93-002423 Division Of Real Estate vs. Danese B. Sloan-Kendall; The Sloan Kendall Group, Inc.; And S.K.G. Management, Inc. Status: Closed Recommended Order on Thursday, April 14, 1994.

Summary: Broker should be reprimanded for failure to insure that corporation was properly licensed; No intent to mislead Department or operate under non-registered name.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF BUSINESS )

AND PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 93-2423

)

DANESE B. SLOAN-KENDALL, THE )

SLOAN KENDALL GROUP, INC., and )

S. K. G., MANAGEMENT, INC., )

)

Respondents. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on December

30, 1993 in West Palm Beach, Florida, before J. Stephen Menton, a duly

designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

Post Office Box 1900

Orlando, Florida 32801

For Respondent: Danese B. Sloan-Kendall, pro se

5 Alford Court

Palm Beach Gardens, Florida 33418

STATEMENT OF THE ISSUE

The issue in this case is whether the real estate licenses issued to

Respondents should be suspended, revoked, or otherwise disciplined based upon

the alleged violations of Chapter 475, Florida Statutes, set forth in the

Administrative Complaint.

PRELIMINARY STATEMENT

On March 18, 1993, the Petitioner, the Department of Business and

Professional Regulation, Division of Real Estate (the "Department"), filed an

Administrative Complaint against the Respondents, alleging a total of nine

violations of Chapter 475, Florida Statutes. Specifically, the Administrative

Complaint alleged that Respondents' real estate broker licenses should be

disciplined for: culpable negligence or breach of trust in a business

transaction in violation of Section 475.25(1)(b), Florida Statutes, (Counts I,

II and III); violating Section 475.25(1)(e), Florida Statutes, by having

operated as a broker without being the holder of a valid and current license as

a broker (Counts IV, V and VI); failing to maintain trust funds in a real estate

brokerage escrow bank account or some other proper depository until disbursement

was properly authorized in violation of Section 475.25(1)(k), Florida Statutes,

(Counts VII 1/ and IX); and failing to assure that the Respondent Sloan-

Kendall Group, Inc., was registered with the Petitioner as required by Rule 21V-

5.019, Florida Administrative Code, which has subsequently been renumbered as

Rule 61V-2.019 (Count X). The Respondents contested the allegations contained

in the Administrative Complaint and requested a formal administrative hearing

pursuant to Section 120.57, Florida Statutes. The case was referred to the

Division of Administrative Hearings which noticed and conducted a hearing.

At the commencement of the hearing, the Department voluntarily dismissed

Counts I, II, III, VII and IX. Petitioner called Respondent Danese B. Sloan-

Kendall to testify and offered five exhibits into evidence, all of which were

accepted without objection.

Respondent Danese B. Sloan-Kendall also testified on behalf of Respondents

who offered ten exhibits into evidence, all of which were accepted without

objection.

At Petitioner's request, official recognition has been taken of Chapters

120, 455 and 475, Florida Statutes.

No transcript of the proceedings has been filed. Both parties filed

proposed recommended orders. A ruling on each of the parties' proposed findings

of fact is contained in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

1 At all times pertinent to this proceeding, Respondent Danese B. Sloan-

Kendall ("Sloan-Kendall") was a real estate broker in the State of Florida,

having been issued license numbers 3000323, 0264296, and 0396811 in accordance

with Chapter 475, Florida Statutes. Sloan-Kendall has been involved in the real

estate business for 20 years, eleven of which have been in Florida. She was

first licensed in Florida in February of 1984. There is no evidence of any

prior disciplinary action against her.

2 Over the last several years, Sloan-Kendall has owned or been affiliated

with several companies engaged in property management and real estate

brokerage, including the corporate Respondents in this case. As discussed in

more detail below, there was some confusion on the part of Respondents as to

when a corporation or other entity needed to be separately licensed and/or

registered with the Department. Because of address changes and corporate

changes, there were brief periods when one or more of the Respondents was not

properly registered and/or licensed. Any such lapses were inadvertent and it

does not appear that there was ever an attempt on the part of any of the

Respondents to operate under a non-registered name.

3 As of June 1993, License No. 0396811 was issued to Sloan-Kendall for the

address 4362 Northlake Boulevard, Palm Beach Gardens, Florida 33410. This

license was previously issued to Sloan-Kendall while she was employed by the

Allen Morris Co. In March 1987, she filed a request for License or Change of

Status form with the Department indicating that she was going to work as a sole

proprietor under the trade name of the Sloan-Kendall Group.

4. In March of 1990, Sloan-Kendall filed a Request for License or Change

of Status form with the Department. On this form, she disclosed her affiliation

with the Sloan-Kendall Group and S. K. G. Management, Inc. As best can be

determined from the evidence presented, Sloan-Kendall submitted this form to

insure that she was properly licensed for her activities undertaken on behalf of

S. K. G. Management, Inc. As discussed below, an application for the

corporation was filed at the same time. Apparently, as a result of the filing

of this form, the Department issued License No. 0264296 to Sloan-Kendall and

License No 0264295 to the corporate entity S. K. G. Management, Inc. As of June

1993, License No. 0264296 was issued to Sloan-Kendall as broker at the address

631 U.S. Highway One, Suite 406, West Palm Beach, Florida 33408.

5. As of March 1993, License No. 3000823 was issued to Sloan-Kendall, c/o

the Sloan-Kendall Group, Inc., 631 U.S. 1, Suite 200, North Palm Beach, Florida

33408. As best can be determined, this license was issued in January 1993 after

the issues in this case came to light. In March 1993, Sloan-Kendall advised the

Department that she had moved her office to suite 406 at the same address.

6. Sloan-Kendall's current business address for all of her licenses is 8895

North Military Trail, Suite D-104, Palm Beach Gardens, Florida 33408. She

notified the Department of this address in August 1993.

7 Respondent, the Sloan Kendall Group, Inc. (the "Group"), is a Florida

corporation which became registered as a real estate brokerage corporation in

the State of Florida effective January 13, 1993, having been issued License No.

1000359. As of June 1993, the registration for the Group listed the address as

631 U.S. Highway One, Suite 406, West Palm Beach, Florida 33408. This was the

same address listed on License No. 0264296 issued to Sloan-Kendall. As of March

1993, it was also the same address listed for License No. 3000823 issued to

Sloan-Kendall.

8 The Respondent S. K. G. Management, Inc. ("S. K. G."), is a Florida

corporation registered as a real estate broker in the State of Florida, having

been issued license number 0264295. S. K. G. was incorporated in November 1989.

The application for registration as a real estate brokerage corporation for S.

K. G. was submitted in March 1990 and listed the address as 631 U.S. Highway 1,

Suite 200, North Palm Beach, Florida 33408. S. K. G.'s affiliation with the

Group was noted on the application and Sloan-Kendall was listed as the

President. At some point, the Department was advised that the office was moved

to Suite 406 at the same address. This change was noted on the registration for

S. K. G. as of June, 1993. As noted above, in August 1993, Sloan-Kendall

advised that all of her operations were being conducted at 8895 North Military

Trail, Suite D-104, Palm Beach Gardens.

9 At all times pertinent hereto, Sloan-Kendall was licensed and operating

as qualifying broker and officer of the Group and S. K. G.

10 At some point in 1993, the Department began an investigation of

Respondents. The investigation focused on whether Respondents properly placed

escrow funds in an appropriate trust account. Sloan-Kendall and the Group were

managing several properties for the Resolution Trust Corporation ("RTC"). For

each property, an account entitled "operating account" was maintained. The

Respondents had authority to sign on the account, but did not own it. These

accounts were used as the depository accounts for the daily operation of the

RTC's various properties being managed by Respondents. Respondents' records

indicate rental funds were being placed into the "operating accounts" and

expenses were paid from the "operating accounts." All funds were accounted for.

Respondents' contract with the RTC mandated the funds be handled this way.

11 At the beginning of the hearing in this case, the Department announced

its determination that Respondents' handling of the operating accounts and the

escrow funds was proper. Accordingly Counts I, II, III, VII and IX were

dismissed.

12 During the course of the investigation, the Department's investigator,

Sue Williams, discovered that S. K. G. was an inactive corporation according to

the Florida Secretary of State. The corporation was administratively dissolved

in November 1990 for failure to file the necessary corporate reports. This

failure occurred after the business moved and no one noticed that the corporate

filing forms were not received and filed. Despite its dissolution, S. K. G.

continued to renew its registration with the Department.

13 As noted above, the Group did not become licensed with the Department

until January 1993. The evidence indicates that the Group was originally a

trade name under which Sloan-Kendall operated. Sloan-Kendall timely registered

the Group as a trade name and listed it on her filings with the Department. The

entity was incorporated in March 1989. When the Group was incorporated, Sloan-

Kendall did not immediately obtain a license for the corporation. In March

1990, Sloan-Kendall filed an Application and Request for Licensure of a Real

Estate Brokerage Corporation on behalf of S. K. G. Around the same time, she

filed a Request for License or Change of Status form with the Department. That

form noted her affiliation with S. K. G. and the Group and indicted that she

wanted a license issued in the name of the Group. The circumstances surrounding

these filings have not been fully explained and the evidence did not clearly

establish what action the Department took with respect to this request. Sloan-

Kendall assumed that she had taken the appropriate steps to notify the

Department of her business affiliations and obtain whatever licenses were

necessary. Apparently, the Department assumed from the information submitted

that the Group was simply a trade name so no corporate license was issued for

the Group. A license in the name of S. K. G. was issued at this time and a new

license was issued to Sloan-Kendall to reflect her role with that company.

CONCLUSIONS OF LAW

14 The Division of Administrative Hearings has jurisdiction over the

parties to and the subject matter of this proceeding. Section 120.57, Florida

Statutes (1993).

15 Section 475.25, Florida Statutes, authorizes the Department to take

disciplinary action against licensed real estate brokers for certain specified

violations. Among other things, Section 475.25(1)(e), Florida Statutes,

authorizes disciplinary action if a real estate broker:

(e) Has violated any of the provisions of

this chapter or any lawful order or rule made

or issued under the provisions of this chapter

or chapter 455.

16 The Department has the burden of proof in this license discipline case

and must prove the allegations set forth in the Administrative Complaint by

clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987);

Evans Packing Company v. Department of Agriculture and Consumer Services, 550

So.2d 112, 116 (Fla. 1st DCA 1989); Pic 'n Save v. Department of Business

Regulation, 601 So.2d 245 (Fla. 1st DCA 1992). The evidence must be of such

weight that it produces in the mind of the trier of fact a firm belief or

conviction, without hesitancy, as to the truth of the allegations sought to be

established." Slomowitz v. Walker, 429 So.2d 797, 800 (Fla. 4th DCA 1983).

Furthermore, the disciplinary action taken may be based only upon the offenses

specifically alleged in the Administrative Complaint. See, Sternberg v.

Department of Professional Regulation, Board of Medical Examiners, 465 So.2d

1324, 1325 (Fla. 1st DCA 1985); Kinney v. Department of State, 501 So.2d 129,

133 (Fla. 5th DCA 1987); Hunter v. Department of Professional Regulation, 458

So.2d 842, 844 (Fla. 2d DCA 1984).

17 In determining whether the licensee has violated Section 475.25,

Florida Statutes, as charged in the Administrative Complaint, one "must bear in

mind that it is, in effect, a penal statute . . . this being true the statute

must be strictly construed and no conduct is to be regarded as included within

it that is not reasonably proscribed by it. Furthermore, if there are any

ambiguities included such must be construed in favor of the . . . licensee."

Lester v. Department of Professional and Occupational Regulations, 348 So.2d

923, 925 (Fla. 1st DCA 1977).

18 As noted in the Preliminary Statement, the Department voluntarily

dismissed Counts I, II, III, VII and IX of the Administrative Complaint at the

commencement of the hearing in this matter. Thus, only Counts IV, V, VI and X

remain for disposition.

19 In Counts IV, V and VI of the Administrative Complaint, the Department

alleged that Respondents violated Section 475.25(1)(e), Florida Statutes, by

violating Section 475.42(1)(a), Florida Statutes. Section 475.42(1)(a)

provides:

No person shall operate as a broker or salesman

without being the holder of a valid and current

license therefore.

20 In Count X, the Department alleged that Sloan-Kendall violated Section

475.25 (1)(e) by failing to insure that the Group was properly registered as

required by Rule 21V-5.019, Florida Administrative Code, which has subsequently

been transferred to 61J2-5.019.

21. The evidence established that at all pertinent times, Sloan-Kendall

held a real estate broker license from the Department for each office from which

she was operating. S. K. G. maintained a registration with the Department even

though the corporation was dissolved for a period as a result of its failure to

file the necessary corporate report. The Group was not registered with the

Department until January 1993. It is clear, however, that the Department was

timely notified that Sloan-Kendall was conducting business in the name of the

Group. Apparently, there was some confusion as to whether it was necessary to

obtain a separate license for the Group. The confusion was due in part to the

fact that the Group was originally just a trade name and was not separately

incorporated. It does not appear that any of the Respondents were deliberately

attempting to avoid licensure requirements. Based upon these facts, it is

concluded that the Department has established the violations alleged in Counts

V, VI and X of the Administrative Complaint. Count IV should be dismissed since

Sloan-Kendall was properly licensed.

22 Section 475.25(1), Florida Statutes, authorizes the imposition of the

following penalties for a violation of the prohibited acts contained therein:

(1) The commission . . . may place a licensee,

registrant, or permittee on proba
t i o n ; m a y

suspend a license, registration, or permit for

a period not exceeding 10 years; may revoke a

license, registration, or permit; may impose an

administrative fine not to exceed $1,000 for each

count, or separate offense; and may issue a

reprimand, and any or all of the foregoing.

23 In determining what disciplinary action should be taken against

Respondents for having committed the violations alleged in Counts V, VI and X of

the Administrative Complaint, it is necessary to consult Rule 61J2-24.001,

Florida Administrative Code. Williams v. Department of Transportation, 531

So.2d 994, 996 (Fla. 1st DCA 1988). Subsection (3) of Rule 61J2-24.001, Florida

Administrative Code, provides that the normal range of penalties for a violation

of 475.25(1)(e), Florida Statutes, is "Up to 8 years suspension or revocation."

Subsection (3) of the Rule provides that the minimum penalty is a reprimand

and/or a fine up to $1,000.

24 Subsection (4)(a) of Rule 61J2-24.001, Florida Administrative Code,

provides that the Commission may impose a penalty outside the normal range where

there are mitigating or aggravating circumstances. The mitigating or

aggravating circumstances that may warrant such a deviation are described in

subsection (4)(b) of the Rule, as follows:

Aggravating or mitigating circumstances may

include, but are not limited to, the following:

1 The severity of the offense.

2 The degree of harm to the consumer or public.

3 The number of counts in the Administrative

Complaint.

4 The number of times the offenses previously have

been committed by the licensee.

5 The disciplinary history of the licensee.

6 The status of the licensee at the time the

offense was committed.

7 The degree of financial hardship incurred by a

licensee as a result of the imposition of a fine

or suspension of the licensee.

8 Violation of the provision of Chapter 475,

Florida Statutes, wherein a letter of guidance

as provided in Section 455.225(3), Florida

Statutes, previously has been issued to the license.

25 In Munch v. Department of Professional Regulation, Division of Real

Estate, 592 So.2d 1136, the First District Court of Appeal recently commented on

the role of the Commission in reviewing minimal, technical violations. Quoting

from Brod v. Jernigan, 188 So.2d 575, 581 (Fla. 2d DCA 1966), the court stated

as follows:

Chapter 475 vests in the Florida Real Estate

Commission a broad discretionary power and

authority to supervise the privileged business

of real estate broker and to deal firmly with

those engaged in it, even to the point of taking

away their means of livelihood by revocation or

suspension of license. But such potent

administrative weapons must always be reasonably

and cautiously, and even sparingly, utilized.

The administrative processes of the Commission

should be aimed at the dishonest and unscrupulous

operator, one who cheats, swindles, or defrauds

the general public in handling real estate

transactions. [citation ommited] 592 So.2d 1144-1145.

26 There is no evidence in this case of any prior disciplinary action

against the Respondents. Some of the original allegations in the Administrative

Complaint were potentially very serious. After a considerable amount of time

and effort was expended by the Department and Respondents, the Department

concluded that Respondents were not guilty of the more serious allegations. By

that time, Respondents had already incurred legal and other expenses. In view

of the technical nature of the violations established in this case, the facts

surrounding these violations, the lack of any prior disciplinary history, and

the expenses already incurred by Respondents in defending the dismissed charges,

it is concluded that no further financial penalty should be imposed on

Respondents.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that Counts I, II, III, IV, VII and IX of the Administrative

Complaint should be dismissed. It is further

RECOMMENDED that a final order be entered finding that Respondents have

violated Section 475.25(1)(e), Florida Statutes, by failing to comply with

Section 475.42, Florida Statutes, and Rule 21V-5.019, Florida Administrative

Code, as alleged in Counts V, VI and X. It is further

RECOMMENDED that Respondents receive a written reprimand.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 13th day of

April 1994.

___________________________________

J. STEPHEN MENTON

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 14th day of April 1994.

ENDNOTE

1/ The Administrative Complaint did not contain a Count VIII.

APPENDIX

Both parties have submitted proposed recommended orders. The following

constitutes my ruling on the proposed findings of fact submitted by the parties.

Petitioner's Proposed Findings of Fact.

1. Addressed in the preliminary statement.

2. Adopted in substance in Finding of Fact 1.

3. Adopted in substance in Findings of Fact 3-5.

4. Subordinate to Finding of Fact 7.

5. Subordinate to Finding of Fact 7.

6. Subordinate to Finding of Fact 8.

7. Subordinate to Finding of Fact 8.

8. Subordinate to Finding of Fact 9.

9. Adopted in substance in Finding of Fact 12

10. Adopted in substance in Finding of Fact 12.

11. Adopted in substance in Finding of Fact 12.

12. Rejected as vague and ambiguous.

13. Adopted in substance in Finding of Fact 10.

14. Adopted in substance in Finding of Fact 10.

Respondent's Proposed Findings of Fact.

Respondent's proposed recommended order adopts the proposed findings of

fact submitted by Petitioner and does not propose any additional findings.

Accordingly, the rulings made on Petitioner's proposed findings are applicable

to Respondent's as well.

COPIES FURNISHED:

James H. Gillis, Esquire

Department of Business and

Professional Regulation

Division of Real Estate

Post Office Box 1900

Orlando, Florida 32801

Danese B. Sloan-Kendall

5 Alford Court

Palm Beach Gardens, Florida 33418

Darlene F. Keller

Division Director

Division of Real Estate

Department of Professional

Regulation

Post Office Box 1900

Orlando, Florida 32802-1900

Jack McRay, General Counsel

Department of Business

and Professional Regulation

Suite 60

1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended

order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this recommended order. Any exceptions to this recommended order should be

filed with the agency that will issue the final order in this case.