vs. ) CASE NO. 86-4442
) JON A. McVETY and LEE COUNTY ) REALTY, INC., )
Respondents. )
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 March 19, 1987 at Fort Myers, Florida.
For Petitioner: James R. Mitchell, Esquire
For Respondents: Terry L. Bowersock, Esquire
By Administrative Complaint filed October 1, 1986, the Department of Professional Regulation, Division of Real Estate, Petitioner, seeks to revoke, suspend or otherwise discipline the license of Jon A. McVety and Lee County Realty, Inc., as a real estate salesman and corporate real estate broker, respectively. As grounds therefore, it is alleged that McVety is guilty of fraud, misrepresentation, et cetera, in the handling of a deposit made as a down payment on a real estate purchase involving Frederick C. Huth as buyer and Larry and June Hildreth as sellers; that he disbursed escrowed funds to one other than the person to whom such funds should have been disbursed; and that he acted as the broker without a license. At the hearing, Petitioner called two witnesses, Respondent testified in his own behalf, and 11 exhibits were admitted into evidence. Proposed findings have been submitted by the Petitioner. Treatment accorded those proposed findings is included in the appendix attached hereto end made a part hereof.
At all times relevant hereto, Jon A. McVety was registered with the Florida Real Estate Commission as a salesman affiliated with Lee County Realty, Inc., a corporate broker. Frederick C. Huth was the qualifying broker for Lee County Realty, Inc.
On March 26, 1986, Frederick C. Huth entered into a contract to purchase a residence in Fort Myers Beach from Larry and June Hildreth, the owners of the residence. The contract provided for a deposit of $500 to be held in escrow by Lee County Realty, Inc., and was contingent upon the buyer, Huth, obtaining a firm commitment for a first mortgage loan within 30 days for $37,000 with interest at 11 percent and payments amortized over a 30-year period. (Exhibit 5)
For his $500 down payment, Huth, unbeknownst to the sellers, signed a promissory note for $500. Huth had formerly owned and operated a motel on Fort Myers Beach which went bankrupt. Huth called several lending institutions to obtain financing pursuant to the contract, but when he disclosed his bankruptcy, he was disapproved. He never submitted a formal application for a loan.
By letter dated April 23, 1986, Huth advised the Hildreths that he was unable to obtain financing pursuant to the contract and would be unable to close the deal. At this time, Huth made no reference to his deposit.
Between March 26 and Huth's resignation, Huth showed McVety the promissory note he had signed. In response to the question asking if he knew what McVety did with the note, Huth answered (TR p. 12):
Well, we couldn't put a note in an escrow account so we really didn't know what to do with it, to tell you the truth. So we put it in his desk drawer, as I remember.
With regard to disposition of the promissory note, Huth later testified at TR p. 26, "I think I--my words were something to the effect, I don't know what to do with this. Would you like to stick it in your drawer?"
By letter to McVety dated April 22, 1986, which was not received by McVety until April 30, Huth resigned as broker for Lee County Realty, Inc., and the company ceased doing business until a new qualifying broker was obtained. At Huth's request and upon receipt of Huth's resignation, McVety returned the promissory note to Buth. Huth advised McVety that he had been unable to obtain financing for the purchase and, before any other demand was made, McVety returned the promissory note to Huth. Prior to his resignation, Huth had given McVety no other instructions regarding the promissory note, nor had he made McVety aware of the contract between him and Hildreth.
Subsequent to Huth's departure, a certified letter addressed to Huth at Lee County Realty from Hildreth, dated May 3, 1986, was received and opened by McVety (Exhibit 7). This letter demanded the $500 down payment on the contract be forfeited and paid to the sellers. At this time the promissory note was no longer in the possession of McVety or Lee County Realty.
By letter dated May 7, 1986 (Exhibit 8), McVety, as registered owner of Lee County Realty, Inc., responded to Hildreth that the $500 deposit had been returned to Huth when the transaction did not close, that Huth was no longer associated with Lee County Realty, and that further inquiry should be addressed to Huth at the latter's residence.
When the $500 deposit was not forwarded, June Hildreth apparently filed a formal complaint with the Real Estate Commission as she had threatened to do in her letter of May 3, 1986 (Exhibit 7). Following an investigation, Huth
voluntarily surrendered his license for revocation and on August 25, 1986, a final order was entered revoking Huth's license as a broker (Exhibit 10).
This action did not result in Hildreth receiving the $500 deposit she had demanded and no evidence was presented regarding any action taken to have this $500 given to her. However, on September 23, 1986, these charges against McVety were signed, they were filed on October 1, 1986, and these proceedings commenced.
McVety's only connection with the controversy between Huth and Hildreth is that at the time the contract was signed, he owned all of the stock in Lee County Realty and he wrote the Hildreths one letter advising them Huth was no longer associated with Lee County Realty. The evidence is uncontradicted that McVety was unaware of the transaction until Huth resigned as broker and the real estate business was forced to close until a new qualifying broker was obtained. That this business was closed is confirmed by Hildreth's testimony that when she called the realty office after Huth's departure, only an answering machine responded with a recorded message.
While he was active broker for Lee County Realty, Inc., Huth was also president and secretary of the company (Exhibit 2). No evidence was submitted suggesting that Huth was other than the chief operating officer of the company while he served as active broker, that McVety had knowledge of the contract (Exhibit 5) before Huth's resignation, or even saw a copy of this contract before receiving a copy attached to the Administrative Complaint in October 1986.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.
In Count I, the Respondents are charged with making false and incomplete statements to the Hildreths in the May 7, 1986, letter informing them that Huth had left in escrow $500 which had been returned to him. At this time, the corporate broker was inactive as it had no active broker and did no business. Accordingly, since a corporate broker can act only through its active broker, there is no basis for this charge against the corporate broker.
Although McVety owned the stock of the corporate broker, this did not give him any authority to direct the activities of the corporate broker and no evidence was submitted that he did so. Responding to Hildreth's letter to tell them that Huth was no longer associated with Lee County Realty does not constitute acting as a broker.
At the time the promissory note was returned to Huth, a demand for this escrow deposit had not been made by Hildreth. Section 479.25(1)(d), Florida Statutes, which McVety is here charged with violating, provides in pertinent part:
However...if conflicting demands have been made upon him for the escrowed property, which property he still maintains in his escrow or trust account, the licensee shall promptly notify the Commission of such doubts... (emphasis supplied)
At the time Hildreth demanded the $500 "escrow deposit," the promissory note was no longer in McVety's possession (and was never placed in the firm's escrow account by the broker who executed the note). Accordingly, no violation of Section 479.25(1)(d) was shown.
A certified letter had been delivered to the real estate office and McVety opened it. Whether the statement in his response to this letter that Huth left in escrow $500 with the realty office, when McVety knew that deposit consisted of a promissory note which cannot be deposited in the firm's escrow account, amounts to the type of fraud contemplated by Section 475.25(1)(b), Florida Statutes, is another matter.
This section providing that real estate registrations may be revoked or suspended upon finding that registrant has been guilty of fraud or breach of trust requires nothing more of real estate dealer or broker than honest, open and fair relationship with his client, such as is normally expected of businessmen of sound integrity. Rivard v. McCoy, 212 So.2d 672 (Fla. 1st OCA 1968).
Here the Hildreths were not clients of McVety and he owed them no duty other than honesty. In responding to Hildreth's letter, McVety was not dishonest in saying the escrowed funds had been returned to the buyer. The culprit in this transaction, if one existed, was Huth, whose license has been revoked by the Commission.
Petitioner has the burden of proof. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977). The evidence connecting Respondent to the Huth-Hildreth transaction consisted solely of McVety "allowing" his broker to place the promissory note in his desk for a few days before it was returned to Huth and in replying to Hildreth's letter. In neither of these situations was Respondent acting as a real estate broker, nor did his actions constitute fraud, dishonesty, or breach of trust.
Absent clear legislative authorization to the contrary, violations of mere contractual rights are concerns only of the courts, and may not be enforced by disciplinary action undertaken by a regulatory agency. Fleischman v. Department of Professional Regulations, 441 So.2d 1121 (Fla. 3rd DCA 1983) rev. den. 451 So.2d 847.
From the foregoing, it is concluded that Petitioner has failed to show by competent evidence that Jon A. McVety acted as a real estate broker; that he was guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction; that he failed to deliver an escrow account to one entitled thereto; or failed to notify the Commission of conflicting demands while the escrow deposit was in his possession. It is
RECOMMENDED that all charges preferred against Jon A. McVety be dismissed.
ENTERED this 7th day of May, 1987, in Tallahassee, Leon County, Florida.
K. N. AYERS Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1987.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-4442
James R. Mitchell, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32802
Terry L. Bowersock, Esquire 8833 Sommerset Boulevard Fort Myers, Florida 33907
