STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, BOARD OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 82-080

)

JIMMY D. NAPIER, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Chipley, Florida, before the Division of Administrative Hearings, by its duly designated Hearing Officer, Robert T. Benton II, on June 10, 1982. The transcript of proceedings was filed on June 16, 1982. The parties were represented by counsel:

APPEARANCES

For Petitioner: Frederick H. Wilsen, Esquire

130 North Monroe Street Tallahassee, Florida 32301

For Respondent: Russell A. Cole, Jr., Esquire

Post Office Box 155 Bonifay, Florida 32425

By administrative complaint filed December 8, 1981, petitioner alleged that respondent "paid delinquent accounts for several Farmers Home Administration borrowers in the DeFuniak Springs, Florida area as consideration for obtaining lease-option agreements pertaining to the borrowers' real property without the prior written consent of Farmers Home Administration . . . then subleased said property"; that respondent "in connection therewith . . . advised borrowers that the lease-options and agreements subleasing [are] legally permiss[i]ble when in fact said activity violates covenant 12 of the terms and conditions of the Farmers Home Administration Mortgage" and that respondent "made said statements and engaged in said conduct knowing them to be false at the time made and . . . [in order] to induce the borrowers to enter into said lease option agreements and subleases" which they did, relying on respondent to their detriment in that "the Farmers Home Administration is foreclosing . . . [on] the mortgages of Doris Stocker Wilson, Bobby J. Turner and Freddie Wakefield," among others.

After respondent disputed the allegations of the administrative complaint and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes (1981), petitioner requested the assignment of a hearing officer, pursuant to Section 120.57(1), (b)3, Florida Statutes (1981). See Section 120.57(1)(a)1, Florida Statutes (1981).

FINDINGS OF FACT

1. Respondent Jimmy D. Napier is a licensed real estate broker having been issued license No. 0063347. His license has been inactive since March 31, 1981.

   
   

2. In early May of 1980, respondent entered into a two-year lease of real property owned by Rosemary Drake, with an option to purchase it. The property was encumbered at the time by a mortgage in favor of Farmers Home Administration (FHA), and Ms. Drake was in arrears on her mortgage payments. Respondent went to FHA's DeFuniak Springs office to inquire as to the precise amount of the arrearage before executing the lease with option to purchase. Mack Baker, who had charge of the FHA office in DeFuniak Springs, had knowledge of the transaction at the time and discussed it with respondent.

   
   

3. On May 17, 1980, respondent entered into a two-year lease of real property in Walton County, Florida, owned by Bobby Joe and Hilda Turner, with an option to purchase it. Petitioner's Exhibit No. 2. One provision of this agreement purported to allow respondent to sublease. The Turners were not delinquent on the FHA mortgage that encumbered the property at the time. Mrs. Turner telephoned FHA's Mack Baker and told him that they planned to rent their home and give an option to purchase. Only after this conversation did she and her husband execute the lease and option. Respondent gave the Turners a check for $3,075 on May 17, 1980, and other consideration subsequently. No commission was paid by any party. Respondent told them that he was a real estate broker buying for his own account, before the lease was executed. Respondent said he would let Mr. Baker know about the transaction and did in fact do so. Since the lease was executed, various people have lived on the property.

   
   

4. On June 14, 1980, respondent entered into a two-year lease of real property in Walton County, Florida, owned by Doris A. Stocker, now Wilson, with an option to purchase it. Petitioner's Exhibit No. 1. At the time, the property was encumbered with a mortgage in favor of FHA, and Mrs. Wilson was sometimes in arrears on her mortgage payments. Jack Webster, a licensed real estate broker, had not succeeded in finding a purchaser for Mrs. Wilson's property when he worked as a salesman in the office of another broker with whom Mrs. Wilson had listed the property. After he went out on his own, he introduced Mr. Napier to Mrs. Wilson (then Stocker) and he was present when Petitioner's Exhibit No. 1 was executed. He had told Mrs. Wilson that respondent was a real estate broker buying for his own account. Respondent paid Mrs. Wilson $1,750 on June 14, 1980. No commission was paid by any party. Mrs. Wilson asked respondent whether she should contact Mr. Baker, but respondent said he would handle it. Eventually, Mrs. Wilson deeded the property to respondent. One provision of the lease and option purported to allow respondent to sublease. Somebody else is now living on the property.

   
   

5. Fred Thurmond Wakefield II, and his wife, Marie, bought some property in Walton County with money they borrowed from FHA. Eventually they listed the property, encumbered with an FHA mortgage, for sale with Joseph G. Lamerche, Jr., a licensed real estate broker in DeFuniak Springs. Mr. Lamerche read the FHA mortgage, Petitioner's Exhibit No. 3, a form used by FHA in all Florida transactions for the last few years. Paragraph (12) states:

   
   

   Neither the property nor any portion

   thereof or interest therein shall be leased, assigned, sold, transferred, or encumbered, voluntarily or otherwise, without the writ- ten consent of the Government. The Govern-

   ment shall have the sole and exclusive rights as beneficiary hereunder, including but not limited to the power to grant consents, par- tial releases, subordinations, and satisfac- tion, and no insured holder shall have any right, title or interest in or to the lien

   or any benefits hereof. Petitioner's Exhibit No. 3.

   
   

   Mr. Lamerche telephoned Mr. Baker and brought the matter up without, however, mentioning the Wakefield property specifically. Mr. Baker told Mr. Lamerche he was glad respondent had bought the Drake property because of problems with Ms. Drake before the sale. Five or six days later, on February 3, 1981, respondent entered into a two-year lease of the Wakefield property with an option to purchase it. Respondent's Exhibit No. 1. Mr. Lamerche represented the Wakefields when the agreement was executed. Before they signed, respondent told them he was a real estate broker buying for his own account. Mr. Wakefield asked respondent if the transaction was legal and respondent answered that he had done three or four the same way.

   
   

6. In all, respondent leased six separate parcels encumbered by FHA mortgages with options to purchase each, and without the written consent of FHA. Typically, the leases called for respondent to make the lessors' FHA mortgage payments. As a result of conversations going back to 1967 with Jerry Ausley, an FHA employee, respondent was under the impression that real estate encumbered by an FHA mortgage could be leased for two years before refinancing was necessary. He did not know that the consent FHA required for a mortgagor to sell property had to be in writing. FHA's Mr. Baker was aware of each of the six transactions. The office which Mr. Baker headed was the appropriate office at which to approach FHA for permission to lease or encumber property mortgaged to the FHA.

   
   

7. FHA accepted mortgage payments from respondent for each of the six mortgages. At some point, however, FHA mailed warning letters threatening everyone leasing to respondent with foreclosure. Under FHA rules, Napier was ineligible for FHA loans because his income was too high, his assets were too great, and because he did not reside on any of the six parcels. Nevertheless, FHA eventually permitted respondent to assume the Turner, Wilson, and Wakefield mortgages. Respondents' Exhibit Nos. 2, 3, and 4.

   
   

8. Respondent's proposed recommended order has been considered in preparation of the foregoing findings of fact, and respondent's proposed findings of fact have been adopted, in substance.

   
   

   CONCLUSIONS OF LAW

   
   

9. Petitioner is authorized to "suspend a license for a period not exceeding 10 years . . . revoke a license . . . impose an administrative fine . . . or . . . issue a reprimand," Section 475.25(1), Florida Statutes (1981), whenever it can establish, by clear and convincing evidence, that a 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 . . . ." Section 475.25(1)(b), Florida Statutes (1981).

   In pertinent part, these statutory provisions are identical to the 1979 statutes.

10. The fact that respondent dealt for his own account does not insulate his dealings from petitioner's scrutiny. In Sellars v. Florida Real Estate Commission, 380 So.2d 1052 (Fla. 1st DCA 1980) , the court said:

    
    

    A registered real estate broker may be disciplined for his dishonest conduct of business affairs for his own account, as well as for such conduct in transactions in which his only interest is as a broker.

    McKnight v. Florida Real Estate Commission,

    202 So.2d 199 (Fla. 2d DCA 1967), cert. den., 209 So.2d 672 (Fla. 1968). At 1054.

    
    

    The statute is explicit on this point, in referring to "any business transaction." Section 475.25(1)(b), Florida Statutes (1981).

    
    

11. At the formal hearing, petitioner had the burden to show by clear and convincing evidence that respondent committed acts alleged in the administrative complaint that would warrant disciplinary action. Walker v. State, 322 So.2d 612 (Fla. 3d DCA 1975); Reid v. Florida Real Estate Commission, 188 So.2d 846 (Fla. 2d DCA 1966). See The Florida Bar v. Rayman, 238 So.2d 594 (Fla. 1970). Disciplinary proceedings like the present case are potentially license revocation proceedings, since the penalty for the infraction alleged lies within the discretion of the disciplining authority, if allegations of misconduct are established at the hearing. Florida Real Estate Commission v. Webb, 367 So.2d 201 (Fla. 1979).

    
    

12. In a matter as grave as license revocation proceedings, the duty allegedly breached by the licensee must appear clearly from applicable statutes or rules or have a "substantial basis," Bowling v. Department of Insurance, 394 So.2d 165, 173 (Fla. 1st DCA 1981), in the evidence. License revocation proceedings have, indeed, been said to be "'penal' in nature." State ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487, 491 (Fla. 1973); Kozerowitz v. Florida Real Estate Commission, 289 So.2d 391 (Fla. 1974); Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1979)(reh. den. 1980)

    
    

13. The proof adduced in the present case was insufficient to establish any intentional violation of Section 475.25(1)(b) Florida Statutes (1981). There was no proof of harm to any individual. Respondent induced a half dozen breaches of FHA mortgage contracts, apparently unaware that the language of the

contract forbade such agreements without prior written permission from FHA. FHA itself has chosen to overlook the breaches and to enter into assumption agreements with respondent, regarding the mortgages specifically pleaded in the administrative complaint. If FHA had foreclosed, respondent, rather than the original mortgagors, would have been the real loser. If respondent had jeopardized a client's interests by failing to read a mortgage agreement, he might have been guilty of culpable negligence, but he cannot be said to owe himself that duty nor to be guilty of culpable negligence by putting his own interests in jeopardy.

RECOMMENDATION

Upon consideration of the foregoing, it is RECOMMENDED:

That petitioner dismiss the administrative complaint filed against respondent.

DONE AND ENTERED this 24th day of June, 1982, in Tallahassee, Florida.

ROBERT T. BENTON, II

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 29th day of June, 1982.

COPIES FURNISHED:

Frederick H. Wilsen, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Russell A. Cole, Jr., Esquire Post Office Box 155

Bonifay, Florida 32425

Carlos B. Stafford Executive Director

Florida Real Estate Commission Post Office Box 1900

Orlando, Florida 32802

Samuel R. Shorstein, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 82-000080

Orders for Case No: 82-000080