STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
TYRONE HARRISON,
Petitioner,
vs.
AMERICA'S FIRST HOMES,
Respondent.
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) Case No. 05-2968
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RECOMMENDED ORDER
Pursuant to notice and in accordance with Section 120.57, Florida Statutes (2005), a formal hearing was held in this case on November 1, 2005, in Orlando, Florida, before Fred L. Buckine, the designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Tyrone Harrison, pro se
8412 Peterson Road
Odessa, Florida 33556
For Respondent: Cristina A. Equi, Esquire
Gray & Robinson, P.A.
301 East Pine Street, Suite 1400 Post Office Box 3068
Orlando, Florida 32802-3068 STATEMENT OF THE ISSUE
Whether Respondent's application of the inflation protection clause of the agreement to purchase real estate, thereby increasing the purchase price, discriminated against
Petitioner in violation of the Florida Fair Housing Act (FFHA) and Sections 760.20 through 760.37, Florida Statutes (2004).
PRELIMINARY STATEMENT
On or about April 14, 2005, Petitioner, Tyrone Harrison, filed a Housing Discrimination Complaint with the Florida Commission on Human Relations (FCHR), alleging Respondent, America's First Homes, engaged in discriminatory financing practices. On April 28, 2005, Respondent filed its Position Statement, consisting of specific denials in response to Petitioner's allegations of housing discrimination.
On May 12, 2005, Petitioner filed an Amended Housing Discrimination Complaint with FCHR, alleging that Respondent discriminated against him on the basis of his race (Black) and alleged handicap (limited income based upon his military disability) by not selling him the home he sought to purchase listed in the initial contract between the parties.
On or about June 28, 2005, FCHR issued its Notice of Determination No Reasonable Cause ("FCHR has determined that reasonable cause does not exist to believe a discriminatory housing practice has occurred.").
On or about July 27, 2005, Petitioner timely filed his Petition for Relief, requesting an administrative hearing.
On August 18, 2005, the matter was transmitted to the Division of Administrative Hearings, and Administrative Law
Judge Carolyn Holifield was initially assigned to this case. On August 19, 2005, the Initial Order was entered, and the Response to the Initial Order was filed on August 26, 2005.
On September 1, 2005, a Notice of Hearing, scheduling the final hearing for September 30, 2005, in Tampa, Florida, and the Order of Pre-hearing Instructions were entered.
On September 26, 2005, Petitioner's motion for continuance was filed, and, by Order of September 27, 2005, the continuance was granted, which required the parties to advise of mutually agreeable dates for rescheduling the final hearing. By Notice of October 4, 2005, the final hearing was rescheduled for November 1, 2005, in Orlando, Florida. Thereafter, this case was transferred to the undersigned.
At the final hearing, Petitioner testified on his own behalf and offered 24 exhibits, which were accepted into evidence. Respondent presented the testimony of six witnesses: Alton Cartwright, Stephanie Sykes-Comas, Mary Tymorek, Ty Cole, Stephanie Linda Andrews, and Jose Arce. Respondent offered
31 exhibits, of which 26 were accepted into evidence.
At the conclusion of the final hearing, the parties were given ten days after the filing of the transcript to submit proposed recommended orders.
A three-volume Transcript was filed on November 22, 2005.
On December 5, 2005, Respondent filed a Proposed Recommended
Order that was given consideration by the undersigned in preparation of this Recommended Order. Petitioner chose not to file a proposed recommended order.
FINDING OF FACT
Based upon observation of the witnesses and their demeanor while testifying, depositions filed, documentary materials received into evidence, stipulations by the parties, and evidentiary ruling made pursuant to Section 120.57, Florida Statutes (2005), the following relevant, substantial, and material facts are determined:
Petitioner, Tyrone Harrison (Mr. Harrison), is an African-American military veteran.
Respondent, America's First Homes (AFH), is a corporate entity engaged in the business of constructing homes per buyers' specifications on lots selected by buyers and selling those homes in a variety of counties throughout Central Florida. AFH's business is directed primarily to first-time homebuyers. AFH is not a mortgage lender; however, business necessity requires establishing and maintaining working relationships with mortgage lenders.
On or about July 10, 2003, Mr. Harrison and AFH entered into the original agreement (Agreement) wherein Mr. Harrison was to select a lot and purchase a home to be built by AFH.
The Agreement entered into by Mr. Harrison and AFH on July 10, 2003, was AFH's standard agreement required of all buyers who were interested in purchasing a lot and home. The Agreement contained a home purchase price of $125,540.00 and a lot price of $23,000.00, for a total purchase price of
$148,540.00, with a $350.00 initial deposit. Mr. Harrison selected the lot location and type of home model, and AFH agreed to construct on said property a completed home known as Builder's Patriot model, elevation B, on a lot to be determined (TBD), in Poinciana, Florida 34758.
The Agreement reads as follows:
Builder agrees to construct on said property a completed home known as Builder's Patriot model, elevation B. This will be done in accordance with the plans and specifications maintained by the Builder for construction of said model and which are incorporated into this agreement. The plans and specifications will remain on file at the office of the Builder. The completed home shall include (unless otherwise noted on the attachments hereto): lot clearing, fill in pre-designated areas, connection to public water system, connection to public sewer system or an allowance for a septic system determined by lot location, and interior amenities according to Standard Specifications and Features. All clearing will commence at ten (10) feet from building structure. Front clearing will commence at the minimum setback established by applicable governmental authorities. The actual positioning of the home on the property described herein shall be at Builder's discretion and in accordance with all codes and setback requirements. This
Agreement is conditioned upon the Buyer obtaining a firm commitment for financing. If Buyer is unable to obtain a mortgage commitment within 180 days of this contract, this contract shall be null and void and any deposit paid by Buyer, less survey fees, appraisal costs and the cost of credit reports, permits and selling expenses will be returned in full, providing Buyer has made application within (5) days of the date of this Agreement, to the lending institution. If Buyer does not make application in good faith as required herein, the deposit herewith shall be applied to the account of the Builder in satisfaction of the Builder's expenses associated with this agreement. Buyer shall furnish promptly all information and cause to be executed all documents needed to obtain a firm mortgage commitment. Buyer assumes responsibility for any loan disqualification before or after initial loan commitment is acquired and until loan closing with lender. Any such loan disqualification cause by the Buyer shall permit Builder to retain all deposits paid by Buyer. If Builder obtains a mortgage pre-approval letter and Buyer cancels for any reason, all deposit monies are retained by Builder. If Buyer elects to enter Credit Re-establishing Program, all deposits given to Builder are deemed non-refundable.
INFLATION PROTECTION [PROVISION]: Buyer
[Mr. Harrison] and Seller [AFH] agree that the Purchase Price specified in the Purchase agreement shall be binding upon both parties for a period of 180 days from the date of the Agreement. In the event that Buyer receives a valid, unconditional, mortgage commitment from a Seller approved lender, on or before 180 days from the date of the agreement, Buyer and Seller hereby agree, that the initial selling price, plus any necessary costs for additional options, lot costs, and/or closing costs, shall remain in effect for the duration of the agreement.
In the event that the Buyer is unable to
obtain a mortgage commitment within 180 days, but is able to secure a mortgage commitment prior to 365 days from the date of the Agreement, Buyer and Seller agree that Base Price of the home shall be the then current advertised price of the specified home in the respective community selected by Buyer. Buyer and Seller agree to execute a new Purchase Agreement at the then current price. In no event shall the Base Price of the home increase more than 4% (four percent) over the initial contract price. In the event that Buyer is unable to secure a mortgage commitment within 365 days of the date of the Agreement, the Agreement shall become null and void and Buyer shall be entitled to a full refund of all deposit monies. At such time, Buyer and Seller shall have no further obligation to each other unless both parties execute a subsequent agreement.
ACCORDING TO SECTION 501.1375, FLORIDA STATUTES, THE BUYER OF A ONE-FAMILY OR TWO- FAMILY RESIDENTIAL DWELLING UNIT HAS THE RIGHT TO HAVE ALL DEPOSIT FUNDS (UP TO 10% OF THE PURCHASE PRICE) DEPOSITED INTO AN INTEREST BEARING ACCOUNT. THIS RIGHT MAY BE WAIVED, IN WRITING, BY THE BUYER. BUYER, BY EXECUTION OF THIS CONTRACT, WAIVES THIS ESCROW RIGHT.
ALL PAYMENTS TOWARD THE PURCHASE PRICE MADE TO THE BUILDER PRIOR TO CLOSING PURSUANT TO THIS CONTRACT MAY BE USED FOR CONSTRUCTION
PURPOSES BY THE BUILDER. [Emphasis added]
The 180-day period referenced above began on July 10, 2003, and ran to January 6, 2004. This 180-day period remained in effect, notwithstanding subsequent rewrites of the Agreement. A rewrite is required when the purchaser make changes, usually lot selection and modification of the home design, to the original purchase agreement.
Respondent gave undisputed testimony explaining the business reasoning and purpose for the Inflation Protection (IP) provision. AFH does not provide mortgage services. Buyers, after making their home and lot location selections and entering the agreement to purchase, must then secure an "unconditional loan commitment." The unconditional loan commitment is insurance that a specific amount of funds are available at a specific time period(s), thereby permitting AFH to enter into labor and material contracts with suppliers.
AFH does not provide "advances," i.e. enter into contracts for labor and materials at specified prices upon the signing of the agreement. AFH employs the IP provision to ensure a reasonable profit margin in the constant changing "labor and material" markets.
After entering into the initial Agreement above,
Mr. Harrison and AFH entered into rewrites of the July 10, 2003, Agreement. Each rewrite was the result of changes Mr. Harrison desired and consisted primarily of different lot selection within a particular subdivision and/or different house design and modifications.
On September 6, 2003, Mr. Harrison entered into the first rewrite. This rewrite referred to property description of Oak Valley III, Lot TBD, Block TBD, Clermont, Florida 34711. This rewrite listed a home price of $114,798.00 and a lot price
of $31,500.00 for a total price of $146,298.00, with an initial deposit of $350.00. AFH agreed to construct on said property a completed home known as Builder's Patriot model, elevation B.
On September 17, 2003, Mr. Harrison entered into the second rewrite. This rewrite referred to property description of Oak Valley, Phase III, Lot 456, Clermont, Florida 34711. This rewrite listed a home price of $114,798.00 and a lot price of $31,500.00 for a total price of $146,298.00, with an initial deposit of $350.00. AFH agreed to construct on said property a completed home known as Builder's Patriot model, elevation B.
On May 25, 2004, Mr. Harrison entered into the third rewrite. This rewrite referred to property description Oak Valley Phase III, Lot 456, Block 3, 1107 Lakeview Oaks Drive, Clermont, Florida 34711. This rewrite listed a home price of
$114,798.00 and a lot price of $31,500.00 for a total price of
$146,298.00, with an initial deposit of $350.00. AFH agreed to construct on said property a completed home known as Builder's Patriot model, elevation B.
On July 28, 2004, Mr. Harrison entered into the fourth rewrite. This rewrite referred to property description Oak Valley III, Lot 456, Block 3, 1107 Lakeview Oaks Drive, Clermont, Florida 34711. This rewrite listed a home price of
$114,798.00 and a lot price of $31,500.00 for a total price of
$146,298.00, with an initial deposit of $350.00. AFH agreed to
construct on said property a completed home know as Builder's Patriot model, elevation C.
Mr. Harrison failed, within the 180-day period, to secure a valid unconditional loan commitment as required by the initial Agreement and each subsequent rewrite. Based upon his testimony, his arguments, and his cross-examination of AFH's witnesses, it became apparent that Mr. Harrison failed to appreciate the significance of securing the required unconditional loan commitment within the 180-day period that began to run at the signing of the first Agreement.
However, on August 21, 2003, well within the 180-day period, Mr. Harris secured a "conditional loan approval" from Irwin Mortgage Corporation. The "conditional loan approval" did not, however, satisfy the required unconditional loan commitment of the IP provision contained in the initial and rewritten contracts. The Irwin Mortgage Corporation's "conditional approval loan commitment" specifically provided that: "IT IS NOT A COMMITMENT TO MAKE A LOAN. . .," and it expired on December 30, 2003. Expiration of the conditional approval loan commitment was well short of the 180-day period contained in the Agreement which began on July 10, 2003, and ran to January 6, 2004, and afforded Mr. Harrison sufficient time to secure the required unconditional loan commitment, which he failed to do.
Mr. Harrison, at some unspecified time, engaged Groves Funding Corporation (Groves) through the services of Mr. Tye Cole, in furtherance of obtaining a loan to purchase the contract home. Approximately one (1) year and eight (8) months after the July 10, 2003, Agreement, Groves issued to
Mr. Harrison a pre-qualification letter. Mr. Cole gave unrefuted testimony that the pre-qualification letter "was not a commitment to make a loan," and the approval was based solely upon verbal financial and credit representations of Mr. Harrison that required verification by Groves. With or without verification, the pre-qualification letter was issued after the expiration of the 180-day (i.e. 182 days) limitation contained in the initial Agreement and binding on the four subsequent rewrites. The pre-qualification letter was in no wise an unconditional loan commitment to make a loan to Mr. Harrison.
According to Ms. Mary Tymorek, a AFH mortgage manager, an apparent break-down in communication between the lender, Groves, and AFH occurred. It was her original understanding that Mr. Harrison was to secure a Veteran's Administration (VA) loan that did not require a down payment from Mr. Harrison. Due primarily to Mr. Harrison's credit history, the VA loan did not occur.
When Mr. Harrison began working with Mr. Cole of Groves, his loan (application) changed from a VA loan to a
Federal Housing Administration (FHA) loan. The FHA loan required a down payment. According to Mr. Cole, Mr. Harrison's credit issues rendered him ineligible for a VA loan with no required down payment. After becoming aware of Mr. Harrison's credit issues, Mr. Cole then sought to secure Mr. Harrison a FHA loan that required a down payment.
At this juncture in the process, a third down payment source, through the services of Ameridream, a down payment facilitator, was made available to Mr. Harrison. However, to secure the down payment from Ameridream, AFH was required to contribute the required down payment and pay an additional service fee to Ameridream. This transaction was not anticipated nor expected by either party when the original and rewrite agreements were executed. On the assumption by both parties that Mr. Harrison would receive a VA loan with no down payment, the price of the down payment as well as the price of the Ameridream service fee was not included in the agreed purchase price of the home.
Because Mr. Harrison was either not able to contribute a down payment and/or refused to contribute the down payment and service fee, AFH would be required to make such contributions to Ameridream and the contributions made would be included in the price of the home in the Agreement between Mr. Harrison and AFH. This resulted in AFH's rewriting Mr. Harrison's Agreement again
to include the down payment and service fee into the purchase price of the home. This necessary increase would have caused the price of the home Mr. Harrison sought to purchase to increase by $5,575.00, thereby increasing the total purchase price and debt obligation of Mr. Harrison to $151,873.00.
The problem with Mr. Harrison's anticipated loan arrangements and subsequent discovery that Mr. Harrison was not eligible for a loan without a down payment precipitated
Ms. Tymorek's review of Mr. Harrison's file. The file review revealed two important factors requiring attention: (1) the 180-day period had expired and (2) the IP provision was not met. As was her responsibility and authority, Ms. Tymorek made a management decision to apply the IP provision in keeping with
prudent business practices. Her application of the IP provision would have allowed AFH's contribution to the down payment facilitator, Ameridream, and resulted in raising the purchase price of the home. Pursuant to the above terms of the agreement (securing down payment through Ameridream and application of the IPP to the purchase price), the purchase price of the selected lot and home per the fourth rewritten Agreement increased to approximately $175,000.00.
It is uncontroverted that at the time Ms. Tymorek undertook to invoke the IP provision and Ameridream down payment
provisions, she had not met Mr. Harrison nor had she personally spoken to him. She had no reason to have had contact with
Mr. Harrison and no means or methods of knowing his race or alleged disability. Even if she could have known Mr. Harrison was black, there is no evidence in the record that her actions were based upon other than routine business procedures and sound business practices. There is not a scintilla of record evidence that would support an allegation that Ms. Tymorek's conduct was based upon a discriminatory motive and/or intent.
After implementing the IP provision and making other modifications to Mr. Harrison's file, Ms. Tymorek then contacted Mr. Harrison and advised him of the decision to implement the IP provision and resulting increase in the purchase price. As a direct result of both, Mr. Harrison's failure to timely secure an unconditional loan commitment and implementing the IP provision, the scheduled closing on the purchase of the home did not occur on February 14, 2005. On March 28, 2005,
Mr. Harrison, by letter to Ms. Tymorek, requested return of his $350.00 deposit. Upon receipt of his letter, it was Ms. Tymorek's understanding that Mr. Harrison was no longer
interested in purchasing a home from AFH, and she returned his
$350.00 deposit.
Based upon his direct testimony and his cross- examinations of Respondent's witnesses, it became apparent that
Mr. Harrison did not understand and accept that the purchase price increase to approximately $175,000.00 resulted from imposition of the IP provision due solely to his inability to secure an unconditional loan commitment within the 180-day period. Petitioner's lack of acceptance is buttressed by his allegation of discrimination, which is not that "AFH refused to sell the property to him," but AFH discriminated against him when AFH "applied the inflation protection provision resulting in an increase of the purchase price." This claim must fall for lack of any evidence in support thereof.
Petitioner failed to prove by direct and/or circumstantial evidence that he was a qualified buyer per the terms of the purchase agreement entered into by him and Respondent.
Petitioner failed to prove by direct and/or circumstantial evidence that Respondent treated him differently than other purchasers outside his class similarly situated who were not black, a veteran, and whose credit history rendered him unable to secure the required down payment.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Sections 120.569 and 760.20 through
760.37 and Subsection 120.57(1), Florida Statutes (2005).
The Fair Housing Act of 1988, 42 U.S.C. Section 3604(b), makes it unlawful "[t]o discriminate against any person in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin," as does Subsection 760.23(2), Florida Statutes.
Statutory construction in Florida recognizes that if a state law is patterned after a Federal law on the same subject, the Florida law will be accorded the same construction as in the Federal courts to the extent the construction is harmonious with the spirit of the Florida legislation. O'Loughlin v. Pinchback,
579 So. 2d 788, 791 (Fla. 1st DCA 1991), citing Kidd v. City of Jacksonville, 97 Fla. 297, 120 So. 556 (1929); Massie v.
University of Florida, 570 So. 2d 963 (Fla. 1st DCA 1990); Holland v. Courtesy Corp., 563 So. 2d 787 (Fla. 1st DCA 1990).
Discrimination cases are subject to the test articulated in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973). To establish a prima facie case of discrimination Petitioner must establish, by a preponderance of the evidence, each of the following: (1) membership in a protected class;
(2) is a qualified buyer; (3) despite his qualification, was denied the purchase; and (4) was treated differently than other similarly-situated individuals outside Petitioner's protected
class. See Gamble v. City of Escondido, 104 F.3d 300 (9th Cir. 1997); and Martin v. Palm Beach Atlantic Association, 696 So. 2d 919 (Fla. 4th DCA 1997).
A Petitioner can prove discrimination by providing either or both direct and circumstantial evidence of discrimination. Kline V. Tennessee Valley Authority, 128 F.3d 337, 348 (6th Cir. 1997); Shealy v. City of Albany, Ga., 89 F.3d 804 (11th Cir. 1996).
Petitioner failed to establish that he possessed a demonstrated ability to secure the down payment required to purchase the home he ultimately selected at a price of
$175,000.00 within the 180-day period. Thus, Petitioner did not establish that he was a qualified buyer.
Having failed to establish a prima facie case of discrimination articulated in McDonnell Douglas Corp. v. Green,
411 U.S. 792, by demonstrating that he was a qualified buyer and was treated differently than other similarly situated individuals outside Petitioner's protected class, the Petition filed in this cause should be dismissed.
Based on the foregoing Findings of Fact and Conclusions of Law, it is
RECOMMENDED that the Florida Commission on Human Relations enter a final order dismissing Petitioner's Petition for Relief.
DONE AND ENTERED this 24th day of January, 2006, in Tallahassee, Leon County, Florida.
S
FRED L. BUCKINE
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 24th day of January, 2006.
COPIES FURNISHED:
Denise Crawford, Agency Clerk Commission on Human Relations 2009 Apalachee Parkway, Suite 100
Tallahassee, Florida 32301
Tyrone Harrison 8412 Peterson Road
Odessa, Florida 33556
Cristina A. Equi, Esquire Gray & Robinson, P.A.
301 East Pine Street, Suite 1400 Post Office Box 3068
Orlando, Florida 32802-3068
Cecil Howard, General Counsel Commission on Human Relations 2009 Apalachee Parkway, Suite 100
Tallahassee, Florida 32301
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.
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 13, 2006 | Agency Final Order | |
| Jan. 24, 2006 | Recommended Order | Petitioner failed to secure an unconditional committment for financing at the adjusted price. The allegation of discrimination based upon race did not establish a prima facie case. Recommend that the petition be dismissed. |
