STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, BOARD OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-2491

)

CATHERINE GRABHORN, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above-captioned matter, after due notice, at Palatka, Florida, On March 10, 1982, before Thomas C. Oldham, Hearing Officer.

APPEARANCES

For Petitioner: James Quincey, Esquire

Post Office Box 1090 Gainesville, Florida 32602

For Respondent: William N. Gambert, Esquire

630 North Wild Olive Avenue Daytona Beach, Florida 32018

STATEMENT OF THE ISSUE

Whether the Respondent's license as a real estate broker should be suspended, revoked, or the licensee otherwise disciplined, for alleged violation of Chapter 475, Florida Statutes as set forth in the Administrative Complaint dated September 3, 1981.

By Notice of Hearing, dated October 26, 1981, this case was set for hearing to be held on December 17, 1981. However, on December 3, 1981, another Administrative Complaint seeking to take disciplinary action against Respondent by Petitioner's Construction Industry Licensing Board was referred to the Division. In view of the fact that both complaints alleged matters arising out of the same transaction, Petitioner's Motion to Consolidate for purposes of hearing was granted and the final hearing was rescheduled for March 10, 1982.

The complaint herein alleges that Respondent, a licensed real estate broker, in her capacity as a certified residential contractor and as President of CAT Development, Inc., a construction firm, contracted to build a dwelling for Jenny Soto, and received full payment under the contract, but abandoned construction prior to completion, permitted the property to deteriorate, and has not refunded monies due the purchaser. It is therefore alleged that Respondent violated Subsections 475.25(1)(b) and (d), Florida Statutes.

FINDINGS OF FACT

1. Respondent Catherine W. Grabhorn is a licensed real estate broker, doing business ads CAT Realty Company at East Palatka,Florida. She was so licensed at all material times alleged in the Administrative Complaint. (Testimony of Respondent)

   
   

2. Respondent is also a certified residential contractor operating as CAT Development, Inc. at East Palatka, Florida, and was so licensed at all material times alleged in the Administrative Complaint. (Testimony of Respondent)

   
   

3. In October, 1978, Jenny Soto, Bronx, N. Y., accompanied other prospective land purchasers to Palatka, ,Florida, where she was shown and purchased a lot for $10,000 at a development known as P & B Ranchettes. The group had traveled to Florida in a van. After the land purchase, the driver of the van took Soto and the others to Respondent's combination real estate and construction firm office where Respondent showed the group a catalog of various homes for possible construction on the lots which had been purchased. Soto saw a split level design that she liked, and Respondent told her that she could build it for $43,000, with the garage and the below ground level part of the split level to be unfinished, and without appliances. A contract was entered into between Respondent as President of CAT Development, Inc. and Soto on October 22, 1978. The contract provided for payments of $13,000 on October 24th, $25,700 on November 12th and the balance of $4,300 due on completion of the house. However, no completion date was stated in the contract. (Testimony of Respondent, Soto, Petitioner's Exhibits 16-19)

   
   

4. On October 24, 1978, Respondent flew to New York City to obtain the initial payment under the contract. Soto met her at the airport and paid

   $13,000. At that time, Soto asked Respondent when house construction would commence, and Respondent indicated that she needed additional money for materials. On November 30, 1978, the parties entered into a new contract to add additional features to the house, including a finished downstairs and garage, and appliances. The new contract price was $47,600, which reflected that

   $13,000 had been paid, $20,000 was due on December 1, 1978, $10,000 due on January 15, 1979, and the balance of $4,600 due on completion of the house. Again, no time for completion was stated in the contract. Pursuant to the agreement, Soto paid Respondent $20,000 on December 1, 1978 in New York City where the contract was signed. At some undisclosed date thereafter, Soto decided she wanted to upgrade the carpeting and appliance allowances, and the parties entered into an oral agreement for a total contract price of $53,000. (Testimony of Respondent, Soto, Petitioner's Exhibits 19-22)

   
   

5. On January 4, 1979, Respondent obtained a Putnam County building permit for the Soto project, and plumbing and electrical permits were obtained by subcontractors later that month. Construction commenced on the house and it was discovered that the ground water table was close to the surface of the land and that there would be drainage problems. However, Respondent told Soto that she would be able to cure the problem by pumping out the standing water in the area. On January 26, Respondent again went to New York and obtained a $10,000 payment from Soto. In February, Soto visited the construction site and observed that standing water near the house was "like a lake". Soto visited the house again in March and gave Respondent the final $10,000 payment on the contract price.

   At that time, the house was substantially completed and there was no apparent water damage. Respondent told Soto that it would take a couple of months to finish construction. It appeared to Soto then that the only remaining work to be done was to install carpeting, light fixtures, and appliances. Several

   county inspections were made as the work progressed during January and February, 1979, and it was determined, after certain minor corrective measures, that the work was being performed satisfactorily. (Testimony of Durbin, Michaels, Soto, Respondent, Petitioner's Exhibits 1-3, 23-24)

   
   

6. During ensuing months, Soto periodically telephoned Respondent to ascertain when the home would be completed, and on these occasions Respondent promised that the house would be completed within thirty days. However, no further work has been done by Respondent, except to obtain approval of a temporary electrical pole in June, 1981. At that time, the county building inspector observed that there was a considerable amount of standing water around the house, and that the outside of the building had deteriorated. Siding was warped and pulled away, the front door was open, and some wrought iron was located in a nearby ditch. (Testimony of Soto, Resondent, Durbin, Petitioner's Exhibit 3)

   
   

7. In response to a request by Soto in 1980 concerning the market value of the house, Respondent wrote her on July l, 1980 that the home was 90 to 95 percent complete and that completion was anticipated "as soon as possible". On May 28, 1981, the building permit was extended by the county to August 31, 1981. In July of that year, Soto visited the property and observed that a lock was missing from the door, mud was present in the lower level, sheetrock on the walls had rotted out, and the kitchen cabinets were missing, apparently due to vandalism. Soto saw the Respondent and asked her why the property was in that condition, and Respondent told her that she had no money because workmen on the project whom she had paid had "run off" with the money. During this visit, Respondent provided Soto with a written statement that the said house would be completed within sixty days, which would be September 20, 1981, unless prevented by "some act of God". (Testimony of Respondent, Soto, Michaels, Petitioner's Exhibits 14, 15, 25)

   
   

8. On September 1, 1981, the county building official wrote to Respondent and advised her that the permit extension had expired the previous day and that new permits would be required to complete the work. The letter also stated that if substantial work was not evident within ten days from her receipt of the letter, he would be forced to conclude that she had effectively abandoned the project and he would bring the matter to the attention of the county contracting board, and to the Florida Construction Industry Licensing Board. Complaints by Soto to the building official of Putnam County resulted in a letter written to him on January 14, 1982 by Respondent wherein she stated that she had not been able to do anything about the Soto house due to her financial situation, but that she hoped to be able to finish the project in thirty to sixty days. (Testimony of Michaels, Petitioner's Exhibits 10, 11)

   
   

9. On February 48, 1982, the county building officials went to the project site and found further evidence of deterioration, but no indication that any corrective or preservative work had been accomplished. Doors and windows were missing from the house, siding and fascia board were warped and pulled away, and several panels fallen from the side of the house. A ditch had been dug around the house and there was standing water in it. Inside, it was observed that gypsum board had been removed from the walls, and in the lower level water stains were evident sixteen to eighteen inches above the flooring. Roof trusses had been broken and structural integrity had deteriorated with rotted 2 x 4 lumber forming bearing walls. It was further noted that kitchen cabinets had been removed from the property. (Testimony of Durbin, Michaels, Petitioner's Exhibits 4-9)

10. Although construction of the house was substantially completed at the time Respondent ceased work, the remaining cost of installing heating and air conditioner units, kitchen appliances, washer/dryer, bathroom and lighting fixtures, pump for septic tank, and carpeting is estimated at approximately

    $13,000. Additionally, to correct the present deficiencies and procure new windows, kitchen cabinets, and other vandalized property, would require a substantial, but unknown additional cost. Respondent estimates that it would take about $10,000 to $15,000 to complete the house. (Testimony of Michaels, Respondent)

    
    

11. Since commencing construction on the Soto house in January, 1979, Respondent has obtained permits and completed construction on nine single family homes, the last permit being issued as recently as January 20, 1982. No complaints have been received by the Putnam County building department on these projects. (Testimony of Michaels, Petitioner's Exhibit 12)

    
    

12. Respondent testified at the hearing and conceded that she had not completed the Soto house, but attributed her failure to "cash flow" problems which had resulted in financial inability to complete the work. Respondent had deposited all of the money paid to her by Soto in her general banking account. This account was used for expenditures on the Soto house, as well as other concurrent projects. Respondent produced a statement of expenditures on the Soto house in the amount of $47,000. However, this statement reflected that Respondent had included airplane fare for two trips in the total amount of

    $434,. These trips were made to pick up checks from Soto in New York. Respondent stated that other costs for fill, construction of a ditch, and rock would not have been necessary if she had followed later advice as to the water problem on the property, and installed a sump pump and "french" drains. She further stated that on various occasions she would lock the house, but each time when she went back the locks would have been stolen, and that although she reported vandalism to the police, the problem continued. Respondent admitted that she had made promises to Soto to complete the house which she had not kept, but that she had never intended to take her money and not perform the work under the contract. She underestimated the cost of building the house due in part to her unfamiliarity with the particular design of the Soto house. (Testimony of Respondent, Petitioner's Exhibits 13, 29)

    
    

    CONCLUSIONS OF LAW

    
    

13. The Administrative Complaint alleges Subsections 475.25(1)(b) and (d), Florida Statutes, as grounds for discipline of the Respondent. However, it is determined that Subsection 475.25(1)(d) is applicable only to failure to account or deliver personal property incident to transactions in which a person has acted in the capacity of licensee under Chapter 475, Florida Statutes. Here, the pertinent contract and actions thereunder were pursuant to Respondent's Iicensure as a residential contractor and not as a real estate broker. Accordingly, Subsection 475.25(1)(d), Florida Statutes, is not available to Petitioner for disciplinary purposes in this case. '

    
    

14. Subsection 475.25(1)(c), Florida Statutes, authorizes Petitioner to take disciplinary action against a licensee who 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 Since this statutory provision applies to misconduct of the licensee in any business transaction, the Petitioner has jurisdiction to take action even though the transaction here involved Respondent's utilization of her residential contractor's license.

15. The evidence establishes that Respondent made false promises to Jenny Soto on severa1 occasions concerning the completion of Soto's house, and further was culpably negligent in failing to assure that all funds paid by Soto for construction of the house were applied for that purpose, and in failing to take necessary precautions to preserve the unfinished building from vandalism and deterioration.

    
    

16. In determining an appropriate penalty to be assessed against Respondent, it is noted that no evidence concerning prior disciplinary action has been presented. Further, it appears that her problems were precipitated by poor financial planning and inexperience in constructing the type of home in question. Although this does not excuse her subsequent misconduct and culpable negligence as stated above, it is considered that the serious penalty of license revocation is unwarranted, but that suspension of her real estate broker's license for a period of six months is a sufficient penalty.

RECOMMENDATION

That Respondent's license as a real estate broker be suspended for a period of six months.

DONE and ENTERED this 25th day of May, 1982, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the clerk of the Division of Administrative Hearings this 25th day of May, 1982.

COPIES FURNISHED:

James Quincey, Esquire Post Office Box 1900 Gainesville, Florida 32602

William N. Gambert, Esquire 630 North Wild Olive Avenue Daytona Beach, Florida 32018

Mr. C. B. Stafford Executive Director Board of Real Estate Post Office Box 1900 Orlando, Florida 32801

Frederick Wilsen, Esquire Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

================================================================= AGENCY FINAL ORDER

================================================================= MEMORANDUM December 8, 1982

TO: Harold Huff, Executive Director, Florida Real Estate Commission; Gail Rodrigues, Chief Investigator; Darlene Keller, Administrative Assistant; Renata Hedrick

FROM: John Huskins, Staff Attorney SUBJECT: Final Commission Action

Case No. 0011848 Catherine W. Grabhorn 0033021-1

DOAH Case No. 91-2491

You are advised that by Final Order entered July 15, 1982, the Commission ordered Respondent's license revoked (copy attached); and the Respondent took appeal from this ORDER, and that on November 9, 1982, the District Court of Appeal entered its ORDER dismissing the appeal (copy attached). Accordingly, the Commission's ORDER of revocation became effective November 9, 1982.

CLOSURE CODE: PLOO

Catherine W. Grabhorn, broker, Palatka, Florida; Revoked, effective November 9, 1982; fraud, misrepresentation, conceal- ment, false promises, dishonest dealing, culpable negligence, breach of trust.

Attachments

cc: Sandy Maston w/file Randy Schwartz

JH/DM

Docket for Case No: 81-002491

Orders for Case No: 81-002491