Cardounel and Alexena Realty, Inc., violated Sections 475.25(1)(b) and (d), Fla.Stat., while representing Ulpiano and Maria Barona, by failing to abide by their clients' instructions regarding the investment and payment of monies entrusted to them, and by failing to deliver or account for those monies. By Administrative Complaint filed August 8, 1984, with the Division of Administrative Hearings and assigned Case No. 84-2847, Petitioner alleges Respondents violated Sections 475.25(1)(b) and (d), Fla. Stat., while representing Harold and Amparo Carvajal, by failing to abide their clients' instructions regarding the investment and payment of monies entrusted to them, and by failing to deliver or account for those monies. By Order of September 12, 1984, the two Administrative Complaints were consolidated.
At final hearing Petitioner called Julian H. Kreeger, Nicholas Manzini, Alberto Vila, Harold Carvajal, Sheila Greenberg, and Ulpiano Barona, as witnesses. Petitioner's Exhibits 1-18, 21-26, 28-29, and 31-33, were received
into evidence. Respondent, Eduardo A. Cardounel, testified on his own behalf and on behalf of Alexena Realty, Inc. Respondents offered Exhibits 1 and 2, and they were received into evidence.
Petitioner has submitted proposed findings of fact and conclusions of law.
No proposed findings of fact and conclusions of law have been submitted on behalf of Respondents. The Petitioner's proposed findings of fact and conclusions have been reviewed and considered. To the extent that any proposed findings have not been adopted in this Recommended Order, they have been rejected as being subordinate, cumulative, immaterial, or unnecessary, or as being contrary to the facts as found in this Recommended Order.
Respondent, Eduardo A. Cardounel (Cardounel), was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license No. 0013037. Cardounel was the owner and sole qualifying broker for Respondent, Alexena Realty, Inc., a Florida corporation, registered as a real estate broker, license No. 0000851.
In 1981 the Hamptons Development Corporation of Dade had under construction a condominium development in North Miami Beach, Florida, to be known as the Hamptons. In August 1981 Cardounel introduced Harold and Amparo Carvajal and Ulpiano and Maria Barona to the Hamptons project, and represented that he was the broker for the development and that these condominiums could be a good investment for them. Respondents concede they acted as agents for the Carvajals and Baronas at all times material to these proceedings.
The Carvajals and Baronas each decided to purchase two units at the Hamptons. To guarantee the reservation of the units they had selected, they were required to place a small deposit and by December 31, 1981, have on deposit with the Hamptons a total of 10 percent of the purchase price of each unit. Dr. Carvajal left $4,000 with Cardounel, and Mr. Barona left $7,500, for the reservations deposits.
The Carvajals and Baronas are residents of Columbia, South America. American dollars are not readily available, and the transfer of funds out of that country is not an easy task. Accordingly, the Carvajals and Baronas had to make arrangements to ensure that any funds which might be required to effect their purchases were available in the United States as those sums became due. The manner in which monies were delivered to Cardounel was, therefore, quite natural and necessary under the circumstances.
On December 31, 1981, in Columbia, South America, Cardounel personally delivered four purchase and sale agreements for the Hamptons units to the Carvajals and Baronas for execution. The Carvajals executed agreements to purchase Units 905 and 1503, for $197,000 and $216,000, respectively. The Baronas executed agreements to purchase Units 605 and 1405 for $194,000 and
$201,000, respectively. These agreements provided that the purchase price be paid as follows:
Ten percent upon execution of the agreement,
An additional 5 percent when
the slab was poured on the floor on which the unit lies,
An additional 5 percent when the
slab was poured on the main roof, and
The balance at time of closing.
Prior to execution of the agreements, the Carvajals and Baronas had made arrangements to have those monies available in the United States. On November 9, 1981, Dr. Carvajal delivered an additional $37,300 to Cardounel for his initial 10 percent deposit. These monies, together with the $4,000 already on deposit, totaled the 10 percent deposit due for Units 905 and 1503. In September 1981 Mr. Barona delivered an additional $30,000 to Cardounel toward the initial 10 percent deposit that would be due on his units. Mr. Barona instructed Cardounel to place these funds in a "terminal deposit," a certificate of deposit, earning interest until the monies were due. 1/ On December 31, 1981, upon execution of the agreements, Mr. Barona delivered an additional
$2,000 to Cardounel, which sum, together with the prior sums, totaled the 10 percent deposits due on his units.
The record is unclear as to when the 10 percent deposit monies the Carvajals and Baronas had entrusted to Cardounel were paid to the Hamptons. They were paid, however.
Initially the parties anticipated that the first additional 5 percent deposit would be due the latter part of 1982, and the second additional deposit in June 1983. Accordingly, in April 1982, Dr. Carvajal delivered $50,000 to Cardounel with instructions that the monies be invested in an interest-bearing account pending payment of the additional 5 percent deposits, and with the correspondent understanding that these monies would be available to pay the deposits as they came due. Mr. Barona transferred $30,000 to Cardounel, $10,000 in September 1982 and $20,000 in October 1982, to be applied toward the 5 percent additional deposits as they became due. Mr. Barona, consistent with his prior instructions, directed that these monies be held in a certificate of deposit, earning interest until the additional 5 percent deposits became due.
By letters dated February 24, 1983, and March 2, 1983, to Dr. Carvajal and Mr. Barona, respectively, Cardounel advised them that the 5 percent deposits had not been paid in December 1982 because the Hamptons was late in construction and it had refused to pay interest on any deposits. In his letter to Mr. Barona, Cardounel advised him that the 5 percent deposit on Unit 605 would be due the end of March and on Unit 1405 the middle of April. In his letter to Dr. Carvajal, Cardounel advised him that the 5 percent deposit on Unit 905 would be due approximately April 1, and on Unit 1503 approximately the middle of April.
Subsequent to Cardounel's letters, the Hamptons inquired directly of Mr. Barona concerning his failure to make the additional deposits. By letter of March 20, 1983, Mr. Barona replied that the monies for these deposits had been delivered to Cardounel and authorized the Hamptons to secure the monies from Cardounel. Mr. Barona also instructed Cardounel to immediately deliver the deposits to the Hamptons.
At the end of March 1983, Dr. Carvajal and Mr. Barona, having been informed by friends that there might be a "problem" with the purchase of the Hamptons units, traveled to South Florida to confer with Cardounel regarding the status of their agreements and their deposit monies. Their initial meeting occurred on Sunday, at which time Cardounel informed them that he could not get them the monies because the bank was closed. They arranged to meet at his office the next day.
On the following day, Dr. Carvajal and Mr. Barona met with Cardounel, but no monies were tendered. Instead, Cardounel exhibited to Dr. Carvajal two original promissory notes purportedly executed by a corporation known as Marfred International Investment, Inc. The first promissory note, dated April 17, 1982, in the amount of $50,000, was for a term of six months, and was represented by Cardounel to be an investment of the $50,000 Dr. Carvajal had entrusted to him. This note was purportedly secured by real property of a value of $120,000. The second promissory note exhibited to Dr. Carvajal, and payable to his order, was an unsecured note dated January 18, 1983, for a term of six months, in the sum of $36,000. This note, purportedly a reinvestment of the proceeds of the first note, did correctly reflect the balance that was due Carvajal, since $14,000 had, with his consent, been previously used for other purposes. This was, however, the first Dr. Carvajal had seen or heard of the January 1983 note.
At the sane meeting, Cardounel exhibited four original unsecured promissory notes to Mr. Barona. These notes were not models of draftsmanship. They variously described the payor as Florida Investors Const. Co., Inc., and Florida Investors Const. Co., Inc., and one even named Florida Investors Const. Co., Inc., as payer but was executed by Florida Investors Const. Co., Inc. The notes exhibited to Mr. Barona were as follows:
A note dated January 27, 1983, for a term of six months, in the sum of $20,500,
A note dated February 2, 1983, for a term of six months, in the sum of $10,250,
A note dated October 1, 1983, for a term of 90 days, in the sum of $10,000, and
A note dated October 16, 1983, for a term of 9 days, in the sum of $20,000 2/
Prior to this meeting, Mr. Barona had no knowledge of the promissory notes, nor that his monies had not been invested as he had instructed.
Dr. Carvajal and Mr. Barona voiced objection to the fact that Cardounel had "invested" their money in the fashion he had, since the monies would not be available as they became due under their agreements with the Hamptons. Further, Cardounel had violated Mr. Barona's instructions to place the sums in a certificate of deposit.
In "satisfaction" of the notes, Cardounel issued four postdated checks, payable to Young, Stern and Tannenbaum-- escrow agents for the Hamptons-
-and drawn on the personal account of "Eduardo Cardounel or Ena Cardounel." Check No. 4082, in the sum of $20,650, and check No. 4083, in the sum of
$19,750, each dated April 7, 1983, represented the amount of monies needed to make the first 5 percent deposits on the Carvajal and Barona units. Check No. 4087, dated July 18, 1983, in the sum of $18,050, and check No. 4088, dated August 2, 1983, in the sum of $12,845, were to be applied to the respective accounts of Carvajal and Barona towards their second 5 percent deposits.
Dr. Carvajal and Mr. Barona tendered their respective checks to Young, Stern and Tannenbaum. Each of the checks was deposited on the due dates and each was dishonored and returned for insufficient funds. To date, despite demand, Cardounel has failed to deliver the monies due Dr. Carvajal or Mr. Barona.
The events which transpired after Cardounel's receipt of the Carvajals' and Baronas' additional monies are suspect.
Cardounel concedes that commencing in 1982 through 1984 his real e state business had not produced any income for him. He had been compelled to sublease space in his offices just to keep his office open, and even then was losing money. Notwithstanding this downturn in the real estate market, Cardounel "invested" the monies entrusted to him with two small development companies with whom he was intimately connected.
The monies which Dr. Carvajal entrusted to Cardounel, in April 1982, were purportedly lent to Marfred International Investment, Inc. (Marfred), as evidenced by a secured promissory note dated April 17, 1982, and a renewal unsecured promissory note dated January 18, 1983. Marfred is a Panamanian corporation authorized to do business in Florida. According to Cardounel, Marfred was a real estate developer to whom he had sold property. Cardounel admitted he was the registered agent for Marfred, but denied he was ever an officer of that company. Further, Cardounel could not recall the names of the corporate officers. The records in the office of the Secretary of State, State of Florida, confirm that Cardounel was the registered agent for Marfred, that he filed every Annual Report for Marfred, and that he was a vice president of Marfred in 1983 and 1984.
While the first promissory note executed by Marfred, April 17, 1982, purported to be secured by real property of a value of $120,000, the property was described only by lot and block number with no city, county, or state designated. No mortgage on the real property was executed or recorded in connection with this promissory note. Cardounel concedes that absent a mortgage, the promissory note was unsecured, and further testified that he had no idea as to the real value or actual location of the property in question. Cardounel had no explanation as to why the second promissory note, January 18, 1983, was unsecured.
The $30,000 which Mr. Barona entrusted to Cardounel, between September and October 1982, was purportedly evidenced by unsecured promissory notes executed by Florida Investros Const. Co., Inc., Florida Investors Const. Co., Inc., or named as payer, Florida Investros Const. Co., Inc., but executed by Florida Investors Constr. Co., Inc. These notes were unconditionally guaranteed by Cardounel. Cardounel was the registered agent for Florida Investros Const. Co., Inc.
Coincidentally, Cardounel testified that contemporaneously with his meeting with Dr. Carvajal and Mr. Barona in March 1983, he learned that both Marfred and Florida Investros Const. Co., Inc., were in trouble and there was serious doubt that they could repay the monies. Notwithstanding this "fact," Cardounel tendered to Dr. Carvajal and Mr. Barona his four postdated checks in "satisfaction" of the promissory notes. It is worthy of note that the six
promissory notes Cardounel exhibited to Dr. Carvajal and Mr. Barona were all originals, which Cardounel had retained in his possession. Additionally, Cardounel, upon tender of his checks in "satisfaction" of the promissory notes, at no time requested or obtained an assignment of those notes but, rather, had them marked "paid."
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
The allegations in this case are that Respondents, Eduardo A. Cardounel and Alexena Realty, Inc., violated Sections 475.24(1)(b) and (d), Fla.Stat.
Section 475.25(1), Fla.Stat., provides in pertinent part:
(1) The Commission ... may suspend a license or permit for a period not exceeding 10 years; may revoke a license or permit; may impose an administrative fine not to exceed
$1,000 for each count or separate offense; and may issue a reprimand, or any or all of the foregoing, if it finds that the licensee, permittee, or applicant:
* * *
(b) 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 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) Has 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 in a real estate commission, or any secret
or illegal profit, or any divisible share or portion thereof, which has come into his hands and which is not his property or which he is not in law or equity entitled
to retain under the circumstances.
Real estate brokerage is a business greatly affected by the public trust, and the holder of a brokerage license stands in a fiduciary relationship with his client. See United Homes, Inc. v. Moss, 154 So.2d 351 (Fla. 2d DCA 1963). As stated in Shelton v. Florida Real Estate Commission, 120 So.2d 191, 194 (Fla. 2d DCA 1960):
... A real estate broker occupies a privileged position wherein those of his profession enjoy a monopoly to engage in a lucra- tive business.... The statutes regulating the activities of real estate brokers in their business were designed to protect the public and to safeguard those persons who put their money
and trust in the hands of
real estate brokers. Ahern v. Florida Real Estate Commission, 1942, 149 Fla. 706, 6 So.2d 857.
Anyone who deals with a licensed broker may assume that he is dealing with an honest and ethical person....
The law extracts a high standard of loyalty on the part of an agent toward his principal, requiring of the agent the utmost good faith toward his principal in all matters connected with the employment. It is the right and privilege of the principal to give his agent instructions in the performance of his services and the duty of the agent to adhere to those instructions. Absent the informed consent of the principal an agent may not represent both parties to a transaction. See generally, 2 Fla.Jur. 2d, Agency and Employment, Section 60- 73.
In this case Respondents, acting as brokers for and on behalf of Dr. Carvajal and Mr. Barona, were entrusted by them with $36,000 and $30,000, respectively, for the sole purpose of paying such sums, as they became due, on their purchases at the Hamptons. Admittedly, Respondents were requested to maintain the funds in an interest-bearing account, a certificate of deposit, until the funds were due, but the funds had to be available for payment in accordance with the terms of the purchase and sale agreements.
Respondents violated the explicit instructions of Mr. Barona that the funds be placed in a certificate of deposit until the payments were due. Instead, the promissory notes of January and February 1983 reflect that the Respondents loaned the monies to a small development corporation for a term that would have precluded payment of tee monies as they became due under Mr. Barona's agreements with the Hamptons.
Respondents further violated the explicit instructions of Dr. Carvajal in that they loaned the monies to a small development corporation for a term that would have prevented payment of the deposits as they became due under his agreements with the Hamptons.
Respondents further breached their trust since they, without full disclosure to Dr. Carvajal or Mr. Barona, acted in a dual capacity and adversely to the interests of Dr. Carvajal and Mr. Barona. As registered agent for Florida Investros Const. Co., Inc., and as registered agent and vice president of Marfred, Cardounel loaned the Carvajal and Barona monies without knowledge of the financial condition of the companies, without security, or if purportedly secured, without perfecting the security and without knowledge of the real value of the proposed security. The Hearing Officer has serious reservations concerning the efficacy of the promissory notes exhibited by Respondents. The authenticity of these promissory notes is totally dependent upon Cardounel's testimony, without any further corroboration. There was no accounting by Respondents demonstrating their receipt and disbursement of any of the monies received for or on behalf of Dr. Carvajal and Mr. Barona.
Cardounel would have the Hearing Officer believe that Respondents followed their clients' instructions and exercised diligence and acted in good faith. Cardounel's testimony is, however, inherently improbable and unworthy of belief.
The facts are clear and convincing that if Cardounel loaned the monies to Marfred and Florida Investros Const. Co., Inc., he disregarded his clients' instructions, acted in a dual capacity without disclosure to his clients, "invested" some $66,000 without knowledge of the financial worth of the companies to which it was loaned, and without security, all contrary to the best interests of his clients.
Cardounel's tender of his personal checks in "satisfaction" of the promissory notes, his failure to request an assignment of those notes to himself, and the notes being marked "paid," constitute an admission that the payment of the notes was his responsibility and raise serious questions concerning the efficacy of the notes themselves.
Petitioner's burden of proof was that of "clear and convincing evidence." See Reid v. Florida Real Estate Commission, 188 So.2d 846 (Fla. 2d DCA 1966). Petitioner has satisfied its burden of proof. Respondents' conduct constituted false promises, culpable negligence, a breach of trust of the parties' relationship, and violated the basic duties imposed by law upon Respondents, all in violation the Section 475.25(1)(b), Fla.Stat. Respondents' conduct further violated Section 475.25(1)(d), Fla.Stat., since they failed to account or deliver the monies entrusted with them to the proper persons, at the time they were due to be paid, or at any time thereafter, and failed to satisfactorily account for those monies.
In dealing with license disciplinary proceedings, the Hearing Officer must be ever mindful of the stringent requirements established by Bowling v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981). In the instant case, a finding that Respondents' conduct violated Sections 475.25(1)(b) and (d), Fla.Stat., does not depend on a retrospective characterization of that conduct. When done, Respondents' conduct was in clear violation of those provisions and was clearly contrary to the public trust inherent in their licensure as registered real estate brokers.
The evidence establishes that the violations are not founded on any loose interpretation of problematic evidence but, rather, upon clear and convincing evidence that weighs as substantially on a scale of penalties for evidence as the penalty hereinafter recommended does on a scale of penalties.
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the real estate broker's license of Respondents, Eduardo
