STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION )

OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 85-0244

)

JOHN D. KANAGO and )

CAROL WHEELER, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice this case was heard on June 26, 1985, in Orlando, Florida, before Donald D. Conn, a duly designated Hearing Officer of the Division of Administrative Hearings. Respondent Carol Wheeler was not present and was not represented at the hearing.

For Petitioner: James R. Mitchell, Esquire

Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

For Respondent: James D. Kanago, pro se

5853 Elan Drive

Orlando, Florida 32808

Petitioner, Department of Professional Regulation, Division of Real Estate, filed an Administrative Complaint against Respondents, John D. Kanago and Carol Wheeler, charging them with violating Section 475.25(1)(b), F.S., due to fraud, misrepresentations, false promises and otherwise dishonest dealings in a real estate transaction with Garland W. Goldston, Sr., and Betty M. Interisano.

At the hearing Petitioner called six witnesses and introduced nineteen (19) exhibits. Respondent Kanago testified on his own behalf. A transcript of the hearing was filed on July 18, 1985.

At the conclusion of Petitioner's case in chief Respondent moved to dismiss the case, and a ruling denying the motion is hereby incorporated in this Recommended Order. The parties were allowed to submit posthearing proposed findings of fact pursuant to Section

120.57(1)(b)4, F.S. A ruling on each proposed finding has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.

FINDINGS OF FACT

1. At all times material hereto, Respondents have been licensed real estate salesmen whose last licenses were issued c/o All-Pro Realty Services, Inc., 6415 West Colonial Drive, Orlando, Florida 32818. Respondent Kanago's license number is 0318422 and Respondent Wheeler's license number is 0095135. At all times material hereto, Respondents were operating as real estate salesmen in the employ of All-Pro Realty Services, Inc.

   
   

2. Respondent Kanago owned certain residential property located at 2000 Sarazen Drive, Orlando, Florida. On or about May 14, 1984, he gave an exclusive listing on this property to All-Pro Realty Services, Inc., to sell the property at $57,000. The listing agreement specified that this price was excluding an "extra" lot.

   
   

3. On or about May 21, 1984, Respondents obtained a sales contract on Respondent Kanago's property from Garland W. Goldston, Sr. and Betty M. Interisano, purchasers. This sales contract was for $60,000, calculated as $57,000 for the property and $3000 for the extra lot. Goldston and Interisano entered into this contract because of representations made to them by Respondents that they could build another residence on the extra lot. Respondent Wheeler told them that Respondent Kanago was in the process of having his property subdivided to form the extra lot and that there would be no problem building on the extra lot once the property was subdivided. The day before closing was to have taken place Respondent Kanago told them he had not completed the subdividing of the property but assured them it could be subdivided to allow a residence to be built on the extra lot. Respondent Kanago knew that the purchasers expected an extra lot to be included in the transaction from May 21, 1984, when the sales contract was executed and also knew there was no extra lot associated with the property when he met with the purchasers the day before closing.

   
   

4. Closing did not take place on June 1, 1984, because Respondent Kanago could not convey clear title to the property.

   The purchasers were greatly inconvenienced since they were prepared to move to the property immediately following closing. Goldston contacted the Orange County Zoning Department on or about June 4, 1984, concerning the "extra" lot associated with Kanago's property and was told there was no extra lot. The zoning on the property is R-1A, single family residential, which has a minimum lot requirement of 7500 square feet. According to a survey of the property, the lot could not be subdivided and meet the minimum square footage zoning requirements since the "extra" lot that would be formed would be only 4638 square feet. A second residence could not be built on Kanago's property.

5. From May 21 when the sales contract was executed until May 31, 1984, Respondent Wheeler advised Goldston and Interisano that Respondent Kanago was having the property surveyed and subdivided to form an "extra" lot on which another residence could be built. Respondent Kanago knew these representations were being made. On the day before closing, May 31, Respondents advised the purchasers that the lot had not been subdivided, but that they would have no problem completing the subdivision themselves and they should go through with the transaction. However, the transaction never closed due to title problems that were discovered on the day of closing and the purchasers subsequently learning that no "extra" lot existed.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this case. Section 120.57(1), F.S. Section 475.25(1)(b), F.S., provides that the Florida Real Estate Commission may discipline a licensee who:

   
   

   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.

   
   

7. The burden of proof in this ease is on Petitioner. 8alino v. Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977). Since this action is penal in nature, involving the possible suspension or revocation of Respondents' licenses, Petitioner's burden is to prove the violations charged by

   clear and convincing evidence. State ex ref. Vining v. Florida Real Estate Commission, 281 So. 2d 487 (Fla. 1973) Bowling v.

   Department of Insurance, 394 So. 2d 165 (Fla. 1st DCA 1981). This is a higher burden of proof than a simple preponderance due to the nature of the action and the possible penalty that could be imposed.

   
   

8. Petitioner has met its burden of proof, and has clearly and convincingly established that Respondents misrepresented and concealed facts material to the sale of Kanago's property to Goldston and Interisano, and that they conspired with each other in this regard. This misrepresentation and concealment was intentional and willful because Respondents knew from the day the sales contract was executed that the "extra" lot was an inducement for the purchasers in this transaction, and they did nothing to explain the true status of the property. They entered into a sales contract for $60,000 on property listed for $57,000, exclusive of an "extra" lot, and as licensed real estate salesmen they should have understood that the "extra" lot was critical to the purchasers' desire for this property. Thus, Respondents demonstrated culpable negligence and a breach of trust in this transaction.

   
   

9. The violations in this case occurred over a two week period and there is no evidence that Respondents repeatedly engaged in a course of conduct that would justify the penalty of revocation of their licenses. Pauline v. Borer, 274 So. 2d 1 (Fla. 1973) Kopf v. Florida Real Estate Commission, 379 So. 2d 1327 (Fla. 3d DCA 1980). Therefore, a reasonable suspension of Respondents' licenses is appropriate in this case.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is recommended that a Final Order be issued suspending each of Respondents' licenses for a period of one (1) year.

DONE and ENTERED this 8th day of August, 1985, at Tallahassee, Florida.

DONALD D. CONN, 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 8th day of August, 1985.

COPIES FURNISHED:

Harold Huff, Executive Director Division of Real Estate

400 West Robinson Street Orlando, FL 32802

James R. Mitchell, Esquire Division of Real Estate

400 West Robinson Street Orlando, FL 32802

John D. Kanago 5853 Elan Drive

Orlando, FL 32808

Carol Wheeler

c/o Sterling Wheeler

309 Lawsona Drive Orlando, FL 32803

Fred Roche, Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, FL 32301

Salvatore A. Carpino, Esquire Department of Professional Regulation

130 North Monroe Street Tallahassee, FL 32301

Docket for Case No: 85-000244

Orders for Case No: 85-000244