STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 84-2745

)

PETER DAVID FRONTIERO, )

)

Respondent. )

)

RECOMMENDED ORDER

This case was heard by R. L. Caleen Jr., Hearing Officer with the Division of Administrative Hearings, on June 10, 1985, in Melbourne, Florida. The parties were represented by counsel:

APPEARANCES

For Petitioner: James H. Gillis Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondent: Michael K. Bailey, Esquire

Post Office Box 20154 Orlando, Florida 32814-0154

ISSUE

Whether Respondent, a licensed real estate salesman, is guilty, as charged, of fraud, misrepresentation, culpable negligence or breach of trust in violation of Section 475.25(1)(b), Florida Statutes.

BACKGROUND

By administrative complaint dated June 29, 1984, the Department of Professional Regulations, Florida Real Estate Commission ("Department"), charged Peter David Frontiero ("Respondent"), a licensed real estate salesman, with fraud, misrepresentation, culpable negligence or breach of trust in violation of Section 475.25(1)(b), Florida Statutes. 1/

Respondent timely disputed the charges and requested a Section 120.57(1) hearing. On July 27, 1984, the Department forwarded this case to the Division of Administrative Hearings for assignment of a hearing officer. Hearing was initially set for December 13, 1984, then--on the Department s unopposed motion-

-continued and reset for June 10, 1985.

The parties filed a pre-hearing stipulation. At hearing, the Department presented the testimony of Peter D. Frontiero, Mary E. Sousa, Karen Dunn-Frehsee and Paul Winkler. Respondent testified in his own behalf and presented the testimony of Kathleen Van Mier. The Department's Exhibit Nos. 1 through 4, and Respondent's Exhibit No. 1 were received in evidence. 2/

The transcript of hearing was filed on June 24, 1985. The parties filed proposed findings of fact by September 3, 1985. A ruling has been made on each proposed finding of fact in the Appendix to this Recommended Order.

Based on the evidence adduced at hearing, the following facts are determined:

FINDINGS OF FACT

I.

1. At all times material to the charges, Respondent was a licensed Florida real estate salesman associated with Woodlake Realty, Inc., in Melbourne, Florida. He obtained his real estate salesman's license in 1982. On March 14, 1985, became a licensed real estate broker and now operates his own business under the name of Peter Frontiero Realty. His office is located in his residence at 3247 West New Haven Avenue, Melbourne, Florida.

   
   

   II.

   
   

2. On or about April 7, 1983, while employed as a real estate salesman at Apollo Realty, Inc., Mary E. Sousa obtained a listing on a tract of land owned by John and Janet Biansco. In connection with the listing, an Exclusive Right of Sale Contract was executed. This contract contained the following legal description of the tract to be sold:

   
   

   Parcel of land lying in the County of Brevard in the southwest 1/4 of Sec 11, TW 28 South Range 36E more particularly described as follows:

   
   

   S 2/3 of the following tract: commence at SE corner of W 1/2 of Sec 11 TW 28 South Range 36E, thence along south line of said Sec 11, 589-54-14 West for 30 feet., thence north 1- 17-00E for [sic] 43 feet to the point of beginning thence south 89-54-14 west along the north R/W line Melbourne Tillman Drainage district canal #63 for 297.43 feet, thence north 1-15-49 east for 353 feet, thence north 89-54-14 east for 297.55 feet, to the west R/W line of Arizona Street; thence south 1 17-00 West along R/W line for 353.00 feet, to the point of beginning.

   
   

   (P-4, Admissions No. 5, 6)

   
   

3. As so described, this tract of land measures 235.34' x 297.47' and contains approximately 1.61 acres. (Admission No. 7)

4. Mary E. Sousa and her broker, Peter Sergis, however, incorrectly determined that the legal description described a tract of land measuring 297' x 353' feet, containing 2.4 acres. (They determined this by examining the legal description attached to the Listing Contract and relying on Mr. Biansco's representation that the tract contained 2.4 acres.) Mary E. Sousa then had the property listed in the Melbourne Multiple Listing Service (MLS) on or about April 26, 1983. The MLS listing reflected the incorrect measurements and size of the tract, as submitted by Ms. Sousa. (P-3, Admission No. 8)

   
   

   III.

   
   

5. During May, 1983, Karen Dunn-Frehsee and Paul Winkler (her fiance), contacted Respondents, a real estate salesman associated with Woodlake Realty, Inc., about purchasing a home. After Respondent showed them a house they were interested in, Ms. Dunn-Frehsee and Mr. Winkler decided that what they really wanted was to buy land on which they could build a residence. They told Respondent that they would need a minimum of two acres since they had two horses: local zoning requirements required at least one acre of land per horse. (Admission No. 10, Testimony of Dunn-Frehsee)

   
   

6. Respondent checked MLS and found the listing (containing the incorrect measurements and size) of the Biansco property. He showed the land to Ms. Dunn- Frehsee and Mr. Winkler, who liked it and decided to make an offer. (At that time, Respondent was unaware that the MLS listing erroneously described the tract to be 297' x 353', containing 2.4 acres, when in fact it was 297.47' x 235.34', containing approximately 1.61 acres.)

   
   

7. On or about May 5, 1983, Respondent prepared a "Contract for Sale and Purchase" containing the offer of Ms. Dunn-Frehsee. After she signed it, it was presented to the Bianscos, who subsequently accepted it. (Admission No. 12, P-

   1) The Contract for Sale and Purchase contained, on the attached addendum--a correct legal description of the tracts as the description was taken from the listing agreement, not the erroneous MLS listing.

   
   

8. Prior to closing, Respondent contacted Ms. Dunn-Frehsee several times to advise her regarding efforts being made by Lawyers Title Insurance Company to locate the prior owner of the property and secure a quitclaim deed covering a 30-foot strip of land bordering Arizona Street on the east side of the property. He was still unaware of the discrepancy between dimensions of the property contained on the MLS listing and the Contract of Sale. He did not tell Ms.

   Dunn-Frehsee that he had personally measured the property, or that he had confirmed the accuracy of the listing information. He was concerned only with the problem of obtaining access to the property through the 30-foot strip bordering Arizona Street. Although he told Ms. Dunn-Frehsee that he thought she was getting 2.7 or 3.0 acres by virtue of the additional strip of land which was to be quitclaimed to her at no additional cost, this belief was based on his reasonable assumption that the original tract contained 2.4 acres, as represented by the listing agents (Mary Sousa and Peter Sergis of Apollo Realty) and reflected in the Multiple Listing Book. Respondent also contacted Mr.

   Winkler, but similarly, did not represent to him that he (Respondent) had personally measured the property or confirmed the MLS information. (Testimony of Respondent)

   
   

9. Prior to the closing, Respondent discussed with Ms. Dunn-Frehsee the need to order a survey of the property. She then ordered a survey, which was completed a week and a half before closing. After picking it up, Respondent telephoned Ms. Dunn-Frehsee. There is conflicting testimony about the

   conversation which ensued. Respondent testifies that he telephoned her and asked if she would like him to deliver the survey to her house or mail it to her, or if she would like to pick it up at his office. (TR-30) Ms. Dunn- Frehsee, on the other hand, testified that Respondent telephoned her stating that he had looked the survey over and there was no reason for her to drive out to his office to pick it up, that he would bring it to the closing. (TR-48) Neither version is more plausible or believable than the other. Both Respondent and Ms. Dunn-Frehsee have a discernible bias: Respondent faces charges which could result in the revocation of his professional license; Ms. Dunn-Frehsee has sued Respondent for damages resulting from her purchase of a tract of land which was smaller than what she was led to believe. Since the burden of proof lies with the Departments, the conflicting testimony is resolved in Respondent's favor as it has not been shown with any reliable degree of certainty that Respondent told Ms. Dunn-Frehsee that he had looked the survey over and that there was no need for her to examine it before closing. Both witnesses agree, however, and it is affirmatively found that Ms. Dunn-Frehsee agreed that Respondent should bring the survey with him to the closing, which was imminent.

   
   

10. The surveys prepared by Hugh Smith, a registered land surveyors correctly showed the property to be approximately 235.33' x 297.43', but did not indicate the size by acreage. (Admission No. 20, P-2) At closings on or about June 23, 1983, Respondent showed the survey to Ms. Dunn-Frehsee. Ms. Dunn- Frehsee questioned the measurements as not being the same as she recalled being on the MLS listing. Neither Ms. Sousa nor Respondent, both of whom were in attendance, had a copy of the MLS listing so that the measurements on the two documents were not compared. (Admission No. 22-23)

    
    

11. Ms. Dunn-Frehsee chose to close the transaction anyway after her questions regarding the property were apparently resolved to her satisfaction by Kathleen Van Mier, the agent for Lawyers Title Insurance Company which was handling the closing. Ms. Dunn-Frehsee signed a contingency statement indicating that all contract contingencies had been satisfied and that she wished to proceed with the closing. (TR-4O-41; 77-78)

    
    

12. Respondent was misinformed regarding the dimensions and size of the property by the listing agents, Mary Sousa and Peter Sergis of Apollo Realty, who had provided inaccurate information to the Multiple Listing Service. Respondent reasonably relied upon the listing information and the representations of the listing agents concerning the size of the property. In his discussions with Ms. Dunn-Frehsee and Mr. Winkler, he drew reasonable inferences from such (incorrect) representations. He did not intentionally mislead anyone. It has not been shown that, under the circumstances, he failed to exercise due care or that degree of care required of a licensed real estate salesman. Nor has it been shown that he violated any professional standard of care adhered to by real estate salesmen and established by qualified expert testimony at hearing.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1983).

    
    

14. In license disciplinary proceedings, such as this, the critical matters in dispute must be shown "by evidence which is indubitably as

    `substantial' as the consequences." Bowling v. Department of Insurance, 394 So.2d 165, 172 (Fla. 1st DCA 1981) (". . . the violation . . . is not to be

    based on loose interpretations and problematic evidence, but . . . must in all its implications be shown by evidence which weighs as `substantially' on a scale suitable for evidence as the penalty does on the scale for penalties.")

    
    

15. Relying on Bowling ,the Department argues that since it (now) seeks only to fine Respondent $500.00 and suspend his license for 30 days, the standard to be applied to the evidence offered to support the charges (or the standard of proof) is less than that required to support revocation. Such an interpretation of Bowling would be fundamentally unfair to a Respondent and raise questions of constitutional proportion. A Respondent would not know what standard of proof would apply to the evidence against him until a penalty is ultimately imposed by a licensing board.

    
    

16. The procedural unfairness to a Respondent is illustrated by the case at hand. By its administrative complaint, the Department charged Respondent with professional misconduct and sought "to suspends revoked or take other disciplinary action against [him] . . .." (Administrative Complaint, p.1) Later, however, in its post-hearing submittal, the Department recommended a penalty less drastic than revocation, and so argued that a correspondingly less onerous standard of proof should apply to its evidence. But the Department's latest position on penalty may not be binding on the Florida Real Estate Commission, the separate entity responsible for final action in this case. This is because the Commission (or any other professional licensing board) may, on submittal of a recommended orders decrease or increase the severity of the penalty recommended by a hearing officer, so long as reasons are given and the record is cited. See Section 120.57(1)(b)9., Fla. Stat. (Supp. 1984).

    
    

17. Thus, under the Department's construction of Bowling, the Respondent comes to hearing without knowing what standard of proof will be applied to the Department's evidence--whether a preponderance of evidence, clear and convincing proof, or something in between. Even after the Department's post-hearing submittal, the Respondent is in no better position to know, as the Department's recommended penalty can be accepted, modified, or rejected by the hearing officer; and the hearing officer's recommended penalty can be ultimately changed by the licensing board responsible for final agency action. The standard of proof is not made known until the penalty is imposed. But such knowledge comes too late. By then, the case before the agency is over.

    
    

18. To avoid such a patently unfair application of Bowling, the standard of proof to be applied must be known to both parties in advance of hearing, so they can intelligently prepare their evidence and argument. To the extent the standard of proof will vary on an evidentiary scale as a penalty may vary on a scale of penalties, that standard must be ascertainable from the face of the administrative complaint. If license revocation is a penalty which may be the outcome of the proceeding the prosecuting agency must prove its charges by the strictest standard applicable to civil proceedings--by clear and convincing evidence. If, however, the administrative complaint eliminates revocation as a potential penalty (presumably with the authorization of the licensing board which finds probable cause and authorizes the complaint), the standard of proof would be something less than clear and convincing though not less than a preponderance of competent substantial evidence; the quantum would correspond on a scale of evidence to the severest penalty possible (under the complaint) on a scale of penalties. Only in this way can the standard of proof be known by the parties and the hearing officer (who must weigh and measure the evidence by the appropriate standard of proof) at the time when each participates in the process.

19. Section 475.25(1), Florida Statutes, authorizes the commission to discipline the license of a real estate salesman if it finds that the licensee, among other things:

    
    

    (b) Has been guilty of fraud, misrepresenta- tion, . . . culpable negligence, or breach of trust in any business transaction . . ..

    
    

20. In the instant case, the Department has failed to sustain its burden of proving its charges by clear and convincing evidence. (Even under the least stringent preponderance of evidence standard it has failed to sustain its burden.) Accordingly, the charges against Respondent must be dismissed for failure of proof.

RECOMMENDATION

Based on the foregoing it is RECOMMENDED:

That the administrative complaint, and all charges against Respondent be DISMISSED for failure of proof.

DONE and ORDERED this 11th day of October, 1985, in Tallahassee, Florida.

R. L. CALEEN, JR. 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 11th day of October, 1985.

ENDNOTES

1/ The complaint also charged Mary E. Sousa, a co-respondent with violating the Florida Real Estate Law. The charges against her were subsequently severed and the Department proceeded against her, separately.

2/ The Department's exhibits will be referred to as "P- ", and Respondent's as "R- ". Pages in the transcript of hearing will be referred to as "TR- ".

APPENDIX

1. As to the Department's proposed findings, paragraphs 1, 2 (with typo corrected), 3, 4, 5, 6, 7, (with typo corrected), 8, 9, 10, 14, 15, 17, 18, 19, and 20 are accepted. Paragraphs 11 and 12 are covered by paragraph 8 of this Recommended Order; paragraph 13 is covered by paragraph 9 of this Recommended Order; paragraph 16 is rejected as not supported by clear and convincing, or

   even a preponderance of the evidence; paragraph 21 is covered by paragraph 8 of this Recommended Order; and paragraph 22 is rejected as not supported by clear and convincing; or even a preponderance of, the evidence.

   
   

2. As to Respondent's proposed findings, paragraphs 1 through 12 are covered by paragraphs 1 through 8 of this Recommended Order; paragraph 13 is covered by paragraph 9 of this Recommended Order; paragraphs 14 through 21 are adopted; and paragraph 22 is covered by paragraph 12 of this Recommended Order.

COPIES FURNISHED:

James H. Gillis, Esquire Post Office Box 1900 Orlando, Florida 32802

Michael K. Bailey, Esquire Post Office Box 20154 Orlando, Florida 32814-0154

Docket for Case No: 84-002745

Orders for Case No: 84-002745