STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 89-6264

)

WALTER GRUHLER, and )

CALVIN L. WILSON, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in this case in Sarasota, Florida on May 24, 1990, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

For the Petitioner: Steven W. Johnson, Esquire

Division of Real Estate

400 West Robinson Street

P.O. Box 1900

Orlando, Florida 32802

For the Respondent: Thomas Fitzgibbons, Esquire

1800 Second Street, Suite 775

Sarasota, Florida 34236 STATEMENT OF THE ISSUES

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

By Administrative Complaint filed in this case on October 18, 1989 by the Petitioner, Department of Professional Regulation, (Department), it seeks to discipline the Respondents' licenses based on their alleged violation of Section 475.25(1) (b), Florida Statutes, by being guilty of dishonesty in a real estate transaction. On November 8, 1989, Respondent Wilson filed his Answer to the Administrative Complaint and Request for Formal Hearing. Respondent Gruhler did not file any response to the Administrative Complaint, but the matter, as to both Respondents, was, on November 14, 1989, forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer.

After Initial Order to each Respondent and response by both parties, on December 7, 1989, the undersigned, by Notice of Hearing, set the case for hearing on January 24, 1990. However, after requests for continuance by both

parties were granted, the case was ultimately set for hearing on May 24, 1990 at which time it was held as scheduled.

At the hearing, Petitioner presented the testimony of Maurice G. Andersen, purchaser of property through the Respondents; and John Harris, an investigator for the Department. Petitioner also introduced Petitioner's Exhibits 1 through

1. Each Respondent testified in his own behalf and they presented the testimony of Feryn Wilson, Respondent Calvin Wilson's wife, and Robert E. Miller, his minister. Respondents also introduced Respondent's Exhibits A, B and C.

   
   

   No transcript was provided but both 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 contained herein, the Petitioner was the state agency responsible for licensing and monitoring the real estate profession in Florida. Respondents, Gruhler and Wilson were licensed as a real estate broker and real estate salesman, respectively, in this state.

      
      

   2. In April, 1988, Respondent Wilson was a 50% owner of Wilson's Cavalier Motor Inn, Inc., located in Sarasota, Florida and, that same month, listed it for sale with his employer, Respondent Gruhler. In June, 1988, Maurice G. Andersen and his wife, who were in the market to buy a motel, looked at the Cavalier and, after discussion with the Respondents, agreed to buy it for

      $181,900.00.

      
      

   3. Prior to agreeing to purchase the property, the Andersens were shown several papers regarding it, including the listing sheet prepared and provided by Mr. Wilson which reflected gross sales of $62,769.00 in 1986 and $65,413.00 in 1987. Based on his analysis of the property, Mr. Andersen made an offer to purchase it by Purchase agreement dated June 28, 1988, with which he enclosed a deposit of $1,000.00.

      
      

   4. Mr. Andersen now claims that at the time he felt the income figures provided by Mr. Wilson were too high for a 9 unit motel but assumed they were accurate. He claims his decision to purchase the property was based on the income and expense figures provided by Mr. Wilson incident to the purchase. A statement of earnings for the property for the period March 5, 1986 to February 28, 1987 , a term of approximately 14 months, reflected gross income of

      $72,360.70, expenses of $37,904.51, with a net income of $34,456.19. This statement which Andersen admits is accurate, is only one of four that he received.

      
      

   5. The closing transferring ownership to the Andersens took place on September 30, 1988. At that time, the parties executed a stock purchase agreement by which the Andersens purchased not only the assets of the motel but also 100% of the stock in the corporation which owned the motel and its assets. The corporation had been owned by Mr. and Mrs. Wilson.

      
      

   6. During the first six months of Andersen's ownership of the property, the income was not up to his expectations. He claims he had been told he'd do a lot of business through advance reservations but, in fact, had only one and the six month gross income during that period was approximately the same amount the previous owner, Mr. Wilson, had done.

   7. In February, 1989, Mr. Wilson gave the Andersens a financial statement on the property and business for the period April 5 through September 30, 1988 which reflected gross income of $24,622.36 and expenses of $24,604.10, for a net income of $18.26. He also provided, sometime that year, a more detailed statement for the period from April 17, 1988 through June 30, 1988 which reflected, among other things, a gross income for that period of $9,956.00. In reality, the income for that period, as reflected on the Department of Revenue sales tax returns submitted by Mrs. Wilson, the bookkeeper, was $7,483.60, a difference of $2,472.40. This is a significant difference. All of the financial information provided to the Andersens by Mr. Wilson, except for that contained in the erroneous statement prepared by Mrs. Wilson, was provided by previous owners of the motel. Neither Mr. Gruhler nor Mr. Wilson was familiar in detail with the actual revenue and expense of the motel prior to the time Mr. Wilson took it over in 1988.

      
      

   8. Mr. Andersen's chief complaint lies with Mr. Wilson, who he believes intentionally misled him with false information to induce his purchase, and not with Mr. Gruhler. He is satisfied the latter did not intentionally try to trick him or commit fraud. Wilson purportedly advised him orally that the motel brought in approximately $3,000 per month when in reality it was only about two- thirds that figure. He admits to having an opportunity to examine the property thoroughly prior to the purchase and even had his accountant in Minnesota go over the listing sheet and the initially provided figures before agreeing to buy.

      
      

   9. The motel is a 9 unit operation with small rooms and one large efficiency apartment. There is no pool. The Andersens occupy one unit and their son occupies another. Mr. Andersen does not know if, even with this reduction from rental space, his operation is bringing in any less than Mr. Wilson did, and proudly claims that as an inexperienced operator, for the year past he did $2,000.00 more in business than did the experienced operator from whom Wilson took back the business. He asserts he had a good year even though the tourist activity for Sarasota County was down for the same period.

      
      

   10. Mr. Wilson was first contacted by Mr. Andersen in June, 1988, regarding several motels for sale advertised by Gruhler, for whom Wilson works. They met at one motel which Mr. Andersen did not like and then went to the Cavalier which Andersen liked because he could afford it. Andersen came back with his wife the following Monday and on the following day, met with Wilson at the Gruhler brokerage office where he made his offer on the property At the time they made the offer, the Andersens had had an opportunity to examine the property and had been given a copy of the listing sheet and the financial statement which, all agreed, was accurate and which were examined by Andersen's accountant before closing. This information was prepared by Mrs. Wilson from the business books which she kept. There is no evidence that Mr. Wilson knew, or had any reason to believe, that the information furnished to the Andersens at any time was incorrect.

       
       

   11. Though Mrs. Wilson admits that one document, that relating to the April 17 through June 30, 1988 income is in error, all other income information provided to the Andersens has been shown to be correct. The error was made when she incorrectly included in the income certain items which should not have been there. Even she did not know the report was incorrect at the time she presented it and first found out about her mistake when it was brought to her attention later by the Andersens after they checked the reported income against the sales tax forms. In light of the fact that she prepared those forms as well and that such forms are public records which are open for inspection, it is found to be

       unlikely she would have intentionally provided incorrect income figures to the Andersens who had already indicated their habit of having financial records checked by their accountant. In any case, there is no evidence she made Mr.

       Wilson or Mr. Gruhler aware of the mistake and that they thereafter acted on that information knowing it to be incorrect.

       
       

   12. The Reverend Robert Miller has known the Wilsons for 11 years and been their pastor for 9 years. Both are dedicated Christians and have a high reputation for truth and veracity in the community. In all the years he has known them there has never been a hint of dishonesty of the part of either.

       
       

       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. Petitioner seeks to discipline the licenses of each Respondent alleging that, in violation of Section 475.25(1)(b), Florida Statutes, they are guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction.

       
       

   15. In order to take any of the disciplinary actions provided for in the statute, the Petitioner must satisfy its burden of proof by establishing the Respondents' guilt of the matters alleged by clear and convincing evidence, Ferris v. Turlington, 510 So.2d 292 (Fla.1987). The proposed discipline is based upon the fact that Respondent Wilson submitted to the Andersens a document containing incorrect income information which, allegedly, helped to influence them to purchase the property from Mr. Wilson.

       
       

   16. Taken in its worst light the evidence presented at the hearing in no way established any misconduct on the part of Mr. Gruhler or any culpable negligence actionable under the statute. The allegation against him should be dismissed.

       
       

   17. As to Mr. Wilson, the evidence establishes that the information provided to the Andersens by Mr. Wilson prior to their making an offer to purchase the property in question was correct and accurate. The erroneous information related to a period of slightly more than two months ending two days after the Offer to Purchase and Contract for Sale was signed by all parties and could not have played a major part in convincing them to buy the property. At worse, it might have made the Andersens reconsider the purchase, but the amount of discrepancy is so minor as to not likely be the sole consideration either way.

       
       

   18. Further, the evidence clearly indicates that the error was that of Mrs. Wilson, the bookkeeper who provided the offending statement to Mr. Wilson for transmittal to the Andersens. It has been found that under the circumstances, even her mistake was not likely to be intentional.

Finally, the evidence is totally devoid of any indication Mr. Wilson knew the information he provided to the Andersens was inaccurate in any way or that he intended to trick, deceive or in any measure take advantage of them.

Further, the mistake, as such it must be categorized, is not so blatant as to constitute the culpable negligence envisioned by the statute to support

discipline. Clearly, the Petitioner has failed to satisfy its burden to establish actionable misconduct by Mr. Wilson by clear and convincing evidence.

RECOMMENDATION

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

RECOMMENDED that the Administrative Complaint as to both Respondents, Walter Gruhler and Calvin L. Wilson, be dismissed.

RECOMMENDED this 3rd day of July, 1990, 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 3rd day of July, 1990.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 89-6264

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

FOR THE PETITIONER:

1. - 3. Accepted and incorporated herein.

4. - 6. Accepted and incorporated herein.

1. Accepted.

2. Accepted and incorporated herein.

3. & 10. Accepted and incorporated herein.

1. Rejected as not supported by the evidence of record.

2. Not proven. The last sentence of this paragraph is rejected.

FOR THE RESPONDENT:

1. Accepted and incorporated herein.

2. Accepted and incorporated herein.

3. Accepted and incorporated herein.

4. & 5. Accepted and incorporated herein.

6. & 7. Accepted and incorporated herein as to ultimate facts.

1. Accepted and incorporated herein.

2. - 11. Accepted and incorporated herein.

12. Not a Finding of Fact but a Conclusion of Law.

COPIES FURNISHED:

Steven W. Johnson, Esquire Division of Real Estate

400 West Robinson Street

P.O. Box 1900

Orlando, Florida 32802

Thomas Fitzgibbons, Esquire 1800 Second Street, Suite 775

Sarasota, Florida 34236

Kenneth E. Easley General Counsel

Department of Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

Darlene F. Keller Division Director Division of Real Estate

400 West Robinson Street

P.O. Box 1900 Orlando, Florida 32801

Docket for Case No: 89-006264

Orders for Case No: 89-006264