vs. ) CASE NO. 83-733
) TERRY L. BAKER and TERRY L. ) BAKER AND ASSOCIATES, INC., )
Respondents. )
Pursuant to notice, R. L. Caleen, Jr., Hearing Officer with the Division of Administrative Hearings, conducted a formal hearing in this case on June 7, 1983, in Jacksonville, Florida.
For Respondents: Terry L. Baker, pro se
Whether respondents' real estate licenses should be revoked, suspended, or otherwise disciplined on charges of false promises, misrepresentation, culpable negligence, and breach of trust in a business transaction.
By administrative complaint dated January 27, 1983, petitioner Department of Professional Regulation, Florida Real Estate Commission ("Department") charged respondents Terry L. Baker ("respondent") and Terry L. Baker and Associates, Inc. with false promises, misrepresentation, culpable negligence, and breach of trust in a business transaction in violation of Section 475.25(1)(b) , Florida Statutes. Respondent disputed the charges and requested a formal hearing.
On March 8, 1983, this case was referred to the Division of Administrative Hearings for assignment of a hearing officer to conduct the requested hearing. Hearing was thereafter set for June 7, 1983.
At hearing, the Department presented the testimony of Dolores Hawkins, Lynn Wilson, James W. Dobson, and Patricia Lynn. Respondent testified on his own behalf. Petitioner's Exhibit Nos. 1-8 were received into evidence. 1/
The Department filed proposed findings of fact on August 3, 1983. Based on the evidence presented at hearing, the following facts are determined:
Respondent Terry L. Baker is now and was at all times material to the charges a licensed real estate broker holding license no. 204679. (P-1)
He also was president, secretary, and treasurer of respondent Terry L. Baker and Associates, Inc., a licensed real estate brokerage corporation (lic. no. 213974) located at 1418 West Edgewood Avenue, Jacksonville, Florida. There are no other officers, directors, or members of this brokerage corporation; respondent owns 100 percent of the capital stock. (P-1)
Respondent was, and continues to be, the active broker for this real estate brokerage corporation. (P-1)
On July 21, 1982, respondent assisted in the negotiation and closing of a real estate sales transaction between Dolores B. Hawkins, as seller, and James
W. and Patricia L. Dobson, as purchasers. The real estate involved was a residential lot and dwelling unit located at 7065 Bishop Hatcher Drive East, Jacksonville, Florida, and was, at the time, the subject of a mortgage foreclosure proceeding. (Testimony of Hawkins, Baker; P-2, P-6)
The real estate sales contract was signed by the seller and buyers on July 21, 1982. At that time, respondent submitted a written estimate of the seller's closing costs. This estimate, signed by both respondent and the seller, showed that the seller would net $1,598.25 from the transaction. It was specifically noted that this net figure did not include an Atlantic Bank payment. This payment was a recognized obligation of the seller and was required to obtain the release of a record judgment lien held by the bank. Ms. Hawkins, the seller, understood that this payment was her obligation and was not included in the $1,598.25 figure. The written estimate also included seller's cost of approximately $2,000 for attorney's fees and back mortgage payments.
The attorney's fees were related to the legal costs associated with the mortgage foreclosure proceeding. An existing mortgage balance, to be assumed by the buyers, was listed as approximately $19,000. (Testimony of Hawkins, Baker; P-3)
On two separate occasions prior to closing, respondent told seller Hawkins that there had been an increase in the charge for attorney's fees associated with the mortgage foreclosure. (Testimony of Hawkins, respondent)
Prior to closing, respondent loaned seller Hawkins $220 to help her pay her apartment rent. They agreed that the loan would be repaid out of the proceeds from the sale of her property. (Testimony of Hawkins, Baker; P-4)
At closing on August 17, 1982, respondent presented the seller with a Seller's Closing Statement listing various charges to the seller, including the loan repayment of $220, the payment to Atlantic Bank (for release of lien) of
$425, attorney's fees of $638.50, and an assumed mortgage of $19,847.51. The net amount due the seller was $675.82. The buyers paid the balance due at closing and the seller delivered the warranty deed to respondent for recording. A couple of days later, respondent, in turn, wrote a check for $675.82 and
delivered it to the seller as net proceeds from the sale. Payment of respondent's commission was shared by the seller and buyers at closing.
Respondent received the warranty deed at closing and the parties to the transaction expected him to have it recorded. He accepted this duty and undertook to perform it. However, he did not record the warranty deed on the public records until October 4, 1982--almost three months later--after repeated requests by the mortgage service company for a copy of the recorded deed. The delay was caused by respondent's waiting to receive a release of the Atlantic Bank lien so that he could record the two instruments at the same time. But after repeated requests for a copy of the recorded deed, he finally recorded it even though he had not yet received the release of lien. (Testimony of Baker, Hawkins, Dobson)
Contrary to the Department's contention, respondent's delay in recording the deed does not constitute culpable negligence, false promises, misrepresentation, or breach of trust in a business transaction. His lack of diligence in recording the deed is, instead, an act of simple negligence. His carelessness exposed the buyers to unnecessary risk. During this delay of almost three months, the seller, while record titleholder, could have reconveyed the property or subjected it to additional encumbrances. Respondent, in delaying recordation almost three months, failed to exercise that degree of care which a reasonable man, in the same situation and with similar experience, would not have omitted. His failure to exercise due care does not, however, demonstrate willful, wanton, or reckless disregard for the rights of others.
The Department also charges that respondent did not have--at time of closing--the lien of Atlantic Bank satisfied. Prior to closing, the respondent-
-on behalf of the seller--negotiated the outstanding debt with attorneys for Atlantic Bank: He was told that the bank would accept fifty cents on the dollar, or $425. Thereafter, respondent collected this amount as a charge to the seller at closing. (Testimony of respondent)
Respondent, however, did not have an executed release of lien form, or the judgment lien satisfied, at closing. He asserts--without contradiction-- that the bank's attorney at first offered to prepare the release, but later asked respondent to do so. By the time of closing, respondent had been either unable to obtain the release from the attorney, or he had been unable to obtain and complete the form on his own. When asked why he proceeded to close the transaction although the release had not been obtained, he states that both buyers and seller consented to the closing because the property was facing foreclosure. Respondent's assertion that the parties consented to closing, in the absence of a release of lien, is unrefuted and accepted as fact. No evidence was presented that, in light of the parties' consent, closing of the transaction was improper.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1981).
Section 475.25(1)(b), Florida Statutes, in pertinent part, empowers the Florida Real Estate Commission to suspend, revoke, or otherwise discipline a license or impose an administrative fine, if it finds that a licensee has engaged in false promises, misrepresentation, culpable negligence, or breach of trust in a business transaction. Culpable negligence, within the meaning of
this statute, requires a greater degree of negligence than simple negligence. Simple negligence, generally, is the doing of something which a reasonable and prudent man would not do, or the failure to do something which a reasonable man, under similar circumstances, would do. Black's Law Dictionary 930 (5th ed.
1979). Culpable negligence requires a showing of reckless indifference or gross or wanton carelessness. See, 57 Am. Jur. 2d Negligence at Secs. 101-107; Florida Real Estate Commission v. James J. Baruch, 5 FALR 262-A.
License revocation proceedings, such as this, are penal in nature.
The prosecuting agency must prove its charges by clear and convincing evidence-- by evidence as substantial as the consequences. See, Reid v. Florida Real Estate Commission, 188 So.2d 846 (Fla. 2d DCA 1966); Walker v. State, 322 So.2d 612 (Fla. 2d DCA 1975); Bowling v. Dept. of Insurance, 394 So.2d 165, 172 (Fla.
1st DCA 1981).
Measured by these standards, the Department has not sustained its burden of proving the charges. Five identifiable acts of misconduct are identified in the administrative complaint.
First, respondent allegedly stated to seller and buyers that the seller would net $1,400-$2,000, when in fact, the seller received only $675.82 at closing. This charge is unproven. The seller agreed to an estimated net of
$1,598.25, minus the amount due Atlantic Bank ($425), and minus the payment of the personal loan ($220) extended to her by respondent. Subtracting these deductions, the propriety of which is acknowledged, results in a net of $953.25. Further, the attorney's fees charged to the seller increased beyond the estimated amount; however, the seller was repeatedly advised of this prior to closing, and the increase was an item beyond respondent's control. It is readily apparent that the variance between the estimate net to seller--submitted prior to closing--and the amount the seller actually received is insufficient to support an accusation of false promises, misrepresentation, culpable negligence, or breach of trust in a business transaction.
Second, respondent is alleged to have not satisfied-- at time of closing--two recorded liens against the property. The evidence, which focuses on a single lien, establishes that both parties consented to closing the transaction without first obtaining a release of the lien. Under such circumstances, closing was permissible and did not violate Section 475.25(1)(b).
Third, respondent allegedly failed to timely record the warranty deed after closing. This fact is not seriously disputed. Respondent, by so doing, was guilty of simple negligence in waiting almost three months to record the deed. The reason given for the delay mitigates, but fails to excuse the delay. Simple negligence, however, cannot-- without more--support a finding of professional misconduct in violation of Section 475.25(1)(b). The remaining two allegations were not proven at hearing, a fact which the Department seemingly recognizes in its posthearing proposed recommended order.
Finally, the Department maintains--in its proposed recommended order-- that repondent, after closing, erred by failing to obtain a release of the Atlantic Bank lien against the subject property. Even if true, this is not misconduct with which he was charged in the administrative complaint. To find him guilty of an offense not charged would be a denial of due process. Wray v. Department of Professional Regulation, Board of Medical Examiners, So.2d (Fla. 1st DCA, Case No. AQ-215, Opinion Filed July 8, 1983), 5 FALR 434-J, 435- J.
The Department's proposed recommended order, containing findings of fact, has been considered in preparing this recommended order. To the extent the Department's proposed findings of fact were consistent with the weight of credible evidence adduced at hearing, they have been adopted and are reflected in this recommended order. To the extent the proposed findings were not consistent with the weight of credible evidence, they have been either rejected or, when possible, modified to conform to the evidence. Additionally, proposed findings which are subordinate, cumulative, immaterial, or unnecessary have not been adopted.
That the administrative complaint, and all charges contained therein, be dismissed for failure of proof.
DONE and ENTERED this 23rd day of September, 1983, in Tallahassee, Florida.
R. L. CALEEN, JR. Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 23rd day of September, 1983.
P. O. Box 1900
Terry L. Baker
Fred M. Roche, Secretary Department of Professional Regulation
P. O. Box 1900
William M. Furlow, Esquire Department of Professional Regulation
P. O. Box 1900
