STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 83-3273

)

1. ERNEST MORRIS, )

   )

   Respondent. )

   )

   
   

   RECOMMENDED ORDER

   
   

   Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on March 16, 1984.

   
   

   APPEARANCES

   
   

   For Petitioner: Tina Hipple, Esquire

   Post Office Box 1900 Orlando, Florida 32802

   
   

   For Respondent: Carmine M. Bravo, Esquire

   1450 State Road 434

   Longwood, Florida 32750

   and

   Steven H. Coover, Esquire Post Office Drawer H Sanford, Florida 32771

   
   

   BACKGROUND

   
   

   By administrative complaint filed on September 1, 1983 petitioner, Department of Professional Regulation, Division of Real Estate, alleged that respondent, H. Ernest Morris, Sr., a licensed real estate broker, had violated Subsection 475.25(1) Florida Statutes, for which disciplinary action against his broker's license should be taken. More specifically, petitioner charged that in November, 1982 respondent presented a check for payment to another Realtor as the successful bidder at an auction, that after depositing the check in his escrow bank account, it was returned to the realtor with the notation "payment stopped", that since then respondent has failed to make the check good, or to close the transaction as provided, and that the foregoing constituted 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 Subsection 475.25(1) (b), Florida Statutes.

   
   

   Respondent disputed the foregoing allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was

   referred by petitioner to the Division of Administrative Hearings on October 18, 1983 with a request that a Hearing Officer be assigned to conduct a hearing.

   
   

   By notice of hearing dated December 12, 1984 a formal hearing was scheduled on March 16, 1984 in Orlando, Florida. An ore tenus motion to continue the hearing made by respondent on March 6, 1984 was denied the same date. At the final hearing petitioner presented the testimony of Glenn A. Blackmore and Gary Shader and offered petitioner's exhibits 1-8; all were received in evidence.

   Respondent testified on his own behalf and presented the testimony of Timothy L. Richards and offered Respondent's exhibit 1-6; all were received in evidence.

   
   

   The transcript of hearing was filed on April 16, 1984. Proposed findings of fact and conclusions of law were due from the parties no later than May 1, 1984. However, none were timely filed and accordingly they were not considered by the undersigned in the preparation of this order.

   
   

   The issue herein is whether respondent's real estate broker's license should be disciplined for the alleged violations set forth in the administrative complaint.

   
   

   Based upon all the evidence, the following findings of fact are determined: FINDINGS OF FACT

   1. At all times relevant hereto, respondent H. Ernest Morris, Sr., held real estate broker's license number 0183598 issued by petitioner, Department of Professional Regulation, Division of Real Estate. His present address is 1843 State Road 434, Longwood Village Shopping Center, Longwood, Florida. He has been licensed as a broker since 1979 and as a salesman since 1976.

      
      

   2. On October 30, 1982 a public auction was held by Tomorrow Realty and Auction Company (TRAC) near Deland, Florida. Glenn Blackmore was broker for TPAC and conducted the auction. One of the parcels of property being sold that day was a 240 acre tract of land owned by Wayne Rohlfing as trustee and lying on State Road 444 in Volusia County, Florida. As is pertinent here, it was commonly identified as Section A and consisted of Lots 1-13.

      
      

   3. Respondent represented an unidentified group of buyers who wished to purchase a hunting preserve in the area. He contacted Blackmore at least five times prior to October 30 inquiring about potential property to buy. Blackmore met with respondent and gave him a complete presentation on the Rohlfing property. The presentation consisted of explaining in "great detail" how the auction worked, and letting Morris examine all pertinent documents including the title binder insurance, standard sale contract, auction contract, handbills, registration, short form memorandum of sale and the like. Blackmore also explained the requirements and procedure for submitting a bid.

      
      

   4. Respondent attended the auction on October 30, 1982 and, like all other prospective bidders, signed a registration form. This form is required to be read and signed in order for one to bid. It also alerts the prospective bidders as to the specific terms and conditions which apply. The form was entitled "Real state Terms of Sale" and contained the terms and conditions of the sale including, inter alia, a provision that "(n)o bids may be retracted and Buyer agrees to make prompt settlement on the day of sale for all real estate purchased, subject to the Terms and Conditions of the Buyer's Guide". Morris was given a copy of the Buyer's Guide when he signed the registration form. All

      parties understood the final closing had to be consummated within fifteen days after the sale.

      
      

   5. Prior to the auction beginning, Blackmore went through the Buyer's Guide word by word with all prospective bidders. He then answered any questions that the bidders might have.

      
      

   6. Pursuant to pre-established procedure in the Buyer's Guide, Blackmore initially sold lots 1-13 to seven Individual buyers. They sold collectively for a total of $113,500. Blackmore then grouped the lots together to see if he could get a higher bid selling them all at once. Morris bid $125,000 on the entire tract and was the highest bidder. A representative of TBAC then immediately went to Morris in the audience and obtained his signature on a "Memorandum of Sale at Public Auction". It read as follows:

      
      

      I Herman Morris hereby acknowledge that I have this 30th day of Oct, 1982, bought at public auction asthe highest and the best bidder that certain parcelof land described as follows:

      
      

      Lots 1-13 Block Section "A" of Volusia County.

      
      

      The total amount bid for the property is

      $125,000with a deposit of $37,500 Check #1197 I have agreed and do hereby sign and execute a Contract for Sale and Purchase this day,

      as per the announced terms of this auction.

      
      

      Morris signed the foregoing memorandum in the presence of a witness. Shortly afterwards, he gave a personal check in the amount of $37,500 to Blackmore's attorney, Gary Shader, made out to "TRAC". Morris asked Shader what the date was and then, without Shader's knowledge, postdated the check to October 31, 1982.

      
      

   7. Shader had a title certificate on the entire tract in his possession when the $37,500 check was drawn by Morris. It had been run the previous month consistent with Shader's prior practice on such sales. This was to enable the seller to show he had clear title before any prospective bids were made. Although Morris claimed he needed to check the title on the property and have a "review" made when he gave the deposit, this testimony is not deemed to be credible. Indeed, Shader showed him the title certificate when the deposit check was written and Blackmore had shown him the title binder at least a week prior to the sale. Morris did not sign a contract for sale and purchase when he gave the deposit check, but one was prepared after he left the premises that afternoon and mailed to him on November 1. It was never signed.

      
      

   8. On Saturday night, Morris apparently knew he was not going to follow through on the deal for the parties have stipulated that on Saturday evening or the next day he contacted at least three individuals who had submitted the high bids when Lots 1-13 were sold individually. The purpose of the contact was to see if they were still interested in buying the property.

      
      

   9. The next day, October 31, Morris attended an open house in Maitland where he met Blackmore and discussed the sale. Morris told Blackmore he might

      not be able to close on the deal because his clients couldn't "get together". Blackmore advised him he would forfeit the $37,500 deposit if they didn't close.

      
      

   10. On Monday morning, November 1, Blackmore called Morris' bank (Winter Park National Bank) to see if he could convert the personal check to a cashier's check. Fe was told there were insufficient funds in the account. He then went to the bank to present the check but was told the same thing. After depositing the check in his bank account that morning, it was returned to Blackmore the same day with the notation "insufficient funds". Morris also had payment stooped on the check the same day.

       
       

   11. Blackmore telephoned and visited respondent on November 2 or 3 to inquire about the check and was told by Morris that he (Morris) did not intend to make payment because he had postdated the check and had signed no contract to purchase the property. Blackmore subsequently filed a complaint with petitioner and also filed an action in circuit court to recover the money. The suit is still pending at this time.

       
       

   12. Morris approached his brother-in-law, Timothy Richards, prior to the auction to secure a $40,000 loan at 15% for three months. Morris told Richards that he had a prospective investment and might need the money if the deal was consummated. Richards agreed to loan the money if it was needed. Morris stated the remainder of the money for the purchase, if indeed it was made, would be borrowed from his father. Sometime after October 30 Morris called Richards to advise the deal had fallen through and he did not need the loan.

       
       

   13. According to Morris, he telephoned Blackmore at least a week prior to the auction to advise that his prospective buyers were no longer interested in Section A because they had purchased another parcel. However, Blackmore denied he was told this. Morris acknowledged making the high bid and stated it was on his own behalf rather than for any other buyers. He also stated he signed a contract for sale and purchase on October 30 prepared by Blackmore's attorney which had a contingency clause making the sale subject to a title review. Even though he was a licensed broker, he claimed he left the premises without being given a copy of the same. According to Morris, he withdrew from the deal after he couldn't get a title search from Shader and was not given a copy of the contract on October 31 as he had requested.

       
       

   14. Both Blackmore and his attorney consider the signing of the memorandum of sale at public auction by Morris to be a legally binding contract for the purchase of the property. They consider it to be of no consequence that Morris did not sign the traditional contract for sale and purchase. They also consider the latter document to merely be an addendum to the auction agreement, and used at Blackmore's auctions primarily to evidence that the broker is holding a deposit in escrow for the buyer.

       
       

   15. The land in question was subsequently resold to other buyers by Blackmore at a later undisclosed date.

       
       

       CONCLUSIONS OF LAW

       
       

   16. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

       
       

   17. Respondent is charged with "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device,

       culpable negligence, or breach of trust" within the meaning of Subsection 475.25(1)(b), Florida Statutes, for his actions in the Rohlfing transaction.

       
       

   18. Initially, it is noted that the administrative complaint does not plead any allegations of fraud with sufficient particularity to apprise respondent of this charge, and although respondent did not challenge the legal sufficiency of the complaint in this respect, nonetheless there was insufficient evidence presented at the final hearing to substantiate this charge. Accordingly, that portion of the complaint should be dismissed.

       
       

   19. Respondent's conduct may be summarized as follows. He made a successful bid on a rather substantial tract of land, gave a deposit in the amount of $37,500 without having funds in his bank to cover the same, decided to back out of the deal, and then stopped payment on this check. The fact that insufficient funds were in his hank account when the check was drawn is immaterial for the check was tendered on a Saturday, and had he intended to follow through on the transaction, he could have deposited, and indeed had access to, sufficient funds the following Monday morning to cover the same.

       
       

   20. The issue is whether respondent's stooping payment on the check, and withdrawing from the transaction, constitutes a violation of any of the remaining elements of Subsection 475.25(1)(b). Respondent's claim that the contract was contingent on a review of the title is rejected as not being credible. Instead, the undersigned concludes that respondent fully intended to purchase the property for his own account when he bid, and after later reflection and consultations, and perhaps because he could not resell it to other buyers at a profit or get them to assume his obligation, he attempted to renege on the deal by claiming the postdated check and failure to sign a formal contract for sale and purchase gave him an out. Whether these are valid grounds need not be determined here, for they are matters to be more appropriately resolved in the pending circuit court proceeding. In any event, there is no evidence that Morris entered into the transaction with any dishonest or illicit interest, or with the desire to misrepresent any material fact to the seller. Indeed, the transaction was for his own account, and while he may be liable to Blackmore and the seller for the $37,500 deposit, any breach of contract is cognizable in the circuit court rather than in this forum. Fleischman v. Department of Professional Regulation, 441 So.2d 1121 (Fla. 3rd DCA 1983). Therefore, the complaint should be dismissed.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the administrative complaint filed against H. Ernest

Morris, Sr. be DISMISSED with prejudice.

DONE and ENTERED this 3rd day of May, 1984, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 3rd day of May, 1984.

COPIES FURNISHED:

Tina Hipple, Esquire

P. O. Box 1900

Orlando, Florida 32802

Carmine M. Bravo, Esquire 1450 State Road 434

Longwood, Florida 32750

Steven H. Coover, Esquire

P. O. Drawer H Sanford, Florida 32771

Fred M. Roche, Secretary

130 North Monroe Street Tallahassee, Florida 32301

Mr. Harold R. Huff, Director Division of Real Estate

400 West Robinson Street Orlando, Florida 32801

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

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

STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION

FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION

Petitioner,

vs. CASE NO. 0034049

DOAH NO. 83-3273

H. ERNEST MORRIS, SR. Respondent.

/

FINAL ORDER

The Florida Real Estate Commission heard this case on June 19, 1984 to issue a Final Order.

Hearing Officer Donald Alexander of the Division of Administrative Hearings presided over a formal hearing on March 16, 1984. On May 3, 1984, he issued a Recommended Order, which is adopted by the Florida Real Estate Commission as to all Findings of Fact. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

However, as to the Conclusions of Law and Recommendation, after a complete review of the record the Florida Real Estate Commission hereby ORDERS that the Hearing Officer's Conclusions of Law be accepted, except for the last paragraph on Page 8. The Commission specifically rejects the Hearing Officer's reliance on the Fleischman v. Department of Professional Regulation case. As to this part of the Conclusions of Law, the Commission adopts the Petitioner's Conclusions of Law, attached. hereto as Exhibit B and made a part hereof.

Based upon a complete review of the record and upon testimony given at the June 19, 1984 Florida Real Estate Commission meeting, the Commission ORDERS that the license of the Respondent be suspended for one (1) year. Respondent is required to file a petition for reinstatement with the Florida Real Estate Commission.

This Order shall be effective thirty (30) days from the date of filing with the Clerk of the Department of Professional Regulation.

DONE AND ORDERED this 19th day of June 1984 in Orlando, Florida.

Brian J. Ladell, Chairman Florida Real Estate Commission

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing was sent by

U.S. Mail to: Carmine M. Bravo, Esquire, 1450 State Road 434, Longwood Springs Professional Center, Longwood, Florida 32750; to David Coover, Esquire, Hutchison and Mamele, 230 North Park Avenue, Sanford, Florida 32771; to James Mitchell, Attorney for Petitioner, Dept. of Professional Regulation, P O Box 1900, Orlando, Florida 32802; and to Hearing Officer Donald Alexander, Division of Administrative Hearings, 2009 Apalachee Parkway, Tallahassee Florida 32301, this 6th day of July, 1984.

Harold R. Huff, Director

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

SECOND AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF PROGRESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION,

Petitioner,

vs. CASE NO. 0034049

DOAH NO. 83-3273

H. ERNEST MORRIS, JR.,

Respondent.

/

FINAL ORDER

The Florida Real Estate Commission heard this case on October 22, 1985 to issue a Final Order.

Hearing Officer Donald R. Alexander of the Division of Administrative Hearings presided over a formal hearing on March 16, 1984. On May 3, 1984, he issued a Recommended Order, which is adopted by the Florida Real Estate Commission as to all Findings of Fact, Conclusions of Law and Recommendation. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

It is therefore ORDERED that the Complaint against the Respondent be dismissed.

DONE and ORDERED this 4th day of October, 1985 in Orlando, Florida.

Harold R. Huff, Director Florida Real Estate Commission

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: w. C. Hutcheson, Jr., Esquire, 230 North Park Avenue, Post Office Drawer

H. Sanford, Florida 32772; to Hearing Officer Donald R. Alexander, division of Administrative Hearings, 2009 Apalachee Parkway, Tallahassee, Florida 32301; and to James R. Mitchell, Attorney for Petitioner, Department of Professional Regulation, Post Office Box 1900, Orlando, Florida 32802, this 29th day of October, 1985.

Harold R. Huff

Docket for Case No: 83-003273

Orders for Case No: 83-003273