vs. ) CASE NO. 87-0861
SHANKER S. AGARWAL and )
Respondent. )
Upon due notice, this cause came on for final formal hearing in Fort Lauderdale, Florida, on June 17, 1987, before Ella Jane P. Davis, the duly assigned Hearing Officer of the Division of Administrative Hearings.
For Petitioner: James R. Mitchell, Esquire
This cause arises upon a ten count Administrative Complaint, dated September 23, 1986 and filed with the Division of Administrative Hearings on February 25, 1987.
Notice and Order of Assignment was entered March 17, 1987. Among other information sought thereby was the parties preference for venue and hearing dates. Petitioner filed timely and appropriate response; no response was forthcoming from Respondent, but neither was the Notice and Order of Assignment returned by U.S. Mail. Notice of Hearing and Order of Prehearing Instructions duly issued on April 6, 1987. Apparently in response thereto, Respondent filed, on May 1, 1987, a letter demanding cancellation of the hearing and requesting copy of the Administrative Complaint. This document was treated as a Motion to Dismiss for Failure to Properly Serve Administrative Complaint and Petitioner was given opportunity to file a response thereto. Upon consideration of the Respondent's letter/motion and Petitioner's response thereto, an Order denying Respondent's Motion to Dismiss was entered May 19, 1987.
On June 5, 1987, Petitioner filed its Prehearing Statement. No Prehearing Statement was filed by Respondent. Rather than cancelling the hearing for failure of a pro se litigant to comply with the Order of Prehearing Instructions, the undersigned caused telephone calls to be made to the last known telephone number of Respondent to determine if his Prehearing Statement had been served but was late in arriving and to determine whether or not he still desired a formal proceeding pursuant to Section 120.57(1), Florida Statutes. It was determined that Respondent's telephone had been "disconnected."
Formal hearing on June 17, 1987, was delayed in commencing from 9:30 a.m. until 10:30 a.m. due to travel arrangements of the undersigned. However, upon arrival at the location scheduled for formal hearing, the undersigned inquired of persons who had been physically present since 8:00 a.m. and determined that neither Respondent nor anyone on his behalf had ever appeared at the location noticed for hearing.
Petitioner presented the oral testimony of Anthony Nicola, Jeanette Miller, David Miller, Zane Arrington, and Jeanette McEndree, and had admitted in evidence fifteen (15) exhibits.
No transcript of proceedings was provided. Petitioner's proposed findings of fact and conclusions of law were not filed within the time provided by law, but have been considered in preparation of this Recommended Order. Petitioner waived preparation of an appendix hereto for specific rulings on its proposed findings of fact pursuant to Section 120.59(2), Florida Statutes. To date, Respondent has filed no post-hearing proposals.
At all times pertinent to the charges, Respondent Shanker S. Agarwal was a real estate broker in the State of Florida, having been issued License No. 0312860. At all times pertinent to the charges, Respondent Agarwal was the owner, president, and sole qualifying broker for Respondent Super Realty, Inc., a corporation registered as a real estate broker, having been issued License No. 0231636.
The Respondents were properly and appropriately served with the Administrative Complaint herein and have had sufficient notice of formal proceedings in this cause, commensurate with the applicable statutes and rules governing disciplinary proceedings.
On or about March 13, 1985, Jeanette and David Miller tendered an offer to purchase real estate owned by the Veterans Administration (VA). On March 18, 1985, the VA accepted their offer.
Upon making the offer to purchase, Mrs. Miller entrusted to the Respondents an escrow deposit of $500. Upon the offer being accepted, and pursuant to the terms of the contract, Mrs. Miller entrusted an additional escrow deposit of $9,500 to the Respondents.
The transaction was scheduled for closing on June 26, 1985. The VA prepared a deed for closing which was sent to the Respondents.
At the scheduled date and time of closing, Mrs. Miller appeared prepared to pay by certified checks in her possession, the balance she understood would be due so as to effect the transfer of the new property.
However, prior to actually signing the closing papers at the scheduled date and time of closing, she discovered that an extra $6,000 had been added to the closing documents. That amount involved a mortgage with a balloon payment to Respondent Agarwal's wife and one or more mortgages or liens placed upon Mrs.
Miller's present home. The closing documents which would have been the best evidence of fraud were not offered at hearing but adequate evidence of their unavailability was made and I accept the unrefuted testimony of Mrs. Miller concerning what she read on the closing documents at the time in question. Mrs. Miller questioned these items in the closing package. Then questioned, Respondent Agarwal first stated that Mrs. Miller should sign and he would explain when they got back to his office. When she persisted, Agarwal flew into a rage. He berated and cursed Mrs. Miller in the presence of several third parties gathered for the closing. When he called her a "bitch," Mrs. Miller was reduced to tears. Mr. Agarwal then stormed out of the room in which the closing was to be conducted.
The closing was never consummated.
Although still anxious to purchase the house in question, the Millers, through an attorney, demanded from Respondent Agarwal the return of their
$10,000, which they understood had been placed in escrow. They sought the help of an attorney because they were unable to get any response from Agarwal despite numerous telephone calls. However, they did not ever demand the deed from Respondents.
On August 5, 1986, during the investigation of this matter by the Petitioner, Investigator Anthony Nicola served upon Respondent Agarwal's wife, Pushpa Agarwal, who was present at the offices of Respondent Super Realty, Inc., a subpoena intended for and addressed to "Mr. Shanker Agarwal, c/o Super Realty, Inc." This subpoena was a Department of Professional Regulation subpoena duces tecum number A-004804 issued in Department of Professional Regulation Case No. 0153241 requesting production of "Escrow Account records relative to $500.00 deposit received from Jeanette & David Miller on March 13, 1985." It required production of these papers at another address on August 6, 1986, at 9:00 a.m. The Respondents did not respond to the subpoena.
On or about October 17, 1985, the VA, upon learning of the aborted transaction, directed the Respondents to send $500 to the VA, along with a return of the deed. The VA further instructed the Respondents to return the balance of $9,500 to the Millers. The $500 demanded by the VA was in the nature of a penalty or forfeiture for having tied up the property for the intervening months since the closing had been scheduled.
Respondent Agarwal notified the VA on November 16, 1985 that because there were conflicting demands on the money, he could not turn over the money or deed to the VA until the Circuit Court resolved the demands. However, neither the VA nor the Millers are aware of any legal action instigated by Respondent. Mrs. Miller, however, had instituted suit against the Respondents to recover her
$10,000.
No notification of doubt or conflicting demands on deposit in escrow was received by the Florida Real Estate Commission from the Respondents pursuant to Section 475.25(1)(d), Florida Statutes.
To the date of formal hearing, the Respondents had never accounted for or delivered to either the VA or the Millers any part of the $10,000 nor the deed.
Further, the Respondents never advised the Millers that the VA had directed them how to disburse the funds. The Millers testified they had become aware of the disbursement recommended by the VA through calls placed to the VA by them and their lawyer, that such a disbursement would have been acceptable to them, and that such a disbursement by Respondents would have resolved any dispute they had with Respondents had that disbursement been made by Respondents.
Mrs. Miller testified that her lawsuit has been protracted and is yet to be resolved because Respondent Agarwal's outbursts of temper and assorted motions have resulted in rotation of three judges and in Mrs. Miller having to obtain new legal counsel, however he is aware that the VA and the Millers agree to the disbursement proposed by the VA. Respondent Agarwal also threatened to turn Mrs. Miller over to the Internal Revenue Service. Mrs. Miller does not know what this threat was intended to mean or what it was supposed to accomplish.
Petitioner elected to put on no evidence in support of Counts IX and X of the Administrative Complaint.
CONCLUSIONS OF LAW
The Respondents have been properly and appropriately served with the Administrative Complaint and have had sufficient notice of the formal proceedings in this cause, commensurate with the applicable statutes and rules governing disciplinary proceedings.
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Section 120.57(1), Florida Statutes.
Respondent Agarwal is charged in Count I of the Administrative Complaint with a violation of Section 475.25(1)(b), Florida Statutes; in Count III with a violation of Section 475.25(1)(d), Florida Statutes; in Count V with a violation of Rule 21V-14.12, Florida Administrative Code, and therefore violation of Sections 475.25(1)(e) and (k), Florida Statutes; in Count VII with a violation of Sections 475.42(1)(h) and 475.25(1)(a), Florida Statutes; and in Count X with a violation of Section 475.25(1)(k), Florida Statutes.
Respondent Super Realty, Inc., is charged in Count II of the Administrative Complaint with a violation of Section 475.25(1)(b), Florida Statutes; in Count IV with violation of Section 475.25(1)(d), Florida Statutes; in Count VI of the Administrative Complaint with violation of Rule 21V-14.12, Florida Administrative Code, and thereby violation of Sections 475.25(1)(e) and (k), Florida Statutes; and in Count VIII with violations of Section 475.41(1)(h) and 475.25(1)(a), Florida Statutes.
The foregoing violations are defined as follows: Section 475.25, Florida Statutes (1985):
The commission may deny any application for licensure, registration, or permit, or renewal thereof; may suspend a license or permit for a period not exceeding 10 years; may revoke a license or permit; may impose an
administrative fine not to exceed $1,000.00 for each count or separate offense; and may issue a reprimand, or any or all of the foregoing, if it finds that the licensee, permittee, or applicant:
Has violated any provision of S. 475.42 or of S. 455.227(1);
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 or any other state, nation; or territory; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public;
Has failed to account or deliver to any person, including a licensee under this chapter, at the time which has been agreed upon or is required by law or, in the absence of a fixed time, upon demand of the person entitled to such accounting and delivery, any personal property such as money, fund, deposit, check, draft, abstract of title, mortgage, conveyance, lease, or other document or thing of value ... which has come into his hands and which is not his property or which he is not in the law or equity entitled to retain under the circumstances ...
Has violated any of the provisions of this chapter or any lawful order or rule made or issued under the provisions of this chapter or chapter 455.
(k) Has failed, if a broker, to immediately place, upon receipt, any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as a broker in escrow with a title company, banking institution, or savings and loan association
located and doing business in this state, or to deposit such funds in a trust or escrow account maintained by him with some bank or savings and loan association located and doing business in this state, where the funds shall be kept until disbursement thereof is properly authorized; ... The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made;
Section 475.42(1)(h), Florida Statutes: No person shall fail or refuse to appear at the time and place designated in a subpoena issued with respect to a violation of this chapter, unless because of facts that are sufficient to excuse appearance in response to a subpoena from the circuit court ...
Rule 21V-14.12, Florida Administrative Code:
Broker's records. A broker who received a deposit such as defined herein shall preserve and make available to the department or its authorized representative, all deposit slips and statements of account rendered by the bank or trust company, or title company with trust powers, in which said deposit is placed, together with all agreements between the parties respecting the transaction, particularly the deposit, and all contracts, agreements, instructions and directions to or with the said depository and shall keep an accurate account in his books of each deposit transaction as well as an account in his books of each separate bank account wherein such trust funds have been deposited, together with a record of all withdrawals
there from, and shall support such accounts by such additional data as good accounting practice requires. All such books and accounts shall be subject to inspection by
the Department or its authorized representatives at all reasonable times during regular business hours. (Emphasis supplied)
The evidence clearly shows that the Respondents, in March, 1985, pursuant to a real estate sales contract, received in trust a total deposit of
$10,000 from Jeanette and David Miller. The transaction failed to close due to actions of Respondent Agarwal at the closing. Although the better evidence of attempted fraud by Agarwal would have been to have admitted the closing documents themselves, the evidence given orally by Mrs. Miller is unrefuted and constitutes adequate explanation for the absence and unavailability of the closing documents. Respondent's actions at the closing and with regard to this transaction as a whole demonstrate a total disregard of the general principles of the real estate license law and constitute concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, and breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes.
Further, subsequent to the attempted closing, the Respondents were directed by
the seller, the VA, to disburse $500 and the deed to VA and $9,500 to the Millers. This offer of resolution was never conveyed by Respondents to the Millers. By even the view most favorable to Respondents, they breached their duty to advise the Millers of the VA's instructions. Later, the Millers found out about the resolution proposed by the VA and made known to the Respondents that this arrangement was satisfactory to them. The Respondents never accounted for nor delivered the funds or the deed to either the buyers or the seller.
Under the circumstances of this case, the fact that a lawsuit is in progress does not impede proof of the charges against Respondent in this forum. Once all persons having any claim on the monies resolve their differences, the real estate licensee, absent an earned commission, has no legitimate right to impede settlement. The Millers were forced to initiate suit against Respondents so as to recover their money and Respondents cannot be permitted to use the courts as a smokescreen to evade their lawful duties. Respondents' failure to notify the Florida Real Estate Commission of doubt and failure to institute their own interpleader action render abundantly clear that they were fraudulently retaining the Millers' money.
However, the evidence does not demonstrate that the Respondents failed to honor a subpoena served on them by the Petitioner or that they failed to allow an inspection of their trust account records relative to this transaction. Section 475.42(1)(h), Florida Statutes, provides that if the facts are sufficient to excuse appearance in response to a subpoena from the Circuit Court, the failure to appear at the time and place designated in the subpoena may be excused. In this instance, the service of the subpoena for Shanker Agarwal, c/o Super Realty, Inc., was served upon his wife in the place of business of Super Realty, Inc. Mrs. Agarwal was an incorporator of the corporation but there is no proof she was an employee and she clearly is not a director or other officer. Had the service been effected upon Respondent Agarwal's wife at his usual place of abode, service would have been perfected upon Agarwal. See Section 48.031(1), Florida Statutes. If it had been established that Mrs. Agarwal was an officer, employee or agent of the corporation, Super Realty, Inc., or if it had been established that she was an agent designated to receive service of process on behalf of the corporation, then service would also have been perfected. See Sections 48.081 and 48.091, Florida Statutes. According to Investigator Nicola's testimony, and as indicated in his affidavit of "return" on the subpoena duces tecum (P-5)1 service was not perfected upon the person (Shanker Agarwal) and corporation (Super Realty) to whom the subpoena was directed, as provided by law.
Therefore, since the facts would be sufficient to excuse appearance in response to a subpoena from the Circuit Court, there has been no violation of Section 475.25(1)(a), Florida Statutes.
Further, although Rule 21V-14.12, Florida Administrative Code, requires that "all such books and accounts shall be subject to inspection by the department or its authorized representatives at all reasonable times during regular business hours," there is no clear and convincing evidence that Investigator Nicola requested to view the items named in the subpoena duces tecum when he served the subpoena at the Respondents' place of business on August 5, 1986. Apparently, Mr. Nicola relied upon the subpoena which required production for August 6, 1986, at another location. Therefore, there is not clear and convincing evidence of violations of Rule 21V-14.12, Florida Administrative Code, and Sections 475.25(1)(e) and (k), Florida Statutes, i.e., Respondents' failure to produce for inspection trust account records as required by rule.
Petitioner elected to put on no evidence in support of Counts IX and X of the Administrative Complaint. Therefore, these counts of the Administrative Complaint, which charge Respondents with having failed to maintain the $10,000 in an escrow account in violation of Section 475.25(1)(k), Florida Statutes, should be dismissed.
Upon the foregoing findings of fact and conclusions of law, it is determined that Respondents are guilty of Counts I and II, violations of Sections 475.25(1)(b), Florida Statutes, (willful fraud, etc.); and are guilty of Counts III and IV, violations of Section 475.25(1)(d), Florida Statutes, (failure to account or deliver a deposit). Respondents have not been proven guilty of Counts V and VI, violations of Rule 21V-14.12, Florida Administrative Code, and Sections 47S.2S(1)(e) and (k), Florida Statutes (failure to produce for inspection trust account records as required by rule), have not been proven guilty of Counts VII and VIII, Section 475.42(1)(h) and Section 475.25(1)(a), Florida Statutes (failure to appear at the time and place designated in a subpoena), and have not been proven guilty of Counts IX and X with regard to escrow accounts.
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Florida Real Estate Commission enter a Final Order
Complaint, exacting a penalty of revocation of both licenses therefore, and dismissing Counts V through X of the Administrative Complaint.
DONE AND RECOMMENDED this 28th day of July, 1987, in Tallahassee, Leon County, Florida.
ELLA JANE P. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 28th day of July, 1987.
James R. Mitchell, Esquire Division of Real Estate Post Office Box 1900 Orlando, Florida 32802
Shanker S. Agarwal
c/o Super Realty, Inc. 6147 Washington Street
Honorable Van B. Poole Secretary
Joseph A. Sole, Esquire General Counsel
