STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 89-5591

)

ANNE E. CARR, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted before Daniel Manry, a duly designated Hearing Officer of the Division of Administrative Hearings on September 12, 1990, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Senior Attorney

Department of Professional Regulation Division of Real Estate

Hurston Building North Tower

400 West Robinson Street, Suite N-308 Post Office Box 1900

Orlando, Florida 32802-1900

For Respondent: Neil F. Garfield, Esquire

Garfield & Associates

3500 North State Road 7, Suite 333 Fort Lauderdale, Florida 33319

STATEMENT OF THE ISSUES

The ultimate issues for determination in this proceeding are whether: Respondent violated Section 475.25(1)(b), Florida Statutes, 1/ by misrepresentation, concealment, culpable negligence, or breach of trust; Respondent violated Section 475.25(1)(k) by failing to immediately deposit funds entrusted to her in her escrow or trust account; and, if Respondent violated either statute, or both, what disciplinary action should be taken against Respondent's real estate broker's license.

PRELIMINARY STATEMENT

Petitioner served Respondent with an Administrative Complaint on September 25, 1989. Respondent requested a formal hearing on or about October 10, 1989. The matter was referred to the Division of Administrative Hearings on October 12, 1989, for assignment of a hearing officer, and assigned to Hearing Officer

Michael Parrish on October 20, 1989. A formal hearing was scheduled for September 12, 1990, pursuant to an Order Rescheduling Formal Hearing entered on August 17, 1990. The matter was transferred to the undersigned prior to the formal hearing on September 12, 1990.

At the formal hearing, Petitioner presented the testimony of two witnesses, Mr. Roy P. Heinz, the proposed seller in the subject transaction, and Respondent. Petitioner presented seven exhibits for admission in evidence.

Petitioner's Exhibits 1,2, and 4-7 were admitted in evidence without objection. Petitioner's Exhibit 3 was admitted over objection. 2/ Respondent testified in her own behalf, called no witnesses, and presented no exhibits for admission in evidence.

A transcript of the record of the formal hearing was requested by Petitioner and filed with the undersigned on October 17, 1990. Proposed findings of fact and conclusions of law were originally due from the parties on October 27, 1990. The time for filing proposed findings of fact and conclusions of law was extended until November 5, 1990, in response to Petitioner's Motion for Extension of Time filed on October 29, 1990. Petitioner's proposed findings of fact and conclusions of law were timely filed on November 1, 1990.

Petitioner's proposed findings of fact are addressed in the Appendix to this Order.

Respondent filed a Motion to Keep Record Open and to Extend Time for Findings and Recommendations on October 29, 1990, for the purpose of taking the deposition of Peter J. Romano, the proposed purchaser in the subject transaction. Oral argument was heard by telephone conference on November 19, 1990. Respondent's motion was granted pursuant to an Order Granting Extension of Time entered on November 27, 1990.

The deposition of Mr. Romano had been previously set in a collateral civil case. A copy of the deposition was to be filed in this proceeding no later than November 30, 1990. Respondent was given until December 21, 1990, to file proposed findings of fact and conclusions of law. As of the date of this Recommended Order, Respondent has not filed proposed findings of fact and conclusions of law, nor has the deposition of Mr. Romano been filed.

FINDINGS OF FACT

1. Petitioner is the state licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida. Respondent is now and has been at all times material to this proceeding a licensed real estate broker in the state, holding license number 0406469. At all times material to this proceeding, Respondent was doing business in the name of Carr Real Estate, Inc., at 2351 N. Federal Highway, under license number 0257527.

   
   

2. Respondent was the selling agent in the proposed sale of a condominium unit known as Trafalgar of Highland Beach, Unit 1005. The listing agent was Barbara Perry of Merrill Lynch Realty. Unit 1005 was owned by Mr. and Mrs. Roy

   P. Heinz. Mr. and Mrs. Heinz had known Respondent for approximately two years, but had no previous real estate experience with Respondent. The prospective purchasers were Mr. and Mrs. Peter Romano who were visiting from the Boston area of Massachusetts. Condominiums in Trafalgar of Highland Beach generally required an unusually long time to be sold. The proposed sale of Unit 1005 occurred sometime within the first four or five weeks after it was listed with Merrill Lynch, but the sale was never consummated.

3. Respondent showed Unit 1005 to Mr. and Mrs. Romano on or before Saturday, November 19, 1988, and Mrs. Romano fell in love with it. Respondent telephoned Mr. Heinz sometime during Saturday evening to inform him that she had a potential buyer for Unit 1005. During several telephone conversations, Mr. Heinz and Respondent discussed the terms that would be acceptable to the sellers. Respondent made an appointment to present a written contract to Mr. and Mrs. Heinz in Unit 1005 Sunday morning at 9:30.

   
   

4. Respondent and Mr. Heinz originally planned for Respondent to present the contract to Mr. and Mrs. Heinz on Sunday and then be joined by the Romanos. Potential purchasers of condominiums at Trafalgar of Highland Beach were required by the bylaws of the condominium association to be interviewed and approved by a screening committee comprised of the board of directors of the condominium association. The Romanos planned to return to the Boston area on Monday, November 21, 1988. Mr. Heinz was a member of the board of directors and determined that he could convene a special meeting of the screening committee on Sunday to interview the Romanos. In addition, the Romanos wanted to see Unit 1005 again.

   
   

5. Respondent typed the contract at her office Sunday morning and took it to Mr. and Mrs. Romano's apartment for their signature before 9:30 a.m. The contract was for the sale and purchase of Unit 1005 at a purchase price of

   $480,000. Respondent and Merrill Lynch Realty were listed as co-brokers entitled to payment of a commission in accordance with the ". . . terms of an existing, separate listing agreement." The amount of deposit shown as held in escrow by Respondent was $20,000. An additional amount of $28,000 was required to be deposited in escrow no later than December 31, 1988.

   
   

6. The Romanos told Respondent they preferred to wait until they got to Unit 1005 before signing the contract or the check. The Romanos explained that there could be changes and that they had only one check with them. Respondent and the Romanos then joined Mr. and Mrs. Heinz at Unit 1005.

   
   

7. Before the contract was signed, Mrs. Heinz went downstairs and had the security guard call the condominium manager to obtain the form used by the screening committee for interviewing prospective purchasers. The manager told Mrs. Heinz that the form could not be obtained before there was a signed contract. Mrs. Heinz returned to Unit 1005 and informed Mr. Heinz of the requirement for a signed contract.

   
   

8. The parties signed the contract and Mr. Romano made and signed the deposit check for $20,000 on Sunday morning, November 20, 1988. 3/ The deposit check was made payable to "Carr Real Estate" but remained in Mr. Romano's check book and was not delivered to Respondent at that time.

   
   

9. Mr. Heinz left Unit 1005 with a signed copy of the contract and asked the president of the board of directors, Mr. Gray, to provide the form used in interviewing prospective purchasers and to arrange for a special meeting of the screening committee. In his own words, Mr. Heinz was " . . . not the best liked guy . . ." on the board of directors. He ". . . was young . . . and everybody else was old . . . ." In addition, Mr. Heinz and the president of the board of directors had ". . . locked horns a couple of times."

   
   

10. The president of the board of directors informed Mr. Heinz that there was a problem with the percentage of tile in Unit 1005. Unit 1005 was carpeted except for tile in the foyer, hallways, and kitchen. A resident on the floor

    below Unit 1005 had complained about the noise. The president further informed Mr. Heinz that the board of directors would inform the Romanos of the problem and that ". . . this could be a problem for you. "

    
    

11. Mr. Heinz returned to Unit 1005 and telephoned both his attorney and the developer of Trafalgar of Highland Beach. There were four ways to compute the ratio of tile to carpet in the condominiums. The percentage of tile in Unit 1005 was within permissible limits when the ratio of tile to carpet was computed using three of the four customary methods of computation. A fourth method of computation resulted in an impermissible percentage of tile in Unit 1005.

    
    

12. Mr. Heinz explained the situation to Mr. and Mrs. Romano. Mr. Heinz believed that carpeting the foyer would resolve the issue of the percentage of tile in Unit 1005 and offered to carpet the foyer with carpeting approved by the Romanos. The parties agreed that Mr. and Mrs. Heinz would provide the Romanos with a written statement that the issue of the tile in Unit 1005 would be resolved to the satisfaction of the Romanos prior to closing.

    
    

13. The Romanos left Unit 1005 without delivering the deposit check to Respondent. With the attention of the parties focused on discussions concerning the tile in Unit 1005 and the impending screening interview, the delivery of the deposit check was overlooked by Respondent and Mr. and Mrs. Heinz. A special meeting of the screening committee was convened, and the Romanos completed the screening interview on Sunday afternoon, November 20, 1988.

    
    

14. Mr. Heinz telephoned Respondent on Monday morning, November 21, 1988, to ask Respondent if she had collected the deposit check the previous day. Respondent informed Mr. Heinz that she had not and went immediately to see the Romanos at their apartment. Mr. Romano delivered the deposit check to Respondent with the understanding that everything was contingent upon the proper resolution of the issue concerning the tile in Unit 1005. Mr. Romano instructed Respondent not to deposit the check until he received the written statement promised to him by Mr. and Mrs. Heinz. Mr. Romano told Respondent that the check was not good anyway until he returned to the Boston area and transferred funds necessary to cover the deposit check. Mr. Romano then told Respondent that if she deposited the check before the issue of the tile was resolved he would stop payment on the check and sue her.

    
    

15. Respondent left the Romanos' apartment with the deposit check in hand. Respondent telephoned Mr. Heinz and informed him of the circumstances surrounding the delivery of the deposit check including the fact that the check was not good until Mr. Romano returned to the Boston area and transferred the funds necessary to cover the deposit check. Respondent also informed Mr. Heinz that Mr. Romano gave her the check with the understanding that the transaction was contingent upon receipt of the written statement promised to them by Mr. Heinz. Respondent then said, "Roy, I represent you. What do you want me to do? I'll do whatever you want me to do."

    
    

16. Mr. Heinz instructed Respondent to hold on to the deposit check until Wednesday, November 23, 1988, when he would provide Respondent with the written statement he had promised to the Romanos. On November 23, 1988, Mr. and Mrs. Heinz executed a written statement stating that the issue of the tile in Unit 1005 would be resolved by Mr. and Mrs. Heinz to the satisfaction of the Romanos. Mr. Heinz then delivered the written statement to Respondent by leaving it with the security guard on Wednesday night at about 10 o'clock for Respondent to pick up.

17. Respondent picked up the written statement executed by Mr. and Mrs. Heinz from the security guard on Wednesday night November 23, 1988. The next day was Thanksgiving. Respondent telephoned Mr. Romano on Friday morning, November 24, 1988, informed him that she had the written statement, and asked Mr. Romano what he wanted her to do with it. Mr. Romano instructed Respondent to send the written statement to him by Federal Express. Respondent sent the written statement to Mr. Romano by Federal Express and specified Saturday delivery.

    
    

18. Respondent telephoned Mr. Romano on Monday morning, November 28, 1988, and asked Mr. Romano if he had received the written statement from Mr. and Mrs. Heinz. Mr. Romano said that he had not received the written statement. Respondent asked Mr. Romano for permission to deposit the check and Mr. Romano refused. Mr. Romano said that he was still concerned about the tile in Unit 1005 and that the best way to resolve the situation was to re-carpet the entire condominium.

    
    

19. Respondent telephoned Mr. Heinz and informed him of Mr. Romano's proposal to re-carpet Unit 1005. Mr. Romano refused to re-carpet prior to closing but agreed to put the money necessary to re-carpet Unit 1005 in escrow.

    
    

20. Respondent telephoned Mr. Romano and informed him of the proposal from Mr. Heinz. Mr. Romano then informed Respondent that his wife had changed her mind and that they did not want to purchase Unit 1005. Respondent telephoned Mr. Heinz and told him that the Romanos had decided not to purchase Unit 1005 and advised Mr. Heinz to call his attorney. Respondent deposited the check from the Romanos on Monday, November 28, 1988, the same day Respondent was instructed to deposit the check by a man Respondent mistakenly believed to be the attorney for Mr. Heinz. Mr. Romano stopped payment on the check, and Respondent received an Advice of Returned Check from her bank dated December 6, 1988.

    
    

21. Respondent was fully aware that she represented Mr. and Mrs. Heinz and followed the instructions of Mr. Heinz rather than Mr. Romano when she did not deposit the Romanos' check until Monday, November 28, 1988. It made no difference to Respondent what the Romanos wanted Respondent to do with the check. Respondent did not deposit the check from the Romanos on November 21, 1988, because Mr. Heinz instructed her to hold on to the check until the written statement was delivered to the Romanos.

    
    

22. Respondent fully informed Mr. Heinz in a timely manner of the facts and circumstances known to her concerning the sale of Unit 1005 at all times material to this proceeding. Respondent informed Mr. Heinz immediately after she took delivery of the deposit check on Monday, November 21, 1988, that there was a signed contract but ". . . no deal." From Monday morning through the rest of the week Respondent was on the telephone daily with Mr. Heinz, sometimes two or three times a day. Respondent always asked Mr. Heinz what he wanted her to do.

    
    

23. As a result of the full and timely disclosure by Respondent, Mr. Heinz knew at all times material to this proceeding that the proposed sale of Unit 1005 was contingent upon the resolution of the issue involving the tile in Unit 1005 to the satisfaction of the Romanos. Mr. Heinz also knew on Monday morning, November 21, 1988, that the deposit check did not have sufficient funds on deposit to cover the amount of the check.

    
    

24. Mr. Heinz believed that he could successfully bring legal action against the board of directors of the condominium association for their interference with the proposed sale of Unit 1005. Mr. Heinz requested a letter

    from Mr. Romano stating that the Romanos were rescinding the contract on Unit 1005 due to their treatment by the board of directors during the screening interview. The Romanos sent Mr. and Mrs. Heinz a letter dated November 29, 1988, stating that they were rescinding the contract as a result of the disclosure by Mr. Heinz and the board of directors of a possible existing violation of the condominium bylaws.

    
    

25. Mr. and Mrs. Heinz knew there was no agreement among the parties unless the issue of the tile in Unit 1005 was resolved to the satisfaction of the Romanos. Mr. Heinz believed, however, that if the check from the Romanos had been in the bank, he would have been entitled to half of the deposit and the real estate agencies would have split the other half. In the words of Mr. Heinz:

    
    

    Nobody knew where it was going, because Romano kept changing his story . . . .I understood that he [Mr. Romano] had nothing to lose by coming back and trying to re- negotiate the Contract three times in that week period, 4/ for me to do this, that and the other thing, before he'd make the money good. Every time I said, 'Okay, fine. I'll do this.' So, then they'd [the Romanos] come up with another deal. Okay, so, no, I didn't anticipate that the thing was going anywhere but down hill; but

    if the check had been deposited as it was supposed to have been, I would have at least had something for the way the man tied up my property for six months.

    
    

26. Unit 1005 was not tied up for six months as a result of the rescission of the contract by the Romanos. Unit 1005 was listed by Mr. and Mrs. Heinz with Merrill Lynch for six months. Respondent telephoned Barbara Perry in New York on November 21, 1988, while Ms. Perry was on vacation. Respondent informed Ms. Perry that " . . . we don't have a deal. . . ." Respondent instructed Ms. Perry not to take Unit 1005 off the market. After the listing expired, Mr. Heinz was approached by Mr. Ted Gray who was a resident of Trafalgar Highland Beach, and Unit 1005 was eventually sold to Mr. Gray. 5/

    
    

    CONCLUSIONS OF LAW

    
    

27. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this proceeding pursuant to Section 120.57(1), Florida Statutes. The parties were duly noticed for the formal hearing.

    
    

28. The burden of proof is on Petitioner to show by clear and convincing evidence that Respondent committed the acts alleged in the Administrative Complaint and that the penalties requested by Petitioner should be imposed. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). In determining whether Petitioner has satisfied its burden of proof, the weight to be accorded the evidence and the credibility of the witnesses are determinations that are solely within the province of the trier of fact. See, e.g., Peterson v. Hancock, 1 So.2d 255, 256 (Fla. 1941); In re Estate of Brackett, 109 So.2d 375 (Fla. 2d DCA 1959); Tibbs v. State, 397 So.2d 1120 (Fla. 1981).

    
    

29. Respondent did not violate Section 475.25(1)(b), Florida Statutes, by misrepresentation, concealment, or breach of trust as alleged in the

    Administrative Complaint. Respondent kept her clients fully informed of the facts and circumstances surrounding the proposed sale of their condominium on a timely basis. The evidence in this proceeding consists of the testimony of two witnesses and seven exhibits. Both witnesses were questioned extensively through direct, cross, re-direct, and re- cross examination. Respondent's testimony was consistent and persuasive. The testimony of the witness called by Petitioner was inconsistent, not persuasive, and less than clear and convincing.

    
    

30. Respondent did not violate Section 475.25(1)(b), Florida Statutes, through culpable negligence as alleged in the Administrative Complaint. Respondent was negligent in several ways. She failed to collect the deposit check from the proposed purchasers at the time the parties signed the contract. Respondent later accepted a deposit she knew would not be honored by the issuer. Finally, Respondent failed to deposit funds entrusted to her immediately upon receipt from the prospective purchasers. Respondent's negligence, however, was neither dishonest nor unscrupulous. Respondent's negligence, therefore, did not constitute culpable negligence within the meaning of Section 475.25(1)(b). See, e.g., Brod v. Jernigan, 188 So.2d 575, 581 (Fla. 2d DCA 1966) (holding that the authority of the Petitioner to discipline licensees should be aimed at the dishonest and unscrupulous operator).

    
    

31. Respondent violated Section 475.25(1)(k), Florida Statutes, by accepting a deposit check from the purchasers and not immediately depositing that check into Respondent's escrow account. There is no language in Section 475.25(1)(k) that allows Respondent to ignore the statutory requirement for immediate deposit of funds entrusted to her merely because the parties instructed her to ignore the statutory requirement. See, e.g., Dryer v. Florida Real Estate Commission, 370 So.2d 95, 99 (Fla. 4th DCA 1979) (holding that

    after-the-fact consent of the purchasers to use deposit monies pending closing was irrelevant to the issue of whether deposit monies were placed in escrow as required by statutes). Once a licensee accepts delivery of earnest monies, Section 475.25(1)(k) requires that such funds be immediately deposited into the licensee's escrow or trust account.

    
    

32. Respondent's violation of Section 475.25(1)(k), Florida Statutes, is a technical violation rather than a violation caused by a dishonest and unscrupulous operator. When the failure to immediately deposit funds entrusted to a licensee is merely a technical violation, which does not involve dishonest and unscrupulous behavior, it is not punishable by suspension or revocation of Respondent's license. Rivard v. McCoy, 212 So.2d 672, 674-676 (Fla. 1st DCA 1968); Brod, 188 So.2d at 581. Cf. Dryer, 370 So.2d at 100.

    
    

33. A technical violation is subject to any penalty less than suspension or revocation of a license, including the minimum penalty required by applicable administrative rules. Brod, 188 So.2d at 581; Dryer, 370 So.2d at 100. The minimum penalty prescribed in Florida Administrative Code Rule 21V- 24.001(3) 6/ for violations of Section 475.25(1)(k), Florida Statutes, is a reprimand and/or fine of $1,000 per count. In addition, Rule 21V-24.001(2) authorizes the placement of a licensee on probation and the required attendance at post- licensure educational courses.

RECOMMENDATION

Based upon the foregoing Findings of Facts and Conclusions of Law, it is recommended that:

1. Respondent should be found guilty of failing to immediately deposit funds entrusted to her in her escrow or trust account in violation of Section 475.25(1)(k), Florida Statutes;

   
   

2. Respondent should receive a written reprimand;

   
   

3. Respondent should be fined $1,000; and

   
   

4. Respondent should be placed on probation for a period not to exceed one year. During her probationary period, Respondent should be required to comply with reasonable conditions of probation in accordance with Rule 21V-24.001(2), including an appropriate probation appearance before the Florida Real Estate Commission. Since Respondent's violation of Section 475.25(1)(k), Florida Statutes, was caused by apparent ignorance, rather than dishonest or unscrupulous behavior, the conditions of probation should include additional real estate broker education not greater than 20 hours, of which 10 hours should include broker management.

RECOMMENDED this 1st day of April, 1991, in Tallahassee, Leon County, Florida

DANIEL MANRY

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 1st day of April, 1991.

ENDNOTES

1/ All statutory references are to Florida Statutes (1987) as amended by Florida Statutes (Supp. 1988) unless provided otherwise.

2/ Petitioner's Exhibit 1 is a certified copy of Respondent's licensure file. Exhibit 2 is a copy of the Contract for Sale and Purchase. Exhibit 3 is a copy of the deposit check, bank transaction receipt, and Advice of Returned Check.

Exhibit 4 is a copy of the transaction receipts for Respondent's trust account. Exhibit 5 is a copy of the bank's advice of return check. Exhibit 6 is a copy of an agreement statement from the seller. Exhibit 7 is a copy of a letter from the proposed purchaser in the subject transaction.

3/ There is conflicting testimony from Mr. Heinz regarding the issue of whether the contract was signed by the Romanos before they arrived with Respondent at Unit 1005. At one point, Mr. Heinz testified that the contract was signed by

the Romanos prior to the time Respondent presented the contract to Mr. and Mrs. Heinz. See TR at 43. The same witness, however, also testified that his wife could not obtain the form used in the screening interview because there was no signed agreement. See TR at 36 and 37. Respondent consistently testified that the contract was signed by all of the parties in Unit 1005.

4/ The "three times" referred to in the testimony presumably include the requirement for a written statement, the requirement to re-carpet the entire condominium, and discussions between the attorneys for the parties pertaining to a condition requested by the Romanos that the contract be conditioned upon the sale of their home in the Boston area.

5/ The president of the board of directors was also named Mr. Gray. The record does not disclose whether the president and the ultimate purchaser of Unit 1005 was the same Mr. Gray. Compare TR at 38 with TR at 98.

6/ All references to administrative rules are to rules published in the Florida Administrative Code (1988) unless otherwise provided.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-5591

Petitioner submitted proposed findings of fact. It has been noted below which proposed findings of fact have been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Petitioner's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

Darlene F. Keller, Director Division of Real Estate Department of Professional

Regulation

400 West Robinson Street

P.O. Box 1900 Orlando, FL 32801

Jack McRay, Esquire General Counsel

Department of Professional Regulation

1940 North Monroe Street Tallahassee, FL 32399-0792

James H. Gillis, Esquire Senior Attorney

Department of Professional Regulation - Legal Section

Division of Real Estate Hurston Building North Tower

400 West Robinson Street Suite N-308

P.O. Box 1900

Orlando, Florida 32802-1900

Neil F. Garfield, Esquire Garfield & Associates Suite 333

3500 North State Road 7

Fort Lauderdale, Florida 33319

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 contact the agency that will issue the final order in this case concerning agency 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: 89-005591

Orders for Case No: 89-005591