STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION )

)

Petitioner, )

)

vs. ) CASE NO. 83-3001

) LORRAINE B. ANTHONY & LORRAINE ) ANTHONY REALTY, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings on February 22, 1984 in Fort Myers, Florida. The appearances were as follows:

APPEARANCES

For Petitioner: Fred Langford, Esquire

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32801

For Respondent: Harvey Rollings, Esquire

PAVESE, SHIELDS, GARNER, HAVERFIELD, DALTON & HARRISON

Post Office Box 88

Cape Coral, Florida 33910

This cause arose on an Administrative Complaint filed by the above-named Petitioner wherein it was alleged as to Count I that the above-named Respondents solicited and obtained a sales contractregarding a parcel of real estate and acknowledged receipt of a $500 earnest money deposit from the purchasers. It is charged that the purchasers defaulted on the contract and the Respondents failed and refused to deliver the earnest money to the seller as a forfeited deposit.

It is then alleged that, in reality, the Respondents never obtained the earnest money deposit required by the terms of the sales contract, but led the seller to believe that they had obtained one, and the seller, Thomas Romano trusted and relied upon statements or acts of the Respondents to that effect. Petitioner thus charges that Respondents are guilty of fraud, misrepresentation, concealment, dishonest dealing by trick and the other elements of reprehensible conduct proscribed by Section 475.25 (1) (b), Florida Statutes.

Concerning Count II it is charged that Respondents, if indeed they received a $500 earnest money deposit in connection with the sales contract executed by Leif and Carol Rosenquist and Thomas Romano on behalf of Santa Barbara

Development Corporation, are guilty of failing to account and deliver the deposit to the sellers in violation of Subsection 475.25(1)(d), Florida Statutes.

Finally, it is alleged that as regards Count III, that the Respondents solicited and obtained a sales contract dated August 4,1982, between the above- named seller and buyers and acknowledged receipt of a $500 earnest money deposit from those purchasers. It is then charged that the transaction failed to close by reason of the purchaser's default and that nonetheless the Respondents returned the $500 deposit to the purchasers upon their request without prior knowledge and consent of the seller, Thomas Romano of Santa Barbara Development Corporation. It is thus charged with regard to Count III that the Respondents have violated Subsection 475.25(1)(b), Florida Statutes. Count IV is a re- allegation of all preceding paragraphs of the complaint with a reiteration of the "failure to account and deliver" charge related to Section 475.25(1)(d), Florida Statutes. It is thus redundant and should be considered to be surplusage.

At the hearing the Petitioner presented three exhibits, all of which were admitted into evidence and witnesses Thomas Romano, Leif Rosenquist and Mrs.

Carol Ann Rosenquist. The Respondents presented two exhibits, both of which were admitted into evidence and presented the testimony of Ida Chacko, Eleanor Smith and the Respondent Mrs. Lorraine Anthony. The issue to be resolved concerns whether the Respondents engaged in the conduct alleged in the factual portions of the Administrative Complaint and, if so, whether that conduct constitutes a violation of the statutory authority alleged in the complaint and if that be the case, what, if any, penalty is warranted.

The parties requested the right to submit proposed findings of fact and conclusions of law which were timely submitted on March 19, 1984. All proposed findings of fact and conclusions of law and supporting arguments have been considered. To the extent that the proposed findings of fact and conclusions of law submitted are in accordance with the findings, conclusions and views stated herein, they have been accepted. To the extent that such proposed findings, conclusions and arguments asserted are inconsistent herewith they have been rejected. Certain of those proposed findings and conclusions have been omitted as not relevant or as not necessary to a proper determination of the material issues presented. To the extent that the testimony of various witnesses is not in accord with the findings herein, it is not credited. See Sonny's Italian Restaurant vs. Department of Business Regulation, 414 So. 2d 1156, 1157 (Fla.

3rdDCA 1982); Sierra Club vs. Orlando Utilities Commission, 436 So.2d383 (Fla. 5th DCA 1983).

FINDINGS OF FACT

1. The Respondents at all times pertinent hereto are licensed real estate brokers having been issued, in the case of Lorraine B. Anthony individually, license number 0123486, and in the case of Lorraine Anthony Realty, Inc., as a corporate broker, license number 0181092. At all times pertinent hereto, Respondent Lorraine B. Anthony was licensed and operating as a real estate broker and the sole "qualifying" broker and officer of Respondent Lorraine Anthony Realty, Inc. The Petitioner is an agency of the State of Florida charged with enforcing the provisions of Chapter 475, Florida Statutes and appurtenant rules governing the licensure standards and practice standards for real estate brokers, broker salesmen and salespersons in the State of Florida and conducting disciplinary proceedings inconnection therewith.

2. On or about May, 1982, Mr. Leif Rosenquist journeyed to Lee County, Florida from his native Sweden with the intention of purchasing real property for the purpose of building a residence for himself and his wife. He became acquainted with Ida Chacko, a real estate salesperson operating in Lee County, Florida, and ultimately entered into a real estate sales contract partly at her behest. Ida Chacko was not then employed by the Respondent, Lorraine B. Anthony nor the Lorraine Anthony Realty, Inc. Mr. Rosenquist gave Ida Chacko approximately $10,000 to place in an escrow account for him in order to effect a deposit and down payment on that real estate purchase. This transaction ultimately did not occur. Ida Chacko, however, retained $7,000 of those funds which were placed in an escrow account with Tri-County Title Company in approximately May of 1982. Shortly thereafter Ms. Chacko became an employee and salesperson with the Respondents real estate firm, with the Respondent Lorraine Anthony as her managing broker.

   
   

3. In approximately August, 1982, Mr. and Mrs. Rosenquist entered into a "deposit, receipt and sales contract" with Santa Barbara Development Corporation and Thomas Romano, its president, for the purchase of a piece of property upon which they wished Mr. Romano to construct a duplex which they would use as their residence. The transaction was arranged by Ida Chacko. Mr. Romano owned that property and contracted with the Rosenquists to construct the dwelling. The contract terms required the payment of a $500 earnest money deposit to Mr. Romano and Santa Barbara Development Corporation. Ida Chacko assured Mr. and Mrs. Rosenquist that the $500 earnest money deposit required by the contract would be paid to Mr. Romano from the $7,000 escrow account which she maintained on their behalf. In fact, Ms. Chacko had, prior to that time, withdrawn the

   $7,000 from the escrow account with Tri-County Title Company for unknown purposes. Further, Ms. Chacko never paid over the $500 earnest money to the Respondent's escrow account nor to Mr. Romano or Santa Barbara Development Corporation. The contract, moreover, was contingent in its terms on the Rosenquists being able to obtain financing at terms stated on the face of the contract, secured by a mortgage with Barnett Bank. The Rosenquists however, were unable to secure compatible financing in accordance with the contractual terms regarding that financing and so that contingency was never satisfied and the Rosenquists elected to never consummate that transaction. That contingency never being satisfied, the Rosenquists never actually defaulted on the contract. Moreover, during the pendency of the Rosenquists attempts to obtain the financial arrangements with Barnett Bank, the time period stated in the contract during which it could be enforceable, expired.

   
   

4. Pursuant to a later contract entered into September 26, 1982, the real estate involved in the Rosenquist transaction was sold to Ida Chacko's daughter. Mr. Romano sold her the property and ultimately constructed a duplex dwelling for Ms. Chacko's daughter on that property according to the same construction plans referenced in the Rosenquist contract and for a higher purchase price. He thus incurred no financial detriment caused by the failure of the Rosenquist transaction, nor did the Santa Barbara Development Corporation.

   
   

5. Some two months after the failure of the Rosenquist transaction, Mr. Romano sought payment of the $500 earnest money deposit he believed he was due from the Respondent Lorraine B. Anthony and Lorraine Anthony Realty, Inc. She initially refused to pay him the $500. The Respondent had no knowledge that the Rosenquist's agreement had been entered into, knew nothing of its particulars, nor of any representations made by any of the parties to the agreement, nor Ida Chacko, until approximately two days after the contract was executed. She learned of the contract when her office manager, Ellen Smith, told her that no earnest money deposit had been obtained on that contract. She immediately

   instructed Mrs. Smith to ascertain that an earnest money deposit was immediately obtained according to the terms of the contract. After later consulting with Ida Chacko and learning that the transaction never reached fruition, she did not inquire further concerning the earnest money deposit or other particulars regarding that transaction, believing that she had no reason or duty to do so.

   
   

6. The Respondent, Lorraine B. Anthony never met with the Rosenquists nor discussed any facet of the transaction with them nor made any representations to them with regard to the transaction. She never discussed the transaction or made any representations regarding it to Mr. Romano, until he finally demanded the $500 earnest money deposit some two months after the failure of the contract with the Rosenquists and after the consummation of the second contract with Ida Chacko's daughter. The Respondents had had a successful business relationship with Mr. Romano prior to these occasions and desired to continue such relationship and therefore, in an abundance of caution, ultimately paid the $500 to Mr. Romano. He has no claim presently pending against the Respondents.

   
   

7. Helen Smith, the Respondents' office manager, established that it was the Respondents' consistent policy to always obtain an earnest money deposit contemporaneously with the execution of a real estate sales contract in which she or her agents were involved, and to deposit such money in her escrow account. Ida Chacko was well aware of this policy at the time the Rosenquist transaction was entered into, but never obtained the earnest money deposit either directly from the Rosenquists nor carried out her assurance to the Rosenquists that she would obtain the required $500 earnest money deposit from the $7,000 "escrow account" supposedly on deposit on their behalf with Tri- County Title Company (or another unidentified party). The $7,000 which Ms. Chacko had on deposit on behalf of the Rosenquists was obtained before she was ever employed with the Respondents' firm as an agent of the Respondent and the Respondent never knew of the existence of those funds.

   
   

8. The only connection Respondent and her firm had with this transaction and her only representation made with regard to this transaction was that Mrs. Smith should make sure that agent Chacko placed the $500 earnest money deposit in the proper escrow account in favor of Mr. Romano and Santa Barbara Development Corporation. In any event the Respondents never received the $500 earnest money deposit. The only representation made to the Rosenquists with regard to the earnest money deposit was that of Ida Chacko to the effect that she would pay it over to the Respondents' escrow account from the funds she supposedly had on deposit on the Rosenquists' behalf, which of course, she failed to do. Neither the Respondent, Lorraine B. Anthony, nor any of her agents, ever represented to Mr. Romano or Santa Barbara Development Corporation that the $500 was held on deposit on his behalf or otherwise. Finally, because the Respondents never received the $500 deposit, they could not possibly have return edit to the purchasers without the prior knowledge or consent of the seller, as alleged in Count II of the Complaint.

   
   

9. In summary, the Respondent instructed her office manager to see that Ida Chacko received the deposit money and placed it in the escrow account at the time she believed the contract to be valid and enforceable and Ida Chacko failed to comply, thus flouting the Respondent's clearly defined office policy regarding the escrowing of deposit money, of which policy Ida Chacko was previously well aware. The Respondent had had prior and subsequent difficulties with Ida Chacko concerning her failure to follow this and other office policies required by the Respondents. The Respondent only learned definitely that no deposit money had been received nor deposited in her escrow account, approximately two months after the contract was executed and long after the

   contract was automatically cancelled. She at no time received any commission related to any transaction involving the subject parcel of real property. She never made any representations of any kind to any of the parties to the deal.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction ofthe parties to and the subject matter of these proceedings. Section 120.57(1), Florida Statutes (1981).

    
    

11. The Respondent has been charged with violations of Section 475.25(1)(b) and (d), Florida Statutes with regard to the misconduct the Respondents allegedly committed. Those provisions provide as follows:

    
    

    1. The board may deny an application for licensure or renewal, may suspend a license for a period not exceeding 10 years, may revoke a license, may impose an adminis- trative fine not to exceed $1,000 for each count or separate offense, or may issue a reprimand, if it finds that the licensee or applicant has:

       * * *

       (b) 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 him by

       law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction....

       * * *

       (d) 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, including a share of a real estate commission. . which is not his property or which he is not in law or equity entitled to retain under the circumstances....

       
       

12. A thorough review of the entire body of testimony and evidence adduced in this proceeding reveals that the Respondents had no connection with the transaction involving the purchasers, the Rosenquists, and the seller, Mr. Romano and Santa Barbara Development Corporation. The only representation made was the assurance concerning the escrowing of the deposit money given to the Rosenquists by Ida Chacko, of which the Respondents had no knowledge. The Respondents consistent office policy gas to immediately require and deposit in an escrow account any earnest money deposit with regard to each such real estate sales contract entered into by, or at the behest, of its firm or salespersons.

    Ida Chacko had been repeatedly instructed of this policy and her failure to abide by it in this instance was without the knowledge or authority of the Respondents. The unperformed representation made concerning the earnest money deposit was a departure from the regularly and consistently followed business practices of the Respondents with regard to such funds by Ida Chacko alone. The Respondents took immediate steps to rectify Ida Chacko's mistake and believed that the deposit money had been appropriately accounted for until she learned otherwise two months later from Mr. Romano, after the deal involved had long since become moot. Further, even if the representation made by Is. Chacko could' be a source of derivative liability by the Respondents, there was no demonstration that Ms. Chacko, at the time she made the representation concerning the manner by which the deposit honey would be paid over and accounted for, had any intent to make a misrepresentation, to commit a fraudulent act, to conceal, make a false promise, or commit any of the other forms of aberrant conduct in a business transaction enumerated in paragraph (b) cited above. To be punishable, a representation must be made which is material and with the knowledge by the one making the misrepresentation at the time that it is indeed false. This was clearly not shown to be the case here and it was not proven that the Respondents had any knowledge of the representation made by Ms. Chacko; that they authorized it or, in the exercise of reasonable care should have been aware of it, since the contract was entered into totally without their knowledge. See Shelton v. Florida Real Estate Commission, 120 So.2d 191 (Fla. 2nd DCA 1960). It was simply not proven that any fraud, concealment or misrepresentation was committed with regard to the Rosenquist transaction. Further, the evidence shows that the Respondents clearly never received the $500 earnest money deposit, that they never solicited or obtained the sales contract dated August 4, 1982, nor that they could have returned the

    $500 deposit to the purchasers upon purchasers' request, without knowledge of the seller, as is charged in Count III, because they simply never received the deposit to begin with. Thus, none of the charges in Counts I and III have been established and so no violation of Subsection 475.25(1) (b), Florida Statutes has been proven.

    
    

13. In Count II it is alleged alternatively that if the Respondents received the $500 earnest money deposit in question then they are guilty of failure to account and deliver the deposit to the sellers in violation of Subparagraph (d) cited above and, in effect, an identical allegation was made in Count IV, which is actually surplusage. The evidence and testimony of record clearly establish that the Respondents never received any earnest money deposit. Thus, it is obvious that Counts II and IV have not been proven.

    
    

14. In summary therefore, none of the counts in the Administrative Complaint have been proven by even a preponderance of evidence and the entire Administrative Complaint should be dismissed.

RECOMMENDATION

Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore

RECOMMENDED that the Administrative Complaint against Lorraine B. Anthony and Lorraine Anthony Realty, Inc. be DISMISSED in its entirety.

DONE and ENTERED this 30th day of April, 1984, in Tallahassee, Florida.

P. MICHAEL RUFF 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 30th day of April, 1984.

COPIES FURNISHED:

Fred Langford, Esquire Department of Professional Regulation

Post Office Box 1900 Orlando, Florida 32801

Harvey Rollings, Esquire PAVESE, SHEILDS, GARNER, HAVERFIELD, DALTON & HARRISON

Post Office Box 88

Cape Coral, Florida 33910

Harold Huff, Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32801

Fred M. Roche, Secretary Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 83-003001

Orders for Case No: 83-003001