STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 91-6683

)

BENIUDA HADDAD and )

SHARP REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a formal hearing in the above-styled case on May 14, 1992, in Miami, Florida.

APPEARANCES

For Petitioner: Theodore R. Gay, Esquire

Senior Attorney

Department of Professional Regulation Suite N-607

401 N.W. 2nd Avenue Miami, Florida 33128

For Respondent: Harold M. Braxton, Esquire

Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156

STATEMENT OF THE ISSUES

At issue in this proceeding is whether respondents committed the offenses alleged in the administrative complaint and, if so, what disciplinary action should be taken.

PRELIMINARY STATEMENT

By administrative complaint dated August 29, 1991, petitioner charged that respondents, Beniuda Haddad and Sharp Realty, Inc., licensed and registered, respectively, as real estate brokers in the State of Florida, were guilty of culpable negligence or breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes; guilty of having failed to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement was properly authorized in violation of Section 475.25(1)(k), Florida Statutes; and, guilty of having failed to prepare and sign monthly written escrow reconciliation statements as required by Rule

21V-14.012(2) and (3), Florida Administrative Code, in violation of Section 475.25(1)(e), Florida Statutes. Such charges were premised on an audit of respondents' escrow account which revealed a shortage of $2,500, and respondents' failure to prepare and sign monthly written reconciliation statements.

Respondents executed an election of rights disputing the allegations of fact contained in the administrative complaint, and requested a formal hearing. The matter was then referred to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes.

At hearing, petitioner called Hector Sehwerert, an investigator with the Department of Professional Regulation, and its exhibits 1-6 were received into evidence. Respondents called Beniuda Haddad and Jaime Vazquez as witnesses, but offered no exhibits.

The transcript of hearing was filed June 11, 1992, and the parties were granted leave until June 22, 1992, to file proposed findings of fact. The parties' proposals have been addressed in the appendix to this recommended order.

FINDINGS OF FACT

1. Petitioner, Department of Professional Regulation, Division of Real Estate (Department), is a state governmental licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the State of Florida, in particular Section 20.30, Florida Statutes, Chapters 120, 455, and 475, Florida Statutes, and the rules promulgated pursuant thereto.

   
   

2. Respondent, Beniuda Haddad (Haddad), is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been issued license number 0353300. The last license issued was as a broker, c/o Sharp Realty, Inc., 7360 Coral Way, Unit 21, Miami, Florida 33155.

   
   

3. Respondent, Sharp Realty, Inc., is now and was at all times material hereto, a corporation registered as a real estate broker in the State of Florida, having been issued license number 0241934, at an address of 7360 Coral Way, Unit 21, Miami, Florida 33155. At all such times, Haddad was licensed and operating as a qualifying broker and officer of Sharp Realty, Inc.

   
   

4. On June 13, 1991, the Department, through its investigator Hector Sehwerert, conducted an audit of respondents' real estate brokerage escrow account. Such audit revealed an escrow liability of $12,000, a bank balance of

   $9,500, and shortage of $2,500. Regarding respondents' escrow liability of

   $12,000, the proof demonstrates that upon receipt of such funds they were deposited in respondents' escrow account pending closure of the respective transactions. Notwithstanding, at the time of audit, the bank balance was only

   $9,500, leaving a deficit of $2,500 on pending transactions.

   
   

5. The audit further revealed that respondents had not been reconciling their escrow account on a monthly basis by comparing the brokers' escrow liability with their bank balance. At most, respondents balanced their bank statements, but made no effort to relate such balance to their escrow liability.

6. Following the audit, respondents were accorded three days to account for the shortage or replace it with their own funds. Respondents were unable to account for the shortage within such time, and offered no explanation for such shortage at hearing, but did promptly replace it with their own funds.

   
   

7. Respondents cooperated fully with the Department's investigator and, as heretofore noted, promptly replaced the shortage with their own funds.

   Moreover, there was no suggestion or proof that respondents had previously been the subject of any prior disciplinary proceeding.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. Sections 120.57(1) and 120.60(7), Florida Statutes.

   
   

9. At issue in these proceedings is whether respondents' conduct violated the provisions of Sections 475.25(1)(b), (e) and (k), Florida Statutes, and Rule 21V-14.012(2) and (3), Florida Administrative Code. In cases of this nature, the Department bears the burden of proving its charges by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). The nature of clear and convincing evidence has been described in Slomowitz v. Walker, 429 So.2d 797, 800 (Fla. 4th DCA 1983), as follows:

   
   

   We therefore hold that clear and convincing evidence requires that the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witness must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a

   firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established.

   
   

   Accord, Smith v. Department of Health and Rehabilitative Services, 522 So.2d 956 (Fla. 1st DCA 1988).

   
   

10. Pertinent to this case, Section 475.25(1), Florida Statutes, provides that the Florida Real Estate Commission may:

    
    

    . . . place a licensee, registrant, or permittee on probation, may suspend a license, registration, or permit for a period not exceeding 10 years; may revoke a license,

    registration, or permit; may impose an adminis- trative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing,

    it if finds that the licensee, registrant, permittee, or applicant:

    * * *

    (b) Has been guilty of . . . culpable negli- gence, or breach of trust in any business transaction in this state or any other state,

    nation, or territory . . . It is immaterial to the guilt of the licensee that the victim . . . of the misconduct has sustained no damage or loss [or] that the damage or loss has been settled and paid after discovery of the misconduct.

    * * *

    (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.

    * * *

    (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 with a title company, banking institution, credit union, or savings and loan association located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank, credit union, or savings and loan association located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized. . . .

    
    

11. Also pertinent to this case, Rule 21V-14.012, Florida Administrative Code, provides:

    
    

    1. 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), deposits 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 dis- closing the date of receipt of the source of

       the funds. The broker shall review, sign and date the monthly statement-reconciliation.

    2. 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 action taken reference shortages or overages of funds in the amount(s). Whenever a trust bank

       balance 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.

       
       

12. Here, the Department has demonstrated that respon-dents had an escrow liability of $12,000 but a bank balance of only $9,500. Upon audit, respondents could offer no explanation for such shortage, and, notwithstanding the elapse of almost one year, offered no explanation for such shortage at hearing. Under such circumstances, the proof supports the conclusion that respondents' failure to maintain such deposits in escrow evidences a breach of trust in a business transaction, as proscribed by Section 475.25(1)(b), Florida Statutes, as well as a failure to maintain such deposits until disbursement was properly authorized, as proscribed by Section 475.25(1)(k), Florida Statutes. The proof further demonstrates that respondents failed to make a monthly written reconciliation of their escrow account as required by Rule 21V-14.012(2) and (3), Florida Administrative Code, and therefore violated the provisions of Section 475.25(1)(e), Florida Statutes.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is recommended that a final order be rendered finding the respondents guilty of violating the provisions of Section 475.25(1)(b), (e) and (k), Florida Statutes, and that respondents be placed probation for a term of one (1) year and fined

$1,000.00 for such offenses.

RECOMMENDED in Tallahassee, Leon County, Florida, this 30th day of June 1992.

WILLIAM J. KENDRICK

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 30th day of June 1992.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-6683

The Department's proposed findings of fact are addressed as follows:

1. Addressed in paragraph 2.

2 & 3. Addressed in paragraph 3.

4-6. Addressed in paragraphs 4 and 5, otherwise subordinate.

1. Addressed in paragraph 5, otherwise subordinate.

2. Addressed in paragraphs 5 and 6, otherwise subordinate.

3. Addressed in paragraphs 4-6, otherwise subordinate.

4. Addressed in paragraph 6.

The Respondents' proposed findings of fact are addressed as follows:

1. Addressed in paragraph 2.

2. Addressed in paragraph 3.

3. Addressed in paragraph 4.

4. Subordinate.

5. Addressed in paragraph 5. Second sentence rejected as contrary to the credible proof.

6. Addressed in paragraph 5.

7 & 8. Addressed in paragraph 4, otherwise subordinate.

9 & 10. Rejected as not a finding of fact. See paragraph 4, Conclusions of Law.

1. Addressed in paragraph 6, otherwise not relevant.

2. Addressed in paragraph 6.

13-15. Addressed in paragraph 7, otherwise rejected as recitation of testimony and not a finding of fact.

COPIES FURNISHED:

Theodore R. Gay, Esquire Senior Attorney

Department of Professional Regulation

Suite N-607

401 N.W. 2nd Avenue Miami, Florida 33128

Harold M. Braxton, Esquire Suite 400, One Datran Center 9100 South Dadeland Boulevard Miami, Florida 33156

Jack McRay General Counsel

Department of Professional Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0792

Darlene F. Keller Division Director Division of Real Estate

Department of Professional Regulation

Post Office Box 1900 Orlando, Florida 32801

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: 91-006683

Orders for Case No: 91-006683