vs. ) CASE NO. 86-3980
ANNETTE J. RUFFIN, )
Respondent. )
James R. Mitchell, Esquire, of Orlando, for Petitioner. Gerald W. Nelson, Esquire, of Tampa, for Respondent.
A formal administrative hearing was held in this case in Tampa on April 7, 1987. (Petitioner ordered a transcript of the formal hearing, which was filed on May 14, 1957.) The issue is whether the Florida Real Estate Commission should discipline Respondent, Annette J. Ruffin, on charges arising out of her handling of a $5000 escrow deposit. Petitioner, Department of Professional Regulation, alleges that Ruffin mishandled the deposit and violated: (1) Section 475.25(1)(b), Florida Statutes (1985), by fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction; (2) Section 475.25(1)(k), Florida Statutes (1985), by failing to maintain the escrow deposit in an escrow account; and (3) Section 475.25(1)(o), Florida Statutes (1985), by having been found guilty once before of misconduct warranting suspension or by having a course of conduct or practices which show that she is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom she may sustain a confidential relation, may not safely be entrusted to her. Respondent denies the allegations.
At all times pertinent to the charges, the Respondent was the holder of a Florida real estate license, number 0076385. From August 15, 1983, to December 24, 1984, the Respondent was licensed and operating as a broker, t/a Century 21, A Little Bit Country. From December 24, 1984, to July 30, 1986, Respondent was licensed as a broker-salesman with U.S. Home Corporation. From July 30, 1986, to at least January 5, 1987, the Respondent's license has been in a suspended status.
The Pending Charge.
On March 7, 1984, A. G. Rappaport and Mitchell Bentley, as buyers, entered into a Contract For Sale Of Real Estate to purchase land owned by Frank
M. Fyfe. All parties executed the contract.
The Respondent, as the real estate broker on the contract, was to receive a commission under paragraph 23 of the contract and was acting as escrow agent for any deposits on the contract under paragraphs 9 and 14 of the contract.
Under the contract, a deposit check of $1,000 was placed with the Respondent, as escrow agent, by the buyers on March 7, 1984. The deposit was given to the Respondent by Mr. Rappaport with the intention that the money be placed in an escrow account. On March 13, 1984, the Respondent deposited the
$1,000 check in her escrow account at the Southeast Bank, account number 012- 060968.
Under the contract, buyers were to pay an additional $4,000 escrow deposit to the Respondent within 90 days, and the closing would be on or before July 15, 1985.
On July 6, 1984, an additional deposit check of $4,000 was given to the Respondent pursuant to the terms of the contract. On July 11, 1984, the Respondent deposited the $4,000 check in her escrow account at the Southeast Bank.
The sales contract provided that Respondent would pay the $5,000 escrow deposit to the seller one hundred and twenty (120) days after execution. But, instead, the parties agreed that Respondent would continue to hold the deposit in escrow until the closing of the transaction.
At the request, and for the convenience, of the seller, the parties to the transaction agreed to close the sale of the real property on March 15, 1985, before the buyers were able to obtain third-party financing, and Fyfe took back a large, short-term purchase money mortgage. All parties, including Respondent, agreed that Respondent's $25,000 commission would be paid to her when the buyers' third party financing closed.
The $5,000 was not disbursed at closing on March 15, 1985, through an oversight on the part of all parties concerned. When the oversight was discovered, Respondent stated that the $5,000 would be retained by her as part of the commission.
At the July 25, 1985, closing of the third party financing, Mr. Fyfe's purchase money mortgage was paid out of the loan proceeds, and Mr. Fyfe paid Respondent's entire commission in the amount of $25,000 less $900 owed to Mr. Fyfe.
At neither closing was the $5,000 deposit disbursed by the Respondent. Neither closing statement reflects or accounts for the $5,000 in the purchase price or credits, and neither the buyers nor the seller received the $5,000 at either closing.
Subsequent to the closing on July 25, 1985, Mr. Rappaport and Mr. Bentley both made demands upon the Respondent for the return of the $5,000 deposit as the deposit had not been accounted for at the closing in the purchase price of the property. The Respondent's response was that she felt she was entitled to more than the $25,000 commission she received and she would interplead the money in circuit court to determine her commission.
On October 20, 1985, the Respondent, through her attorney Gerald Nelson, filed an Amended Complaint in the Thirteenth Judicial Circuit seeking a
determination as to who (i.e., the Respondent or the buyers) was entitled to the
$5,000 and, further, claiming the $5,000 as additional commission. On November 19, 1986, the circuit court judge found that the buyers (Rappaport and Bentley) were entitled to the $5,000 and that, because of a breach of the Respondent's fiduciary duty, Respondent waived her right to the $25,000. The court ordered that Rappaport and Bentley recover from the Respondent the total sum of $30,000 (deposit plus commission), pre-judgement interest, and post-judgement interest.
Respondent's escrow account at the Southeast Bank was closed on August 16, 1984. On the same date, August 16, 1984, the Respondent opened an escrow account at the Sun Bank, account number 510-10764203. The Respondent maintained this account until at least November, 1986. The Respondent was the only signature on either account.
At no time from the time the deposits were made has the Respondent disbursed the funds to Mr. Rappaport, Mr. Bentley, Mr. Fyfe or the closing agent.
From the time the Respondent received the $1,000 and deposited it in her escrow account on March 13, 1984, to July 11, 1984, the date she deposited the additional $4,000, her escrow account balance fell below $1,000 three (3) times as follows:
Date | Balance |
May 1, 1984 | $ 12.49 |
June 22, 1984 | $ 0.00 |
June 29, 1984 | $310.49 |
From the time the Respondent received the additional $4,000 deposit and deposited it in her escrow account on July 11, 1984, (making the total deposit $5,000), her escrow account balance fell below $5,000 on July 19, 1984, and did not again reach a minimum balance of $5,000 until August 6, 1985, and promptly fell below the $5,000 level as of September 16, 1985. The following are examples of some of the Respondent's bank balances after July 11, 1984:
Date | Balance |
|
July 25, 1984 | $2470.49 |
July 30, 1984 | $ 770.49 |
August 1, 1984 | $ 3.33 | overdraft |
August 15, 1984 | $1069.33 | overdraft |
September 26, 1984 | $ 351.08 |
|
October 5, 1984 | $ 451.08 |
|
November 30, 1984 | $ 251.08 |
|
December 20, 1984 | $ 98.88 |
|
January 31, 1985 | $ 398.88 |
|
February 26 to |
|
|
March 26, 1985 (time period of 1st |
|
|
closing) | $ 450.10 |
April 30, 1985 | $ 450.10 |
May 17, 1985 | $ 5.10 |
June 28 to July |
|
31, 1985 (time |
|
period of 2nd |
|
closing) | $ 5.10 |
The Respondent maintained, both in the court pleadings and in correspondence through her attorney, Gerald Nelson, to Department of Professional Regulation Investigator, Edward Shea, that the $5,000 consistently was maintained in her escrow account. These representations were, and are, false.
B. The Prior Offense. 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 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.
While filling out the loan application at Norwest, Helen Anderson learned that the Veterans Administration allowed applicants to apply for loans equal to 100 percent 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." 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 percent 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 percent financing, and that the sellers would be required to pay more discount points at closing.
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.
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.
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 the 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.
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 her a form for requesting an escrow disbursement order 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.
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 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.
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 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.
On or about April 2, 1985, an Administrative Complaint, Case No. 0049958, was filed against the Respondent on the matters set out in paragraphs
18 through 25, above. The matter was referred to the Division of Administrative Hearings (DOAH Case No. 85-1319) where it proceeded to a formal hearing on July 25, 1985. A Recommended Order was issued on September 5, 1985, finding the Respondent guilty of failing to maintain the $500 deposit in her escrow account and guilty of misrepresentation, concealment, false promises and breach of trust in a business transaction. The Hearing Officer recommended a penalty of ninety
(90) days suspension and a fine of $500. On October 2, 1985, the Florida Real Estate Commission adopted the Recommended Order without change. The matter was appealed to the Second District Court of Appeal which, on June 4, 1986, affirmed the decision of the Commission.
CONCLUSIONS OF LAW
Section 475.25(1), Florida statutes (1985), provides that the Florida Real Estate Commission may suspend a license for a period not exceeding 10 years, revoke a real estate license, impose an administrative fine not to exceed
$1,000 for each count or separate offense or issue a reprimand, or any or all of the foregoing, if it finds a licensee:
(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;
(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 is properly authorized;
(o) Has been found guilty, for a second time, of any misconduct that warrants his suspension or has been found guilty of
a course of conduct or practices which show that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of
investors, or those with whom he may sustain a confidential relation, may not safely
be entrusted to him[.]
The evidence establishes that Respondent, in her capacity as a broker and escrow agent, received a $1,000 deposit and a $4,000 deposit, both pursuant to the terms of the Fyfe Rappaport and Bentley contract, and the deposits were placed in her escrow account on March 13, 1984, and July 11, 1984, respectively. The property sale closed on March 15, 1985, and the loan closed July 25, 1985. At the July closing, the Respondent received her commission. However, at neither closing was the $5,000 deposit disbursed by Respondent.
The evidence further shows that at no time did the Respondent disburse the deposit to Messrs. Fyfe, Bentley or Rappaport. On October 20, 1985, the Respondent filed a civil court action to determine who was entitled to the deposit. On November 19, 1986, the court determined the deposit rightfully belonged to Messrs. Bentley and Rappaport and, due to Respondent's actions and behavior in the transaction, she was to forfeit her commission.
The evidence proved that the Respondent failed to maintain the deposits in her escrow account from May 1, 1984, through the civil court action. To the contrary, her account balances dropped to negative balances on two occasions, with the largest overdraft being $1,069.33 on August 15, 1984.
To further aggravate the situation, the Respondent maintained through responsive pleadings in the court action and responses to the DPR Investigator that she was maintaining the funds in escrow when she in fact was not.
The evidence also shows that the Respondent has previously been disciplined by the Commission for failing to maintain a deposit in escrow on an unrelated transaction. Some of the escrow violations in this case occurred after an Administrative Complaint already had been filed on the other charges (although most occurred before).
As a real estate broker in Florida, the Respondent occupies a status under the law with recognized privileges and responsibilities. Zichlin v. Dill,
25 So.2d 4 (Fla. 1946); United Homes, Inc. v. Moss, 154 So.2d 351 (Fla. 2nd DCA 1963). Inasmuch as a real estate broker in Florida belongs to a privileged profession, the State has prescribed a high standard of qualifications. Zichlin, supra. "The law specifically requires that a person, in order to hold a real estate license, must make it appear that he is honest, truthful, trustworthy, of good character and that he bears a good reputation for fair dealing." McKnight v. Florida Real Estate Commission, 209 So.2d 199 (Fla. 2nd DCA 1967). Anyone who deals with a licensed broker should be able to assume he is dealing with an honest and ethical person. Shelton v. Florida Real Estate Commission, 120 So.2d 191 (Fla. 2d 1960).
In this case, Respondent's violations are not merely technical infractions of minor importance but rather go to the central theme of professional licensure in the State of Florida. The Respondent has failed to live up to the standards expected of and required of a licensed real estate broker.
On the facts of this case, the Respondent is guilty of misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes (1985), and is guilty of failing to maintain a deposit in escrow in violation of Section 475.25(1)(k), Florida Statutes (1985). By reason of these and past offenses, Respondent is guilty of a course of conduct which shows that she is so incompetent, negligent, dishonest, or untruthful, that money may not safely be entrusted to her, in violation of Section 475.25(1)(o), Florida Statutes (1985).
Based on the foregoing Findings Of Fact and Conclusions Of Law, it is RECOMMENDED that the Florida Real Estate Commission enter a final order
revoking the license of Respondent, Annette J. Ruffin, to be a real estate
broker.
RECOMMENDED this 27th day of May, 1987, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 27th day of May, 1987.
1/ Rulings on the parties' proposed findings of fact can be found in the Appendix To Recommended Order, Case No. 86-3980, attached.
2/ Findings 18 through 25 are verbatim from the Final Order, Department of Professional Regulation v. Ruffin, DOAH Case No. 85-1319, 8 F.A.L.R. 2220 (FREC 1985).
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3980
To comply with Section 120.59(2), Florida Statutes (1985), the following rulings are made on the parties' proposed findings of fact:
All of Petitioner's, Proposed Findings Of Fact are accepted and incorporated.
Respondent filed no proposed findings of fact.
James R. Mitchell, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32802
Gerald W. Nelson, Esquire 4830 West Kennedy Blvd.
Joseph A. Sole, Esquire General Counsel
