STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 81-1415

)

MARY ANNE SHIELL, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for administrative hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings, on February 15, 1982. The following appearances were entered:

APPEARANCES

For Petitioner: Joseph Doherty, Esquire

3220 Chelsea Street

Orlando, Florida 32803

For Respondent: Charles N. Prather, Esquire

17 South Lake Avenue, Suite 103 Orlando, Florida 32801

This cause was instituted on an Administrative Complaint filed by the Department of Professional Regulation, Board of Real Estate, against Mary Anne Shiell. The Respondent is a licensed real estate salesman, having license No. 0044116. The Administrative Complaint charges that the Respondent is guilty of fraud, misrepresentation and concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, as well as breach of trust in a business transaction in violation of Section 475.25(1)(a), Florida Statutes (1977), as substantially reenacted in Section 475.25(1)(b), Florida Statutes (1979). Specifically, it is charged that the Respondent made a number of misrepresentations regarding the condition of a dwelling and various appliances or items of equipment within the dwelling in connection with her sale of a parcel of residential real estate in Orlando, Florida.

At the hearing the Petitioner presented six witnesses and the Respondent presented two, including the testimony of the Respondent. The Petitioner presented five exhibits, which were admitted; and the Respondent presented Exhibit A, which was admitted. At the conclusion of the hearing the parties elected to obtain a transcript of the proceedings and chose to avail themselves of the right to file proposed findings of fact and conclusions of law.

Subsequent to the filing of the transcript, an extended briefing schedule was requested and the requirements of Rule 28-5.402 were waived.

FINDINGS OF FACT

1. The Respondent, Mary Anne Shiell, is a licensed real estate salesman holding license No. 0044116. The Petitioner, the Department of Professional Regulation, Board of Real Estate, is an agency of the State of Florida, having jurisdiction over licensing and the regulation of licensure status of real estate salesmen. This dispute arose out of a business transaction involving the showing by the Respondent and others of a piece of residential real property to the complaining witnesses, William G. and Geraldine Fellows (son and mother).

   
   

2. On March 6, 1979, the Respondent, Juanda Marsh and Skip Mark were employed as real estate salesmen by Mannix, Inc. On that day Juanda Marsh, while attempting to find residential property listings, became aware of a home owned by Paul E. Phipps and his wife which was for sale. After talking to the owners of the house, Mr. and Mrs. Phipps, Ms. Marsh went back to the Mannix realty office where she spoke to the Respondent and advised the Respondent of the Phippses' home being for sale. Ms. Marsh then met the complaining witnesses, the Fellowses, and took them to meet Mr. Phipps at the home in question. This was late in the afternoon of March 6, 1979, and the electricity had been turned off in the home. Mr. Phipps was then in the process of wallpapering and painting the dwelling, which he used as rental property.

   
   

3. After leaving the home that evening, the complainants decided to offer the Phippses $37,000 for the property. The complainants and Ms. Marsh prepared the contract, which was executed that evening by the complainants.

   
   

4. The sellers executed the contract the following day, and the transaction was closed March 15, 1979. The complainants did not take possession of the premises until sometime in April of 1979.

   
   

5. On March 6, 1979, when the complainants first viewed the premises, the Respondent, Marsh, Mark, as well as Phipps, the seller, were present. The complainant addressed the group of people generally, asking what kind of condition the roof was in. All concerned looked toward Mr. Phipps; he nodded his head, assenting that the roof was in good condition. There was a general agreement that the house appeared to be in good condition. Neither the Respondent nor Ms. Marsh nor Skip Mark had any additional knowledge regarding the condition of the house other than that which they saw that day in the presence of the complainants. All were seeing it for the first time. The Respondent did not give any assurance to the complainants that the roof was in good condition; she relied, as did all present, on the assurance given by Mr. Phipps at the time.

   
   

6. Immediately prior to the drafting of the contract on that evening, the complainants were advised by the Respondent that if an "as is" clause were placed in the contract it might induce the seller to accept the lower offer which the complainants had in mind, and the complainants agreed. Accordingly, Ms. Marsh inserted in the contract the "as is" clause on the face of the contract, meaning that the purchasers, the Fellowses, would buy the property in the condition it was in at the time for the price they were offering and which, ultimately, the owner accepted.

   
   

7. Prior to the closing of the transaction, the Fellowses called the Respondent by telephone to ascertain that all checks had been made pursuant to the Buyer Protection Plan and the Respondent advised that she thought everything was in good working condition, but she would attempt to inspect the premises to ascertain for sure if all equipment and appliances were working. The Respondent

   attempted to make an inspection of the premises a day or two before closing and there was no electricity or water turned on so that the various appliances could not be tested. She informed the complainants of this, but they said they could not afford to have the utilities turned on. The Respondent then called Mr.

   Phipps and explained the situation to him. She asked if he was in a position to tell the complainants what condition everything was in and he told her that so far as he knew the only thing in the house that might not function properly was the dishwasher.

   
   

8. Mr. Phipps told the Respondent that the air conditioner functioned properly and indeed the vents were in the walls or ceiling and appeared to be in order. The Respondent looked in the oven door of the range in the kitchen and the oven element appeared to be in good condition, although it was impossible to test it because the utilities were not on. The Respondent removed the kitchen range elements and visually inspected them. Again, no electricity was available to test them after this fact had been disclosed to the complainants.

   
   

9. Upon taking possession of the property in April, 1979, the complainants discovered certain defects consisting of: a leaky roof; duct work missing from the air conditioning system; the oven was inoperable; the range had several inoperative elements; the plumbing in the toilets leaked; the hot water heater was inoperable; and the disposal was not connected. Witness Ralph Porch inspected the air conditioning system and found that no duct work existed in the hall ceiling to connect the air conditioning system to the mechanical unit. He did not try to turn on the air conditioner. He did recall seeing the air supply grills and stated that the only way one could find out that there were no ducts in place was to climb up in the attic and look; that it was not a defect observable from the normal living areas of the house. The Respondent, in addition to inspecting the kitchen appliances, inspected but saw no evidence of a mineral deposit or other symptoms of leaks around the toilets. Mr. Phipps had represented that the hot water heater was not very old and so the Respondent had no reason to believe that the hot water heater was inoperable. She looked beneath the sink to examine the garbage disposal and did not notice any pipes or electrical wiring absent.

   
   

10. The complainants maintained that the Respondent represented to them that the electricity had been turned on for one day and that all the appliances had been checked out and were in working order. The Hearing Officer finds this testimony not credible inasmuch as the Respondent testified that she had never made such a representation, but rather had visually inspected them to the best of her ability with no electricity available to actually test the functioning of the appliances, which testimony was corroborated by the testimony of Bernice Shackleford from the Orlando Utilities Commission, who established that the electricity was turned off March 5, 1979, the day before the property was first shown to the Fellowses and to the Respondent. Ms. Shackleford also testified that the utilities were inactive continuously until April 20, 1979, long after the closing and long after the alleged inspection of the appliances took place. The undersigned thus finds that the Respondent never represented to the Fellowses that the electricity had been turned on for a day, nor that she had thus tested the appliances and found them all in working order. The Respondent did not make any statement to the effect that the roof did or did not leak. A reasonable inspection of the residence would not disclose that the air conditioning vents or air supply grills were not connected by ducts to the mechanical portion of the air conditioning system.

11. Subsequent to their taking possession of the house and initially complaining to the Respondent and Mannix, Inc., concerning the defects in the dwelling, the complainants filed a civil action regarding their complaints. The complainants sued the Phippses, who were the sellers; Juanda Marsh; Mannix, Inc.; the Respondent; and Electronic Realty Associates, Inc. Although the complainants denied settlement of the case, in their testimony in the instant proceeding, the civil litigation was in fact dismissed by their attorney (see Notice of Voluntary Dismissal; Respondent's Exhibit A). In that civil action, only Juanda Marsh and Skip Mark were alleged to have made false representations to the complainants.

    
    

12. In summary, the Respondent was not shown to have had any knowledge regarding the condition of the premises which she failed to reveal to the complainants and sometime after the controversy arose, the Respondent offered, on behalf of Mannix, Inc., to purchase the property back from the complainants for what they had paid for it, but this offer was rejected.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

14. The Respondent is charged with violation of Section 475.25(1)(a), Florida Statutes (1977), substantially reenacted as Section 475.25(1)(b), Florida Statutes (1979). That subsection provides in pertinent part as follows:

    
    

    1. The board may deny an application for licensure or renewal, may suspend a licensure 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 licensee or applicant has:

       * * *

       (b) Been guilty of fraud, misrepresen- tation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of

       trust in 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 misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such miscon- duct and has committed an overt act in further- ance of such intent, design, or scheme. . . .

       
       

15. The charges in the Administrative Complaint concern alleged fraud, misrepresentation and concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device or breach of trust in a business transaction, all of which charges involve the element of intent or scienter. The facts found above show that the Respondent was present with the complainants as well as the two other realtors from her firm and the seller (Mr. Phipps) when the

    complainants first viewed the property. The facts show that Mr. Phipps made the only representation concerning the condition of the roof in response to a query concerning it by the Respondent and realtors Marsh and Mark, as well as the complainants. The record does not reflect that the Respondent made any representation concerning the condition of the house or any of its appliances other than that as far as she knew everything was in good working order, which is simply what Mr. Phipps had related to her. The Respondent could not have known any more detailed information concerning the condition of the dwelling or its appliances because the electricity was not turned on and the complainants did not see fit to have it turned on so that the appliances could be thoroughly tested. The only representations that the record reflects may have been made were by Mr. Phipps himself concerning the condition of the hot water heater which he maintained was not very old or was relatively new, and the representation he made to the Respondent that the air conditioner was in good working order. There is no question that the air conditioner, the roof, and the stove turned out not to be in proper working order or condition, although there is no clear evidence that the toilets actually leaked. There is no evidence to establish, however, that the Respondent had any knowledge that any of these defects were present in the subject property and the evidence shows that she made reasonable efforts to ascertain the condition of the dwelling by visually inspecting it when she was unable to have the utilities turned on, and by inquiring directly of the seller concerning the condition of the dwelling and appliances.

    
    

16. The purchasers acquired the property on an "as is" basis after voluntarily agreeing to such a clause in the contract submitted to the seller in hopes of gaining a pecuniary advantage, to wit, a lower purchase price. Even if the Respondent made representations concerning the quality and favorable features of the property offered for sale which turned out not to be accurate, there was no evidence to show that she knew those representations were false when she made them. The record reflects, in an unrefuted way, that the Respondent merely relayed information she received from the seller, some of which was related in the presence of the complainants such that they were on actual notice that the representations were not those of the Respondent herself. The evidence simply fails to disclose that the Respondent had any knowledge at the time she made any representations concerning the condition of the premises that they were false nor that she had any intent to defraud the purchasers or deal dishonestly with them or to commit any other of the intentional acts enumerated in Section 475.25(1)(b), Florida Statutes (1979). To be punishable, a misrepresentation must be made which is material, and with knowledge by the one making the misrepresentation that it is indeed false. See Shelton v. Florida Real Estate Commission, 120 So.2d 191 (2d DCA Fla. 1960). In discussing charges substantially identical to those in the case at bar, the court in Brod

    v. Jernigan, 188 So.2d 575 (Fla. 2d DCA 1966) opined:

    
    

    . . . Fraud cannot be predicated on state- ments which are promissory in their nature or constitute expressions of intention, and an actionable representation cannot consist of mere broken promises, unfulfilled pre- dictions or expectations, or erroneous con- lectures as to future events, even if there

    is no excuse for failure to keep the promise, and even though a party acted in reliance

    on such promise; nor . . . is the mere non- performance of a promise evidence estab- lishing fraud or lack of intent to perform.

17. In short, the preponderant evidence in this cause shows that the Respondent had no intent to defraud the prospective purchasers or to deal dishonestly with them in any way. Accordingly, it must be concluded that the Petitioner has failed to sustain its burden of proof of any act which would be grounds for punishment under the statutory provisions under which the Respondent has been charged.

RECOMMENDATION

Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence in the record, the candor and demeanor of the witnesses and the pleadings and arguments of counsel, it is, therefore,

RECOMMENDED that the Administrative Complaint filed herein against Mary Anne Shiell be dismissed.

DONE AND ENTERED this 29th day of July, 1982, at Tallahassee, Florida.

P. MICHAEL RUFF Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

FILED with the Clerk of the Division of Administrative Hearings this 29th day of July, 1982.

COPIES FURNISHED:

Joseph Doherty, Esquire 3220 Chelsea Street

Orlando, Florida 32803

Charles N. Prather, Esquire

17 South Lake Avenue, Suite 103 Orlando, Florida 32801

Frederick H. Wilsen, Esquire Department of Professional Regulation

400 West Robinson Street Orlando, Florida 32801

C. B. Stafford, Executive Director Florida Real Estate Commission Post Office Box 1900

Orlando, Florida 32802

Samuel R. Shorstein, Secretary Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 81-001415

Orders for Case No: 81-001415