STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) Case No. 98-2820

)

MANUEL COLUMBIE, )

)

Respondent. )

)

RECOMMENDED ORDER

This cause came on for formal hearing on March 10, 1999, in Daytona Beach, Florida, before the Division of Administrative Hearings by its designated Administrative Law Judge, Suzanne F. Hood.

APPEARANCES

For Petitioner: Laura McCarthy, Esquire

Department of Business and Professional Regulation

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

For Respondent: James H. Gillis, Esquire

8424 Pamlico Street

Orlando, Florida 32817-1514 STATEMENT OF THE ISSUES

The issues are whether Respondent violated Section 475.25(1)(b), Florida Statutes, and if so, what penalty should be imposed.

PRELIMINARY STATEMENT

On or about November 20, 1997, Petitioner Department of Business and Professional Regulation (Petitioner) issued an Administrative Complaint, alleging that Respondent Manuel Columbie (Respondent) violated Section 475.25(1)(b), Florida Statutes, when he failed to disclose the existence of a sinkhole on residential property purchased by his client. Respondent filed a request for a formal administrative hearing with Petitioner on December 23, 1997. Petitioner referred this case to the Division of Administrative Hearings on June 22, 1998.

By order dated July 16, 1998, the undersigned scheduled the formal hearing for October 30, 1998. Subsequently, the undersigned issued an Order Rescheduling Hearing, which set December 17, 1998, as the hearing date.

Petitioner filed a Motion to Continue on November 30, 1998.

The undersigned issued an order dated December 3, 1999, which granted the motion and rescheduled the hearing for March 10, 1999.

At the hearing, Petitioner presented the testimony of six witnesses. Petitioner offered six exhibits, which were received into evidence.

After Petitioner rested, Respondent moved to strike the Administrative Complaint for failure to allege facts that would render him guilty of violating Section 475.25(1)(b), Florida Statutes. Specifically, Respondent argued that the complaint

should be dismissed because it did not allege that he knew about sinkhole activity on the property purchased by his client.

Petitioner's motion is hereby denied in that the Administrative Complaint was specific enough to inform Respondent with reasonable certainty of the nature of the charge against him.

See Hunter v. Department of Professional Regulation, 458 So. 2d 842, 844 (Fla. 2nd DCA 1984). Additionally, the motion was untimely pursuant to Rule 28-106.204, Florida Administrative Code.

Respondent testified on his own behalf and presented the testimony of two additional witnesses. Respondent offered five exhibits which were received into evidence. Respondent offered three exhibits, relating to license information of non-parties, which were excluded as irrelevant.1

At the conclusion of the hearing, the parties requested permission to extend the time for filing their proposed recommended orders to twenty days after the filing of the transcript. The undersigned granted their request.

The Transcript of the proceeding was filed on May 4, 1999. The proposed recommended orders were due to be filed on May 24, 1999. Respondent filed his Proposed Recommended Order on May 23, 1999.

On May 24, 1999, Petitioner filed an unopposed Motion for Extension of Time to file its proposed order. Petitioner filed its Proposed Order on May 25, 1999.

FINDINGS OF FACT

1. Petitioner is a state licensing and regulatory agency charged with the duty of prosecuting administrative complaints pursuant to Chapters 455 and 475, Florida Statutes.

2. Respondent is and was, at all times material hereto, a licensed Florida real estate salesperson. He holds license number 0487661. Respondent was working as a real estate salesperson in association with Global Realty of Volusia, Inc. (Global Realty) in Deltona, Florida, when he received his current license.

3. In 1993, Paul Costello owned a residence (hereinafter "the property") in Deltona, Florida. Mr. Costello lived in Miami, Florida. He rented the property to tenants who informed him that cracks were developing in the property's driveway. Additionally, the house was settling and cracking.

4. Mr. Costello subsequently made a claim for the property's reported distress on his homeowner's insurance policy with Republic Insurance Company. The insurance company retained a geotechnical engineering firm to determine the cause of the reported distress.

5. The engineering firm made a site visit to the property on August 22, 1993. A visual inspection revealed cracks up to one and one-half inches wide in the exterior walls of the garage. The engineering firm completed its investigation in September

   1993 and concluded that the property was subject to sinkhole conditions/activity.

6. Based on the recommendations of the engineering firm, the insurance company hired a grouting contractor. Deep cement grout injections and shallow grouting (mudjacking) were performed in an attempt to stabilize the loose soil conditions on the property. Steel piles were used to raise and support the structure's footing. The stabilization effort took approximately two months to complete.

7. In 1995, Shawna Lee Christenson and Janice Beery worked as licensed real estate salespersons for Choice Properties, Inc., (Choice Properties) in Deltona, Florida. Jean Gillian, a licensed real estate broker and owner of Choice Properties, gave Ms. Christenson and Ms. Beery their first employment as real estate sales associates. Because they were new to the real estate profession, Ms. Gillian directed Ms. Christenson and

   Ms. Beery to work as partners.

   
   

8. Respondent was also working at Choice Properties when Ms. Gillian hired Ms. Christenson and Ms. Beery. He worked for Choice Properties for several weeks before returning to Global Realty as a sales associate.

9. Sometime prior to October 22, 1995, Ms. Christenson received a call from a woman in Orlando. The woman, a friend of Mr. Costello's, requested Ms. Christenson to perform a market analysis on the property.

10. Ms. Christenson and Ms. Beery performed the market analysis on the property. Subsequently, they received permission from Mr. Costello to list the property for sale as a multiple listing.

11. Ms. Christenson and Ms. Beery signed a listing agreement with Mr. Costello. About that time, or soon thereafter, Ms. Christenson had a telephone conversation with Mr. Costello. During the conversation, Mr. Costello informed Ms. Christenson about possible prior sinkhole activity on the property.

12. Ms. Christenson and Ms. Beery discussed the problem with Ms. Gillian. Everyone at Choice Properties thought the situation was humorous because the property was the first listing for Ms. Christenson and Ms. Beery.

13. Later, Mr. Costello sent Ms. Christenson a document with the name of the geotechnical engineering firm.

    Ms. Christenson then contacted Mike Wilson, a friend who worked in soils engineering. Mr. Wilson contacted the engineering firm and requested that a copy of its settlement claim evaluation report be sent to Ms. Christenson.

14. Ms. Christenson placed a copy of the engineering firm's report in the property's file at Choice Properties. She disclosed the possible sinkhole activity to everyone who called about the property. She advised all callers that the report was in the file. After learning about the possible sinkhole

    activity, real estate agents would not show the property to their customers.

15. Sometime in October 1995, Barbara Redding, a single disabled female, contacted Respondent after seeing an advertisement in the newspaper. Respondent was aware that Ms. Redding was a recipient of Social Security benefits.

16. On or prior to October 22, 1995, Respondent telephoned Ms. Christenson to inquire about the property. He told

    Ms. Christenson that he had a client (Ms. Redding) who was a Social Security recipient and really needed a home. Respondent was interested in the property because it was within

    Ms. Redding's price range and had an assumable mortgage.

    
    

17. Ms. Christenson disclosed the possible sinkhole activity to Respondent. She told him that the engineering firm's report was in the file. Respondent declined Ms. Christenson's offer to fax the report to him. Ms. Christenson was surprised to learn that Respondent intended to show the property to

    Ms. Redding despite the disclosure about the sinkhole activity.

    
    

18. Sometime after the initial phone call, Ms. Beery was outside the office of Choice Properties smoking a cigarette. Ms. Christenson was with Ms. Beery when Respondent arrived. As he walked into the office, Respondent joked about the fact that Ms. Christenson's and Ms. Beery's first listing was on a sinkhole.

19. Respondent showed Ms. Redding four or five houses, including the subject property. After seeing the property,

    Ms. Redding contacted Respondent to make an offer to purchase it.

    
    

20. Respondent prepared a contract for sale and purchase, which Ms. Redding signed on October 22, 1995. Respondent was acting as buyer's agent for Ms. Redding. The contract states that a deposit in the amount of $100 was held in escrow by "Associated Land Title upon acceptance by October 30, 1995." Respondent included the following language in the contract as an addendum:

    Seller agrees to remove branch from roof and repair roof and soffit where branch is presently lodged. This offer is contingent on Buyer receiving settlement from Social Security that has already been awarded.

    Seller agrees to close at Associated Land Title contingent on all payments being up to date. Regardless of principal balance, cash to mortgage [sic] will be $6,000 (six thousand dollars.)

    Respondent hand-delivered the contract for sale and purchase to Choice Properties.

21. Mr. Costello, through Ms. Christenson and Ms. Beery, made a counter offer for a higher purchase price and a $500 deposit. The counter offer eliminated language in the contract addendum related to removal of the branch and repair of the roof. It also deleted the language related to $6,000 cash payment. The offer included an additional addendum to the contract that stated as follows:

    Buyer acknowledges that there has been disclosure regarding the driveway and previous activity affecting it. Seller reserves the right to leave property on market to entertain offers. Buyer acknowledges property is being sold "AS IS."

    
    

22. Ms. Christenson and Ms. Berry asked Ms. Gillian to review the language in the contract addendum before they returned the contract to Respondent. After Ms. Gillian approved the statement, Ms. Christenson and Ms. Berry returned the contract to Respondent.

23. Ms. Redding only had $100 in cash for a deposit. Respondent offered to loan her the other $400. Ms. Redding accepted Respondent's offer and signed a promissory note to that effect. Ms. Redding subsequently paid Respondent the $400 that she owed him.

24. When Ms. Redding reviewed the counter offer, she asked Respondent about the additional language in the contract addendum stating that the buyer acknowledged disclosure about the driveway and previous activity affecting it. Respondent told Ms. Redding that the driveway had been cracked and that a new driveway had been put in. Respondent never discussed possible sinkhole activity with Ms. Redding.

25. The contract closed in November 1995. After painting the house, Ms. Redding moved in on January 20, 1996. Sometime in March or April of 1996, a friend of Ms. Redding's asked her if she knew she had purchased a home on a sinkhole. Ms. Redding

    then discovered that all of her neighbors were aware of the problem.

26. Ms. Redding contacted Richard Meyer, a professional geologist who works for the Volusia County Environmental Management Department. Mr. Meyer inspected the property in August 1996 and on three subsequent occasions.

27. In the meantime, Ms. Redding contacted Ms. Christenson and Ms. Beery. They told Ms. Redding that they had advised Respondent about the sinkhole activity prior to Ms. Redding's purchase of the property. Ms. Gillian showed Ms. Redding a copy of the engineering report from the property's file at Choice Properties. Ms. Gillian gave Ms. Redding a copy of the report.

28. Ms. Redding showed the engineering report to Mr. Meyer on one of his visits. Mr. Meyer determined that the property definitely was subject to sinkhole activity. He concluded that the property was a "slow sinking hole."

29. Ms. Redding did not contact Respondent after she learned about the sinkhole on the property. At that point in time, Ms. Redding felt intimidated by Respondent.

30. One day Ms. Redding heard a loud crunch as she was going into her garage. She asked the fire department to inspect the property to determine whether it was safe as a dwelling. The fire department determined that the property was not safe for habitation.

31. Ms. Redding moved out of the house and had it demolished in October 1996 after the fire department condemned it. Ms. Redding's insurance company "totaled" the property.

    CONCLUSIONS OF LAW

    
    

32. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Sections 120.569 and 120.57(1), Florida Statutes.

33. Petitioner has the burden of proving by clear and convincing evidence that Petitioner violated Section 475.25(1)(b), Florida Statutes. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

34. Section 475.25(1)(b), Florida Statutes, states as follows, in pertinent part:

    1. The commission may deny an application for licensure, registration, or permit, or renewal thereof; 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 administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee, registrant, permittee, or applicant:

       * * *

       (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 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.

35. Respondent is a salesperson within the meaning of Section 475.01(k), Florida Statutes, which states as follows:

    (k) "Salesperson" 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. A salesperson renders a professional service and is a professional within the meaning of s. 95.11(4)(a).

    
    

36. Section 475.01(f), Florida Statutes, defines the term "fiduciary" as follows:

    (f) "Fiduciary" means a broker in a relationship of trust and confidence between that broker as agent and the seller or buyer as principal. The duties of the broker as fiduciary are loyalty, confidentiality, obedience, full disclosure, and accounting and the duty to use skill, care, and diligence.

37. Section 475.01(l), Florida Statutes, defines a "single agent" as follows:

    (l) "Single agent" means a broker who represents, as a fiduciary, either, the buyer or seller but not both in the same transaction.

38. At all times material to this proceeding, Respondent was acting as a single-agent salesperson for Ms. Redding, a buyer. He knew the property was subject to possible sinkhole activity. He breached his fiduciary duty to Ms. Redding by failing to disclose the possibility of sinkhole activity as a latent material defect on the property. Instead, he intentionally concealed the existence of the possible sinkhole activity when Ms. Redding inquired about the contract addendum language regarding the driveway and previous activity affecting it.

39. Respondent replied to Ms. Redding's inquiry by telling her that the language in the contract addendum related only to cracks in the driveway, which had been replaced. Respondent's response amounts to intentional misrepresentation and dishonest dealing.

40. Respondent breached the trust that Ms. Redding placed in him when he failed to examine the contents of the engineering report confirming the sinkhole activity, which he knew was in the property's file at Choice Properties. Even if Respondent was not aware of the possible sinkhole activity and the report in the file, he breached his duty to Ms. Redding by failing to use skill, care and diligence to clarify and disclose to Ms. Redding what the people from Choice Properties meant by "related activity."

41. Petitioner has met its burden of proving by clear and convincing evidence that Respondent violated Section 475.25(1)(b), Florida Statutes.

42. Rule 61J2-24.001(3)(c), Florida Administrative Code, provides that the following applies for violations of Section 475.25(1)(b), Florida Statutes, absent mitigating or aggravating circumstances:

    In the case of fraud, misrepresentation and dishonest dealing the usual action of the Commission shall be to impose a penalty of revocation. In the case of concealment, false promises and false pretenses, the usual action to the Commission shall be to impose a penalty of a 3 to 5 year suspension and an administrative fine of $1,000. In the case of culpable negligence and breach or trust, the usual action of the Commission shall be to impose a penalty from a $1,000 fine to a

    1-year suspension.

    
    

43. Rule 61J2-24.001(4)(b), Florida Statutes, states that aggravating or mitigating circumstances include, but are not limited to the following: (a) the severity of the offense; and

(b) the degree of harm to the consumer or public. In this case, these two factors serve as aggravating circumstances. There are no mitigating circumstances.

RECOMMENDATION

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

RECOMMENDED:

That the Florida Real Estate Commission enter a final order revoking Respondent's real estate license.

DONE AND ENTERED this 28th day of June, 1999, in Tallahassee, Leon County, Florida.

SUZANNE F. HOOD

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 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 28th day of June, 1999.

ENDNOTE

1/ The three excluded documents were included in the record as proffered evidence. They are identified as R6, R7, and R8.

COPIES FURNISHED:

Laura McCarthy, Esquire Department of Business and

Professional Regulation Suite N-308

400 West Robinson Street Orlando, Florida 32801

James H. Gillis, Esquire 8424 Pamlico Street

Orlando, Florida 32817-1514

Herbert S. Fecker, Division Director Division of Real Estate

Department of Business and Professional Regulation

400 West Robinson Street Orlando, Florida 32802-1900

William Woodyard, 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: 98-002820

Orders for Case No: 98-002820