STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 89-4699

)

BOBBIE G. SCHEFFER and )

RALPH ECOFF, )

)

Respondents. )

)

RECOMMENDED ORDER

This matter came on for hearing in Shalimar, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on September 28, 1990. 1/ The Division of Administrative Hearings received the transcript of proceedings on December 5, 1990.

The parties filed proposed recommended orders on November 10, 1990. The attached appendix addresses proposed findings of fact by number.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Post Office Box 1900 Orlando, Florida 32802-1900

For Respondent Michael T. Webster, Esquire Scheffer: Webster & Merritt

Post Office Box 873 Shalimar, Florida 32579

For Respondent

Ecoff: Ralph Ecoff, Pro Se PRELIMINARY STATEMENT

By administrative complaint dated August 18, 1989, petitioner alleged that respondent Scheffer "[a]t all times material . . . licensed and operating as qualifying broker for Rivard Realty, Inc." and respondent Ecoff "a licensed real estate salesman . . . provided a copy of MLS computer print out sheet pertaining to certain residential property . . . to Daniel H. and Dorothy M. Stacy . . . [to verify] that the house was eight years old and on a commercial sewer system", that respondent "Ecoff was the owner of the property and the listing salesman"; that the Stacys "entered into a contract to purchase the property . .

. relying upon the representations made by the [r]espondents"; that "Scheffer was the broker who handled the sale while Ralph S. Ecoff was licensed as a salesman in her employ"; that respondents "failed to disclose or point out to

the buyers the true age of the house being 14 years or that the house was actually on a septic system"; that "the buyers closed on the house believing the age of the house to be eight years old and having a commercial sewer system"; that respondent "Ecoff admitted knowing that the house was on a septic tank"; and that respondents are therefore both 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 Subsection 475.25(1)(b), Florida Statutes" and of "having placed or caused to be placed an advertisement which is false, deceptive or misleading in violation of Rule 21V-10.025," Florida Administrative Code.

After respondents executed election of rights forms disputing the administrative complaints' factual allegations and requesting a formal hearing, the Department of Professional Regulation referred the matter to the Division of Administrative Hearings for hearing, in accordance with Section 120.57(1)(b)3., Florida Statutes (1989).

FINDINGS OF FACT

1. At all pertinent times, respondent Bobbie G. Scheffer, who holds license No. 0073955, was a real estate broker for Rivard Realty, Inc. in Fort Walton Beach, Florida; and Ralph S. Ecoff was a licensed real estate salesman, employed by Rivard Realty, Inc. He holds license No. 0454969.

   
   

2. In the spring of 1988, another salesman in the employ of Rivard Realty, Inc., Wayne Thompson, obtained the listing for the three-bedroom, one-story house at 28 East Casa Loma Drive in Mary Esther, Florida, from its then corporate owner, Roman Acts, Inc. He received information about the property from a representative of the corporation.

   
   

3. Without verifying the information, Mr. Thompson entered it into a computer. Misled by the owner's representative, he reported the house's age as eight years. Respondent's Exhibit No. 7. In fact, the house had been built in 1974. Petitioner's Exhibit No. 4.

   
   

4. A public water supply serves the house, but a septic tank, not a public sewer, receives wastewater from the house. Aware of these matters, Mr. Thompson, when confronted with a blank on a form labelled "WATR/SEW", filled in "Pub. Wat." Respondent's Exhibit No. 7. No more than another letter or two could have been squeezed into the blank on the form displayed on a computer video terminal.

   
   

5. Respondent Ralph S. Ecoff saw the house in the course of showing it to prospective buyers, and decided to buy it himself. After a representative of Roman Acts, Inc. accepted his offer (but before the closing), Mr. Ecoff and a partner set about refurbishing the house.

   
   

6. Mr. Ecoff, a septuagenarian who bought the house with the intention of reselling it, finds computers intimidating. Still another real estate salesman in the employ of Rivard Realty, Inc., Steve Kehran, volunteered to enter a revised listing in the multiple listing service computer, to let it be known that the property was again for sale.

   
   

7. As instructed by Mr. Ecoff, Mr. Kehran raised the price and "changed the blurbage" (to read "EVERYTHING NEW AGAIN. COMPARES WITH NEW HOME. LOW INTEREST RATE," etc.) Petitioner's Exhibit No. 11. In keeping with Mr. Ecoff's instructions, Kehran relied on the superseded listing for other information

   about the house. That is why the age of the house was again inaccurately reported as eight years.

   
   

8. Extrapolating innocently but inaccurately from the earlier listing's "Pub. Wat.," Mr. Kehran assumed public sewers accompanied the public water supply and filled in the "WATER/SEW" blank with the abbreviation "Comm Sew." Petitioner's Exhibit No. 11. Mr. Ecoff had read the listing from which Mr. Kehran took the information but, he testified, he did not read it carefully. Whether he read over what Mr. Kehran wrote at any time before the Stacys complained of the inaccuracies is not clear.

   
   

9. Mr. Ecoff has said all along that he was aware the property had a septic tank. He testified to this effect at hearing and also testified that he was aware the house was more than eight years old when the Stacys agreed to buy it. If he had read the listing Mr. Kehran entered in the computer for him with proper care and due regard for the importance of its accuracy, he would have discovered the misinformation it contained.

   
   

10. Although Mr. Stacy had physical possession of a multiple listing sheet bearing the information Mr. Kehran introduced into the computer data bank at Mr. Ecoff's behest, while he and his wife drove around with Ms. Scheffer, looking at houses, and may well have read it at that time, the evidence did not show that either Ms. Scheffer or Mr. Ecoff reiterated the information verbally. (It was not clear whether Mr. Stacy retained the sheet Ms. Scheffer furnished him after seeing the house.)

    
    

11. Engaged by a mortgage company, an appraiser who was familiar with the neighborhood reported the true age of the house, but put its "effective age" at ten years, after two visits to the property. The appraiser's report, which recited inaccurately, as the listing had, that a public sewer served the property, was furnished to the mortgage company that financed the Stacys' purchase. Once the report reached the mortgage company, it was available to the Stacys, although they did not in fact see it, as far as the evidence showed, before the closing, which took place on August 24, 1988.

    
    

12. On or before January 1, 1991, Mr. and Mrs. Stacy will be required to cause pipe to be installed to connect the house to a public sewer main, itself yet to be laid. Mr. Stacy has been told the hook-up will cost $1,600.00 over and above the $600.00 it will cost to install the connector. Even so, the evidence did not establish that the house's dependence on a septic tank affected its market value in 1988. The evidence also failed to show that the house's age materially affected its value.

    
    

13. Ms. Scheffer encourages salespersons in her employ to take advantage of courses the local Board of Realtors offers, and scheduled Mr. Ecoff for every such course available. She has not personally instructed salespeople to verify information sellers give them by independent inspection. Perhaps because the practice of relying on sellers' representations is widespread, the multiple listing sheets all bear the disclaimer, "INFORMATION DEEMED RELIABLE, BUT NOT GUARANTEED."

    
    

14. The evidence did not show how carefully Ms. Scheffer read the inaccurate listing that salesmen in her employ generated, or that she would have been or should have been aware of the inaccuracies, however carefully she had examined the listing. Although Mr. Ecoff said he knew there was a septic tank on the property because the grass was so green in part of the backyard, Mr. Stacy testified that the septic tank is buried in front of the house. It was

    not proven that even an experienced real estate broker like Ms. Scheffer should necessarily infer an actual age of more than eight from an effective age of ten years. In short, the evidence did not clearly and convincingly demonstrate that respondent Scheffer actually knew or had reason to know the listing was inaccurate.

    
    

    CONCLUSIONS OF LAW

    
    

15. Since the Department of Professional Regulation referred respondent's hearing request to the Division of Administrative Hearings, in accordance with Section 120.57(1)(b)3., Florida Statutes (1989), "the division has jurisdiction over the formal proceeding." Section 120.57(1)(b)3., Florida Statutes (1989).

    
    

16. "The commission . . . may place a licensee . . . on probation, may suspend a license, . . . may revoke a license, . . . may impose an administrative fine . . . and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee . . . : (b) Has been guilty of . . . misrepresentation, concealment, false promises, false pretenses, dishonest dealing . . . culpable negligence, or breach of trust in any business transaction . . . ." Section 475.25, Florida Statutes (1989).

    
    

17. Strict procedural protections apply in disciplinary cases, and the prosecuting agency's burden is to prove its case clearly and convincingly. Ferris vs. Turlington, 510 So.2d 292 (Fla. 1987). See Addington vs. Texas, 441

    U.S. 426 (1979); Ferris vs. Austin, 487 So.2d 1163 (Fla. 5th DCA 1986);

    Anheuser-Busch, Inc. vs. Department of Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981); Walker vs. State Board of Optometry, 322 So.2d 612 (Fla. 3rd DCA 1975); Reid vs. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2nd DCA 1966). License revocation proceedings have been said to be "'penal' in nature." State ex rel. Vining vs. Florida Real Estate Commission, 281 So.2d 487, 491 (Fla. 1973); Kozerowitz vs. Florida Real Estate Commission, 289 So.2d 391 (Fla. 1974); Bach vs. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1979) (reh. den. 1980). A licensee's breach of duty justifies revocation only if the duty has a "substantial basis," Bowling vs. Department of Insurance, 394 So.2d 165, 173 (Fla. 1st DCA 1981) in the evidence, unless applicable statutes and rules create a clear duty, which the evidence shows has been breached.

    
    

18. By not reading carefully the multiple listing sheet he caused Mr. Kehran to produce, respondent Ecoff failed to discover misinformation about the house's age and sewage disposal system that eventually and foreseeably became the basis of misrepresentations to the buyers. Although petitioner did not prove that the market value depended on the house's age or mode of sewage disposal, the buyers now face substantial assessments. In this connection, Section 475.25(1)(b), Florida Statutes (1989) provides that it "is immaterial to the guilt of the licensee that the victim . . . of the misconduct has sustained no damage or loss . . . ." While petitioner did not clearly and convincingly prove intentional wrong doing, petitioner did carry its burden to show that respondent Ecoff was culpably negligent.

    
    

19. The evidence did not, however, establish that respondent Scheffer violated Section 475.25(1)(b), Florida Statutes (1989). Since Mr. Ecoff knew the house's age and knew about the septic tank, Ms. Scheffer's failure to instruct him or Mr. Thompson to verify information owners furnish them had no consequences for this particular "business transaction." Section 475.25, Florida Statutes (1989). Petitioner did not show that Ms. Scheffer overlooked anything in reading the multiple listing sheet. The evidence did not prove clearly and convincingly that the property's appearance or anything else put her on notice

that the listing sheet she furnished Mr. and Mrs. Stacy contained inaccurate information.

RECOMMENDATION

It is, in accordance with Rule 21V-18.008, Florida Administrative Code, recommended:

1. That petitioner suspend respondent Ecoff's license for thirty (30) days.

   
   

2. That petitioner dismiss the administrative complaint, insofar as it alleges that respondent Scheffer violated Section 475.25(1)(b), Florida Statutes (1989).

RECOMMENDED this 20th day of December, 1990, in Tallahassee, Florida.

ROBERT T. BENTON, II

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 20th day of December, 1990.

ENDNOTE

1/ The transcript misstates the Hearing Officer's name.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-4699

Petitioner's proposed findings of fact Nos. 1, 2, 3, 6, 7, 8, 9, and 10 have been adopted, in substance, insofar as material.

With respect to petitioner's proposed finding of fact No. 4, the information was entered in May.

With respect to petitioner's proposed finding of fact No. 5, Mr. Ecoff was aware of the septic tank and did not tell Kehran.

With respect to petitioner's proposed finding of fact No. 11, dishonesty was not proven.

Respondent's proposed findings of fact A through T, V through Z, BB, CL and EE have been adopted, in substance, insofar as material.

With respect to respondent's proposed finding of fact U, no verbal representation was proven.

With respect to respondent's proposed finding of fact AA, they had no direct input.

With respect to respondent's proposed finding of fact DD, it was not clear whether either the septic tank or the true age were apparent.

With respect to respondent's proposed findings of fact FF through HH are immaterial.

COPIES FURNISHED:

Darlene F. Keller Division Director Division of Real Estate

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

Kenneth E. Easley General Counsel

Department of Professional Regulation

1940 North Monroe Street Tallahassee, FL 32399-0792

James H. Gillis, Esquire Department of Professional

Regulation

400 West Robinson Street Post Office Box 1900 Orlando, FL 32802-1900

Michael T. Webster, Esquire Webster & Merritt

12 Old Ferry Road Post Office Box 873 Shalimar, FL 32579

Ralph S. Ecoff

7 Birch Studio Arm 201

Forth Walton Beach, FL 32458

Docket for Case No: 89-004699

Orders for Case No: 89-004699