STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, BOARD OF REAL )

ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 81-1467

)

SUE ELLEN WALTON and )

WALTON ASSOCIATES, INC., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above captioned matter before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, in Daytona Beach, Florida, on September 9, 1981.

APPEARANCES

For Petitioner: James S. Quincey, Esquire

Post Office Box 1090 Gainesville, Florida 32602

For Respondent: Edward T. Cook, Esquire

1885 Lee Road, Suite 1 Winter Park, Florida 32789

BACKGROUND

By Administrative Complaint dated October 17, 1980, Petitioner, Department of Professional Regulation, Board of Real Estate, has charged that Respondents, Sue Ellen Walton and Walton Associates, Inc., violated Subsections 475.25(1)(b) and 475.453(1), Florida Statutes, for which disciplinary action against their real estate licenses should be taken. In summary form it is charged that in August, 1979, one Narendra H. Patel went to the offices of Respondents in Daytona Beach, Florida, to obtain information about securing a rental property; that Patel executed a rental service agreement with Walton Associates, Inc., and paid a $40 fee for which he received the address of five properties to view; that none of the properties were available or in accordance with the specifications given by Patel; that Patel then requested a refund of his $40 fee but was refused by the realtor; and that by reason of the foregoing Respondents are guilty of violating Subsections 475.25(1)(b) and 475.453(1), supra.

Respondents disputed the allegations set forth in the Administrative Complaint and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. This request was transmitted by the Petitioner to the Division of Administrative Hearings on May 26, 1981, with a request that a Hearing Officer be assigned to conduct a hearing. By Notice of Hearing dated June 24, 1981, the

matter was scheduled for final hearing on July 20, 1981, in Daytona Beach, Florida. At the request of Respondents and with the agreement of Petitioner, the matter was rescheduled to September 9, 1981, at the same location.

At the final hearing, Petitioner called G. V. Patel, Narendra H. Patel and Sue Ellen Walton as its witnesses and offered Petitioner's Exhibits 1-3. All were received into evidence except Exhibit 2 upon which a ruling was reserved. Respondent offered Respondents' Exhibits 1-3, each of which was received into evidence.

The transcript of the hearing was filed on October 5, 1981. The parties were given the opportunity to file proposed findings of fact and conclusions of law; however, none were filed.

The issue herein is whether Respondents' real estate licenses should be revoked or suspended or whether they should be otherwise disciplined for violations set forth in the Administrative Complaint.

Based upon all the evidence, the following findings of fact are determined: FINDINGS OF FACT

1. At all times relevant hereto, Respondent, Sue Ellen Walton, was a licensed real estate broker and the active firm member for Respondent, Walton Associates, Inc., with offices at 520 North Ridgewood Avenue, Daytona Beach, Florida. She has been a real estate broker since 1974.

   
   

2. Walton owned and operated a real estate firm in Orlando, Florida. However, because she wished to relocate to the east coast of Florida, she assumed control of a real estate office in Daytona Beach at the end of July, 1979, with the intention of operating it as a branch office from her principal office in Orlando. The primary activity of the Daytona Office had been securing rentals for prospective tenants. This activity was continued by Walton after assuming control and all licensed salesmen previously employed by the prior broker were retained.

   
   

3. On or about August 15, 1979, G. V. (Nani) Patel and her sister-in-law, Anju N. Patel, visited the Daytona Office of Walton Associates, Inc., for the purpose of renting a house in the Daytona Beach area. Nani was acting on behalf of her brother, Narendra H. Patel, who was unable to take off work that day. Anju, who was Narendra's wife, was also present but because she spoke very little English, left the negotiations to Nani. Nani met with one Robert A. Hibbard, a sales associate in the office. After describing the type of rental property desired, Nani and Hibbard signed a rental agreement on behalf of her brother. Nani also paid a $40 fee for Respondents' services (Petitioner's Exhibit 1) . For this fee she was to receive the locations of various properties within the desired area that fit her specifications, including rent, size and type of dwelling. The agreement contained the following provision:

   
   

   NOTICE: Pursuant to Florida Law - If the rental information provided under this contract is not current or accurate in any material aspect,

   you may demand within 30 days of this contract date a return of your full fee paid. If you do not obtain a rental you are entitled to receive

   a return of 75 percent of the fee paid, if you make demand within 30 days of this contract date. (Chap. 475, Florida Statutes, Rule 2IV-10.15)

   
   

4. Hibbard furnished Nani the address of six properties that were purportedly for rent and which met her specifications. That same day Nani and her sister-in-law visited each of the six locations. Two properties had been rented approximately two months earlier, one of the properties was for sale, one (a garage apartment) had been rented two days earlier, one of the properties on Halifax Drive was not for rent, and no one answered the door at the last location. Having had no success, Nani telephoned Walton Associates, Inc., and was told by an unnamed person to telephone the next day to get additional listings. Despite Nani's efforts to contact Hibbard on several subsequent occasions, Hibbard never returned her calls or furnished any other listings. Narendra and Nani visited the office of Respondents sometime during the next two weeks but were unsuccessful in obtaining further listings. Narendra subsequently located a suitable property on his own and advised Hibbard that Respondents' services were no longer needed. Narendra also made application for a refund of his $40 fee on September 14, 1979, which was within the 30-day time limitation specified in the contract. He was advised by Hibbard that the request would be processed in the main office in Orlando and disposition of the claim would be made within a short period of time.

   
   

5. On or about September 27, 1979, Narendra received a speed message from Walton Associates. The message was dated September 24, 1979, and stated as follows:

   
   

   Request denied. Listings were provided in price range, size and locations requested. The fact you abandoned service and refuse fur ther assistance is not grounds for refund. Service remains available for length of contract. (Petitioner's Exhibit 2)

   
   

   The signature on the message was not fully legible but it was sent in a company envelope postmarked in Orlando, Florida, on September 26, 1979 (Petitioner's Exhibit 3). Upon receipt of. the message Narendra instituted this proceeding by filing a complaint with the Department on November 18, 1979 (Respondents' Exhibit 1).

   
   

6. At no time did Nani or Narendra have direct dealings with Sue Ellen Walton. Rather, all communications were with Robert A. Hibbard or other undisclosed personnel in the Daytona office. Hibbard terminated his relationship with Respondents in September, 1979. Walton closed her Daytona Beach office in June, 1980, and now operates only her office in Orlando, Florida.

   
   

7. As a result of operating both the Orlando and Daytona Beach offices at the same time, Walton was not able to exercise continuing control over the activities of her employees in Daytona, particularly since she commuted between the offices on a daily basis. She did keep a log of hours worked by each employee in the Daytona office (Respondents' Exhibit 3), but nevertheless permitted the sales associates, including Hibbard, a large degree of independence.

8. Walton was unaware of the Patel transaction until the complaint with the Department was filed. She stated that Hibbard never forwarded to her the request for refund, and that the signature on the speed message sent to Patel was not her own. Walton's office policy at the time the events herein occurred was to make refunds when such were required by the contract and Department rules. To support this claim, a large number of refund checks were introduced (Respondents' Exhibit 2). She blamed the Patel problem on Hibbard, an employee she inherited from the predecessor broker, and who left shortly after the transaction occurred.

   
   

   CONCLUSIONS OF LAW

   
   

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

   
   

10. Petitioner's Exhibit 2 is hereby received into evidence. That exhibit is a photocopy of a speed message dated September 24, 1979, and sent on Walton Associates, Inc. stationery to Narendra Pate advising that his request for a refund had been denied. Respondents objected to the admissibility of Exhibit 2 on the grounds the original letter was the best evidence. However, both the Evidence Code and Chapter 475 provide ample authority for the admission of this document. See Sections 90.953, 90.954 and 475.28(2), Florida Statutes.

    
    

11. Petitioner has charged Respondents with (1) being .... guilty of false promises, false pretenses, dishonest dealing and breach of trust in a business transaction" within the meaning of Subsection 475.25(1)(b), Florida Statutes; (2) having ..... violated a duty imposed upon them by the terms of their listing contracts and their rental real estate transactions"; (3) having

    .... aided, assisted and conspired with one another in furtherance of such false promises, false pretenses, dishonest dealing and breach of trust both of which are violations of Subsection 475.25(1)(b) , supra; (4) having violated Subsection 475.453(1), Florida Statutes, by "...failing to make refunds to prospective tenants upon their demand when the information provided by the respondents was not current or accurate in material respects, after demand for refund had been made within 30 days as the contract date"; and (5) ...having failed to account or deliver to Narendra Patel her (sic) rental fee which had come into respondents' hands in which they were not in law or equity entitled to obtain under the circumstances..." in violation of Subsection 475.25(1)(d) supra. 1/

    
    

12. Because the proceeding is penal in nature, State ex rel Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973) , the evidence required to support conventional forms of regulatory action will not suffice; rather, the "critical matters in issue must be shown by evidence which is indubitably as 'substantial' as the consequences". Bowling v. Department of Insurance, 394 So.2d 165, 172 (Fla. 1st DCA 1981) That is to say, the proof must be commensurate with the potential penalty. Henderson Signs v. Florida Department of Transportation, 397 So.2d 769 (Fla. 1st DCA 1981). This being so, the record will be examined to determine whether there is sufficient evidence of a "substantial" nature to support the charges.

    
    

13. The evidence discloses that the sister and wife of the complaining consumer visited the office of Respondents on August 15, 1979. There they met a sales associate named Hibbard, and after some discussion concerning the type and price of rental desired, the sister executed an agreement, whereby for a $40 fee, Hibbard furnished her the addresses of six properties that fit her

    specifications. During the hearing Respondents pointed out that the transaction was consummated by the sister while the Administrative Complaint alleged that the brother in fact met with Hibbard, signed the agreement and paid the fee.

    But, through uncontroverted testimony it was established that the sister was authorized to act on her brother's behalf and that he furnished her the money with which to pay the fee. Moreover, it is clear that Hibbard understood that the rental would be in the brother's name. Therefore, the discrepancy is deemed to be immaterial and Respondents' argument that the proceeding should be dismissed for this reason is without merit.

    
    

14. After receiving the six addresses from Hibbard, an investigation by the sister and wife revealed that none of the six properties were available for

    rent--three had been previously rented, one was for sale, one did not exist, and no one was at the final location to secure information regarding its availability. Section 475.453(1), supra, provides in part:

    
    

    1. Each broker or salesman...who fur nishes rental information to a prospective tenant, for a fee paid by the prospective tenant, shall provide such prospective tenant with a contract or receipt, which contract or receipt contains a provision for the repayment of any amount over 25 percent of the fee to the prospective tenant if the prospective tenant does not obtain a rental. If the rental information provided by the broker or salesman to a prospective tenant is not current or accurate in any material respect, the

       full fee shall be repaid to the pros pective tenant upon demand. A demand from the prospective tenant for the return of the fee, or any part thereof, shall be made within 30 days following the day on which the real estate broker or salesman has contracted to perform services to the prospective tenant.

       
       

       Rule 2IV-10.30, Florida Administrative Code, tracks the language in Subsection 475.453(1), supra, and reposes the same requirement upon a broker or salesman. The agreement contained similar advice to Patel.

       
       

15. There is no dispute that Narendra Patel made a timely claim for a refund of his money in accordance with the law and agreement. Whether he was entitled to 75 percent of his fee or the full $40 hinges on whether the information provided by Hibbard was "not current or accurate in any material respect". Clearly the information provided Patel was not "current" for three of the properties had been rented earlier and one was for sale. The inclusion of this non-current information must be considered material for the listings were the sole reason for paying the fee. Therefore, Patel was entitled to a full refund of his moneys and a denial of his claim for refund constituted a violation of Subsection 475.453(1) and Rule 2IV-10.30, supra. The failure to deliver money to Patel also constituted a violation of Subsection 475.25(1)(d), supra, and a breach of a duty imposed by law in contravention of Subsection 475.25(1)(b), supra.

16. Petitioner also contends that Respondents were guilty of false promises, false pretenses, dishonest, dealing and breach of trust in a business transaction within the meaning of Subsection 475.25(1)(b) , supra. Here, there was insufficient evidence of a "substantial" nature to show that Hibbard, as a sales associate for Respondents, intended to deceive or trick the Patels when the transactions were entered into, and to continue that pattern of conduct throughout the course of their relationship. Accordingly, it is concluded that this portion of the complaint should be dismissed.

    
    

17. Finally, it is charged that the Respondents "aided, assisted and conspired with one another in furtherance of such false promises, false pretenses, dishonest dealing and breach of trust in violation of Subsection 475.25(1)(b) , supra. But the evidence does not support this charge for it was not shown that Respondent Walton collaborated with Hibbard in an effort to perpetuate the "scheme". Indeed, the evidence reveals that Walton never met or spoke with the Patels, that Hibbard did not advise her of the matter, and that she was without knowledge of the entire transaction until after the complaint with the Department was filed. Therefore, it is concluded that this charge should be dismissed.

    
    

18. The sole remaining issue is whether Walton and her firm are responsible for the actions of Hibbard, a sales associate, so that guilt may be imputed to them as charged in the complaint. As noted earlier, violations of Subsection 475.25(1)(b) and (d), 475.453(1) and Rule 21V-10.30, supra, have occurred, albeit by Hibbard, an associate in the firm. The circumstances here are unique, for Walton was unaware of the Hibbard-Patel transaction, and disclaimed any knowledge of the speed message that denied Patel's refund. She further testified that had the matter been brought to her attention, as Hibbard was instructed to do, Patel would have been given a prompt refund in accordance with the terms of the agreement and then existing office policy.

    
    

19. The most compelling evidence presented herein to prove that Walton had knowledge of the Hibbard-Patel transaction was the envelope in which the speed message was mailed. It was postmarked in Orlando, Florida, where Walton's principal office was located. Aside from this, there was no evidence whatever to show that Walton signed the message, or otherwise had knowledge of the transaction or approved and ratified the acts of Hibbard. That circumstantial evidence, standing alone, is insufficient to prove scienter of the illicit acts on the part of Respondents. Bowling, supra.

    
    

20. It is true that Walton was negligent in failing to exercise reasonable control over the activities of Hibbard, who is the real culprit in this matter. 2/ But she has not been charged with culpable negligence, if indeed that element is applicable to the factual circumstances herein. Rather, she has been charged with responsibility for the acts of Hibbard, and absent a showing of knowledge, approval or ratification of those acts, it must be concluded that no violation by Respondents of Subsections 475.25(1)(b), 475.25(1)(d) and 475.453(1), supra, has occurred. 3/

    
    

21. Finally, Patel is entitled to a refund of his $40 fee. The Respondents have agreed to do so since that conforms to their then-existing office policy, and such refund should be made in a prompt manner.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that all charges against Respondents be DISMISSED. It is

further

RECOMMENDED that Respondents promptly return the rental agreement fee to Narendra Patel in accordance with their agreement on the record in this cause.

DONE AND ENTERED this 22nd day of October, 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 22nd day of October, 1981.

ENDNOTES

1/ Although the Complaint referred to Subsection 475.25(1)(b), it is assumed such was a typographical error and that the Complaint intended to refer to Subsection 475.25(1)(d) to support the latter charge.

2/ Hibbard apparently permitted his real estate license to lapse and consequently, no charges have been brought against him.

3/ Petitioner has cited no authority to support the proposition that the guilty conduct of a salesman may be imputed to a broker absent a showing of knowledge, approval or ratification of those acts on the part of the broker. Because penal statutes must be strictly construed, Bach v. Board of Dentistry, 378 So.2d 34 (Fla. rat DCA 1979), such a showing by Petitioner is required in order to impute guilt.

COPIES FURNISHED:

James Quincey, Esquire Post Office Box 1090

Gainesville, Florida 32602

John Huskins, Esquire Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 32301

Edward T. Cook, Esquire 1885 Lee Road, Suite 1 Winter Park, Florida 32789

Docket for Case No: 81-001467

Orders for Case No: 81-001467