Pursuant to notice, this cause came on for final hearing before Linda M. Rigot, the assigned Administrative Law Judge of the Division of Administrative Hearings, on January 12, 2010, by video teleconference with sites in Orlando and in Tallahassee, Florida.
Daniel Villazon, P.A.
The issue presented is whether Petitioner is entitled to recover from Respondent his attorney's fees and costs, pursuant to the Florida Equal Access to Justice Act, Section 57.111,
Florida Statutes.
On November 16, 2009, Petitioner Elbert Cecil Wright, III, filed Petitioner's Florida Statute 57.111 Motion for Attorney Fees/Costs seeking reimbursement for the attorney's fees and costs he had incurred in his successful defense of the underlying action, DOAH Case No. 08-4720PL. Although Respondent Department of Business and Professional Regulation, Division of Real Estate, was able to stipulate to many of the issues raised by Petitioner's Motion, Respondent's response to Petitioner's Motion asserted that Respondent was substantially justified in initiating the underlying proceeding and was without knowledge as to whether Petitioner's net worth qualified him to be considered a small business party in the underlying proceeding. Respondent requested an evidentiary hearing as to those issues.
and C were admitted in evidence. Respondent's request for official recognition was granted as to the Department's Proposed Recommended Order and as to the Department's Exceptions to the Recommended Order, both of which were filed in the underlying proceeding.
The transcript of the final hearing was filed on February 1, 2010. Proposed final orders were timely filed and have been considered in the entry of this Final Order.
On October 24, 2007, Respondent Department of Business and Professional Regulation, Division of Real Estate, received a complaint against Petitioner Elbert Cecil Wright, III, a certified residential appraiser holding license numbered 219. The complaint was assigned to an investigator, Judy S. Smith, who has some level of training regarding real estate appraisals but no personal experience or licensure in the field.
The complaint letter was written by Kathleen Tesi, who lives in Virginia and represents herself to have no expertise in real estate appraisal. At the urging of a personal friend in 2005, she purchased a vacant lot, sight unseen, in Bella Collina West, Montverde, Florida, for $655,900.
Tesi understood that she would be buying the lot with her friend with the expectation that they would hold title for some time period and then sell it for a profit. The two of them had done this together in the past. The entire transaction, including the closing, was done by mail, and multiple documents and multiple versions of those documents were exchanged.
It appears that Tesi and her friend are both named on the mortgage, although Tesi questions her friend's signature.
The mortgage note, however, was executed only by Tesi. The contract for purchase of the lot, however, was in the name of her friend and a third party, whom Tesi does not know, and Tesi is not reflected as a purchaser of the lot. Respondent's investigative file does not contain a copy of the deed to the lot, so it is unknown whether Tesi has an ownership interest in the lot or just the financial obligation to pay for it.
Tesi's potential mortgage company, SunTrust Mortgage, Inc., contracted with Petitioner to prepare an appraisal of the property for SunTrust. Petitioner prepared and submitted an appraisal to SunTrust, his client, which reflected that the property was valued at the purchase price.
In 2007, when property values fell sharply and Tesi's friend advised her that she would no longer help Tesi with the mortgage payments, Tesi began seeking and gathering copies of the purchase agreement and closing documents from the title company and SunTrust. She then filed a complaint with the Georgia Banking Commission against SunTrust for, essentially, loaning her more money than she could pay back; against the title company for, essentially, inconsistent names throughout the paperwork involved in the closing and transfer of title; and
the complaint with Respondent against Petitioner for producing an inferior appraisal.
Her complaint regarding Petitioner's appraisal of the property raises three concerns: Petitioner did not use appropriate comparables, Petitioner overvalued her property, and Petitioner misrepresented the size of the lot. In her complaint to the Georgia Banking Commission, she suggests that the incorrect lot size on Petitioner's appraisal should invalidate the appraisal and, therefore, invalidate the loan she obtained from SunTrust.
Smith forwarded Tesi's complaint to Petitioner, who responded by letter dated November 30, 2007. He explained that at the time of his appraisal, Lake County had not yet uploaded records on the new subdivision Bella Collina West concerning plats or sales. He, therefore, obtained such information from the on-site sales staff and named the sales manager who advised him that there were not yet any closed sales in the subdivision and who gave Petitioner the dimensions of Tesi's lot. The letter explained in detail why Petitioner chose comparables in the earlier-developed phase of Bella Collina and how he made adjustments in value for those recent closed sales of much- larger lot sizes because they were not on the golf course as was Tesi's lot.
Investigator Smith interviewed Petitioner on January 31, 2008. He explained to her again why he chose the
comparables that he chose, how he computed the value of the lot in question, and that he obtained the lot dimensions from the on-site sales staff for the subdivision.
Smith also interviewed a sales person at the developer's sales office at the subdivision. He explained to her that the lots in the subdivision were in such high demand in 2005 that the developer resorted to a lottery system to determine who would even be able to buy a lot. Smith did not speak to the sales person Petitioner said he had obtained information from when he prepared his appraisal of Tesi's lot.
Smith went to Bella Collina West and Bella Collina, an earlier phase of the development. She saw that the comparables utilized by Petitioner were much-larger lots than Tesi's but that Tesi's was on the golf course.
She did no further investigation. Specifically, she did nothing to verify the information Petitioner gave her relating to the issues raised by Tesi. For example, she did not verify Petitioner's statements to her that there were 14 sales of vacant lots the same size as Tesi's lot that sold for the same price as Tesi's at the same time. She did not consult with an expert to determine if there were any statutory violations
committed by Petitioner regarding that appraisal or if there were professional standards violated.
Smith completed her investigative report which, basically, included Tesi's complaint and Petitioner's response. That report was forwarded to the Florida Real Estate Appraisal Board, along with a draft administrative complaint. The report contains no explanation concerning the professional standards or statutes Petitioner allegedly violated. The report simply recites what each of the three individuals Smith interviewed said to her.
The Probable Cause Panel of the Board considered the investigative report on April 9, 2008. The Transcript of the meeting reflects the presence of 12 persons, only two of whom were members of the probable cause panel. The remainder of those present were attorneys or staff members for the Board or the Department.
Of the two probable cause panel members,
Michael Rogers was physically present, and Clay Ketcham attended the meeting by telephone. No evidence was offered in this proceeding as to whether they were licensees of the Board or lay persons, although Respondent's attorney asserted during argument in this proceeding that both gentlemen are state certified general appraisers.
The entire consideration of the charges against Petitioner is less than three transcript pages long. First, the prosecutor erroneously described the size of Tesi's vacant lot, the date of the appraisal, and the county in which the lot was located. She then mentioned that the comparables Petitioner used were larger, and he made adjustments for size, location, and view. She then advised that Petitioner had two prior disciplinary actions and recommended the Board approve the draft six-count administrative complaint.
Panel member Ketcham asked whether prior disciplinary action could constitute a charge in an administrative complaint. His question was answered, and the two panel members then found probable cause to file the administrative complaint.
There was no discussion regarding any of Tesi's allegations, the explanations Petitioner had given, why Petitioner's choice of comparables or the offset he used were incorrect, the alleged statutory violations Petitioner was charged with committing, or the professional standards Petitioner was charged with violating. It is clear that the two panel members simply "rubber-stamped" the prosecutor's recommendation.
After the administrative complaint was issued, Petitioner requested an administrative hearing, and the matter was referred to the Division of Administrative Hearings and
assigned DOAH Case No. 08-4720PL. The final hearing in that case, the underlying proceeding, was conducted on January 22, 2009.
At the final hearing, the Department's only expert to testify agreed with Petitioner that the erroneous lot size Petitioner used in his appraisal had no impact on the value of the lot. Although the Department's expert disagreed with the comparables used and the adjustments in value Petitioner made, there was no suggestion as to what the "correct" appraised value of the lot should have been.
On April 1, 2009, the undersigned entered a Recommended Order finding that the Department of Business and Professional Regulation, Division of Real Estate, had failed to prove any of the six counts contained in the administrative complaint and recommending that a final order be entered finding Petitioner not guilty and dismissing the administrative complaint. On September 18, 2009, the Florida Real Estate Appraisal Board entered a Final Order adopting that Recommended Order and dismissing the administrative complaint against Petitioner.
On November 16, 2009, Petitioner filed his motion for attorney's fees and costs, seeking to be reimbursed for those amounts expended in defending the underlying action. His motion was assigned DOAH Case No. 09-6338F. That motion seeks an award
of attorney's fees in the amount of $9,720.00 and costs in the amount of $1,206.95, for a total of $10,926.95.
Petitioner prevailed in the underlying proceeding and is a small business party. His net worth, including both personal and business investments, is less than $2,000,000.
Respondent was not substantially justified in initiating the underlying proceeding against Petitioner.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Sections 57.111(4), 120.569, and 120.57(1), Florida Statutes.
This proceeding was filed pursuant to Section 57.111, Florida Statutes, the Florida Equal Access to Justice Act. That statute provides for an award of reasonable attorney's fees and costs against a state agency and in favor of a prevailing small business party unless the actions of the agency were substantially justified or special circumstances exist which would make the award unjust.
Respondent's Motion to Dismiss Petitioner's Motion for Attorney's Fees and Costs, which was subsequently denied, also served as Respondent's response to the Initial Order entered in this cause on November 17, 2009. In its Motion, Respondent admitted that it initiated the underlying proceeding against
Petitioner, that it was not a nominal party, and that the Petitioner was the prevailing party. Respondent also asserted that it had insufficient information to admit the reasonableness of the attorney's fees and costs being sought and insufficient information as to Petitioner's net worth to know if Petitioner qualified under the statutory definition of small business party. § 57.111(3), Fla. Stat. Lastly, Respondent asserted that its actions in initiating the underlying proceeding against Petitioner were substantially justified because Respondent had a reasonable basis in law and fact at the time that it issued its administrative complaint.
At the final hearing, Respondent stipulated that the amount of attorney's fees and costs being sought by Petitioner in this proceeding are not in dispute, in effect stipulating that the amounts are reasonable.
Section 455.225(4), Florida Statutes, regulates the composition of probable cause panels for various professional and occupational licensing boards and requires that probable cause panels be composed of at least two members, one of whom must be a present professional board member and one of whom must be a former or present consumer member if one is available. Although the statute affords latitude to various boards to promulgate more detailed rules relating to each board's probable cause panels, the statute sets forth minimum requirements for
all probable cause panels. The probable cause panel that found probable cause and initiated the underlying proceeding against Petitioner appears to have been legally deficient.
There is no evidence in this proceeding as to whether Messrs. Rogers and Ketcham are present professional board members or consumer members. Respondent's attorney's argument stating that they are both certified appraisers is not evidence. Even if it were and both were professional members of the Board, then there would not be a consumer member on the probable cause panel, and the transcript of that meeting contains no representation that a consumer member was not available. Accordingly, since there is no evidence that the probable cause panel was legally constituted, it, a fortiori, could not be substantially justified in finding probable cause against Petitioner.
Section 57.111(3)(e), Florida Statutes, provides that a proceeding is substantially justified if it had a reasonable basis in law and fact at the time it was initiated. The underlying proceeding against Petitioner lacked a reasonable basis in law and lacked a reasonable basis in fact for several reasons, and Respondent, therefore, was not substantially justified in filing its administrative complaint against Petitioner.
First, a totally irresponsible investigation of
charges by an agency justifies an award of attorney's fees and costs. Dept. of Health and Rehabilitative Services v. S.G., 613 So. 2d 1380 (Fla. 1st DCA 1993. In this proceeding, the investigation report was simply a compilation of the complaint letter and Petitioner's response and a recitation of what each person said during an interview. There was no verification of the truth of any statement. In short, there was only a report and not an investigation.
Second, the probable cause panel's review of the investigation was cursory, at best. There was no discussion regarding the allegations in the complaint or Petitioner's response. There was no discussion regarding what Petitioner had done or not done that was factually or legally deficient or improper. The only brief discussion concerned whether Petitioner had been disciplined previously: a question as to whether prior discipline could constitute a separate count in an administrative complaint, an affirmative answer, and then a finding of probable cause. The law is both long- and well- settled that such a cursory review is legally insufficient. To sustain a probable cause determination, there must be some evidence considered by the panel that would reasonably indicate that the violations alleged had indeed occurred. Kibler v.
Dept. of Professional Regulation, 418 So. 2d 1081 (Fla. 4th DCA 1982).
Lastly, an agency is not substantially justified in filing a complaint when the probable cause panel fails to discuss the facts or issues before a panel member moves to find probable cause. Thompson, M.D. v. Dept. of Health, Board of Medicine, 7 So. 3d 1150 (Fla. 2nd DCA 2009). In the present case, as in Thompson, there was no meaningful discussion of the facts or the law concerning the proposed charges against Petitioner.
Petitioner has proven that he is a prevailing small business party, and Respondent has failed to present evidence that it was substantially justified in law and in fact in initiating the underlying proceeding against him. Petitioner is entitled to recover his reasonable attorney's fees and costs incurred in the underlying proceeding.
ORDERED that Respondent shall reimburse Petitioner for his reasonable attorney's fees in the amount of $9,720.00, and his reasonable costs in the amount of $1,206.95, for a total of
$10,926.95.
DONE AND ORDERED this 3rd day of March, 2010, in Tallahassee, Leon County, Florida.
LINDA M. RIGOT
Filed with the Clerk of the Division of Administrative Hearings this 3rd day of March, 2010.
Daniel Villazon, Esquire Daniel Villazon, P.A.
A party who is adversely affected by this Final Order is entitled to judicial review pursuant to Section 120.68, Florida Statutes. Review proceedings are governed by the Florida Rules of Appellate Procedure. Such proceedings are commenced by filing the original Notice of Appeal with the agency clerk of the Division of Administrative Hearings and a copy, accompanied by filing fees prescribed by law, with the District Court of Appeal, First District, or with the District Court of Appeal in the Appellate District where the party resides. The notice of appeal must be filed within 30 days of rendition of the order to be reviewed.
