STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 83-3764

) SUSANNE BENNINGTON, BENNINGTON & ) ASSOCIATES, INC., & KATHLEEN P. ) ARCHANGELI )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above- styled case on April 13, 1984, at St. Petersburg, Florida.

APPEARANCES

For Petitioner: Robert W. Lee, Esquire

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

For Respondent: Steven H. Mezer, Esquire

Mezer & Kipp, P.A.

1454 U. S. 19 South, Suite 405

Clearwater, Florida 33546

By Administrative Complaint filed October 20, 1983, the Department of Professional Regulation, Division of Real Estate, seeks to revoke, suspend, or otherwise discipline the licenses of Bennington & Associates, Inc., as a corporate real estate broker; Susan Bennington, as a real estate broker; and Kathleen P. Archangeli, as a real estate salesman. As grounds therefor it is alleged that they were guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing, culpable negligence, and breach of trust in negotiating a contract to purchase a condominium by Margaret S. Purvance. At the commencement of the hearing Respondents stipulated they were licensed as alleged and were so licensed at all times here relevant.

Thereafter, Petitioner called five witnesses, including the two Respondents, and

14 exhibits were admitted into evidence. Objection to Exhibit 12 was sustained.

Proposed findings submitted by the Respondents which are included herein are adopted; otherwise, they are rejected as not supported by the evidence, irrelevant, or unnecessary to the conclusions reached. Proposed findings were not received from Petitioner within the ten days of the filing of the transcript as directed at the conclusion of the hearing.

FINDINGS OF FACT

1. At all times relevant hereto Susanne Bennington was licensed as a real estate broker and active firm member of Bennington & Associates, Inc., a corporate real estate broker; and Kathleen P. Archangeli was licensed as a real estate salesman in this firm.

   
   

2. Susanne Bennington, while working as a broker/salesman for another real estate broker in 1979, sold Margaret S. Purvance a condominium at La Concha Condominium. She also negotiated the sale of land on which Beach Cottage Condominiums were subsequently built, and thereafter opened her own office of Bennington & Associates, Inc., the corporate respondent herein. Bennington & Associates became the sales agents for Beach Cottage Condominiums.

   
   

3. Following the sale of the condominium to Purvance in 1979, Bennington and Purvance saw each other frequently, as Bennington owned the condominium next to the one she had sold to Purvance. When the sale of Reservations to Purchase Beach Cottage Condominiums was commenced, Bennington told Purvance about the project and that she thought it would be one of the better condominium projects on the Gulf Coast. During the summer of 1930 Purvance worked at the Bennington office for one week as a receptionist. She met the developer of Beach Cottage Condominiums and became aware of the enthusiasm displayed in the Bennington real estate office regarding this project. She also became aware that Bennington and Archangeli were sufficiently impressed with the potential of Beach Cottage Codominiums as an investment that both bought reservations and expected to make a profit before the time came to complete the transaction by going through the closing.

   
   

4. On November 1, 1980, Purvance executed a Reservation Deposit (Exhibit

   1) to reserve Unit 1109 A for purchase upon completion at a purchase price of

   $191,900 and gave Respondent Archangeli $5,000 to deposit in escrow. This contract provided that the $5,000 deposit would be applied to the purchase price at closing, that upon receipt of condominium documents, purchase agreements, and other papers, the buyer had fifteen (15) days to review the condominium documents and accept or the option to cancel the Reservation Agreement and get the full deposit returned.

   
   

5. Construction on Beach Cottage Condominiums was commenced after the developer arranged his financing. Thereafter, Purvance, on August 31, 1981, executed a contract dated August 8, 1981, to purchase Condominium 1109 A in the Beach Cottage Condominiums for the total purchase price of $191,900 (Exhibit 4) and made an additional deposit of $14,190 which was to be held in escrow until closing at which time the balance of $172,7l0 was due from buyer. This contract provided the contract was voidable by buyer giving seller written notice to cancel within 15 days of signing the contract or receipt of all condominium documents. Upon cancellation all deposits were refundable to buyer.

   
   

6. Purvance is a widow whose husband died in 1968 leaving her a home in Countryside free and clear, bank accounts, and a widow's portion of his pension from U.S. Steel Corporation. Although not wealthy by many standards, Purvance has sufficient income (approximately $1 ,800 per month) to live comfortably.

   The condominium she purchased at La Concha at a price of $135,000 with $80,000 down had obviously turned out to be a good investment and a tax shelter prior to the signing of the contract to purchase Condominium 1109 A, Beach Cottage Condominiums.

7. Purvance read all of the documents she signed, employed an accountant to prepare her taxes, had purchased the La Concha condominium from information received from her attorney, saw this attorney socially and took him to an open house at Beach Cottage Condominiums, executed the contract to purchase in her broker's office where the contract was witnessed and the $14,190 check was written, was told by her broker that the condominium was not a wise investment; but now contends that she relied on the representations of the Respondents that the Beach Cottage Condominiums was a good investment, that she could double her money, that she would not have to close, but could sell her contract before closing, and that she believed the statements rather than the written contract provisions. Ms. Purvance actually believed the Beach Cottage Condominiums development was a good investment and that she was privileged to be in on this condominium project. She was fully aware of her option to cancel the contract to purchase within 15 days after she executed the contract. Before executing the contract, she discussed the purchase with her accountant and showed him the financing figures she had received. Her accountant inquired of her about taxes and advertising costs to operate the condominium as rental property.

   
   

8. Purvance was aware in April, 1982, before the final contract was executed, that she could lease the condominium to the developer as a model for

   $1,500 pear month. She was also aware, before she executed the contract on August 31, 1933, that she could not qualify for conventional financing. This contract had been forwarded to Purvance in mid-July, 1982, with instructions that she had only 15 days in which to execute or reject the contract. She did not execute the contract at the end of that 15-day period but waited until August 31, 1982. To keep within this 15-day period she dated the contract August 8, 1982.

   
   

9. In her testimony Purvance acknowledged that her purchase was motivated by the fact that she expected to make a lot of money out of her Beach Cottage condominium. When she ended up losing money, she complained to the Real Estate Commission and brought civil suit against the developer and the Respondents herein. She characterized her complaint as she lost a lost of money relying on Respondents' false representations that Beach Cottage Condominiums could be sold before closing, that she did not feel Respondents should make false promises, and that Respondents had a duty to keep a buyer away from a improvident investment.

   
   

10. Respondents never saw a financial statement on Purvance. They only knew that she owned a home in a well-to-do neighborhood, that she had purchased a condominium at La Concha, that she had been audited by the IRS, that she was interested in acquiring another condominium, and that she appeared financially capable of purchasing the Beach Cottage condominium. Both of these Respondents purchased a Reservation to Buy a condominium at Beach Cottage Condominium, neither could qualify for financing, one executed a contract and lost her additional deposit of $15,000, one never got to the contract stage and had to wait until the unit sold before her initial deposit was refunded. Both categorically denied they ever told Purvance that she could make $20,000 in one year on the project, that either told her that she would never have to close, or that under no circumstances would she ever lose her deposit. Neither Respondent had any reason to believe that Purvance did not know what she was doing when she signed the reservation form and when she signed the contract to purchase.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

12. Respondents are charged with violation of Section 475.25(1)(b), Florida Statutes, which provides disciplinary action can be taken against the license of a licensee who

    
    

    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...

    has violated a duty imposed upon him by law or by the terms of a listing contract....

    
    

13. It is to be noted that Respondents are the agent of the seller and not of the buyer. Accordingly, the duty owed by them to the seller is that of agent to principal, a higher duty than is owed to the buyer. To the buyer, the agent owes the same duty as is owed by his principal to the buyer. That duty is to be truthful and not intentionally deceive the buyer. This duty sounds in tort rather than in contract. The allegations of fraud, concealment, false promises, etc., are tortious acts rather than breaches of contract. The principal is liable for the tortious acts of his agent which cause harm to a third person. Fraud involves an intent to deceive. No evidence of such intent was here presented. The worst that can be said of the actions of Respondents with respect to their communications with Ms. Purvance is that their comments regarding Beach Cottage Condominiums amounted to "puffing." Simple "puffing" includes the concept that the salesman is describing the object for sale in terms a little better than the salesman actually believes exist. Here both Respondents obviously believed the Beach Cottage Condominiums would be a successful project and those who purchased these condominiums would be well rewarded. They were sufficiently sure that each reserved one for themselves. Under these circumstances it can hardly be said they intentionally misled the buyer by saying they thought Beach Cottage Condominiums would be a rewarding buy.

    
    

14. Respondents are here charged with making such false promises to Purvance as the value of the condominium would appreciate, that she could double her money in the sale of her contract interest, and that there was no risk in the project. Brod v. Jernigan, 188 So.2d 575 (Fla. 2nd DCA 1966) involved an allegation of false promises and breach of trust in a business transaction by a real estate broker who induced the sellers to enter into a contract with a potential buyer and as inducement the broker promised to buy the house at a fixed net amount to the seller if the buyer defaulted. When the buyer subsequently declined to go through with the purchase and the broker failed to buy the house as promised, the charges of false promises and breach of trust were preferred by the Florida Real Estate Commission. In Brod, supra, at p. 579 the court stated:

    
    

    There undoubtedly was a promise made by Brod to the Davises, but there was no false promise or at least it was not proved to

    be false. The statute requires the promise to be false to be grounds for suspension.

    A promise that is merely unfulfilled is not necessarily a false promise to

    to do something in the future, even if made as a representation to induce the other person to enter into a contract, does not

    amount to fraud in the legal sense (citations omitted) The rule is well stated in Vol. 37 CJS Fraud 11 page 231 wherein it is set forth inter alia as follows:

    * * *

    fraud cannot be predicated on statements of which are promissory in their nature,

    or constitute expressions of intention, and an actionable representation cannot consist of mere broken promises, unfulfilled predictions or expectations, or erroneous conjectures 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

    establishing fraud or lack of intent to perform.

    
    

15. While it is recognized that the buyer is often of the opinion that the real estate salesman is his agent, the legal fact is that this is not so. Too often the salesman encourages this misconception and neglects the duty he owes to the seller in a real estate transaction.

    
    

16. The evidence here presented will not support a finding that Respondents were guilty of fraud, misrepresentation, breach of trust, or other violation of Section 475.25(1)(b), Florida Statutes, as alleged, even under the preponderance of the evidence test, let alone the stricter clear and convincing test that is applied in license revocation cases. To the contrary, the evidence is clear that Ms. Purvance became convinced that the Beach Cottage condominium would be a good investment in which she could obtain a substantial financial benefit; and she went into this transaction with advice from her broker, her accountant, and possibly her lawyer although she testified she did not discuss the merits of this purchase with her friend, the attorney.

    
    

17. From the foregoing it is concluded that evidence will not support a finding that any of the Respondents engaged in fraud, misrepresentation, false promises, or other conduct proscribed by Section 475.25(1)(b), Florida Statutes. It is therefore

RECOMMENDED that a Final Order be entered finding Respondents not guilty of all charges and that these charges be dismissed.

ENTERED this 22nd day of Nay, 1984, at Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of May, 1984.

COPIES FURNISHED:

Robert W. Lee, Esquire

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

Steven H. Mezer, Esquire Mezer & Kipp, P.A.

1454 U.S. 19 South, Suite 405

Clearwater, Florida 33546

Harold Huff, Director Division of Real Estate

Department of Professional Regulation Post Office Box 1900

Orlando, Florida 32802

Fred M. Roche, Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 83-003764

Orders for Case No: 83-003764