STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-1067

)

JIMMY D. HILL, t/a )

JIM HILL ASSOCIATES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William B. Thomas, held a formal hearing in this case on July 22, 1986, in Panama City, Florida. The transcript was filed on August 11, 1986, and the parties were allowed 15 days thereafter to submit proposed findings of fact and conclusions of law. These were received and have been considered. A ruling has been made on each proposed finding of fact in the Appendix to this Recommended Order.

APPEARANCES

FOR PETITIONER: Arthur R. Shell, Jr., Esquire

Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

FOR RESPONDENT: Michael C. Overstreet, Esquire

225 McKenzie Avenue

Panama City, Florida 32401

By Administrative Complaint filed on February 11, 1986, the Respondent was charged with violation of Sections 475.25(1)(b) and 475.25(1)(k), Florida Statutes. The complaint alleges that the Respondent obtained a sales contract and a $3,000 escrow deposit from Margaret Gorshi and Glenn Coker on June 28, 1983, and when the sale failed to close and the buyers made a demand upon the Respondent for a refund of their escrow deposit, the Respondent's $3,000 refund check was returned for insufficient funds. The Respondent is further charged with failing to maintain the $3,000 deposit in his escrow account until disbursement.

FINDINGS OF FACT

1. At all times relevant to the charges brought against the Respondent, Jimmy D. Hill, he was a licensed real estate broker in the State of Florida, holding license number 0144888.

2. On June 20, 1983, a contract for the purchase of Unit 219 in Polynesian Village in Bay County, Florida, was signed by Margaret Gorshi and Glenn Coker. The buyers paid a total of $3,000 as an earnest money deposit which the Respondent deposited into his escrow account at Bay Bank and Trust Company in Panama City.

   
   

3. This real estate transaction was subject to the buyers obtaining 90 percent financing, and it was scheduled to close on or before September 15, 1983.

   
   

4. The transaction did not close because the buyers were not able to obtain the necessary financing, and in September of 1984 the buyers requested that their earnest money deposit be returned.

   
   

5. On September 27, 1984, the Respondent's office manager forwarded a check for $3,000 dated September 24, 1984, to the buyers. This check was drawn on the Respondent's escrow account at Bay Bank and Trust Company in Panama City.

   
   

6. This check was presented for payment in November of 1984, but it was not paid by the bank, and was returned because of insufficient funds in the Respondent's escrow account. The Respondent's escrow account was closed in July of 1985 without this check having been honored.

   
   

7. Sometime prior to the issuance of the check to refund the buyer's deposit, another check in the amount of $5,400 was cashed at Bay Bank and Trust Company, drawn on the Respondent's business checking account at First National Bank. When this check was not honored by First National Bank due to insufficient funds, it was returned to Bay Bank and Trust Company.

   
   

8. Upon receipt of this dishonored check, Bay Bank and Trust Company departed from its standard banking policy by charging the full amount thereof against the Respondent's trust or escrow account. As a result, the Respondent's escrow account became out of balance by $5,400.

   
   

9. The Respondent's escrow account balance was at least $3,000 from June, 1983, through July, 1984. This balance was $1,600 on August 31, 1984; $1,600 on September 30, 1984; $600 on October 31, 1984; and from November 1984, through July, 1985, when the account was closed, the escrow account balance was $585. Without the unauthorized debit of $5,400, the balance was sufficient to enable the refund check to the buyers in the amount of $3,000 to clear.

   
   

10. Although the Bay Bank and Trust Company issued a debit memo reflecting the charge of $5,400 to the Respondent's escrow account, the Respondent did not receive it. He testified that it must have been intercepted or diverted from him, by office personnel.

    
    

11. The Respondent learned that his $3,000 check to the buyers had bounced in November or December, 1984. On February 25, 1985, the Respondent issued a replacement check for $3,000 to purchase a cashier's check which he intended to forward to the buyers. This check was given to an office employee to purchase the cashier's check, but the employee did not do so.

    
    

12. Approximately three months later, in May of 1985, the Respondent was notified by an attorney for the buyers that they had not received the refund. The buyers had retained this attorney to obtain their refund from the

    Respondent, and after two or three discussions with the attorney, the Respondent finally forwarded his check for $3,400 plus, to counsel for the buyers in August of 1985.

    
    

13. Although the Respondent's first refund check was caused to bounce by the bank's unauthorized charge of another check to his escrow account, the Respondent was negligent in not reviewing his escrow account statements so as to be informed of the bank's charge to his escrow account. The Respondent also failed to follow-up to assure that the buyers received the first replacement check when it was written in February, 1985. He did not regularly review the balances in his escrow account monthly after July of 1984, and only when he was contacted by the Real Estate Commission's investigator did he perform a thorough reconciliation of his escrow account in July, 1985. The Respondent also failed to supervise his employees and establish policies pertaining to review and verification of the balances in his escrow account.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

15. Section 475.25(1), Florida Statutes, authorizes the Real Estate Commission to suspend or revoke a real estate license, or impose an administrative fine up to $1,000 for each offense, if it finds that the licensee has violated subsections (a)-(p) of this statute. The Respondent is charged with violating subsections (b) and (k).

    
    

16. Section 475.25(1)(k), Florida Statutes, requires a licensee to place any money received from a person dealing with him as a broker, into an escrow account where the funds must be kept until disbursement is authorized. Despite the Respondent's bank's charge of $5,400 against his escrow account by mistake, the Respondent did not properly supervise and monitor his escrow account so as to know its status and its balance from month to month, resulting in non-payment of the refund of $3,000 to buyers of property who placed funds with the Respondent in escrow. Thus, the Respondent is guilty as charged of this offense.

    
    

17. Section 425.25(1)(b), Florida Statutes, proscribes culpable negligence or breach of trust in any business transaction, irrespective of whether any loss or damage has been sustained by the victim. The failure of the Respondent to supervise his office employees and to establish policies pertaining to his escrow account was a principal cause of the non-payment of the refund check drawn on his escrow account. The bank's error in charging the escrow account for $5,400 when it should not have done so, was not discovered by the Respondent as it should have been, and as it would have been if the escrow account had been properly monitored. Thus, the Respondent is also guilty as charged of this offense.

    
    

18. However, since the non-payment of the Respondent's check to the buyers refunding escrow funds to them, was not solely caused by the Respondent's violations, but would not have occurred without the improper and unauthorized debit of his escrow account by Bay Bank and Trust Company, a penalty of a $500 fine for each count is all that is warranted.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Respondent, Jimmy D. Hill, trading as Jim Hill

Associates, be assessed an administrative fine of $1,000.

THIS RECOMMENDED ORDER entered this 25th day of September, 1986 in Tallahassee, Leon County, Florida.

WILLIAM B. THOMAS

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

FILED with the Clerk of

Division of Administrative Hearings this 25th day of September, 1986.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 86-1067

Department of Professional Regulation, Division of Real Estate vs. Jimmy D. Hill,

t/a Jim Hill Associates Case No. 86-1067

Rulings on Petitioner's Proposed Findings of Fact: 1-10. Accepted.

11. Rejected because not a factual finding. 12-17. Accepted.

Rulings on Respondent's Proposed Findings of Fact: (Paragraphs not numbered, but referred to in order.)

1. Accepted.

2. First sentence accepted. Second, third and fourth sentences rejected as not supported by corroborating evidence and thus are self-serving. Fifth, sixth and seventh sentences accepted.

3. First sentence accepted. Second and third sentences rejected as not supported by corroborative evidence and thus are self-serving.

4. Accepted.

5. Accepted.

6. First sentence accepted. Second and third sentences rejected as irrelevant.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esquire Department of Professional

Regulation

Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Michael C. Overstreet, Esquire

225 McKenzie Avenue

Panama City, Florida 32401

Fred Roche Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Wings S. Benton, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Mr. Harold Huff Executive Director

Department of Professional Regulation

Post Office Box 1900 Orlando, Florida 32802

Docket for Case No: 86-001067

Orders for Case No: 86-001067