Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William F. Quattlebaum, held a formal hearing in the above-styled case on February 28, 1991, in Niceville, Florida.
For Petitioner: James H. Gillis, Esquire
400 W. Robinson Street
P.O. Box 1900
For Respondent: Bart O. Moore, Esquire
The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalty should be imposed.
On January 18, 1990, Petitioner filed an Administrative Complaint (Case No.
improperly maintained his escrow account. Respondent filed an Election of Rights disputing the factual allegations and requesting a formal hearing.
On February 22, 1990, Petitioner filed a second Administrative Complaint (Case No. 90-2462) alleging that the Respondent inappropriately handled an earnest money deposit received in connection with a real estate sales contract.
Again, Respondent filed an Election of Rights disputing the factual allegations and requesting a formal hearing.
On April 25, 1990, both requests for hearing were filed by Petitioner with the Division of Administrative Hearings. On June 4, 1990, the cases were consolidated and scheduled to be heard on July 27, 1990 by the assigned Hearing Officer.
Subsequently, counsel for Petitioner moved to abate the proceeding pending adoption of a stipulated settlement agreement by the Florida Real Estate Commission. Without objection, the hearing was continued and the case placed in abeyance. On August 21, 1990, the Commission rejected the settlement stipulation.
By Case Status Report filed November 5, 1990, the Petitioner moved to reschedule the case for hearing. By Notice of Hearing dated December 7, 1990, formal hearing was rescheduled for February 28, 1991. On February 22, 1991, the consolidated cases were transferred to the undersigned Hearing Officer.
At the hearing, Petitioner presented the testimony of Granger Bruner and Elaine Brantley, and had exhibits numbered 1- 15 admitted into evidence.
Respondent presented the testimony of Robert Tuno and Granger Bruner, and had exhibits numbered 1-2 admitted.
The hearing transcript was filed on March 13, 1991. The Respondent timely filed a proposed recommended order. The Petitioner did not file a proposed order. The proposed findings of fact are ruled upon in the Appendix which is attached and hereby made a part of this Recommended Order.
R. Granger Bruner is and at all material times has been licensed as a real estate broker, Florida license number 0010871.
CASE NO. 90-2462
On or about September 9, 1989, Mr. Bruner obtained a contract from Alabama resident Earl W. Reed in which Mr. Reed offered to purchase certain property from owner Gary Salter. 1/ Mr. Reed, by his check, deposited with Mr. Bruner the sum of $1,000, as an earnest money deposit in connection with Mr. Reed's offer to purchase Mr. Salter's property.
Mr. Bruner erroneously deposited Mr. Reed's earnest money deposit check into the Granger Bruner Realty operating account at People's National Bank of Niceville. Mr. Bruner's escrow account, where the earnest money deposit should have been held, was at the local Barnett Bank in the name of Granger Bruner Realty Trust Account.
On or about September 14, 1989, the listing agent for Mr. Salter contacted Mr. Bruner's office and informed Mr. Bruner that Mr. Salter had withdrawn the property from the market.
By letter dated September 21, 1989, Mr. Bruner notified Mr. Reed that the property had been withdrawn from the market and that the earnest money deposit was being returned. Enclosed with the letter was People's National Bank of Niceville check #509 drawn on the operating account of Granger Bruner Realty
in the amount of $1,000 payable to Earl Reed. The letter and check were mailed to Mr. Reed at his address in Alabama.
Mr. Reed apparently did not receive the letter or check, and became concerned about the return of his deposit money. The administrative complaint alleges that Mr. Reed continued to demand return of the deposit. Although the Department introduced a copy of Mr. Reed's complaint, Mr. Reed did not testify. The evidence does not establish that Mr. Reed made repeated demands on Mr. Bruner for return of the deposit. The complaint further alleges, but the evidence does not establish, that the September 21, 1989 check was not mailed until September 28, 1989.
On September 30, 1989, Mr. Reed met in Crestview with Mr. Bruner and demanded the return of his earnest money deposit. Mr. Bruner issued check #2924 in the amount of $1,000 from Mr. Bruner's wife's personal account payable to Earl Reed. Mr. Bruner subsequently had a stop-payment order issued against the first check to Mr. Reed.
CASE NO. 90-2463
Prior to October 6, 1989, Elaine Brantley, an auditor/investigator for the Department contacted Mr. Bruner and made an appointment to perform a routine audit on Mr. Bruner's accounts.
Prior to October 6, 1989, Mr. Bruner was aware that his escrow account was short. On that date, Mr. Bruner deposited approximately $1,400 into his escrow account to cover the shortage. The deposit resulted in an overage in the account.
Upon Ms. Brantley's arrival, Mr. Bruner informed her that the escrow account was short, that he'd gotten behind in bookkeeping, and that his secretary was depositing additional funds into the escrow account.
Ms. Brantley had Mr. Bruner telephone the bookkeeping department at Barnett Bank. With Mr. Bruner's approval, Ms. Brantley asked for and obtained the balance of the escrow account by telephone from a bank employee. 2/ Mr. Bruner then informed Ms. Brantley that escrow account liabilities totaled
$1,727.38. Ms. Brantley reviewed the account's check ledger and determined that the escrow account was indeed short.
During the audit, Ms. Brantley noted an escrow account check #453 dated 7/25/89 in the amount of $500 made payable to Mr. Bruner. Ms. Brantley stated that Mr. Bruner said that he had disbursed the funds to himself to cover a mortgage payment he made to a third party identified as Ms. Penner.
At hearing, Mr. Bruner testified that he had used his escrow account to cash a $400 check for another person, and that check #453 was drafted to recover his personal funds from the account. He stated that the check was written in error and that the transaction was not handled correctly. He admitted that he did not know the balance of the escrow account at the time the check was written. The recorded checkbook balance at the time was $340.19.
At the time of the audit, Ms. Brantley also noted check #487 dated 9/26/89 in the amount of $500 to Ms. Penner. The evidence establishes that check #487 was Mr. Bruner's personal mortgage payment to Ms. Penner.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(), Florida Statutes.
Petitioner has responsibility for disciplinary action taken against licensed real estate brokers. Section 475.25(1), Florida Statutes. The burden of proof lies with the Petitioner. The allegations of the Administrative Complaint must be proven by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). The Petitioner has met the burden.
Section 475.25(1), Florida Statutes, in relevant part provides that the licence of a Florida real estate broker may be disciplined by the Petitioner when the Respondent:
(b) Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction....
Has failed to account or to 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 or delivery, any personal property such as money, fund,
deposit, check, draft, . . . 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.
Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.
(k) Has failed, if a broker, to immediately place,
upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow... or to deposit such funds in a trust or escrow account maintained by him..., wherein such funds shall be kept until disbursement thereof is properly authorized.... The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made.
Violation of disciplinary statutes is punishable by denial of a license renewal application, or by a license suspension for a period not to exceed ten years, or by revocation of the license, or through an administrative fine not to exceed $1,000 for each count or separate offense, or through issuance of a reprimand, or through any combination thereof. Section 475.25(1), Florida Statutes.
Guidelines for the imposition of disciplinary action are as stated in Chapter 21V-24, Florida Administrative Code. Except where otherwise provided, the minimum penalty which may be imposed for each violation is a reprimand, or a fine up to $1,000 per count, or both.
In the Reed transaction, Mr. Bruner has clearly violated Section 475.25(1)(k), Florida Statutes, in that Mr. Reed's earnest money deposit was placed not into Mr. Bruner's escrow account but into the operating account. Violation of Section 475.25(1)(k), Florida Statutes, requires a minimum 90 day suspension and $1,000 fine, and can result in license revocation. Rule 2IV- 24.001(3) (1), Florida Administrative Code.
The evidence is insufficient to establish that Mr. Bruner failed to timely return Mr. Reed's deposit, thus the Department has failed to establish a violation of Section 475.25(1)(d), Florida Statutes. Mr. Bruner attempted to mail a check to Mr. Reed approximately six days after learning that the sale would not be closed. The check was not received. Upon Mr. Reed's personal demand, Mr. Bruner immediately returned the deposit, albeit with a check drawn on an inappropriate account.
As to the allegations related to improper maintenance of the escrow account, Mr. Bruner has violated Section 475.25(1)(b) and (e), Florida Statutes. At the time of the audit, Mr. Bruner acknowledged that the escrow account was short and that bookkeeping duties had not been performed. Such failure constitutes culpable negligence in his business transactions and violates Rule 2IV-14.012, Florida Administrative Code, which in relevant part provides:
A broker who receives a deposit such as defined herein shall preserve and make available to the Department, or its authorized representative, all deposit slips and statements of account rendered by the bank or trust company, credit union, or title company with trust powers, in which said deposit is placed, together with all agreements between the parties respecting the transaction, particularly the deposit, and all contracts, agreements, instructions, and directions to and with the said depository, and shall keep an accurate account in his books of each deposit transaction, as well as an account in his books of each separate bank account wherein such trust funds have been deposited, together with a record of all withdrawals therefrom, and shall support such accounts by such additional data as good accounting practice requires. All such books and accounts shall be subject to inspection by the Department or its authorized representatives at all reasonable times during regular business hours.
( 2) A broker shall cause to be made at least monthly a written statement comparing the broker's total liability with the reconciled bank balance(s) of all trust accounts. The broker's trust liability is hereby defined as the sum total of all deposits received, pending and being held by the broker at any point in time. The minimum information to be included in the monthly statement-reconciliation shall be the date the reconciliation was undertaken, the date used to reconcile the balances, the name of the bank(s), the name(s) of the account(s), the account number(s), the account balance(s) and date(s), deposit(s) in transit, outstanding checks identified by date and check number, and any other items necessary to reconcile the bank account balance(s) with the balance per the broker's
checkbook(s) and other trust account books and records disclosing the date of receipt and source of the funds. The broker shall review, sign and date the monthly statement-reconciliation. 3/
(3) Whenever the trust liability and the bank balances do not agree, the reconciliation shall contain a description or explanation for the difference(s) and any corrective actions taken reference shortages or overages of funds in the account(s). Whenever a trust bank account record reflects a service charge or fee for a non-sufficient check being returned or whenever an account has a negative balance, the reconciliation shall disclose the cause(s) of the returned check or negative balance and the corrective action taken.
Violation of Section 475.25(1)(b), Florida Statutes, merits up to five years suspension or revocation. Rule 2IV- 24.001(3) (c), Florida Administrative Code. Violation of Section 475.25(1) (e), Florida Statutes, entails up to eight years suspension or revocation. Rule 2IV-24.001(3)(f), Florida Administrative Code.
Counsel for Mr. Bruner asserts that the information upon which the Department relied in alleging that the escrow account was short was provided telephonically to the Department's investigator by a Barnett Bank employee who did not testify and therefore is unsupported hearsay evidence. Hearsay evidence may be used for supplementing or explaining other evidence, but is not sufficient in itself to support a finding of fact unless it is admissible over objection in a civil action. Section 120.58(1) (a), Florida Statutes. In this case, there is no supporting evidence to establish the exact escrow account balance as of the date of the audit. However, there is evidence, notably Mr. Bruner's admission, that the escrow account was short and that a $1,400 deposit was being made at the time of the audit to cover the shortage. It is unnecessary in this case to determine the exact amount of the escrow account shortage.
