STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 97-2144

)

EDUARDO SALAZAR, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a Section 120.57(1) hearing was held in this case on October 17, 1997, by video teleconference at sites in Miami and Tallahassee, Florida, before Stuart M. Lerner, a duly designated Administrative Law Judge of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Geoffrey T. Kirk, Esquire

Department of Business and Professional Regulation

400 West Robinson Street, Suite N-308 Orlando, Florida 32801-1772

For Respondent: Frederick H. Wilsen, Esquire

Law Offices of Gillis and Wilsen 1415 East Robinson Street Orlando, Florida 32801

STATEMENT OF THE ISSUES

1. Whether Respondent committed the violations alleged in the Administrative Complaint.

2. If so, what punitive action should be taken against him.

   PRELIMINARY STATEMENT

   
   

   On October 10, 1996, the Department of Business and Professional Regulation (Department) issued an Administrative Complaint against Respondent. The Administrative Complaint contained the following "essential allegations of material fact":

   1. Petitioner is the state government 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 20.165, Fla. Stat., Chapters 120, 455 and 475, Fla. Stat., and the rules promulgated pursuant thereto.

      
      

   2. Respondent is and was at all times material hereto a licensed real estate broker, issued license number 0194989 in accordance with Chapter 475, Fla. Stat.

      
      

   3. The last license issued was as a broker at 1355 W. 53rd Street #320, Hialeah, Florida 33012.

      
      

   4. Respondent also is the President and principal stock holder of Double Diamond Properties, Inc.. a/k/a Imperial Acres (hereinafter referred to as "Double Diamond"). A copy of an Affidavit dated February 23, 1996 from Respondent is attached hereto, incorporated herein and made a part hereof by reference as Administrative Complaint Exhibit 1.

      
      

   5. Double Diamond owns undeveloped property in Polk County, Florida which it markets in Puerto Rico. See Exhibit 1.

      
      

   6. Respondent utilized the services of Mr. Raul Marrero to show parcel #818 at Imperial Acres to Mr. Angel Martinez. See Exhibit 1 hereto. At all material times,

      Mr. Marrero did not possess a valid, current and active real estate license from the State of Florida. A copy of DBPR's computer print- out is attached hereto, incorporated herein

      and made a part hereof by reference as Administrative Complaint Exhibit 2.

      
      

   7. Mr. Martinez entered into a contract to purchase the aforedescribed parcel on or about June 28, 1992. A copy of the purchase contract is attached hereto, incorporated herein and made a part hereof by reference as Administrative Complaint Exhibit 3.

      Mr. Martinez paid the balance of the purchase price in October, 1992. See Exhibit 1.

      
      

   8. Mr. Raul Marrero entered Florida and personally showed the parcel in question to Mr. Martinez. A copy of a letter dated September 25, 1995, from Double Diamond to Mr. Martinez is attached hereto, incorporated herein and made a part hereof by reference as Administrative Complaint Exhibit 4. Exhibit

      4 states, in part: "Furthermore, Mr. Raul Merrier, the Real Estate salesman that sold you the parcel, stated that he personally showed you the property. . . ." (Emphasis supplied.)

      
      

   9. Mr. Raul Marrero received a commission for his role in effecting the sale of said parcel from Double Diamond to Mr. Martinez. See Exhibit 1.

      
      

   10. Furthermore, the said parcel which was sold to Mr. Martinez by Double Diamond was not a lawful building site. See Exhibits 1 and 4.

       
       

   11. At all material times hereto, Respondent knew or should have known that the parcel he sold to Mr. Martinez could not be built on because Polk County had not yet installed roads -- the County will not issue a building permit where, among other things, the property sought to be developed does not abut a County approved road. See Exhibits 1 and 4.

       
       

   12. Respondent, as a (broker) licensee, had [the] duty to make full and adequate disclosure to the buyer as to any and all material facts which could affect the subject real estate.

   13. At all material times hereto and including the time Mr. Martinez contracted for the subject property and including the time Mr. Martinez paid the balance of the purchase price in full, Mr. Martinez understood that the subject property was buildable. It was only after Mr. Martinez attempted to secure a building permit that he learned that he could not build on the property. A true copy of Mr. Martinez's complaint/additional statement dated

January 29-30, 1996 is attached hereto, incorporated herein and made a part hereof by reference as Administrative Complaint Exhibit

5. True copies of correspondence from Mr. Martinez to the Polk County Building Department dated December 27, 1993 and the Polk Building Department's reply dated January 13 are attached hereto, incorporated herein and made a part hereof by reference as Administrative Complaint Exhibit 6.

[14.] Respondent failed to adequately inform the buyer, Mr. Martinez, that he could not lawfully build a house (or anything else for that matter) on the property he was buying prior to Mr. Martinez closing on said property.

COUNT I

Based upon the foregoing, Respondent is guilty of having employed any person as a salesperson who is not the holder of a valid and current license as salesperson in violation of Section 475.42(1)(c), Fla. Stat. and therefore in violation of Section 475.25(1)(e), Fla. Stat.

COUNT II

Based upon the foregoing, Respondent is guilty of sharing a commission with, or paid a fee or other compensation to, a person not properly licensed as a broker, broker- salesperson, or salesperson under the laws of this state, for the referral of real estate business, clients, prospects, or customers, or for any one or more of the services set

forth Section 475.01(1)(c), Fla. Stat. and therefore in violation of Section 475.25(1)(h), Fla. Stat.

COUNT III

Based upon the foregoing, Respondent is guilty of fraud, misrepresentation by omission, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in any business transaction in this state or any other state, nation, or territory in violation of Section 475.25(1)(b), Fla. Stat.

WHEREFORE, Petitioner respectfully requests the Florida Real Estate Commission to issue a Final Order as final agency action finding the Respondent guilty as charged. The penalty for each count or separate offense may range from a reprimand; an administrative fine not to exceed $5,000.00 per violation; probation; suspension of license, registration or permit for a period not to exceed ten (10) years; revocation of the license, registration or permit; and any one or all of the above penalties as provided for by Section 455.227 and Section 475.25(1), Fla. Stat. and Fla. Admin. Code R. 61J2-

24.001. In addition to the foregoing,

Petitioner requests an award of costs as provided for by Section 455.227(3).

Respondent subsequently requested a Section 120.57(1) hearing on the allegations made in the Administrative Complaint. On May 8, 1997, the matter was referred to the Division of Administrative Hearings for the assignment of an administrative law judge to conduct the Section 120.57(1) hearing Respondent had requested.

As noted above, the hearing was held on October 17, 1997.1 Respondent was the only witnesses to testify at the hearing. In addition to Respondent's testimony, 20 exhibits (all of which were offered by the Department) were received into evidence.

Among these exhibits were the transcript of the October 8, 1997, deposition of Angel Martinez, the allegedly aggrieved purchaser referenced in the Administrative Complaint, and the February 28, 1996, sworn written statement of Raul Marrero, who, according to the Administrative Complaint, showed the property Martinez purchased, notwithstanding that he (Marrero) did not possess a Florida-issued real estate license. These two exhibits were offered and received into evidence, without objection, in lieu of Martinez's and Marrero's live testimony.

At the conclusion of the evidentiary portion of the hearing, the undersigned announced on the record that proposed recommended orders had to be filed no later than 20 days from the date of the undersigned's receipt of the transcript of the final hearing.

The undersigned received the hearing transcript on November 10, 1997. The Department and Respondent timely filed their proposed recommended orders on Wednesday, November 26, 1997, and Monday, December 1, 1997, respectively. These post-hearing submittals have been carefully considered by the undersigned.

FINDINGS OF FACT

Based upon the evidence adduced at hearing and the record as a whole, the following findings of fact are made:

1. Respondent is now, and has been since 1980, a Florida- licensed real estate broker (holding license number 0194989).

2. For the two years immediately prior to his obtaining his Florida broker's license, he was licensed as a real estate

   salesperson in Florida.

   
   

3. Respondent has also been licensed as a real estate broker in Puerto Rico.

4. Respondent is the president and sole shareholder of Double Diamond Properties, Inc. (Double Diamond).

5. Double Diamond owns undeveloped, subdivided acreage in Polk County, Florida.

6. The subdivision is known as Imperial Acres.

   
   

7. Double Diamond began offering lots for sale in the Imperial Acres subdivision in 1991 or early 1992 after obtaining the required approval to do so from the Florida Division of Florida Land Sales, Condominiums, and Mobile Homes (in the form of an order of registration issued pursuant to Chapter 498, Florida Statutes).

8. As of the date of the final hearing in this case, Double Diamond had sold all but 80 or 90 of the approximately 400 acres in the Imperial Acres subdivision. No residential structures have been constructed on any of the lots Double Diamond has sold.

9. Double Diamond retained the services of Puerto Rico Property Services, Inc. (PRPS), a real estate broker licensed in Puerto Rico and owned in part (one-half) by Respondent, to market and sell in Puerto Rico (on behalf of Double Diamond) lots in the Imperial Acres subdivision in return for a commission paid by Double Diamond.

10. PRPS agreed, at Double Diamond's request, to perform

    these services in accordance with the requirements of Florida law concerning the sale of Florida subdivided lands.

11. PRPS hired Raul Marrero to assist it in performing these services in return for a commission paid by PRPS.

12. Marrero does not now, nor did he at any time relevant to the instant case, possess a Florida-issued real estate license. He does have, however, a license to sell real estate in Puerto Rico.

13. Angel Martinez is an 81 year-old retiree who now resides in El Paso, Texas, with his son.

14. In or about 1992, Martinez was living in Puerto Rico when he heard Marrero advertising the Imperial Acres subdivision on a local radio program. Marrero told listeners that the lots for sale in the subdivision were good investments because of their proximity to the Disney attractions in central Florida.

15. After hearing the radio advertisement, Martinez contacted Marrero to express his interest in purchasing a lot in Imperial Acres. Martinez was interested in making such a purchase "primarily as an investment."

16. Marrero thereafter delivered to Martinez at Martinez's home in Puerto Rico an English and Spanish version2 of an unsigned Property Purchase Agreement (Contract) for the purchase by Martinez from Double Diamond of Parcel 818 in the Imperial Acres subdivision for a "purchase price," excluding finance charges, of $7,995.00. The Contract provided for Martinez to

    make a down payment of $700.00 and for the remainder ($7,295.00) of the "purchase price" to be financed by Double Diamond and repaid by Martinez in 157 monthly payments of $75.29 per month (thereby bringing the "total sale price" to $12,475.91).

17. The Contract that Marrero delivered to Martinez was prepared on a form Property Purchase Agreement (drafted by an attorney retained by Double Diamond) that had been submitted to the Florida Division of Florida Land Sales, Condominiums, and Mobile Homes along with Double Diamond's application for registration of the Imperial Acres subdivision. The form Property Purchase Agreement (and consequently the Contract) contained the following provisions, among others:

    Security: Seller retains title to the Property until receipt of payment in full from purchaser as obligations under the contract documents. . . .

    
    

    Prepayment: There is no pre-payment penalty. If you pay off early you will not have to pay a penalty. See your contract documents for any additional information about non-payment or default. . . .

    
    

    Purchaser acknowledges that he has read all the terms, conditions and acknowledgments above and on the reverse side hereof and all such terms, conditions and acknowledgments are a part of this agreement and further acknowledges that the required Public Offering Statement has been delivered to him in advance of the signing of this Property Purchase Agreement. The date of this transaction shall be the date this agreement is signed by Double Diamond Properties of Polk County, Inc.

    
    

    If Purchaser did not receive a Florida Public Offering Statement prior to signing this

    contract or agreement, Purchaser may cancel the contract or agreement by giving notice to the Seller anytime before midnight of the seventh day following the signing of the contract or agreement.

    
    

    If purchaser did not receive a Florida Public Offering Statement before signing the contract or agreement, Purchaser may cancel the contract or agreement anytime within two years from the date of signing. . . .

    
    

    ADDITIONAL TERMS AND CONDITIONS OF AGREEMENT

    
    

    1. WARRANTY DEED: Within sixty (60) days after payment in full of the purchase[] price, DOUBLE DIAMOND PROPERTIES OF POLK COUNTY, INC. will deliver a Warranty Deed conveying good, marketable or insurable title to Purchaser, free and clear of all encumbrances, except those restrictions, conditions, reservations and easements which are of record and local zoning and regulatory ordinances. All oil, gas and mineral rights have been reserved by prior owners. These reservations are recorded in the Public Records of Polk County, Florida.

       
       

    2. POSSESSION: Possession and use of the property shall be retained by Double Diamond Properties of Polk County, Inc. until the purchase price is paid in full and the Warranty Deed is delivered. . . .

       
       

       1. IMPROVEMENTS: Seller is not promising to make any improvements to the property. The property offered herein is unimproved, unsurveyed acreage without roads, drainage or other improvements. The County Government of Polk County, Florida has not promised or agreed to provide streets or other improvements to this property. Purchasers are subject to and shall abide by the conditions and restrictions imposed by the County in which the property is located.

          
          

       2. CLOSING COSTS: Upon payment in full and compliance with the terms and provisions of this Contract, Seller shall cause the deed to be recorded in Purchaser(s)' name and Seller

          shall pay all recording fees and documentary stamps required by state law. . . .

          
          

       3. This purchase agreement and attached rider(s), if any, constitute the entire agreement and the Purchaser acknowledges that no additional representations have been made.

       
       

       In addition, immediately to the left of the signature line for the purchaser in the English version (and at the bottom of the first page in the Spanish version) was the following provision:

       This property is unimproved, unsurveyed and without roads or drainage. 35 % of the property is swampy bayhead and is subject to flooding. All oil, gas and mineral rights have been reserved.

       
       

18. The Public Offering Statement referenced in the Contract (like the Contract) had been prepared by an attorney retained by Double Diamond and it too had been submitted to the Florida Division of Florida Land Sales, Condominiums, and Mobile Homes in connection with Double Diamond's application for registration of the Imperial Acres subdivision. The Public Offering Statement provided additional information concerning the subdivision. Among other things, it described government regulations affecting development in the subdivision and it indicated that the subdivision was located in the Green Swamp Area of Critical State Concern.3

19. Martinez signed both the English and Spanish versions of the Contract (on the purchaser signature line), and made a down payment of $700.00, on June 28, 1992. He did not read either version of the Contract carefully before signing them.

20. Respondent, in his capacity as the president of Double Diamond, ultimately received the English and Spanish versions of the Contract that Martinez had signed. Respondent also received a receipt for a Public Offering Statement that appeared to have been signed by Martinez on June 28, 1992.

21. Respondent signed the English and Spanish versions of the Contract on behalf of Double Diamond (as the seller of the property which was the subject of the Contract) on July 13, 1992.

22. After making two or three monthly payments (as prescribed by the Contract), Martinez determined that it would be in his best interest to "prepay" (in one lump sum) the remainder of the amount he owed. He therefore, in or about October of 1992, made such a "prepayment" (in the form of check made payable to Puerto Rico Property Services, Inc., in the amount of

    $6,795.00).

    
    

23. Double Diamond thereafter provided Martinez with a warranty deed to the property. The deed was signed by Respondent in his capacity as president of Double Diamond.

24. Before making payment in full, Martinez (on the advice of his banker) travelled to Florida and visited the Imperial Acres subdivision. Marrero escorted Martinez on his visit and showed him Parcel 818.4

25. On their way to the Imperial Acres subdivision, as they were passing by a trailer and houses, Marrero made a comment that led Martinez to erroneously believe that these structures were on

    land that was part of the subdivision.

    
    

26. During his visit to the Imperial Acres subdivision, Martinez advised Marrero that he hoped to someday construct a home for himself on the property he had purchased. In response to this advisement, Marrero suggested that Martinez contact the "county engineers" concerning "access to the property."

27. At no time did Marrero specifically tell Martinez that he (Martinez) would not be able to build on the property. Neither did he ever affirmatively state to Martinez that he (Martinez) would be able to build on the property.

28. Marrero was paid a commission by PRPS for facilitating the sale of the property. Neither Respondent, nor Double Diamond, compensated Marrero for his services.

29. Martinez dealt exclusively with Marrero in connection with his (Martinez's) acquisition of Parcel 818 of the Imperial Acres subdivision.

30. At no time prior to his receiving title to Parcel 818 did Martinez have any personal contact or communication with Respondent.

31. At no time did Respondent instruct or authorize Marrero to misrepresent to Martinez (by either affirmative statement or concealment) that he (Martinez) would be able to build on the property under existing conditions, nor did Respondent have any reason to believe that Marrero would make such a misrepresentation. Furthermore, there is no indication that

    Respondent had any intent to deceive Martinez and lead him (Martinez) to believe that, at the time the transaction was consummated, it was legally possible to build on the property. Respondent reasonably believed, in light of the favorable action taken by the Florida Division of Florida Land Sales, Condominiums, and Mobile Homes on Double Diamond's application for registration of the Imperial Acres subdivision, that the information contained in the Contract and the Public Offering Statement (both of which had been submitted to the Florida Division of Florida Land Sales, Condominiums, and Mobile Homes along with Double Diamond's application for registration and, as far as Respondent knew, had been reviewed by Martinez) was sufficient to meet any legal obligation Double Diamond may have had to apprise Martinez about restrictions on the development of the property.5

32. After receiving title to Parcel 818, Martinez wrote a letter to the Polk County Department of Development Coordination inquiring about the possibility of his building on the property.

33. By letter dated January 13, 1993, Pat Brady, a Polk County Permit Technician, responded to Martinez's inquiry as follows:

    The above referenced property [Parcel 818] which is currently zoned Rural Conservation does not abut a County approved road for access.

    
    

    I am enclosing a copy of items needed to secure a permit in this County.

    You will determine by this information that at this time we cannot issue a building permit for this property.

    
    

34. Polk County Ordinance No. 92-5, which became effective April 30, 1992, provides that "[n]o building or mobile home set- up permit shall be issued unless the lot or parcel upon which the proposed structure will be located has a minimum frontage of fifty (50) feet abutting a street or road which is publicly maintained." Pursuant to the ordinance, a variance from this prohibition may be granted, if "the following criteria have been met":

    1. That the applicant has record access to the lot or parcel which is the subject of the variance. Such determination shall not constitute a representation to the applicant or any other person concerning the state of the title of such access.

       
       

    2. That the access is or will be reasonably sufficient in width and stability to allow ingress and egress by motor vehicles including school buses, fire, and other emergency vehicles.

       
       

    3. That the lot, parcel or surrounding land is not susceptible to such future resubdivision as will adversely impact the access to the lot or parcel or will result in disorderly and unplanned development.

       
       

    4. That the variance, if granted, will not result in traffic control or road maintenance problems either on the property which is the subject of the variance or any abutting publicly maintained road.

       
       

    5. The approval of the variance request will not set a precedent for similar variance request[s] in the area, thereby resulting in increased development and traffic as referred to in 4 above. In order to determine if a

       precedent will be set, the following factors should be considered:

       
       

       1. There have been no other variances granted using the same access.

          
          

       2. The surrounding property can be subdivided into three or more lots or parcels, each of which would require a variance from this ordinance in order to obtain a building permit for each lot.

          
          

       3. There are existing lots in the vicinity of the variance request which have not been built on and would require a variance from this ordinance in order to obtain a building permit.

          
          

    6. If the private access is used by more than one person or family the access will be maintained.

       
       

    7. There are no reasonable alternatives available to the applicant other than the variance request which would allow the permit to be issued without the need for a variance.

       
       

    8. The lot size and intended use are consistent with the zoning designation of the parcel.

       
       

    9. There are no restrictions placed on the property which would preclude the issuance of a permit or the division of a parcel.

       
       

    10. The variance is the minimum necessary to afford relief to enable the applicant to utilize the property.

        
        

    11. The lot or parcel contains sufficient upland from the 100 year flood plain or wetlands to be used in accordance with the variance request.

        
        

        The burden of demonstrating entitlement to a variance from the regulations shall rest with the applicant.

        Approval of any variance request must be consistent with the County Comprehensive Plan.6

35. Had he been more diligent, Martinez could have discovered prior to having purchased his lot in the Imperial Acres subdivision what he learned after his purchase from reading Brady's January 13, 1993, letter: that, without a "County approved road" abutting the lot and without a variance, he would not be able to build on the lot (pursuant to Polk County Ordinance No. 92-5O).

36. After making this post-purchase discovery, Martinez wrote to Double Diamond requesting that they either assist him in "getting [him] a buyer for [his] land" or, alternatively, refund the monies he paid to purchase it.

37. Carmen Camacho of Double Diamond's accounting department responded to Martinez's request by letter dated September 25, 1995, the body of which read as follows:

    Please excuse our belated answer to your July 31st letter. The contract for the purchase of your parcel #818 specifically state[s] that these are unimproved acres, therefore you are right [that there can be no building activity on the parcel at this time].

    
    

    This property is not meant to build a home on it because it has not been improved.

    Furthermore, Mr. Raul Marrero, the Real Estate salesman that sold you the parcel, stated that he personally showed you the property and told you that you could not build on it.7

38. Martinez subsequently filed a complaint against Respondent with the Department. In his complaint, he described

    his version of the events that led to his acquisition of Parcel 818 in the Imperial Acres subdivision.

39. Martinez's complaint was investigated by the Department.

40. Following the completion of its investigation, the Department issued the Administrative Complaint which is the subject of this proceeding.

    CONCLUSIONS OF LAW

    
    

41. The Florida Real Estate Commission (Commission) is statutorily empowered to take disciplinary action against Florida-licensed real estate brokers based upon any of the grounds enumerated in Section 475.25(1), Florida Statutes.

42. Such disciplinary action may include one or more of the following penalties: license revocation; license suspension (for a period not exceeding ten years); imposition of an administrative fine not to exceed $1,000.00 for each count or separate offense; issuance of a reprimand; and placement of the licensee on probation. Section 475.25(1), Florida Statutes.

43. Proof greater than a mere preponderance of the evidence must be submitted. Clear and convincing evidence is required. See Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932, 935 (Fla. 1996); Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987); McKinney v. Castor, 667 So. 2d 387, 388 (Fla. 1st DCA 1995); Tenbroeck v. Castor, 640 So. 2d 164, 167 (Fla. 1st DCA

    1994); Nair v. Department of Business and Professional Regulation, 654 So. 2d 205, 207 (Fla. 1st DCA 1995); Pic N' Save v. Department of Business Regulation, 601 So. 2d 245 (Fla. 1st DCA 1992); Munch v. Department of Professional Regulation, 592 So. 2d 1136 (Fla. 1st DCA 1992); Newberry v. Florida Department of Law Enforcement, 585 So. 2d 500 (Fla. 3d DCA 1991); Pascale v. Department of Insurance, 525 So. 2d 922 (Fla. 3d DCA 1988); Section 120.57(1)(h), Florida Statutes. ("Findings of fact shall be based on a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute.").

44. "'[C]lear 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 witnesses 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.'" In re Davey, 645 So. 2d 398, 404 (Fla. 1994), quoting, with approval, from Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983).

45. The disciplinary action taken against the licensee may be based only upon those offenses specifically alleged in the administrative complaint. See Cottrill v. Department of Insurance, 685 So. 2d 1371 (Fla. 1st DCA 1996); Kinney v.

    Department of State, 501 So. 2d 129, 133 (Fla. 5th DCA 1987); Hunter v. Department of Professional Regulation, 458 So. 2d 842, 844 (Fla. 2d DCA 1984).

46. In determining whether Section 475.25(1), Florida Statutes, has been violated in the manner charged in the administrative complaint, one “must bear in mind that it is, in effect, a penal statute. . . . This being true the statute must be strictly construed and no conduct is to be regarded as included within it that is not reasonably proscribed by it. Furthermore, if there are any ambiguities included such must be construed in favor of the . . . licensee.” Lester v. Department of Professional and Occupational Regulations, 348 So. 2d 923, 925 (Fla. 1st DCA 1977).

47. The Administrative Complaint issued in the instant case alleges that, in connection with the sale of a lot in Polk County, Florida (Parcel 818 of the Imperial Acres subdivision) owned by a corporation of which Respondent was the president and sole shareholder (Double Diamond), Respondent engaged in conduct that violated: Section 475.25(1)(b), Florida Statutes (Count III); Section 475.42(1)(c), Florida Statutes, and therefore also Section 475.25(1)(e), Florida Statutes (Count I); and Section 475.01(1)(c), Florida Statutes, and therefore also Section 475.25(1)(h), Florida Statutes Count II).

48. Subsection (1)(b) of Section 475.25, Florida Statutes, authorizes the Commission to discipline a Florida-licensed real

    estate broker who "[h]as 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 or any other state, nation, or territory; 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; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme.

    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 that 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."

49. A broker may be disciplined pursuant to subsection (1)(b) of Section 475.25, Florida Statutes, "not only for dishonest conduct in transactions in which his only interest is as a broker, but also for such conduct in his own personal affairs," including transactions involving the sale of the broker's own real property. LaRossa v. Department of Professional Regulation, 474 So. 2d 322, 323 (Fla. 3d DCA 1985).

50. Whether the business transaction is one in which the

    licensee acts in his capacity as a broker or one in which he acts on his own behalf there must be wrongful intent or scienter on the part of the licensee for there to be a violation of subsection (1)(b) of Section 475.25, Florida Statutes. See Munch v. Department of Professional Regulation, 592 So. 2d 1136, 1143-

    44 (Fla. 1st DCA 1992); Morris v. Department of Professional Regulation, 474 So. 2d 841, 843 (Fla. 5th DCA 1985).

51. Subsection (1)(e) of Section 475.25, Florida Statutes, authorizes the Commission to discipline a Florida-licensed broker who "[h]as violated any of the provisions of this chapter [Chapter 475, Florida Statutes]."

52. Among the "provisions of this chapter [Chapter 475, Florida Statutes]" is subsection (1)(c) of Section 475.42, Florida Statutes, which provides that "[n]o broker shall employ, or continue in employment, any person as a salesperson who is not the holder of a valid and current license as salesperson."

53. Section 475.01(2), Florida Statutes, provides that the terms "employ," and "employment," when used in Chapter 475, Florida Statutes, "describe the relationship between a broker and a salesperson," and "include an independent contractor relationship when such relationship is intended by and established between a broker and a salesperson."

54. "Salesperson," as used in Chapter 475, Florida Statutes, "means a person who performs any act specified in the definition of 'broker,' but who performs such act under the

    direction, control, or management of another person." Section 475.01(1)(d), Florida Statutes.

55. "Broker," as used in Chapter 475, Florida Statutes, is defined in Section 475.01(1)(c), Florida Statutes, as follows:

    "Broker" means a person who, for another, and for a compensation or valuable consideration directly or indirectly paid or promised, expressly or impliedly, or with an intent to collect or receive a compensation or valuable consideration therefor, appraises, auctions, sells, exchanges, buys, rents, or offers, attempts or agrees to appraise, auction, or negotiate the sale, exchange, purchase, or rental of business enterprises or business opportunities or any real property or any interest in or concerning the same, including mineral rights or leases, or who advertises or holds out to the public by any oral or printed solicitation or representation that he is engaged in the business of appraising, auctioning, buying, selling, exchanging, leasing, or renting business enterprises or business opportunities or real property of others or interests therein, including mineral rights, or who takes any part in the procuring of sellers, purchasers, lessors, or lessees of business enterprises or business opportunities or the real property of another, or leases, or interest therein, including mineral rights, or who directs or assists in the procuring of prospects or in the negotiation or closing of any transaction which does, or is calculated to, result in a sale, exchange, or leasing thereof, and who receives, expects, or is promised any compensation or valuable consideration, directly or indirectly therefor; and all persons who advertise rental property information or lists. A broker renders a professional service and is a professional within the meaning of s. 95.11(4)(a). Where the term "appraise" or "appraising" appears in the definition of the term "broker," it specifically excludes those appraisal services which must be performed only by a state-licensed or state-certified appraiser,

    and those appraisal services which may be performed by a registered appraiser as defined in part II. The term "broker" also includes any person who is a general partner, officer, or director of a partnership or corporation which acts as a broker. The term "broker" also includes any person or entity who undertakes to list or sell one or more timeshare periods per year in one or more timeshare plans on behalf of any number of persons, except as provided in ss. 475.011 and 721.20.

56. Subsection (1)(h) of Section 475.25, Florida Statutes, authorizes the Commission to discipline a Florida-licensed broker who "[h]as shared a commission with, or paid a fee or other compensation to, a person not properly licensed as a broker, broker-salesperson,8 or salesperson under the laws of this state, for the referral of real estate business, clients, prospects, or customers, or for any one or more of the services set forth in s. 475.01(1)(c)," Florida Statutes. It further provides as follows:

    For the purposes of this section, it is immaterial that the person to whom such payment or compensation is given made the referral or performed the service from within this state or elsewhere; however, a licensed broker of this state may pay a referral fee or share a real estate brokerage commission with a broker licensed or registered under the laws of a foreign state so long as the foreign broker does not violate any law of this state.

57. A "foreign broker" (without a Florida real estate license) violates the laws of this state if he performs compensable real estate brokerage services in Florida. There is no violation of Florida law, however, if the "foreign broker" merely assists in locating purchasers in the state or other

    jurisdiction where he is licensed and he performs no compensable brokerage services in Florida. See Revac, S.A. v. Arthur V. Woodward, P.A., 550 So. 2d 3 (Fla. 2d DCA 1989); Winchester v.

    Amrhein-Hatcher, Inc., 436 So. 2d 274 (Fla. 4th DCA 1983); Krieger v. Ocean Properties, Ltd., 387 So. 2d 1012 (Fla. 4th DCA 1980); Kagan v. Garfinkle, 312 So. 2d 778 (Fla. 3d DCA 1975); Paris v. Hilton, 352 So. 2d 534 (Fla. 1st DCA 1977); Pokress v. Tisch Florida Properties, Inc., 153 So. 2d 346 (Fla. 3d DCA 1963).

58. None of the provisions of Section 475.25(1), Florida Statutes, that Respondent is alleged to have violated authorize the Commission to discipline a Florida-licensed broker for the misconduct of his employees or agents acting on his behalf where there is no showing of personal wrongdoing on the part of the licensee. Cf. Pic N' Save v. Department of Business Regulation, 601 So. 2d 245, 250 (Fla. 1st DCA 1992)("Although the statutory language in section 561.29(1) has since 1957 spoken in terms of the Division's power to revoke or suspend a beverage license for violations of the beverage law committed by a licensee, or 'its agents, officers, servants, or employees,'9 the courts of this state have consistently construed and applied this disciplinary authority only on the basis of personal misconduct by the licensee. Thus, while an employee may violate the beverage law in making illegal sales of alcoholic beverages to minors, the licensee's culpable responsibility therefor is measured in terms

    of its own intentional wrongdoing or its negligence and lack of diligence in training and supervising its employees regarding illegal sales. This limitation on the licensee's liability is consistent with the notion, also long recognized by the courts of this state, that one's license to engage in an occupation is not to be taken away except for misconduct personal to the licensee.

    . . . While the statute Pic N' Save allegedly violated in this case, section 562.11, Florida Statutes, is the same statute that was involved in Davis [Davis v. Shiappacossee, 155 So. 2d 365 (Fla. 1963], this case is not a civil negligence action for personal injury damages resulting from harm caused by the alleged illegal sales; the principles of respondeat superior applied in Davis have no application in determining whether Pic N' Save's license should be revoked or suspended; and the burden of proof to establish the licensee's personal misconduct is significantly stricter than that applicable to civil cases such as Davis."); McDonald v. Department of Professional Regulation, Board of Pilot Commissioners, 582 So. 2d 660, 669 (Fla. 1st DCA 1991)("There is no language to clearly evidence a legislative intent to impose on a state licensed pilot vicarious responsibility for the neglect or misconduct or others, i.e., to hold the pilot strictly responsible for the conduct of all other personnel involved in operating and maneuvering the vessel at the time the allision occurred. The statute does not purport to impose any nondelegable duties on a state licensed harbor pilot that would

    give rise to personal responsibility for the negligent acts of others. Under Florida law, disciplinary statutes such as section

    310.101 are penal in nature and must be strictly construed against the enforcing agency; thus, without a clear, unambiguous provision in the statute indicating legislative intent to hold the licensee responsible for the negligent or wrongful acts committed by another, the administrative agency is not authorized to so extend the effect of the statute."10); Federgo Discount Center v. Department of Professional Regulation, Board of Pharmacy, 452 So. 2d 1063, 1066 (Fla. 3d DCA 1984)("We conclude that if the Legislature desired to make community pharmacy permittees strictly liable for the acts of pharmacists who are separately licensed by the State, then it could have done so in no uncertain terms. In the absence of a clear expression from the Legislature making these permittees subject to discipline for the misdeeds of their chosen licensed pharmacist, we are obliged to reverse the Board's order of revocation.").

59. In the instant case, the record evidence fails to clearly and convincingly establish that, in connection with Double Diamond's sale to Martinez of Parcel 818 of the Imperial Acres subdivision, Respondent engaged in "personal misconduct" in violation of the provisions of Chapter 475, Florida Statutes, cited in Counts I through III of the Administrative Complaint.

60. While Martinez may not have realized until after the transaction was consummated that "he could not lawfully [in light

    of Polk County Ordinance 92-5] build a house (or anything else for that matter) on the property" he had purchased, it has not been shown that Respondent personally engaged in any conduct calculated to mislead Martinez concerning the restrictions on the development of the property or that Respondent in any other way violated subsection (1)(b) of Section 475.25, Florida Statutes, in connection with the sale of the property, as alleged in Count III of the Administrative Complaint.

61. It appears that Respondent, in his capacity as president and sole shareholder of Double Diamond, acted, not with any intent to conceal and deceive, but in a manner reasonably designed to result in the timely disclosure to Martinez (and other residents of Puerto Rico purchasing property in Imperial Acres) of all information (including information relating to restrictions on development) required to be disclosed to purchasers of subdivided lands pursuant to Chapter 498, Florida Statutes.11 Before any of the lots in Imperial Acres were marketed and sold, the necessary approval to sell these subdivided lands was obtained from the Florida Division of Land Sales, Condominiums, and Mobile Homes, which gave its approval only after reviewing documentation submitted by Double Diamond, including a form Property Purchase Agreement and a Public Offering Statement. After such approval was obtained, Respondent, on behalf of Double Diamond, entered into an agreement with a Puerto Rico-licensed real estate broker (PRPS)

    to market and sell these lots in Puerto Rico, with the stipulation that these services were to be performed in accordance with the provisions of Chapter 498, Florida Statutes, including those provisions mandating the pre-disposition disclosure of information affecting the property. If, contrary to the terms of this agreement, Martinez was not timely provided such information (as he claimed during his deposition testimony), it was not because of any "personal misconduct" on Respondent's part. Respondent did not himself take any action to conceal information from Martinez, nor did he cause, authorize, foster, condone, or negligently overlook the taking of such action by anyone acting on his or Double Diamond's behalf. He had no pre- disposition, direct dealings with Martinez and had no reason to believe that Marrero, the Puerto Rico-licensed real estate salesperson hired by PRPS who did deal directly with Martinez on behalf of Double Diamond prior to the disposition of the property, would depart from the terms of the agreement between Double Diamond and PRPS and fail to timely provide Martinez with the information that a seller of subdivided lands is required to disclose to the purchasers of those lands pursuant to Chapter 498, Florida Statutes.12 Indeed, at the time he executed the Contract on behalf of Double Diamond (on July 13, 1992), Respondent had good reason to believe (and in fact did believe), in light of the documentation he then had in his possession, specifically the written receipt for a Public Offering Statement

    that appeared to have been signed by Martinez on June 28, 1992, that Marrero had timely provided Martinez with the required information.

62. In view of the foregoing, Count III of the Administrative Complaint should be dismissed.

63. With respect to Counts I and II of the Administrative Complaint, the record evidence does not clearly and convincingly establish that there ever was an employer-employee or broker- salesperson relationship between Respondent and Marrero or that Respondent ever shared a commission with or otherwise paid any monies to Marrero to compensate Marrero for his role in the sale of Parcel 818 of the Imperial Acres subdivision to Martinez. Marrero was compensated for his services in connection with the sale, but by PRPS (by whom he was employed and with whom he had a salesperson-broker relationship), not by Respondent. Although Respondent may have owned a one-half interest in PRPS, there is no indication that Respondent in any way participated in the decision made by PRPS to hire or to compensate Marrero, nor is there any basis for piercing the corporate veil and holding Respondent personally responsible for the actions of the PRPS corporate entity. See American States Insurance Company v. Kelley, 446 So. 2d 1085, 1086 (Fla. 4th DCA 1984)("The general rule is that corporations are legal entities separate and distinct from the persons comprising them. . . . Absent fraud, the corporate veil is not pierced."). Moreover, even if

    Respondent could be held personally responsible for the actions of PRPS, the Commission would still not be authorized to discipline Respondent on the basis of these actions inasmuch as the record evidence is insufficient to establish that PRPS hired or authorized Marrero (who had a Puerto Rico, but not a Florida, real estate license) to perform any services for which a Florida real estate license was required under Chapter 475, Florida Statutes, or that the monies PRPS paid Marrero included compensation for the performance of such services (as opposed to being entirely for the performance of services for which a Puerto Rico, but not a Florida, real estate license was required).13

64. In view of the foregoing, Counts I and II of the Administrative Complaint, like Count III of the Administrative Complaint, should be dismissed.

RECOMMENDATION

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

RECOMMENDED that the Commission issue a final order dismissing the Administrative Complaint against Respondent in its entirety.

DONE AND ENTERED this 31st day of December, 1997, in Tallahassee, Leon County, Florida.

STUART M. LERNER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 31st day of December, 1997.

ENDNOTES

1 The hearing was originally scheduled to commence on July 21, 1997, but was continued at Respondent's request.

2 Martinez is fluent in both English and Spanish.

3 The Green Swamp area was designated an area of Critical State Concern effective July 1, 1979. Section 380.0551, Florida Statutes.

4 The evidence does not establish that the visit occurred prior to the time that Martinez signed the English and Spanish versions of the Contract, as the Department claims in its proposed recommended order. Although the Department presented evidence (in the form of testimony given by Martinez during his October 8, 1997, deposition) in support of such a finding, this testimony is seemingly inconsistent with other testimony Martinez gave during his deposition (and also with representations Martinez made in the complaint he filed with the Department). The undersigned therefore has credited the statement made by Marrero on the subject found in Petitioner's Exhibit 13 (which, the parties stipulated at the final hearing, the undersigned could consider as competent substantial evidence sufficient to support a finding of fact if found to be more credible than Martinez's deposition testimony to the contrary).

5 Before granting an application for registration of subdivided lands, the Florida Division of Florida Land Sales, Condominiums, and Mobile Homes must determine whether:

1. The subdivider can convey or cause to be conveyed the interest in any subdivided lands offered for disposition if the purchaser complies with the terms of the offer and, when appropriate, that release clauses, conveyances in trust, or other safeguards have been provided;

   
   

2. Reasonable assurance is given that all obligations imposed by this chapter and all obligations contained in the purchase contract, public offering statement, and registration statement will be complied with by the subdivider;

   
   

3. The advertising material and the general promotional plan are not false or misleading and comply with the standards prescribed by the division in its rules and afford full and fair disclosure;

   
   

4. The subdivider has not, or, if a corporation, its officers, directors, or principals have not, been convicted of a crime involving land dispositions or any aspect of the land sales business in this state, the United States, or any other state or foreign country, or had a bond forfeited when charged with such a crime, within the past 10 years;

   
   

5. No evidence exists which would reasonably lead the division to believe that the subdivider is, or, if a corporation, its officers, directors, or principals are, contemplating a fraudulent or misleading sales promotion;

   
   

6. The public offering statement requirements of this chapter have been satisfied; and

   
   

7. The subdivided lands which are the subject of the proposed registration have been or will be made usable for the purpose for which they are being offered or sold.

   Section 498.031(1), Florida Statutes. The "public offering statement requirements" of Chapter 498, Florida Statutes (which are referenced in Section 498.031(1), Florida Statutes) are found in Section 498.037, Florida Statutes, subsection (1)(a) of which provides as follows:

   
   

   1. Any public offering statement shall disclose fully and accurately the physical characteristics of the subdivided lands and shall make known to prospective purchasers all unusual and material circumstances or features affecting those lands.

      
      

      1. The proposed public offering statement submitted to the division shall be in a form prescribed by its rules and shall include the following information and items, unless otherwise provided by the division:

1. The name and principal address of the subdivider;

   
   

2. A general description of the subdivided lands, stating the total number of lots, parcels, units, or interests in the offering;

   
   

3. A map, which shall be physically separate from the public offering statement, but which shall be delivered to the purchaser with the public offering statement, indicating the location of the lots, parcels, or units being offered within the subdivision and its location in relation to the surrounding area;

   
   

4. A statement of the significant terms of any encumbrances, easements, liens, and restrictions, including zoning and other regulations affecting the subdivided lands and each lot, parcel, or unit; a statement of all existing taxes and existing or proposed special taxes or assessments which affect the subdivided lands; the name and office address of each special taxing district in which all or any part of the subdivided lands are located; and, if all or any part of the subdivided lands are located in a community development district established under chapter 190, a copy of the information required by s. 190.009, relating to the

   public financing and maintenance of improvements to real property undertaken by the community development district;

   
   

5. A statement of the use for which the property is offered;

   
   

6. Information concerning improvements, including streets, water supply, levees, drainage control systems, irrigation systems, sewage disposal facilities, and customary utilities, and the estimated cost, date of completion, and responsibility for construction and maintenance of existing and proposed improvements which are referred to in connection with the offering or disposition of any interest in subdivided lands;

   
   

7. Notice of any local or state land use regulation or plan and of any moratorium, the duration of which is 180 days or more, imposed by executive order, law, ordinance, regulation, or proclamation adopted by any governmental body or agency which prohibits or restricts the development or improvement of property which development or improvement would not otherwise be prohibited or restricted by applicable law, and the effect on the proposed use of the property;

   
   

8. A statement that the subdivider shall provide the purchaser with a recordable agreement for deed and a statement as to what effect recording of the agreement will have in providing the purchaser with legal protection; and

   
   

9. Additional information required by the division to assure full and fair disclosure to prospective purchasers.

"No person may dispose of, or participate in the disposition of, any interest in subdivided lands unless: (a) A current public offering statement is delivered to the purchaser prior to the disposition; (b) The purchaser is afforded a reasonable opportunity to examine the public offering statement prior to the disposition; and (c) The contract and public offering statement authorize the purchaser to cancel the agreement without cause

until midnight of the seventh day after he executes the contract." Section 498.023(2), Florida Statutes.

6 The Department offered into evidence (as Petitioner's Exhibit

18) Appendix 2.132 of the Polk County Comprehensive Plan, which addresses the subject of development in the Green Swamp Area of Critical State Concern (where Martinez's lot and the other lots in the Imperial Acres subdivision are located). Because the exhibit, on its face, reflects that these plan provisions were adopted after Martinez acquired his lot, they should have no bearing on the outcome of the instant case.

7 While Camacho may have believed that Marrero made such a disclosure to Martinez when Marrero showed Martinez the parcel, the record evidence in the instant case does not support a finding that the disclosure was actually made.

8 A "broker-salesperson" means "a person who is qualified to be issued a license as a broker but who operates as a salesperson in the employ of another." Section 475.01(1)(e), Florida Statutes.

9 Section 475.25(1), Florida Statutes, unlike Section 561.29(1), Florida Statutes, does not contain any language suggesting that a licensee may be disciplined for violations committed by the licensee's "agents, officers, servants, or employees."

10 There is no such "clear, unambiguous provision" in Section 475.25(1), Florida Statutes.

11 Chapter 498, Florida Statutes, imposes upon a seller of subdivided lands sold as commercial or investment property a duty to disclose information he would not otherwise have to reveal. See Kaplan v. Peterson, 674 So. 2d 201, 203 (Fla. 5th DCA 1996)("The doctrine of caveat emptor was found to be sufficiently unappetizing and unfair in the context of residential real property to prompt the Florida Supreme Court to abolish it in this state. . . . However, although questioned and criticized, the doctrine still prevails in Florida with regard to sales of commercial real property."); Green Acres, Inc. v. First Union National Bank of Florida, 637 So. 2d 363, 364 (Fla. 4th DCA 1994)"[U]nder the present state of the law in Florida, even intentional nondisclosure of known material facts in a real estate transaction is not actionable."); Futura Realty v. Lone Star Building Centers (Eastern), Inc., 578 So. 2d 363, 364 (Fla. 3d DCA 1991)("Nowhere does Johnson [Johnson v. Davis, 480 So. 2d 625 (Fla. 1985)] address or change the long line of case law establishing caveat emptor as the rule in the sale of commercial property."); cf. Nelson v. Wiggs, No. 96-3328 (Fla. 3d DCA August 13, 1997)("Immediately available from the building department, open to the Nelsons' diligent attention, were the flood criteria to which the county required the house to be built in order to

protect it from seasonal flooding. We conclude that the trial court correctly denied the Nelsons' recission complaint as the flood-prone nature of the area was within the diligent attention of the Nelsons, thus Mrs. Wiggs had no duty to disclose it."); Metropolitan Dade County v. Fountainebleu Gas and Wash, Inc., 570 So. 2d 1006, 1007 (Fla. 3d DCA 1990)("Owners are deemed to purchase property with constructive knowledge of applicable land use regulations.").

12 There is no evidence, for instance, that any other purchasers of lots in the Imperial Acres subdivision were not timely provided with information to which they were entitled pursuant to Chapter 498, Florida Statutes, prior to their purchases.

13 The record evidence does not clearly and convincingly establish when, in relation to Martinez's and Marrero's post- purchase visit to the lot Martinez had purchased, Marrero was compensated for his services by PRPS.

COPIES FURNISHED:

Geoffrey T. Kirk, Esquire Department of Business and

Professional Regulation

400 West Robinson Street, Suite N-308 Orlando, Florida 32801-1772

Frederick H. Wilsen, Esquire

Law Offices of Gillis and Wilsen 1415 East Robinson Street Orlando, Florida 32801

Henry M. Solares, Executive Director Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32892-1900

Lynda L. Goodgame, General Counsel Department of Business and

Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 97-002144

Orders for Case No: 97-002144