94-006686 Division Of Real Estate vs. Michael R. Hull; Karolyn K. Busby; Cmt Holdings, Inc.; And Cmt Holdings, Ltd. Status: Closed Recommended Order on Thursday, May 30, 1996.

Summary: Broker not guilty of culpable negligence because disclosed to seller's listing agent; Broker guilty of failing to institute escape procedures timely.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 94-6686

)

MICHAEL R. HULL, KAROLYN K. BUSBY, )

C M T HOLDINGS, INC., and )

C M T HOLDING, LTD., t/a )

THE PRUDENTIAL FLORIDA REALTY, )

)

Respondents. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on August 15,

1995, in Fort Lauderdale, Florida, before Patricia Hart Malono, a duly

designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Daniel Villazon, Senior Attorney

Department of Business and

Professional Regulation

Division of Real Estate

Legal Section, Suite N308

Hurston Building North Tower

400 West Robinson Street

Orlando, Florida 32801

For Respondent: James H. Gillis, Esquire

1415 East Robinson Street, Suite B

Orlando, Florida 32801

STATEMENT OF THE ISSUE

The issue in this case is whether the respondents committed the violations

alleged in the Amended Administrative Complaint, and, if so, the penalties which

should be imposed.

PRELIMINARY STATEMENT

In a twenty-one count Administrative Complaint dated October 20, 1994, the

Department of Business and Professional Regulation, Division of Real Estate

("Department"), charged the respondents, Michael R. Hull, Karolyn K. Busby, CMT

Holdings, Inc., and CMT Holding, Limited, t/a The Prudential Florida Realty,

with violations of section 475.25(1), Florida Statutes. Specifically, with

respect to a transaction between Carol R. Blucher and Jacques and Aimee Gautier,

the Department charged Mr. Hull, CMT Holdings, Inc., and CMT Holding, Limited,

t/a The Prudential Florida Realty, in Counts I, II, and III, respectively, with

culpable negligence or breach of trust in violation of section 475.25(1)(b); in

Counts IV, V, and VI, respectively, with failure to account or deliver funds in

violation of section 475.25(1)(d)1; and, in Counts VII, VIII, and IX,

respectively, with failure to notify the Florida Real Estate Commission of a

deposit dispute and failure to implement remedial action in violation of rule

61J2-10.032, Florida Administrative Code, and section 475.25(1)(e).

With respect to a transaction between Stephen and Mary Krathen and Patrice

Scarborough, the Department charged Ms. Busby, CMT Holdings, Inc., and CMT

Holding, Limited, t/a The Prudential Florida Realty, in Counts X, XI, XII,

respectively, with failure to timely notify the Florida Real Estate Commission

of a deposit dispute or good faith doubt regarding the disposition of a deposit

and failure to timely implement remedial action in violation of rule 61J2-10.032

and section 475.25(1)(e).

With respect to a transaction between the Estate of Cecelia Silberzweig and

Edna Vargas, the Department charged Ms. Busby, CMT Holdings, Inc., and CMT

Holding, Limited, t/a The Prudential Florida Realty, in Counts XIII, XIV, and

XV, respectively, with culpable negligence or breach of trust in violation of

section 475.25(1)(b); in Counts XVI, XVII, and XVIII, respectively, with failure

to account or deliver funds in violation of section 475.25(1)(d)1; and, in

Counts XIX, XX, and XXI, respectively, with failure to implement remedial action

in violation of rule 61J2-10.032 and section 475.25(1)(e).

The respondents timely requested an administrative hearing, and the case

was referred to the Division of Administrative Hearings for assignment of a

Hearing Officer. The hearing was ultimately scheduled for August 15, 1995.

On June 26, 1995, the Department filed a Motion to Amend Administrative

Complaint, in which it sought to amend the complaint in two respects. First,

the Department sought to amend paragraph 2 of the complaint to indicate that Mr.

Hull's real estate broker-salesperson license is currently voluntarily inactive.

Secondly, the Department sought to dismiss Counts IV and VII of the

Administrative Complaint. The Department did not attach a copy of the Amended

Administrative Complaint to its motion. There being no response filed by the

respondents, an order was entered July 17, 1995, granting the Motion to Amend

Administrative Complaint in accordance with the specific amendments identified

in the motion.

At the hearing on August 15, 1995, the Department filed its Amended

Administrative Complaint. The original Administrative Complaint was modified in

three respects: The language in paragraph 2 was modified in accordance with the

order granting the motion to amend; paragraph 3 was deleted as unnecessary; and

Counts IV and VII were deleted. The Amended Administrative Complaint,

therefore, charges the respondents with nineteen counts of violating section

475.25(1).

At hearing, the Department presented the testimony of four witnesses:

Deborah Burns, Mary Kathryn Kornburger Krathen, Robert Mann, and Patrice

Scarborough. Petitioner's Exhibits 1 through 6, and 9 through 20 were received

into evidence; the Department later withdrew Petitioner's Exhibits 17, 18, and

19. The respondents presented the testimony of four witnesses: Michael R.

Hull, Joan C. Sher, Joanna Youngblood, and Karolyn K. (Busby) Hall.

Respondents' Exhibits 1 through 16 were received into evidence. Additionally,

Joint Exhibits 1 through 8 were received into evidence. The parties prepared

and filed at the hearing an Amended Prehearing Stipulation, which includes a

number of stipulated facts.

A transcript of the proceedings was filed with the Division, and the

parties timely filed Proposed Recommended Orders. A ruling on each party's

proposed findings of fact is included in the Appendix to this Recommended Order.

FINDINGS OF FACT

Based on the oral and documentary evidence presented at the final hearing

and on the entire record of this proceeding, the following findings of fact are

made:

1. The Department of Business and Professional Regulation is a state

government licensing and regulatory agency charged with the responsibility and

duty to prosecute administrative complaints pursuant to the laws of the State of

Florida, in particular chapters 120, 455, and 475, Florida Statutes, and the

rules promulgated thereunder. The Florida Real Estate Commission operates

within the Department and is the entity directly responsible for licensing and

disciplining those licensed under chapter 475. Section 475.02, Fla. Stat. The

Division of Real Estate operates within the Department and assists the

Commission in carrying out its statutory duties. Section 475.021, Fla. Stat.

2. Respondent Michael R. Hull is now and was at all times material hereto

a licensed Florida real estate broker-sales person, issued license number

0398325 in accordance with chapter 475, Florida Statutes. The Department's

records show that Mr. Hull's license is voluntarily inactive. At the times

material hereto, he worked out of one of the Fort Lauderdale offices of The

Prudential Florida Realty.

3. Respondent Karolyn K. Busby is now and was at all times material hereto

a licensed Florida real estate broker, issued license numbers 0152284 and

0272478 in accordance with chapter 475, Florida Statutes. The last licenses

issued to Ms. Busby were as a broker c/o CMT Holdings, Inc., 1988 Gulf-to-Bay

Boulevard, Clearwater, Florida 34625, and c/o Preferred Rentals, Inc., 19353

U.S. Highway 19 North, Number 100, Clearwater, Florida 34624.

4. At all times material hereto, Ms. Busby was licensed and operating as

qualifying broker and officer of respondent CMT Holdings, Inc.

5. Respondent CMT Holdings, Inc., is and was at all times material hereto

a corporation registered as a Florida real estate broker, issued license numbers

0266412 and 0266434 in accordance with chapter 475, Florida Statutes. The last

licenses issued were at 1988 Gulf-to-Bay Boulevard, Clearwater, Florida 34625,

and as a partner to CMT Holding, Limited, t/a The Prudential Florida Realty,

19353 U.S. Highway 19 North, Number 100, Clearwater, Florida 34624.

6. Respondent CMT Holding, Limited, t/a The Prudential Florida Realty, is,

and was at all times material hereto, a limited partnership registered as a

Florida real estate broker, having been issued license number 0266433 in

accordance with chapter 475, Florida Statutes. The last license issued was at

19353 U.S. Highway 19 North, Number 100, Clearwater, Florida 34624.

Blucher/Gautier transaction: Counts I, II, III, IV, V, VI, and VII of the

Amended Administrative Complaint

7. Carol R. Blucher listed for sale her condominium apartment, number 405

of Harbor Haven, located in Fort Lauderdale, Florida. Deborah H. Burns and her

broker, Elizabeth T. Beauchamp, were the seller's and listing agents for Ms.

Blucher's condominium, and Intercoastal Realty, Inc., was the listing office.

8. On January 1, 1994, Jacques and Aimee Gautier executed a Deposit

Receipt and Contract for Purchase and Sale of Ms. Blucher's condominium. The

contract disclosed that Intercoastal Realty was the listing office for the

transaction and that The Prudential Florida Realty was the selling office.

Michael R. Hull signed the contract as an associate of The Prudential Florida

Realty.

9. In the contract, Mr. Hull acknowledged receiving as a deposit a check

in the amount of $500; Mr. Hull accepted this check on behalf of The Prudential

Florida Realty for deposit in its escrow account.

10. The contract provided that the transaction would close on or before

February 28, 1994, and that Mr. and Mrs. Gautier would make an additional

deposit of $7,000 within seven days of acceptance of the contract. The

additional deposit was to be held by The Prudential Florida Realty in its escrow

account. The Gautiers were to wire the $7,000 to the Clearwater office of The

Prudential Florida Realty, since the accounting department, which handles the

escrow accounts, was located in that office.

11. Mr. Hull hand-delivered the executed Deposit Receipt and Contract for

Purchase and Sale to Ms. Burns, together with a letter dated January 3, 1994.

In this letter, Mr. Hull requested certain information from Ms. Burns relative

to the transaction, and he informed her that Mr. and Mrs. Gautier intended to

wire the additional $7,000 deposit and that he would confirm receipt with her.

12. Ms. Burns, in turn, conveyed the contract to Ms. Blucher, who accepted

the offer on January 4, 1994, by executing the contract. The executed contract

was delivered to Mr. Hull on January 7, and both Mr. Hull and Ms. Burns

considered January 13 to be the date on which the additional deposit was due.

13. Mr. Gautier told Mr. Hull that the additional deposit would be wired

on January 10. On January 13, Mr. Hull was told by the bookkeeper in the

Clearwater office of The Prudential Florida Realty that the transfer of the

$7,000 had not been confirmed. For several days thereafter, Mr. Hull was in

daily contact with the bookkeeper because he feared that there had been an error

in the wire transfer.

14. The transfer of the $7,000 was not confirmed as of January 21. Mr.

Hull made several attempts to contact Mr. Gautier after January 13. When he

finally got in contact with him, Mr. Gautier promised Mr. Hull that he would

wire the $7,000 deposit "the next day." The transfer of the $7,000 deposit to

The Prudential Florida Realty was not confirmed by January 31, and Mr. Gautier

did not respond to Mr. Hull's further attempts to contact him.

15. In letters dated January 13, 21, and 31, 1994, Mr. Hull advised Ms.

Burns, Ms. Blucher's selling and listing agent, of the status of his efforts to

secure the additional deposit and of Mr. Gautier's responses or lack thereof.

These letters were properly addressed and sent either by facsimile transmittal

or by United States mail on the date shown on the letters or on the day after.

16. Mr. Hull was in San Diego, California, from February 2 through 9,

1994, attending a realtors' conference, and his next contact with Ms. Burns was

on February 15 or 16, when they spoke by telephone. During that conversation,

Mr. Hull advised Ms. Burns that the transfer of the $7,000 deposit to The

Prudential Florida Realty had not been confirmed by the Clearwater office and

that Mr. Gautier would not respond to repeated attempts to contact him.

17. Ms. Burns waited until on or about February 22, a week before the

February 28 closing date, to notify Ms. Blucher that the Gautiers had not made

the additional $7,000 deposit. Ms. Blucher was "flabbergasted." Although she

had not directly asked Ms. Burns about the status of the deposit, she assumed

the deposit had been received because Ms. Burns had not told her anything to the

contrary.

18. Throughout the course of this transaction, Ms. Burns dealt exclusively

with Ms. Blucher as selling and listing agent, and Mr. Hull dealt exclusively

with Ms. Burns. Mr. Hull did not deal directly with Ms. Blucher because he

believed that it would be unethical if he did so. However, he kept Ms. Burns

fully informed about the status of the transaction and assumed she was passing

the information on to her client. For her part, Ms. Blucher considered Ms.

Burns her realtor and expected to deal exclusively with her and to be kept

informed with regard to this transaction.

19. By advising Ms. Burns that the $7,000 additional deposit had not been

received within the time specified in the contract and by keeping her informed

of his attempts to secure the deposit, Mr. Hull fulfilled his duty to Ms.

Blucher to disclose information material to the transaction. The Department

offered no proof that, by statute, rule, or industry practice, Mr. Hull was

required to inform Ms. Blucher of the status of the deposit directly rather than

indirectly through her agent, Ms. Burns. Under the circumstances, Mr. Hull was

justified in relying on Ms. Burns to communicate with her client. The proof is

not sufficient to establish that Mr. Hull was culpably negligent or committed a

breach of trust with regard to this transaction.

Scarborough/Krathen transaction: Counts VIII, IX, and X of the Amended

Administrative Complaint

20. On June 18, 1993, Patrice Scarborough accepted the offer of Stephen

and Mary Krathen to purchase her home in Fort Lauderdale, Florida. The offer

was made in a Deposit Receipt and Contract for Sale and Purchase executed by

Howard Scott, attorney for Dr. and Mrs. Krathen. The agent who prepared the

contract was Sidney White of The Prudential Florida Realty. Ms. Scarborough had

listed the property with Sunrise Realty, and Robert F. Mann was acting as her

selling agent.

21. In accordance with the terms of the contract, Mr. Scott tendered a

check made payable to The Prudential Florida Realty in the amount of $1,000 as a

deposit and partial down payment on the subject property. The check was dated

June 18, 1993, and the contract shows the acknowledgment of Sidney White that,

on June 18, 1993, he received $1,000 as an associate of The Prudential Florida

Realty.

22. In the contract, the Krathens, through Mr. Scott, agreed to tender an

additional deposit of $44,000, with $9,000 payable on or before June 22, 1993,

and $35,000 payable on or before June 29, 1993.

23. The Krathens did not remit either the additional $9,000 or the

additional $35,000 deposits, and they were in default of the contract as of June

29, 1993. In July 1993, Ms. Scarborough authorized Mr. Mann to demand the

$1,000 deposit on her behalf. Mr. Mann immediately telephoned Mr. White and

advised him that Ms. Scarborough felt she was entitled to the $1,000 deposit

because the Krathens had defaulted on the contract by failing to remit the

additional $44,000 deposit.

24. Mrs. Krathen knew shortly after the contract was entered into that she

would not be able to obtain the financing necessary to purchase the Scarborough

home. She contacted The Prudential Florida Realty in July 1993 and verbally

requested the return of the $1,000 deposit.

25. After demanding the $1,000 on behalf of Ms. Scarborough, Mr. Mann was

in regular contact with Mr. White with regard to the deposit. Mr. Mann and Mr.

White enjoyed a good working relationship, and Mr. Mann knew that Mr. White had

repeatedly tried to contact Dr. Krathen and his attorney, Mr. Scott, and had

gotten no response.

26. Meanwhile, shortly after authorizing Mr. Mann to demand the $1,000

deposit, Ms. Scarborough learned that the Krathens had previously declared

bankruptcy and that, once the bankruptcy was removed from their credit report,

their chances of being approved for financing would improve. Ms. Scarborough

told The Prudential Florida Realty that she was willing "to go along with" Dr.

Krathen in his attempts to resolve the bankruptcy issue, but the contract for

purchase and sale was not modified, Ms. Scarborough did not take her home off

the market, and she did not rescind her demand for the $1,000 deposit. During

this time, Ms. Scarborough spoke several times directly with Sidney White and

was kept informed by The Prudential Florida Realty of the status of the

Krathen's attempts to secure financing.

27. Although he cannot recall the exact date, at some point Mr. Mann

telephoned Joan Sher and told her of the problems he was having getting the

matter of the $1,000 deposit resolved. Ms. Sher was the broker and branch

manager responsible for The Prudential Florida Realty's Fort Lauderdale office

out of which Mr. White worked. Mr. Mann made a formal demand to Ms. Sher for

arbitration of the deposit dispute.

28. On December 13, 1993, Ms. Sher received a written demand for the

deposit from Mr. Scott, the attorney acting on behalf of Dr. Krathen. Ms. Sher

then prepared a Notice of Escrow Dispute/Good Faith Doubt, dated December 14,

1993, in which she identified Kay Rehard Busby as the broker for the

Scarborough/Krathen transaction. In Ms. Busby's absence and with her

authorization, Ms. Sher signed the Notice of Escrow Dispute/Good Faith Doubt

"Kay Rehard Busby" and included her initials under the signature line to

indicate that she had signed on Ms. Busby's behalf. At the times material to

this proceeding, Ms. Busby was the broker and general manager responsible for

the eight branch offices of The Prudential Florida Realty located in Broward

County.

29. On December 22, 1993, Gerri Barnoske, of the Division of Real Estate,

sent a letter to Ms. Busby advising her that the Notice of Escrow Dispute/Good

Faith Doubt had been received by the Division on December 20. The letter

further advised Ms. Busby that, within fifteen days from the date the form was

received by the Division, she must either arrange for arbitration of the

dispute, put the matter before a civil court, arrange for mediation, or request

an Escrow Disbursement Order from the Florida Real Estate Commission.

30. On the Notice of Escrow Dispute form, there is a space marked

"Optional" which can be checked to request the Division to send the paperwork

necessary to request an escrow disbursement order. This space was not checked

on the form prepared by Ms. Sher, and the Division did not send the paperwork

necessary to request an escrow disbursement order.

31. Ms. Sher thought that she had requested the necessary paperwork to

request an escrow disbursement order when she submitted the Notice of Escrow

Dispute to the Division of Real Estate. She had made an entry on her tickler

system, and, when the tickler came up and she realized that she had not received

the paperwork, she telephoned the Division. She was told to submit a request

for the paperwork in writing. She did so in a letter dated January 20, 1994.

The necessary paperwork was sent by the Division on January 26, 1994, and the

completed Request for Escrow Disbursement Order form was received by the

Division on February 4, 1994.

32. The Request for Escrow Disbursement Order was prepared from

information provided by Mr. White, and he identified July 15, 1993, and July 24,

1993, as the dates on which the conflicting Krathen and Scarborough demands were

received. The form was reviewed by Ms. Sher, and signed "Kay Rehard Busby," as

the requesting broker, "By Joan C. Sher." Ms. Sher signed Ms. Busby's name in

her absence and with her authorization.

33. On June 22, 1994, the Florida Real Estate Commission issued an Escrow

Disbursement Order, ordering that the $1,000 deposit be paid to Ms. Scarborough.

The funds were disbursed in accordance with the order.

34. The evidence is clear and convincing that, even though Dr. Krathen's

attorney did not respond to his messages or make a written demand for the

deposit until December 13, 1993, Mr. White was aware by mid-July 1993 that Mrs.

Krathen and Ms. Scarborough had made conflicting demands for the $1,000 deposit

held in escrow by The Prudential Florida Realty. Accordingly, the proof

establishes that Ms. Sher, acting on Ms. Busby's behalf, did not promptly submit

the Notice of Escrow Dispute/Good Faith Doubt to the Division of Real Estate;

rather, the notice was submitted approximately five months after it became known

that there was a dispute. The responsibility to notify the Division was not

obviated by Ms. Scarborough's willingness to "go along" until December to see if

the Krathens were able to clear up their bankruptcy problems and obtain

financing. In addition, the evidence is clear and convincing that none of the

four alternatives available to resolve the escrow dispute was instituted

promptly after notifying the Division of the dispute.

Silberzweig/Vargas transaction: Counts XI, XII, XIII, XIV, XV, XVI, XVII, XVIII,

and XIX of the Amended Complaint

35. On December 7, 1993, the personal representative of the Estate of

Cecelia Silberzweig accepted the offer of Edna Vargas to purchase a condominium

apartment, number 110, Building 1-J, Oriole Gold and Tennis Club, located in

Margate, Florida. In the Deposit Receipt and Contract for Purchase and Sale,

Ms. Vargas agreed to make an initial deposit of $500, which was received by Jean

Gilchrist, as an associate of The Prudential Florida Realty. 1/

36. Ms. Vargas also agreed to make an additional deposit of $3,000,

payable upon acceptance of the contract. The personal representative of the

Estate of Cecelia Silberzweig accepted the offer to purchase on December 7,

1993, and the additional $3,000 deposit was received by The Prudential Florida

Realty and deposited in its escrow account.

37. Pursuant to the contract, the transaction was to close on or before

December 10, 1993. An Addendum to the contract, executed by Ms. Vargas on

December 11 but not executed by the seller, purported to extend the closing date

until December 20, 1993. Notwithstanding the purported extension, Ms. Vargas

requested that her interview with the condominium association be scheduled on

December 23, 1993. 2/ The closing did not take place on either December 10 or

December 20.

38. On January 25 or 26, 1994, Joanna (White) Youngblood received a letter

from the attorney for Ms. Vargas demanding the return of the $3,500 deposit. Ms.

Youngblood also received a letter from the seller demanding the deposit. At the

times material to this proceeding, Ms. Youngblood was the broker for the Fort

Lauderdale office of The Prudential Florida Realty out of which Ms. Gilchrist

worked.

39. Both before and after the demand letters were received, the

transaction was "on again, off again." However, for reasons which are not clear

from the record, the transaction never closed.

40. At the times material to this proceeding, Ms. Busby was the broker and

general manager for The Prudential Florida Realty's Broward County offices. On

February 4, 1994, she personally signed a Notice of Escrow Dispute/Good Faith

Doubt form with regard to the $3500 deposit at issue in the Silberzweig/Vargas

transaction. She did not check the option on this form to request that the

Division of Real Estate send her the paperwork necessary to request an escrow

disbursement order.

41. On February 16, Gerri Barnoske, of the Division of Real Estate, sent a

letter to Ms. Busby advising her that the Notice of Escrow Dispute/Good Faith

Doubt had been received by the Division on February 10. The letter further

advised Ms. Busby that, within fifteen days from the date the form was received

by the Division, she must either arrange for arbitration of the dispute, put the

matter before a civil court, arrange for mediation, or request an Escrow

Disbursement Order from the Florida Real Estate Commission.

42. On March 28, 1994, the Division of Real Estate received a Notice of

Settlement Procedure for Escrow Dispute indicating that interpleader or other

court action "has been instituted" in the Silberzweig/Vargas escrow dispute.

The form was prepared by Joanna Youngblood, who signed the form "Karolyn Kay

Busby, G.M. (by JWY)." The form was signed by Ms. Youngblood in Ms. Busby's

absence and with her authorization; the signature was dated March 8, 1994.

43. At the time the form was submitted to the Division, no interpleader or

other court action had been instituted.

44. When she submitted the Notice of Settlement Procedure for Escrow

Dispute to the Division, or shortly thereafter, Ms. Youngblood contacted the

attorney for Ms. Vargas to advise him that she intended to turn the matter over

to the courts. Ms. Vargas's attorney asked that she request an Escrow

Disbursement Order rather than go to court. As a result, Ms. Youngblood called

the Division's Orlando office to request the paperwork necessary to request an

escrow disbursement order. After calling twice, she finally received a form,

but it was a Division of Real Estate Uniform Complaint Form.

45. Even though she knew it was not the proper form, Ms. Youngblood gave

the Complaint Form to Jean Gilchrist, the associate who had been involved with

the transaction. Ms. Gilchrist completed and signed the form; her signature was

dated May 20, 1994. The form also carries the signature "Kay Busby G.M. (by

JWY)." Ms. Youngblood signed the form for Ms. Busby in her absence and with her

authorization.

46. Ms. Youngblood was subsequently advised by Don Piersol, an

investigator with the Division's Fort Lauderdale office, that she had submitted

the wrong form. She obtained the correct form, and, in a letter to Ms. Barnoske

dated June 17, 1994, signed "Kay Busby (JWY)," she enclosed a Request for Escrow

Disbursement Order, asking that the request be expedited. On February 27, 1995,

the Florida Real Estate Commission issued an Escrow Disbursement Order, ordering

that the $3,500 deposit be paid to Ms. Vargas. The funds were disbursed in

accordance with the order.

47. The proof is not sufficient to establish that Ms. Busby was culpably

negligent with regard to the Silberzweig/Vargas transaction, or that she

committed a breach of trust. Additionally, the proof affirmatively establishes

that Ms. Busby timely notified the Division of the conflicting demands made for

the deposit. However, the evidence is clear and convincing that those acting on

Ms. Busby's behalf, and with her authorization, failed to implement promptly any

of the four alternative procedures available to resolve the escrow dispute. Ms.

Youngblood represented to the Division in March that an interpleader or other

court action had been instituted, when, in fact, no such action had been filed.

The evidence is also clear and convincing that none of the other alternatives

available to resolve the escrow dispute was instituted promptly after notifying

the Division of the dispute. This failure is not excused by Ms. Youngblood's

confusion with regard to the proper procedure for requesting the appropriate

forms.

CONCLUSIONS OF LAW

48. The Division of Administrative Hearings has jurisdiction of the

subject matter of and the parties to this administrative proceeding. Section

120.57(1), Fla. Stat.

49. The Florida Real Estate Commission may deny, suspend, or revoke a

license, registration, or permit issued pursuant to chapter 475, Florida

Statutes, and may "impose an administrative fine not to exceed $1,000 for each

count or separate offense; and may issue a reprimand." Section 475.25(1), Fla.

Stat.

50. As the prosecuting agency for the Commission, the Department seeks to

have the Commission impose administrative sanctions on the respondents which may

include revocation or suspension of their licenses or the imposition of an

administrative fine. Therefore, the Department has the burden of proving the

allegations in the Amended Administrative Complaint by clear and convincing

evidence. Department of Banking & Finance, Division of Securities & Investor

Protection v. Osborne Stern Co., 21 Fla. L. Weekly S142, S143 (Fla. March 28,

1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

51. In Evans Packing Co. v. Department of Agriculture & Consumer Services,

550 So. 2d 112, 116, n. 5 (Fla. 1st DCA 1989), the court explained:

[C]lear and convincing evidence requires

that the evidence must be found to be

credible; the facts to which the witnesses

testify must be distinctly remembered; the

evidence must be precise and explicit and

the witnesses must be lacking in 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 the firm belief of

[sic] conviction, without hesitancy, as to

the truth of the allegations sought to be

established.

Solomowitz v. Walker, 429 So.2d 797, 800

(Fla. 4th DCA 1983).

52. Section 475.25(1)(d)1 authorizes the Commission to impose

administrative sanctions if it finds that a licensee

(b) Has been guilty of fraud, misrepresent-

ation, concealment, 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.

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

Estate, 592 So. 2d 1136, 1138 (Fla. 1st DCA 1992), the Department charged a

licensed broker-salesperson with "'fraud, misrepresentation, concealment, false

promises, false pretenses, dishonest dealing by trick, scheme, or device,

culpable negligence or breach of trust in a business transaction' in violation

of Section 475.25(1)(b), Florida Statutes." The court held:

It is clear that Section 475.25(1)(b) is

penal in nature. As such, it must be

construed strictly, in favor of the one

against whom the penalty would be imposed.

See [Holmberg v. Department of Natural Re-

sources], 503 So.2d 944 (Fla. 1st DCA 1987).

Reading the first clause of Section 475.25(1)(b)

. . . , and applying to the words used their

usual and natural meaning, it is apparent that

it is contemplated that an [intentional] act be

proved before a violation may be found. [See

Rivard v. McCoy], 212 So.2d 672 (Fla. 1st DCA),

[cert. denied], 219 So. 2d 703 (Fla. 1968).

Id. at 1143-44. [Emphasis added.]

54. Section 475.25(1)(d)1 authorizes the Florida Real Estate Commission to

impose administrative sanctions if it finds that a licensee

(d)1. 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 absence

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, . . . which has come into his hands

and which is not his property or which he is

not in law or equity entitled to retain under

the circumstances. However, if the licensee,

in good faith, entertains doubt as to what

person is entitled to the accounting and

delivery of the escrowed property, or if con-

flicting demands have been made upon him for

the escrowed property, which property he still

maintains in his escrow or trust account, the

licensee shall promptly notify the commission

of such doubts or conflicting demands and

shall promptly:

a. Request that the commission issue an

escrow disbursement order determining who is

entitled to the escrowed property;

b. With the consent of all parties, submit

the matter to arbitration;

c. By interpleader or otherwise, seek

adjudication of the matter by a court; or

d. With the written consent of all parties,

submit the matter to mediation.

55. Rule 61J2-10.032, Florida Administrative Code, provides

(1)(a) A real estate broker, upon receiving

conflicting demands for any trust funds being

maintained in the broker's escrow account,

must provide written notification to the

Commission within 15 business days of the

last party's demand and the broker must

institute one of the settlement procedures as

set forth in s. 475.25(1)(d)1, Florida Statutes,

within 15 business days after the date of the

notification is received by the Division.

* * *

(2)(a) If the broker has instituted a settle-

ment procedure other than a request for an

Escrow Disbursement Order, the broker shall

provide written notification to the Commission

within 15 business days of the receipt of the

initial notification by the Division of the

procedure instituted to resolve the matter.

56. Section 475.25(1)(e) authorizes the Florida Real Estate Commission to

impose administrative sanctions if it finds that a licensee "[h]as 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."

57. With respect to the Blucher/Gautier transaction, the Department

charged Mr. Hull with culpable negligence and breach of trust in a business

transaction, in violation of section 475.25(1)(b). Based upon the findings of

fact herein, the Department has failed to meet its burden of proving these

charges against Mr. Hull by clear and convincing evidence. 3/

58. With respect to the Scarborough/Krathen transaction, the Department

charged Ms. Busby with failure to notify the Florida Real Estate Commission of a

deposit dispute promptly and with failure to employ one of the escape procedures

identified in section 475.25(1)(d)1 promptly, in violation of rule 61J2-10.032

and section 475.25(1)(e). Based on the findings of fact herein, the Department

has met its burden of proving these charges by clear and convincing evidence.

59. With respect to the Silberzweig/Vargas transaction, the Department

charged Ms. Busby with culpable negligence and breach of trust in violation of

section 475.25(1)(b), with failure to account or deliver funds in violation of

section 475.25(1)(d)1, and with failure to implement remedial action in

violation of rule 61J2-10.032 and of section 475.25(1)(e). Based on the

findings of fact herein, the Department has met its burden of proving by clear

and convincing evidence that those acting on Ms. Busby's behalf did not

institute any of the four alternatives available to resolve the escrow dispute

within the time specified in rule 61J2-10.032. The Department has failed to

meet its burden of proving that Ms. Busby was negligent or committed a breach of

trust or failed to account or deliver funds.

60. Rule 64J2-24.001(3), Florida Administrative Code, provides that the

minimum penalty for violations of section 475.25(1) "is a reprimand and/or a

fine up to $1,000 per count." In its Proposed Recommended Order, the Department

has recommended that the individual respondents be reprimanded, fined $1,000 for

each count of which they are found guilty, and ordered to take a thirty (30)

hour broker management course. The Department has further recommended that CMT

Holdings, Inc., and CMT Holding, Limited, t/a The Prudential Florida Realty be

reprimanded. The recommendations for a reprimand and fine are within the

penalties permitted by both statute and rule and are appropriate under the

circumstances of this case. It appears that the disciplinary guidelines permit

the Commission to require that post-licensing courses be taken only as a

condition of probation. See 61J2- 24.001(2), F.A.C. The Department has not

recommended probation in this case and, under the circumstances, probation is

not warranted.

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

(1) Finding respondents Karolyn K. Busby, CMT Holdings, Inc., and CMT

Holding, Limited, t/a The Prudential Florida Realty, guilty of violating rule

61J2-10.032, Florida Administrative Code, and section 475.25(1)(e), Florida

Statutes, as charged in the Amended Administrative Complaint, Counts VIII, IX,

and X, with respect to the Scarborough/Krathen transaction, and Counts XVII,

XVIII, and XIX with respect to the Silberzweig/Vargas transaction;

(2) Imposing administrative penalties consisting of

(a) A reprimand of Karolyn K. Busby, CMT Holdings, Inc., and CMT Holding,

Limited, t/a The Prudential Florida Realty, and

(b) An administrative fine against Karolyn K. Busby in the amount of two

thousand dollars ($2,000); and

(3) Dismissing Counts I through VII and Counts XI through XVI of the

Amended Administrative Complaint.

DONE AND ENTERED this 30th day of May, 1996, in Tallahassee, Leon County,

Florida.

_____________________________________

PATRICIA HART MALONO, 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 30th day of May, 1996.

ENDNOTES

1/ The dates of the offer and payment of the $500 initial deposit are confused.

The date typed on the signature page of the Deposit Receipt and Contract for

Purchase and Sale shows that the Ms. Vargas executed the contract as buyer and

that Ms. Gilchrist accepted the initial deposit on December 17, 1993. This must

be a mistake.

2/ The contract provides that no sale of a condominium is final until it is

approved by the condominium association or its representatives.

3/ There are no findings of fact or conclusions of law relating to Counts IV,

V, VI, and VII of the Amended Administrative Complaint because the Department,

in its Proposed Recommended Order, has recommended that these counts be

dismissed.

APPENDIX

The following rulings are made on the petitioner's proposed findings of fact:

Paragraphs 1 through 10, 15, 16, 18 through 23, and 25: Accepted and

incorporated in substance but not verbatim in paragraphs 1 through 6, 8 through

10, 12, 20, 21, 24, 29, 31, 40 through 43, and 47 of the Recommended Order.

Paragraph 11: Rejected because not supported by the weight of the

evidence. The letters dated January 13, 21, and 31, 1994, were written to Ms.

Burns by Mr. Hull, properly addressed, and mailed or sent via facsimile in the

normal course of business.

Paragraphs 12 through 14: No findings of fact have been made because the

Department recommended dismissal of the underlying counts of the Amended

Administrative Complaint.

Paragraph 17: Rejected because contrary to the facts as found in paragraph

23 of the Recommended Order.

Paragraph 24: Rejected because not supported by the evidence.

The following rulings are made on the respondent's proposed findings of fact:

Paragraph 1: Accepted as true but irrelevant; the Department's authority

to prosecute this action was not disputed at hearing.

Paragraphs 2 through 13, 19 through 21, 33, 34, 36, 39, 42 through 44, and

47: Accepted and incorporated in substance but not verbatim in paragraphs 2

through 10, 12, 17, 18, 20, 21, 28, 29, 31, 33 and 37 of the Recommended Order.

Paragraphs 15 and 16: Rejected insofar as the proposed findings of fact

are contrary to the findings of fact in paragraphs 15 and 16 of the Recommended

Order.

Paragraphs 16 and 17: Rejected because not supported by the weight of the

evidence.

Paragraphs 18 and 20: Accepted as true but not incorporated in the

findings of fact because unnecessary to resolving the issues presented.

Paragraphs 22 through 32: No findings of fact have been made because the

Department recommended dismissal of the underlying counts of the Amended

Administrative Complaint.

Paragraph 35: Rejected because not supported by the weight of the evidence

and because contrary to the facts as found in paragraphs 23 and 26 of the

Recommended Order.

Paragraph 37: Rejected because contrary to the weight of the evidence.

Paragraph 38: The first clause of the proposed finding of fact is rejected

because not supported by the evidence; the remainder of the proposed finding of

fact is accepted and incorporated in substance but not verbatim in paragraph 28

of the Recommended Order.

Paragraph 40: Accepted insofar as incorporated in substance in paragraphs

29 and 31 of the Recommended Order; otherwise rejected because unnecessary to

resolution of the issues presented and because not supported by weight of the

evidence.

Paragraph 41: Accepted insofar as incorporated in substance in paragraph

32 of the Recommended Order; otherwise rejected because unnecessary to resolving

the issues presented.

Paragraph 45: Accepted insofar as incorporated in substance in paragraphs

35 and 36 of the Recommended Order; otherwise rejected because not supported by

the evidence .

Paragraph 46: Accepted insofar as incorporated in substance in paragraph

37 of the Recommended Order; otherwise rejected because not supported by the

evidence

Paragraph 48: Accepted insofar as incorporated in substance in paragraph

39 of the Recommended Order; otherwise rejected because not supported by the

evidence

Paragraph 49: Rejected because mischaracterization of the evidence.

Paragraph 50: Rejected because argument.

Paragraph 51: Accepted insofar as incorporated in substance in paragraph

46 of the Recommended Order; otherwise rejected because contrary to the evidence

cited.

Paragraph 52: Rejected because argument or unnecessary to resolving the

issues presented.

COPIES FURNISHED:

Steven W. Johnson, Esquire

Department of Business and

Professional Regulation

Post Office Box 1900

Orlando, Florida 32801

James H. Gillis, Esquire

8424 Pamlico Street

Orlando, Florida 32817-1514

Henry M. Solares

Division Director

Department of Business and

Professional Regulation

400 West Robinson Street

Post Office Box 1900

Orlando, Florida 32802-1900

Lynda L. Goodgame

General Counsel

Department of Business and

Professional Regulation

Northwood Centre

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 ten 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.