STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) Case No. 85-2799

)

LOUIS S. BLANCO, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on February 6, 1986 in Miami, Florida. Thereafter, the parties were afforded leave through April 10 to submit post-hearing memoranda supportive of their respective positions. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order. Proposed rulings which were not incorporated in this Recommended Order are the subject of specific rulings in an appendix to this Recommended Order.

APPEARANCES

. For Petitioner: James R. Mitchell

Staff Attorney

Department of Professional Regulation Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

For Respondent: Yale L. Galanter, Esquire

Executive Plaza Building Suite 301

3050 Biscayne Boulevard

Miami, Florida 33137

ISSUE

The issue presented for decision herein is whether or not Respondent's real estate brokers license should be disciplined

because he engaged in acts and/or conduct amounting to fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust, and for failure to account and deliver1 in violation of Subsections 475.25(1)(b) and (d), Florida Statutes.

BACKGROUND

By Administrative Complaint filed August 22, 1985, Petitioner, Department of Professional Regulation, charges that Louis S. Blanco violated Subsections 475.25(1)(b) and (d), Florida Statutes. Specifically, Petitioner alleges that Respondent failed to advise the owner of a parcel of land, Emeterio Padron Cruz, prior to closing that the Respondent's corporation, Maryland Properties, Inc., was to be the actual buyer. It is further alleged that had Mr. Padron known who was buying his land that he would not have paid to the Respondent a

$650 real estate commission. Further, it is alleged that Respondent, when selling the same parcel several months later, failed to divulge to the buyers the existence of the mortgage from Maryland Properties, Inc. to Padron and signed an affidavit to the effect that no liens or encumbrances were on the land.

Finally, it is alleged that Respondent failed to pay the last installment on the mortgage to Mr. Padron, whereby Mr. Padron began foreclosure proceedings. Respondent settled the foreclosure action, however, there remains outstanding a court order judgment of attorneys fees.

Respondent has disputed the charges and requested a hearing pursuant to Section 120.57(1), Florida Statutes. A formal hearing was initially set for October 21, 1985, but was continued based on a request by Petitioner and concurrence by Respondent.

The hearing was reset and held on February 6, 1986.

At the hearing, Petitioner called Louis Sabatino, Antonio Alonso, Carl Crouch, Emeterio Padron Cruz via deposition and Paz Padron via deposition. Petitioner's Exhibits 1-16 were received into evidence. The Respondent called himself to testify.

Respondent's Exhibits 1-6 were received into evidence and Exhibit A, marked for identification, was not received.

FINDINGS OF FACT

Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and the entire record compiled herein, including post-hearing memoranda, I hereby make the following relevant factual findings:

1. During times material herein, Respondent was, and is, a licensed real estate broker in Florida and has been issued license number 0007278. (Petitioner's Exhibit 1).

   
   

2. Maryland Properties, Inc. was a corporation organized under the laws of Florida during times material and incorporated as such on March 24, 1977 and was involuntarily dissolved on November 10, 1983. At times material, Respondent was President of Maryland Properties, Inc. (Petitioner's Exhibit 2).

   
   

3. Prior to December, 1980, Mr. and Mrs. Emeterio Padron Cruz were the owners of lots 16 and 17, block 11, of Athol Subdivision, Dade County, Florida. (Petitioner's Exhibit 11) Padron Deposition-Page 5; Petitioner's Exhibits 12-Mrs. Padron Deposition-Pages 2 and 3; Petitioner's Exhibit 3).

   
   

4. Mr. and Mrs. Padron were interested in selling lots 16 and 17 and Respondent, in his capacity as real estate broker, sought buyers on behalf of the Padrons. (TR 94).

   
   

5. On September 6, 1980, a contract was obtained by the Respondent between Mr. and Mrs. Padron, as sellers, and Roberto Hernandez and/or assigns as buyer. According to the terms of the contract, a real estate commission of $650 was to be paid to Respondent. (TR 97).

   
   

6. The transaction between the Padrons as sellers and Roberto Hernandez as buyers did not materialize and instead Respondent, through the entity Maryland Properties, Inc., purchased the property and a closing was held on December 1, 1980. Respondent became interested in the purchase of this property based on a need expressed by the Padrons that they needed to dispose of their property and they wished that Respondent would purchase the property along the same terms as Roberto Hernandez had previously agreed. In this regard, Respondent executed the closing documents as President of Maryland Properties, Inc., the purchaser of the Padron property. The Padrons were aware that Respondent was President of Maryland Properties, Inc., based on their review of the closing documents.

   
   

7. Respondent received a $650 commission in his capacity as broker in the Padron to Maryland Properties, Inc. transaction. (Petitioner's Exhibit 13; Petitioner's Exhibit 11-Padron Deposition-Pages 13 and 14).

   
   

8. As part of the Padron/Maryland Properties, Inc. transaction, a mortgage dated December 1, 1980 was given back to Padron by Maryland Properties, Inc. for $8,000. The mortgage deed and note were not recorded until March 11, 1981. Respondent prodded the Padrons to record the mortgage and to keep the note

   in a safe in the event that it was needed later on. Per Respondent's insistence, the Padrons finally recorded the mortgage and note on March 11, 1981. (Petitioner's Exhibit 4).

   
   

9. On November 27, 1980, Maryland Properties, Inc., through its President, the Respondent, entered into a contract to sell the same lots (16 and 17) to Agustin R. and Gladys A. Verde (Respondent's Exhibit 1).

   
   

10. The Maryland Properties, Inc./Verde transaction closed on February 4, 1981 without the Verdes or their attorney, Antonio Alonso, being aware of the Maryland Properties, Inc. to Padron Mortgage. At no time prior to closing did the Respondent reveal to the Verdes or Mr. Alonso the existence of the mortgage. Mr. Alonso, prior to closing, received and reviewed an abstract on the property which abstract did not contain the mortgage as it could not have since the mortgage was not recorded until subsequent to the Verde closing. Additionally, Respondent executed an affidavit prior to closing wherein it is stated that the property was free and clear of any lien or encumbrance. (Petitioner's Exhibit 15) The closing statement executed by Respondent speaks of a purchase money (first) mortgage, which mortgage was from the Verdes to Maryland Properties, Inc. (Petitioner's Exhibits 4, 5, 8, 14, 15; TR 70-77).

    
    

11. Respondent, as President of Maryland Properties, Inc., failed to make the final mortgage payment of $4,000 to Padron when same became due on December 2, 1982. Padron foreclosed on the mortgage which action was initiated on December 1, 1983. Respondent entered a settlement to the foreclosure action and paid the mortgage deficiency, however, there remains outstanding an award for attorneys fees for the foreclosure action in favor of the Padron's attorney (Louis Sabatino).

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. Section 120.57(1), Florida Statutes (1983).

    
    

13. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes (1983).

    
    

14. The Petitioner's authority is derived from Chapter 475, Florida Statutes (1983).

    
    

15. Respondent, a licensed real estate broker, is subject to the disciplinary guides of Chapter 475, Florida statutes.

16. Section 475.25(1)(d), Florida Statutes, authorizes the Petitioner to suspend or revoke a real estate license or impose an administrative fine not exceeding $1,000 for each separate offense or count, or issue a reprimand or any or all of the foregoing if it finds a licensee 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. . . .

    
    

17. Subsection 475.25(1)(d), Florida Statutes, authorizes the same penalties if the licensee is found to have failed to account or deliver monies which have come into his hands and the licensee is not entitled to retain said monies.

    
    

18. The burden of proof in cases as this is upon Petitioner. Balino 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 Respondent's license, Petitioner its burden is to prove the violation charged by clear and convincing evidence. Bowling v. Department of Insurance, 394 So. 2d 165 (Fla. 1st DCA 1981).

    
    

19. Insufficient evidence was offered herein to establish that the Respondent had failed to advise Mr. and Mrs. Padron that the Respondent's corporation, Maryland Properties, Inc., would be purchasing the Padron's property and that the Padrons would not have agreed to pay to Respondent a real estate commission had they known the Respondent's company was the actual buyer. In fact, all competent and substantial evidence herein reveals that Respondent, through the closing documents, put the Padrons on notice that he was the President of Maryland Properties, Inc. and the Padrons sought Respondent out, as purchaser, when the initial contract for sale between Roberto Hernandez failed to close. Finally, the Padrons suggested that Respondent purchase their property under similar terms as Mr. Hernandez had agreed. The identical language in the Hernandez contract for sale was utilized by the parties and the closing documents related the

    $650 commission to be paid to Respondent.

    
    

20. Competent and substantial evidence was offered herein to establish that Respondent failed to fully inform all parties in the Maryland Properties, Inc./Verde transaction about the unrecorded mortgage from Maryland Properties, Inc. to Padron. Additionally, Respondent signed an affidavit, as further inducement to the Verdes that the property was not subject to any liens or encumbrances. Since the mortgage was not recorded at the time that the subject transaction closed and based upon Respondent's execution of the no lien affidavit, any reviews by attorney Alonso would not have disclosed the Padron mortgage. It

    is reasonable to conclude that the Verdes would have relied upon the public records and therefore close on the transaction without any knowledge of the subject encumbrance. Based thereon it is concluded that Respondent engaged in acts of misrepresentation, concealment and breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes.

    
    

21. Insufficient evidence was offered herein to establish that Respondent failed to account and deliver as charged since no evidence was adduced which tended to establish that there had been any demand upon Respondent for the return of the funds or that he (Respondent) had otherwise failed to account or deliver funds which had come into his hands into which he was not entitled to retain. Additionally, the charge of failing to account and deliver as to the court order judgment represents a judgment against Maryland Properties and rights stemming from that transaction were contractual in nature and has been addressed by the judiciary.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED: That the Respondent 's license number 0007278 be suspended for a period of six (6) months.

RECOMMENDED this 27th day of May, 1986, in Tallahassee, Florida.

JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 27th day of May, 1986.

ENDNOTE

1/ The failure to account and deliver allegation of the charge was withdrawn by Petitioner during the course of the hearing. (TR 107)

COPIES FURNISHED:

James R. Mitchell, Staff Attorney Department of Professional

Regulation-Legal Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

Yale L. Galanter, Esquire Executive Plaza Building Suite 301

3050 Biscayne Boulevard

Miami, Florida 33137

Fred Roche, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Salvatore A. Carpino, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Harold Huff, Executive Director Department of Professional Regulation

Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

APPENDIX

Rulings on Petitioner's Proposed Findings of Fact:

1. Rejected as contrary to other competent, substantial evidence which reveals that Mr. and Mrs. Padron knew that Maryland Properties, Inc., would be purchasing the property when it became clear that Roberto Hernandez would not be purchasing the Padron's property.

   
   

2. Rejected in part based on competent, substantial evidence which reveals that the Padrons agreed to sell the property to Respondent along the same terms that had been agreed upon by the purchase agreement executed by Roberto Hernandez.

12 Rejected as irrelevant to a determination of the issues presented herein.

Rulings on Respondent's Proposed Findings of Fact:

1. Rejected based on other competent and substantial evidence which reveals that Respondent failed to fully and truthfully advise the Verdes of the existence of the mortgage from the Padrons which was not then a part of the public records of Dade County, Florida.

   
   

2. Rejected inasmuch as diligent inquiry would not have disclosed the existence of the wrap around mortgage between Maryland Properties, Inc. and Agustin and Gladys Verde.

   
   

3. Rejected as being unnecessary to determine the issues posed by the Administrative Complaint filed herein.

Docket for Case No: 85-002799

Orders for Case No: 85-002799