08-005802PL Department Of Business And Professional Regulation, Division Of Real Estate vs. Michael W. Bugg Status: Closed Recommended Order on Wednesday, June 17, 2009.

Summary: Petitioner did not demonstrate that Respondent aided the unlicensed practice of real estate by hiring an unlicensed person as a sales agent.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 08-5802PL

)

MICHAEL W. BUGG, )

)

Respondent. )

)

RECOMMENDED ORDER

On April 10, 2009, a duly-noticed hearing was held by means

of video teleconferencing in Jacksonville and Tallahassee,

Florida, before Lisa Shearer Nelson, an Administrative Law Judge

assigned by the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Patrick Cunningham, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801

Orlando, Florida 32801

For Respondent: William Haley, Esquire

Brannon, Brown, Haley,

Robinson & Bullock, P.A.

Post Office Box 1029

Lake City, Florida 32056-1029

STATEMENT OF THE ISSUES

The issues to be decided in this proceeding are whether Respondent was guilty of the violations alleged in the two-count

Administrative Complaint and if so, what penalties should be

imposed.

PRELIMINARY STATEMENT

On January 17, 2008, the Department of Business and

Professional Regulation, Division of Real Estate (Division),

filed a two-count Administrative Complaint charging Respondent

with violating Section 455.227(1)(j)(aiding, assisting,

procuring, employing, or advising any unlicensed person or entity

to practice a profession contrary to Chapter 455, 475 or the

rules of the Division) and Section 475.25(1)(e) by virtue of

Section 475.42(1)(c), Florida Statutes (employing any person as a

sales associate who is not the holder of a valid and current

license as sales associate, and thus violating any part of

Chapter 475, Florida Statutes). On February 12, 2008, Respondent

filed an Election of Rights disputing the allegations in the

Administrative Complaint and requesting a Section 120.57(1)

hearing. On November 19, 2008, some nine months later, the

Division forwarded the matter to the Division of Administrative

Hearings for assignment of an administrative law judge.

A Notice of Hearing issued on November 25, 2008, scheduling

the case for hearing to be conducted February 19, 2009. At the

request of Respondent, the hearing was continued and rescheduled

for April 10, 2009, and proceeded as scheduled.

Petitioner presented the testimony of Fred Seli and Marsha

Creviston, and Petitioner's Exhibits 1-5 were admitted into

evidence. Respondent testified on his own behalf and presented

the testimony of Clifton Coates, and Respondent's Exhibits A-F

were admitted. The proceedings were recorded and a Transcript

was filed with Division of Administrative Hearings on May 6,

2009. At the request of the parties, the time for filing

proposed recommended orders was extended until May 22, 2009.

Respondent filed a Proposed Recommended Order May 20, 2009.

Petitioner's Proposed Recommended Order was filed May 26, 2009,

and no objection to its late filing has been entered. Both

submissions have been carefully considered in the preparation of

this Recommended Order.

Respondent also filed a Request for Official Recognition on

May 11, 2009, asking for official recognition of the Department

of Professional Regulation, Division of Real Estate, Florida Real

Estate Commission News & Report, Summer 1992, Volume XL. The

Department has not filed any objection to the request, and it is

hereby granted. Unless otherwise indicated, all references shall

be to the codification of the Florida Statutes in effect at the

time of the conduct alleged, i.e. , 2005.

FINDINGS OF FACT

1. Petitioner is the state governmental agency charged with

the licensing and regulation of real estate brokers and sales

associates, pursuant to Section 20.165 and Chapters 120, 455, and

475, Florida Statutes.

2. Respondent is and was at all times material to these

proceedings, a licensed real estate broker, issued license number

BK-3013375.

3. Respondent is the qualifying broker for Lifestyles

Realtors, LLC, d/b/a Belleza (Lifestyles), located at 1400 Marsh

Landing Parkway, Suite 112, Jacksonville, Florida, and was the

qualifying agent at the time of the events giving rise to this

case. Lifestyles is an agency that works primarily for

developers.

4. On or about August 2005, Lifestyles employed Clifton

Coates. At the time he was hired, Clifton Coates was not

licensed as a real estate sales associate or broker in the State

of Florida. He was a long-time friend of the Respondent.

5. At the inception of his employment, Mr. Coates worked in

marketing under the supervision of the vice president of

marketing, Katie Armstrong. In that capacity, he worked on floor

plans, brochures, and communications with the developer for a

major project with which the company was involved. He did not

have a role in terms of contact with potential buyers of real

estate.

6. The project was a condominium project called Esplanade.

Lifestyles started selling units of the project in November 2005.

At that time, the project was still under construction. When the

sales began in November, volume was very heavy, so Mr. Coates

began working with the sales team, which consisted of two

licensed agents on the premises, Julie Seago and Marcia

Creviston. He did so at the developer's request because of his

familiarity with the particular type of development being

marketed.

7. Throughout his employment, Mr. Coates was a salaried

employee. He did not receive commissions from any of the

properties sold. He wore a name tag that simply listed his name

and the name of the company.

8. When customers came into the sales office, Mr. Coates

would see that they were comfortable, take down preliminary

information such as their name and address and what their plans

were, and input the information into a computer. He would hand

out preprinted brochures, and would relay prices provided by the

developer. He did not show the actual property, but would show

customers a scaled model of the project that was on display in

the sales area. Mr. Coates dealt only with people who came into

the sales office. No evidence was presented to show that he took

any action to advertise the project or induce people to come look

at it.

9. If the customer indicated a desire to purchase a unit,

Mr. Coates would enter the information regarding the unit the

customer wanted, pull the fields from the initial welcome

information, and the computer would self-populate the remaining

information for a contract.

10. Mr. Coates could not change or negotiate anything

related to price of a unit, the price of upgrades, the amount of

the deposit or where it went. All of these items were controlled

by the developer.

11. Once Mr. Coates entered the information into the

computer and a contract was generated, Mr. Coates would take the

printed contract and the customer to Julie Seago, a licensed

sales agent. Ms. Seago would go over the contract with the

customers and, should the customer ultimately decide to purchase

the property, would sign the contract on behalf of Lifetsyles.

12. Based on the evidence presented, a contract with Gina

Gatlin was signed by Ms. Seago. There was no credible evidence

presented regarding the Gatlin sale other than that Ms. Seago

signed the contract and an internal listing existed showing

Mr. Coates as the agent for the sale. However, this internal

listing identifies people as "agent" based upon whose computer

terminal is used to input data, as opposed to any information

regarding licensure.

13. Mr. Coates took the real estate examination and became

a licensed agent in April 2006. Until that time, he abided by

the instructions given to him when he first worked with the sales

team. At that time, he was given a list of "do's and don'ts"

that purported to be from the Florida Real Estate Broker's Guide

published by the Florida Association of Realtors. This same list

was also printed in the Florida Real Estate Commission's

newsletter in the summer of 1992.

14. The list, upon which Mr. Coates and Respondent relied,

indicated that it was permissible for an unlicensed person to

answer and forward telephone calls; write ads for approval of a

supervising broker or licensee; receive, record and deposit

earnest money and deposits; type contract forms for approval by a

licensee and supervising broker; prepare flyers and promotional

information for approval by licensee and supervising broker;

answer oral questions about listings if the answer could be

obtained from preprinted materials; and hand out objective,

written information on a listing, along with other activities not

relevant to these proceedings. Mr. Coates' activities did not

vary from these permissible activities.

15. In short, Mr. Coates did not show properties, but only

a model. He did not negotiate prices. He did not hold himself

out as a licensed agent; did not receive commissions; and did not

set closing dates. Mr. Coates did not engage in the unlicensed

sale of real estate, and Respondent did not assist him in doing

so.

CONCLUSIONS OF LAW

16. The Division of Administrative Hearings has

jurisdiction over the subject matter and the parties to this

action in accordance with Sections 120.569 and 120.57(1), Florida

Statutes (2008).

17. The Department seeks to discipline Respondent's license

as real estate broker. It therefore has the burden of proving

the allegations of the Administrative Complaint by clear and

convincing evidence. Department of Banking and Finance v.

Osborne Stern & Co. , 670 So. 2d 932 (Fla. 1996); Ferris v.

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

18. Count I of the Administrative Complaint charges

Respondent with violating Section 455.227(1)(j), Florida

Statutes, which provides:

(1) The following acts shall constitute

grounds for which the disciplinary actions

specified in subsection (2) may be taken:

* * *

(j) Aiding, assisting, procuring, employing,

or advising any unlicensed person or entity

to practice a profession contrary to this

chapter, the chapter regulating the

profession, or the rules of the department or

the board.

19. The Legislature has defined the terms "broker" and

"salesperson" in Section 475.01, Florida Statutes:

(1) As used in this part:

(a) "Broker" means a person who, for

another, and for a compensation or valuable

consideration directly or indirectly paid or

promised, expressly or impliedly, or with an

intent to collect or receive a compensation

or valuable consideration therefor, . . .

sells, . . . or offers, attempts or agrees to

appraise, auction, or negotiate the sale ,

exchange, purchase, or rental of . . . any

real property or any interest in or

concerning the same, . . ., or who advertises

or holds out to the public by any oral or

printed solicitation or representation that

she or he is engaged in the business of . . .

selling, . . . real property of others or

interests therein, . . . or who takes any

part in the procuring of sellers, purchasers ,

lessors, or lessees of business enterprises

or business opportunities or the real

property of another, . . . or who directs or

assists in the procuring of prospects or in

the negotiation or closing of any transaction

which does, or is calculated to, result in a

sale, exchange, or leasing thereof, and who

receives, expects, or is promised any

compensation or valuable consideration,

directly or indirectly therefore . . . . A

broker renders a professional service and is

a professional within the meaning of s.

95.11 (4)(a). . . . (Emphasis supplied.)

* * *

(j) "Sales associate" means a person who

performs any act specified in the definition

of "broker," but who performs such act under

the direction, control, or management of

another person. . . .

20. The Division has not demonstrated by clear and

convincing evidence that Respondent committed the violation

alleged in Count I. Mr. Coates was employed initially for

another purpose, i.e. , to work on floor plans and other marketing

materials needed for the developer. He assisted the sales team

once the units began to sell. However, he was salaried, received

no commissions, exercised no discretion and engaged in no

negotiations. He referred only to preprinted materials and a

scaled model, and relayed cost information controlled and

provided by the developer. At Respondent's request, Mr. Coates

followed the guidelines printed in the Florida Real Estate

Commission's newsletter regarding what an unlicensed person can

do and did not engage in those activities that were identified as

prohibited.

21. Count II of the Administrative Complaint asserts that

Respondent is guilty of having employed any person as a sales

associate who is not the holder of a valid and current license as

a sales associate, in violation of Section 475.42(1)(c), Florida

Statutes, and therefore violated Section 475.25(1)(e), Florida

Statutes.

22. Section 475.42(1)(c) provides:

(c) A broker may not employ, or continue in

employment, any person as a sales associate

who is not the holder of a valid and current

license as sales associate; but a license as

sales associate may be issued to a person

licensed as an active broker, upon request

and surrender of the license as broker,

without a fee in addition to that paid for

the issuance of the broker's active license.

23. Section 475.25(1)(e) provides:

(1) The commission may deny an application

for licensure, registration, or permit, or

renewal thereof; may place a licensee,

registrant, or permittee on probation; may

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, if it finds that the

licensee, registrant, permittee, or

applicant:

* * *

(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.

24. The Department has not demonstrated by clear and

convincing evidence the allegations in Count II because it has

not demonstrated that Mr. Coates was employed as a sales

associate. As noted above, the term sales associate is defined

by statute. Given that the Department did not prove that

Mr. Coates acted within the definition of a real estate broker,

he also did not act as a sales associate. Therefore, no

violation of Section 475.42, and by extension, Section

475.25(1)(e) has been proven.

RECOMMENDATION

Upon consideration of the facts found and conclusions of law

reached, it is

RECOMMENDED:

That the Florida Real Estate Commission enter a final order

dismissing the Administrative Complaint.

DONE AND ENTERED this 17th day of June, 2009, in

Tallahassee, Leon County, Florida.

S

LISA SHEARER NELSON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone]

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 17th day of June, 2009.

COPIES FURNISHED:

Patrick J. Cunningham, Esquire

Department of Business and

Professional Regulation

400 West Robinson Street

Hurston Building-North Tower, Suite N801

Orlando, Florida 32801

William Haley, Esquire

Brannon, Brown, Haley,

Robinson & Bullock, P.A.

Post Office Box 1029

Lake City, Florida 32056-1029

Ned Luczynski, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-0792

G. W. Harrell, Executive Director

Construction Industry Licensing Board

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.