STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 84-3415

) 85-0293

ROBERT G. BOSTAD AND REALTY )

ONE OF BROWARD, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice; this cause was heard by Ella Jane P. Davis the assigned Hearing Officer of the Division of Administrative Hearings on April 10, 1985, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: James R. Mitchell, Staff Attorney

DPR-Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

For Respondent Robert G. Bostad, Pro Se Robert G. Bostad: Realty One of Broward, Inc.

7567 West Oakland Park Boulevard Ft. Lauderdale, Florida 33315

For Respondent Realty One of

Broward Inc.: No appearance 1/

BACKGROUND INFORMATION

By Administrative Complaint filed with the Division of Administrative Hearings on October 9, 1984, and assigned DOAH Case No. 84-3415, Petitioner, Department of Professional Regulation Division of Real Estate, alleges that Respondents, Robert G. Bostad and Realty One of Broward, Inc., violated Subsections 475.25(1)(b), and (k), Florida Statutes, by failing to maintain trust funds in their escrow account until disbursement thereof was properly authorized and by issuing a check for a Real Estate transaction closing for which there were insufficient funds and on which Respondent requested a stop payment order.

By Administrative Complaint filed with the Division of Administrative Hearings on January 30 1985, and assigned DOAH Case No. 85-0293, Petitioner alleges Respondent violated Subsections 475.25(1)(b) and (d) Florida Statutes,

by failing to account for and deliver real estate commissions to Sarah Sampson; by failing to repay a personal loan to Sarah Sampson, and by failing to satisfy a judgment Sarah Sampson secured against the Respondent in regard to these monies.

An Answer and Affirmative Defenses were filed by Respondents on October 9, 1984 with regard to Case No. 84-3415 and same becomes part of the formal record of this cause.

By Order of February 12, 1985, Respondents' then-Attorney was permitted to withdraw.

The two causes, previously noticed for formal hearing by the undersigned were consolidated for formal hearing by notice and order entered February 22, 1985.

At formal hearing the undersigned ruled that Requests for Admissions not timely responded to by Respondents were formally recognized for purposes of the formal hearing, without their admission in evidence. Since the conclusion of the hearing, the undersigned has reviewed the record and determined that only the Notice of Service of Petitioner's First Request for Admissions in Case No. 84-3415 was ever filed with the Division of Administrative Hearings and accordingly, this Recommended Order has not considered Requests for Admissions not filed, published, or admitted in evidence.

At formal hearing, Petitioner presented the testimony of Sanford Parish, Donald W. Piersol, Herbert Cohen, Linda Mayer, (Nee Cohen) Sarah C. Sampson, and James Allan Burns. Petitioner's Exhibits 1-17 (including 8A-C and 16A-C) were admitted in evidence. These exhibits include certain after-filed exhibits pursuant to stipulations and orders entered at the formal hearing. Respondent Bostad testified on his own behalf and on behalf of Respondent Realty One of Broward Inc. and had admitted Exhibits R-1A and R-1B. Exhibit R-2 (a promissory note) was admitted subject to a copy being provided the undersigned within 10 days since Respondents wished to retain the original. It has not been provided.

The transcript of hearing was filed by Petitioner on April 24, 1985.

Thereafter pursuant to time limits stipulated at the hearing, Petitioner filed a Proposed Recommended Order; Respondents did not avail themselves of that opportunity. Time for entry of this Recommended Order was waived.

ISSUE

Whether Respondents' real estate licenses should be disciplined upon alleged violations of Sections 475.25(1)(b), (d) and (k) as set forth in the Administrative Complaints.

FINDINGS OF FACT WITH REGARD TO DOAH CASE NO. 84-3415

1. Respondent Robert G. Bostad is now, and at all pertinent times was, a licensed real estate broker, having been issued license number 0164579. The last license issued was as a broker, c/o Realty One of Broward, Inc., 7567 West Oakland Park Boulevard, Fort Lauderdale, Florida 33319.

   
   

2. Respondent Realty One of Broward Inc. at all times pertinent hereto was a corporation licensed as a real estate broker having been issued license 0223879 with a business address of 7567 West Oakland Park Boulevard, Fort Lauderdale, Florida 33319.

3. At all times pertinent hereto, Respondent Robert G. Bostad was licensed and operating as a real estate broker and as the qualifying broker and officer of Respondent Realty One of Broward, Inc.

   
   

4. In the summer of 1984, Respondents in their capacity as real estate brokers received in excess of $5,200.00 earnest money deposit in regard to the Cohen/Mayer to Cullen transaction. This deposit was received in the form of two checks and delivered to Respondent Bostad. Said deposit was received in trust and was placed in the Respondent Realty One of Broward Inc.'s escrow account. A fiduciary relationship existed thereafter as between Respondents and the buyers, Mr. and Mrs. Cullen.

   
   

5. The closing of the Cohen/Mayer to Cullen transaction was scheduled for June 8, 1984, at Atlantic Title and Trust with Sanford Parish as the closing agent.

   
   

6. Respondent Bostad caused an associate to deliver to Mr. Parish at Atlantic Title and Trust check number 488 drawn on Respondent Realty One of Broward Inc.'s escrow bank account in the amount of $5,200.00, which after some appropriate disbursements not here at issue was the final total amount necessary to effect transfer of title from the Cohen/Mayers to the Cullens.

   
   

7. Mr. Parish conducted the closing on the Cohen/Mayer to Cullen transaction and deposited the Realty One check for $5,200.00 into Atlantic Title's escrow account. Subsequently the Realty One escrow check was returned to Mr. Parish due to a "stop payment" order having been placed on the check by Respondent Bostad.

   
   

8. Respondent Bostad testified that he placed the "stop payment" order on the Realty One $5,200.00 check number 488 to maintain some control over the situation when he became aware that Impact Realty (with whom Cohen/Mayer had listed) had never arranged for a $290 deduction at closing time for the buyer protection plan requested and signed-for by Mr. and Mrs. Cohen (Nee Linda Mayer). Mrs. Mayer was formerly Mrs. Cohen. She has since divorced and remarried and hence the name change. The testimony of Mrs. Mayer Mr. Cohen and Respondent Bostad is consistent that such a plan was requested by the Cohens. Exhibits R-1A and R-1B, support this testimony. However, Respondent Bostad conceded there were also insufficient funds to cover check 488 at the time it was presented. The bank statements indicated insufficient funds, and the check is stamped "NSF", symbolizing "not sufficient funds". Thereafter, about June 21, 1984, Respondents issued another escrow check for $5,200.00 which was honored. Respondent Bostad testified that from the date of the receipt of the

   $5,200.00 earnest money deposit by the Respondents from the potential buyers (Cullens) until June 21, 1984, he had not maintained $5,200.00 in the Realty One escrow bank account at Sun Bank and further admitted that he personally utilized all or part of the $5,200.00 for purposes other than that for which they were intended without the prior knowledge and consent of the parties to the sales transaction; also, be acknowledged that between June 7 and June 11, 1984, there was not $5,200.00 in the escrow account.

   
   

9. Mr. Parish has handled 700-1000 closings for Atlantic Title and Trust in the last 5 years and has never had another occasion where a broker stopped payment on a check because a buyer protection plan was not paid for. Respondent Bostad concurred that normally a $5,200.00 closing would not be held up for a

   $290 buyer protection plan. Further, the $5,200.00 check issued on June 21 by Respondents was issued without resolution of the buyer protection plan problem.

10. As of June 21, 1984, Respondent Bostad had received in trust monies concerning nine sales transactions (not including the Cohen/Mayer to Cullen transaction). All nine were pending and not closed as of that date. However, Respondents on that date maintained only $330.28 in Realty One's escrow account, leaving unaccounted-for an amount of $13,569.72. Respondent Bostad admitted at hearing that approximately $13,900.00 should have been in escrow-on June 21, 1984 but that in fact, it was not in escrow. Further Respondent admitted that monies were utilized for purposes other than authorized. However he maintained that all of these transactions have now closed without loss of money to any buyer or seller, but this is uncorroborated. 2/

    
    

    FINDINGS OF FACT WITH REGARD TO DOAH CASE NO. 85-0293

    
    

11. Finding of Fact Paragraphs 1-3, above, are reiterated, adopted and incorporated here.

    
    

12. Prior to July 1984, Respondents employed Sarah Sampson as a real estate sales person. Upon leaving the employ of Respondent, Mrs. Sampson had earned commissions in the LeMay to Gordon and the DiChristina to McHugh real estate transactions and on a lease agreement involving a Richard Dietz, totalling approximately $2,700.00.

    
    

13. Prior to July, 1984, Respondents had received the proceeds from the transactions referred to in Paragraph 12 supra but failed to pay over to Mrs. Sampson her share of the commissions. Subsequent to Mrs. Sampson's departure from the Respondents' employ, Mrs. Sampson made demands upon the Respondents for the commissions. Payment was not forthcoming.

    
    

14. On June 11, 1984, Mrs. Sampson loaned to Respondent Bostad, on a personal basis, $5,000.00. Respondent Bostad promised in writing to repay Mrs. Sampson with interest in one week's time. Respondent Bostad failed to repay in said time period. Subsequent to June 18, 1984 Mrs. Sampson made demands upon Respondent Bostad for the return of the $5,000.00 personal loan, which Respondent Bostad again promised in writing to repay by a date certain. Respondent Bostad again failed to pay the $5,000.00 personal loan. Thereafter after Respondent repeatedly failed to account for or deliver the earned commissions to Mrs. Sampson and after Respondent Bostad repeatedly failed to repay the personal loan of $5,000.00, Mrs. Sampson filed suit. A November 27, 1984 Amended Judgment in that cause was entered against Respondents Realty One of Broward Inc. and Robert G. Bostad for the commissions owed and against Respondent Bostad personally for the personal loan. This judgment has not been satisfied as of the date of formal DOAH hearing held April 10, 1985. Respondent Bostad admits to owing Mrs. Sampson the commissions as to LeMay and DeChristina and as to the $5,000.00 personal loan.

    
    

15. Respondent Bostad testified to extraordinary attempts to collect the liquid capital to pay these debts but to date of hearing had not done so. He emphasized that all his troubles stem from being a good salesman but a poor bookkeeper and from financial problems arising from his divorce. Each of the agency investigators involved in the Petitioner's audit of Respondents' accounts noted that Respondents' failure to carry balances forward in the escrow account checkbook could be misleading as to the amount of monies actually in the escrow account at any given time. Respondent emphasized that he has not tried to leave the community but wishes to make good his debts.

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding.

    
    

17. The following sections of Florida Statutes (in pertinent part) apply to the instant cause:

    
    

    Section 475.25(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

    $1,000.00 for each count or separate offense; and may issue a reprimand, or any or all of the foregoing, if it finds that a 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; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public. (Emphasis supplied)

    * * *

    (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 of 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.

    * * *

    (k) Has failed if a broker,

    to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof if properly authorized...

    * * *

    
    

18. Contrary to Petitioner's proposals, Petitioner's burden of proof is that of clear and convincing evidence in penal proceedings such a this. Bowling

    v. Department of Insurance, 394 So.2d 165 (Fla. 1st DCA 1981) may suggest that the "clear and convincing" standard of proof is replaced in Section 120.57(1) Florida Statutes proceedings by a "competent substantial evidence" standard, but the latter standard has always been and only can be, a standard for appellate review proceedings. "Penal sanctions should be directed only toward those who by their conduct have forfeited their right to the privilege, and then only upon clear and convincing proof of substantial causes justifying the forfeiture." Reid v. Florida Real Estate Commission, 188 So.2d 846 (Fla. 2d DCA 1966). Likewise, in Brod v. Jernigan and Florida Real Estate Commission, 188 So.2d 575 (Fla. 2d DCA 1966) it was stated, "the penalty of suspension should be sparingly and cautiously used and directed at the dishonest and unscrupulous operator, one who cheats swindles, or defrauds the general public in handling real estate transactions."

    
    

19. Respondents' conduct with regard to the Cohen/Mayer to Cullen transaction is clearly a violation of Sections 475.25(1)(b), (d), and (k), Florida Statutes, in failing to account and deliver monies to the person

    entitled to the same and by failing to maintain trust funds in their escrow account until disbursement thereof was properly authorized. Clearly, the "stop payment" fiasco, while perhaps technically justified, was in this case, only a ruse to cover the insufficient funds. Even Respondent Bostad admits a "stop payment" is not the custom and usage of the trade for a buyer-protection plan mix-up. This one situation resulted in a delay of closing for only 13 days (June 8 through 21, 1984), but in light of the evidence and the admission that there were insufficient funds in the Respondents' escrow account to cover the

    $5,200.00 check on June 8 and his admission that when $5,200.00 was paid out on June 21 there were insufficient funds to cover $13,569.72 in other pending real estate transactions, it must be concluded that there were far more serious problems then poor book-keeping involved in Respondents' business practices.

    This entire machination involves all monies in trust being utilized by Respondent Bostad for purposes other than authorized or allowed by Florida law without proper authorization by those whom he represented in a fiduciary capacity.

    
    

20. The earned commissions were legitimately owed to Sarah Sampson and failure to pay same, constitute a violation of Section 475.25(1)(d).

    
    

21. Respondents' attempts to finalize closings without loss and to secure money to pay Mrs. Sampson's commissions after discovery are not material to guilt, but if they could be accomplished would have some mitigating effect. Unfortunately, accomplishment of these attempts or good intentions was not demonstrated at hearing.

    
    

22. The loan by Mrs. Sampson to Respondent Bostad is personal in nature, as reflected by the testimony herein and by the civil judgment obtained. The inference urged by Petitioner, that Respondent Bostad probably used Mrs. Sampson's $5,000 personal loan to try to keep his business afloat by covering the Cohen/Mayer to Cullen transaction check does not alter the purely personal nature of the loan. Bostad did not mislead Sampson as to why he wanted the loan and there is no more fraud, misrepresentation, false promises, false pretenses, or dishonest dealing in his subsequent offers to pay by extended dates than in any other situation in which a debtor hopes to pay, promises to pay, but fails to pay.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is, recommended that:

Petitioner enter a final order suspending Respondents' licenses for two years and ordering Respondents to pay an administrative fine of $2,500.00.

However, if Respondents establish that the nine transactions pending on June 21, 1984 have successfully closed without loss and pay Mrs. Sampson the commissions owed her then Respondents' licenses should not be suspended but in addition to payment of the $2500.00 fine, Respondents' licenses should not be suspended but should be monitored in a probationary status for five years.

DONE and ORDERED this 19th day of July, 1985 in Tallahassee, Florida.

ELLA JANE P. DAVIS

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 19th day of July, 1985.

ENDNOTES

1/ Robert G. Bostad was given the option of filing a corporate resolution on behalf of Realty One of Broward Inc. to indicate retroactive corporate approval of him as qualified representative of the corporate entity, Realty One of Broward, Inc., however, such corporate resolution has not been filed and therefore the appearance of Robert G. Bostad as qualified representative on behalf of Realty One of Broward Inc. has not been recognized. Since Bostad is qualifying broker for Realty One, absence of the resolution is not significant.

2/ Although Mr. Bostad succeeded in getting two investigators of the Department of Professional Regulation to admit under oath that they had received phone calls from Respondents' former attorney assuring them that these amounts had been made good and that the nine transactions had closed without loss to any client, a finding of fact may not be made upon uncorroborated hearsay and especially not upon rank hearsay upon hearsay.

COPIES FURNISHED:

James R. Mitchell Staff Attorney

DPR-Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando Florida 32802

Robert G. Bostad Pro se

of Realty One of Broward Inc. 7567 West Oakland Park Boulevard Ft. Lauderdale, Florida 33315

Realty One of Broward Inc.

7567 West Oakland Park Boulevard Ft. Lauderdale, Florida 33315

Fred Roche, Secretary Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

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

AGENCY FINAL ORDER

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

STATE OF FLORIDA

DEPARTMENT OF PROFESSIONAL REGULATION FLORIDA REAL ESTATE COMMISSION

DEPARTMENT OF PROFESSIONAL REGULATION, FLORIDA REAL ESTATE COMMISSION

Respondents.

/

FINAL ORDER

The Florida Real Estate Commission heard this case on September 17, 1985 to issue a Final Order.

Hearing Officer Ella Jane P. Davis of the Division of Administrative Hearings presided over a formal hearing on April 10, 1985. On July 19, 1985, she issued a Recommended Order, which is adopted by the Florida Real Estate Commission a to all Findings of Fact. A copy of this Recommended Order is attached hereto as Exhibit A and made a part hereof.

On or about July 30, 1985, Petitioner filed Petitioner's Exceptions to the Recommended Order. The Conclusions of Law presented in Petitioner's Exceptions are adopted by the Florida Real Estate Commission. A copy of said Exceptions is attached hereto as Exhibit B and made a part hereof.

As to the recommended penalty, based on the Petitioner's Exceptions the Florida Real Estate Commission increases the Recommendation of the Recommended Order in part and decreases the Recommendation in part. Therefore, the Florida Real Estate Commission ORDERS that the real estate license and registration of the Respondents be suspended for a period of five (5) years.

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 17th day of September 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: Robert G. Bostad and Realty 1 of Broward Inc., 932 La Costa Way. Lantana, Florida 33462; to Realty 1 of Broward Inc. 8006 SW 21st Place, Davie, Florida 33324; to Hearing Officer Ella Jane P. Davis, Division of Administrative Hearing, 2009 Apalachee Parkway, Tallahassee, Florida 32301; and to James Mitchell, Staff Attorney, Dept. of Professional Regulation, P O Box 1900, Orlando, Florida 32301, this 25th day of September, 1985.

LG:pep Harold R. Huff

Docket for Case No: 84-003415

Orders for Case No: 84-003415