STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 88-3758

)

NEVIN H. NORDAL, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Shalimar, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on January 19, 1989. The parties are represented as follows:

For Petitioner: James H. Gillis, Esquire

Senior Attorney

Department of Professional Regulation

400 West Robinson Post Office Box 1900

Orlando, Florida 32802

For Respondent: Mary Polson, Esquire

COTTON, WESLEY, POSCHE & GATES

3 Plew Avenue

Shalimar, Florida 32579

The issue addressed in this proceeding is whether Respondent is guilty of having failed to account and deliver to any person at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, a deposit, draft or other document or thing of value, which has come into his hands and which is not his property or which he is not in law or equity entitled to retain under the circumstances.

At hearing Petitioner introduced ten (10) exhibits, and called three (3) witnesses who were cross-examined by the Respondent. Respondent testified in his own behalf and did not introduce any exhibits.

The Petitioner and Respondent filed their proposed recommended orders on February 13, 1989 and February 27, 1989, respectively. The parties proposed findings of fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cumulative or subordinate. Specific rulings on the parties proposed findings of fact are contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Respondent is now and was at all times material to this action a licensed real estate broker in the State of Florida, holding license number 0064475. Respondent operated his own real estate brokerage firm under his license. The firm was located in Niceville, Florida. In addition to his real estate brokerage business Respondent maintained and managed his personal real estate investments. Several of these personal investments included rental property which Respondent would later sell. One such piece of property was located at 104 Perdido Circle, Niceville, Florida, and is the property involved in this action.

   
   

2. Prior to July 6, 1985, the Respondent, as seller and not as a broker, advertised for sale the Perdido property. Sometime around July 6, 1985, Robert

   L. Mitchell and June F. Mitchell looked at the Perdido property. Frank Ray, a salesman for John Brooks Realty, an unrelated real estate firm showed the property to the Mitchells. They liked the property and wanted to buy it.

   
   

3. Frank Ray made arrangements for himself and the Mitchells to meet with Respondent in order to discuss the terms of the potential purchase contract. They met on July 6, 1985. The meeting lasted approximately an hour to an hour and a half. During the lengthy meeting Respondent went over the purchase terms contained in the contract of sale. The Mitchells main concern was to have immediate occupancy of the house. Special terms were developed for renting the property.

   
   

4. At some point during the meeting the down payment came under discussion. Originally, the Mitchells had planned on a $1500 down payment which was acceptable to Respondent. However, as the meeting progressed the Mitchells decided they would like to reduce the amount of the down payment. Respondent informed the Mitchells that the only way he could decrease the $1500 down payment was to make the money a non-refundable option payment. Respondent then marked out the $1500 down payment figure contained in the purchase contract and inserted a $1200 figure. Respondent concurrently added the language "option payment" next to the $1200 figure.

   
   

5. The remainder of the contract was discussed and the Mitchells signed the amended document. The Mitchells then wrote a check to Respondent, personally, in the amount of $1200. The note section of the check the Mitchells wrote contained the language "house down payment."

   
   

6. The exact discussion on the down payment/option is not clear. What is clear from the evidence is that neither party had a meeting of the minds over what the $1200 check was. The Mitchells being very inexperienced in real estate thought it was a down payment. Although it is doubtful the Mitchells understood the legal meaning of the term "down payment." Respondent thought it was a non- refundable option payment.

   
   

7. Absolutely no evidence of fraud or misrepresentation on the part of Respondent was demonstrated. Likewise, there was no evidence that Respondent in any way used his knowledge or expertise in the real estate market improperly.

   
   

8. The final result of the negotiations was that the Mitchells had entered into what on its face purports to be a rental contract with an option to buy. However, since there was no meeting of the minds over the option, the option was eventually unenforceable.

9. Since there was no meeting of the minds regarding the $1200 the money was not properly escrowable property. In essence the $1200 was neither a down payment nor an option payment. This lack of escrowability is borne out by the sales contract which calls for another escrow agent. 1/

   
   

10. The Mitchells took possession of the property for approximately three months. The Mitchells failed to obtain financing. The contract was conditioned upon the Mitchells obtaining financing, and the transaction failed to close. A dispute arose between the parties concerning the down payment/option money.

    
    

11. When the dispute could not be resolved by the parties, the Mitchells filed a lawsuit against Nevin H. Nordal demanding a refund of the $1200 "house down payment."

    
    

12. As a result of the Mitchell's lawsuit the County Court, in Okaloosa County, Florida, Summary Claims Division, by Amended Final Judgment dated January 20, 1987, awarded the sum of $1,028,87. The judgment figure is the balance of the $1200 after deduction of a counterclaim of $171.13 for cleaning the house after the Mitchells evacuated the property.

    
    

13. Additionally, the Respondent was required to pay costs in the sum of

    $57 for a total of $1,087.87 due the Mitchells. The judgment amount is bearing interest at a rate of 12 percent per annum.

    
    

14. The County Court judgment contains no findings of fact as to the Judge's reasoning on the judgment award. The Mitchells have repeatedly demanded of the Respondent that he pay the judgment. He has repeatedly refused to pay the judgment. Respondent did account to the Mitchells for the money when he told them he had deposited the check and had spent the funds.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

16. Subsection 475.25(1), Florida Statutes provides that the Florida Real Estate Commission may suspend a license for a period not exceeding ten (10) years; revoke a real estate license; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and, may impose a reprimand or, any or all of the foregoing, if it finds that the licensee:

    
    

    1. Has failed to account or deliver to any person, including a licensee through this chapter, at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value, including a share of a real estate commission, or any secret or illegal profit or any divisible share or portion thereof, which has come into his hands and which is not his property or which he is not in law or equity entitled to retain

       under the circumstances. However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, which property he still maintains in his escrow or trust account, the licensee shall promptly notify the commission of such doubts or conflicting demands and shall promptly:

       1. Request the commission to issue an Escrow Disbursement Order to determine who is entitled to the escrowed property;

       2. With the consent of all parties, submit the matter to arbitration;

       3. By Interpleader or otherwise, seek adjudication of the matter by a court. If the licensee promptly employs one of the escape procedures contained herein, and if he abides by the order or judgment resulting therefrom, no administrative complaint may be filed against the licensee for failure to account, deliver, or maintain the escrowed property. (Emphasis supplied.)

          
          

17. Subsection 475.25(1)(d), Florida Statutes, the Subsection under which the Respondent is charged, only applies when escrowed property is involved. The term "escrowed property" as used in the statute governing the discipline of real estate licensees, refers to property placed with a stakeholder or third party not involved in the transaction itself. Fleischman v. Department of Professional Regulation, 441 So.2d 1121 (Fla. 3d DCA 1983), at page 1123. The

    $1200 at issue here was never escrowed property. The check was not given to the escrow agent nor demanded by that agent. The check was given personally to Respondent and as such was his property to deal with as he chose. The notation on the check does not change the check's character since it only reflects the Mitchells intent. Respondent, therefore, is not subject to discipline under this Subsection.

    
    

18. Moreover, Subsection 475.25(1)(d), Florida Statutes is not applicable in instances where a real estate broker is acting as the seller of his own real property unless the contract for sale establishes the seller/broker as the escrow agent. Clearly that is not the case here. Fleischman, supra.

    
    

19. More importantly, however, is the fact that contractual disputes may not be enforced by disciplinary action undertaken by a regulatory agency. Fleischman, supra.

    
    

20. The Fleischman decision involved a licensee and a potential lessee who were negotiating for a parcel of property owned by the licensee. The potential lessee gave Fleischman a security deposit. There was no agreement on the refundability of the deposit. Both parties ultimately claimed the deposit. The potential lessee complained to the Petitioner herein and the Florida Real Estate Commission instituted disciplinary proceedings. The Court of Appeals for the Third District, confronted with the issue of disciplinary proceedings arising out of a contractual dispute between the complaining witnesses and the Respondent licensee, opined:

    
    

    "It is well settled, on the one hand, that absent clear legislative authorization to the

    contrary, violation of mere contractual rights are concerns only for the courts and may not be enforced by disciplinary action undertaken by a regulatory agency like the real estate commission. Id. at 1122-1123."

    
    

21. The fact that the Mitchells have a judgment from a civil court does not change the above fact. The judgment simply awards a sum of money. It does not find that that sum was a down payment which should have been escrowed. 2/ Without such a finding the judgment is nothing more than a debt similar to any debt owed to a bank or Sears, etc. Refusal to pay such debts is not subject to discipline under Chapter 475.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is therefore

RECOMMENDED that the Administrative Complaint failed against Respondent, Nevin H. Nordal, be dismissed.

DONE and ENTERED this 4th day of March, 1989, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of March, 1989.

ENDNOTES

1/ The contract called for Brooks Realty to be the escrow agent of any down payment money. However, the Mitchells did not make the $1200 check to Brooks Realty, and Brooks Realty made no demand for the money.

2/ Such a fact is not supported by this record.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-3758

The findings of fact contained in paragraphs 2, 4, 7, 8 and 9 of Petitioner's proposed findings of fact are adopted in substance, insofar as material.

The findings of fact contained in paragraphs 1, 3, 6, 10, 11 and 12 of Petitioner's proposed findings of fact are subordinate.

The findings of fact contained in paragraph 5 of Petitioner's proposed findings of fact are adopted except for the monies characterization as a down payment.

The findings of fact contained in the first and second sentence of paragraph 13 of Petitioner's proposed findings of fact are adopted. The remainder of the paragraph was not shown by the evidence.

The findings of fact contained in paragraph 14 of Petitioner's proposed findings of fact are subordinate. However, Mr. Ray's testimony is not considered reliable due to his considerable loss of memory.

The findings of fact contained in paragraph 15 of Petitioner's findings of fact are immaterial.

* * *

The findings of fact contained in paragraph 1 of Respondent's proposed findings of fact were not shown by the evidence.

The findings of fact contained In paragraph 2 of Respondent's proposed findings of fact are subordinate.

The findings of fact contained in paragraph 3 of Respondent's proposed findings of fact are adopted in substance insofar as material.

COPIES FURNISHED:

James H. Gillis, Esquire Senior Attorney

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

Mary Polson, Esquire

COTTON, WESLEY, POSCHE & GATES

3 Plew Avenue

Shalimar, Florida 32579

Darlene F. Keller, Executive Director Division of Real Estate

Florida Real Estate Commission

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

Docket for Case No: 88-003758

Orders for Case No: 88-003758