STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, FLORIDA REAL )

ESTATE COMMISSION, )

)

Petitioner, )

)

vs. ) CASE NO. 84-0180

)

EDWARD M. O'CONNOR t/a )

O'CONNOR REALTY and )

WILLIAM BERG, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for formal hearing before P. Michael Ruff, duly designated Hearing Officer on November 13, 1985, in Punta Gorda, Florida, as noticed. The appearances were as follows:

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Staff Attorney

Department of Professional Regulation Division of Real Estate

Post Office Box 1900 Orlando, Florida 32902

For Respondent Elwood P. Safron, Esquire O'Connor: SAFRON, ROONEY & DZURAK

306 East Olympia

Punta Gorda, Florida 33950

For Respondent Jesus M. Hevia, Esquire Berg: WOTITZKY, WOTITZKY, WILKINS,

FROHLICH & JONES

2595 Harbor Boulevard, Suite 204 Port Charlotte, Florida 33952

By Administrative Complaint the Petitioner alleges that the Respondents, Edward M. O'Connor, a licensed real estate broker, and William Berg, a licensed real estate salesman and employee of O'Connor, are, as to Counts I and II of the Administrative Complaint guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes. Concerning Count III Respondent O'Connor is charged with failure to account for and deliver escrowed funds in violation of Subsection 475.15(1)(d), Florida Statutes. The gravamen of the factual allegations involve the attempted purchase by William Berg of a piece of

property from one Louis J. Knetter. It is alleged generally that Respondents Berg and O'Connor represented to seller Knetter and his representative realtor, Emanuel Consalvo, that $500 had been placed in escrow as a binder or cash deposit to secure the performance of the contract. It is then alleged that this was a misrepresentation because the Respondents had in fact never put up the

$500 earnest money deposit or binder nor placed it in an appropriate escrow account, Finally, it is charged that Respondent broker Edward O'Connor failed to account for and deliver the earnest money deposit allegedly held by O'Connor or Berg to the seller, Knetter, or his agent Mr. Consalvo, when the subject real estate transaction failed to close.

The Respondents generally deny that any such representations concerning the existence or payment of $500, or any other amount of earnest money deposit were ever made, nor that any such monies were placed in an escrow account as a binder or earnest money deposit, such that they could be accounted for or delivered to the seller or any other person entitled to them. The Respondents contend simply that no representation was ever made at the time the contract was entered into; or later that a cash earnest money deposit would be posted or placed in escrow.

The cause came on for hearing as noticed, at which the Petitioner offered eight exhibits and the Respondent offered two exhibits, all of which were admitted into evidence without objection. Five witnesses were examined at the trial in addition to the testimony of Respondents Berg and O'Connor.

The parties elected to have the proceedings transcribed and to file proposed findings of fact and conclusions of law after the filing of the transcript. The findings of fact and conclusions of law were timely submitted by the parties. Those findings of fact and conclusions of law are treated, considered and ruled upon in this Recommended Order and additionally are specifically ruled upon in the Appendix attached hereto and incorporated by reference herein.

The issue to be resolved concerns which, if any, of the Respondents, is guilty of the conduct charged in the Administrative Complaint concerning the supposed $500 earnest money deposit or the representation that one existed and if one or both are found guilty of the conduct charged, what if any, penalty is warranted.

FINDINGS OF FACT

1. At all times pertinent hereto Respondent O'Connor was a licensed real estate broker in the State of Florida having been issued license lumber 0065137. Respondent Berg was a licensed real estate salesman having been issued license number 0391098. At all pertinent times alleged in the Administrative Complaint Respondent Berg was licensed and operated as a real estate salesman in the employ of broker Respondent Edward M. O Connor.

   
   

2. On or about February 15, 1953, Respondent Berg entered into a contract as purchaser seeking to purchase certain real property in Charlotte County, Florida, described as: Lot 26, Block 1, Charlotte Harbour Subdivision, also known as 201 Cortex Street, Charlotte County, Florida. The property was owned by Louis J. Knetter. Mr. Knetter, as seller, was represented by Emanuel Consalvo, a licensed real estate salesman or broker. This proposed contract, contrary to the allegations of Petitioner, made no mention in its terms of any

   $500 binder or earnest money deposit. Rather, the contract, instead of mentioning a cash deposit, had the words "commission" clearly written on the top, being Berg's pledge to pay $300 of the real estate commission he would be

   entitled to on the transaction to the buyer at closing. The proposed contract was tendered to Emanuel Consalvo , the seller's agent, who examined it thoroughly with his client Louis Knetter. Mr. Knetter subsequently refused to enter into that proposed contract.

   
   

3. Respondent Berg then made a second offer to purchase the same property which was accepted by the seller. This offer was made on April 18, 1983. The contract regarding the second offer was prepared from a rough draft which Respondent Berg had handwritten. He handwrote the word "commission" precisely as on the original offer of February 15, 1983. On the final typed copy of the contract the abbreviated word "comm.," was typed into the contract to indicate (and it was Respondent Berg's intent) that the commission to be earned by Berg would be used as a down payment at closing rather than any proposal by Berg (or O'Connor) to post $500 or other amount of cash earnest money deposit upon the offering of the contract. Respondent Berg genuinely believed that anything of value could be inserted into a contract to provide consideration and could serve as sufficient consideration therefor including his offer to pay to the buyer a part of the real estate commission he would be entitled to with regard to that transaction Neither Respondents Berg nor O'Connor made any representations or statements, verbally or written, to Louis Knetter or Emanuel Consalvo to the effect that there ever was an earnest money deposit in any amount posted by the purchaser Berg, or on account at O'Connor Realty.

   
   

4. Kevin O'Connor, the son of Respondent O'Connor, is also a licensed real estate broker who holds a degree in the field of real estate. He established that the textbook practice and indeed, the general real estate industry custom or practice in the Charlotte County area allows for anything of value to be used as consideration for a real estate contract and that a cash earnest money deposit is not necessary. He established the industry practice with regard to the posting of earnest money deposits for real estate sales contracts and demonstrated that unless a contract, by its terms, clearly indicates that an earnest money deposit has been posted, there is no basis for a seller or his agent to assume that to be the case.

   
   

5. Kevin O'Connor, a witness for the Respondents, had personal contact with the seller's agent, Emanuel Consalvo, regarding the transaction and established that the Respondent Edward M. O'Connor was not even in his office or in the area during the time of the contract proposal or offer. Kevin O'Connor was operating the office in the Respondent Edward O'Connor's absence. Kevin 0'Connor established that the question of an earnest money deposit was never discussed with Consalvo and that neither Consalvo nor Knetter ever raised a question during the pendency of the transaction concerning the existence of an earnest money deposit. Kevin O'Connor never told Consalvo that any money was in escrow nor did Respondent Berg or Edward O'Connor. No representation was ever made to Consalvo or Knetter, singly or jointly, to the effect that any money had been placed on deposit or in escrow with regard to either of the two offers. Indeed, Mr. Consalvo acknowledged that no one at 0'Connor Realty ever told him of any money being placed in an escrow account.

   
   

6. The transaction ultimately failed to close because the seller failed to include all the furniture with the home as required by the contract. At that juncture, the seller demanded the supposed $500 earnest money deposit to be paid him as a forfeiture on the mistaken belief that an earnest money deposit had been posted with regard to the transaction. Such was not the case however, nor was it ever represented to be the case.

   CONCLUSIONS OF LAW

   
   

7. The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties to these proceedings, Section 120.57(1), Florida Statutes (1993). The Petitioner is an agency of the State of Florida charged with enforcing the provision of Chapter 475, Florida Statutes, as they relate to the imposition of licensure standards and standards for the practice of the real estate profession in its various forms in the State of Florida, including sanctions for violation of those standards.

   
   

8. Subsection 475.25(1), Florida Statutes, provides that the 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 count or separate offense; and may issue a reprimand for any and all of the foregoing if it finds that the licensee:

   
   

   (b). . . has been guilty of fraud, misrepresentation, concealment false pretenses, dishonest dealing by tricks scheme or device, culpable negligence or breach of trust in any business transaction; or has formed an intent, design or scheme to engage in any

   such misconduct and in the furtherance thereof, committed an overt act in furtherance of such intent, design or scheme. It is immaterial to the

   guilt of the licensee that the victim. . . of the misconduct has sustained or damage or loss; that the damage or loss had been settled and paid after the discovery of the misconduct, or that such victim

   was a customer or a person in con- fidential relation with the licensee. . . .

   * * *

   (d) Has been guilty of failure to account and deliver. . .any. . .

   deposit. . . .

   
   

9. The burden of proof in license revocation proceedings is solely on the Petitioner, Balino v. U.S. Department of Health and Rehabilitative Services, 348 So.2d 349, (Fla. 1st DCA 1977). The Petitioner is seeking to revoke, suspend or otherwise discipline the licensure status of the Respondents. Consequently these proceedings are definitely penal in nature as envisioned in State ex rel Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973).

   
   

10. The burden of proof required in matters such as this is that the relevant, material operative facts must be proven by clear and convincing evidence. See Hel Heifetz, d/b/a Key Wester Inn v. Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, 7 FALR 4651; (Fla. 1st DCA 1995). Both the Supreme Court of the United States and Florida Courts have

    held that procedural due process is involved in evidentiary standards of proof in license revocation proceedings. Robinson v. Department of Professional Regulation, Board of Dentistry, 447 So.2d 930 (Fla. 3rd DCA 1994) and Santowski

    v. Kramer, 102 S.Ct. 1333, 1396 (1991). In the Santowski decision the court stated:

    
    

    This court has mandated an intermediate standard of proof-- `clear and convincing'

    --evidence when the individual interests in a state proceeding are `particularly important' and more substantial than mere loss of money. Addington v. Texas, 441 U.S. 424, 99 S.Ct. 1909.

    
    

    Standards of proof, like other `procedural due process rules, are shaped by the risk of error in the truth finding process as applied to the generality of cases, not the rare exceptions.' Matthew v. Eldridge, 96 S.Ct. at 907.

    
    

11. Clearly the loss of a valuable professional license authorizing engagement in a livelihood such as the practice of the real estate profession is more than a "mere loss of money." Accordingly, the findings made herein must be predicated upon a showing of clear and convincing evidence. In view of this standard of proof and in view of the opinions in State v. Pattishall, 99 Fla 296, 126 So. 147 (1930) and Bach v. Board of Dentistry, 379 So.2d 34 (Fla. 1st DCA 1979) which held that statutes providing grounds for revocation of licenses must be strictly construed and strictly followed because of their penal nature, it must be concluded that the evidence adduced by the Petitioner is not sufficient to establish a finding that any of the misconduct charged was actually committed by these Respondents. Thus, none of the sought penalties are justified.

    
    

12. Indeed, in the instant case; there was absolutely no evidence presented by Petitioner to show that Respondent Berg actually engaged in any willful acts of fraud, misconduct, dishonest dealing by trick, etc. It was not shown that he misrepresented any facts to the putative seller with regard to the real estate transaction involved with the intent of deceiving him. See Tampa Farm Service, Inc. v. Cargill, Inc., 356 So.2d 347, (Fla. 2nd DCA 1978). The Petitioner has been unable to prove that either Respondent engaged in any kind of conduct proscribed by Section 475.25(1)(b) or (d) Florida Statutes.

    
    

13. The only evidence adduced leads to the conclusion that the seller's agent misunderstood or misinterpreted the contract to his principal Mr. Knetter, or else Mr. Knetter misinterpreted it himself, concerning their belief in the existence of an earnest money deposit in favor of his client. No substantial proof has been offered to show that either Respondent made any effort to defraud or trick the seller or the seller's agent herein. Although the facts presented at trial suggest some confusion on the part of the seller and his agent, it is clear from the evidence that this was not generated by any scheme, fraud, dishonest dealing or culpable negligence on the part of either Respondent. Respondent Berg's actions were effected in a good faith effort to purchase the subject real estate and were based upon his belief that items or things of value other than actual cash or checks could be the basis for consideration of a real estate sales contract, hence his proposal to pay a portion of his commission to the buyer in lieu of an earnest money deposit. Finally, Petitioner adduced no

evidence to indicate that Respondent O'Connor was even aware of the transaction, nor that broker Kevin O'Connor, who stood in his stead in operating the office at the time the subject events occurred, made any sort of misrepresentation or dishonest dealing or failed to account and deliver any monies due those entitled to them. There were certainly no documents or verbal representations which could have put Respondent O'Connor on notice that there were any monies he was required to account for and deliver to the seller, Consalvo, or any other panty.

RECOMMENDATION

Having considered the foregoing Findings of Fact and Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore

RECOMMENDED that the complaint filed by Petitioner against Respondents William Berg and Edward M. 0'Connor t/a O'Connor Realty, be DISMISSED in its entirety.

DONE and ENTERED this 5th day of February, 1986 in Tallahassee, Florida.

P. MICHAEL RUFF 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 5th day of February, 1986.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 84-0180 PETITIONER'S PROPOSED FINDINGS OF FACT:

1. Accepted.

2. Accepted.

3. Accepted.

4. Rejected as not comporting with the competent, substantial, credible evidence presented.

5. Accepted, but not in itself dispositive of the material issues presented.

6. Rejected as not comporting with the competent, substantial, credible evidence presented.

7. Accepted, but not dispositive of the material issues presented in itself.

8. Accepted, but not dispositive of the material issues presented.

9. Accepted, but not dispositive of the material issues presented.

RESPONDENT EDWARD O'CONNOR'S PROPOSED FINDINGS OF FACT:

1. Accepted.

2. Accepted.

3. Accepted.

4. Accepted.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Rejected as constituting a conclusion of law.

10. Accepted.

11. Rejected as constituting a conclusion of law.

12. Accepted.

13. Accepted.

14. Accepted.

15. Accepted.

RESPONDENT WILLIAM BERG'S PROPOSED FINDINGS OF FACT:

1. Accepted.

2. Accepted.

3. Accepted.

4. Accepted.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted.

11. Accepted.

12. Accepted.

13. Accepted.

14. Accepted.

15. Accepted.

COPIES FURNISHED:

James H. Gillis, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Elwood P. Safron, Esquire SAFRON, RODNEY & DZUPAK

306 E. Olympia

Punta Gorda, Florida 33950

Jesus Hevia, Esquire WOTITZKY, WOTITZKY, WILKINS, FROHLICH & JONES

201 West Marion Avenue Punta Gorda, Florida 33950

Harold Huff, Executive Director Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802

Fred Roche, Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Salvatore A. Carpino, Esquire General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Docket for Case No: 84-000180

Orders for Case No: 84-000180