vs. ) Case No. 99-1725
Respondent. )
Pursuant to notice, a formal hearing was held in this case before Lawrence P. Stevenson, a duly designated Administrative Law Judge of the Division of Administrative Hearings, on June 1, 2000.
For Respondent: Steven W. Johnson, Esquire
Steven W. Johnson, P.A. 1801 East Colonial Drive Suite 101
The issue in this case is whether Respondent, Ute Elisabeth Stork, committed the offenses alleged in an Administrative Complaint issued against her on January 26, 1999.
On January 26, 1999, Petitioner, the Department of Business and Professional Regulation, issued an Administrative Complaint alleging that Respondent, Ute Elisabeth Stork, violated Sections 475.215(2), 475.25(1)(b),(d)1, and (e), and 475.42(1)(b), Florida
Statutes. Ms. Stork disputed the allegations of fact in the Administrative Complaint by an Election of Rights dated April 7, 1999.
Copies of the Administrative Complaint and the Election of Rights were filed with the Division of Administrative Hearings on April 15, 1999, by Petitioner with a request that the matter be assigned to an Administrative Law Judge. The matter was assigned to the undersigned and scheduled for hearing on September 14, 1999. Three continuances were granted, with the hearing ultimately being held on June 1, 2000.
The formal hearing of this case was conducted by video conferencing equipment. The undersigned was located in a video hearing room of the Department of Management Services in Tallahassee. Petitioner, Respondent, the court reporter, and all the witnesses were located in Room 165-A, Regional Service Center, Department of Management Services in Fort Myers, Florida.
Petitioner presented the testimony of Elke Reichardt, Ernest Seemann, Michael Omerzu, Harold C. Shireman, and Marjorie Bennett. Petitioner's Exhibits 1 through 5 and 10 through 12 were accepted into evidence.
Respondent testified on her own behalf and presented the testimony of Sven Jutz. Respondent's Exhibits 2, 4, and 12 through 14 were accepted into evidence.
A Transcript of the hearing was filed on August 23, 2000.
Pursuant to the parties' stipulation at hearing, proposed orders were due thirty days after filing of the transcript.
Respondent's motion for extension was granted by order dated September 27, 2000. Respondent filed a Proposed Recommended Order on October 5, 2000. Petitioner timely filed a Proposed Recommended Order on October 6, 2000.
Petitioner, the Department of Business and Professional Regulation, Division of Real Estate (hereinafter referred to as the "Division"), is an agency of the State of Florida. The Division is charged with the responsibility for, among other things, regulating the practice of persons holding real estate brokers' and real estate salespersons' licenses in Florida. Section 20.165, and Chapters 455 and 475, Florida Statutes.
Respondent, Ute Elisabeth Stork, is now, and at all times relevant to this matter has been, licensed as a real estate salesperson in Florida. On March 23, 1998, Ms. Stork passed the broker examination and became a real estate broker/salesperson. Ms. Stork holds license number 0646762.
Between February 28, 1997, and February 10, 1998, Ms. Stork was registered with Petitioner as a salesperson employed by SWF Business Brokers, Inc., a registered brokerage corporation with offices in Fort Myers.
On or about September 29, 1997, Ms. Stork began operating as a salesperson employed by FHIG Platinum Realty, a registered brokerage corporation trading as ERA Platinum and located in Naples.
There was conflicting evidence on the issue of whether Ms. Stork severed her relationship with SWF Business Brokers prior to starting her employment with ERA Platinum. Michael Omerzu, her employing broker at SWF Business Brokers, testified that Ms. Stork continued as a nominal employee of his firm until February 10, 1998, when he fired her. Mr. Omerzu knew that Ms. Stork was also working for ERA Platinum, but he believed her role there was clerical and that any of Ms. Stork's real estate transactions would continue to go through his company. Mr. Omerzu conceded that Ms. Stork did not come into the office after September 29, 1997, but also stated that Ms. Stork did work on one project in his office after that date. Mr. Omerzu formally terminated Ms. Stork in February 1998, after learning of her involvement in the transaction that is the subject of this proceeding.
Ms. Stork admitted that she did not notify Mr. Omerzu that she was quitting his employ, but contended that her actions
would have given any reasonable person notice that she was no longer working at SWF Business Brokers. After September 29, 1997, she no longer came into the office, she attended no meetings, and she filed none of the bi-weekly reports expected of active employees at SWF Business Brokers.
Ms. Stork offered a copy of a form 400.5, signed by her and dated September 29, 1997, indicating the change in brokers from SWF Business Brokers to ERA Platinum. However, the evidence established that the Division never received this document. Ms. Stork admitted that she did not send the form to the Division. She testified that she assumed the signing broker for ERA Platinum would see to it that the form reached Petitioner.
After the investigation leading to this case commenced, Ms. Stork submitted a form 400.5 to the Division's investigator. Unlike the form she offered at the hearing, the form Ms. Stork sent to the investigator was not signed or dated. Ms. Stork's explanation of the disparity between the forms was confused and not credible.
Ms. Stork's husband, Sven Jutz, was president and part owner of ERA Platinum. Mr. Jutz was not licensed to operate as a real estate broker in Florida. ERA Platinum employed licensed persons to perform the functions of brokers. Both Ms. Stork and Mr. Jutz are natives of Germany and have lived in the United States for about five years.
At some point prior to December 1997, ERA Platinum purchased an advertisement in a German magazine, offering its services to Germans seeking to purchase businesses in the United States and to qualify for resident visas. Elke and Deiter Reichardt, a German couple visiting Florida and interested in moving to the state, called Ms. Stork in response to the advertisement. They met Ms. Stork at the ERA Platinum office in Naples. Ms. Reichardt testified that she believed Ms. Stork was the broker for ERA Platinum. Ms. Stork characterized her role as one of transaction broker.
Ms. Stork first took the Reichardts to visit a computer business in Tampa. After the visit, all parties agreed that the Reichardts' proficiency in English was probably not sufficient for the day-to-day operation of a business involving a great deal of personal customer contact.
Ms. Stork next showed the Reichardts a business called Club Nautico, a Captiva Island boat rental business owned by Aquavestments, Inc. Ms. Stork believed that the Reichardts would be capable of dealing with tourists, and testified that Club Nautico was an established business with a good track record.
Ms. Stork and the Reichardts visited Club Nautico, and the couple decided to make an offer on the business. Ms. Stork prepared a contract for the sale and purchase of the business. The contract named "D.E.C. Boat Rental, Inc." as the purchaser of the business.
D.E.C. Boat Rental was formed on the advice of Ms. Stork and Mr. Jutz. They persuaded the Reichardts that it would be easier for German citizens to purchase an American business through a corporation. Mr. Jutz hired a law firm to prepare the corporate documents, listing Mr. Jutz as the sole director and officer of D.E.C. Boat Rental. The Reichardts were not mentioned in the corporate documents.
Mr. Jutz also offered to run the boat rental business for the Reichardts pursuant to a management contract. The Reichardts rejected this offer.
The contract was signed by Ms. Reichardt on behalf of
D.E.C. Boat Rental, though she was not a named officer or director of the corporation. The contract provided that the buyer would make a $1,000 earnest money deposit at the time of signing on December 11, 1997, and would make an additional deposit of $23,000 toward the purchase price five days after the seller's acceptance of the offer.
The contract provided that all deposits would be held by "Don Ross, Att." Mr. Jutz testified that Don Ross was a lawyer who had offices in the same building as ERA Platinum. Mr. Jutz stated that he had used Mr. Ross as escrow agent and closing attorney on one deal, and "it was not fun." Mr. Jutz testified that he had not yet severed relations with Mr. Ross at the time of the D.E.C. Boat Rental contract, so ERA Platinum continued to list him as the escrow agent. Mr. Ross did not testify.
Ms. Reichardt testified that Ms. Stork told her that Don Ross was the escrow agent, and that Ms. Stork instructed her to make out the $1,000 earnest money check to "Don Ross, Escrow." Ms. Reichardt made out such a check on December 11, 1997, and handed the check to Ms. Stork.
Both Ms. Stork and Mr. Jutz testified that the check ultimately ended up in the hands of Mr. Jutz, who handled all the money for ERA Platinum. The check was deposited at First Union Bank. The check was endorsed by "ERA Platinum Realty, Inc.," but Mr. Jutz testified this was the escrow account set up by Don Ross for his company. Mr. Jutz stated that he deposited the check into the account.
On or about December 24, 1997, Ms. Reichardt sent a second check from Germany to Ms. Stork. This check was in the amount of $23,000, and was made out to "Escrow Agent." Ms. Reichardt testified that Ms. Stork instructed her to make the check payable to "Escrow Agent." This check was endorsed by "Within Named Payee" and deposited into ERA Platinum's escrow account at Barnett Bank. It was undisputed that this Barnett Bank account had no connection whatever with Don Ross.
The contract between D.E.C. Boat Rental and Aquavestments did not close. Ms. Reichardt testified that the seller held out for more money, and was concerned about the Reichardts' ability to pay. Ms. Reichardt also stated that she and her husband became concerned with Mr. Jutz' machinations, and
contacted an attorney, Ernest Seemann, who advised them not to go through with the deal.
Mr. Seemann is a native of Germany who has practiced law in Florida for 20 years. He testified that Ms. Reichardt came to see him with the D.E.C. Boat Rentals contract and sought his advice. He reviewed the contract, then researched the corporate records and learned that the Reichardts were not shown on the corporate records of the company formed by Mr. Jutz to purchase the business. Mr. Seemann advised the Reichardts not to complete the deal because D.E.C. Boat Rentals was not in their name.
Mr. Seemann testified that he also contacted Don Ross, who told him he had nothing to do with this contract and had received no money to hold in escrow. This testimony was corroborated by Mr. Jutz, who conceded that Don Ross did not personally participate in this transaction.
His suspicions aroused, Mr. Seemann investigated further and found confusion as to the identity of the broker for whom Ms. Stork was working. After the exchange of many letters and phone calls, he finally received a letter from Mr. Omerzu acknowledging that Ms. Stork was a sales agent in his office, but that Mr. Omerzu knew nothing about Ms. Stork's dealings with the Reichardts or the whereabouts of their deposit money. As noted above, Ms. Stork claimed that she had already severed her
relationship with Mr. Omerzu at the time of the D.E.C. Boat Rental transaction.
Mr. Seemann then began attempting to track down the whereabouts of the Reichardts' money. He contacted Charles Carney, a broker for ERA Platinum, but learned that he had left the company before this transaction commenced. Mr. Seemann then contacted Harold Shireman, the successor broker to Mr. Carney at ERA Platinum. Mr. Shireman knew nothing about the Reichardts' money. Mr. Shireman testified that he left ERA Platinum shortly after this incident, partly because he was uncomfortable at being "kept in the dark" about transactions for which he was the nominal broker.
Mr. Seemann ultimately discovered that the Reichardts'
$23,000 deposit was being held in an ERA Platinum escrow account, and that Mr. Jutz had sole signatory authority over that account. He requested that Mr. Jutz transfer the money to Mr. Seemann's trust account, but Mr. Jutz refused.
The Reichardts ultimately purchased the business from Aquavestments pursuant to a second contract entered on or about February 27, 1998. Mr. Seemann formed a corporation, Sea Wave Boat Rentals, Inc., for the Reichardts' purchase. The Reichardts are the directors of Sea Wave Boat Rentals.
This contract provided that the $1,000 earnest money deposit and the $23,000 additional deposit would be held in escrow by "ERA Platinum Realty, Inc., Harold Shireman, Broker."
As noted above, Mr. Shireman was not involved in the transaction, had no knowledge of the deposit money, and had no ability to draw on the ERA Platinum escrow account. The contract provided that all funds would be disbursed by the closing agent in accordance with the closing statement, and that any dispute regarding escrow funds would be referred by the broker to the Florida Real Estate Commission.
Mr. Jutz and Ms. Stork refused to attend the closing or to turn over the $24,000 of the Reichardts' money they were holding. To conclude the closing, the Reichardts were forced to pay an additional $14,000 to the listing broker in exchange for the listing broker's assignment of rights to the money being held by Mr. Jutz and Ms. Stork.
Mr. Jutz ultimately returned $9,750 to the Reichardts. He retained $14,250 as the commission for his firm's role as the buyer's broker.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties to, and the subject matter of, this proceeding. Section 120.57, Florida Statutes.
The burden of proof in this proceeding was on the Division, the party asserting the affirmative of the issue: that Respondent committed violations of Section 475.25(1), Florida Statutes. See Florida Department of Transportation v. J.W.C. Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981); Balino v.
Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977). The Division was required to meet its burden by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
A real estate licensee is charged with knowledge of Chapter 475, Florida Statutes. Wallen v. Florida Department of Professional Regulation, Division of Real Estate, 568 So. 2d 975 (Fla. 3d DCA 1990).
Section 475.25, Florida Statutes, authorizes the Florida Real Estate Commission to take disciplinary action against the license of any real estate broker or real estate salesperson if the licensee commits certain specified acts. Of the specified acts of Section 475.25(1), Florida Statutes, Respondent was charged with violating the following:
(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 . . . .
* * *
(d)1. Has failed to account or deliver to any person . . . at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value, including a share of a real estate commission. . . .
Respondent is also charged with violating Section 475.215(2), Florida Statutes, which provides that a salesperson or broker/salesperson may have no more than one employer at any one time. This violation is punishable through Section 475.25(1)(e), Florida Statutes, which provides discipline for violations of any provision of Chapter 475.
Finally, Respondent is charged with violating Section 475.42(1)(b), Florida Statutes, which prohibits a person licensed as a salesperson from operating as a broker.
Respondent claimed to be operating as a transaction broker. Section 475.01(1)(l), Florida Statutes, defines a transaction broker as "a broker who provides limited representation to a buyer, a seller, or both, in a real estate transaction, but does not represent either in a fiduciary capacity or as a single agent." The evidence in this case proved that the Reichardts were not operating under the impression that Ms. Stork was functioning as a transaction broker. Nonetheless, Section 475.278(2)(a), Florida Statutes, requires of transaction brokers the duties of dealing honestly and fairly, accounting for all funds, and using skill, care, and diligence in the transaction.
The evidence established that Ms. Stork misled the Reichardts as to the identity of the escrow agent, leading them to believe that an attorney, Don Ross, was handling their money when in fact their $24,000 was under the control of her husband,
Sven Jutz. This constituted misrepresentation, in violation of Section 475.25(1)(b), Florida Statutes.
The evidence established that Ms. Stork did not properly file a form 400.5 changing her employing broker from SWF Business Brokers to ERA Platinum, nor did she inform Mr. Omerzu of SWF Business Brokers that she was leaving his employment in September 1997. The evidence established that Ms. Stork was still employed by SWF Business Brokers at the time she accepted deposits from the Reichardts and turned them over to her husband at ERA Platinum, and that this dual employment violated Section 475.215(2), Florida Statutes.
The evidence established that the qualifying brokers at ERA Platinum Realty had no knowledge of the deposits that Ms. Stork turned over to her husband. The evidence also established that Ms. Stork knew that her husband was not licensed to operate as a real estate broker in Florida. Ms. Stork nonetheless turned over the deposit money to her husband, rather than to the brokers.
The evidence established that Ms. Stork operated as a broker in the Reichardt transaction while she was licensed only as a salesperson, in violation of Section 475.42(1)(b), Florida Statutes.
The evidence established that Ms. Stork took no effective steps to return the deposit monies to the Reichardts upon a proper demand, and that the Reichardts were forced to put
up an additional $14,000 to cover the failure of ERA Platinum to attend the closing and bring the deposit monies.
Ms. Stork's chief defense is that any illegalities in the Reichardt transaction were committed by her husband. She argues that she had no power over the escrow account, she was not the broker for ERA Platinum, and she simply conveyed the money to Sven Jutz. This defense is unavailing. Ms. Stork presented herself to the Reichardts as their broker. Ms. Stork failed to act in the Reichardts' behalf, or even inform them, when her husband took their deposit money and deposited it into an account over which he had sole control. If not outright fraud or dishonest dealing, Ms. Stork's actions certainly constitute concealment and breach of trust in a business transaction, in violation of Section 475.25(1)(b), Florida Statutes.
Even if she were merely a transaction broker as she claimed, Ms. Stork still owed the Reichardts a duty of honest and fair dealing, accounting for all funds, and skill, care, and diligence in the transaction under Section 475.278(2)(a), Florida Statutes, but failed to perform that duty.
Ms. Stork was intimately involved in her husband's machinations. Petitioner forcefully contends that she aided and abetted her husband in his dealings with the Reichardts and their attorney. Even if Ms. Stork's version of events were accepted, the best that could be said is that she stood by and did nothing
for the Reichardts, her clients. Such a defense is not persuasive.
RECOMMENDED that a final order be entered by Petitioner finding that Respondent has violated Sections 475.215(2), 475.25(1)(b), 475.25(1)(d)1, 475.25(1)(e) and 475.42(1)(b),
Florida Statutes, as alleged in the Administrative Complaint issued against Respondent, and that Respondent's real estate license be revoked.
LAWRENCE P. STEVENSON
Steven W. Johnson, Esquire Steven W. Johnson, P.A.
Herbert R. Fisher, Chairperson Florida Real Estate Commission Department of Business and
Barbara D. Auger, General Counsel Department of Business and
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.
