STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA REAL ESTATE COMMISSION, ) HAROLD L. CLARK, )

)

Petitioner, )

)

vs. ) CASE NO. 75-1118

)

RUSSELL T. GORGONE AND )

RUSS GORGONE, INC. )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter was heard in Suite 201 of the Courtney Building, 2069 First Street, Ft. Myers, Florida, at 2:00

1. on October 13, 1975, before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings.

   
   

   APPEARANCES

   
   

   For Petitioner: Frederick W. Jones, Esquire

   2699 Lee Road

   Winter Park, Florida 32789

   
   

   For Respondent: Allan M. Parvey, Esquire

   GOLDBERG, RUBINSTEIN & BUCKLEY, P.A.

   Post Office Box 2366

   Fort Myers, Florida 33902 INTRODUCTION

   The issue presented for decision at the hearing was whether respondents are guilty of fraud, misrepresentation, false promises, dishonest dealing, breach of trust in a business transaction and/or failure to account and deliver, all in violation of F.S. 475.25(1)(a) and (c), and whether such conduct, if true, warrants suspension of the registration of the respondents as real estate brokers.

   The respondents stipulated to the factual allegations of the information filed by the petitioner, but disputed the legal conclusions that such factual recitations constitute violations of the Florida Statutes.

   
   

   At the beginning of the hearing, the attorney for the respondent moved to dismiss Russ Gorgone, Inc. as a party- respondent on the ground that Russell Gorgone acted individually in the performance of the acts charged in the information, and that the corporation was not responsible for his acts. The undersigned Hearing Officer denied this motion for the purposes of the hearing and took it under advisement. It is now felt that the corporation is a proper party-respondent and that the motion to dismiss on this ground lacks merit.

   
   

   FINDINGS OF FACT

   
   

   1. At all relevant times, the respondents Russell T. Gorgone and Russ Gorgone, Inc., were registered Florida real estate brokers.

      
      

   2. On July 11, 1972, an exclusive listing agreement was entered into between Russ Gorgone, Inc., as broker, and Jack Vollhoffer, as owner of the subject property, for the purpose of securing a purchaser for Vollhoffer's duplex located at 4252 and 4254 Armeda Avenue, Ft. Myers. The terms of this agreement included that the buyer would arrange financing, that the property was to be sold for $27,500.00 if conventional financing were used or for $29,500.00 if VA or FHA financing were used; and that Vollhoffer would pay Russ Gorgone, Inc. a fee of six percent of the sales price if a purchaser were procured. (Exhibit 1)

      
      

   3. Russ Gorgone, Inc. procured a purchaser for the subject property - one Chester Lee Phillips. Russ Gorgone, Inc. prepared a deposit receipt on August 3, 1972, showing a purchase price of

      $29,100.00, closing costs to be paid by the seller, Mr. Vollhoffer. (Exhibit 3) At first, Mr. Vollhoffer would not accept this offer because he wanted to receive $25,500.00 as his net-net-net proceeds of the sale. Mr. Russell T. Gorgone went to Lee County Title Company and asked for an estimate of the closing costs and was assured by said title company that they would not exceed $3,600.00. He thus made the determination that the property could be purchased for $29,100.00 and Vollhoffer would still receive $25,500.00 as net-net-net proceeds from the sale.

      
      

   4. On August 4, 1972, Russell T. Gorgone wrote the Vollhoffers a letter on Russ Gorgone, Inc. stationary, stating the

      offer of $29,100.00, requesting the Vollhoffers to accept it with the agreement that they would receive a total of $25,500.00 as the net-net-net proceeds as the result of the sale. It was further stated that Gorgone's sales fee and other closing expenses would be absorbed out of the $3,600.00 difference between the purchase price and the proceeds to the Vollhoffers. Mr. Vollhoffer accepted the offer of Mr. Phillips, on the basis of this August 4, 1972, letter. (Exhibit 2)

      
      

   5. Based upon Russell T. Gorgone's conversations with a Mr. Cohen of the Lee County Title Company, he (Mr. Gorgone) did not believe that the closing costs would exceed $3,600.00 and believed, in fact, that they would be less than that amount. He fully intended, at the time of executing the August 4th letter, that the Vollhoffers would receive $25,500.00 as a result of the sale.

      
      

   6. At the time of the closing on September 8, 1972, there was much discussion, primarily between Gorgone and the title agent, Cohen, regarding the closing statement. (Exhibits 4 and A) Mr. Gorgone testified that he was upset with Cohen over some of the figures charged to Vollhoffer and that he (Gorgone) still intended and felt that Vollhoffer should receive net-net-net proceeds of $25,500.00. He further stated that Cohen explained the changes in the closing costs to Vollhoffer. Vollhoffer testified that nobody explained the discrepancies to him and that he did not pay much attention to these discussions because it was not his business what the closing costs were and he was not concerned with them. His only concern was receiving his

      $25,500.00.

      
      

   7. While Vollhoffer testified that Gorgone did not tell him he did not have to close at the price discussed, he stated that he understood that he did not have to sell. Mr. Gorgone testified that he gave Vollhoffer the option of not signing the contract.

      
      

   8. Vollhoffer did sign the closing statement, which gave him net-net-net proceeds of $24,943.49. Mr. Vollhoffer testified that he signed because Mr. Gorgone had become hostile with him and because Gorgone had other property to sell for him and he therefore did not wish to antagonize him.

      
      

   9. Mr. Gorgone testified that he did not become hostile or abusive toward Vollhoffer at the closing and Mr. Phillips, the purchaser, testified that he did not observe Gorgone becoming hostile toward anyone. Phillips also testified that Vollhoffer

      did not, at the time of the closing, appear to be unhappy with the transaction.

      
      

   10. Some time after the closing, Mr. Vollhoffer made demand upon Mr. Gorgone for the difference between $25,500.00 and

       $24,943.49. Mr. Gorgone denied owing Vollhoffer anything.

       
       

       CONCLUSIONS OF LAW

       
       

   11. Florida Statutes 475.25(1)(a) and (c) provide that a real estate registration may be suspended if the registrant is found guilty of, inter alia, fraud, misrepresentation, false promises, dishonest dealing, breach of trust in any business transaction and/or failing to account or deliver money which has come into his hands and which is not his property or which he is not entitled to retain under the circumstances. However, two well known propositions of law with respect to disciplinary proceedings involving suspensions or revocations of professional licenses should be borne in mind. First, in such proceedings, the burden is upon the regulatory board, in this case the Real Estate Commission, to prove by clear and convincing evidence the misconduct charged. The Florida Bar v. Schonbrun, 257 So.2d 6 (Fla. 1971). Second, the penalty of suspension of a professional license should always be sparingly and cautiously used and should be directed at the dishonest and unscrupulous - those who cheat, swindle or defraud the general public. Pauline v. Borer, 274 So.2d 1 (Fla. 1973).

       
       

   12. Applying these principles to the facts of this case, it is the conclusion of the undersigned Hearing Officer that the Real Estate Commission has failed to prove, by clear and convincing evidence, that the registrants are guilty of the offenses charged in the information. There is absolutely no proof of fraud, dishonest dealing, or false promises under the circumstances of this case. A promise that is merely unfulfilled is not necessarily a false promise. Brod v. Jernigan, 188 So.2d 575 (Fla. App. 2nd, 1966). Fraud requires scienter and intent. The evidence herein shows that Mr. Gorgone had no intent to defraud Mr. Vollhoffer. Gorgone made a good faith effort to ascertain what the closing costs would be and was informed by the title company that they would be no more than $3,600.00. Based upon that information, he assured Vollhoffer that he would still receive his $25,500.00 with a selling price of $29,100.00. When Gorgone gleaned at the closing that the closing costs may be more than anticipated, he engaged in long conversation and debate with the title agent, still intending that Vollhoffer should receive his $25,500.00. When it became evident at the closing that the

closing costs would exceed $3,600.00, Mr. Gorgone informed Vollhoffer that he was not obligated to accept the $29,100.00. Mr. Vollhoffer testified that he was aware that he did not have to sign the sales contract. The reason stated by Vollhoffer for

deciding to go through with the transaction - that he did not wish to antagonize the Respondent - adds nothing to proving the charges against respondent. Nor is there any evidence of misrepresentation or breach of trust. As stated above, up until the actual time of the closing, Gorgone thought and understood, based upon the prior representation of and reliance upon the title company, that the closing costs would be no more than $3,600.00.

A mistake obviously occurred somewhere in this transaction, but that in itself is not evidence of lack of intent to perform, misrepresentation or breach of trust on the part of Gorgone. In short, it is the conclusion of the undersigned that, at the time of the execution of the August 4, 1972, agreement, there was absolutely no ill-intent on the part of the respondents. When respondents learned of the discrepancies between the expected and actual closing costs, Vollhoffer was given the option not to close. Vollhoffer, for reasons not relevant to the charges against respondents, agreed to accept the lesser amount of money. For this reason, respondents were entitled to accept and retain their commission and fees and there has thus been no failure to account or deliver money which respondents are not in law or equity entitled to retain under the circumstances herein set forth.

RECOMMENDATION

Based upon the above findings of fact and conclusions of law, it is recommended that the information against the respondents be dismissed.

Respectfully submitted and entered this 7th day of November, 1975, in Tallahassee, Florida.

DIANE D. TREMOR, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Frederick W. Jones, Esquire

299 Lee Road

Winter Park, Florida 32789

Allan M. Parvey, Esquire GOLDBERG, RUBINSTEIN &

BUCKLEY, P.A.

Post Office Box 2366

Fort Myers, Florida 33902

===============================================================

AGENCY FINAL ORDER

================================================================= FLORIDA REAL ESTATE COMMISSION

HAROLD L. CLARK,

Petitioner,

vs. PROGRESS DOCKET NO. 2669

LEE COUNTY

RUSSELL T. GORGONE, Broker, DOAH CASE NO. 75-1118 and RUSS GORGONE, INC.,

Corporate-Broker

Respondents.

/

FINAL ORDER

At a regular meeting of the Florida Real Estate Commission held at the Executive Headquarters in Winter Park, Florida, on December 22, 1975,

Present: Edgar L. Schlitt, Chairman

John R. Wood, Vice Chairman Maggie S. Lassetter, Member

Appearances: Frederick W. Jones, Attorney for Plaintiff Allan M. Parvey, Attorney for Defendants

This matter came on for Final Order upon the Plaintiff's Information, the Defendants' Answer, Amended Answer and Motion to Quash, and the Hearing Officer's Recommended Order, the Plaintiff's Exceptions thereto and the Defendants' Motion to Strike Exceptions of Plaintiff, together with the Record and oral argument of Counsel for the Plaintiff and Defendants, respectively, and having fully reviewed the entire Record and the Findings of Facts and Conclusions of Law in the Recommended Order the Commission, being otherwise fully advised therein, finds:

1.

According to the records of the Commission, the Defendant Russ Gorgone, Inc., is currently registered with the Commission as a corporate broker at 3440 Fowler Street, Fort Myers, Florida 33901.

2.

According to the records of the Commission, the Defendant Russell T. Gorgone is currently registered with the Commission as a real estate broker c/o Russ Gorgone, Inc., 3440 Fowler Street, fort Myers, Florida 33901.

3.

The Plaintiff's Exceptions to the Examiner's Recommended Order are not well taken and should be overruled.

4.

The Defendant's Motion to Strike Exceptions of Plaintiff are well taken and should be granted.

5.

The Hearing Officer's Findings of Fact are supported by competent, substantial evidence in the record and should be adopted by the Commission; however, the Commission finds that the penalty recommended by the Hearing Officer was not supported by the evidence and that a letter of caution should be sent to the Defendants.

IT IS THEREFORE ORDERED:

1. That the Plaintiff's Exceptions to the Hearing Officer's Recommended Order be, and the same are hereby, denied.

   
   

2. That the Defendants' Motion to Strike Exceptions of Plaintiff be, and the same is hereby, granted

   
   

3. That the Defendant Russell T. Gorgone and the Defendant Russ Gorgone, Inc., be, and they are hereby, found not guilty of the charges contained in the Information, and the same are hereby dismissed, but with a letter of caution to each Defendant advising them to be more cautious in their future dealing with the general public and, further, to honor written agreements which are

executed by them promising the principals certain and definite proceeds as a result of a real estate transaction.

DONE and ORDERED at Winter Park, Florida, this 19th day of January, 1976.

Edgar L. Schlitt Chairman

John R. Wood Vice Chairman

Maggie S. Lassetter Member

I CERTIFY that I mailed a copy of the foregoing Final Order to ALLAN M. PARVEY, ESQUIRE, c/o Goldberg, Rubinstein & Buckley,

P. A., P. O. Box 2366, Fort Myers, Florida 33902, attorney for the Defendants Russell T. Gorgone and Russ Gorgone, Inc., by United States Registered Certified Mail this 19 day of January, 1976.

Executive Director

NOTICE TO DEFENDANTS:

This Order shall become effective on the 18th day of February, 1976, unless Petition for Writ of Certiorari is filed on or before that time. See Subsection 475.31(3) and Sections 475.35 and 475.40, Florida Statutes, and Rules 4.1 and 4.5(c), Florida Appellate Rules.

FWJ:bsm

Docket for Case No: 75-001118

Orders for Case No: 75-001118