15-006775PL Department Of Business And Professional Regulation, Real Estate Commission vs. Brenda W. Smith Status: Closed Recommended Order on Friday, July 29, 2016.

Summary: Respondent's license as a real estate broker should be revoked for violation of real estate broker license standards.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND

PROFESSIONAL REGULATION, REAL

ESTATE COMMISSION,

Petitioner,

vs. Case No. 15 - 6775PL

BRENDA W. SMITH,

Respondent.

_______________________________/

RECOMMENDED ORDER

An administrative hearing was conducted in this case on

March 22 , 2016, in Pensacola, Flo rida, before James H.

Peterson, III, an Administrative Law Judge with the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Brande L. Miller, Esquire

Crystal D. Stephens, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

For Respondent: Brenda W. Smith, pro se

Post Office Box 15453

Panama City, Florida 32406 - 8503

STATEMENT OF THE ISSUE S

Whether Respond ent, Brenda W. Smith, violated s ections

475.25(1)(b) and 475.25(1)(d)1., Florida Statutes (2013 ), 1/ as

alleged in the Administrative Complaint and , if so, what is the

appropriate penalty.

PRELIMINARY STATEMENT

On April 13, 2015, Petitioner, Department of Busine ss and

Professional Regulation (Petitioner or the Department ) , filed a

two - count Administrative Complaint before the Florida Real

Estate Commission against Respondent, Brenda W. Smith

( Respondent), alleging certain violations of c hapter 475,

Florida Statutes, in connection with RespondentÓs rental

management of real property located at 3803 Long John Drive,

Panama City Beach, Florida 32408. Respondent timely filed an

Election of Rights form disputing the allegations and requesting

an administrative hearing .

On December 1, 2015, the Department referred the case to

t he Division of Administrative Hearings (DOAH) for assignment of

an administrative law judge. The case was originally assigned

to Administrative Law Judge Lisa Shearer Nelson and scheduled

for a n administrative hearing to be held by video teleconference

on February 19, 2016 . The case wa s subsequently transferred to

the undersigned to conduct the hearing . By Order dated

February 17, 2016 , the hearing was continued and rescheduled for

a hearing to be held live in Panama City on March 22, 2016 .

At hearing, o ff icial recognition was taken of c hapters 120

and 475, Florida Statutes, and Florida Administrative Code

Rule 61J2 - 24.001 . The Department presented the testimony of

Department inve stigator, Jack Case ; the owner of the subject

rental property , Dorothy Roberts 2 / ; and one of the tenants of the

subject property, Lori Pridgen . The Department offered 1 0

exhibits which were received into evidence as PetitionerÓs

Exhibit s P - 1 through P - 4, P - 6, P - 8 , P - 18, P - 22, P - 25, and P - 26 .

Respondent testified on her own behalf and presented the

testimony of her husband, Jesse Smith . Respondent also

introduced 15 e xhibits received into evidence as Exhibits R - 1

through R - 15.

The proceedings were recorded and a transcript was ordered.

The parties were given 45 days from the filing of the transcript

within which to file proposed recommended orders. A two - volume

Transcript of the proceeding was filed April 29, 2016 . The

partie s timely filed their respective Proposed Recommended

Order s, wh ich were considered in preparing this Recommended

Order.

FINDINGS OF FACT

1. Petitioner is the state agency charged with the

responsibility and duty to prosecute real estate licensees,

pursu ant to section 20.165 and c hapters 120, 455, and 475,

Florida Statutes.

2. Respondent is licensed by Petitioner as a r eal estate

b roker in the s tate of Florida, license BK 534400.

3. RespondentÓs address of record with Petitioner is Post

Office Box 15453, Panama City, Florida 32406.

4. RespondentÓs b rokerage, Spirits Realty, Inc., is a

registered for - profit corporation in the s tate of Florida with

its principal place of business listed as 3812 Dolphin Drive,

Panama City Beach, Florida 32408 , an d a mailing address listed

as Post Office Box 15453, Panama City, Florida 32406 .

5. On May 31, 2012, Respondent, on behalf of her

brokerage, Spirit s Realty, Inc., entered into a property

management a greement (Property Management Agreement) with

Ronald W. Roberts to manage the rental of Mr. RobertsÓ property

located at 3803 Long John Drive, Panama City Beach, Florida

32408. 3 / The term of the Property Management Agreement was for

one year , beginning May 31, 2012 , and provided :

THI S PROPERTY MANAGEMENT AGREE MENT is made

on the 31 st day of May 2012 and is effective

31 May 2012 by and between Ronald W. Roberts

whose address is 3555 Walden Land, Acworth,

Ga 30102, hereinafter referred to as ÐOwnerÑ

and SPIRITS REALTY INC., BRENDA SMITH,

LICENSED REAL ESTATE BROK ER, Post Office Box

15453, Panama City, Florida 32406,

hereinafter referred to as ÐAgent Ñ.

WITNESSETH in consideration of the mutual

promises and covenants herein contained, the

Owner and Agent agree as follows:

1. The Owner repre sents to the Agent as

follows: (a) The Owner is the sole owner

and holder of marketable record title to the

following described property: 3803 Long

John Drive, Panama City Beach, F lorida

32408. The Owner hereby appoints the Agent

as the sole and exclusive Agent to Lease and

manage the premises known as 3803 Long John

Drive.

2. This Agreement is for 1 year beginning

31 May 2012. Agent to enter into an

agreement for 1 year lease, $1000 per month

rental, tenant to pay Jun/July rent in

advance (non - refundable); & $1000 securi ty

deposit . The owner agrees to the following:

Spirits Realty Inc. Commission of 10% of the

rents collected in each calendar month

(which shall be deducted from rents

collected each month). Spirits Realty Inc.,

Hancock Bank, holds the security deposit

( for liquidated damages) and advanced last

mo nths [sic] rent in Escrow. If Agent is

not available, Jesse Smith, Admin, is

authorized signer.

4. [sic] Owner authorizes the broker to

secure tenant; and enter into a 1 year

lease. Manage tenant relations collecting,

give receipts, holding and disbursing rents

to owner, serving notices, initiating

eviction & damage actions. Agent will

receive and forward $ 2500 check from tenant

to Ron Roberts, for sale agreement of

furniture and furnishings, on site.

6. The Property Management Agreement was signed by

Ronald W. Roberts and notarized in Cherokee County, Georgia , on

May 31, 2012.

7. Notably, the Property Management Agreement does not

require advanced notice on the part of the Owner to terminate

the Property Management Agreement.

8. On May 31, 2012, Respondent and/or Spirits Realty Inc. ,

ostensibly acting on behalf of Mr. Roberts, entered into a four -

page residential lease agreement drafted by Respondent ( Lease )

with Allen Pridgen and Lori Roark ( n/k/a Lori Pridgen) , as

tenants, for the rental of Mr. Ro bertsÓ property located at

3803 Long John Drive, Panama City Beach, Florida 32408 (the

Premises) . The term of the Lease was for one year, from June 1,

2012 , through June 30, 2013 .

9. Curiously, instead of naming Mr. Roberts as the lessor,

the first s entence on the first page of the Lease names ÐSpirits

Realty Inc., Brenda Smith, Lic. Real Estate Broker, AgentÑ as

ÐLessor.Ñ The bottom of the first page of the Lease states

ÐPage 1 of 1.Ñ In addition, p age four of the L ease submitted by

Respondent as part of her Exhibit R - 7 (which page was not

included in the copy of the Lease submitted by Petitioner as

part of Exhibit P - 2) is signed by Respondent and Spirits Realty ,

Inc. , on and below the signature line labeled ÐLessor , Ñ

respectively.

10. By comparing t he signatures of the ÐLesseesÑ on the

last page of the Lease (page four) with the signatures on the

exhibit entitled ÐSecurity Deposit/Advance Last Months [sic]

Rent Receipt Ñ (Deposit Receipt) , it is apparent that Allen and

Lori Pridgen both signed page four of the Lease on May 31, 2012 ,

as Lessees .

11. As documented by the Deposit Receipt , o n May 31, 2012,

Respondent collected from Allen and Lori Pridgen a $1,000 c ash

s ecurity d eposit , plus $1,000 as the last monthÓs rental p ayment

under the Lease. The Deposit Receipt , signed by both of the

Pridgens , as well as Respondent , provides that the monies

collected would be held in a Ðnon - interest bearing account

Spirits Realty, Inc. EscrowÑ with Hancock Bank in Panama City

Beach, Florida.

12. Mr. Roberts signed a typed statement on May 31, 2012 ,

printed on paper with a fax number, date, and time in the top

margin, stating: ÐThe four page Residential Lease on Long John

D rive, Panama City Beach, Florida , is hereby agreed upon and

approved by the property owner Ronald W. Roberts.Ñ

13. The next year , Respondent prepared a document entitled

Ð Lease Renewal Agreement Ñ (Lease Renewal) for renewal of the

Lease for another seven months , from June 1, 2013 , to January 1,

2014. The initial paragraph of the Lease Renewal listed the

parties as :

Lessor 4 / : Allen Pridgen & Lori [ Pridgen ]

Agent: Spirit s Realty Inc., Lic. Real

Estate Broker

14. The Lease Renewal kept all terms of the Lease in

effect and provided that the Security Deposit and last month Ó s

rent would continue to be held in Hancock Bank. The Lease

Renewal also stated:

That tenants shall pay a monthly rental of

$1,000 for each month by the 1 st of each

month to Spirits Realty, Inc., for the

Renewal Term. Tenants agree to give 60 days

written notice prior to vacating property,

Or give notice of intent to renew lease for

up to one year.

15. According to dates next to their signatures , the Lease

Renewal was signed by Al an and Lori Pridgen on May 30, 2013; by

Brenda Smith for Ð Spirits Realty Inc and B renda Smith, Lic Real

Estate BrokerÑ on May 31, 2013; and by Dor othy and Ronald

Roberts as ÐP roperty O wner Ñ on June 4, 2013.

16. I n late 2013, the Roberts decided to terminate the

Property M anagement Agreement and manage the rental of the

Premises themselves. The decision to terminate the agreement

was made a short time after the tenants had a problem with a

water leak and a f aulty water heater. Because the tenants

considered the problem to be an emergency, they dealt directly

with the Roberts, who, as owners, authorized the tenants to pay

for the required repairs directly and take the payment off the

rent.

17. On December 1, 2013, Mr. Roberts spoke to Respondent

on the telephone and advised her that the Roberts no longer

wanted to use RespondentÓs brokerage, Sprits Realty, Inc., for

property management services and that they were going to

terminate the Property Management Agreement. Ms. Roberts was

present with her husband during the telephone conversation and

overheard the discussions. During the conversation, Respondent

told Mr. Roberts that they needed to give her at least a 60 - day

notice of termination , and Mr. Roberts advised Respondent that

their termination of the Property Ma nagement Agreement would be

effective February 1, 2014 .

18. The next day, December 2, 2013 , the Roberts sent a

letter by certified mail to Respondent , at her address , and to

Spirits Realty, Inc. , at it s address . The letter was signed by

both Mr. and Ms. Roberts , witnessed and notarized , and stated:

Dear Mrs. Smith,

Per our conversation on December 1,

2013, please accept this letter as a 60 day

formal notification t hat we wish to

terminate the contract we currently have

with Spirit Realty for Property Management

Services. As of 2/1/2014, we will no longer

require your services in handling the

property management for 3803 Long John

Drive , Panama City, Florida, 32408.

Please forward the security deposit

that you collected from the tenant, Alan

Pridgen in 2012 and are currently holding in

an escrow account. You can mail it to

Ronald & Dorothy Roberts at 3555 Walden

Lane, Acworth, Georgia 301 02.

We appreciate your time and services

since Mr. Pridgen began occupying the

property.

19. Although multiple attempts we re made to deliver the

letters, they were returned unaccepted.

20. The Roberts made additional attempts to contact

Respondent by telephone, but were unabl e to do so.

21. By another letter sent by certified mail to Respondent

dated January 16, 2014, Mr. and Ms. Roberts again requested in

writing that Res pondent forward to them the $2,000 identified in

the Deposit Receipt . The letter reiterated the fact that in a

telephone conversation on December 1, 2013 , Respondent was

advised that the Roberts were terminating the Property

Management Agreement. The letter was returned unaccepted.

22. Although the Roberts letters to Respondent dated

December 1, 201 3, and January 16, 2014, were returned

unaccepted, RespondentÓs own exhibit, a copy of a certified

letter that Respondent allegedly sent to the tenants on

December 11, 2013, acknow ledges that Mr. Roberts called on

December 1, 2013 , regardin g both the Lease and the Property

Management Agreement . T he first paragraph on the third page of

RespondentÓs December 11, 2013, letter to the tenants states :

1 Dec 2013 Ron Roberts called SRI [Spirits

Realty, Inc.] agent saying Alan [Pridgen]

paid over $900 in improvement costs having

to do with the air conditioner and hot water

heater - & Alan would not be paying rent due

1 Jan 2014 Î SRI would not receive a

management fee Î triggering liquidated

damages clause. Breach of lease. Lease Î

Agreement/relationship of landlord & tenant

(real property) or lessor and lessee Î

specifes [sic] 10 % rent compensation.

23. Further, during her cross - examination of Ms. Roberts

at th e final hearing, Respondent acknowledged that she had

spoken on the telephone with Mr. Roberts on December 2, 201 3 ,

and that during the conversation the subject of breaking a

contract with a real estate person was discussed. While it is

found that the telephone conversation occurred on December 1,

2013, as opposed to December 2, 2013, it is evident that the

conversation indeed occurred.

24. Based on the evidence, it is found that on December 1 ,

2013, the Roberts effectively communicated their desire to

terminate the Property Management Agreement, effective

February 1, 2014 . Further, although the certified letters were

refused, it is found that the Roberts timely asked Respondent

for return of the $2 , 000 reflected in the Deposit Receipt.

25. In addition to the letters that the Roberts sent to

Respondent , after speaking to the Roberts , Ms. Pridgen prepared

a letter , at the RobertsÓ request, for her husband to send to

Respondent , dated December 1, 2013, which stated:

Brenda,

This letter is to inform you that I no

longer wish to continue my contract with you

and the Roberts. I have been renting this

property since June of 2012, the original

contract was for one year. I agreed to rent

the property for an additional 6 months

which is now up. I no longer wish to

contin ue this contract with Spirits Realty

Inc.

Thank you

Allen D. Pridgen

26. The letter was sent to Respondent by certified mail on

December 4, 2013, but Respondent never picked it up.

27. Shortly after her conversation with Mr. Roberts on

December 1, 2013, Respondent called the police and tried to have

the Pridgens evicted from the Premises. The Roberts explained

over the phone to the police officer that they , not Respondent,

were the owne rs of the Premises. The Pridgens were not evicted.

28. Ms. PridgenÓs credible testimony explained that they

did not intend to vacate the Premises, but rather plan ned to

continue to rent it directly from the Roberts. As of the date

of the final hearing, the Pridgens were still leasing the

Premises from Ms. Roberts.

29. To date, Respondent has not return ed to Ms. Roberts,

as owner with responsibilities over the Lease , either the $1,000

Security Deposit or the $1,000 Advanced Rent she collected from

the tenants. Instead, Respondent has retained the entire $2,000

and characterizes the funds as Ðliquidated damagesÑ for the

RobertsÓ wrongful termination of the Property Management

Agreement.

30. Th e Property Management Agreement has no specific

requirement for the manner in which it is to be terminated .

Nevertheless, Resp ondent transferred the $2,000 reflected in the

Deposit Receipt into Spirits Realty, Inc.Ós, operating account

at Hancock Bank.

31. Respondent argues that she is entitled to retain the

$2,000 because Ms. Roberts did not make a timely claim upon the

escrow deposit following receipt of RespondentÓs expressed

intent to keep the escrow monies as Ðliquidated damages .Ñ

Respondent bases her argument on the RobertsÓ alleged breach of

the Property Management Agreement . As there was no breach and

the RobertsÓ request for return of the escrow funds was timely

made, RespondentÓs belief that she is entitled to liquidated

damages has no merit.

32. Respondent also suggests that she is entitled to

retain the $2 , 000 reflected in the Deposit Receipt because the

tenants failed to give 60 days Ó notice of their intent to

terminate the Lease. R espondentÓs suggest ion is premised upon

the fact that she and her brokerage are erroneously named as the

Ð Lessor Ñ in the Lease that Respondent drafted . RespondentÓs

argument evinces that she either has a misunderstanding of her

role as agent for the Roberts, or intended to take advantage of

her position in a manner inconsistent with her obligations under

the Property Management Agreement.

33. Although erroneously listed as the ÐLessorÑ under the

Lease, neither Respondent n or her brokerage was a proper part y

to the Lease . Rather, in accordance with the Property

Management Agreement, Respondent and her brokerage were only

authorized as agent s for Mr. Roberts in dealing with the

Premises.

34. Under the circumstances, even if the tenants had

breached the Lease (which they did not), Mr. Roberts and his

successor in interest, Ms. Roberts, not Respondent and her

brokerage, would be entitled to make a claim against the tenants

as the owners and actu al lessors under the Lease .

35. Incredibly, a t the final hearing, Respondent submitted

into evidence a copy of a document entitled Ð Lease Addendum Ñ

dated May 31, 2012, which was purportedly signed by the tenants,

Alan Pridgen and Lori Pridgen . The purported ÐLease AddendumÑ

provides:

Lease Addendum 31 May 2012

FS 83.575, 83.595 breach, liquidated

damages, and termination

FS 83.59 5(4) Tenant statue [sic] contains

two liquidated damages provisions allowing

the landlord (Lessor) an opportunity to

impose liquidated damages on the tenant for

early termination or for failure to give

notice of intent not to renew lease.

Lessor, Spirits Realty Inc. will receive the

$2,000 advance fees, Ðearly termination

feeÑ, out of escrow, if a bre ach of the

lease occurs.

X I agree as provided in the lease

agreement, $2,000 security (an amount that

does not exceed 2 months rent) as liquidated

damages or an early termination fee if I

elect to terminate the lease agreement and

Lessor waives the right to seek additional

rent beyond the month in which landlord

takes possession.

FS 83.575 Lessee is required to give 60 days

notice of intent not to renew the lease or

Lessor, Spirits Realty Inc will receive the

$2,000 advance fees security deposits as

Ðliquidated damagesÑ. Spirits Realty Inc is

entitled to 5% real estate fee at close.

36. In addition, Respondent submitted into evidence a

second document entitled ÐLease AddendumÑ purported ly signed by

the now - deceased Mr. Roberts. That second ÐLease AddendumÑ

provides:

Le ase Addendum 31 May 2012

I agree with the Lease Addendum. Spirits

Realty Inc will receive the $2,000 security

deposits advanced fees out of escrow if

there is a breach in the lease. Spirits

Realty Inc will receive 5% real estate fee

when the property closes. Lessor is acting

as a Transaction Broker to lease/sale

property.

37. Ms. Roberts and Lori Pridgen credibly testified during

the hearing that neither they nor Mr. Roberts , prior to his

death , signed a separat e Lease Addendum . Ms. Pridgen testified

that she would not have signed any type of document which

essentially gave up any and all rights to the escrow monies.

Further, Ms. Roberts expla ined that her late husband,

Mr. Roberts, who had a n understanding of real estate matters,

would not have signed such a document.

38. Moreover, t he document s presented as lease addend a are

suspect. T he type font is remarkably different from other

documents obtained on May 31, 2012, in connection with the Lease

and Property Management Agreement. Further, the paper signed by

Mr. Roberts on May 31, 2 012 , in which he agree d to the Lease ,

has a fax number, date , and time at the top, but the purported

lease addend um does not. Finally, the signatures on the lease

addenda appear to have been copied from other signa tures and

taped into place. While reviewing the purported lease addendum

during her cross - examination by Respondent at the final hearing ,

Ms. Pridgen testified :

Oka y. First of all, this is not the Î -

this has never been seen in our paperwork.

The whole time that weÓve been doing

paperwork with you for all these years, this

was never ever seen till Brande sent it up

here in the paperwork she had.

And besides that, the print is not the

same as any of your paperwork. And also,

you can tell by the signature that they have

been copied and paste onto the amendment.

If the Î somebody will just look at

them, you didnÓt clean up your work under

your tape before you put it right there. So

you - - you needed to clean your work up

when you tape something like that because

weÓve done it before. You have to clean up

your work, or people can tell it when you

look at it.

39. Other than evincing RespondentÓs nefarious intent to

justify her retention of the $2 , 000 , the purported lease addenda

are given no evidentiary value.

40. The evidence does not justify Respondent Ós retention

of the $2,000 . The evidence adduced at the final hearing

otherwise clearly and convincingly showed that Respondent

wrongfully retained the $2,000 identified in the Deposit

Receipt .

CONCLUSIONS OF LAW

41. The Division of Administrative Hearings has

jurisdiction over the parties and subject matter of this

proceeding. See §§ 120.569, 120.57(1), 120.60(5), and

455.225(5), Fla. Stat. (2016 ).

42 . Petitioner , through its Division of Real Estate, is

responsible for prosecuting disciplinary cases against licensed

real estate brokers. See § 475.021(1), Fla. Stat.

43. The Florida Real Estate Commission (the Commission) is

statutorily empowered to take disciplinary action against

Florida - licensed re al estate brokers based upon an y of the

grounds enumerated in c hapter 475 .

44. Such disciplinary action may include one or more of

the following penalties: license revocation; license suspension

not exceeding ten years; imposition of an administrative fi ne

not to exceed $5,000 for each count or separate offense;

issuance of a reprimand; and placement of the licensee on

probation. § 4 75.25(1), Fla. Stat . In addition, the Commission

"may assess costs related to the investigation and prosecution

of the case excluding costs associated with an attorney's time. Ñ

§ 455.227(3)(a), Fla. Stat .

45 . Petitioner, as the party asserting the affirmative in

this proceeding, has the burden of proof. See , e.g. , Balino v.

DepÓt of Health & Rehab. Serv s . , 348 So. 2d 34 9 ( Fla. 1st DCA

1977). Because Petitioner is seeking to prove violations of a

statute and impose administrative fines or other penalties, it

has the burden to prove the allegations in the complaint by

clear and convincing evidence. Ferris v. Turlington , 510 So. 2d

292 (Fla. 1987).

46 . Clear and convincing evidence:

[r]equires that evidence must be found to be

credible; the facts to which the witnesses

testify must be distinctly remembered; the

testimony must be precise and explicit and

the witnesses must be lacking confusion as

to the facts in issue. 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.

In re Hen son , 913 So. 2d 579, 590 (Fla. 2005), quoting Slomowitz

v. Walker , 429 So. 797, 800 (Fla. 4th DCA 1983).

47 . Disciplinary statutes, such as s ection 475.25(1) are

penal in nature, and must be construed against the authorization

of discipline and in favor o f the individual sought to be

penalized. Munch v. DepÓt of Bus. & ProfÓl Reg. , 592 So. 2d

1136 (Fla. 1st DCA 1992). A statute imposing a penalty is never

to be construed in a manner that expands the statute. Hotel &

Rest. CommÓn v. Sunny Seas No. One , 1 04 So. 2d 570, 571 (1958).

48 . In determining whether Petitioner has met its burden

of proof, the evidence presented should be evaluated in light of

the specific factual allegations in the A dministrative

C omplaint. Disciplinary actions against licensees may only be

based upon those offenses specifically alleged in the charging

document . See , e.g. , Trevisani v. Dep't of Health , 908 So. 2d

1108 (Fla. 1st DCA 2005).

49. T he charging instrument in the instant case, the

Administrative Complaint, charges Respondent with two violations

of real estate license law.

50. Count One of the Administrative Complaint cha rges

Respondent with violating s ection 475.25(1)(b) . That section

subjects a real estate licensee to discipline if the licensee:

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; has

aided, assisted, or conspired with any other

person engaged in any such misconduct and in

furt herance thereof; or has formed an

intent, design, or scheme to engage in any

such misconduct and committed an overt act

in furtherance of such intent, design, or

scheme. It is immaterial to the guilt of

the licensee that the victim or intended

victim of the misconduct has sustained no

damage or loss; that the damage or loss has

been settled and paid after discovery of the

misconduct; or that such victim or intended

victim was a customer or a person in

confidential relation with the licensee or

was an iden tified member of the general

public.

51. An intentional act must be proven before a violation

of a statute prohibiting real estate brokers or salespersons

from engaging in activities involving fraud, misrepresentation,

concealment, false promises, false pretenses, dishonest dealing

by trick, scheme or device, culpable negligence, or breach of

trust in business transaction(s) may be found . Munch v. DepÓ t

of Prof Ól Reg. , Div. of Real Estate , 592 So. 2d 1136 ( Fla. 1st

DCA 1992). Culpable negligence has bee n defined as a Ðreckless

indifference to the rights of others which is equivalent to a n

intentional violation of them . Ñ Cannon v. State , 107 So. 360,

363 (Fla. 1926). See also Carraway v. Revell , 116 So. 2d 16

(Fla. 1959) .

52. Petitioner proved, by clear and convincing evidence ,

that Respondent violated s ection 475.25(1)(b). Respondent had a

legal duty to perform for the Roberts under the Property

Management Agreement terms and , upon the RobertsÓ termination of

that Agreement, Respondent deliberatel y chose not to fulfill her

duty. On December 1, 2013, Mr. Roberts advised Respondent that

the Property Management Agreement was being terminated effective

February 1, 2014, and that the Roberts woul d thereafter manage

the Lease. Under the circumstances, Respondent should have

transferred the escrowed funds to the Roberts upon the effective

date that they began managing the Lease so that the Roberts

could hold the funds for the benefit of the tenants. See

§ 83.49(7), Fla. Stat. 5/ Instead, Respondent wron gfully

classified the tenantsÓ money as Ðliquidated damagesÑ and

distributed the funds that were being held in escrow into her

brokerageÓs operating account .

53. Further, Respondent submitted multiple unfounded

justifications for her actions, none of which mitigate or

justify her intentio nal taking of the escrow funds. In fact,

the evidence indicates that Respondent created false docum ents,

i.e. the lease addenda, with wrongful intent to validate her

claim to the funds. Even without RespondentÓs manu facture of

false documents, Respondent Ós actions breached her c lientsÓ (the

Roberts) trust and, at the very least, constitute d actions taken

in a culpably negligent manner. Therefore, based upon clear and

convincing evidence , it is concluded that Responde nt breach ed

her clientsÓ trust and , at a minimum, acted in a culpabl y

negligen t manner in a busine ss transaction in violation of

s ectio n 475.25(1)(b) .

54. Count Two of the Administrative Complaint charges

Respondent with viola ting section 475.25(1)(d)1 . Section

4 75.25(1)(d)1. subjects a real estate licensee to discipline if

the licensee:

Has failed to account or deliver to any

person, including a licensee under this

chapter, at the time which has been agreed

upon or is required by law or, in the

absenc e 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 if a

civil judgment relating to the practice of

the licenseeÓs profession has been obtained

against the licensee and said judgment has

not been satisfied in accordance with the

terms of the judgment within a reasonable

time, or any secret or illegal profit, or

any divisible share or portion thereof,

which has come into the licenseeÓs hands and

which is not the licenseeÓs property or

which the licensee is not in law or equity

entitled to retain under the circumstances.

55. The evidence adduced at the final hearing also clearly

and convincingly demonstrated that Respondent violated s ection

475.25(1)(d)1 . Respondent intentionally transferred the

tenantsÓ escrow monies into her brokerageÓs operating account as

Ðliquidated dama gesÑ based upon her assertion that it was

justified because the Roberts had breached the Property

Management Agreement . RespondentÓs assertion was further

confounded by her argument that she was entitled to retain the

funds as ÐlessorÑ because the tenants failed to give 60 daysÓ

notice to her of their intention to terminate their lease with

her and her brokerage. The only basis for RespondentÓs argument

that she or her brokerage was the ÐlessorÑ is because of an

obvious error in the designation of the par ties to the Lease

drafted by Respondent.

56. The Roberts requested in writing on more than one

occasion that Respondent forward the tenantsÓ escrow monies to

them following their termination of the Property Management

Agreement . Respondent cannot reasonably argue that she had no

notice of those requests because she refus ed to accept the

certified letters from the Roberts . 6/

57. Further, considering the fact that Respondent was on

actual notice from her telephone conversation with Mr. Roberts

on December 1, 2013, that the Property Management Agreement was

going to be terminated effective February 1, 2014, her lack of

review of the RobertsÓ letters does not relieve Respondent from

her statutory obligation to forward the escrowed funds to the

Roberts to hold for the benefit of the tenants. See end note 5 .

T herefore , it is concluded that Respondent violated section

475.25(1)(d)1. b y fail ing to account and deliver , as required by

law, as well as upon demand , the escrowed funds to her clients ,

the Roberts, which she is not legally entitled to retain .

58. In conclusion, it is evident from the record that

Respondent intentionally chose t o keep the disputed escrow

m onies in the amount of $2,000 and did so wrongfully and

unlawfu lly. Respondent Ós attempted justification of her actions

provided no excuse for her violation of real estate license law

which she, as a licensed real estate broker, is expected to

understand and implement. Disciplinary action against

Respondent is warranted.

59. I n this case, there is clear and convincing ev idence

establish ing that Respondent committed the violation s alleged in

the charging instrument and that d isciplinary action is

warranted . I n determining the appropriate disciplinary action ,

it is necessary to consult the disciplinary guidelines set forth

in Florida Administrative Code Rule 61J - 24.001, which impos e

restrictions and limitations on the exercise of Petitioner's

disciplinary authority. See Parrot Heads, Inc. v. Dep't of Bus.

& Prof'l Reg. , 741 So. 2d 1231, 1233 (Fla. 5th DCA 1999)("An

administrative agency is bound by its own rules . . . creat[ing]

gu ideline s for disciplinary penalties.") ; and Buffa v.

Singletary , 652 So. 2d 885, 886 (Fla. 1st DCA 1995)("An agency

must comply with its own rules.").

60. Rule 61J2 - 24.001(1)(c) provides for a disciplinary

penalty consis ting of a $1,000 to $2,500 administrative fine and

30 - day suspension to revocation of the license for a first - time

violation of s ectio n 475.25(1)(b) .

61. Rule 61J2 - 24.001(1)(e) provides for a disciplinary

penalty cons isting of a $250 to $1,000 administrative fine and

suspension to revocation of the license for a first - time

violation of s ection 475.25(1)(d)1 .

62. Respondent offered no proof of mitigating

circumstances and none are so found.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a f inal o rder be entered by the

Department of Business and Professional Regulation, Florida Real

Estate Commission, finding that Respondent violated s ections

475.25(1)(b) and 475.25( 1)(d)1. as charged in the Administrative

Comp laint, imposing an a dministrative f ine in the amount of

$3,500 , ass essing reasonable costs pursuant to s ection

455.227(3)(a) , and revoking RespondentÓs license to practice

real estate.

DONE AND ENTERED this 29th day of July , 201 6 , in

Tallahassee, Leon County, Florida.

S

JAMES H. PETERSON, III

Administrative Law Judge

Division of Administrative Hearings

The Desoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

t his 29th day of July , 201 6 .

ENDNOTES

1 / Unless otherwise noted, all references to the Florida

Statutes or Florida Administrative Code are to the 201 3 version s

effective at the time of the alleged violations .

2/ Ms. Roberts appeared telephonically .

3 / On November 9, 2012, due to his declining health, Mr. Roberts

executed a Quit Claim Deed granting his complete ownership of

the property located at 3803 Long John Drive, Panama City Beach,

Florida 32408, to his wife, Dorothy Roberts . Mr. Roberts passed

away in 2015.

4 / The Lease Renewal erroneously lists the tenants , Allen and

Lori Pridgen, as ÐLessor.Ñ The correct designation of a tenant

under a lease is Ðlessee.Ñ See Blacks Law Dictionary 812 (5th

ed. 1979)(defines lessee as Ð [o]ne who rents property from

another. In the case of real estate , the lessee is also known

as the tenant.Ñ Lessor is defined as Ð[o ]ne who grants a lease.

One who rents property to another. In case of real estate, the

lessor is also known as the landl ord.Ñ).

5/ Section 83.49(7) , Florida Statutes, provides , in pertinent

part , that Ð upon a change in the designated rental agent, any

and all security deposits or advance rents being held for the

benefit of the tenants shall be transferred to the new owner or

agent, together with any earned interest and with an accurate

accounting showing the amounts to be credited to each tenant

account. Ñ

6/ Cf. , Fields v. Turlington , 481 So. 2d 960, 962 (Fla. 4th DCA

1986)(ÐA party cannot prevail in an argument att acking the

sufficiency of service by certified mailing (in those cases in

which certified mailing is appropriate) when the party has taken

affirmative action to avoid the acceptance of the certified

mailing .Ñ).

COPIES FURNISHED :

Brande L. Miller, Esquire

Crystal D. Stephens, Esquire

Department of Business and

Professional Regulation

2601 Blair Stone Road

Tallahassee, Florida 32399

(eServed)

Brenda W. Smith

Post Office Box 15453

Panama City, Florida 32406 - 8503

Darla Furst, Chair

Real Estate Commission

Department of Business and

Professional Regulation

400 W est Robinson Street, N801

Orlando, Florida 32801

(eServed)

Jason Maine, General Counsel

Department of Business and

Professional Regulation

Capital Commerce Center

2601 Blair Stone Road

Tallahassee, Florida 32309

(eServed)

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.