STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 87-2105

)

RICHARD B. WATSON, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter came on for hearing in Shalimar, Florida, before Robert T. Benton, II, Hearing Officer of the Division of Administrative Hearings, on September 29, 1987. The Division of Administrative Hearings received the transcript of proceedings on October 28, 1987. The parties' proposed recommended orders contain proposed findings of fact which are addressed by number in the attached appendix.

The parties are represented by counsel:

For Petitioner: James R. Mitchell, Esquire

400 West Robinson Orlando, Florida 32801

For Respondent: Howard Hadley, Esquire

827 Deltona Boulevard

Deltona, Florida 32725

By administrative complaint dated April 20, 1987, petitioner Department of Professional Regulation (DPR) alleged that respondent Richard B. Watson "is now and was at all times material . . . a licensed real estate broker-salesman . . . in the employ of Liz Caldwell Realty, Inc."; and that, with respect to each of

16 of 17 purchase agreements, respondent "signed . . as a witness to the execution of the purchase agreements by both the purchaser and the seller . . . [and] signed the [seventeenth] purchase agreement as a witness to the execution of the purchase agreement by the seller . . . [even though he] did not see the purchasers or the seller execute the 17 purchase agreements"; that the purchase agreements were "false documents in that the signature of each purchaser was forged"; that it "was well known to the Respondent at the time the Respondent affixed his signature . . as a witness" that the "individuals reflected as purchasers never did sign the agreements or kn[o]w of them"; that respondent "knew or should have known that the purchase agreements were to be presented to a lender in connection with an application for a construction loan on behalf of the seller"; and that, for these reasons, respondent "is guilty of fraud, misrepresentation, concealment, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction all in violation of Subsection 475.25(1)(b), Florida Statutes."

ISSUE

Whether petitioner should take disciplinary action against respondent for the reasons alleged in the administrative complaint?

FINDINGS OF FACT

1. The parties stipulated that respondent Richard B. Watson holds a license issued by petitioner and has since 1976. He holds license No. 0163723, and has, at all pertinent times, worked as a broker-salesman for Liz Caldwell Realty, Inc., 126- 128 Eglin Parkway Southeast in Fort Walton Beach, Florida. Petitioner's Exhibit No. 1.

   
   

2. On June 13, 1983, Lloyd H. Waldorff executed an employment contract under which Liz Caldwell Realty, Inc. was to have the exclusive right to sell the 25 units Waldorff Properties of Ft. Walton proposed to build as "phase two" of its La Mar West Townhouse Project in Mary Ester, Florida. Petitioner's Exhibit No. 6. Nobody signed the written agreement on behalf of the broker, but Mr. Waldorff's testimony that Ms. Caldwell or somebody in the agency "accepted" it was uncontradicted, and fully consonant with the other evidence adduced.

   
   

3. Mr. Waldorff or his organization needed agreements from prospective buyers to purchase units when built, in order to induce a lender to lend money for construction of phase two. One Saturday, probably in mid-July of 1983, Ms. Caldwell presented him with 18 such agreements.

   
   

4. It seemed peculiar to Mr. Waldorff, getting 18 purchase agreements at once; and he was also struck by the number of Californians and other non- Floridians among the putative purchasers. But he had nevertheless signed the agreements himself before Ms. Caldwell gave them to Mr. Watson for attestation; and he later furnished all of the purchase agreements to Security Federal Savings and Loan Association of Panama City in support of an eventually successful application for a $1,100,000.00 construction loan. (T.90)

   
   

5. Mr. Waldorff signed the purchase agreements in a back room within the Liz Caldwell Realty, Inc. offices. At hearing he remembered that a woman was present. He did not recall respondent's being there.

   
   

6. Seventeen of the 18 agreements furnished the lender were purportedly signed by persons to whose signatures, except in one instance, respondent Watson attested. Petitioner's Exhibit No. 4. On 16 of the 17 purchase agreements on which he signed as a witness to putative purchasers' signatures, respondent also signed as a witness to Mr. Waldorff's signature in a blank provided under the heading "signed in the presence of:". Petitioner's Exhibit No. 4. Respondent was aware at the time that Mr. Waldorff, whom he considers a friend, needed such agreements in order to obtain financing.

   
   

7. As time for closing on the purchase agreements approached, Mr. Waldorff testified, he became suspicious, and asked Ms. Caldwell to see her escrow account statements, but she put him off. Eventually he asked her if the purchase agreements were "bogus," and she answered by nodding affirmatively. It was at this point, Mr. Waldorff said, that he notified the lending institution of their falsity, and asked for an extension of time in which to repay the construction loan. But the weight of the evidence established that the purchase agreements were shams from their inception and that Mr. Waldorff knew it before he obtained the loans.

8. On September 9, 1985, Paul R. Bratton, III, an investigator for DPR, asked Mr. Watson about the purchase, agreements on which he had witnessed purported parties' signatures. In this interview, Mr. Watson said, with respect to some of the contracts which he had signed as a witness, "that he did not see the buyers or the sellers sign the contract." (T.63)

   
   

9. In a deposition he gave in the course of related civil litigation, respondent Watson testified that it was "(p)retty much," Petitioner's Exhibit No. 5, p.10, "standard procedure" for him to witness signatures which he had not seen being affixed. In response to the question, "Does that mean also you wouldn't know whether these people exist in real life or not?", Mr. Watson answered, "It could be. ..." Id. as 15.

   
   

10. Mr. Waldorff told Mr. Watson he was going to use the 18 purchase agreements, all but one of which respondent had signed as a witness, to secure a construction loan even though they were "bogus." Petitioner's Exhibit No. 5. This conversation antedated the loan closing. Id.

    
    

    CONCLUSIONS OF LAW

    
    

11. In response to petitioner's administrative complaint, respondent Watson requested a formal administrative hearing, and the Department transmitted his request to the Division of Administrative Hearings, in accordance with Section 120.57(1)(b)3., Florida Statutes. (1986 Supp.).

    
    

12. Petitioner is authorized to "suspend a license or permit for a period not exceeding 10 years... revoke a license or permit...impose an administrative fine not to exceed $1,000 for each count or separate offense ... [or] issue a reprimand," Section 475.25(1), Florida Statutes (1985) whenever a licensee like respondent is shown to have

    
    

    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....

    Section 475.25(1)(b), Florida Statutes (1985).

    
    

    The administrative complaint in the present case charges that respondent Watson violated this provision because he knew or should have known that the falsified purchase agreements he signed as a witness were "to be presented to a lender in connection with an application for a construction loan on behalf of the seller."

    
    

13. License revocation proceedings have been said to be "'penal' in nature." State ex rel. Vining v. Florida Real Estate Commission, 281 So.2d 487, 491 (Fla. 1973); Kozerowitz v. Florida Real Estate Commission, 289 So.2d

    391 (Fla. 1974); Bach v. Florida State Board of Dentistry, 378 So.2d 34 (Fla. 1st DCA 1979)(reh. den. 1980). Strict procedural protections apply, and the prosecuting agency's burden is to prove its case clearly and convincingly. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). See Addington v. Texas, 441

    U.S. 426 (1979); Ferris v. Austin, 487 So.2d 1163 (Fla. 5th DCA 1986); Anheuser- Busch, Inc. v. Department of Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981); Walker v. State Board of Optometry, 322 So.2d 612 (Fla. 3rd DCA 1975); Reid v. Florida Real Estate Commission, 188 So.2d 846, 851 (Fla. 2d DCA 1966).

    A licensee's breach of duty justifies revocation only if the duty has a "substantial basis," Bowling v. Department of Insurance, 394 So.2d 165, 173 (Fla. 1st DCA 1981) in the evidence, unless applicable statutes and rules create a clear duty, which the evidence shows has been breached.

    
    

14. The evidence did not clearly and convincingly establish the precise point at which Mr. Watson was bluntly told that the purchase agreements he signed as a witness were "bogus." But the evidence left no doubt that he knew they were falsifications before they were used to induce the construction loan; and that he knew beforehand that Mr. Waldorff intended to use them for that purpose. This proof establishes a violation of the statute.

    
    

15. Respondent contends that he has not been proven guilty of civil fraud because there has been no proof of respondent's "specific intent" to defraud the lender. He also argues that "[w]itnesses are not needed or required on contracts for the sale and purchase of real property."

    
    

16. Assuming arguendo the validity of both of these contentions, the evidence nevertheless showed that respondent, in witnessing signatures he had not seen being made, misrepresented the signatures of the purchasers as genuine; that the validity of the contracts hinged on the genuineness of these signatures; and that respondent knew a lender would be told the purchase agreements were valid, and be asked for money on the strength of the contracts. Even if his conduct had not been culpable at the time he signed as a witness, respondent was guilty of "concealment ... dishonest dealing ... [or] culpable negligence" when, having been told the purchase agreements were "bogus," and knowing of their intended use to induce a loan, he remained silent.

It is, accordingly, RECOMMENDED:

That petitioner revoke respondent's license as a real estate broker- salesman.

DONE AND ENTERED this 2nd day of December, 1987, in Tallahassee, Florida.

ROBERT T. BENTON, II

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 2nd day of December, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-2105

Petitioner's proposed findings of fact Nos. 1, 2, 5, 8, 9, 12 have been adopted, in substance, as supported by the weight of the evidence, insofar as relevant.

With respect to petitioner's proposed finding of fact No. 3, see paragraph two of the findings of fact in the recommended order.

Petitioner's proposed finding of fact No. 4 has been adopted, in substance, except that more than 17 persons signed as purchasers.

With respect to petitioner's proposed finding of fact No. 6 and 7, see paragraph six of the finding of fact in the recommended order.

Petitioner's proposed finding of fact No. 10 has been adopted, in substance, except that the evidence did not establish whether the purported purchasers ever learned of the agreements.

With respect to petitioner's proposed finding No. 11, the evidence showed that Watson had good reason to know that the purchase agreements were shams when he signed them, but it is not clear when, in relation to his signing as a witness, he was told they were "bogus."

Respondent's proposed finding of fact Nos. 1, 2, 4, 7, 9, 11 have been adopted, in substance, insofar as relevant.

With respect to respondent's proposed finding of fact No. 3, his broker told him to sign but he did not have "every reason to believe...that the parties had signed the document." To the contrary, he had good reason to believe the purchasers had not.

Respondent's proposed finding of fact Nos. 5 and 6 are rejected as against the weight of the evidence.

Respondent's proposed finding of fact No. 8 has been adopted only to the extent that "respondent was not really concerned about being a witness on these contracts without personally seeing all [or any of] the people sign."

With respect to respondent's proposed finding of fact No. 10, whatever Mr. Waldorff's testimony, respondent himself conceded he knew why the contracts were needed.

With respect to respondent's proposed finding of fact No. 12, respondent was evasive and afflicted by strange memory losses in answering investigators' questions as, indeed, he was at hearing.

COPIES FURNISHED:

James R. Mitchell, Esquire

400 West Robinson Orlando, Florida 32801

Howard Hadley, Esquire 827 Deltona Boulevard

Deltona, Florida 32725

Darlene F. Keller, Acting Director

Department of Professional Regulation

400 West Robinson Post Office Box 1900

Orlando, Florida 32801

Tom Gallagher, Secretary Department of Professional

Regulation

130 North Monroe Street Tallahassee, Florida 323990750

William O'Neil General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32399-0750

Docket for Case No: 87-002105

Orders for Case No: 87-002105