STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 88-1253

) ROBERT A. SEMPELL, VIRGINIA ) BLOISE and HOME SHOPPE, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on May 24, 1988, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondent: David D. Centola, Esquire Robert A. Sempell 125 Hypoluxo Road

Lantana, Florida 33462

For Respondents: No appearance Virginia Bloise

Home Shoppe, Inc.

BACKGROUND

In an eleven count administrative complaint filed on February 23, 1988, petitioner, Department of Professional Regulation, Division of Real Estate, charged that respondents, Robert A. Sempell, Virginia Bloise and Home Shoppe, Inc., all licensed as real estate brokers, had violated various provisions within Chapter 475, Florida Statutes (1987). 1/ In a somewhat complicated factual scenario, the complaint alleges that in February, 1984 Ilana Frank, then employed as a salesperson by Home Shoppe, Inc., solicited and obtained a contract from an interested purchaser (Morgan King) on certain property in Delray Beach, that King made a $1200 cash deposit in connection with his offer but was unable to obtain the additional $3800 needed for the total deposit, that Frank executed a promissory note and borrowed the $3800 from a third party (Alan Mentser) so that King could make the required deposit, that King later failed to fulfill his obligation under the contract, that Mentser then demanded a return of his money from Frank and respondent Sempell, that the seller also demanded the full $5000 as a forfeiture under the sales contract, that Mentser thereafter

obtained a judgment against Frank for the $3800 plus interest and costs, that in October, 1984 Sempell absconded with a part of Home Shoppe, Inc.'s escrowed deposits, that Bloise took over Home Shoppe, Inc. as its broker of record and utilized $3500 of the $5000 cash deposit for her own use, and that, to date, none of the monies have been repaid to Mentser or disbursed to the seller.

According to the complaint, the above conduct by respondents constituted a violation of Subsections 475.25(b), (d) and (k), Florida Statutes (1983).

Respondents disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes (1987). The matter was referred by petitioner to the Division of Administrative Hearings on March 21, 1988, with a request that a Hearing Officer be assigned to conduct a formal hearing. By notice of hearing dated April 8, 1988, the final hearing was scheduled on May 24, 1988, in West Palm Beach, Florida. On May 23, 1988, the case was transferred from Hearing Officer Joyous D. Parrish to the undersigned.

At final hearing, petitioner presented the testimony of Ilana Frank, Charles Ranson Kirby, Alan David Mentser, Douglas K. Rill, S. Tenney McGraw, Kirk E. Friedland and Grant J. Bartels. It also offered petitioner's exhibits 1-3, 5, 7-10 and 12. All exhibits were received in evidence.

The transcript of hearing was filed on June 29, 1988. Proposed findings of fact and conclusions of law were filed by petitioner on July 15, 1988. 2/ A ruling on each proposed finding is made in the Appendix attached to this Recommended Order.

The issue is whether respondents' real estate broker licenses should be disciplined for the reasons 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, Robert A. Sempell, was a licensed real estate broker having been issued license number 02178232 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). Respondent, Virginia Bloise, was also a licensed real estate broker having been issued license number 0376974. Respondent, Home Shoppe, Inc., is a corporation registered as a broker having been issued license number 0229887. When the events herein occurred, the firm was located at 2610 North Federal Highway, Boynton Beach, Florida. Sempell operated as qualifying broker for Home Shoppe, Inc., from November 14, 1983, until October 12, 1984, Bloise was a salesperson with the same firm from July 9, 1984, until October 18, 1984, when she assumed the position of broker of record. Ilana Frank was the firm's only licensed salesperson, and she worked for the firm from 1983 until around January, 1986.

   
   

2. In February, 1984, Frank represented Morgan King, an individual interested in purchasing a home located at 502 Northeast Second Street, Delray Beach, Florida. The property was listed with Douglas Rill and Associates, Inc., a West Palm Beach real estate firm. The home was owned by Joseph Michell, a Pratt-Whitney employee being transferred to Texas, and he had turned it over to TransAmerica Relocation Service, Inc. (TransAmerica), a firm that handled real estate sales for Pratt-Whitney employees who were relocating to other areas of the country.

3. Deciding to purchase the property, King executed a standard contract on February 20, 1984 to purchase the home for $125,000. The contract contained a clause providing that the purchase was contingent on King obtaining a Veterans Administration (VA) loan in the amount of $122,250 at a 12 1/2 percent interest rate. 3/ A closing date of May 20, 1984, was established by the parties. The contract provided further that King would make a $1,200 cash deposit and that, pursuant to an addendum executed on February 22, he could rent the house until closing at a rate of $628 per month. Finally, the contract required that King give an extra $3800 to be deposited in escrow before moving into house, and within 45 days after the contract was executed, to 'submits' an additional

   $3,000. The addendum provided, however, that the $8,000 was "nonrefundable."

   
   

4. After King signed the original contract, he gave Frank a $1,200 deposit. Frank, who was not a signatory on the firm's escrow account, carried the money to Sempell who placed his signature on the contract as an acknowledgment of receipt of deposit. Whether the money was deposited into the firm's escrow account is not of record. In any event, King did not have the extra $3800 needed to satisfy the initial deposit requirements of the contract. To ensure that a closing could be held, Frank approached Alan D. Mentser, a real estate salesman with another firm, Bob Railey's Realty, Inc., and asked if he would loan King the money until the anticipated closing on March 30, 1984. 4/ Mentser agreed to do so with the understanding that the $3800 would be placed immediately in an escrow account until closing. When he loaned the money, Mentser was under the impression that the money would be held in the escrow account of Douglas Rill, the listing broker.

   
   

5. Because Mentser did not feel comfortable loaning the money to King, a person who he did not know, he required Frank to sign a promissory note on February 24, 1984 in the amount of $3800. At the same time, King signed an identical promissory note for $3800 payable to Frank. In addition, Frank orally agreed with Mentser that, for the use of his $3800 until March 30, 1984, she would pay him $1200 interest, or a handsome thirty percent return on his money. The $1200 was to be taken out of Frank's portion of the broker commission split. However, Mentser recognized that he was not a participating broker or salesman in the transaction and had no formal claim to the escrowed money in a realtor capacity. Indeed, the loan to Frank was personal in nature, and although Mentser intended it to be used as a part of the deposit, it was not considered a part of the real estate transaction.

   
   

6. On February 24, Mentser gave Frank $3800 in cash which she promptly gave to Bloise the same day. Bloise was a signatory on the firm's trust account and had authority to make deposits and disbursements. After Bloise prepared a deposit receipt, Frank used $300 of the $3800 to purchase renter's insurance for King and deposited the remaining $3500 in Home Shoppe, Inc.'s escrow account at the Bank of South Palm Beaches in Lantana. The $300 deduction was made pursuant to an agreement by all parties.

   
   

7. After King took possession of the property, he failed to qualify for a VA loan. Sometime later, he moved out of the house with no notice to the realtors or seller and gave no forwarding address. His whereabouts are unknown. TransAmerica later instituted eviction proceedings in order to legally take possession of the property. A final judgment of eviction was obtained on July 6, 1984.

   
   

8. By now March 30, 1984, had come and gone and Mentser was eager to get his money. He initially contacted Frank but learned something had gone awry with the contract. When his informal requests to Frank were unsuccessful,

   Mentser engaged the services of an attorney who wrote a certified letter on May

   4 to Sempell demanding a refund of his money from the firm's escrow account. After the letter was returned three times, the attorney had the letter hand- delivered to the firm's address where Frank signed for it. There is no evidence that Sempell was given the letter.

   
   

9. After Mentser contacted Frank about his money, Frank spoke to Bloise on several occasions concerning Mentser's inquiry. The dates of these conversations are not of record. In any event, Bloise told her that a "dispute" had arisen over the escrow deposit and until it was resolved by the Division, Mentser could not get his money. This was not true since Bloise never turned the matter over to the Division for resolution. On July 12, 1984, the seller made a formal claim for the full deposit on the ground King had breached the contract and forfeited the deposit. Although there is no specific evidence as to the disposition of the claim, it may be reasonably inferred that TransAmerica's claim has not been honored.

   
   

10. On August 6, 1984, Mentser obtained a default judgment against Frank in circuit court and was awarded $3800 in damages, prejudgment interest of $160, attorney fees of $300, and fees and costs of $50, or a total of $4310. He wisely did not request that he also be awarded the $1200 interest for the use of his money. The judgment has never been satisfied.

    
    

11. Sempell went "out of the country" sometime in 1984 and was absent for much of the year. There is no evidence he received any demands for Mentser's money before he resigned as broker of record nor is there evidence that he was a signatory on Home Shoppe, Inc.'s escrow account. Indeed, the president of the bank in which the firm's escrow account was placed knew only that Bloise was a signatory on the account. Further, copies of cancelled checks written on the account and introduced into evidence reflected only Bloise's signature. The allegation that in October, 1984, Sempell absconded with certain funds from the firm's escrow account was not addressed at hearing and has been disregarded.

    
    

12. Partial bank records of the firm's escrow account reflect that the

    $3500 was properly deposited into the account on February 27, 1984. As of December 28, 1984, the balance in the account had dropped to $1,688.98, which meant at least a part of the deposit had been spent for other purposes. Whether these expenditures occurred before or after Sempell resigned as broker of record is unclear. In any event, Bloise acknowledged to a Division investigator in May, 1987, that she had written a number of checks on the account for her own use. She justified this action by explaining that Frank had told her that the

    $3800 was their "own" money and could be spent "to run the business." Bloise also confirmed that, when this controversy arose, she was the only signatory on the firm's account and that Sempell had no authority to write checks or make disbursements.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

    
    

14. Because respondents' professional licenses are at risk, petitioner is obliged to prove its charges by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

15. Remaining at issue in this cause are Counts III-XI. In brief, they allege that (a) Sempell is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction [s. 475.25(1)(b)], failing to account and deliver a deposit [s. 475.25(1)(d)], and failing to maintain trust funds in the firm's trust account [s. 475.25(1)(k)] (Counts III, IV and V), (b) Bloise is guilty of the same conduct (Counts VI, VII and VIII), and (c) Home Shoppe, Inc., has likewise violated the same statutes (Counts IX, X and XI). The charges will be examined separately.

    
    

16. Preliminarily, a brief comment regarding the $3800 loan and the right of Mentser to make a claim on the escrowed funds is appropriate. The loan between Mentser and Frank was personal in nature and was not a part of the King- TransAmerica transaction. Indeed, the contract makes no mention of Mentser or the source of the $3800 deposit. This being so, and contrary to the conclusionary allegations in the complaint, Mentser had no right to demand that Home Shoppe, Inc. or its broker make repayment from the escrowed funds. If Mentser had collected any money directly from the funds, he would have violated Subsection 475.42(1)(d), Florida Statutes (1987), which prohibits a salesman from receiving any money from a real estate transaction except in the name of and with the consent of his employer. Mentser's only recourse appears to be against the signer of the unsecured note (Frank). Next, since the addendum provided that the $5000 deposit was nonrefundable, only the seller had a right to make a demand for the deposit in the event King failed to perform under the contract. Therefore, Home Shoppe, Inc. had a duty to disburse the funds to TransAmerica (but not Mentser).

    
    

17. As to respondent Sempell, there is no evidence that he actively participated in the King-TransAmerica transaction. It is true that he acknowledged receiving the initial $1200 deposit from King by placing his signature on the contract, but the record does not disclose any further participation in or knowledge of the matter. Further, there is no evidence that Sempell was a signatory on the firm's trust account or had authority to make a disbursement. Indeed, Bloise's admission corroborates the fact that Sempell had no dealings with the escrow account. Finally, there is no evidence that Sempell was made aware of the demands of either Mentser or the seller. Under these circumstances, if any guilt is to be ascribed to Sempell, it can be done only by imputing to him as broker of record the acts of other employees. Since a broker of record must accept responsibility for the acts of his employees, the illicit conduct of Bloise may be imputed to Sempell. This is true even though he absented himself from the state until his resignation as broker in October, 1984, and had no knowledge of the events. Cf. Alles v. Department of Professional Regulation, Construction Industry Licensing Board, 423 So.2d 624 (Fla. 5th DCA 1982)(qualifying agent-contractor assumes responsibility for all work performed by contracting company).

    
    

18. As to Bloise, who was the only person authorized to make deposits into and disbursements from the escrow account, she should have responded to the TransAmerica demand. By not doing so, she violated Subsection 475.25(1)(d) by failing to deliver a deposit. Further, since she acknowledged to an investigator that she wrote checks on the trust account for her own use, she violated Subsection 475.25(1)(k), Florida Statutes (1983). Finally, her conduct equates to a breach of trust in a business transaction as proscribed by Subsection 475.25(1)(b), Florida Statutes (1983). Therefore, to this extent, Counts VI, VII and VIII have been sustained.

19. Because of Bloise's illicit activities, the same charges must lie against Sempell since he is responsible for her conduct until he resigned as broker of record on October 14, 1984. Therefore, Counts III, IV and a part of V have been proven. Finally, Home Shoppe, Inc., as the corporate broker, bears the same guilt as does its broker of record since Bloise, Sempell and Home Shoppe, Inc. were essentially one and the same. Accordingly, Home Shoppe, Inc. Is guilty of the same conduct as Bloise and Sempell, and it is concluded that the charges in Counts IX, X and a part of XI have been sustained.

    
    

20. Guidelines for determining penalties are set forth in Rule 21V-24.001, Florida Administrative Code (1987). The suggested penalties for violating Subsections 475.25(1)(b) and (k) are as follows:

    
    

    475.25(1)(b) - up to 5 years suspension or

    revocation

    475.25(1)(d) - up to 5 years suspension 475.25(1)(k) - up to 2 years suspension

    
    

    Deviation from these guidelines is authorized if there are "mitigating or aggravating circumstances." In the case at bar, no mitigating or aggravating evidence was offered as to Bloise and Home Shoppe, Inc. while Sempell's absence from the state when the illicit conduct occurred militates in his favor.

    
    

21. As to Bloise and Home Shoppe, Inc., both violated each of the foregoing statutes, and their broker licenses should be suspended for five years. In view of Sempell's lack of direct knowledge of this affair, his license should be suspended for one year.

    
    

22. Exhibit 10, which is an affidavit of Willa A. Fearrington, was conditionally received into evidence subject to petitioner identifying those portions of the record that the affidavit supplemented or explained. Because petitioner did not do this, the entire exhibit has been disregarded.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondents be found guilty of violating Subsections

475.25(1)(b), (d) and (k), Florida Statutes (1983), and that the broker licenses

of Bloise and Home Shoppe, Inc. be suspended for five years. Sempell's broker license should be suspended for one year.

DONE AND ORDERED this 20th day of July, 1988, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of July, 1988.

ENDNOTES

1/ Ilana Frank, a licensed salesperson, was also named as a respondent in this cause. However, at the outset of the hearing, petitioner's counsel announced that Frank had entered into a settlement agreement which would be presented to the Division for approval. He accordingly requested that the action against Frank (which included Counts I and II) be held in abeyance pending approval of the agreement. Accordingly, jurisdiction is relinquished to the Division as to respondent Frank, and Counts I and II are no longer in issue.

2/ Proposed orders were due no later than July 14, 1988. Despite petitioner's untimeliness, its proposed order has been considered.

3/ The copy of the contract offered in evidence appears to reflect a mortgage requirement of $122,250. The actual number is not clearly legible since it has been changed at least once by the buyer. Further, it does not square with the

$125,000 purchase price since King was also required to give an initial $5000 deposit. The ambiguity was not clarified at hearing.

4/ This date conflicts with the May 20, 1984 closing date reflected on the contract.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-1253

Petitioner:

1. Covered in finding of fact 1.

2. Covered in finding of fact 2.

3-4. Covered in finding of fact 4.

1. Covered in finding of fact 7.

2. Covered in finding of fact 8 to the extent it is consistent with the evidence.

3. Rejected since there is no evidence that Sempell personally received the demand letters.

4. Covered in finding of fact 10.

5. Partially covered in findings of fact 1 and 11. The remainder has been rejected since there was no evidence that Sempell absconded with a cash deposit.

6. Covered in finding of fact 12.

7. Covered in findings of fact 9 and 10.

COPIES FURNISHED:

Steven W. Johnson, Esquire Post Office Box 1900 Orlando, Florida 32802

David D. Centola, Esquire

125 Hypoluxo Road Lantana, Florida 33462

Ms. Virginia Bloise Home Shoppe, Inc.

8438 Linden Way

Lake Worth, Florida 33467

Ms. Darlene F. Keller Executive Director Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

William O'Neil, III, Esquire General Counsel

130 North Monroe Street Tallahassee, Florida 32399-0750

Docket for Case No: 88-001253

Orders for Case No: 88-001253