STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND PROFESSIONAL REGULATION, FLORIDA REAL ESTATE APPRAISAL BOARD,

Petitioner,

vs.

ALFREDO PEYNO,

Respondent.

)

)

)

)

)

)

)

) Case No. 06-2275PL

)

)

)

)

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was conducted in this case on October 6, 2006, by video teleconference at sites in Orlando, Miami, and Tallahassee, Florida, before Administrative Law Judge Claude B. Arrington of the Division of Administrative Hearings

(DOAH).

APPEARANCES

For Petitioner: Raquel White, Esquire

Department of Business and Professional Regulation

Division of Real Estate

400 West Robinson Street, Suite 801N Orlando, Florida 32801-1757

For Respondent: John O. Sutton, Esquire

Jamerson & Sutton, LLP

2655 Le Jeune Road, Penthouse II Coral Gables, Florida 33134

STATEMENT OF THE ISSUE

Whether Respondent, an appraiser, committed the offenses alleged in Counts I, II, and IV of the Amended Administrative Complaint1 and, if so, the penalties that should be imposed.

PRELIMINARY STATEMENT

Petitioner’s Amended Administrative Complaint, which was served on Respondent prior to the referral of the proceeding to DOAH, alleged certain facts pertaining to an appraisal report (the Report) signed by Respondent and Celso Paul Mesa dated November 30, 1998. Petitioner alleged that the Report contained certain specified errors. Specifically, paragraph 5 of the Amended Administrative Complaint referenced the subject Report and alleged the following deficiencies:

1. The Report contained the following errors:

   1. There was no documentation in the work filed to support the negative adjustment made to comparable sale 1 for its pool;

   2. There was no documentation in the work file to support the negative adjustments made to comparable sales 1, 2, and 3 for their larger site lots;

   3. There was no documentation in the work file to support the values reached under the Cost Approach;

   4. Respondent failed to state the intended use of the Report, and the intended users of the Report;

   5. Respondent failed to keep and maintain an original copy of the Report as communicated to the client.

Based on the deficiencies alleged in paragraph 5, Petitioner alleged in Counts I, II, and IV the following:

Count I: Based upon the foregoing, Respondent has violated a standard for the development or communication of a real estate appraisal, specifically Standard Rule 1-2(a) and (b), or other provisions of the Uniform Standards of Professional Appraisal Practice (1998) (USPAP) in violation of Section 475.624(14), Florida Statutes (1998).[2]

Count II: Based upon the foregoing, Respondent has violated a standard for the development or communication of a real estate appraisal, specifically Standard Rule 1-4(a) and (b), or other provisions of USPAP in violation of Section 475.624(14), Florida Statutes

Count IV: Based upon the foregoing, Respondent is guilty of failing to retain, for at least five years, original or true copies of any contracts engaging the appraiser’s services, appraisal reports, and supporting data assembled and formulated by the appraiser in preparing appraisal reports in violation of Section 475.629, Florida Statutes, and, therefore, in violation of Section 475.624(4), Florida Statutes.

Respondent timely requested a formal hearing, to challenge the allegations of the Amended Administrative Complaint, the matter was referred to DOAH, and this proceeding followed.

At the final hearing, Petitioner presented the testimony of one witness, Kathleen Koeberich, who is both Chief of Enforcement for Petitioner’s Division of Real Estate (which includes appraisers) and the custodian of records. This witness

served only to authenticate Petitioner’s exhibits, as she had no direct knowledge of the investigation that culminated in the filing of the Amended Administrative Complaint, and she was not called to give expert testimony. Petitioner presented three Exhibits. Petitioner’s Exhibit 1 was the Investigative Report prepared by Tibizay Morales, an investigator who is no longer employed by Petitioner. Petitioner’s Exhibit 2 was a Supplemental Investigative Report prepared by Ms. Morales.

Petitioner’s Exhibit 3 was Respondent’s certification as an appraiser.

Respondent presented the testimony of Diana DeFonzo, who was qualified and accepted as an expert. Respondent offered one composite Exhibit, consisting of the Amended Administrative Complaint and the attachments thereto.

A Transcript of the Hearing was filed October 30, 2006. Both parties timely filed Proposed Recommended Orders, which have been duly considered by the undersigned in the preparation of this Recommended Order.

FINDINGS OF FACT

1. Petitioner is the agency of the State of Florida charged with regulating and enforcing the statutory provisions pertaining to persons holding licenses as real estate appraisers. Petitioner is charged with the duty to prosecute administrative complaints pursuant to Chapters 20, 120, 455, and

   475, Florida Statutes, and the rules promulgated pursuant thereto.

2. The Report was dated November 30, 1998. At that time, Respondent was a registered appraiser who could only perform appraisals under the supervision of a certified appraiser. As of November 30, 1998, Mr. Mesa served as the certified appraiser who supervised Respondent. Respondent’s expert witness described Respondent’s status while he worked for Mr. Mesa as being a “trainee,” “apprentice,” or “journeyman.”

3. Both Respondent and Mr. Mesa signed the Report. Above Respondent’s signature is the designation “Appraiser.” Under Respondent’s signature is his state license number and a designation indicating his status as a registered real estate appraiser. Above Mr. Mesa’s signature is the designation “Supervisory Appraiser.” Under Mr. Mesa’s signature is his state license number and a designation indicating his status as a certified real estate appraiser. At the top of the Report were the words “Mesa Appraisals.” On the bottom of the Report were the words “Mesa Appraisals, Inc.”

4. Petitioner failed to prove the factual predicate set forth in paragraph 5(a) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that there was adequate documentation contained within the Report to support the

   negative adjustment to comparable sale 1 because that comparable had a swimming pool and the subject property did not.

5. Petitioner failed to prove the factual predicate set forth in paragraph 5(b) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that there was adequate documentation contained within the Report to support the negative adjustments to comparable sales 1, 2, and 3 because those comparable sales were sited on larger lots than the subject property.

6. Petitioner failed to prove the factual predicate set forth in paragraph 5(c) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that there was adequate documentation contained within the Report to support the values reached under the cost approach methodology.

7. Petitioner failed to prove the factual predicate set forth in paragraph 5(d) of the Amended Administrative Complaint. The testimony of Ms. DeFonzo established that the Report reflected the intended use of the Report and the intended users of the Report. The Report reflects that it was for lending purposes and identifies the lender/client.

8. As to paragraph 5(e), the testimony of Ms. DeFonzo established that industry practice was for the certified appraiser to maintain the original appraisal file and for the registered appraiser not to keep a copy of the original file

   because of the confidential and proprietary information that may be contained in appraisal file. There was no competent evidence that Respondent acted inconsistently with that industry practice.3

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding pursuant to Sections 120.569 and 120.57(1), Florida Statutes (2006).

10. Petitioner bears the burden of proving that Respondent committed the violations alleged in the administrative complaint by clear and convincing evidence. See Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932, 935 (Fla. 1996); Pic

    N' Save of Central Florida v. Department of Business Regulation, 601 So. 2d 245, 249 (Fla. 1st DCA 1992); and Section 120.57(1)(j), Florida Statutes.

11. Clear and convincing evidence "requires more proof than a 'preponderance of the evidence' but less than 'beyond and to the exclusion of a reasonable doubt.'" In re Graziano, 696 So. 2d 744, 753 (Fla. 1997). It is an "intermediate standard." Id. For proof to be considered "'clear and convincing' . . . 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).

12. Section 475.624(14), Florida Statutes, provides that an appraiser may be disciplined for violating any provision of the USPAP.

13. Section 475.629, Florida Statutes, pertains to the retention of records and provides, in relevant part, as follows:

    An appraiser registered, licensed, or certified under this part shall retain, for at least 5 years, original or true copies of any contracts engaging the appraiser's services, appraisal reports, and supporting data assembled and formulated by the appraiser in preparing appraisal reports.

    The period for retention of the records applicable to each engagement of the services of the appraiser runs from the date of the submission of the appraisal report to the client. These records must be made available by the appraiser for inspection and copying by the department on reasonable notice to the appraiser. . . .

    
    

14. Section 475.624(6), Florida Statutes, provides that an appraiser may be disciplined for violating any applicable statute.

15. The alleged violations set forth in Counts I and II of the Amended Administrative Complaint are predicated on the factual assertions set forth in paragraph 5(a) – (d) of the Amended Administrative Complaint. Petitioner failed to prove those factual assertions and, consequently, failed to prove the alleged violations set forth in Counts I and II.

16. The prosecution of the alleged violation set forth in Count III of the Amended Administrative Complaint was abandoned by Petitioner.

17. The violation alleged in Count IV of the Amended Administrative Complaint is based on Petitioner’s construction of Section 475.629, Florida Statutes, as argued by its counsel. Petitioner’s counsel contends that the statute requires Respondent to keep a copy of the subject appraisal file even though he was a registered appraiser working under the supervision of a certified appraiser. Petitioner’s counsel correctly argues that an agency’s interpretation of statutes it is required to enforce is entitled to deference unless the interpretation contradicts the plain meaning of the statute or is clearly erroneous or contrary to law. See Level 3 Communications, LLC v. Jacobs, 841 So. 2d 447 (Fla. 2003) and Osorio v. Board of Professional Surveyors and Mappers, 898 So. 2d 188, (Fla. 5th DCA 2005). However, Petitioner has not cited any rule or prior agency order that adopts the construction of

the statute argued by its counsel. No deference is required to be given counsel’s argued construction merely because counsel is representing an agency. It is concluded that the construction of the statute as argued by agency counsel is overly broad and contrary to industry practice. The appropriate construction, which is consistent with industry practice, would only require for the appraisal file to be maintained and for the registered appraiser to have access to the appraisal file, if necessary.

In this proceeding, it is concluded that the records retention requirement set forth in Section 475.629, Florida Statutes, was satisfied because the working file was available for inspection at Mr. Mesa’s office. Respondent should be found not guilty of the alleged violation set forth in Count IV.

RECOMMENDATION

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

RECOMMENDED that Petitioner enter a Final Order finding Respondent not guilty of each of the counts set forth in the Amended Administrative Complaint.

DONE AND ENTERED this 14th day of November, 2006, in Tallahassee, Leon County, Florida.

S

CLAUDE B. ARRINGTON

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 14th day of November, 2006.

ENDNOTES

1/ Petitioner voluntarily abandoned the prosecution of Count III of the Amended Administrative Complaint at the beginning of the formal hearing.

2/ Unless otherwise indicated, all references to statutes are to Florida Statutes (1998).

3/ Petitioner’s Exhibits reflect that by the time Petitioner requested a copy of the working file for the appraisal, Respondent’s licensure status had been elevated from a registered appraiser to a certified appraiser. Respondent had left the employ of Mr. Mesa’s company and had started his own company. A letter in the Petitioner’s Exhibit 2 dated March 7, 2002, appears to be from Respondent to Ms. Morales. That letter reflects that the original working file was left with Mr. Mesa. It appears that Ms. Morales subsequently obtained what purports to be a complete copy of the working file from Mr. Mesa. There was no evidence that Respondent could not have obtained a copy of the working file from Mr. Mesa had he been required to do so.

COPIES FURNISHED:

Raquel White, Esquire Department of Business and

Professional Regulation Division of Real Estate

400 West Robinson Street, Suite 801N Orlando, Florida 32801-1757

John O. Sutton, Esquire Jamerson & Sutton, LLP

2655 Le Jeune Road, Penthouse II Coral Gables, Florida 33134

Frank Gregoire, Chairman Real Estate Appraisal Board Department of Business and

Professional Regulation

400 West Robinson Street, Suite 801N Orlando, Florida 32802-1900

Josefina Tamayo, General Counsel Department of Business and

Professional Regulation Northwood Centre

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: 06-002275PL

Orders for Case No: 06-002275PL