99-005314 Department Of Business And Professional Regulation, Division Of Florida Land Sales, Condominiums, And Mobile Homes vs. Robert E. Poindexter Status: Closed Recommended Order on Wednesday, June 28, 2000.

Summary: Applicant for renewal of yacht salesman license showed he had good moral character; the Agency should grant the renewal.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT Of BUSINESS and )

PROFESSIONAL REGULATION, )

DIVISION Of FLORIDA LAND SALES, )

CONDOMINIUMS AND MOBILE HOMES, )

)

Petitioner, )

)

vs. ) Case No. 99-5314

)

ROBERT E. POINDEXTER, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

An administrative hearing was conducted in this proceeding

on April 12, 2000, in Viera, Florida, before Daniel Manry,

Administrative Law Judge ("ALJ"), Division of Administrative

Hearings ("DOAH").

APPEARANCES

For Petitioner: Scott K. Edmonds

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-2202

For Respondent: Thomas C. Houck, Esquire

312 South Harbor City Boulevard

Melbourne, Florida 32901

STATEMENT OF THE ISSUE

The issue in this case is whether Petitioner shou ld deny

Respondent's application for a yacht salesperson's license on the

ground that Respondent failed to furnish proof of his good moral

character in violation of Section 326.004(6)(a), Florida Statutes

(1999). (All chapter and section references are to Florida

Statutes (1999) unless otherwise stated.)

PRELIMINARY STATEMENT

Petitioner served Respondent with a Notice of Intent to Deny

License Renewal Application on or about November 18, 1999. On

December 7, 1999, Respondent requested an administrative hearing.

On December 17, 1999, Petitioner referred the matter to DOAH for

assignment of an ALJ to conduct the hearing.

At the hearing, Petitioner presented the testimony of two

witnesses and submitted seven exhibits for admission in evidence.

Respondent testified in his own behalf, called two witnesses, and

submitted 13 exhibits for admission in evidence.

The identity of the witnesses and exhibits, and the rulings

regarding each, are set forth in the Transcript of the hearing

filed on May 12, 2000. The parties timely filed their respective

proposed recommended orders ("PRO") on June 16, 2000.

FINDINGS OF FACT

1. Petitioner is the state agency responsible for

regulating yacht and ship salespeople and brokers and for

administering and enforcing Chapter 326. Respondent is a

licensee applying for renewal of a yacht salesperson's license.

2. Respondent applied for and the Division approved

Respondent's initial yacht salesperson's license in 1995.

Pursuant to Section 326.004(1), yacht salesperson's licenses are

valid for a two-year period. In addition, Respondent formerly

held a state contractor's license and a real estate broker's

license from Petitioner's agency.

3. The Construction Industry Licensing Board ("CILB") is a

division of Petitioner. The CILB served Respondent with an

administrative complaint regarding his contractor's license in

March 1997. In 1998, the Florida Real Estate Commission ("FREC")

revoked Petitioner's real estate license. The Division did not

become aware of the administrative proceedings against

Respondent's construction and real estate licenses until August

1998.

4. By final order issued March 19, 1998, the CILB fined

Respondent and suspended his state contractor's license for five

years. The CILB found that Respondent violated Section

489.129(1)(h)(2), (k) and (m). Respondent committed

mismanagement that caused financial harm to a customer by

accepting deposit money but failing to perform on the contract;

abandoned the construction project under contract by failing to

begin construction for a period of five months; and engaged in

deceitful conduct in the practice of contracting. The CILB also

found that Respondent violated Section 489.129(1)(n) by

committing incompetence and misconduct in the practice of

contracting.

5 . The victims in Respondent's CILB case received

$22,845.00 from the Construction Industries Recovery Fund as

compensation for the harm they suffered due to Respondent's

violation of Section 489.129(1)(h)(2). Respondent's obligation

to pay restitution to the victims was discharged in bankruptcy.

Respondent is still paying the fines and interest ordered in the

CILB license suspension case involving his construction license.

6. After the CILB suspended Respondent's contractor's

license, FREC, another division of Petitioner, issued an

administrative complaint seeking to revoke Respondent's real

estate broker's license on the ground that the CILB had suspended

Respondent's construction license. Respondent voluntarily

surrendered his real estate broker's license for revocation. By

final order dated August 19, 1998, FREC revoked Respondent's real

estate broker's license.

7. Respondent timely applied for, and the Division

approved, the renewal of Respondent's yacht salesperson's license

in August 1997. On this renewal application, Respondent answered

"N" to question number four which asked whether there were any

cases pending against the applicant.

8. In August 1999, Respondent timely applied for renewal of

his yacht salesperson's license. Petitioner denied the

application on the sole ground that Respondent failed to show

that he is of good moral character in violation of Section

326.004(6)(a). Petitioner determined that Respondent failed to

show good moral character based on the CILB suspension of

Respondent's contractor's license, FREC's revocation of

Respondent's real estate license, and Petitioner's conclusion

that Respondent had answered question four on his 1997 renewal

application untruthfully in violation of Section 326.006(2)(f)1.

Petitioner relied solely on a review of the documents in its file

and did not conduct an independent investigation or interview

Respondent.

9. Respondent did not falsely answer "no" to question four

on his 1997 renewal application. Question four asked, in

relevant part:

Has any judgment or decree of court been

entered against you or is there now pending

any case, in this or any other state, in

which you were charged with any fraudulent or

dishonest dealing.

10. Question four limited its scope to judgments, decrees,

and cases pending in any court in this or another state and did

not ask for disclosure of administrative proceedings.

Administrative agencies, including DOAH, are not courts. The

administrative complaint filed against Respondent in March 1997

was not a case pending in a court in this or another state. As

Petitioner noted on its Investigative Report, ". . . a final

order of an agency is not a judgment or decree of court."

11. Respondent construed question four on his 1997 renewal

application to be limited to courts. Respondent's interpretation

was reasonable and valid. It was not intended to deceive

Petitioner.

12. In August 1998, an attorney for FREC informed

Respondent that he should disclose administrative proceedings in

addition to court cases. Respondent immediately informed

Petitioner by telephone and letter of the pending administrative

proceedings.

13. In the renewal application filed in 1999, Respondent

disclosed the suspension of his construction license, the

revocation of his real estate license, and answered "yes" to

question four on the application. In an effort toward full

disclosure, Respondent answered "yes" to question three when

Respondent should have answered "no." Question three asked

Respondent if he had been convicted of a crime.

14. The only finding from the suspension of Respondent's

construction license by the CILB and the revocation of

Respondent's real estate license by FREC that is at issue in this

case is a finding by ALJ Daniel M. Kilbride that Respondent

committed fraud and deceit by adding a provision for a commission

at the end of a construction contract entered into on December

23, 1994. By final order entered on March 16, 1998, the CILB

adopted the Recommended Order of Judge Kilbride.

15. The judicial doctrine of equitable estoppel, or

estoppel by judgment, bars the re-litigation of factual and legal

issues common to both the CILB case and this case. Therefore,

the finding that Respondent committed fraud and deceit in 1994

cannot be litigated in this case.

16. The good moral character of Respondent was not at issue

in the license suspension case decided by Judge Kilbride.

Therefore, Respondent is entitled to present evidence of his good

moral character in this case including evidence that explains and

mitigates the circumstances of the 1994 transaction in an effort

to show that Respondent does not now lack good moral character.

17. The sales commission at issue in the 1994 transaction

was to be paid out of Respondent's proceeds from the construction

contract. It was not an additional expense to be paid by the

buyers. It did not increase the construction price of the house.

The commission was to be paid by Respondent for services provided

by Castle Real Estate on behalf of Respondent.

18. The buyers did not object to the insertion of the

commission provision at the end of the contract. The buyers did

not object to the commission being paid at closing.

19. The construction lender released the funds for the

commission as part of the construction draw Respondent received.

The funds were not separately identified, and Respondent had no

knowledge that the lender had released the funds as part of the

construction draw.

20. Respondent was an active builder in the local real

estate market. He had constructed several "spec" homes. When

the real estate market declined, Respondent incurred financial

problems attributable to subcontractors and was unable to service

the debt he owed on the "spec" homes.

21. Respondent declared bankruptcy in 1996. The buyers in

the 1994 transaction did not make any request for refund until

after Respondent had declared bankruptcy. Respondent could not

make preferential payments to creditors after he declared

bankruptcy.

22. More than five years have passed since the 1994

transaction. Even if Respondent lacked good moral character in

1994, he now possesses good moral character.

23. Respondent is now in stable financial condition.

Respondent has made all payments due under the license suspension

order in a timely manner.

24. Respondent is a licensed captain in the Coast Guard

Auxiliary. He has served as a commodore of the local boating

club and as a former public affairs officer in charge of public

education for the local flotilla.

25. Respondent has conducted himself with integrity in all

of his yacht sales. Respondent enjoys an excellent reputation in

the boating community for honesty and integrity. Respondent's

knowledge about yachts is above average.

26. Over a span of 15 years, Respondent has held licenses

with the state as a mortgage broker, real estate salesman, and

real estate broker. During that time, no complaints have ever

been filed against Respondent for his activities under those

licenses. The revocation of Respondent's real estate license was

based on the suspension of Respondent's construction license by

the CILB. The complaint filed against Respondent's construction

license involved a single isolated transaction that occurred more

than five years ago for which there were significant mitigating

circumstances.

CONCLUSIONS OF LAW

27. DOAH has jurisdiction over the subject matter and

parties. The parties were duly noticed for the administrative

hearing.

28. Petitioner cannot employ the refusal to renew a

license, to one who has previously demonstrated that he satisfies

the statutory prerequisites including good moral character, as a

substitute for a license revocation proceeding. Dubin v.

Department of Business Regulation , 262 So. 2d 273 (Fla. 1st DCA

1972). The power to stop the renewal of a license once issued

and needed in order to engage in a specific business should be

exercised with no less careful circumspection than the original

issuance of the license. Wilson v. Pest Control Commission of

Florida , 199 So. 2d 777 (Fla. 4th DCA 1967). Once a license has

been issued, the annual renewal of the license is a ministerial

duty. If a violation occurs, Petitioner must resort to

revocation rather than a denial of renewal. Dubin , 262 So. 2d at

275.

29. Petitioner has incorrectly used the license renewal

process as a substitute for a license disciplinary proceeding.

In August 1998, Petitioner had all of the information in its file

that it had when Respondent applied for renewal of his license.

Rather than proceeding with a license discipline proceeding,

Petitioner waited for Respondent to renew his license and then

denied the renewal.

30. Petitioner incorrectly argues that evidence explaining

the circumstances surrounding the 1994 transaction is barred by

the judicial doctrine of collateral estoppel. The doctrine of

collateral estoppel does not bar the ALJ from considering

evidence presented by Respondent to explain the circumstances

surrounding the 1994 transaction. The evidence is not considered

for the purpose of re-litigating the finding in the license

suspension case that Respondent committed fraud and deceit in

1994. The evidence is considered for the purpose of determining

whether Respondent can show he now possesses good moral

character. Respondent's good moral character was neither a

factual nor legal issue in the license suspension case.

31. An applicant previously disciplined in administrative

orders may explain and mitigate the circumstances of the earlier

transactions in an effort to demonstrate that he is not now a

person who lacks good moral character. Mitigation evidence

regarding a guilty finding of a felony is admissible in a

subsequent administrative hearing to show good moral character.

McGraw v. Department of State, Division of Licensing , 491 So. 2d

1193 (Fla. 1st DCA 1986). Similarly, mitigation evidence of the

circumstances surrounding previous discipline in administrative

proceedings is admissible to show current worthiness to transact

business. Osborne Stern and Company, Inc. v. Department of

Banking and Finance, Division of Securities and Investor

Protection , 647 So. 2d 245, (Fla. 1st DCA 1994).

32. In Castleman v. Office of Comptroller , 538 So. 2d 1365

(Fla. 1st DCA 1989), the court held that the ALJ erred by

excluding evidence explaining the facts underlying other

disciplinary orders against an applicant for a securities license

under Chapter 517. In relevant part, the court stated:

We do so on the rationale that the applicable

provisions in Chapter 517 do not direct

denial of the application merely upon proof

that such disciplinary history adjudications

have occurred. Rather, those provisions

require the Department to make a

discretionary determination that the

applicant is not of good repute and has

demonstrated his unworthiness to transact

business of an associated person in order to

deny the application. The applicable

statutes and rules contemplate that an

applicant previously disciplined pursuant to

administrative orders may explain and

mitigate the circumstances of those

transactions in an effort to demonstrate that

he is not now a person of bad business repute

and unworthy to transact securities business.

33. Like the statutes and rules at issue in Castleman ,

Florida Administrative Code Rule 61B-60.003(3) does not direct

denial of an application merely upon proof of prior disciplinary

history. Rather, the rule requires Petitioner to make a

discretionary determination of an applicant's good moral

character based on factors that "bear upon good moral character."

Those factors are not conclusive.

34. Petitioner has the burden of proof in this proceeding.

Petitioner must show by clear and convincing evidence that

Respondent lacks good moral character. Ferris v. Turlington , 510

So. 2d 292 (Fla. 1987). Petitioner failed to satisfy its burden

of proof.

35. Petitioner did not conduct an independent investigation

of Respondent's good moral character. Petitioner relied solely

on a review of the documents in its agency file and a telephone

conversation with Respondent. Section 326.004(6)(a) does not

direct denial of Respondent's application merely upon proof that

disciplinary history adjudications have occurred. Section

326.004(6)(a) requires Petitioner to exercise its agency

discretion by considering all of the facts and circumstances that

bear upon good moral character.

36. Respondent showed that he possesses good moral

character within the meaning of Section 326.004(6)(a). The 1994

transaction was a single isolated incident in an otherwise

unblemished career. The 1994 transaction involved substantial

mitigating circumstances sufficient to refute the culpable intent

inherent in bad moral character. In the five years since the

1994 transaction, Respondent has established a reputation for

honesty and competency.

RECOMMENDATION

Based upon the foregoing Findings of Fac t and Conclusions of

Law, it is

RECOMMENDED that Petitioner enter a final order finding that

Respondent has good moral character, within the meaning of

Section 326.004(6)(a), and renewing Respondent's yacht

salesperson's license.

DONE AND ENTERED this 28th day of June, 2000, in

Tallahassee, Leon County, Florida.

___________________________________

DANIEL MANRY

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahas see, 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 28th day of June, 2000.

COPIES FURNISHED:

Ross Fleetwood, Director

Division of Florida Land Sales,

Condominiums and Mobile Homes

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

Scott K. Edmonds

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street, Suite 60

Tallahassee, Florida 32399-2202

Thomas C. Houck, Esquire

312 South Harbor City Boulevard

Melbourne, Florida 32901

Barbara D. Auger, 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

agency that will issue the final order in this case.