STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 86-3779

)

ANDREW DEGRAFFENREIDT and )

CIRCLE D. REALTY, INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on June 5, 1987 in Fort Lauderdale, Florida. The parties were afforded leave following receipt of the transcript to submit post-hearing memoranda but elected not to do so.

APPEARANCES

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

Division of Real Estate Florida Real Estate Commission

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801

For Respondent: Andrew DeGraffenreidt III, Esquire

1760 Northwest 27th Terrace Fort Lauderdale, Florida 33311

ISSUE PRESENTED

The issue presented for decision herein is whether or not the Respondents, Andrew DeGraffenreidt and Circle D. Realty, are guilty of conduct, set forth hereinafter in detail, amounting to fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction and have failed to account and deliver rental money all in violation of Subsections 475.25(1)(b)and (d), Florida Statutes.

FINDINGS OF FACT

Based upon my observation of the witnesses and their demeanor while testifying, documentary evidence received and entire record compiled herein, I hereby make the following relevant factual findings.

1. Petitioner, Department of Professional Regulation, Division of Real Estate (hereinafter sometimes called the Petitioner), is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute the Administrative Complaints pursuant to Chapters 20, 120, 455 and 475, Florida Statutes and rules promulgated pursuant thereto.

   
   

2. Respondent, Andrew DeGraffenreidt, is now and was at all times material, a licensed real estate broker having been issued license number 0320099.

   
   

3. Respondent, Circle D Realty, Inc., Is now and was at all times material hereto, a corporation licensed as a real estate broker in Florida having been issued license number 0221329.

   
   

4. At all times material hereto, Respondent DeGraffenreidt was an officer of, and was the qualifying broker for Respondent, Circle D Realty, Inc.

   
   

5. Respondents, in their capacity as a real estate broker, entered into an agreement with Emmett and Louis Anderson, during August, 1984 to handle the rental management of certain residential property owned by the Andersons located at 320 Northwest 20th Avenue, Fort Lauderdale, Florida. The management agreement was by its terms, effective for a period of one year beginning August 21, 1984 and ending August 22, 1985, and continuing from year to year until either party terminated the agreement by giving notice to the other party sixty

   (60) days prior to the end of any yearly renewal period.

   
   

6. The Andersons, as owners, granted Respondents, inter alia, the following authority:

   
   

   Full management and control of said property with authority to collect rents and other monies and securities from tenants, to negotiate leases and renewals thereof, to have minor repairs made and to purchase necessary supplies and to pay all bills and charge same to owner, to serve vacate notices upon tenants and to prosecute in the name of the owner, to hire, discharge and pay from owners' funds any and all employees necessary to the maintenance and operation of the building, and were clothed with such general authority and powers as maybe necessary or expeditious to carry out the spirit and intent of the management agreement with respect to the renting, management and operation of the property.

   
   

7. For such services, Respondents would receive 10 percent of gross rentals and other monies. Respondent was authorized to deduct from the owners' funds held by them, any amount due Respondent for any charges incurred on the owners' behalf.

8. At the time when Respondents entered into the management agreement with the Andersons, there were two outstanding mortgages on the subject property in favor of Associates Financial Services Company and California Federal of Florida, Inc. Both mortgages were delinquent at the time Respondents agreed to manage the Andersons' property.

   
   

9. When Respondent assumed management of the subject property, the tenants were paying monthly rent of $450.00, an amount insufficient to cover the outstanding mortgages. During some undetermined time during August 1984 and June, 1985, Respondent raised the rent from $450.00 to $600.00, an amount agreed to by the tenants who were desirous of purchasing the property.

   
   

10. The management agreement between Respondent and the Andersons was for management of the property and not one for the payment of the mortgages. However, during some unspecified period of time, Mrs. Emmett Anderson, by telephone, requested Respondent's office manager, Mary MacDonald, to mail the mortgage payments of $338.48 and $207.00 to the various mortgage companies. Ms. MacDonald agreed to accept Mrs. Anderson's request and have rent monies mailed directly from Respondent to the two financial institutions without consulting Respondent, DeGraffenreidt. Respondent DeGraffenreidt, upon learning of the verbal agreement with Mrs. Anderson and the office manager, MacDonald, informed Ms. MacDonald that she would have to assume the task of paying and mailing mortgage payments each month and he (DeGraffenreidt) would cash the rental check and give her money orders to be mailed and/or paid to the respective financial institutions.

    
    

11. As early as February, 1984, the mortgages were delinquent for the Andersons' property and both institutions were contemplating instituting foreclosure proceedings. (Respondent's Exhibit 2).

    
    

12. All written communications between the financial institutions concerning the delinquency were mailed to the Andersons who had relocated to Boston, Georgia.

    
    

13. Unbeknownst to Respondent DeGraffenreidt, the mortgage payment to California Federal was increased from $207.00 to $296.00 per month. California Federal refused one payment for $207.00 which had been sent by Respondent after the amount was increased to $296.00. Respondent DeGraffenreidt requested Anderson to advise him of the correct amount of the mortgage payment to be sent to California Federal. Mr. Anderson did not respond to this request. During October and November, 1985, Respondent DeGraffenreidt advised the Andersons that additional monies were needed from them to bring the mortgages current. Respondent DeGraffenreidt again telephoned the Andersons and advised them during early December, 1985 that he needed $1,000.00 to prevent California Federal from foreclosing on the mortgage. At that time, Mr. Anderson requested that the Respondents try to sell the property. Respondent DeGraffenreidt contacted some business associates and investors trying to arrange a sale for the Anderson property. However, no investors were interested based on the asking price and all potential buyers lost interest in the Andersons' property when they learned that the two outstanding mortgages exceeded the marketable value for the property.

    
    

14. During June and July, 1986, Respondent DeGraffenreidt attempted to reconcile the Anderson account and determined the exact amount that the Andersons were owed based on some returned payments which Circle D received from the financial institutions and which were placed in an escrow account.

    Respondent determined this amount to be approximately $557.35, which amount was tendered to the Andersons via a money order during the course of the hearing.

    
    

15. Respondents maintained a ledger which correctly showed the monies due and owing to the Andersons based on monies returned by the financial institutions.

    
    

16. The Andersons never provided Respondents a written account of any change in the mortgage payments.

    
    

17. On or about January, 1986, the Andersons notified the Johnsons (tenants) to pay the rent directly to the Andersons. The Andersons never advised the Respondents that they were terminating the management contract which required written notice from the Andersons.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Section 120.57(1), Florida Statutes.

    
    

19. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

    
    

20. The authority of the Petitioner is derived from Chapter 475, Florida Statutes.

    
    

21. Based on the foregoing facts, insufficient evidence was offered to establish that the Respondents Andrew DeGraffenreidt or Circle D Realty are 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.

    
    

22. Based on the foregoing facts, insufficient evidence was offered herein to establish that Respondents, Andrew DeGraffenreidt or Circle D Realty failed to account and deliver rental money based on the above-referenced conduct in violation of subsection 475.25(1)(d), Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Administrative Complaint filed herein be DISMISSED.

DONE and RECOMMENDED this 24th day of November, 1987, in Tallahassee, Florida.

JAMES E. BRADWELL

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of November, 1987.

COPIES FURNISHED:

Arthur R. Shell, Jr., Esquire Department of Professional Regulation - Division of

Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Andrew DeGraffenreidt and Circle D. Realty, Inc.

2123 Northwest Sixth Street Ft. Lauderdale, Florida 33311

Harold Huff, Executive Director Department of Professional Regulation, Division of Real Estate

400 West Robisnon Street Post Office Box 1900 Orlando, Florida

Tom Gallagher, Secretary

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

William O'Neill General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

Docket for Case No: 86-003779

Orders for Case No: 86-003779