Judges: SHARYN L. SMITH
Agency: Department of Business and Professional Regulation
Latest Update: Nov. 01, 1982
Summary: Petitioners did not prove Respondent culpably negligent in his Real Estate dealings nor was he guilty of fraud. Recommended Order: dismiss complaint.
81-2398STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
DEPARTMENT OF PROFESSIONAL )
REGULATION, Florida Real Estate ) Commission, )
)
Petitioner, )
)
vs. ) CASE NO. 81-2398
)
JAMES J. BARUCH, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Sharyn L. Smith, held a formal hearing in this case on June 28, 1982, by telephone conference call. The following appearances were entered:
APPEARANCES
For Petitioner: James H. Gillis, Esquire
Staff Attorney
Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32301
For Respondent: Nicholas Rockwell, Esquire
McCUNE HIAASEN CRUM FERRIS & GARDNER, P.A.
25 South Andrews Avenue Post Office Box 14636
Fort Lauderdale, Florida 33302
The issue for determination in this case is whether the Respondent's real estate license should be revoked, suspended or other disciplinary action imposed for the violations as alleged in the Administrative Complaint.
BACKGROUND
By Administrative Complaint signed September 2, 1981, Petitioner Department of Professional Regulation, Florida Real Estate Commission, charged that Respondent James J. Baruch violated Sections 475.25(1)(b) and 475.25(1)(d), Florida Statutes. In summary, the complaint alleged that Respondent while a broker for Wyn Pope Associates, Inc., allowed an escrow deposit to be transferred to Centennial Development Corporation contrary to the express terms of a real estate contract.
Respondent disputed the allegations in the complaint, filed an answer and requested a formal hearing pursuant to Section 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings on March 5, 1982. By Notice of Hearing dated April 7, 1982, the final hearing was scheduled for June 21, 1982, in Fort Lauderdale, Florida. On the Respondent's motion, the hearing was continued until June 28, 1982, when it was conducted by telephone conference call. During the conference call, the parties agreed that no material issues of fact existed and forwarded to the undersigned an executed Prehearing Stipulation to that effect. Additionally, the parties stipulated to the authenticity of all documents attached to the Administrative Complaint and agreed that no witnesses would be called. As stipulated by the parties, the only remaining issue for determination is whether the Respondent's conduct as established by the stipulated facts constitutes negligence as proscribed by Sections 475.25(1)(b) and/or (d), Florida Statutes.
Proposed Recommended Orders have been submitted by the parties. Those findings not incorporated in this Recommended Order were not considered relevant to the issues, were not supported by competent and substantial evidence or were considered immaterial to the results reached.
FINDINGS OF FACT
Pursuant to the Prehearing Stipulation, the following facts are established:
This case is based on allegations by John Carosso that James J. Baruch, a licensed real estate broker, wrongfully allowed the dispersal of a deposit Mr. Carosso had made to Centennial Development Corporation on a villa to be constructed.
James J. Baruch was associated with Wyn Pope Associates, Inc., as a realtor and salesman over a period of several years and on several projects which Mr. Pope developed. On the Gasa Tiempo project, the developer was Centennial Development Corporation and sales were handled by Wyn Pope Associates, Inc.
This corporate realtor was formed using James J. Baruch's realtor's license.
During their association, Wyn Pope and James Baruch had always agreed that no deposits would be accepted which could not be used for construction after the mortgage commitment. In the past Mr. Baruch had rejected contracts which did not allow such use of the deposit.
The Casa Tiempo contracts all contained such a provision and deposit monies were invariably used for construction with the knowledge of the purchasers.
Only the contract with John Carosso was changed to provide for an escrow and to prohibit use of the deposit for construction. Mr. Baruch did not prepare or negotiate this contract and his only connection with the Carosso sale was to witness Mr. Carosso's signature. The contract was negotiated and altered by Wyn Pope without Mr. Baruch's knowledge or consent.
Neither Mr. Baruch nor Wyn Pope Associates was a party to the contract and the contract said that the deposit would be held in escrow, but did not specify an escrow agent.
As a party to the contract, Centennial acknowledged receipt of the deposit and thereby agreed to hold it in escrow.
Since Mr. Baruch was not an officer or in any way a part of Centennial Development Corporation, he had no authority to approve or modify the contracts and no reason to believe that he needed to review each contract himself.
Mr. Baruch was therefore not authorized to control the deposit which according to the terms of the contract was made to Centennial Development Corporation.
Although the contract was signed July 6, 1979, no deposit was received until July 17, 1979. The changes regarding escrow, although typed in, were each initialed, indicating that the contract was changed after execution and witnessing.
Given the ten-day delay and initialing, it is likely that the changes regarding the deposit were made in the contract after Mr. Baruch had witnessed Mr. Carosso's signature and as a condition of the deposit being actually paid. In that case, Mr. Baruch would have no way of knowing that the standard contract had been modified unless he checked each contract submitted by other salesmen.
Contrary to paragraph 9 of Petitioner's Complaint, Mr. Baruch never had actual knowledge of the terms of the Carosso contract until the project was taken over by Casa Tiempo Builders, Inc., in May, 1980.
Mr. Baruch received no commission on the Carosso sale and never received any part of the deposit.
Mr. Baruch completely severed his connection with Wyn Pope Associates, Inc., and Casa Tiempo in March, 1980, and did not profit in any way from the additional deposits demanded and received by Joseph Falso in May, 1980.
On or about August 7, 1980, John Carosso entered into an agreement for the completion of his villa in which he released Centennial Development from all claims connected with his deposit.
John Carosso was injured by the use of his deposit only in that he lost the option of withdrawing his deposit and rescinding the contract. He could not have finished his home at the original contract price even if the deposit remained in escrow.
All the homes in the project had appreciated greatly in value between the contract of July 6, 1979 and the May, 1980 meeting, thus it was to each owner's advantage to pay the 7,500 and complete construction.
Because of this appreciation, Mr. Carosso could have paid the $7,500 and immediately sold the house in May, 1980 for enough to return his entire initial deposit plus a profit. One Mr. Hmeilewski, a contract vendee, did so with the help of the new management of Centennial.
Selling his contract would thus have enabled Mr. Carosso to be in a better position than rescission and return of the deposit. He preferred to have the house at the increased price.
Respondent's position is that he was not responsible for the deposit and should not be sanctioned for the events stipulated to, especially since no actual damage was incurred by Mr. Carosso and all claims against the Developer and escrow holder Centennial Development Corporation were released by Mr. Carosso.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this dispute. See Section 120.57(1) and (2), Florida Statutes.
The Respondent James J. Baruch is charged with violating Sections 475.25(1)(b) and (d), Florida Statutes (1979) which empowers the Board to, inter alia, suspend, revoke, fine or reprimand a licensee who has, in pertinent part:
(b) [b]een guilty of fraud, misrepre- sentation, 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; ....
(d) [f]ailed to account or deliver to any person, ... at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check, draft ....
Pursuant to the Prehearing Stipulation executed and filed by the parties, the only issue remaining in this case is whether ". . . the acts of Mr. Baruch amounted to negligence for which he should be sanctioned." In its Proposed Recommended Order, the Petitioner has asserted that Baruch's actions regarding the questioned deposit constitute "culpable negligence" for which disciplinary action should be imposed. If the issue in this case is one of simple negligence, the case must be dismissed as a matter of law since Section 475.25(1)(b), Florida Statutes, requires proof of "culpable negligence." Assuming, however, that the parties were aware of the statutory provisions in this case at the time of executing the Prehearing Stipulation, the term negligence, as used therein, is construed by the Hearing Officer to contemplate only "culpable negligence."
"Culpable negligence" has been defined as the omission of an act which a reasonable person would do or the commission of an act which such a person would not do. See Russ v. State, 191 So.296 (Fla. 1939). To prove culpable negligence a showing of a reckless indifference or grossly careless disregard of the safety of others is necessary. In order to sustain the crime of culpable negligence, see Section 784.05, Florida Statutes, a degree of proof is required higher than that necessary to sustain recovery of compensatory damages. See Russ, supra at 298. Also see State v. Green, 348 So.2d 3 (Fla. 1977) and 57 Am Jur.2d, Negligence at ss101-107.
The facts as established in the Prehearing Stipulation do not demonstrate that the Respondent acted in a culpably negligent manner in handling the Carosso deposit. No evidence was presented to show that Baruch knew that this particular deposit agreement had been altered after he witnessed the parties' signatures, to prohibit use of the escrow money by the developer. Neither he nor the real estate company where he worked was a party to the original deposit agreement. Due to the post-execution amendment to the deposit agreement, there was nothing to indicate to the Respondent that this contract was any different from all others in which deposit agreements were used to offset construction costs. The Respondent's failure to review the contract relating to escrowed funds prior to delivery of the funds to the developer does not constitute negligence because the Respondent had no reason to believe that the buyer and developer had agreed to a different procedure in this case.
Regarding Count II, no evidence was presented that Baruch failed to deliver any money or deposit upon demand.
Finally Respondent has argued that the case should be dismissed since Carosso suffered no injury as a result of the misappropriation of the deposit by Wyn Pope and the development company. While the lack of injury to a complaining party may mitigate a penalty, it is not a recognized defense to a violation of Section 475.25(1)(d), Florida Statutes. See Dreyer v. Florida Real Estate Commission, 370 So.2d 95 (Fla. 4th DCA 1979), which held that the fact that parties to a real estate transaction were in retrospect, not unhappy with the salesman's improper use of deposit monies pending closing was not determinative of whether the salesman's conduct violated the law.
RECOMMENDATION
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:
That the Administrative Complaint filed against James J. Baruch be dismissed.
DONE and ORDERED this 24th day of August, 1982, in Tallahassee, Florida.
SHARYN L. SMITH, 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 24th day of August, 1982.
COPIES FURNISHED:
Frederick H. Wilsen, Esquire Department of Professional Regulation State Office Building
400 West Robinson Street Orlando, Florida 32801
James H. Gillis, Esquire Staff Attorney
Department of Professional Regulation
130 North Monroe Street Tallahassee, Florida 32301
Nicholas Rockwell, Esquire McCUNE HIAASEN CRUM FERRIS
& GARDNER, P.A.
25 South Andrews Avenue Post Office Box 14636
Fort Lauderdale, Florida 33302
Samuel R. Shorstein, Secretary Department of Professional Regulation Old Courthouse Square Bldg.
130 North Monroe Street Tallahassee, Florida 32301
Carlos B. Stafford Executive Director
Florida Real Estate Commission Post Office Box 1900
Orlando, Florida 32802
Docket for Case No: 81-002398
Orders for Case No: 81-002398
| Issue Date |
Document |
Summary |
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Oct. 19, 1982 |
Agency Final Order
|
|
|
Aug. 24, 1982 |
Recommended Order
|
Petitioners did not prove Respondent culpably negligent in his Real Estate dealings nor was he guilty of fraud. Recommended Order: dismiss complaint.
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