STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

v. ) CASE NO. 85-1319

)

ANNETTE J. PUFFIN, T/A )

CENTURY 21 A 1ITTLE BIT )

COUNTRY, )

)

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 July 25, 1985 in Tampa, Florida.

APPEARANCES

For Petitioner: James A. Mitchell, Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondent: Gerald W. Nelson, Esquire

4950 West Kennedy Boulevard Tampa, Florida 33809

BACKGROUND

By administrative complaint filed on April 2, 1985, petitioner, Department of Professional Regulation, Division of Real Estate, has charged that respondent, Annette J. Ruffin, a licensed real estate broker, had violated Chapter 475, Florida Statutes. In brief petitioner charges that in her capacity as a real estate broker, respondent received a cash earnest money deposit of $500.00 in connection with a sales contract for certain property, that the transaction never closed, that the

buyers applied for a refund of the deposit but that respondent refused to return the same, that respondent failed to maintain the $500.00 deposit in her trust account at all times after receipt of said deposit and used all or part of it for her own use and benefit, and that she failed to promptly notify petitioner that she had conflicting demands for the deposit and was in doubt as who was entitled to the same. Petitioner further alleges this conduct (a) constituted fraud, misrepresentation and the like in violation of Subsection 475.25(1)(b) (Count I), (b) violated Subsection 475.25(1)(k) by Ruffin having failed to maintain trust funds in her brokerage account until disbursement (Count II), (c) violated Subsection 475.25(1)(d) by respondent having failed to account and deliver the deposit (Count III), and (d) constituted a violation of Subsection 475.25(1)(d) by respondent having failed to promptly notify petitioner of the deposit dispute (Count IV).

Respondent disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by petitioner on April 24, 1985, with a request that a hearing officer be assigned to conduct a final hearing. By notice of hearing dated May 31, 1985, the final hearing was scheduled for July 25, 1985 in Tampa, Florida.

At final hearing petitioner presented the testimony of Helen A. Anderson, Patricia A. Benton, Lester J. Michaud, Mary

1. Reynolds and George A. Cartwright. It also offered petitioner's exhibits 1-17. All were received in evidence. Respondent testified on her own behalf and presented the testimony of Deborah Cassidy, Juanita Thurman, Carol L. Jackson, Charles Inglis and Margaret D. Morgan, and offered respondent's exhibit 1 which was received in evidence.

   
   

   The transcript of hearing was filed on August 5, 1985.

   Proposed findings of fact and conclusions of law were filed by petitioner and respondent on August 16 and 26, 1985, respectively. A ruling on each proposed finding of fact 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.

   
   

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

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

   
   

   FINDINGS OF FACT

   
   

   1. At all times relevant hereto, respondent, Annette J. Ruffin, held real estate broker license number 0076385 issued by petitioner, Department of Professional Regulation, Division of Real Estate. When the events herein occurred, respondent was owner and broker for Century 21 A Little Bit Country at 915 Lithia Pinecrest Road, Brandon, Florida. She is presently employed by U. S. Homes Corporation in Tampa, Florida.

      
      

   2. James and Shirley Yaksic wished to sell their residence at 3512 Plainview Drive in Brandon, Florida. They listed their property with Century 21 Solid Gold Properties II, Inc. in Brandon in December, 1983. Deborah Cassidy was a salesman at respondent's office, and knew her parents, J. R. and Helen Anderson, were in the market for a new home. With Cassidy's assistance, the Andersons executed a contract on February 16, 1984, to purchase the Yaksics' residence. The contract called for a purchase price of $65,000 with a down payment of $10,000, including a $500.00 cash deposit which was given to respondent's firm several days after the contract was executed. The deposit was placed in Ruffin's escrow account on February 28, 1984. The Andersons were also required to seek VA financing on the balance owed. After the contract was accepted by the Yaksics on February 17, Helen Anderson made application on February 23 for a $55,000 VA loan with Norwest Mortgage, Inc., a lending institution in Tampa. Florida. Since her husband was in New York State, only Helen signed the loan application agreeing to allow verification of all representations made in the application.

      
      

   3. While filling out the loan application at Norwest, Helen Anderson learned that the Veterans Administration allowed applicants to apply for loans equal to 100% of the value of the property. Since the Andersons preferred to make no down payment, Helen Anderson wrote Norwest in early March requesting that their loan application be increased from $55,000 to

      $65,000. She also noted that she did not sign the "disclosure statement" on behalf of her husband since "it would be incorrect." In response to this Letter, Norwest wrote the Andersons in early April requesting a number of items needed to process the application as well as an amendment to the contract reflecting that the sellers agreed to 100% financing by the buyers. The Andersons did not respond to this inquiry. In

      addition, they never, advised the sellers that they had changed their loan application to 100% financing, and that the sellers would be required to pay more discount points at closing.

      
      

   4. Because no amendment to the contract was ever filed, Norwest processed the application for a $55,000 loan. Due to insufficient income and excessive obligations, the application was denied. The Andersons were so notified by letter dated May 3, 1984.

      
      

   5. After Helen Anderson received the denial letter she telephoned respondent's office manager on several occasions to seek a refund of her deposit. This information was apparently conveyed to Ruffin by the office manager. About the same time the sellers were advised by the listing salesman that the Andersons did not intend to close. On May 5, the sellers wrote a letter to Solid Gold requesting that it notify the selling broker to not "release the binder to the buyers as we are entitled to this money." For some reason, a copy of this letter was not mailed to respondent until May 31, and she received it in early June. Even though Ruffin may have been orally advised in early May of the Yaksics' intended claim by the listing office, she had no concrete evidence of this intention until she received their letter in early June.

      
      

   6. On June 29, 1984, Helen Anderson wrote respondent's office manager a letter requesting a return of her deposit no later than July 9. She also indicated the letter was being sent pursuant to instructions received from petitioner. On July 2, Ruffin replied by letter stating that "we cannot release your deposit as the house was off the market for such a long time," and that Norwest had advised her that the Andersons "did not bring in a lot of the information until it was too late." After Helen Anderson filed a complaint with the Department of Professional Regulation (DPR), DPR wrote respondent a letter dated July 19, 1984, stating in part that Anderson had been refused her deposit and that its records did not show that respondent had notified DPR of conflicting demands for that money.

      
      

   7. On July 30, 1984, respondent replied to DPR's inquiry and gave her version of the circumstances surrounding the transaction. After receiving no reply to this letter, she wrote a second letter in late December, 1984 to the Division of Real Estate (Division) requesting advice on the deposit matter. The Division sent a her form for requesting an escrow disbursement order on January 4, 1985 which was returned by respondent within

      a few weeks. An escrow disbursement order was eventually issued by the Division on April 19, 1985 directing her to refund the deposit to the Andersons. She did so on May 5, 1985.

      
      

   8. In conjunction with its investigation, DPR obtained copies of respondent's escrow account bank statements during the period when the Andersons' deposit was retained by Ruffin. Although the $500.00 deposit should have been maintained in that account from February, 1984 until disbursement in May, 1985, her account dropped below $500.00 on sixteen separate days during this period of time, and continuously from February 28 through April 30, 1985.

      
      

   9. Respondent, who has been a broker since 1977, maintained a record of all escrow deposits and expenditures in a ledger book which reflected when the Anderson money was deposited and when it was paid out. Although she inferred the problem may have been attributable to her bookkeeper, no adequate explanation was given as to why her bank balances dropped below $500.00 on a number of occasions. She acknowledged that she learned of the conflicting demands in May, 1984, but felt that she could still "solve" the credit problem of the Andersons. She stated that she intended to give notice to the Division of the conflicting claims on the deposit and needed no encouragement from the Division to do so. There is no evidence that respondent has ever been disciplined on any other occasion since first receiving her salesman license around twelve years ago.

      CONCLUSIONS OF LAW

      
      

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

       
       

   11. Respondent is charged in four separate counts with various violations of Subsection 475.25(1), Florida Statutes, in conjunction with the Anderson-Yaksic transaction. In its proposed recommended order, petitioner concedes that no evidence was presented that would support the charge in Count III that Ruffin failed to account and deliver the Andersons' deposit, and accordingly that portion of the complaint should be dismissed. The remaining three counts will be discussed separately hereinafter.

       
       

   12. Count I - In essence, petitioner alleges that Ruffin's conduct of having "failed, refused and neglected to refund the

       $500.00 earnest money deposit" to the Andersons, of having "failed to maintain the $500.00 in her real estate brokerage trust account or some other proper depository," and of having "utilized all or part of the $500.00 for her own use and benefit or for some other use not intended, all without the prior knowledge and consent of the persons entitled to the money" collectively constituted misrepresentation, concealment, false promises, culpable negligence and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes 1

       
       

   13. The facts do not establish that Ruffin "failed, refused and neglected" to refund the disputed deposit to the Andersons within the meaning of Subsection 475.25(1)(b), since to do so would have subjected her to a similar complaint from the Yaksics. Indeed, with conflicting demands for the money, her only recourse was to follow one of three procedures prescribed in Subsection 475.25(1)(d), Florida Statutes. Next, the evidence supports the allegation that Ruffin "failed to maintain the $500.00 in her real estate brokerage trust account or some other proper depository." Finally, a reasonable inference from the evidence is that Ruffin used the Anderson deposit "for some other use not intended" since her escrow account fell below $500.00 on numerous occasions. This is true even though the undersigned is convinced Ruffin had no sinister purpose in doing so, and fully intended to return the $500.00 to the successful claimant once the dispute was resolved. By using trust money for "some other use not intended" and by failing to maintain a deposit in her trust account, it is concluded that

       she is guilty of misrepresentation (impliedly representing that the deposit would be kept at all times in her escrow account), concealment (failing to disclose her actions to the buyers), false promises (making an implied promise to the buyers as to the disposition of their deposit), and breach of trust in a business transaction (violating the trust imposed upon her relative to the handling and maintenance of the deposit).2 However, the facts do not establish culpable negligence on the part of respondent.

       
       

   14. Count II - It is alleged that respondent violated Subsection 475.25(1)(k) by having failed to "maintain trust funds in her brokerage account or some other proper depository until disbursement thereof was authorized." That subsection requires a licensee to "immediately place, upon receipt. any . .

       . deposit . . . entrusted to him . . . in a trust or escrow account . . . wherein the funds shall be kept until disbursement is properly authorized." The evidence clearly establishes a violation of the foregoing statute, and it is concluded that the charge in Count II has been proven.

       
       

   15. Count IV - Finally, petitioner charges that respondent "is guilty of having failed to promptly notify the Florida Real Estate Commission of the deposit dispute, in violation of Subsection 475.25(1)(d), Florida Statutes." That statute required Ruffin to "promptly notify the Commission of such . . . conflicting demands." According to petitioner, Ruffin was aware of such conflicting demands in early May, 1984 and waited some two and one-half months, or until July 30, 1984, to notify the Division of this dispute. It contends this time period is not "prompt" and therefore a violation of the statute has occurred.

       
       

   16. Although Ruffin may have been advised by telephone in early May of the sellers' demand for the deposit, she had no concrete evidence of this fact until early June 1984, when she received the sellers' demand. She then waited for almost two months to notify the Division of these claims. The term "promptly" in the context of how much time is allowed for notification is not defined by statute or rule, and there was no evidence as to how the Division construes this term, the standard expected of licensees, or what the Division's past practice has been where licensees have been similarly charged. Absent any evidence or precedent as to what time period is or is not in compliance with the law, the undersigned must accordingly construe the term in a manner most favorable to respondent, Bach v. Florida State Board of Dentistry, 378 So. 2d 34 (Fla. 1st DCA 1980), since penal statutes must be strictly construed. Using a

       narrow and strict interpretation, a sixty day delay is not wholly unreasonable and untimely, although this would appear to be the maximum time period in which a licensee could take no action. Therefore, it is concluded that the charge in Count IV should fail, and that this portion of the complaint be dismissed.

       
       

   17. In its proposed order, petitioner suggests that Ruffin's license be suspended for two years, and that she be fined $1,000. This penalty is presumably premised on the notion that Ruffin is guilty of all three counts. Given the fact that the Andersons received their deposit immediately after the escrow disbursement order was issued, that no consumer was harmed, and Ruffin has an unblemished record prior to these offenses, a ninety-day suspension and $500.00 fine are appropriate.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that respondent be found guilty as set forth in the Conclusions of Law portion of this order. All other charges should be DISMISSED. It is recommended that respondent's broker license be suspended for ninety days and that she be fined

$500.00.

DONE and ORDERED this 5th day of September, 1985, in Tallahassee, Florida.

DONALD R. ALEXANDER

Bearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, FL 32301

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of September, 1985.

ENDNOTES

1/In its proposed order, petitioner has abandoned its original claim that this conduct also constituted fraud and dishonest dealing by trick, scheme or device as alleged in the complaint.

2/ One of the difficulties in assessing whether any of the numerous elements in Subsection 475.25(1)(b) has been violated is the lack of any statutory, rule or informal policy definition of the terms, and the lack of any cited agency orders from which precedent and statutory construction can be drawn.

COPIES FURNISHED:

James A. Mitchell, Esq.

P. O. Box 1900 Orlando, FL 32802

Gerald W. Nelson, Esq. 4950 W. Kennedy Blvd. Tampa, FL 33809

Docket for Case No: 85-001319

Orders for Case No: 85-001319