00-001617 Department Of Business And Professional Regulation, Division Of Real Estate vs. Lee H. Davis Status: Closed Recommended Order on Tuesday, March 13, 2001.

Summary: Respondent guilty of failure to keep funds in escrow account and failure to return funds upon proper demand.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner , )

)

vs. ) Case No. 00-1617

)

LEE H. DAVIS, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this

case before Lawrence P. Stevenson, a duly-designated

Administrative Law Judge of the Division of Administrative

Hearings, via teleconference at sites in Orlando and

Tallahassee, Florida, on February 5, 2001.

APPEARANCES

For Petitioner : Sunia Y. Marsh, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Suite N-308A

Orlando, Florida 32801-1772

For Respondent : No appearance

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent, Lee H. Davis,

committed the offenses alleged in an Administrative Complaint

issued against him on August 16, 1999.

PRELIMINARY STATEMENT

On August 16, 1999, Petitioner, the Department of

Business and Professional Regulation, Division of Real Estate,

issued a four-count Administrative Complaint (the "Complaint")

against Respondent, Lee H. Davis. Count I of the Complaint

alleges that Respondent is guilty of failure to account for or

deliver funds, in violation of Subsection 475.25(1)(d )1,

Florida Statutes. Count II of the Complaint alleges that

Respondent is guilty of misrepresentation, concealment,

dishonest dealing, culpable negligence, or breach of trust in

any business transaction, in violation of Subsection

475.25(1)(b), Florida Statutes. Count III of the Complaint

alleges that Respondent is guilty of failure to maintain trust

funds in the real estate brokerage escrow account or other

proper depository until disbursement was properly authorized,

in violation of Subsection 475.25(1)(k), Florida Statutes.

Count IV of the Complaint alleges that Respondent is guilty of

having collected money in connection with a real estate

brokerage transaction not in the name of his employer and

without his employer's express consent, and is guilty of

commencing or maintaining an action for a commission or

compensation against a person other than his registered

employer, in violation of Subsection 475.42(1)(d), Florida

Statutes, and therefore in violation of Subsection

475.25(1)(e), Florida Statutes.

Respondent disputed the allegations of fact in the

Administrative Complaint by an Election of Rights dated

February 29, 2000.

Copies of the Administrative Complaint and the Election

of Rights were filed with the Division of Administrative

Hearings on April 17, 2000, by Petitioner with a request that

the matter be assigned to an Administrative Law Judge. The

matter was assigned to the undersigned and scheduled for

hearing on July 25, 2000. On June 16, 2000, Petitioner's

motion to take deposition by telephone and motion to use

deposition as evidence at formal hearing were granted. On

July 12, 2000, Petitioner's motion to place the case in

abeyance was granted, pending settlement negotiations. On

November 1, 2000, Petitioner filed a status report, stating

that the parties had been unable to reach a settlement and

requesting that the matter be set for hearing. On November 7,

2000, the undersigned issued an order setting the matter for

hearing on January 30, 2001. Two additional continuances were

granted, with the hearing ultimately being held on February 5,

2001.

The formal hearing of this case was conducted via

telephonic conference. The undersigned was located in

Tallahassee. Petitioner and the court reporter were located

at the offices of the Division of Real Estate in Orlando.

Respondent failed to appear or participate in the formal

hearing.

Petitioner presented the deposition testimony of

Robert Trindle, Brian Piper, and John Brouillette.

Petitioner's Exhibits 1 through 10 were accepted into

evidence.

On February 5, 2001, an Order to Show Cause was issued,

informing Respondent that the formal hearing had taken place

in his absence and providing Respondent a period of ten days

in which to show cause why the record in the proceeding should

not be closed. Respondent did not respond to the Order to

Show Cause.

A Transcript of the hearing was filed on February 20,

2001. Pursuant to Petitioner's request, proposed orders were

due 15 days after filing of the Transcript. Petitioner timely

filed a Proposed Recommended Order on March 7, 2001.

FINDINGS OF FACT

1. Petitioner, the Department of Business and

Professional Regulation, Division of Real Estate (hereinafter

referred to as the "Division"), is an agency of the State of

Florida. The Division is charged with the responsibility for,

among other things, regulating the practice of persons holding

real estate brokers' and real estate salespersons' licenses in

Florida. Section 20.165, and Chapters 455 and 475, Florida

Statutes.

2. Respondent, Lee H. Davis, is and was at all times

relevant to this matter licensed as a real estate broker in

Florida, issued License Number 0186063. The last license

issued was as an involuntary inactive broker, c/o 815 New

Waterford Drive, No. 204, Naples, Florida 34104.

3. On or about August 24, 1995, Respondent executed a

form 400.5 and submitted it to the Division to register as a

salesperson with Sentry Realty and Property Management, Inc.

("Sentry"). At all times relevant to these proceedings,

Respondent was registered with the Division as employed by

Sentry.

4. On or about September 7, 1995, Respondent facilitated

a contract for sale and purchase (the "contract") between

Robert Trindle as buyer and John Petracelli as seller/builder

for property described as Hallandale Park, Plat Book 12, Page

37, Block 37, Lots 6,7,8, a/k/a approximately 2801 North East

214 Street, North Miami Beach, Florida. Mrindle testified

that he intended to purchase a townhouse to be built by Mr.

Petracelli as part of a project to include 40 to 50

townhouses.

5. The contract provided that a $3,900 deposit was to be

held by "Lee H. Davis Escrow Agent." Mrindle gave

Respondent two checks totaling $3,900, as the earnest money

deposit on the purchase price of $130,000. The first check,

dated October 9, 1995, was for $1,000. The second check,

dated November 3, 1995, was for $2,900. The checks were made

out to "Lee H. Davis-- Escrow." Also noted on the checks was

"Davena Group Inc.," which Mrindle understood to be

Respondent's real estate company. Each check was negotiated

by Respondent within a week of its receipt.

6. At the time of this transaction, Respondent's

registered broker was John Brouillette of Sentry. Respondent

did not place the escrow deposit with Mr. Brouillette, who

testified that he knew nothing of the transaction at the time

it occurred and never saw the contract.

7. Respondent represented to Mrindle that he would

maintain the escrow deposit as broker during this transaction.

Mrindle did not give Respondent permission to transfer the

escrow deposit to the builder/seller, Mr. Petracelli.

8. Correspondence from Respondent indicated that he did

turn the escrow deposit over to Mr. Petracelli, without

informing Mrindle. Mr. Petracelli never built the

promised townhouses. Rather, he left the country, absconding

with Mrindle's escrow deposit along with monies provided

by other purchasers and/or investors in the project.

9. Mrindle attempted to contact Respondent regarding

the status of his escrow deposit, but was unable to reach him

prior to the filing of his complaint with the Division. As of

the date of the hearing, the earnest money deposit had not

been returned to Mrindle.

CONCLUSIONS OF LAW

10. The Division of Administrative Hearings has

jurisdiction of the parties to and the subject matter of this

proceeding. Section 120.57, Florida Statutes. The parties

were duly noticed for the administrative hearing.

11. The burden of proof in this proceeding was on the

Division, the party asserting the affirmative of the issue :

that Respondent committed violations of Subsection 475.25(1),

Florida Statutes. See Florida Department of Transportation v.

J.W.C. Company, Inc. , 396 So. 2d 778 (Fla. 1st DCA 1981) ;

Balino v. Department of Health and Rehabilitative Services ,

348 So. 2d 349 (Fla. 1st DCA 1977). The Division was required

to meet its burden by clear and convincing evidence. Ferris

v. Turlington , 510 So. 2d 292 (Fla. 1987).

12. A real estate licensee is charged with knowledge of

Chapter 475, Florida Statutes. Wallen v. Florida Department

of Professional Regulation, Division of Real Estate , 568 So.

2d 975 (Fla. 3d DCA 1990).

13. Section 475.25, Florida Statutes, authorizes the

Florida Real Estate Commission to take disciplinary action

against the license of any real estate broker or real estate

salesperson if the licensee commits certain specified acts.

Of the specified acts of Subsection 475.25(1), Florida

Statutes, Respondent was charged with violating the following:

(b ) Has been guilty of fraud,

misrepresentation, concealment, false

promises, false pretenses, dishonest dealing

by trick, scheme, or device, culpable

negligence, or breach of trust in any

business transaction in this state or any

other state, nation, or territory; has

violated a duty imposed upon her or him by

law or by the terms of a listing contract,

written, oral, express, or implied, in a real

estate transaction. . . .

* * *

(d )1. Has failed to account or deliver to

any person . . . at the time which has been

agreed upon or is required by law or, in the

absence of a fixed time, upon demand of the

person entitled to such accounting and

delivery, any personal property such as

money, fund, deposit, check, draft, abstract

of title, mortgage, conveyance, lease, or

other document or thing of value, including a

share of a real estate commission. . . .

* * *

(k ) Has failed, if a broker, to

immediately place, upon receipt, any money,

fund, deposit, check, or draft entrusted to

her or him by any person dealing with her or

him as a broker in escrow with a title

company, banking institution, credit union,

or savings and loan association located and

doing business in this state, or to deposit

such funds in a trust or escrow account

maintained by her or him with some bank,

credit union, or savings and loan association

located and doing business in this state,

wherein the funds shall be kept until

disbursement thereof is properly

authorized. . . .

14. Respondent is also charged with violating

Subsection 475.42(1)(d), Florida Statutes, which provides that

no salesperson shall collect any money in connection with a

real estate brokerage transaction except in the name of the

employer and with the express consent of the employer. This

violation is punishable through Subsection 475.25(1)(e),

Florida Statutes, which provides discipline for violations of

any provision of Chapter 475.

15. The evidence established that Respondent registered

with the Division as employed by Sentry, as of August 24,

1995. If Respondent thereafter did business as an employee or

principal of "Davena Group Inc.," he did so without properly

filing a form 400.5 with the Division.

16. Respondent facilitated the contract at issue while

registered as an employee of Sentry. The evidence established

that Respondent facilitated the contract without the knowledge

and consent of Mr. Brouillette, his registered broker, in

violation of Subsection 475.42(1)(d), Florida Statutes.

17. The evidence established that Respondent received an

earnest money deposit of $3,900 from Mrindle, and that

Respondent represented to Mrindle that the money would be

held in escrow. Respondent in fact turned the money over to

Mr. Petracelli, who absconded with it. Respondent's actions

constitute misrepresentation, concealment, dishonest dealing,

culpable negligence and breach of trust, in violation of

Subsection 475.25(1)(b), Florida Statutes.

18. The evidence established that Respondent collected

the escrow deposit not in the name of Mr. Brouillette, his

registered broker, and without the express consent of Mr.

Brouillette, in violation of Subsection 475.42(1)(d), Florida

Statutes.

19. The evidence established that Respondent failed to

maintain the deposit in escrow until Mrindle authorized

disbursement, in violation of Subsection 475.25(1)(k), Florida

Statutes.

20. The evidence established that Respondent took no

effective steps to account to Mrindle as to the status of

the escrow funds, and that Respondent failed to deliver the

funds to Mrindle upon demand, in violation of

Subsection 475.25(1)(d )1, Florida Statutes.

21. Subsection 475.25(1), Florida Statutes, provides a

range of penalties that the Florida Real Estate Commission may

impose upon a real estate licensee, including revocation;

suspension for a period not to exceed ten years;

administrative fines not to exceed $1,000 for each count or

separate offense; reprimand; probation; or any combination of

the foregoing. Rule 61J2-24.001(3), Florida Administrative

Code, sets forth ranges of suggested discipline and has been

considered in this case.

22. Disciplinary statutes are penal in nature and must

be strictly interpreted against the authorization of

discipline and in favor of the person sought to be penalized.

Munch v. Department of Business and Professional Regulation ,

592 So. 2d 1136, 1143 (Fla. 1st DCA 1992) ; Fleischman v.

Department of Business and Professional Regulation , 441 So. 2d

1121, 1123 (Fla. 3d DCA 1983).

23. The Division has shown by clear and convincing

evidence that Respondent committed the violations set forth in

the Complaint. The Division submitted evidence sufficient to

establish Respondent's culpability and shift the burden to

Respondent to dispute that evidence or, at least, to offer

evidence in mitigation of the facts established by the

Division. Respondent declined to appear at the hearing or

otherwise contest the case presented by the Division.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions

of Law, it is

RECOMMENDED that a final order be entered by Petitioner

finding that Respondent has violated Subsections 475.25(1)(b),

475.25(1)(d )1, 475.25(1)(e), 475.25(1)(k), and 475.42(1)(d),

Florida Statutes, as alleged in the Administrative Complaint

issued against Respondent, and that Respondent's real estate

license be revoked.

DONE AND ENTERED this 13th day of March, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

LAWRENCE P. STEVENSON

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 [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of March, 2001.

COPIES FURNISHED:

Sunia Y. Marsh, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

400 West Robinson Street

Suite N-308A

Orlando, Florida 32801-1772

Lee H. Davis

815 New Waterford Drive, No. 204

Naples, Florida 34104

Herbert S. Fecker, Director

Division of Real Estate

Department of Business and

Professional Regulation

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32802-1900

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this recommended order. Any

exceptions to this recommended order should be filed with the

agency that will issue the final order in this case.