STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE OF FLORIDA, DEPARTMENT OF ) PROFESSIONAL REGULATION, BOARD OF ) REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 80-2088

) JOHN G. NIES AND JACK NIES REAL ) ESTATE COMPANY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings on December 12, 1981 at Ft. Lauderdale, Florida.

APPEARANCES

For Petitioner: Harold M. Braxton, Esquire

45 Southwest 36th Court Miami, Florida 33135

For Respondent: Frank C. Walker, Esquire

Post Office Box 2397

Ft. Lauderdale, Florida 33303

Pursuant to an administrative complaint filed November 7, 1980 the Petitioner, the Department of Professional Regulation/Board of Real Estate, seeks to revoke, suspend or take other disciplinary action against Respondents as licensee and against their license as an individual corporate broker.

Specifically, it is alleged that the Respondent John G. Nies, acting on his own financial behalf and on behalf of his corporation, of which he was officer and active broker, was responsible for the breach of a valid contract for the sale and purchase of residential real property, which he subsequently purchased and sold for his own account in derogation of the rights of the parties to that contract and the original purchaser's broker. He is thus charged with fraud, misrepresentation, concealment, false promises, false pretenses, breach of a fiduciary duty and other alleged reprehensible conduct as delineated in Subsection 475.25(1)(a), Florida Statutes (1978) and Subsection 475.25(1)(b), Florida Statutes (1979). Further, it is alleged that the Respondent has been guilty of a course of conduct or practice exhibiting incompetency, negligence, dishonesty, and untruthfulness in violation of Subsection 475.25(1)(n), Florida Statutes (1979).

The issue thus is whether the Respondent was justified in conducting himself as if the term of the contract between Mrs. Moore and Mrs. Cressotti had expired and whether Nies was thus justified in entering an agreement with Mrs.

Moore, the seller, to purchase the property for himself and then resell to other buyers at a profit, given the uncontroverted fact that the Respondent and Mrs.

Moore were already parties to an earlier repurchase agreement by which the Respondent agreed to purchase the property back from Mrs. Moore at anytime she chose to sell it.

Subsequent to the hearing, the parties elected to obtain a transcript of the proceedings. An extended briefing schedule was requested and the requirements of Rule 28-5.402, Florida Administrative Code were waived.

FINDINGS OF FACT

1. The Respondent is a registered real estate broker. He has been actively engaged in his profession in the Broward County area for many years. Sometime prior to 1978, he and his wife sold a residential property at 50th Court, Ft. Lauderdale to Mrs. Virginia Moore, and her husband, who was then employed by the Respondent as a real estate salesman. On or before the closing of that sale, the Respondent entered into a written agreement with Mrs. Moore whereby he agreed to buy back the premises from Mrs. Moore should she ever desire to sell it. Sometime subsequent to the closing of that transaction, Mrs. Moore was divorced and retained ownership of the property which is the subject of this proceeding, holding it for rental income.

   
   

2. Sometime in the spring or summer of 1978, Mrs. Moore found herself in financially straitened circumstances and decided to place the home on the market. She listed it with the Respondent as her broker who in turn listed the property with the Multiple Listing Service (MLS). In late July, 1978, another real estate sales firm, Sell America (broker Jay Magid), obtained a prospective purchaser, Mrs. Patricia Cressotti. After some negotiations between Mrs. Moore and Mrs. Cressotti and their respective agents (the Respondent and James Pryde), Mrs. Moore and Mrs. Cressotti ultimately reached an agreement on terms of purchase and executed the deposit receipt and sales contract represented in Exhibit one. The purchaser, Mrs. Cressotti, was to purchase the house contingent on receiving approval for FHA financing under a special program for low-income loan applicants. She sought that approval from FHA and was rejected on at least four (4) occasions between August, 1978 and January, 1979. She re- applied for her loan on each of those occasions, attempting to remedy the objections to her qualification as a mortgagor for the subject premises.

   
   

3. Sometime contemporaneous to the execution of the contract, the prospective purchaser and her agent Mr. Pryde, had assured Mrs. Moore that the closing could be effected within thirty (30) to sixty (60) days from the date of the contract. After waiting a substantial period of time (three to four months) for the closing of the transaction, Mrs. Moore experienced increasing financial difficulties to the extent that she become delinquent with her mortgage payments on the subject premises while waiting for Mrs. Cressotti's loan approval. Accordingly, after consulting with the Respondent, on November 27, 1978, she directed Mr. Nies to send a letter to Mrs. Cressotti, informing her that she would be allowed until December 12, 1978 to consummate the transaction, after which time, if no closing occurred, Mrs. Moore would consider the contract void and seek an alternative buyer. No objection was raised by the purchaser or her agent to this announcement, but Mrs. Cressotti's agent assured the Respondent and Mrs. Moore that they still expected to close the transaction by December 12, 1978. It proved impossible to close the transaction by that date however, since Mrs. Cressotti's FHA loan approval was again refused. She did not ultimately obtain approval of her loan application until January 23, 1979.

4. In the meantime, on December 14, 1978, Mrs. Moore, after voiding the contract and pursuant to the above-mentioned written re-purchase agreement with Mr. Nies, sold Mr. Nies the subject property. The Respondent considered himself bound by that repurchase agreement to purchase Mrs. Moore's property if it had not been sold to another purchaser in a reasonable time, which it had not. Mrs. Moore sold to the Respondent freely and voluntarily, knowing he was buying for purposes of investment, was happy with the price and terms he offered and was relieved to thus alleviate her financial burdens. She made $973.00 more profit from selling to Mr. Nies than if she had sold to the original prospective purchaser, Mrs. Cressotti. She had in no way been coerced into voiding the contract with Mrs. Cressotti in order to sell to the Respondent. After purchasing the property, the Respondent advertised it on the open market, including with MLS, and after approximately three weeks found a buyer and contracted to sell it to a Mr. and Mrs. Bales. His sale to the Bales was made pursuant to and after his advertisement and listing the property with the MLS, rather than due to any preconceived arrangement with the Bales to obtain the property for and on their behalf by suborning the breach of the Moore/Cressotti contract.

   
   

5. After consulting with his attorney and being advised that a fifteen

   (15) day notice was sufficient to terminate the contract and after being ordered by Mrs. Moore to send the November 27, 1978 letter, the Respondent genuinely believed the contract validly terminated. Throughout the course of the pending Moore/Cressotti transaction the Respondent actively sought to assist in the culmination of the deal. The witness for Mrs. Cressotti's putative lender established that the Respondent repeatedly contacted her to check on the progress of the loan application. He was helpful and all his contacts were in the vein that he was anxious for the transaction to close. The lender's representative ultimately advised Mr. Nies on December 10, 1978 that, once again, the loan application had been rejected and that she did not expect it to be successful.

   
   

6. In short, after being originally assured by Mrs. Cressotti's agent that the deal would close in thirty (30) to sixty (60) days and waiting a substantial period of time longer than that, Mrs. Moore voided the contract and sold to Nies voluntarily and under no coercion. Nies advertised the property in good faith in the MLS service, and obtained a previously unknown buyer. He realized little profit from the sale since he had to expend $2,213.63 to repair the vandalized property for sale. It is significant that in the related suit in circuit court, Mrs. Cressotti was dropped as a party plaintiff and the judgement won by Sell America for breach of contract and real estate commission lies solely against Mrs. Moore. The Respondent was never sued for breach of the subject contract or for the real estate commission found to be owed to Sell America.

   
   

7. It should finally be pointed out that no real damage was suffered by any party to the transaction. Mrs. Cressotti was represented by her own broker and only paid a $100 deposit in connection with the contract, which was retained by her broker and which she ultimately was refunded. She was able to buy another house in the same area through Sell America and paid Sell America a commission on that transaction. In the instant proceeding Mrs. Cressotti was not a complaining witness, rather the proceeding was initiated by Sell America, not Mrs. Cressotti or Mrs. Moore. The Respondent has had no prior complaints lodged against him with the Board of Real Estate or with the local Board of Realtors in his community and his character witnesses established that he enjoys an outstanding reputation for honesty and integrity in his community.

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

   
   

9. The Respondent is charged with violation of Section 475.25(1)(a), Florida Statutes (1978)(reenacted as Section 475.25(1)(b), Florida Statutes (1979) as well as Section 475.25(3) Florida Statutes (1978)(reenacted as Section 475.25(1)(n), Florida Statutes [1979]). These Sections provide, respectively, in pertinent part as follows:

   
   

   1. The board may deny an application for licen- sure or renewal, may suspend a license for a period not exceeding 10 years, may revoke a license, may impose an administrative fine not to exceed $1,000 for each count or separate offense, or may issue a reprimand, if it finds that the license or applicant has:

      (b) Been guilty of fraud, misrepresentation, con- cealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negli- gence, or breach of trust in any business transaction; 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 per- son engaged in any such misconduct and in further- ance thereof; or has formed an intent, design, or scheme to engage in any such misconduct ...

      Section 475.25(1)(n)... Been found guilty, for a second time, of any misconduct that warrants his sus- pension, or been found guilty of a course of conduct or practices which show that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or

      those with whom he may sustain a confidential relation, may not safely be entrusted to him.

      
      

10. The Respondent's defense is, in essence, that he had no fraudulent or reprehensible intent in purchasing the property from Mrs. Moore upon cancellation of the contract and reselling at a slight profit to Mr. and Mrs. Bales approximately three weeks later. The Respondent's contention in this regard is borne out by the unrefuted evidence in the record which shows that the conduct of the Respondent throughout this transaction (before and after the breach) was not clothed with any devious intent such that he can be found guilty of any of the charges based upon fraud, misrepresentation or other misconduct specifically enumerated above. Throughout the pendency of the Moore/ Cressotti transaction, the Respondent checked repeatedly with the lender to ascertain if she would be approved for financing and the uncontradicted testimony of the witness from the mortgage company establishes that each contact she had with the Respondent was one in which he in some way showed his hopefulness that that transaction would be consummated. The record also reflects conclusively that the abrogation of the contract was wholly Mrs. Moore's act which fact is borne out by the circuit judge's order finding her solely responsible for the breach of the contract and in which lawsuit the Respondent was never even named as a Defendent. There is simply no convincing evidence that could establish that the

    Respondent, through his statements or conduct, convinced Mrs. Moore to abrogate her contract with Mrs. Cressotti and thus even if the Respondent could be deemed to owe a fiduciary duty to Mrs. Cressotti who was independently and fully represented by her own licensed broker in that transaction (which duty was not proven to exist by the evidence in this record) the breach of the contract was still not shown to be the fault of the Respondent. The evidence further shows that the Respondent felt himself bound to repurchase the property if it was offered to him by Mrs. Moore once the existence of the initial contract with Cressotti was extinguished and when he elected to purchase the property from Mrs. Moore he had already made full disclosure of his status as a real estate broker and that he was acting for his own investment purposes. His lack of intent to defraud anyone or otherwise engage in a devious scheme proscribed by the statutory authority quoted first above is also convincing demonstrated by the written repurchase agreement, the fact that he had no ready buyer when he bought the property from Mrs. Moore, but rather only found the Bales as purchasers after he had advertised and listed the property with the MLS service and the fact also that the Respondent acted in good faith on the advice of legal counsel to the effect that the contract indeed was voidable, before he purchased the property from Mrs. Moore.

    
    

11. There is no question that the Respondent is not guilty of a "course of conduct" involving fraudulent representations or dishonest dealing or the other reprehensible acts or omissions enumerated above since there is clearly no evidence that the Respondent ever engaged in any conduct proscribed by the above authority on the occasion charged, much less on any other occasion. In KOPF vs. Florida Real Estate Commission, 379 So.2d 1327, it was established that a course of conduct must be considered as fraudulent representations, incompetency or other inappropriate practice enumerated in the authority quoted second above in more than one transaction (emphasis supplied) There was, of course, no evidence of any other such illegal transaction established in this proceeding and thus the Respondent could not have been found guilty of a violation of Section 475.25(1)(n) even had he committed the acts charged in the one instance which is the subject of the administrative complaint.

    
    

12. In short, although the Respondent may have been guilty of poor judgement in purchasing the property for himself immediately after his client's unilateral abrogation of the contract, there simply is no showing that he acted with any fraudulent intent sufficient to establish a violation of the authority charged in the administrative complaint and accordingly it must be concluded that the violations charged have not been proven.

RECOMMENDATION

Having considered the foregoing findings of fact, conclusions of law, the candor and demeanor of the witnesses and the pleadings and arguments of counsel, it is therefore

RECOMMENDED:

That the administrative complaint be dismissed with prejudice.

DONE AND ENTERED this 19th day of April, 1982 in Tallahassee, Florida.

P. MICHAEL RUFF, 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 19th day of April, 1982.

COPIES FURNISHED:

Harold M. Braxton, Esquire

45 Southwest 36th Court Miami, Florida 33135

S. Ralph Fetner, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Frank C. Walker, Esquire Post Office Box 2397

Ft. Lauderdale, Florida 33303

Mr. C. B. Stafford Executive Director Board of Real Estate

P.O. Box 1900 Orlando, Florida 32801

Frederick Wilsen, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 80-002088

Orders for Case No: 80-002088