estate broker’s license. On August 16, 2016, the Commission issued a Notice of Intent to Deny notifying Petitioner that it denied her application for a sales associate license. The Commission denied Petitioner’s application based on its finding that Petitioner’s broker’s license was previously revoked by the Commission in 2002. At the final hearing, Petitioner explained the circumstances that led to her broker’s license revocation. In 2000, a Commission investigator audited her real estate trust account. The audit uncovered information that Petitioner failed to timely transfer a $1,000 deposit and properly reconcile her escrow account. Petitioner disclosed that a sales contract she was handling required the buyers to deposit $1,000 with her as the broker. The sale fell through, and the buyers did not close on the house. In May, 2000, the buyers demanded Petitioner transfer the deposit within 15 business days. Petitioner, however, did not forward the deposit out of her escrow account until four months later in September 2000. Based on this incident, the Commission alleged that Petitioner failed to account for delivered funds; failed to keep an accurate account of all trust fund transactions; failed to take corrective action to balance her escrow account; and filed a false report in violation of sections 475.25(1)(d)1, 475.25(1)e, 475.25(1)(l), 475.25(1)(b) and Florida Administrative Code Rule 61J2-14.012(2). Based on the charges, the Commission ordered Petitioner’s real estate broker’s license permanently revoked. Petitioner stressed that she did not steal the buyers’ money. Her mistake was in not timely transferring the deposit from her trust account. Petitioner asserted that she simply lost track of the funds. At the final hearing, Petitioner accepted full responsibility for her mismanagement. At the final hearing, Petitioner expressed that she first entered the Florida real estate industry in 1982 when she became a licensed real estate sales associate. In 1987, she obtained her broker's license. She subsequently purchased a Century 21 franchise. She conducted her real estate business until 2002 when her broker’s license was revoked. Petitioner explained that she is not seeking another broker’s license from the Commission. Instead, she is just applying for another sales associate license. Petitioner described the difference between a sales associate and a broker.5/ Petitioner stated that a sales associate works directly under, and is supervised by, a broker. The sales associate interacts with prospective buyers and sellers, negotiates sales prices, and accompanies clients to closings. Regarding financial transactions, however, the broker, not the sales associate, processes all funds related to a real estate sale. The broker, not the sales associate, transfers funds into and out of escrow accounts. In other words, the error Petitioner committed as a broker in 2000 could not happen again if she was granted a sales associate license. Petitioner further testified that during the time she worked as a sales associate, she was involved in the sale of approximately 100 houses. Petitioner represented that she never received any complaints or criticisms from any of her clients. Petitioner relayed that she became motivated to return to the real estate business following her husband’s death in 2015. Petitioner expressed that she was very good at selling houses. Real estate is her passion. She voiced that she eats, sleeps, walks, and talks real estate. Despite her misstep in 2000, Petitioner declared that she is a very honest and hardworking person. She just wants another chance to work in the profession that she loves. Currently, Petitioner works for a charitable organization. She helps administer and manage the charity’s finances. Petitioner represented that she has never failed to meet her financial responsibilities. She has always accounted for all of the funds for which she is entrusted (approximately $8 million since she began working for the charity over 20 years ago). No evidence indicates that Petitioner has committed any crimes or violated any laws since her broker’s license was revoked in 2002. At the final hearing, Petitioner presented three witnesses who testified in favor of her receiving a sales associate license. All three witnesses proclaimed that Petitioner is trustworthy, of good character, maintains high moral values, and is spiritually strong. The witnesses, who know Petitioner both personally and professionally, opined that she is honest, truthful, and has an excellent reputation for fair dealing. All three witnesses declared that the public would not be endangered if the Commission granted Petitioner’s application for licensure. Petitioner also produced six letters of support. These letters assert that Petitioner is an honorable and trustworthy person. Based on the competent substantial evidence presented at the final hearing, the preponderance of the evidence provides the Commission sufficient legal grounds to deny Petitioner’s application. Consequently, Petitioner failed to meet her burden of establishing that she is entitled to a license as a real estate sales associate. However, as discussed below, Petitioner demonstrated that she is rehabilitated from the incident which led to the revocation of her broker’s license in 2002. Therefore, the Commission may, in its discretion, grant Petitioner’s application (with restrictions) pursuant to sections 475.25(1) and 455.227(2)(f).
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, the Florida Real Estate Commission has the legal authority to deny Petitioner’s application for licensure. However, based on the underlying facts in this matter, it is RECOMMENDED that the Florida Real Estate Commission enter a final order granting Petitioner’s application for a license as a real estate sales associate. DONE AND ENTERED this 10th day of May, 2017, in Tallahassee, Leon County, Florida. S BRUCE CULPEPPER 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 May, 2017.
Findings Of Fact Respondent Sexsmith is a licensed real estate broker, having held License Number 0079448 at all times relevant to these proceedings. Respondent Bellitto is a licensed real estate salesman, having held License No. 0204206 at all times relevant to Case No. 81-2630. Respondent Select Realty, Inc., is a licensed corporate real estate broker, having held License No. 0157174 at all times relevant to these proceedings. Respondent Sexsmith founded Select Realty, Inc., in 1975. He was a full time realtor until his employment by the Hollywood Fire Department in 1976. Select Realty thereafter became inactive. In 1979, Respondent Sexsmith was contacted by a Mr. Jim Holmes, who was seeking to register the corporate name, Select Realty. Sexsmith agreed to permit the name Select Realty to be used by Holmes and his associates to open a real estate office at 3045 North Federal Highway, Fort Lauderdale. Sexsmith also applied to Petitioner for certification as a director and active broker with this company. His application was granted in June, 1979, and he remained affiliated with Respondent Select Realty, Inc., in this capacity until about April, 1980. Respondent Sexsmith did not participate in Select Realty operations and received no compensation for the use of his name and broker's license. He was slated to open and manage a branch office in Hollywood, but this project failed to materialize. Petitioner produced Mr. Tom Ott and Ms. Terri Casson as witnesses. They had utilized the services of Select Realty, Inc., in December, 1979 (Ott) and February, 1980 (Casson). Both had responded to advertisements in which Select Realty offered to provide rental assistance for a $45 refundable fee. These witnesses understood money would be refunded if Select Realty did not succeed in referring them to rental property which met their specifications. Mr. Ott was referred to several properties which did not meet his requirements. He sought to have his fee or a portion thereof returned, but was refused. His demand for such return was made within the 30-day contract period (PX-11). Ms. Casson was similarly dissatisfied with the referrals and sought the return of her fee within the 30-day contract period (PX-7). However, she was unable to contact this company or its agents since the office had closed and no forwarding instructions were posted or otherwise made available to her.
Recommendation From the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent Select Realty, Inc., and Gary Lee Sexsmith be found guilty as charged in Counts Three and Four of the Administrative Complaint filed in DOAH Case No. 81-2630. It is further RECOMMENDED that all other charges against these Respondents and other Respondents named in DOAH Cases 81-2630 and 81-2490 be dismissed. It is further RECOMMENDED that the corporate broker's license of Select Realty, Inc., be revoked. It is further RECOMMENDED that the broker's license of Gary Lee Sexsmith be suspended for a period of one year. DONE AND ENTERED this 18th day of February, 1982, in Tallahassee, Florida. R. T. CARPENTER 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 18th day of February, 1982. COPIES FURNISHED: Michael J. Cohen, Esquire Suite 101, Kristin Building 2715 East Oakland Park Boulevard Fort Lauderdale, Florida 33306 William Grossbard, Esquire Suite 6175M 6191 Southwest 45 Street 6177 North Davie, Florida 33314 Anthony S. Paetro, Esquire Bedzow and Korn, P.A. Suite C 1125 Northeast 125 Street North Miami, Florida 33161 Lawrence J. Spiegel, Esquire Spiegel and Abramowitz Suite 380 First National Bank Building 900 West 49th Street Hialeah, Florida 33012 Mr. Gary Lee Sexsmith 321 Southwest 70t Avenue Pembroke Pines, Florida 33023 Mr. Guiseppe D. Bellitto 2635 McKinley Street Hollywood, Florida 33020 Select Realty, Inc. c/o Mr. Gary Lee Sexsmith last acting Director and Trustee of Select Realty, Inc. 321 Southwest 70th Avenue Pembroke Pines, Florida 33023 Mr. Carlos B. Stafford Executive Director Board of Real Estate Post Office Box 1900 Orlando, Florida 32802
The Issue This is a proceeding pursuant to Section 57.111, Florida Statutes, in which the Petitioner, Florida Home Finders Realty, Inc. ("Realty, Inc."), seeks an award of costs and attorney's fees incurred in its successful defense of an administrative disciplinary proceeding. The disputed issues in this case are whether the case is moot, whether the person acting on behalf of the Petitioner is authorized to do so, and whether circumstances exist that would make an award of costs and attorney's fees unjust.
Findings Of Fact Realty, Inc., the Petitioner in this proceeding, was one of numerous Respondents in a multi-count Administrative Complaint filed by the Florida Department of Business and Professional Regulation in September of 1995. Two of the other Respondents named in the same Administrative Complaint were Ian R. Law and Benjamin Schiff. Most, if not all, of the other Respondents in that multi-count Administrative Complaint resolved the charges against them without resort to proceedings before the Division of Administrative Hearings. Ian R. Law and Benjamin Schiff both disputed the charges in the Administrative Complaint and requested an evidentiary hearing before the Division of Administrative Hearings. Ian R. Law and Benjamin Schiff retained the services of the law firm of Akerman, Senterfitt & Eidson, P.A., to represent them in their defense against the charges in the Administrative Complaint. Messrs. Law and Schiff were represented by Mark Herron, Esquire, and Chris Haughee, Esquire, of the previously mentioned law firm. Simultaneous with the filing of the Administrative Complaint described above, the Florida Department of Business and Professional Regulation issued an emergency suspension order. The effect of the emergency suspension order was to suspend the real estate broker licenses of Messrs. Law and Schiff and to suspend the corporate real estate broker registration of Realty, Inc. Immediately following the filing of the Administrative Complaint and the emergency suspension order, the Florida Department of Business and Professional Regulation filed a petition in circuit court seeking to place Realty, Inc., and a related corporation into receivership. The petition was granted, and Realty, Inc., and the related corporation were placed in receivership. Receivers were appointed to operate Realty, Inc., and the related corporation, and to take possession of the assets of Realty, Inc., and the related corporation. As of the date of the final hearing in this case, the receivership was still in effect, although the assets of Realty, Inc., and the assets of the related corporation had been sold. The receivers were able to conduct the business affairs of both Realty, Inc., and the related corporation without either corporation being registered as a real estate broker. Accordingly, it was of no importance to the receivers that Realty, Inc.'s, real estate broker registration had been suspended by emergency order or that such registration might be revoked as a result of the Administrative Complaint.4 Therefore, the receivers took no action to challenge the emergency suspension order or to defend Realty, Inc., against the charges in the Administrative Complaint. Specifically, the receivers did not file any response to the Administrative Complaint and did not request an evidentiary hearing on the charges against Realty, Inc. In June of 1996, counsel for the Florida Department of Business and Professional Regulation filed a motion with the Florida Real Estate Commission seeking entry of a final order against Realty, Inc., on the charges in the Administrative Complaint. Grounds for the motion were that there were no disputed issues of material fact, because Realty, Inc., had failed to respond to the service of the Administrative Complaint and had failed to request a hearing on the charges in the Administrative Complaint. The receivers of Realty, Inc., did not oppose the motion, because they were not concerned about the disposition of the charges in the Administrative Complaint. The Department's motion was, however, opposed by Ian Law and Benjamin Schiff. Messrs. Law and Schiff, through their legal counsel, Mark Herron, Esquire, filed a response in which they argued that the motion should be denied on the grounds that a final order revoking the registration of Realty, Inc., would have an adverse impact on the substantial interests of Messrs. Law and Schiff. In this regard they directed attention to Section 475.31(1), Florida Statutes, which reads as follows: An order revoking or suspending the license of a broker shall automatically cancel the licenses of all sales persons registered with the broker, and, if a partnership or corporation, of all members, officers, and directors thereof, while the license of the broker is inoperative or until new employment or connection is secured. Based on the above-quoted statutory provision, Messrs. Law and Schiff argued that, in order to protect their own interests, they were entitled to litigate the issue of whether Realty, Inc., was guilty of the violations alleged in the Administrative Complaint. Messrs. Law and Schiff also argued that it would be a violation of their personal due process rights if they were deprived of an evidentiary hearing on the issue of whether Realty, Inc., was guilty of the violations charged in the Administrative Complaint. By order dated June 18, 1996, the Florida Real Estate Commission denied the relief requested in the Department's motion and directed that the charges against Realty, Inc., be referred to the Division of Administrative Hearings for an evidentiary hearing.5 Since the issuance of the order placing Realty, Inc., in receivership (the order was issued October 6, 1995, nunc pro tunc to September 28, 1995), Messrs. Law and Schiff have not had any authority to take any action on behalf of Realty, Inc. That authority has been, and continues to be, vested solely in the receivers appointed to manage the affairs of Realty, Inc., and in the circuit judge who entered the receivership order. Neither the circuit judge nor the receivers ever retained legal counsel to represent Realty, Inc., in the underlying administrative proceedings from which this case arises. Neither the circuit judge nor the receivers ever authorized anyone else to retain legal counsel to represent Realty, Inc., in the underlying administrative proceedings from which this case arises. Specifically, neither the circuit judge nor the receivers ever retained or authorized anyone else to retain the law firm of Akerman, Senterfitt & Eidson, P.A., to represent Realty, Inc., in the underlying administrative proceedings. Similarly, neither the circuit judge nor the receivers have authorized either the law firm of Akerman, Senterfitt & Eidson, P.A., or Benjamin Schiff, Esquire, to file the instant proceeding on behalf of Realty, Inc.
Findings Of Fact On December 6, 1979, Respondent was employed by The Keyes Company as a sales associate in its Cutler Ridge branch office and was so employed until March 12, 1981. Pursuant to a power of attorney, Andrew Kasprik manages property owned by his father and located at 9604 Sterling Drive, Miami, Florida. Kasprik and Respondent met in October, 1980, and entered into an oral agreement whereby Respondent would obtain a tenant for the house on Sterling Drive and Kasprik would pay him one-half a month's rent for his services. On October 6, 1980, Respondent leased Kasprik's property to John and Debbie Protko on a month-to-month basis at a rent of $650 per month, and Kasprik paid Respondent the agreed-upon commission of $325. The Keyes Company has no record of a listing for rental of property at 9604 Sterling Drive during October, 1980, and Respondent did not turn in to Keyes any funds received by him as a commission or fee for the rental of that property. Prior to March, 1981, Kasprik never dealt directly with Keyes and never signed a listing agreement with Keyes for the rental of the Sterling Drive property. By Notice of Hearing dated November 17, 1981, Respondent was given notice of the hearing in this cause as required by the applicable statutes and rules. Respondent's copy of that notice was not returned, and the undersigned has received no communication from Respondent regarding his attendance or nonattendance.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is, therefore, RECOMMENDED THAT: A final order be entered finding Earnest Kelley guilty of the allegations in the Administrative Complaint filed against him and suspending Earnest Kelley's real estate salesman's license for a period of six months. RECOMMENDED this 19th day of February, 1982, in Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of February,1982 COPIES FURNISHED: Theodore J. Silver Esquire 9445 Bird Road Miami, Florida 33165 Frederick H. Wilsen, Esquire Assistant General Counsel Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Earnest Kelley 8640 S.W. 112th Street Miami, Florida 33156 Mr. Samuel R. Shorstein Secretary, Department of Professional Regulation 130 North Monroe Street Tallahassee, Florida 32301 Mr. Carlos B. Stafford Executive Director Board of Real Estate Department of Professional Regulation Post Office Box 1900 Orlando, Florida 32802 =================================================================
