STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, BOARD OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 80-2051

)

MAUREEN ANN O'MALLEY AND )

FREDERIC E. LEWIS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, DONALD R. ALEXANDER, held a formal hearing in this case on January 20, 1981, in Jacksonville, Florida.

APPEARANCES

For Petitioner: S. Ralph Fetner, Jr., Esquire

150 North Monroe Street Tallahassee, Florida 32301

For Respondent: Myron S. Dunay, Esquire

912 American Heritage Life Building Jacksonville, Florida 32202

BACKGROUND

On October 20, 1980, the Petitioner, Florida Board of Real Estate, issued an Administrative Complaint against Respondents, Maureen Ann O'Malley and Frederick E. Lewis, both realtors, charging Respondents violated Section 475.25(11(a), Florida Statutes (1977) 1/, by failing to disclose a fire-damaged attic to the purchasers of a home located in Atlantic Beach, Florida.

On October 20, 1980, Respondents requested a formal hearing under Section 120.57(1), Florida Statutes. Thereafter, by agreement of the parties, a final hearing was set for January 20, 1981. At the final hearing, the Board called James and Gloria Gipson as its witnesses, and offered Petitioner's Exhibit Nos.

1 and 2, both of which were received into evidence. Respondents called Maureen Ann O'Malley, James W. Emory, Katherine Salazar and Glenn Finney, and offered Respondents' Exhibit Nos. 1 and 2, both of which were received into evidence. Additionally, the testimony of Allen Jones and Richard H. Hilliard, given in Case No. 80-1833 in the Circuit Court, Fourth Judicial Circuit in and for Duval County, Florida, was read into the record by agreement of the parties.

At the conclusion of the Petitioner's case-in-chief, Respondents made a Motion to Dismiss the complaint on the grounds Petitioner failed to make a prima

facie case in support of the complaint. A ruling on said Motion was reserved and will be dealt with in the Conclusions of Law portion of the Order.

Proposed findings of fact were filed by Respondents on January 31, 1981, and have been considered by the undersigned in the preparation of this Order.

To the extent any proposed findings of fact submitted by Respondents are not incorporated herein, they are expressly rejected as unsupported by the evidence, irrelevant to the issue determined or conclusions of law as opposed to findings of fact.

ISSUE

At issue herein is whether Respondents' real estate licenses should be revoked or suspended or whether they should be otherwise disciplined for failure to comply with the provisions of Section 475.25(1)(a) Florida Statutes (1977) by failing to disclose a fire-damaged attic to the purchasers of a house.

FINDINGS OF FACT

1. At all times pertinent hereto, Respondents Maureen Ann O'Malley and Frederick E. Lewis held real estate license numbers 0065689 and 0052102 respectively. Respondent O'Malley was employed as a broker-salesman by Respondent Lewis, who operated under the trade name of Lewis Realty with offices in Atlantic Beach, Florida.

   
   

2. On or about May 17, 1979, Respondent O'Malley negotiated a contract for the sale of a house owned by Respondents to James E. and Gloria Gipson, husband and wife (Respondents' Exhibit No. 1). The house was located at 825 Plaza Drive, Atlantic Beach, Florida, and the total purchase price was $28,500.

   
   

3. In November, 1965, a fire had occurred in the attic of the Gipson's house causing damage to the electrical wiring, and leaving portions of the rafters and attic floor in a charred and blackened condition. However, no structural damage occurred. Shortly after the fire, some of the trusses in the roof were reinforced with two by fours in order to insure the structural integrity of the premises.

   
   

4. The house has been sold on a number of occasions since the fire occurred, and before the Respondents purchased the house in early 1979, the most recent sale was 4 or 5 years earlier.

   
   

5. The attic is a small space between the roof and the ceiling, and is reached by climbing a ladder and crawling through an opening in the ceiling. It is too small to stand in, cannot be used for living purposes, and its value is limited to storing boxes, suitcases and the like.

   
   

6. Prior to the closing, the Gipsons were advised by O'Malley to inspect the property, and if any problems existed, they would he corrected at Respondents' expense. The Gipsons visited the house on at least one occasion before the closing, and were given the keys for the purpose of measuring curtains and installing a television antenna. However, at no time did they inspect the attic, or were they apprised by the realtor of the fact that a fire had occurred.

   
   

7. The attic was finally inspected by Mr. Gipson several days after the house was purchased. He found portions of the attic charred, and covered with ashes and soot.

8. Upon being advised by the Gipsons of the attic condition, O'Malley had a contractor check the attic for structural damage. There being none, she then offered to provide cosmetic repairs by spraying it with silver paint, and laying plywood strips on the floor. However, this was unsatisfactory to the Gipsons.

   
   

9. Respondent O'Malley did not disclose the attic condition to the Gipsons because (a) she considered the matter to be "immaterial", particularly since there was no structural damage to the attic, (b) the house had been sold on several occasions since the fire, and (c) she was not aware of any prior complaints.

   
   

10. Respondent Lewis had only limited contact with the Gipsons, and was not involved in the negotiation of the sale of the house.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the cause and the parties thereto pursuant to Section 120.57(1), Florida Statutes.

    
    

12. Section 475.25(1)(a), Florida Statutes (1977), provides as follows:

    
    

    1. The registration of a registrant may be suspended for a period not exceeding 2 years, or until compliance witb a lawful order imposed In the final order of suspension, or both, upon a finding of facts showing the registrant has:

       
       

       1. Been guilty of fraud, misrepre- sentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or devices, culpable negligence, or breach of trust any business transaction in this state or any other state, nation, or territory: has violated a duty imposed upon him

          by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such conduct and has committed an overt act in furtherance of such intent, design,

          or scheme. It shall be immaterial to the guilt of the licensee that the victim

          or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the mis- conduct; or that such victim or intended victim was a customer or a person in a confidential relation with the licensee, or was an identified member of the general public;

13. In Ribard v. McCoy, 212 So.2d 672 (Fla 2nd DCA 1968), cert. denied 219 So.2d 703, the Court construed the provisions of Subsection 475.24(1)(a), Supra, as follows:

    
    

    The statute is not ambiguous, and the words used therein must be construed according

    to their usual and natural meaning. It requires nothing more of a real estate dealer or broker than an honest, open and fair relationship with the client, such as is normally expected of a businessman of sound integrity. Id. at 674

    
    

14. In Chisman v. Moylan, 105 So.2d 186 (Fla. 2nd DCA 1968) the Court stated:

    
    

    A broker has imposed upon him during the period of such relationship with his principal the legal obligation to inform him with fairness, promptness and complete- ness concerning all facts within his knowledge which are or may be material in connection with which he is employed. Id. at 189

    
    

    This obligation to deal in a fair, honest and open manner extends not only to the principal, but to the buyer as well. Zichlin v. Dill, 25 So.2d 4 (Fla.

    1946). Accordingly, a broker-salesman has an obligation to inform the buyer/principal of all facts and information known to him that might reasonably influence the buyer/principal's decision relative to the transaction. Where a broker-salesman has knowledge of some rumor, fact or information that might influence the buyer's decision, and fails to reveal it to his buyer/principal, he is guilty of concealment within the meaning of the Act. The failure of O'Malley to advise the Gipsons that a fire had occurred in the attic of the house, albeit unintentional and deemed by her to be immaterial, nevertheless constituted concealment under the law. The Gipsons were entitled to nothing less than complete frankness by the broker-salesman, and it is concluded that, had they known of the fire, such knowledge might have reasonably influenced their decisions. Accordingly, it is concluded Respondent O'Malley is guilty of violating Section 475.25 (1)(a), Supra.

    
    

15. In light of an apparent lack of intent on the part of O'Malley to deliberately conceal the attic condition from the Gipsons, a private reprimand is adequate punishment. This is particularly true since a more harsh penalty should be used sparingly and cautiously and directed only at the dishonest and unscrupulous broker, i.e., one who cheats, swindles or defrauds the general public. Here the record does not establish a conscious effort to deceive nor does it reflect such conduct as to justify a more severe penalty.

    
    

16. Respondent Lewis, who employed O'Malley as a saleswoman, had very little contact with the Gipsons, and no participation in the transaction itself. Further, he was not shown by the Board to have actively assisted, aided, conspired or schemed to conceal the attic from the Gipsons. While the broker is responsible for the salesman's acts within the scope of the salesman's authority, the extremely remote connection with the violation warrants a dismissal of the charges against Lewis.

17. In view of the conclusions reached herein, the Respondents' Motion to Dismiss is hereby denied.

RECOMMENDATION

From the foregoing findings; fact and conclusions of law, it is RECOMMENDED that Maureen Ann O'Malley be found guilty of violating Section

475.25(1)(a) Flrida Statutes (1977), by reason of failure to disclose to or

buyers a fire-damaged attic in a residence located at 825 Plaza Drive, Atlantic Beach, Florida.

It is further

RECOMMENDED that Respondent O'Malley be given a private reprimand. It is further

RECOMMENDED that the charges against Respondent Frederick E. Lewis be dismissed.

DONE and ENTERED this 12th day of February, 1981, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 12th day of February, 1981.

COPIES FURNISHED:

S. Ralph Fetner, Jr., Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Myron S. Dunay, Esquire

912 American Heritage Life Building Jacksonville, Florida 32202

Ms. Maureen Ann O'Malley 1195 Mayport Road

Atlantic Beach, Florida 32233

Mr. Frederick E. Lewis c/o O'Malley Real R:tote 1195 Mayport Road

Atlantic Beach, Florida 32233

Docket for Case No: 80-002051

Orders for Case No: 80-002051