Judges: K. N. AYERS
Agency: Department of Business and Professional Regulation
Latest Update: Oct. 05, 1976
Summary: Dismiss charges. Respondent did not have scienter for fraud.
76-0911.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
FLORIDA REAL ESTATE COMMISSION, ) ex rel. HARTSELL F. McCUE, )
)
Petitioner, )
)
vs. ) CASE NO. 76-911
) WILLIAM L. BALDWIN, ARTHUR C. ) ENGER, T. MAURICE ROUEDE and ) ROUEDE REALTY, INC. )
)
Respondents. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled cause on July 8, 1976 at Melbourne, Florida.
APPEARANCES
For Petitioner: Richard J. R. Parkinson, Esquire
Staff Attorney
Florida Real Estate Commission 644 Lee Road
Winter Park, Florida
For Respondents: Myron S. Krasny, Esquire Arthur C. Enger Post Office Box 1376
Melbourne, Florida 32901
Rouede Realty, Inc. William C. Potter, Esquire Maurice Rouede and Post Office Box 820, Williams L. Baldwin Melbourne, Florida 32901
By Administrative Complaint filed December 10, 1975, the Florida Real Estate Commission ex rel. Hartsell F. McCue, seeks to revoke or suspend the licenses of the above named Respondents and their right to practice under said licenses. As grounds therefor the complaint alleges that Respondents Enger and Baldwin as salesmen for Rouede Realty, Inc., while selling lots in Southgate sub-division on which Rouede was constructing homes, advised William E. and Irene R. Cook, that the property immediately south of said sub-division was zoned Residential R-1, the same as Southgate, when in fact it was zoned R-3 for multiple family dwellings. The complaint alleges that this constituted misrepresentation, false pretenses, and breach of trust in a business
transaction by all Respondents. By virtue of being Active Firm Member of Rouede Realty, Inc., Respondent Rouede and Rouede Realty are allegedly guilty of the same offenses as the Respondent salesmen by virtue of their duty as broker to supervise the activities of their salesmen. Five witnesses were called by
Petitioner, five witnesses, including the Respondents, testified on behalf of the Respondents, and fifteen exhibits were admitted into evidence.
FINDINGS OF FACT
At all times here relevant, Respondents Arthur C. Enger and William L. Baldwin were registered real estate salesmen and T. Maurice Rouede and Rouede Realty, Inc. were registered real estate brokers.
In 1969 the cities of Eau Gallie and Melbourne were merged into the City of Melbourne. A comprehensive zoning plan for the new City of Melbourne was embarked upon and by Melbourne Ordinance No. 72-4, a comprehensive zoning plan was adopted. Because of the large area affected by the plan individual property owners were not advised of any changes in zoning of adjacent property.
Southgate sub-division was sub-divided into lots and platted in 1964 by Disc Corporation, the owners of this property. Between this date and 1972 several of these lots had been sold to individuals who had erected houses on these lots.
In 1972 some 38 lots in this sub-division remaining in the ownership of Disc Corporation were purchased by Rouede Builders, Inc. for the purpose of erecting homes thereon for sale.
A model home was erected and used as the on-site sales office while the remainder of the property was sold.
Since numerous lots in Southgate had already been sold by Disc when the remaining lots were bought by Rouede, a map showing the two platted units in Southgate were obtained from Disc by Rouede and placed on the wall in the on- site sales office with those lots already sold so indicated in red.
Although there was some discrepancy in the testimony regarding which particular map was exhibited on the wall of the on-site sales office, each of these maps (which were introduced into evidence as Exhibits 11, 13, and 15) contained the entire plat of the Southgate lots and showed 11 lots number 7 - 17 adjacent to and immediately south of the lots which Rouede was offering for sale.
Since all of these maps showed lots 7 - 17 south of the Rouede property and they differed only in the manner in which previously sold lots were indicated, it is immaterial to the issues herein which map was actually exhibited on the wall of the sales office.
While the testimony on how the Rouede lots were sold was not clear, it appears that these lots were sold only to individuals who also contracted with Rouede for the construction of a residence, or were sold only with the residence. The property immediately south of the Rouede property was zoned R-1 prior to 1972, and it appears that lots 7 - 17 were shown on the map used by the Tax Assessor prior to 1975. The Comprehensive Zoning Plan enacted in 1972 zoned this property R-3 for multiple family dwellings.
The current parcel map (Exhibit 10) indicates that in May, 1975 the parcel map was corrected by the addition of Village Green. Village Green occupies the same geographical area as lots 7 - 17 shown on Exhibits 11, 13, and
15 without any lot lines separation.
On May 29, 1973 Rouede Builders, Inc. entered into a contract, (Exhibit 12) with William E. and Irene Cook to erect a residence thereon and deed lot number 27 in Southgate Section 2, Unit 1 to the Cooks. The construction was delayed for several weeks to obtain a variance for the purchasers. The construction was completed, and by warranty deed dated January 28, 1974 (Exhibit 8) Rouede Builders, Inc. conveyed the property to the Cooks.
Following the occupancy of the residence by the Cooks the owners of the property immediately south of the Cook's property, designated as Village Green on Exhibit 10, commenced the construction of townhouses. These are two story units with each unit comprising a ground floor and second floor, and with walls common to an adjacent unit on either side. These units are constructed 25 feet from the property line as required by the setback restrictions, and by virtue of the two-foot variance obtained for the Cook's residence they are located 48 feet from the Cook's house.
Mrs. Cook testified that prior to entering into a contract for the purchase of Lot 27, the salesman with whom she was dealing, Arthur C. Enger, in response to her question, advised her that the property immediately south of Southgate (lots 7 - 17 on the wall plat) was zoned for single family residences the same as lot 27. Subsequent to the commencement of the construction of her house she testified that William C. Baldwin, in a telephone conversation also indicated that the property immediately south of Lot 27 was zoned R-1. She talked to Mr. Rouede once or twice by phone regarding construction of her home, but never discussed zoning with him.
Other witnesses who contracted for the erection of a home in Southgate from Rouede recalled no discussion with any salesman regarding the zoning of the area to the south. One of these witnesses took it upon himself to ascertain this fact prior to having his house built and learned from the zoning authorities that the property was zoned R-3.
All Respondents denied that they ever knew what the zoning of the area immediately south of the Rouede property was while they were building and selling houses in Southgate or that they ever discussed such zoning with prospective purchasers or among themselves. None of the Respondents knew who the owners of the property were at the time Rouede was building homes in Southgate; only that it was not included in their sales package.
At the initial sales meeting, where the salesmen were advised how the lots would be sold as well as at subsequent monthly sales meetings, no mention was ever made regarding the zoning of the property later known as Village Green. At this time the property was undeveloped and what is shown as Berkley Avenue on Exhibits 11, 13, and 15, was not in existence.
The map on the wall was reproduced to an 8 1/2 x 14 size (Exhibit 14) and copies of this smaller map were given to all salesmen. These maps were used only as visual sales tools and to keep the salesmen current on which lots were available for sale.
CONCLUSIONS OF LAW
As noted above, the Respondents are charged with misrepresentation, false pretenses, and breach of trust in a business transaction, to wit: the sale of Lot 27 to the Cooks. If true, this constitutes grounds for suspension of the licenses of each Respondent in accordance with subsection 475.25(1)(a) F.S.
With respect to William Baldwin, the only evidence that he ever discussed zoning with any purchaser of a Southgate lot was Mrs. Cook's testimony that after her house was under construction she recalls him saying the property south of her lot was zoned R-1. Even if this were true, which Baldwin categorically denies, such representation on his part certainly had no effect on the Cook's decision to purchase the lot and house for which they contracted before ever meeting Baldwin.
Misrepresentation, false pretenses, and breach of trust in a business transaction must have some causitive effect on or evince an intent to affect, the business transaction in which they occur. Stated differently the fraud encompassed in the above phrase results whenever a party makes a false representation of a material fact to a person ignorant thereof, with intent that it shall be acted upon, followed by reliance upon and by action thereon amounting to a substantial change of position by the person to whom the false representation is made. Watson v. Jones, 41 Fla. 241 (1899).
With respect to T. Maurice Rouede as owner and Active Firm Member of the corporate broker Rouede Realty, Inc. and Rouede Realty, Inc., no testimony was presented that either made any representations or misrepresentations to the Cooks or any other purchaser regarding the zoning of the property adjacent to that being developed by Rouede.
In prosecuting the charges herein the Commission appears to take the position that:
The broker is liable for all acts of his salesmen; or
That the broker conspired with and/or encouraged his salesmen to misrepresent the zoning on the property now known as Village Green.
With respect to (2) above, no evidence was adduced to support this position unless the fact that Rouede produced the map which was exhibited on the wall of the sales office, and the exhibition of this map by itself was evidence of an intent to misrepresent.
In this regard it should be noted that "fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, trick, scheme or device, culpable negligence, or breach of trust in any business transaction" which subsection 475.25(1)(a) F.S. says constitutes grounds for suspension of the registration of a registrant, all require scienter. Scienter on behalf of a registered real estate broker or salesman may be shown by evidence that they made the false statement without regard to their actual knowledge of its falsity. This is so because the statutes regulating such registrants were designed to protect the public and to safeguard those persons who put their money and trust in the hands of real estate brokers. Anyone who deals with a licensed broker may assume that he is dealing with an honest and ethical person, and the old rule of caveat emptor is set aside. Shelton v. Florida Real Estate Commission, 120 So.2d 191 (2 DCA 1960). However, absent some evidence of an intent to deceive, the otherwise innocent use of a map that others could incorrectly interpret as a zoning map does not constitute a violation of subsection 475.25(1)(a) F.S.
The proposition that the broker is liable for the acts of his salesmen, if viable, must stem from the common law doctrine of master-servant relationship or principle-agent relationship. While it is true that the salesmen must, under the real estate license law and regulations promulgated pursuant thereto, submit a request for registration (after passing the examination) [which has been] "certified by a registered broker, who is willing to be responsible for the acts of such salesmen"" (Rule 21V-6.02 F.A.C.) this does not make the broker's license liable for the acts of the salesmen of which the broker has no knowledge, unless the broker was culpably negligent in failing to have such knowledge.
With respect to Enger, the only evidence to support the charge that he misrepresented the zoning of the property adjacent to the Cook's lot was the testimony of Mrs. Cook. Although her testimony was not so improbable, conflicting, or ambiguous so as to be unworthy of belief, neither was Respondent Enger's testimony flatly denying that he ever discussed the zoning of this property with Mrs. Cook or with anyone else. The fact that great emphasis was placed by the commission attorney, in presenting his evidence against Respondent, on the fact that the map on the wall of the sales office in an of itself, could have induced purchasers of lots to assume that all property shown thereon was zoned R-1, lends credence to the conclusion that no specific statements regarding the zoning of this tract was made to Mrs. Cook. Be that as it may, the preponderance of the evidence does not support a finding that Enger made false representations to the Cooks regarding the zoning of the property south of Lot 27 when the contract to purchase said lot was entered into by the Cooks.
From the foregoing it is concluded that Respondents, Arthur C. Enger, William L. Baldwin, T. Maurice Rouede and Rouede Realty, Inc. are not guilty of the charges as alleged. It is therefore,
RECOMMENDED that the charges against Arthur C. Enger, William L. Baldwin,
T. Maurice Rouede and Rouede Realty, Inc. as contained in the Administrative Complaint dated December 10, 1975, be dismissed.
DONE and ENTERED this 28 day of July, 1976, in Tallahassee, Florida.
K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304
(904) 488-9675
COPIES FURNISHED:
Richard J. R. Parkinson, Esquire Florida Real Estate Commission
64 Lee Road
Winter Park, Florida 32789
Myron S. Krasny, Esquire Post Office Box 1376 Melbourne, Florida 32901
William C. Potter, Esquire Post Office Box 820 Melbourne, Florida 32901
Docket for Case No: 76-000911
Orders for Case No: 76-000911
