STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF REAL ) ESTATE, )

)

Petitioner, )

)

v. ) CASE NO. 85-0735

) RODNEY G. GREEN and CHARTER ) REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on May 21, 1985, in Orlando, Florida.

APPEARANCES

For Petitioner: Arthur R. Shell, Jr., Esquire

Post Office Box 1900 Orlando, Florida 32802

For Respondents: Margaret A. Wharton, Esquire

Post Office Box 1172 Oviedo, Florida 32765

BACKGROUND

By administrative complaint filed on February 1, 1985, Petitioner, Department of Professional Regulation, Division of Real Estate, has charged that Respondents, Rodney G. Green and Charter Realty, Inc., both licensed real estate brokers, had violated various provisions within Chapter 475, Florida Statutes. Generally, Petitioner has alleged that in June, 1984, Respondents solicited and obtained a sales contract from certain prospective purchasers of property, that the purchasers provided a $20,000 earnest money deposit to be held in escrow for an

August 15, 1984 closing, that when the transaction did not close Respondents failed to return the deposit, and that they failed to do so until after the purchasers had filed a complaint with Petitioner. According to the administrative complaint, this conduct constitutes a violation of Subsections 475.25(1)(b), (d), and (k), Florida Statutes.

Respondents disputed the above allegations and requested a formal hearing pursuant to Subsection 120.57(1), Florida Statutes. The matter was referred to the Division of Administrative Hearings by Petitioner on March 28, 1985, with a request that a hearing officer be assigned to conduct a formal hearing. By notice of hearing dated Apri1 19, 1985, the final hearing was scheduled for May 21, 1985, in Orlando, Florida.

At final hearing Petitioner presented the testimony of Hassan Soltani and offered Petitioner's exhibits 1-3. All were received in evidence. Respondent Green testified on his own behalf and presented the testimony of Joseph C. Regner.

Respondents also offered Respondents' exhibits 1 and 2 which were received in evidence.

The transcript of hearing was filed on June 17, 1985.

Proposed findings of fact and conclusions of law were filed by Respondents on June 25, 1985. None were filed by Petitioner. A ruling on each proposed finding of fact has been made either directly or indirectly in this Recommended Order, except where such proposed findings of fact have been rejected as subordinate, cumulative, immaterial or unnecessary.

At issue herein is whether Respondents' licenses as real estate brokers should be disciplined for the alleged violations set forth in the administrative complaint.

FINDINGS OF FACT

1. At all times relevant hereto, Respondent, Rodney G. Green, held real estate broker license number 0113068 issued by Petitioner, Department of Professional Regulation, Division of Real Estate (Division). Respondent, Charter Realty, Inc. (Charter), is a corporation licensed as a broker and is the holder of license number 0224926 also issued by Petitioner. When the events herein occurred, Green was the sole qualifying broker and officer of Charter Realty, Inc. The offices of Charter are located at 800 Westwood Square, Suite C, Oviedo, Florida.

2. Respondent Green is also the owner of Rodney G. Green, Inc., a building and development company. Its office is located in the same building as Charter, where they share a common reception area. Each entity has a separate telephone number.

   
   

3. Around June, 1984, Rodney Green was attempting to sell seven commercial lots known as Green's Commercial Addition to Oviedo located in Oviedo, Florida. Green was the owner of the seven lots. He had a large For Sale sign on the property which carried the name and telephone number of both Charter and Rodney

   G. Green, Inc. Green had an understanding with associates in his real estate office that if a prospective buyer called on the Charter telephone line concerning the lots, he would give a sales commission to the associate who answered the call if a sale materialized. Otherwise, he intended to sell the lots through his development company and not through the real estate firm.

   
   

4. Hassan Soltani, an electrical engineer, wished to buy a commercially zoned lot in Oviedo on which to construct a building for his newly formed corporation, Bio-Med Engineering, Inc. After seeing Green's property, he telephoned the offices of Charter Realty, Inc. Green's wife answered the call, advised him that Green personally owned the property, that Charter was not involved in the transaction, and that it would be sold by Rodney G. Green, Inc. rather than Charter. She referred him to Green who reiterated this same advice to Soltani.

   
   

5. On or about June 21, 1985, Soltani executed a contract to purchase Lot 7 of Green's Commercial Addition. The contract provided for a $35,000 sales price, a $1,750 deposit, and a closing date of July 27, 1984. When he executed the contract, Soltani advised Green that the lot would be purchased by a partnership made up of Soltani, Claire M. Marachel and John T. Tobin, Jr., the latter two employees at Soltani's firm. Soltani also told Green that the partnership had $20,000 cash counting the $1,750 deposit, and would obtain the remaining $15,000 prior to closing by selling a $20,000 stock certificate held by Marachel. Based on this representation, Green did not provide any contingency clauses in the contract for borrower financing. The only contingency clause was one requiring Green to "fill Northeast corner of lot to within one foot of existing grade." It is noted that Green accepted the Soltani offer over that of another buyer because no financing would be required on the Soltani contract.

6. About a week before closing, Soltani telephoned Green to inquire when the lot would be filled. Green thereafter had the lot filled in accordance with the contract. On July 27, the date of closing, Soltani advised Green that Marachel had had difficulty in getting the stock certificate transferred to her from the stock broker, and they needed an extension of time to close on the contract. Green did not wish to extend the closing date because he had a closing on other property across the street and needed cash immediately. Soltani offered to increase the cash deposit to $20,000 which could be used by Green to close on the other property in return for an extension of the closing date to August 15, 1984. Soltani also agreed to seek bank financing from a local bank recommended by Green. Green accepted these terms and all parties executed an amendment to the contract extending the closing date to August 15, 1984. Soltani also gave Green an additional $18,250 as deposit on the land. The deposit was placed in the bank account of Rodney G. Green, Inc. and was temporarily used by Green to close on the other property. There was still no contingency clause in the contract for buyers' financing.

7. In early August, Green made Soltani and his partners an appointment with a loan officer at a local bank. The loan officer agreed to loan Soltani $15,000 conditioned upon all three partners filing financial statements and a partnership agreement, and Marachel liquidating her stock and purchasing a

   $20,000 certificate of deposit at Barnett. When the August 15 deadline was not met, Green orally agreed to another extension of time on the closing date since Soltani continued to express an interest in purchasing the property. Around the first September, Soltani told Green he was not going to furnish the bank with the requested documents and asked if Green would provide owner financing on the $15,000 balance. Green responded he could not.

   
   

8. At a later date, Soltani called Green's office twice requesting to talk to Green and to obtain a refund of his deposit. Green's wife answered both times and told Soltani he would have to speak to Green. Green attempted to return the calls but was unsuccessful in reaching Soltani. Soltani then sent Green a letter on October 4, 1984 demanding a return of his deposit no later than October 11, 1984. He also filed a complaint with Petitioner on or about October 18, 1984. Before Green could respond to the letter, an investigator from Petitioner's office visited Green for the purpose of auditing his escrow account. The investigator found that the $20,000 deposit was not in Charter's escrow account and advised Green to place it in the account at once. Green did so on October 23, 1984, and two days later refunded the entire deposit to Soltani, Marachel and Tobin. He did so to avoid "problems" with Petitioner, but considered Soltani to have breached the contract by failing to close on the specified closing date. The instant disciplinary action was instituted a few months later.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.

   
   

10. In conjunction with the Soltani transaction Respondents are charged with 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 (Count I), having failed to notify Petitioner of having received conflicting demands for the delivery of the $20,000 deposit in violation of Subsection

    475.25(1)(d), Florida Statutes (Count II), and failing to immediately place and maintain the $20,000 deposit in an escrow account until disbursement thereof was properly authorized, in violation of Subsection 475.25(1)(k), Florida Statutes (Count III).

    
    

11. It is well settled that penal statutes such as Section

    475.25 must be strictly be construed against the agency and in favor of the licensee being subjected to disciplinary action. Bach v. Fla. State Board of Dentistry, 378 So. 2d 34 (Fla. 1st DCA 1980). Secondly, it is undisputed that the transaction herein involved the broker's own property, and he was not acting in the capacity of a licensee when the transaction occurred. With these considerations in mind, the evidence will be reviewed to determine whether the facts establish a violation of the cited statutes.

    
    

12. First, it is alleged that Green and Charter were essentially dishonest in a business transaction within the purview of Subsection 475.25(1)(b), Florida Statutes. But it cannot be held that Green or Charter are "guilty of dishonesty' for refusing to pay back a sum of money which in good faith (they) claim (they) are entitled to retain." Hogg v. Real Estate Commission, 54 Cal. App. 2d 712, 129 P.2d 709 (1942) cited with approval in Fleishman v. Department of Professional Regulation,

    441 So. 2d 1121 (Fla. 3d DCA 1983). Therefore, the charge in Count I must fail.

    
    

13. In Count II, Petitioner charges that Respondents failed to notify Petitioner of having received conflicting demands of escrowed monies as required by Subsection 475.25(1)(d), Florida Statutes. However, in order for this statute to apply, the licensee must be holding a deposit as a third party not involved in the transaction himself, Smith v. Macbeth, 119 Fla. 796, 161 So. 721 (1935) Fleishman, supra at 1123. Since this essential element is missing, the allegation in Count II must also fail.

    
    

14. Finally, the agency contends that Green and Charter failed to immediately deposit the $20,000 cash deposit in their escrow account as required by Subsection 475.25(1)(k), Florida Statutes. This subsection applies whenever a licensee receives monies "entrusted to him by any person dealing with him as a broker. . . ." Because Green was acting on his' own behalf, and not as broker, there can be no violation of the foregoing statute.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the administrative complaint herein be DISMISSED, with prejudice.

DONE and ORDERED this 3rd day of July, 1985, in Tallahassee, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, FL 32301

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of July, 1985.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esq.

P. O. Box 1900 Orlando, FL 32802

Margaret A. Wharton, Esq.

P. O. Box 1172 Oviedo, FL 32765

Docket for Case No: 85-000735

Orders for Case No: 85-000735