98-002878 Division Of Real Estate vs. Mercedes M. Powers And Patricia A. Fleck Status: Closed Recommended Order on Friday, May 14, 1999.

Summary: Where deposit check was lost by receptionist, realtors cannot be charged with failing to immediately deposit check into escrow fund.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-2878

)

MERCEDES M. POWERS and )

PATRICIA A. FLECK, )

)

Respondents. )

________________________________)

RECOMMENDED ORDER

Pursuant to notice, this matter was heard on March 23, 1999,

in Brooksville, Florida, before Donald R. Alexander, the assigned

Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Ghunise Coaxum, Esquire

Division of Real Estate

400 West Robinson Street

Suite N-308

Orlando, Florida 32801-1772

For Respondents: Charlie Luckie, Jr., Esquire

Post Office Box 907

Brooksville, Florida 34605-0907

STATEMENT OF THE ISSUE

The issue is whether Respondents' real estate licenses

should be disciplined on the ground that Respondents violated a

rule and various provisions within Chapter 475, Florida Statutes,

as alleged in the Administrative Complaint filed by Petitioner on

May 20, 1998.

PRELIMINARY STATEMENT

This matter began on May 20, 1998, when Petitioner,

Department of Business and Professional Regulation, Division of

Real Estate, issued an Administrative Complaint charging that

Respondents, Mercedes M. Powers and Patricia A. Fleck, both

licensed real estate brokers, had violated a rule and various

provisions within Chapter 475, Florida Statutes, when they

handled a real estate transaction in 1997.

Respondents denied the allegations and requested a formal

hearing under Section 120.569, Florida Statutes, to contest the

charges. The matter was referred by Petitioner to the Division

of Administrative Hearings on June 29, 1998, with a request that

an Administrative Law Judge be assigned to conduct a formal

hearing. By Notice of Hearing dated September 4, 1998, a final

hearing was scheduled on March 23, 1999, in Brooksville, Florida.

On March 22, 1999, the case was transferred from Administrative

Law Judge Diane Cleavinger to the undersigned.

At final hearing, Petitioner presented the testimony of

George B. Sinden, an agency investigator, and Douglas K. Rogers,

the complaining consumer. Also, it offered Petitioner's

Exhibits 1-5. All exhibits were received in evidence.

Respondents testified on their own behalf and presented the

testimony of Mary Giftis, an employee of the real estate firm.

Also, they offered Respondents' Exhibits 1-4. All exhibits were

received in evidence.

The Transcript of the hearing was filed on April 22, 1999.

Proposed Findings of Fact and Conclusions of Law were filed by

Petitioner and Respondents on May 7 and 10, 1999, respectively,

and they have been considered by the undersigned in the

preparation of this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of

fact are determined:

1. When the events herein occurred, Respondents, Mercedes

M. Powers and Patricia A. Fleck, were both licensed as real

estate brokers, having been issued license numbers 0151412 and

0027277, respectively, by Petitioner, Department of Business and

Professional Regulation, Division of Real Estate (Division).

Fleck served as qualifying broker for Patricia A. Fleck Real

Estate, 5466 Spring Hill Drive, Spring Hill, Florida, while

Powers was employed as a broker-salesperson at the same firm.

2. Douglas K. Rogers, a Spring Hill resident, was

interested in purchasing a lot in a Spring Hill subdivision and

observed a "for sale" sign on Lot 7 at 12287 Elmore Drive. The

lot was owned by Wayne and Faith Ryden, who resided in North

Hero, Vermont. Rogers contacted the Rydens by telephone in mid

or late March 1997 to ascertain the price of the lot.

3. Rogers had also seen a nearby lot for sale carrying a

sign from Respondents' firm. On March 23, 1997, he telephoned

Powers and inquired about another lot in the same subdivision.

Powers contacted the owners but learned that they did not want to

sell. After relaying this advice to Rogers, she told him that

she had a listing on Lot 6; however, Rogers was not interested in

Lot 6 and merely indicated he would "get back" to her later.

4. On April 3, 1997, Rogers again telephoned Powers and

told her he was interested in purchasing Lot 7, which was owned

by the Rydens. Powers invited Rogers to come to her office where

she would call the sellers. Powers then "ran the public record"

and learned that the Rydens owned the lot.

5. On Friday, April 4, 1997, in the presence of Rogers,

Powers telephoned Mrs. Ryden and spoke with her for three or four

minutes. In response to an inquiry from Mrs. Ryden, Powers

indicated that if the Rydens listed the property with her, she

would represent the sellers; otherwise, she would represent the

buyer in the transaction. Based on Mrs. Ryden's response, Powers

was led to believe that the Rydens wanted Powers to represent

them in the transaction. Accordingly, she explained the

arrangement to Rogers, and he voluntarily signed an Agency

Disclosure form which acknowledged that he understood, and agreed

with, that arrangement.

6. With Powers' assistance, that same day Rogers executed a

contract for the sale and purchase of Lot 7 for a price of

$8,500.00. The contract called for the sellers to accept the

offer no later than April 7, 1997, or three days later, and that

the contract would close by May 15, 1997, unless extended by the

parties. The contract further called for Rogers to provide a

$200.00 cash deposit, which was "to be placed in escrow by

4-7-97." The contract, listing agreement, and expense report

were all sent by overnight mail to the Rydens the same day.

7. Because Rogers did not have sufficient cash for a

deposit with him, he advised Powers that he would return with a

check the following Monday, or April 7. Notwithstanding the

language in the contract, he gave Powers specific instructions

that when he delivered a check, she was to hold it until the

Rydens signed the contract, and then deposit the money. This is

confirmed by a contemporaneous note made by Powers which read:

"Mr. Rogers will bring check Monday. Then to hold until Rydens

sign contract, then deposit it."

8. Rogers testified that he delivered check no. 3497 in the

amount of $200.00 to a receptionist in Respondents' office

approximately two hours after he executed the contract. He also

says he got the receptionist to make a copy of the face of the

check, which has been received in evidence as Petitioner's

Exhibit 5.

9. If in fact a check was actually delivered to a

receptionist that day, that person lost the check and never

advised Powers or Fleck (or anyone else) that one had been

delivered. Indeed, until June 6, 1997, Respondents were not

aware that one was purportedly delivered, and they never saw a

copy of the face of the check until they received the

Administrative Complaint, with attached exhibits, in May 1998.

The original check has never surfaced, and it was never presented

for payment to the bank. Under these circumstances, it was

impossible for Respondents to deposit the check in the firm's

escrow account, as required by rule and statute.

10. According to a Division investigator, there have been

other instances where a realtor denies receiving a deposit from

the buyer. It can be fairly inferred from his testimony that

when this occurs, if the realtor's denial is accepted as being

true, the realtor will not be held accountable.

11. At no time did Respondents ever intend to violate any

rule or statute governing the deposit of escrow funds; had they

known that a check had been delivered to the firm, it would have

been handled in an appropriate manner.

12. The contract technically expired on April 7, 1997, when

the Rydens had not yet accepted the offer. However, on April 8,

1997, Powers again contacted Mrs. Ryden by telephone since Powers

had not received a reply. Based on that conversation, which led

Powers to believe that the Rydens may not have received the first

set of documents, Powers re-sent by overnight mail copies of the

contract, agency disclosure, and expense sheet to the Rydens with

a request that they either accept or refuse the contract, but in

either event, to return the contract and let her know their

decision. The Rydens, however, never extended her the courtesy

of a reply. It is fair to infer from the evidence that by now,

Rogers had again contacted the Rydens by telephone about

purchasing the lot in a separate transaction so that the parties

would not have to pay a realtor's commission.

13. Rogers telephoned Powers once or twice in April or

May 1997 to ask if the contract had ever been returned by the

Rydens. He made no mention of his check. Those inquiries are

somewhat puzzling since Rogers was well aware of the fact that

the parties intended to negotiate a separate agreement. In any

event, on the reasonable belief that the contract had never been

accepted, and no deposit had ever been made by Rogers, Powers did

nothing more about the transaction until June 6, 1997, when

Rogers telephoned her at home that evening asking for "his

check." By then, he had a separate binding contract with the

Rydens for the sale of the lot; he had already stopped payment on

the check a week earlier; and he knew that it had never been

deposited.

14. Powers advised Rogers that if in fact his check was at

the office, he could drop by the next day at 10:30 a.m. and get

it from the broker. Rogers came to the office the next morning,

but he arrived at around 8:45 a.m., or well before Powers

expected him. In Powers' absence, the on-duty receptionist was

unsuccessful in locating his file (which was in Powers' office)

and the check.

15. On June 14, 1997, Rogers sent a complaint to the

Division. That complaint triggered this proceeding. It is fair

to infer that Rogers filed the complaint to gain leverage in the

event Respondents ever brought an action against him to recover

their lost real estate commission.

16. Unknown to Respondents, on June 10, 1997, the sale was

completed, and the Rydens executed and delivered a warranty deed

to Rogers and his wife conveying the property in question.

17. For all their efforts in attempting to accommodate

Rogers, Respondents were deprived of a real estate commission

through the covert acts of the buyer and seller, and they were

saddled with the legal costs of defending this action.

18. In terms of mitigating and aggravating factors, it is

noted that Fleck was never involved with this transaction until

the demand for the check was made in June 1997. There is no

evidence that Powers has ever been disciplined by the Real Estate

Commission on any prior occasion. On an undisclosed date,

however, Fleck received a fine and was required to complete a

30-hour broker management course for failing to adequately

supervise a "former rental manager" and failing to "timely notify

FREC of deposit dispute." Neither Rogers or the Rydens suffered

any harm by virtue of the deposit check being lost, and the

parties completed the transaction on their own without paying a

commission. During the course of the investigation, Respondents

fully cooperated with the Division's investigator.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties hereto

pursuant to Sections 120.569 and 120.57(1), Florida Statutes.

20. Because Respondents' professional licenses are at risk,

Petitioner bears the burden of proving by clear and convincing

evidence that the allegations in the Administrative Complaint are

true. See , e . g ., Ramsey v. Dep't of Prof. Reg., Division of Real

Estate , 574 So. 2d 291 (Fla. 5th DCA 1991).

21. In the single count involving Powers, she is charged

with failing to immediately place with her registered employer

money entrusted to her as agent of the employer in violation

of Rule 61J2-14.009, Florida Administrative Code, and

Section 475.25(1)(k), Florida Statutes. By violating the

rule and statute, it is charged that she also violated

Section 475.25(1)(e), Florida Statutes.

22. Count II of the Administrative Complaint charges that

Fleck is "guilty of failure to immediately deposit trust funds"

in violation of Rule 61J2-14.010, Florida Administrative Code,

which constitutes a violation of Section 475.25(1)(e), Florida

Statutes. Count III alleges that Fleck "is guilty of having

failed to properly supervise the activities of Respondent's

salespersons," as required by Section 475.01(1)(d), Florida

Statutes. By violating that statute, it is alleged that Fleck

also violated Section 475.25(1)(e), Florida Statutes.

23. As to Count I, the more credible evidence shows that

Powers had no knowledge that a check was purportedly delivered to

her firm; thus, she was never entrusted with money from Rogers.

Under these circumstances, she cannot be held accountable for

failing to immediately place with her registered employer money

entrusted to her as an agent of her employer, as charged in the

Administrative Complaint. Therefore, Count I must necessarily

fail.

24. Under the same rationale, Fleck cannot be held

accountable for failing to immediately deposit trust funds, as

required by Rule 61J2-14.010, Florida Administrative Code. Like

Powers, Fleck had no knowledge that a check had been purportedly

delivered by Rogers to the firm, and she never had money

entrusted to her as a broker. Therefore, Count II should be

dismissed.

25. Finally, there is less than clear and convincing

evidence that Fleck failed to properly supervise Powers during

the aborted transaction. This is because Powers violated no

statute or rule during her brief participation in the aborted

transaction, and thus there is no wrongdoing that can be imputed

to her broker. Therefore, Count III should also fail.

26. Although the undersigned has recommended dismissal of

all charges, paragraph (4) of Rule 61J2-24.001, Florida

Administrative Code, identifies aggravating and mitigating

circumstances which, if present, entitle the Commission to

deviate from the suggested disciplinary guidelines. Relevant to

this proceeding are the mitigating circumstances set forth in

Finding of Fact 18, which clearly justify a downward deviation

from the penalty guidelines, assuming arguendo that a rule or

statute had technically been violated.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Florida Real Estate Commission enter a

final order dismissing the Administrative Complaint, with

prejudice.

DONE AND ENTERED this 14th day of May, 1999, in Tallahassee,

Leon County, Florida.

___________________________________

DONALD R. ALEXANDER

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 14th day of May, 1999.

COPIES FURNISHED:

Herbert S. Fecker, Director

Division of Real Estate

Post Office Box 1900

Orlando, Florida 32802-1900

Ghunise Coaxum, Esquire

Division of Real Estate

400 West Robinson Street

Suite N-308

Orlando, Florida 32801-1772

Charlie Luckie, Jr., Esquire

Post Office Box 907

Brooksville, Florida 34605-0907

William M. Woodyard, General Counsel

Department of Business and

Professional Regulation

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 Florida Real

Estate Commission.