STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 91-1713

) KENNETH A. NORBERG, T/A ARDEN ) REAL ESTATE ASSOCIATES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on May 22, 1991, in West Palm Beach, Florida, before J. Stephen Menton, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Senior Attorney

Department of Professional Regulation, Division of Real Estate- Legal Section

Hurston Building - North Tower Suite N-308

400 West Robinson Street

P. O. Box 1900

Orlando, Florida 32802-1900

For Respondent: Kenneth A. Norberg, pro se

Arden Real Estate Associates

525 West Lantana Road Lantana, Florida 33462

STATEMENT OF THE ISSUE

The issue in this case is whether the real estate license issued to the Respondent, Kenneth A. Norberg, should be revoked or otherwise disciplined based upon the acts alleged in the Administrative Complaint.

PRELIMINARY STATEMENT

On February 21, 1991, the Petitioner, Florida Department of Professional Regulation, Division of Real Estate (the "Department" or the "Petitioner") filed an Administrative Complaint charging Respondent, Kenneth A. Norberg, a licensed real estate broker, with violating certain portions of Section 475.25, Florida Statutes. The Administrative Complaint contains three counts: Count I alleges

that Respondent failed to maintain a sign as required by Section 475.22, Florida Statutes and Rule 21V-10.024, Florida Administrative Code and, therefore, has violated Section 475.25(1)(e), Florida Statutes. Count II alleges that Respondent was guilty of misrepresentation, culpable negligence or breach of trust in a business transaction in violation of Section 475.25(1)(b); Count III alleges that Respondent violated Section 475.25(1)(e), by failing to promptly notify the Florida Real Estate Commission of a deposit dispute and failing to implement remedial action as required by Rule 21V-10.032, Florida Administrative Code and Section 475.25(1)(d), Florida Statutes.

The Respondent denied the allegations of the Administrative Complaint and timely requested a hearing on the charges. The case was referred to the Division of Administrative Hearings which noticed and conducted a formal hearing pursuant to Section 120.57(1), Florida Statutes.

At the hearing, Petitioner presented the testimony of three witnesses: Sharon Thayer, an investigator with the Department; Joe Ann Shoop, who had listed property she owned for sale through Respondent; and Bernadette Butler, a prospective purchaser who placed a deposit with Respondent for Ms. Shoop's property. Petitioner offered nine exhibits into evidence, all of which were accepted except Petitioner's Exhibit 7 which was withdrawn. At Petitioner's request, official recognition has been taken of Section 20.30, Florida Statutes and Chapters 120, 455 and 475, Florida Statutes and Rules 21V-10.024 and 21V- 10.032, Florida Administrative Code.

Respondent testified on his own behalf and offered three exhibits into evidence, all of which were accepted.

A transcript of the proceedings has been filed. In accordance with the agreement reached between the parties at the conclusion of the hearing, proposed recommended orders were due by June 17, 1991. The Petitioner timely filed a proposed recommended order. The Respondent filed his proposed recommended order on June 20, 1991. Although Respondent's proposed recommended order was not timely filed, it has been reviewed and considered in the preparation of this Recommended Order. A ruling on each of the parties proposed findings of facts is included in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon the oral and documentary evidence adduced at the final hearing and the entire record in this proceeding, the following findings of fact are made.

1. At all pertinent times, Respondent, Kenneth A. Norberg, was a licensed real estate broker in the State of Florida having been issued License Nos. 0143669 and 0243001 in accordance with Chapter 475, Florida Statutes. The last licenses issued to Respondent were as a broker t/a Arden Real Estate Associates,

   525 West Lantana Road, Lantana, Florida 33462.

   
   

2. Respondent operates both an insurance business and a real estate business out of his office. There is a large sign outside the office near the street that indicates both "INSURANCE" and "REAL ESTATE" in large letters. Beneath those words in smaller print, are the words "Arden Insurance" Association and "Ken Norberg Real Estate". This sign is reflected in Respondent's Exhibit 1 and has been in place for approximately fifteen years.

3. Sometime prior to March of 1989, Joe Ann Shoop was awarded ownership of a corporation known as Jerraang Enterprises, Inc. as part of a divorce settlement. That corporation owned certain property located at 7967 Overlook Road, Hypoluxo, Palm Beach County, Florida. There are two small cottages located on the property. Ms. Shoop's attorney is an officer of the corporation, but it is not clear whether he is a stockholder.

   
   

4. Ms. Shoop visited Respondent's office in order to inquire about insurance for the property. While she was in Respondent's office, Ms. Shoop asked Respondent if he would be interested in listing the property for sale. She explained that she did not need the property and was anxious to sell it in order to get some cash. Respondent agreed to list the property.

   
   

5. Sometime in March of 1989, Respondent received an offer to purchase the property from Bernadette Butler. Included with that offer was a $500.00 earnest money deposit. Respondent placed the $500.00 deposit into his escrow account maintained at the Bank of South Palm Beaches, Hypoluxo, Florida.

   
   

6. Ms. Shoop accepted Ms. Butler's offer and a contract was agreed upon in March of 1989 with an anticipated closing date in May of 1989. The contract price was $30,000. The specific terms of that initial contract have not been established. Neither party offered the contract into evidence at the hearing.

   
   

7. The parties agreed to extend the closing date of that contract and a new written contract was entered on June 23, 1989. That new contract indicated that the closing was to take place on July 26, 1989. The second contract provided that the sale was contingent upon the purchaser obtaining financing in the amount of $21,000.00.

   
   

8. The purchaser was unable to arrange financing and the transaction failed to close by July 26, 1989. The parties verbally agreed to extend the contract, however, the evidence is inconclusive as to how long an extension was agreed to.

   
   

9. By October of 1989, it became clear that the transaction would not close. At that time, Ms. Shoop demanded the deposit and began efforts to sell the property to someone else. Ultimately, the property was sold at auction for

   $15,000.

   
   

10. Ms. Shoop claims that she was not advised and would not have agreed to a contract that was contingent upon the buyer obtaining financing. As indicated above, the terms of the first contract have not been established. However, it is clear that the second contract did provide a contingency for financing.

    
    

11. On October 31, 1989, Respondent sent a letter to Ms. Butler indicating that Ms. Shoop had requested the release of the deposit to her. Respondent enclosed a copy of a Release of Deposit Receipt form for Ms. Butler to execute. Ms. Butler did not execute the form and/or authorize the release of the deposit to Ms. Shoop.

    
    

12. Respondent retained the deposit in his escrow account for several more months. During this time, Ms. Butler continued her attempts to obtain financing and also began searching for additional properties. Ms. Butler indicated to Respondent her intention to apply the money held in escrow to any new purchases that may arise if the contract with Ms. Shoop did not close.

13. On several occasions in late 1989 and early 1990, Ms. Shoop attempted to contact the Respondent and determine the status of the escrow money. Respondent did not answer her inquiries.

    
    

14. On September 10, 1990, an investigator from the Department visited Respondent's office to conduct a random audit of Respondent's business and his escrow account. During this audit, the investigator discovered the deposit being held in escrow without a current contract. She advised Respondent that he needed to be sure to comply with the requirements of Section 475.25(1)(d), Florida Statutes and Rule 21V-10.032, Florida Administrative Code.

    
    

15. In October of 1990, the Respondent sent a letter to both Ms. Butler and Ms. Shoop enclosing a Release of Deposit Receipt form pursuant to which he suggested that the parties divide the deposit equally. Respondent sent a copy of this letter to the Department to notify it of his attempt to resolve the dispute over the deposit.

    
    

16. By letter dated October 11, 1989, Gerri E. Barnoski, an analyst for the Florida Real Estate Commission, (the "Commission") advised Respondent of his options. In this letter, Ms. Barnoski told Respondent that he had to either

    (1) arrange for arbitration, (2) place the matter before a civil court or (3) request an Escrow Disbursement Order from the Florida Real Estate Commission.

    
    

17. The Respondent subsequently requested an Escrow Disbursement Order from the Florida Real Estate Commission and the matter is currently pending resolution by the Commission in Case No. E902949. The deposit remains in Respondent's escrow account.

    
    

18. In sum, the evidence demonstrated that Respondent failed to promptly notify the Commission of the conflicting demands to the escrow deposit. Respondent claims that he never received a formal written demand from either party. However, the evidence is clear that by at least October of 1989, Respondent was aware of the conflicting demands for the deposit. After delay of approximately one year, Respondent finally attempted to resolve the matter in an appropriate manner. Respondent says he was concerned that attorney's fees would consume the entire deposit. However, this concern does not excuse the delay.

    
    

19. There is no indication that Respondent was manipulating the transaction for his own personal gain and/or that he was trying to defraud either party.

    
    

20. There is no indication that Respondent ever used the escrow account for improper purposes or withdrew money from the escrow account for his own personal or business use.

    
    

21. At the time Petitioner's investigator visited Respondent's office in September of 1990, there was no sign immediately outside the entrance door to Respondent's office. The large sign alongside the roadway (which is described in Finding of Fact 2 above) was in place and there was a trademark indication of a Realtor on the entrance door. However, a sign which had previously been on the wall immediately next to the entrance door was missing. The evidence established that the sign at the entrance door was temporarily missing due to unusual circumstances. Respondent was in the middle of a hotly contested divorce. Respondent and his former wife had previously worked out of the office together. The sign next to the entrance door had both of their names on it. Respondent taped over the name of his former wife and the sign was subsequently vandalized. Respondent had delayed obtaining a new sign until the divorce

    proceedings were concluded. The evidence indicates the road side sign was in place approximately fifteen feet from the entrance. Visitors to the office were sufficiently alerted to the identity of the real estate broker within. In view of all the circumstances, Respondent was not in violation of the requirement that he have a sign on or about the entrance to the real estate office.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

23. The Petitioner has the burden to prove by clear and convincing evidence all essential allegations made against Respondent. See, Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

24. Section 475.25, Florida Statutes, (1989) empowers the Florida Real Estate Commission to revoke, suspend or otherwise discipline the real estate license of a licensee found guilty of any of the acts enumerated in Section

    475.25. The Administrative Complaint alleges that Respondent violated Section 475.25(1)(b), (d) and (e). Those sections provide in pertinent part as follows:

    
    

    475.25 Discipline --

    (1) The Commission may suspend a license for a period not exceeding ten years; may revoke a license... may impose an administrative fine not to exceed $1000 for each count or separate offense; and may issue a reprimand, or any

    or all of the foregoing, if it finds the licensee...

    * * *

    (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 in this state ...; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express or implied in a real estate transaction... It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the

    misconduct; or such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public.

    * * *

    (d) Has failed to account or 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 and delivery, any personal property such as money, fund, deposit, check draft,... or thing of value,

    ... 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. However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or if conflicting demands have been made upon him for the escrowed property, which property he still maintains in his escrow or trust account, the licensee shall promptly notify the commission of such doubts or conflicting demands and shall promptly:

    1. Request that the commission issue an escrow disbursement order determining who is entitled to the escrowed property;

    2. With the consent of all parties, submit the matter to arbitration; or

    3. By interpleader or otherwise, seek adjudication of the matter by a court.

    If the licensee promptly employs one of the escape procedures contained herein, and if he abides by the order of judgment resulting therefrom, no administrative complaint may be filed against the licensee for failure to account for, deliver, or maintain the escrowed property...

    (e) 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.

    * * *

    
    

25. Count I of the Administrative Complaint charges Respondent with failing to maintain an entrance sign as required by Section 475.22, Florida Statutes and Rule 21V-10.024, Florida Administrative Code.

    
    

26. Section 475.22, Florida Statutes (1989) provides in pertinent part:

    
    

    Broker to maintain office and sign at entrance of office. ... Each active broker shall maintain a sign on or about the entrance of his principal office and each branch office, which sign may be easily observed and read by any person about to enter such office and shall be of such form and minimum dimensions as shall be prescribed by the commission.

    
    

27. Rule 21V-10.024, Florida Administrative Code, provides pertinent part:

    
    

    Signs. All real estate brokers, holding an active license, shall erect and maintain a sign on or about the entrance of their principal office and all branch offices, which sign may be easily observed and read by persons about to enter the offices. Every such sign shall contain, in letters not less

    than one inch in height, the name of the broker, together with his trade name, if any, and if a partnership or corporation, shall contain the name of the firm or corporation along with the name of the principal broker(s) and the words "Licenses Real Estate Broker" (or Lic. Real Estate Broker)...

    
    

28. The evidence established that Respondent had a prominent sign along the roadside immediately in front of his office. In addition, Respondent had a sign immediately outside of his entrance door which had been taken down after recent vandalism. While the roadway sign did not have the required words "Licensed Real Estate Broker", Respondent was clearly identified and there was no doubt as to who the broker was at this office. In view of all of the circumstances, the failure to have a sign outside of the entrance door that included the words "Licensed Real Estate Broker" was at most a technical violation of the rule for which disciplinary action is unwarranted. The identity of the broker could easily be determined and the circumstances surrounding the missing sign provide an adequate explanation for the lack of a sign at the entrance way for a short period of time. Count I of the Administrative Complaint should be dismissed.

    
    

29. In Counts II and III, Petitioner has charged Respondent with violating Subsections 475.25(1)(b) and (e) as a result of the handling of the deposit in the Shoop/Butler transaction. The evidence in this case was sufficient to establish a violation of these provisions by clear and convincing evidence.

    
    

30. While the Butler deposit was timely placed in an escrow account at Respondent's bank, Respondent did not take the prompt action required when a dispute over those funds became evident.

    
    

31. Rule 21V-10.032, Florida Administrative Code, provides in pertinent part:

    
    

    Notice requirements. A real estate broker upon receiving conflicting demands on an earnest money deposit held in the broker's escrow account must notify the Florida Real Estate Commission, in writing, within five (5) working day of last party's demand and must institute one of the procedures of Section 475.25(1)(d), Florida Statutes, within thirty

    (30) days after the last demand. ...

    
    

32. When a dispute arose as to who was entitled to the funds, Respondent did not promptly notify the Florida Real Estate Commission as required by this rule. It appears that Respondent felt that Ms. Butler was sincerely interested in purchasing the property and that the contract was contingent upon her obtaining financing. Therefore, he continued to hold the money in escrow while she attempted to secure financing. Ms. Butler consented to him retaining the escrow deposit until she could either obtain financing or find another piece of property to purchase. In the meantime, however, Ms. Shoop felt that she was entitled to the deposit. By October of 1989, it was clear that there was a dispute over who was entitled to the escrow money. Once that dispute became obvious, Respondent was obligated under the existing rules of the Commission to promptly adopt one of the courses set forth in Section 475.25(1)(d). Respondent's failure to insure that some appropriate steps were promptly taken

    to resolve the dispute constitutes culpable negligence in a business transaction in violation of Section 475.25(1)(b) and is also a violation of the Rule and, therefore, Section 475.25(1)(e). Respondent's good faith belief that Ms. Shoop was not entitled to the deposit does not relieve him of his obligations under the rule once a dispute became obvious.

    
    

33. Rule 21V-24.001, Florida Administrative Code, sets forth the minimum and maximum penalties to be applied in a disciplinary case such as this and provides, in pertinent part, as follows:

    
    

    (3) The minimum penalty for all below listed sections is a reprimand and/or a fine up to

    $1,000.00 per count. ... The maximum penalties are as listed:

    * * *

    (h) 475.25(1)(b) -- Up to 5 years suspension or revocation.

    * * *

    (k) 475.25(1)(e) - Up to 8 years suspension or revocation.

    
    

34. Rule 21V-24.001(4) permits Petitioner to deviate from the foregoing guidelines if aggravating or mitigating circumstances are demonstrated. Rule 21V-24.001(4)(b), sets forth aggravating or mitigating circumstances to be considered in disciplining a licensee. Among the factors relevant in this case are the severity of the offense, the degree of harm to the consumer or public, the number of times the offense was previously committed by the licensee, and the disciplinary history of the licensee. Applying these factors, there is no evidence of prior disciplinary action against Respondent. The violation in this case appears to be an isolated incident. While Respondent failed to promptly initiate action to resolve the dispute over the deposit in the Butler/Shoop transaction, there is no indication that Respondent was attempting to defraud or harm either of the parties. It is clear that Ms. Butler was content with the money remaining in Respondent's escrow account. While Ms. Shoop was continuing to assert claims to the money, her entitlement to the deposit was questionable. Ms. Shoop will still recover her money if she is entitled to it. Therefore, the only injury that has occurred is the delay that Ms. Shoop has experienced in receiving the portion of the deposit, if any, that she is entitled to.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Petitioner enter a Final Order finding Respondent not

guilty of the allegations contained in Count I of the Administrative Complaint,

finding Respondent guilty of Counts II and III, reprimanding him, placing him on probation a period of one year and imposing a fine of $250.00.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 24th day of June, 1991.

J. STEPHEN MENTON 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 24th day of June, 1991.

APPENDIX TO RECOMMENDED ORDER

Both parties have submitted Proposed Recommended Orders. The following constitutes my rulings on the proposed findings of fact submitted by the parties.

The Petitioner's Proposed Findings of Fact

Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or

Reason for Rejection.

1. Rejected as unnecessary.

   
   

2. Adopted in substance in Findings of Fact 1.

   
   

3. Adopted in substance in Findings of Fact 1.

   
   

4. Adopted in substance in Findings of Fact 14.

   
   

5. Subordinate to Findings of Fact 21.

   
   

6. Adopted in substance in Findings of Fact 5.

   
   

7. Adopted in substance in Findings of Fact 5.

   
   

8. Adopted in substance in Findings of Fact 8.

   
   

9. Adopted in substance in Findings of Fact 7.

   
   

10. Subordinate to Findings of Fact 9-15.

    
    

11. Subordinate to Findings of Fact 15-18.

    
    

12. Adopted in substance in Findings of Fact 17.

The Respondent's Proposed Findings of Fact

Proposed Finding Paragraph Number in the Findings of Fact of Fact Number in the Recommended Order Where Accepted or

Reason for Rejection.

1. Rejected as irrelevant.

   
   

2. Rejected as unnecessary.

   
   

3. Adopted in substance in Findings of Fact 1.

   
   

4. Adopted in substance in Findings of Fact 1.

   
   

5. Adopted in substance in Findings of Fact 14.

   
   

6. Subordinate to Findings of Fact 2 and 21.

   
   

7. Adopted in substance in Findings of Fact 5.

   
   

8. Adopted in substance in Findings of Fact 5.

   
   

9. Adopted in substance in Findings of Fact 5.

   
   

10. Subordinate to Findings of Fact 7-15.

    
    

11. Subordinate to Findings of Fact 11.

    
    

12. Subordinate to Findings of Fact 10-17.

    
    

13. Adopted in substance in Findings of Fact 17.

COPIES FURNISHED:

James H. Gillis, Esquire Department of Professional

Regulation

Division of Real Estate Legal Section

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Kenneth A. Norberg

Arden Real Estate Associates

525 West Lantana Road Lantana, Florida 33462

Darlene F. Keller Division Director

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Jack McRay General Counsel

Department of Professional Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0792

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: 91-001713

Orders for Case No: 91-001713