on February 8, 1983, in the Courthouse Annex, Daytona Beach, Florida. The issue for determination at the hearing was whether the Respondents' licenses to practice as real estate brokers under the laws of the State of Florida should be suspended or revoked, or whether other disciplinary action should be taken for the reasons set forth in the Administrative Complaint.
For Petitioner: William M. Furlow, Esquire
For Respondent: Mr. Victor L. Contessa, pro se and as
President of Cavalier Southern Realty, Inc.
By Administrative Complaint dated August 23, 1982, Respondents were charged with a violation of Subsection 475.25(1)(b), Florida Statutes, for fraud, misrepresentation, and culpable negligence as real estate brokers in dealings involving the sale of a piece of property in Volusia County, Florida, in 1981 to Norman H. Riley.
In support of the allegations in the complaint, Petitioner presented the testimony of Mr. Riley and Exhibits 1 through 6. Respondent Contessa testified in his own behalf and offered Respondents' Exhibits A through F. Hearing Officer's Exhibit 1 was also received.
Victor L. Contessa, Respondent, was licensed as a real estate broker and officer/director of Cavalier Southern Realty, Inc., in Port Orange, Florida, by the Florida Real Estate Commission on June 1, 1981, and was so licensed at all times pertinent to this inquiry. His license number is 0016808, and Cavalier Southern's license number is 0217638.
Respondent received an MRS circular on the property in question in late 1977 or early 1978 from the listing agency out of Hollywood, Florida. The contact point on the flier for the property was a Mr. Henry W. Harbinson, Sr. This flier showed the legal description of the property as containing land "North of Spruce Creek . . . ." Mr. Contessa's view of the property did not indicate a total of 28.77 acres as described on the circular, so he called Mr. Harbinson, who advised him that the property south of Spruce Creek was included, and who sent a map tending to show this. He also, during the course of negotiations with the Chiodos for a portion of the property in December, 1977, corresponded with Mr. Konigsburg, attorney for the sellers. Mr. Konigsburg agreed to include the south portion for an additional consideration.
At some time in the latter part of 1977 or early 1978, Norman H. Riley answered an advertisement in the newspaper concerning a piece of property for sale in the Spruce Creek area of Volusia County, Florida. As a result, he met the Respondent, who was acting as broker on the property. Mr. Contessa told Riley how to get out to the property, but did not accompany him there. Riley looked at the property, which consisted of a total of more than 28 acres, and, as a result, in late January, 1978, signed a contract for sale and purchase of a portion of the total property (approximately seven acres), offering a purchase price of $56,000, on which he paid a deposit of $500 to Mr. Contessa. The contract was witnessed, as to Riley's signature, by Victor Contessa, Respondent, and was executed/accepted by the seller on January 20, 1978. Closing was scheduled for on or before March 7, 1978.
However, because the property in question was part of an estate and other individuals were involved in other purchases of contiguous and adjacent parcels, for some reason, the sale could not be consummated. Mr. Riley left the
$500 deposit with Respondents, Contessa and Cavalier.
Efforts were made to finalize the transaction for several years without success, and finally in mid-1981, Respondent Contessa contacted Riley and told him he could probably purchase the whole piece if he wanted it. Since Mr. Riley's financial situation had improved, he felt he was now in a position to buy that much, and he arranged for another real estate agent to make an appraisal of the property after talking with his bankers. This appraisal showed a value of just over $120,000 for the 28 acres. As a result, on May 4, 1981, Mr. Riley made another offer to the owners of the property, the Estate of Joseph Green, for the entire parcel, agreeing to pay $120,000.
This contract described the property being bid on as: North of Spruce Creek in Government Lot 1,
Section 34, Township S Range 33 East, a/k/a:
34-l6S-33E, Book 3 Page 91, Volusia County. [Emphasis added.]
The previously executed contract for $56,000 contained the same legal description with the following addition: "Sections A, B, G, H, J and K on the
attached Plat of the above property." The property was described in part in the formal appraisal dated April 26, 1981, as:
LEGAL DESCRIPTION:
Part of Assessors Sub in Section 34 Township 16 South Range 33 East Volusia County, Florida.
NEIGHBORHOOD:
Located on the East and West Side of Spruce Creek Road extending from Taylor Road South to the North Shore of Spruce Creek . . . .
The May 4, 1981, offer of $120,000 was rejected by the owner, who countered with a demand of $170,000. Mr. Riley and Mr. Contessa discussed this, and Riley concluded he could not pay that much. During these discussions, the point was raised by Mr. Contessa that he thought there might be enough land south of Spruce Creek on which to build a house. This interested Riley; and Respondent Contessa, who indicated he had never been out to the property personally, again told Riley how to get out there.
Riley found the property, got on that portion south of Spruce Creek, and walked it, satisfying himself that there was, in fact, enough land on which to build a house. When Mr. Contessa confirmed that the acreage in question included this piece south of Spruce Creek, Mr. Riley concluded that taken together, both pieces were worth more than the appraised value of $120,000; and he ultimately, on June 15, 1981, after an interim offer of $135,000 which was rejected, submitted an offer of $150,000 for the property, which was accepted.
The legal description of this last contract for sale, after the discussions referenced above, was the same as on the prior one, without change, which referenced that property "North of Spruce Creek.
Mr. Riley could not get a bank loan to cover the amount needed to buy the property in question, but was of the opinion he could get the necessary extra money by selling off the small triangular piece on the south side of Spruce Creek, which he believed to be included in the parcel he was buying. As a result, he negotiated a sale of that smaller parcel to another individual for
$35,000.
Closing on Mr. Riley's purchase of the overall parcel was delayed for some reason. During this delay period, Mr. Riley learned that the triangular parcel was not included in the land he was purchasing.
There is no evidence to indicate Mr. Contessa knowingly or intentionally misrepresented the size of the property.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.
Section 475.25(1)(b), Florida Statutes, states that the Board (Florida Real Estate Commission) may suspend a license for a period not exceeding ten years, may revoke a license, may impose an administrative fine not to exceed
$1,000 for each offense, or may issue a reprimand if it finds that the licensee has:
Been guilty of fraud, misrepresentation, 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 misconduct 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 misconduct; or that such victim
or intended victim was a customer or a person in confidential relation with the licensee, or was an identified member of the general public . . . .
The charges in the Administrative Complaint allege fraud, misrepresentation, and culpable negligence. Both fraud and misrepresentation charges involve the element of intent or scienter. Although the facts found above show that Respondent represented to Mr. Riley that the parcel he was buying included the triangle south of Spruce Creek, and the representation was not accurate, Respondent believed it was, and his belief was based on information provided him by others. He had no knowledge at the time he made the erroneous representation that it was false. The evidence then simply fails to show that Respondent had any intent to defraud Mr. Riley or to mislead him in violation of Section 475.25(1)(b) Florida Statutes. To be punishable, a misrepresentation must be made which is material and with knowledge by the one making it that it is indeed false. See Shelton v. Florida Real Estate Commission, 120 So.2d 191 (2 DCA Fla. 1960).
Turning then to the question of whether Respondent's conduct constituted culpable negligence as is required by the statute, culpable negligence can be defined as a failure to exercise that degree of care rendered appropriate by the particular circumstances and which a man of ordinary prudence in the same situation and with equal experience would not have omitted. When a real estate broker or salesman makes representations to members of the general public respecting real estate matters, the public is entitled to rely upon that information. It is, therefore, incumbent upon the broker or salesman to assure himself that statements he is making are in fact true.
Here there is no question that Mr. Contessa advised Mr. Riley that the triangular piece south of Spruce Creek was included, and Mr. Contessa believed that it was. The question is: Did he take appropriate steps to assure himself that that statement was true? The evidence shows that when Respondent first received the flier on the property, his view of the map did not convince him that the property for sale came to 28.77 acres as represented. As a result, he called the offering broker, Mr. Harbinson, who indicated that the portion south of Spruce Creek was included and forwarded a plat of the property (Respondent's Exhibit 13). At this point, Respondent should have checked further because the flier reflects the legal description of the property in question and for sale as relating to "Lot 1." All maps introduced by the Respondent reflect that the parcel south of Spruce Creek is "Lot 5." Also, Respondent should have been put on notice by the fact that the flier's description of the property was "North of Spruce Creek," and all the contracts prepared by the Respondent correctly reflected that. Further, the letter from attorney Konigsburg dated December 27, 1977, which he relies upon to show the inclusion of the smaller parcel, in fact includes it only on payment of an "aggregate price increase of $5,000.00 with regard to parcels C, D, and E."
It is clear, therefore, that though Respondent made some effort to clarify the actual property description, in light of the obvious discrepancies, he did not do enough. His failures were serious lapses, as opposed to mere oversights; and his negligence is, therefore, blameworthy, or, in the statutory term, "culpable." Mr. Riley's failure to heed Respondent's suggestion to contact the surveyor does not exculpate Respondent.
The parties have submitted posthearing legal memoranda which include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law above. They have been otherwise rejected as contrary to the better weight of the evidence, not supported by the evidence, irrelevant to the issues, or legally erroneous.
