STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 89-1608

) LONNIE A. FITTON, THOMAS J. ) TWITTY,JR., and TWITTY & )

COMPANY, LTD. )

)

Respondents. )

)

RECOMMENDED ORDER

A hearing was held in this case in St. Petersburg, Florida on February 20, 1991, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

DPR - Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

For Respondent: Daniel J. Grieco, II, Esquire Fitton 19139 Gulf Blvd.

Indian Shores, Florida 34635

For Respondent: Dominic E. Amadio, Esquire Twitty, and 100 34th Street North Twitty & Co. Suite 305

St. Petersburg, Florida 33713 STATEMENT OF THE ISSUES

The issue for consideration in this matter is whether the Respondents' licenses as registered real estate salesman, broker, and brokerage company, respectively, should be disciplined because of the misconduct alleged in the Administrative Complaint filed herein.

PRELIMINARY STATEMENT

By Administrative Complaint dated February 22, 1989, Fred Wilsen, for Larry Gonzalez, then Secretary of the Department of Professional Regulation, (Department), sought to discipline the Respondent's licenses as noted above, alleging that all three parties, jointly and individually, were guilty of fraud

and concealment, among other things, in violation of Section 475.25(1)(b), Florida Statutes. On March 1 and 15, 1989, the Respondents, Twitty and Fitton respectively, disputed the allegations contained in the Complaint and requested formal hearing. On March 23, 1989, the file was forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer. By Notice of Hearing dated April 26, 1989, Hearing Officer Donald R. Alexander set the case for hearing on June 27, 1989 in St. Petersburg. However, after six motions to continue filed by the parties hereto were granted, on January 29, 1991, H.O. Alexander entered an Order setting the case for hearing on February 20, 1991, at which time it was held, as set, by the undersigned to whom it had been transferred in the interim.

At the hearing, Petitioner presented the testimony of P. David Harclarode, a licensed real estate broker; Yvonne L. Renshaw, purchaser and co-owner of the property in question; and Diane T. Booth, a real estate sales person.

Petitioner also introduced Petitioner's Exhibits 1 through 11. Both Fitton and Twitty testified in their own behalf and presented the testimony of Irene R. Rondeau and Robert M. Schmidt both Realtor/brokers. Respondent Fitton introduced Respondent's Exhibit A.

No transcript was provided. All parties submitted proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the allegations herein, the Petitioner, Division of Real Estate, (Division), was the state agency responsible for the regulation of the real estate profession in Florida.

   
   

2. At the same time, Respondent, Thomas Twitty, Jr. was a licensed real estate broker in Florida, operating under license number 0090569, and was broker for the Respondent, Twitty and Company, Ltd., which operates under license number 0211681 at 13090 B. Starkey Road, Largo, Florida. Respondent, Lonnie A. Fitton, was a licensed real estate salesman under license number 0442127.

   
   

3. On March 12, 1985, while employed as a salesman with Twitty & Company, Ltd., Fitton solicited and obtained from James L. Schneider a sales listing for Schneider's house located at 1316 Kennywood, Largo, Florida. The listed sales price was $129,500.00.

   
   

4. Mr. Schneider had purchased the property, along with another individual no longer involved, Mr. Daly, from Pioneer Federal Savings and Loan Association in December, 1984 for $50,000.00 in a distress sale. The property had been occupied but was abandoned, and Pioneer, which had held the mortgage on it, gained title in a foreclosure action. When Schneider purchased the house, it was in poor condition. The walls and cement slabs on which it rested were severely cracked in numerous places. The foundation, pool decking, and decorative block walls were severely cracked, and it was determined that this condition was due to an abnormal settling and subsidence of the ground on which the house had been constructed. This settling caused and continues to cause door and window frames to fall out of square resulting in a poor fit and, in many cases, large gaps and along the window and door parameters.

   
   

5. After Mr. Schneider purchased the property, Fitton, along with Fitton's father, both of whom resided next door to the property in question, assisted Mr. Schneider in making repairs to the property. Cracks were filled in with cement, plaster and caulking, and the property was painted which covered up the

   filled in cracks and gaps which had existed. When the repairs were completed, the property was put on the market with Fitton securing the listing. There is little evidence as to how the repairs were made to the property other than that the cracks were filled and painted. No effort was made to correct the soil conditions which underlay the problem. No evidence was produced to indicate whether the corrective actions taken by Mr. Schneider, along with the Fittons, was appropriate to correct problem causing the cracks or if filling was the appropriate method of correction. Also, it was not clearly established how much and of what nature the work was accomplished by Respondent, Fitton. Whereas he indicates his participation was limited to only carrying away trash and debris, Ms. Renshaw indicates he was actively engaged in actual repair work. Whatever the actual work involvement, it is clear that he knew of the condition of the house and was familiar with the steps taken to correct the deficiencies.

   
   

6. In May, 1985, Yvonne L. and Lorraine Renshaw, sisters, were shown the property by Diane Y. Palcelli (Booth), a salesperson employed by a different realty company. The Renshaws made an initial offer of $96,000.00, and Ms. Palcelli transmitted the offer, through Fitton, (and Twitty & Co.), to Mr. Schneider who resided out of state. A series of proposals by both sides followed and ultimately, on June 1, 1985, the parties agreed upon a sales price of $106,000.00.

   
   

7. After the sales price had been agreed upon and the contract for sale signed, during the interim period leading up to closing, which was held in late July, 1985, the Renshaws, along with their agent and friends, visited the property on numerous occasions even going so far as to commence decorative work to fix it up to their tastes. Also during this period, Fitton, who had done some work on the repairs to the property, advised his broker, Twitty, that there had been defects in the property and asked if it was necessary to disclose this. Mr. Twitty, who himself had, at this point, not seen the property, asked if the defects had been corrected, and when told that they had been, advised Fitton it was not necessary to make any further disclosure.

   
   

8. During the course of their repeated visits to the property, the Renshaws noted some minor cracking which they brought to Fitton's and Daly's attention. Fitton mentioned this to Twitty who suggested they have someone out to look at them. Someone was called, reportedly an engineer, who looked at the cracks and agreed to fix them. Daly indicated insurance would cover the repairs and agreed to have the cracks repaired. They were. Ms. Palcelli, (Booth), also advised the Renshaws to have the property examined by their own expert to insure it was structurally sound. The Renshaws did not do this.

   
   

9. The sale was closed on July 23, 1985 for the $106,000.00 purchase price and both Fitton and Twitty & Co. received their respective shares of the commission.

   
   

10. Several months after the closing, the Renshaws noticed cracks beginning to open in the walls of the house and between the pool deck and the house wall. They contacted Ms. Palcelli, (Booth) who examined the property and then tried to contact Fitton. Both Fitton and Twitty disclaimed any responsibility for the damage.

    
    

11. Thereafter, the Renshaws filed suit against Schneider, Daly, Fitton, Twitty and Twitty & Company in Circuit Court in Pinellas County alleging one Count of fraud and one Count of grand theft. On February 22, 1991, the Court entered its Order granting Defendants', (Respondents') Motion to Dismiss the Count alleging grand theft, but denied a similar motion relating to the fraud

    Count. That same date, the Court entered a Final Judgement concluding that the knowing representation the property was in "excellent" condition when they knew it was not, in an anticipation of making a profit on the sale, constituted fraud. Twitty was faulted for not having inquired of Fitton, his "novice employee", more thoroughly before advising him no disclosure to the buyers was necessary. Fitton is faulted by the Court for having:

    
    

    ... intentionally, knowingly and fraudulently misrepresented to the [Renshaws] the high quality, excellent condition and good value

    of the property, intending that the [Renshaws] would rely on those representations; [they] hid the true condition of the property from the [Renshaws] and induced them to make the purchase, believing that they were purchasing

    a quality property worth the price being asked.

    
    

12. The Court also concluded that the [Respondents] were obligated to disclose to the [Renshaws] the information and knowledge which they had regarding the cracking and repairs. Fitton has moved for a rehearing on the basis that the property was described as excellent on the listing sheet by Mr. Schneider, not by him. However, he was obviously aware of the condition of the property from his frequent visits to the site while it was being readied for sale. In addition, the Judgement has now been appealed to the Second District Court of Appeals by Twitty and Twitty & Company, Ltd..

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

14. In the three Counts of the Administrative Complaint, differentiated only by identity, the Respondents are alleged 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, in violation of Section 475.25(1)(b), Florida Statutes.

    
    

15. The burden of proof is on the Petitioner to establish the guilt of each Respondent by clear and convincing evidence, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

16. The evidence of record is clear that Fitton, regardless of his degree of participation in the actual repair work, as a next door neighbor to the property and a continuing observer of its deterioration and subsequent renaissance through the efforts of his father and Messers. Schneider and Daly, was fully aware of the property's defects and the actions taken to repair or conceal them. Petitioner failed to present evidence on the issue of whether the repair efforts were bona fide attempts to restore the property or mere cosmetic subterfuge to entice an unknowing buyer. No evidence was presented as to what would constitute proper repair of this house in this condition.

    
    

17. It is also clear that the cracks in the walls and deck were filled and the structure subsequently painted. It is equally clear that Mr. Schneider and Fitton were aware of the real problem, the conditions within the soil on which the property was constructed, and that nothing was done to correct it. It is without question they knew, or should have known, that without correction of the

    underlying problem, the concealed damage would reoccur. Therefore, when Fitton listed the property for sale, even though the "excellent" description in the listing agreement was offered by Schneider, with the knowledge he had, he should have made some effort to disclose the prior difficulties or have declined the listing. He did not do so and he cannot be excused by the "advice" he received from Mr. Twitty that disclosure was not necessary. Clearly, he recognized the problem since he raised the subject with Twitty in the first place. His failure to disclose constitutes concealment at least.

    
    

18. As to Mr. Twitty, it is recognized, as his counsel notes in argument, he is a broker of long standing who oversees a large staff producing a substantial volume of business. No doubt this sale was not significant and it is not likely he would intentionally seek to conceal what he knew to be a serious flaw. However, when the situation was brought to his attention, he could not properly disregard the problem on the mere representation that the required corrections had been made. Having been warned, he should have insisted on disclosure with the further representation the flaws had been corrected if he so believed. His failure to do so; his total reliance on the representations of Mr. Fitton; and his cavalier dismissal of the problem constitutes, at best, culpable negligence.

    
    

19. It is impossible to separate the actions and culpability of Mr. Twitty from those of Twitty & Company, Ltd.

    
    

20. The Court has adjudicated the legal remedy the Renshaws have against these Respondents and that aspect is not here addressed. By the same token, the propriety of license discipline is not founded upon the Court's determination of fraud liability. The issues are separate and the conclusions regarding discipline have been based on an independent evaluation of the evidence of record in this action before the Division which clearly and convincingly supports such conclusions.

    
    

21. While it is clear that the Respondents are subject to discipline, the quantum of punishment is somewhat mitigated by several factors. Fitton was a new licensee. This listing was his first official action after being licensed. Though trained and successfully examined he was, nonetheless, inexperienced and most likely, overeager. Twitty's misconduct is more in the omission of care than in concealment or fraud. Further, it must also be considered that the Renshaws, having observed and reported some cracking prior to closing, were properly advised to have their own expert examine the property. Having been so advised, their failure to do so, while not justifying Respondents' misconduct, tends to somewhat mitigate the severity of the impact of that misconduct. Taken together, the evidence of record is this case does not support revocation of the license of any Respondent.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore recommended that a Final Order be entered herein providing that:

1. The salesman's license of Respondent, Lonnie A. Fitton, be reprimanded, and he be placed on probation, under such terms and conditions as may be stipulated by the Division, for a period of two years, and

   
   

2. The licenses of Respondents, Thomas J. Twitty, Jr. and Twitty & Co., Ltd., be reprimanded and they be placed on probation, under such terms and conditions as may be stipulated by the Division, for a period of six months.

RECOMMENDED this 21st day of March, 1991, in Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 21st day of March, 1991.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-1608

The following constitutes my specific rulings pursuant to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein.

COPIES FURNISHED:

Steven W. Johnson, Esquire DPR - Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Dominic E. Amadio, Esquire

100 34th Street North, Suite 305 St. Petersburg, Florida 33713

Daniel J. Grieco, Esquire 19139 Gulf Blvd.

Indian Shores, Florida 34635

Jack McRay General Counsel

Department of Professional Regulation

1940 North Monroe Street Tallahassee, Florida 32399-0792

Darlene Keller Division Director

Division of Real Estate

400 W. Robinson Street Post Office Box 1900 Orlando, Florida 32801

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should consult with the agency that will issue the final order in this case concerning their rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 89-001608

Orders for Case No: 89-001608