STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5863

) MARVIN M. KORNICKI and WATERWAY ) PROPERTIES, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to Notice, this cause was heard by Linda M. Rigot, the assigned Hearing Officer from the Division of Administrative Hearings, on January 11, 1991, in Miami, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Department of Professional Regulation

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

For Respondents: Marvin M. Kornicki, pro se

Waterway Properties, Inc. 16560 Biscayne Boulevard

North Miami Beach, Florida 33160 STATEMENT OF THE ISSUES

The issue presented is whether Respondents are guilty of the allegations contained in the Administrative Complaint filed against them, and, if so, what disciplinary action should be taken against them, if any.

PRELIMINARY STATEMENT

Petitioner filed an Administrative Complaint alleging that Respondents, licensed real estate brokers, had committed several violations of the statutes and rules regulating their professional conduct. Respondents timely requested a formal hearing regarding the allegations in that Administrative Complaint, and this matter was transferred to the Division of Administrative Hearings for the conduct of that formal proceeding.

Petitioner presented the testimony of Respondent Marvin M. Kornicki, and Petitioner's Exhibits numbered 1-7 and 9-14 were admitted in evidence. No transcript of the final hearing was filed.

Petitioner submitted post-hearing proposed findings of fact in the form of a proposed recommended order. A ruling on each proposed finding of fact can be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times material hereto Respondent Marvin M. Kornicki has been a licensed real estate broker in the State of Florida, having been issued License Nos. 0265344 and 0252335. The last license issued was as a broker for Waterway Properties, Inc., t/a Waterway Properties.

   
   

2. At all times material hereto, Respondent Waterway Properties, Inc., t/a Waterway Properties, has been a corporation registered as a real estate broker in the State of Florida, having been issued License No. 0265344.

   
   

3. At all times material hereto, Respondent Kornicki was licensed and operating as the qualifying broker and an officer of Respondent Waterway Properties, Inc.

   
   

4. On January 7, 1990, Respondents solicited and obtained an offer in the amount of $155,000 from Alda Tedeschi and John Tocchio, buyers, to purchase real property, to-wit: Unit 422 at Mariner Village Garden Condominium, Aventura, Florida, from Arthur Goldstein and Myra Goldstein, sellers.

   
   

5. The buyers' offer reflected a $1,000 deposit to be held in trust by the Respondent Waterway Properties, Inc. The offer reflected that if the offer was not executed by and delivered to all parties, or fact of execution communicated in writing between the parties, on or before January 10, 1990, the deposit would be returned to the buyers and the offer would be withdrawn. The offer also reflected that "time is of the essence."

   
   

6. On January 8, 1990, Respondents sent the buyers' offer to the sellers in New Jersey by air express.

   
   

7. On January 10, 1990, the sellers signed the offer but made it a counteroffer by requiring the buyers to furnish an additional deposit of $14,500 by January 12, 1990, and requiring the buyers to sign a condominium rider and an agency disclosure form.

   
   

8. The sellers returned the counteroffer with condominium rider and agency disclosure form to the Respondents.

   
   

9. On January 12, 1990, Respondents sent the counteroffer, condominium rider, and agency disclosure form, together with a letter dated January 11, 1990, to the buyers for the buyers' initials and signatures.

   
   

10. Although the buyers could not have received the counteroffer until after its expiration date, they advised Respondents by telephone that they had in fact initialed the counteroffer and mailed it back to Respondents. Respondents never received from the buyers that accepted counteroffer.

11. The buyers subsequently verbally demanded the return of their $1,000 deposit, but Respondents wrote to the buyers on February 9, 1990, advising the buyers that they were in default. On February 8, 1990, Respondents had already disbursed the $1,000 deposit to Respondents' operating account since the sellers had told the Respondents to use the deposit to cover the costs incurred advertising the sellers' property.

    
    

12. Since he was uncertain as to whether he had "conflicting demands upon an escrow deposit" Respondent Kornicki telephoned the Florida Real Estate Commission and discussed the matter with one of the Commission's attorneys. Because Respondent Kornicki believed that the buyers were "in default," Respondents failed to notify the Florida Real Estate Commission in writing that they had received conflicting demands. No explanation was offered as to why Respondent Kornicki believed the buyers were in default when the counteroffer could not have been signed by the buyers prior to its expiration and when Respondent Kornicki had never seen a fully executed document. Further, no explanation was offered as to why the sellers believed they were entitled to the money.

    
    

13. Since that transaction, Respondents have experienced other transactions where conflicting demands were made. In those subsequent instances, they have timely notified the Florida Real Estate Commission in writing as to those conflicting demands.

    
    

14. On June 18, 1990, Petitioner's investigator conducted an office inspection and escrow/trust account audit of Respondents' office and escrow/trust account. That audit revealed that Respondents wrote a trust account check on September 1, 1989, in the amount of $369.15, which was returned on October 3, 1989, for insufficient funds. A second trust account check in the amount of $800 was also returned for insufficient funds on October 3, 1989.

    
    

15. Respondents had received rental monies from a tenant by check. Respondents had written checks out of those monies for the mortgage payment on the rental property, not knowing that the tenant's check would fail to clear. The worthless check written by the tenant caused these checks written by Respondents to be returned for insufficient funds.

    
    

16. Respondents have changed their office policies so that they no longer accept checks from tenants except before tenants move into rental properties and the checks must clear before the tenants are allowed to take possession of the leased premises.

    
    

    CONCLUSIONS OF LAW

    
    

17. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1), Florida Statutes (1990).

    
    

18. Counts I and 11 allege that Respondents Kornicki and Waterway Properties, respectively, are guilty of culpable negligence or breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. Petitioner had met its burden of proof regarding these Counts. Transmitting an expired counteroffer to the buyers, declaring them to be in default without ever having seen a signed acceptance of the counteroffer, and releasing their deposit monies without their consent to someone other than them

    does constitute culpable negligence and breach of trust. Although the buyers had advised Respondent Kornicki verbally that they had accepted the counteroffer, such an acceptance could only have been conveyed in writing.

    
    

19. Counts III and IV charge Respondents Kornicki and Waterway Properties, respectively, with failing to account and deliver a deposit, in violation of Section 475.25(1)(d), Florida Statutes. Respondents Kornicki and Waterway Properties having failed to return the buyers' deposit to them in the absence of an executed contract does constitute a violation of that section.

    
    

20. Counts V and VI charge Respondents Kornicki and Waterway Properties, respectively, with violating Section 475.25(1)(k), Florida Statutes, by failing to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized. No explanation was offered as to why Respondents and/or the sellers believed that the sellers were entitled to the deposit monies so that the sellers would have a right to authorize Respondents to retain that money to reimburse themselves for costs incurred. It is clear that the buyers never authorized Respondents to disburse their deposit money to anyone other than them. Petitioner has met its burden of proof regarding these Counts.

    
    

21. Counts VII and VIII allege that Respondents Kornicki and Waterway Properties, respectively, failed to notify the Florida Real Estate Commission of a deposit dispute and failed to implement remedial action, in violation of Rule 21V-10.032, Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. That Rule provides deadlines by which a broker is required to notify the Florida Real Estate Commission, in writing, when the broker has good-faith doubt as to who is entitled to an earnest money deposit. Although it is believed that Respondent Kornicki did telephone the Florida Real Estate Commission to discuss the situation, Respondents admit that they failed to notify the Commission in writing and failed to do so within the deadlines provided in that Rule. It is also clear that Respondents failed to implement remedial action regarding the questioned deposit monies. Accordingly, Respondents have violated a rule of the Commission which, in turn, constitutes a violation of Section 475.25(1)(e), Florida Statutes.

    
    

22. Counts IX and X charge Respondents Kornicki and Waterway Properties, respectively, with failing to disclose agency relationships in writing prior to the signing of a contractual offer, in violation of Rule 21V-10.033, Florida Administrative Code, and, therefore, in violation of Section 475.25(1)(e), Florida Statutes. That Rule requires a broker to disclose in writing to all parties for whom he is not an agent in a real estate transaction that he is the agent of another party in that transaction. The written disclosure must be given prior to the signing of a contractual offer. Respondents represented the sellers in the subject transaction and failed to provide to the buyers a written disclosure of that fact prior to the time that they executed their offer to purchase the subject property. Although the agency disclosure form was sent to the buyers along with the sellers' counteroffer, that activity was untimely since the agency disclosure was not done prior to the time that the buyers executed their offer. Accordingly, Petitioner has met its burden of proof regarding these Counts.

    
    

23. Counts XI through XIV do not relate to the offer and counteroffer on the Goldstein condominium unit. Rather, they are based upon a separate set of factual allegations contained in the Administrative Complaint regarding the office inspection and audit and the findings made by Petitioner's investigator during that office inspection and audit. Those factual allegations involve

    Respondents' failure to have a required sign at the entrance to their office, the two checks that were returned for insufficient funds, and a temporary shortage in Respondents' trust account. Petitioner's investigator did not testify in this proceeding. Although Respondent Kornicki testified that there was a small sign to the side of a door and a larger sign on the interior building door, there was no further evidence offered and that testimony lacks any specificity. There are no counts in the Administrative Complaint charging Respondents with violating any signage requirements. Similarly, while the investigator's notes include mention of some temporary trust account shortage, those notes constitute uncorroborated hearsay, and no finding of fact can be based upon them.

    
    

24. Counts XI and XII charge Respondents Kornicki and Waterway Properties, respectively, with culpable negligence or breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes. Writing checks from an account based upon a deposited check which has not yet cleared does constitute culpable negligence or breach of trust in a business transaction, and Petitioners have met their burden of proof as to Counts XI and XII.

    
    

25. Counts XIII and XIV charge Respondents Kornicki and Waterway Properties, respectively, with having failed to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized, in violation of Section 475.25(1)(k), Florida Statutes. These Counts relate to the factual allegation regarding the temporary trust account shortage, and Petitioner presented only hearsay evidence regarding that matter. Accordingly, Petitioner has failed to meet its burden of proof regarding Counts XIII and XIV.

    
    

26. In its proposed recommended order, Petitioner notes the "admirable efforts put forth" by Respondent Kornicki to correct all violations and further notes the cooperation of the Respondents in this matter. Petitioner recommends that Respondent Kornicki pay a total fine of $1,000; that if the fine is not paid within 60 days, all of Respondents' licenses should be revoked; that if the fine is timely paid, Respondents be placed on probation for one year with the terms of that probationary period to be determined by the Florida Real Estate Commission except that Respondent Kornicki shall not be required to retake any state licensure examination; that during any period of probation, Respondent Kornicki be required to complete 60 hours of approved real estate post-licensure education for brokers, 30 hours of which shall include the real estate broker management course; that the 60 hours of continuing education be in addition to normal continuing education requirements; and that Respondent Kornicki be required to appear before the Commission at its last meeting preceding the termination of his probation. Petitioner's recommendation is reasonable and appropriate except that the 60 hours of continuing education in addition to normal continuing education requirements should be reduced to a total of 60 hours of continuing education. As Respondent Kornicki repeatedly testified, the audit and the uncompleted condominium transaction have already been "quite a learning experience." In subsequent transactions, Respondents have fully complied with legal requirements concerning deposit disputes.

XI;

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered:

1. Finding Respondent Kornicki guilty of Counts I, III, V, VII, IX, and

   
   

2. Finding Respondent Waterway Properties, Inc., guilty of Counts II, IV,

   VI, VIII, X, and XII;

   
   

3. Dismissing Counts XIII and XIV;

   
   

4. Ordering Respondent Marvin M. Kornicki to pay a fine of $1,000 to the Division of Real Estate within 60 days and revoking Respondents' licenses should such fine not be timely paid;

   
   

5. Placing Respondents on probation for a period of one year if the fine is timely paid;

   
   

6. Requiring Respondent Kornicki to complete and provide satisfactory evidence of having completed 60 hours of approved real estate post-licensure education for brokers, 30 hours of which shall include the real estate broker management course, during the probationary period;

   
   

7. Establishing terms for the probationary period except that such probationary terms shall not require Respondent Kornicki to retake any state licensure examinations and

   
   

8. Requiring Respondent Kornicki to appear before the Commission at the last meeting of the Commission preceding the termination of Respondents' probation.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 13th day of February, 1991.

LINDA M. RIGOT

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 13th day of February, 1991.

APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 90-5863

1. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting a finding of fact but rather as constituting a conclusion of law.

   
   

2. Petitioner's proposed findings of fact numbered 2-4, 6-14, and 16-19 have been adopted either verbatim or in substance in this Recommended Order.

   
   

3. Petitioner's proposed finding of fact numbered 5 has been rejected as being unnecessary for determination of the issues herein.

   
   

4. Petitioner's proposed finding of fact numbered 15 has been rejected as not being supported by the weight of the credible evidence in this cause.

COPIES FURNISHED:

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

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

Jack McCray, Esquire

Department of Professional Regulation Legal Division

1940 North Monroe Street Tallahassee, Florida 32399-0792

James H. Gillis, Esquire

Department of Professional Regulation

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

Marvin M. Kornicki Waterway Properties, Inc. 16560 Biscayne Boulevard

North Miami Beach, Florida 33160

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: 90-005863

Orders for Case No: 90-005863