STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ROBERT C. PRUYN, )

)

Petitioner, )

)

vs. ) CASE NO. 76-1369

)

ELDORADO TEALTY, INC., )

AND ERNEST R. TASHEA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on December 20, 1976, in Ft. Lauderdale, Florida.

APPEARANCES

For the Florida: John M. Gough, Esquire Real Estate 2699 Lee Road

Commission Winter Park, Florida 32789

For Respondents: Irving M. Weiss, Esquire

2803 East Commercial Boulevard Post Office Box 2312

Ft. Lauderdale, Florida 33308

The Florida Real Estate Commission (hereinafter sometime referred to as the Commission), through its nominal Petitioner, Robert C. Pruyn (Petitioner, hereafter), filed an administrative complaint against Eldorado Realty, Inc., and Ernest R. Tashea (Respondents, hereafter), on May 13, 1976. In Count One of the complaint it is alleged that the Respondent-licensee, Eldorado Realty, Inc., (Respondent corporation) and Respondent-Licensee, Ernest R. Tashea (Respondent) was at all times material a registered real estate broker and that the Respondent as President of Respondent corporation drew a check on September 13, 1974, on the corporation's escrow bank account in the Deerfield Beach State Bank in the amount of $25,000 payable to "James F. Spindler, Jr., Trust Account" which as evidenced by the Respondent corporation's escrow bank account statement reflects that on September 12, 1974, the said escrow bank account was credited with the balance of $11,000 and that when the $25,000 check was deposited the account became overdrawn by $14,000. It is thus alleged that based on the foregoing the Respondent, individually and as president of the Respondent corporation, is guilty of failing to maintain in the Respondent corporation's escrow bank account, monies entrusted to him by others as a broker, in violation of Subsection 475.25(1)(i), Florida Statutes. In Count Two it is alleged that by warranty deed dated May 13, 1974, Earle L. Henneman and his wife Jeanne M. Henneman sold a duplex located at 1942 N.E. 4th Street, Deerfield Beach, Florida, to Francis A. and Adeline M. Sines, his wife. Further that on January 3, 1974, the buyers entered into a deposit receipt contract to purchase the

aforesaid property through the Respondent corporation, at which time the Respondent represented to the buyers that if they completed closing of the subject property, within two days after the closing, he would send a check for one-half of all closing costs incurred by them and would enter into a joint tenancy with them. It is alleged that the buyers agreed to said proposition based on the fact that they were nonresidents and wanted someone on the scene to manage the duplex.

Respondent represented to buyers that he could not enter directly into the purchase with them as joint tenants inasmuch as it would be "unethical for him to do so inasmuch as he was the selling broker." Thereafter when it became apparent that the buyers would be unable to effect a joint tenancy with the Respondent, they suggested that a joint account be set up between them and the Respondent for further dispersal of funds for management and operating expenses. Complaint alleges further that an oral management contract agreement arose between the Respondent individually and as president of the corporation and the buyers in what the Respondent referred to as "S & T Associates" using the first letters of the buyers and his own last name i.e., Sines and Tashea. Complaint alleges that Respondent failed to register the fictitious name "S & T Associates" as required by Subsection 865.09(3), Florida Statutes. Complaint also alleges that the Respondent corporation, by and through the Respondent, leased one-half of the duplex to Francis Giblin for a 12 month lease at monthly payments of $275 for a total yearly rent of $3,300. At the outset, the first and last months rent was payable in advance plus a $100 security deposit was placed by the lessee as provided by the lease. The other side of the duplex was leased by Don Guimares and T. Starr Guimares, his wife, for the same amount as lessee Giblin. Both lessees broke their leases because they "became dissatisfied with the way the Respondent managed the duplex and his failure to make necessary repairs as requested". Finally it is alleged that the Respondent allowed the mortgage loan on the duplex, which was held by First Federal Savings and Loan Association of Delray Beach, to become delinquent in the amount of

$705.59 and an additional amount of $88 representing the premium for the flood insurance on the property which was charged to the loan balance which the Sines made current. Thereafter the Sines retained Attorney James H. Carroll to represent them and in so doing he demanded a full accounting of all matters relating to the duplex from the Respondent which he failed to produce.

Based on the foregoing, it is alleged that the Respondent made false representations and is guilty of fraud in violation of Subsection 475.25(1)(a), Florida Statutes; that he failed to account or deliver to the buyers monies, checks etc. which are not his property and which he is not in law or equity entitled to retain under the agreement to manage the buyers' duplex, in violation of Subsection 475.25 (1)(c), Florida Statutes. Further, the Respondent is guilty of breach of trust and culpable negligence in a business transaction violative of Subsection 475.25(1)(a), Florida Statutes, by failing to register the fictitious name "S & T Associates" as required by Subsection 865.09(3), Florida Statutes, which made S & T Associates inter alia, subject to possible charges of misdemeanors in the second degree as provided in Subsection

1. or Subsection 775.083, Florida Statutes.

   
   

   In Count Three, it is alleged that based on the foregoing conduct, the Respondents are guilty of a course of conduct or practices which show that they are so incompetent, negligent, dishonest and untruthful that the money, property, transactions and rights of investors or those with whom they may sustain a confidential relation may not safely be entrusted to them in violation of Subsection 475.25(3), Florida Statutes.

   Based upon my observation of the witnesses and their demeanor while testifying, I make the following:

   
   

   FINDINGS OF FACT

   
   

   1. The Respondent was at all times material herein registered with the Commission as a real estate broker. (See Commission's Exhibit #1).

      
      

   2. On September 13, 1974, the Respondent, as President of Eldorado Realty, Inc., drew a check in the amount of $25,000 payable to James F. Spindler, Jr., Trust Account and when said check was presented to the Deerfield Beach State Bank for payment, the Respondent corporation's escrow account had a balance of

      $14,000 as evidenced by its September 30, 1974 statement (see Commission's Exhibit #3). The bank honored this check creating an overdraft in the amount of

      $11,000. However, evidence reveals that within a few days, Respondent made a deposit sufficient to cover the overdrawn balance. During December, 1973 and January, 1974, the Respondent acted as a real estate broker in negotiating a real property transaction between the Hennemans as sellers and Francis A. and Adeline M. Sines as buyers of a duplex located at 1942 N.E. 4th Street, Deerfield Beach, Florida. The Sines made an offer to purchase the duplex for a total purchase price of $55,000 in the form of a contract to purchase which was executed by the Sines on or about January 3, 1974. (See Commission's Exhibit #5 received in evidence).

      
      

   3. Based on the undisputed testimony of Adeline M. Sines, Respondent advised the Sines that he would reimburse them for one-half of all closing costs incurred by them in the duplex transaction approximately two days after the closing. The Sines agreed to this proposition based on the fact that they were nonresidents and wanted someone on the scene to manage the duplex. Initially the Sines wanted the Respondent to enter into a joint tenancy with them but Respondent refused stating that it would be "unethical" for him to do so in view of his relationship as selling broker. On May 13, 1974, the property transaction was closed between the buyers and sellers. Shortly thereafter the parties entered into an oral management contract for the duplex between the Respondent individually and as President and the buyer thereafter used the term "S & T Associates" which represented the initials of the last name of the buyers and the Respondent i.e., Sines and Tashea. Evidence introduced during the hearing revealed that the Respondent failed to register the fictitious name "S & T Associates" as required by Subsection 865.09(3), Florida Statutes. (See Commission's Exhibit #13, received in evidence).

      
      

   4. Approximately two months later on July 17, 1974, the Respondent secured a lease for one-half of the duplex from Francis P. Giblin for a total annual rental of $3,300. The first and last months rent was payable in advance and a

      $100 security deposit was paid by the lessee. During the following month, Respondent was able to lease the remaining portion of the duplex to Don and T. Starr Guimares, his wife, for the same terms as set out in the Giblin lease. (See Commission's Exhibit #15). Mrs. Guimares testified that she vacated the property approximately six months later i.e., in late February, 1975, due to her dissatisfaction with the way that the Respondent managed the building.

      
      

   5. On March 5, 1975, the Sines received a letter from the First Federal Savings and Loan Association of Delray Beach advising them that their mortgage loan was delinquent in the amount of $705.59. That letter advised them that they should immediately bring their account current inasmuch as they were being charged at the maximum legal rate permitted while the loan remained delinquent. Two months prior, the Sines received a letter that their flood insurance premium

      was delinquent and that their escrow account was being charged $88 which represented the premium for the flood insurance which amounts were paid by the Sines by money orders dated March 3 and March 13, 1975.

      
      

   6. Mrs. Sines repeatedly demanded accountings from the Respondent for monies expended in the management of the property to no avail. Thereafter she retained the services of Attorney James H. Carroll, who by letter dated March 6, 1975, addressed to the Respondent corporation, demanded a full accounting of all matters relating to the duplex and full documentation of the agreement to repurchase. It suffices to say that the Respondent did not comply with Carroll's request or demands for an accounting. However, it is noted that the Respondent, on January 1, 1975, executed a promissory note payable to the Sines for $21,000 within 90 days of January 1, 1975. That note was never honored. Thereafter the Sines sold the property during November, 1975, for a total purchase price of $51,250. Based thereon, it appears that the Sines incurred a net loss of approximately $3,750.

      
      

      CONCLUSIONS OF LAW

      
      

   7. The Division of Administrative Hearings has jurisdiction Over this subject matter and the parties to this action.

      
      

   8. The burden of proving that a licensed real estate broker has violated the licensing law lies with the Commission or its representative. State ex rel Vining v. Florida Real State Commission, 281 So.2d 487 (Fla. 1973).

      
      

   9. The action of the Respondent (Tashea) in the Henneman - Sines transaction in representing to the Sines that they (Tashea and Sines) would enter a joint tenancy agreement or alternatively a joint management agreement; by his useage of the terms S & T Associates and failing to register the fictitious name as required by Subsection 865.09(3), Florida Statutes, and by failing to account to the Sines for monies received and expenses incurred in the operation of the duplex; and the Respondent, Ernest R. Tashea, individually as maker of a promissory note is guilty of fraud and misrepresentation, in violation of Subsection 475.25(1)(a), Florida Statutes, and the Respondent (Tashea) failure to account or deliver monies, checks etc. which were received by him in the management operation of the duplex is conduct violative of Subsection 475.25(1)(c), Florida Statutes.

      
      

   10. The Respondent's failure to register the fictitious name "S & T Associates" as required by Subsection 865.09(3), Florida Statutes amounted to conduct violative of Subsection 475.25(1)(a), Florida Statutes.

       
       

   11. The monies that the Respondent received in the management of the Sines' duplex was received in violation of the Respondent's fiduciary obligations to the Sines and amounts to illegal commissions. Based thereon, I find the Respondent is guilty of misconduct that warrants the suspension of his registration as a real estate broker under Florida Statutes, Section 475.25(1).

       
       

   12. The Respondent, individually and as President of the Respondent corporation, by failing to maintain in the Respondent corporation's escrow bank account monies entrusted to him by others as a broker is violative of Subsection 475.25(1)(i), Florida Statutes.

       
       

   13. By his course of conduct in this case, the Respondent individually and as President of the Respondent corporation has shown that he is so dishonest and untruthful that the money, property, transactions and rights of those which whom

he may sustain a confidential relation may not safely be entrusted to him in violation of Florida Statutes, Section 475.25(3).

RECOMMENDED ORDER

Based upon the foregoing findings of fact and conclusions of law, it is hereby RECOMMENDED as follows:

1. That the Respondent's individual registration as a broker with the Florida Real Estate Commission be revoked.

   
   

2. That the Respondent corporation's registration with the Commission be revoked.

Recommended this 27th day of January, 1977, in Tallahassee, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings

530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675

COPIES FURNISHED:

John M. Gough, Esquire 2699 Lee Road

Winter Park, Florida 32789

Irving M. Weiss, Esquire 2803 E. Commercial Blvd. Post Office Box 2312

Ft. Lauderdale, Florida 33308

Docket for Case No: 76-001369

Orders for Case No: 76-001369