STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASE NO. 87-4631

)

NAOMI N. RADCLIFF, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing in the above-styled matter was held on May 16, 1988, in Fort Pierce, Florida, before Joyous Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Department of Professional Regulation, Division of Real Estate

400 West Robinson Street Orlando, Florida 32802

For Respondent: No Appearance

BACKGROUND AND PROCEDURAL MATTERS

This cause began on August 4, 1987, when the Department of Professional Regulation (Department) filed an Administrative Complaint against Respondent. The ten count Administrative Complaint alleged Respondent to be guilty of the following described misconduct:

Count I: Fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction all in violation of Subsection 475.25(1)(b), Florida Statutes.

Count II: Having failed to maintain trust funds in her real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(k), Florida Statutes.

Count III: Having failed to account and deliver a deposit in violation of Subsection 475.25(1)(d), Florida Statutes

Count IV: Failed to make records available for inspection to an authorized representative in violation of Rule 21V-14.12, Florida Administrative Code and therefore in violation of Subsection 475.25(1)(e), Florida Statutes.

Count V: Having failed to maintain trust funds in her real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(k), Florida Statutes.

Count VI: Fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction all in violation of Subsection 475.25(1)(b), Florida Statutes.

Count VII: Having failed to account and deliver a deposit in violation of Subsection 475.25(1)(d), Florida Statutes.

Count VIII: Having failed to maintain trust funds in her real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(k), Florida Statutes.

Count IX: Fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence and breach of trust in a business transaction all in violation of Subsection 475.25(1)(b), Florida Statutes.

Count X: Having failed to maintain trust funds in her real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Subsection 475.25(1)(k), Florida Statutes.

On October 16, 1987, Respondent requested an administrative hearing and the case was forwarded to the Division of Administrative Hearings for formal proceedings.

At the hearing, Petitioner presented the testimony of the following witnesses: Randy Mangold; Catherine Prince; Joel Weltz; Larry Whitten; Alyssa Maloy; Garrison Dundas; and Susan Meitner. Petitioner's exhibits numbered 1, 2, 3, 4, 6, 7, 8, 9, 10, 11, and 12 were admitted into evidence. Respondent did not appear at the hearing and no evidence was offered in her behalf.

The transcript of the proceedings was filed on June 6, 1988.

After the hearing, Petitioner filed a proposed recommended order. It has been carefully considered in the preparation of this Recommended Order and specific rulings on the proposed findings of fact are included in the attached Appendix.

ISSUE

The central issue in this case is whether Respondent is guilty of the violations alleged in the Administrative Complaint; and, if so, what penalty should be imposed.

FINDINGS OF FACT

Based upon the testimony of the witnesses and the documentary evidence received at the hearing, I make the following findings of fact:

1. Respondent, Naomi N. Radcliff, is licensed in Florida as a real estate broker (license No. 0369173) and has been at all times material to the Administrative Complaint.

   
   

2. On December 2, 1987, Respondent submitted a Request for License or Change of Status form which sought to cancel the license. Thereafter, the Department reclassified Respondent as an inactive broker.

   
   

3. In July, 1986, Randy Mangold and his wife entered into a contract to purchase real property located in Indian River Estates. Naomi Radcliff was the real estate agent who handled the transaction on behalf of the Mangolds.

   
   

4. The Mangolds' contract provided for occupancy prior to closing with a security deposit for the rental in the amount of $1500. This amount was paid to Respondent. At closing the $1500 security deposit was to be applied to the buyers' closing costs.

   
   

5. The Mangolds rented the home for a year and attempted to obtain financing for the purchase. When their mortgage application was denied, they elected to vacate the property.

   
   

6. After they vacated the property, the Mangolds requested the return of the $1500 security deposit. Demands were made on Respondent who refused to return the deposit despite the fact that the Mangolds had fully paid all rents owed and had left the house in good condition.

   
   

7. Finally, the Mangolds sued Respondent in the St. Lucie County Court and obtained a judgment for the $1500 security deposit. Respondent has not satisfied the judgment. At one point Respondent did give the Mangolds a check for $500 which was returned due to insufficient funds in the account.

   
   

8. In December, 1986, Respondent acted as a rental agent for Walter Zielinski, an out-of-state owner. Mr. Zielinski owned two houses in Port St. Lucie, one of which was located at 941 Fenway. In early December, 1986, Respondent advised Mr. Zielinski that the tenants had left the home at 941 Fenway and that the unit was in fairly good condition. Sometime later in the month, Mr. Zielinski discovered the house was empty but that it had been damaged. There were holes in the wall in the utility room approximately two feet in diameter. The flooring in the utility room and kitchen was ripped up. There was a hole in the wall in the master bedroom. More important to Mr. Zielinski, the house was unsecured because the garage door latch was broken and the house was accessible through the garage.

   
   

9. After discovering the unit was at risk for additional damage, Mr. Zielinski attempted to contact Respondent but numerous calls to Respondent, her place of work, and to a former employer proved to be unsuccessful. Finally, Mr. Zielinski obtained another real estate agent to represent the 941 Fenway home. The new agent, Cathy Prince, attempted to obtain from Respondent the keys, the security deposit, and the rent money belonging to Mr. Zielinski.

   
   

10. In January, 1987, Mr. Zielinski came to Florida from Illinois to take care of the rental problems. Mr. Zielinski incurred expenses totalling $876.74

    to repair the damages to 941 Fenway. Also, Mr. Zielinski wanted to collect the rents owed by Respondent for his other property and have the security deposit for the second property transferred to the new agent. Respondent issued a personal check for the security deposit which was returned for insufficient funds. A second personal check paid to Mr. Zielinski for the rent owed was accepted and cleared. According to Mr. Zielinski, Respondent did not maintain an office where he could find her during the latter part of December, 1986 through January, 1987.

    
    

11. In March, 1987, the security deposit for Mr. Zielinski's second rental was paid to the new agent. The check was issued by Respondent's mother. Respondent never personally returned any calls to the new agent.

    
    

12. In June, 1986, Alyssa and Jeffrey Maloy entered into a contract to purchase a house. Respondent handled the real estate transaction for the Maloys. The closing was to be December 9 or 10, 1986. Respondent held monies that were required to complete the Maloy closing. Respondent attended the closing but the check tendered to the closing agent, Chelsea Title, was drawn on an trust account which had been closed. The closing agent discovered the problem and requested sufficient funds. Respondent left the closing and returned some hours later with new checks drawn on another account. After checking with the bank, it was again discovered that the funds in the account were insufficient to cover the amount needed for closing. Finally, some days later the Respondent's brother delivered a certified check to cover the amount needed to close the Maloy transaction.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of these proceedings.

    
    

14. Section 475.25(1), Florida Statutes, provides in pertinent part:

    
    

    The commission may deny an 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 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:

    * * *

    (b) Has been guilty of fraud, misrepresentation, concealment, false promise, 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.

    * * *

    1. 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, including a share of a real estate commission, or any secret or illegal profit, or any divisible share or portion thereof, which has come into his hands and which is not his property or which he is not in law or equity entitled to retain under the circumstances. However, if the licensee, in good faith, entertains doubt as to what person is entitled to the accounting and delivery of the escrowed property, or 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 or conflicting demands and shall promptly:

       1. Request that the commission issue an escrow disbursement order determining who is entitled to the escrowed property;

       2. With the consent of all parties, submit the matter to arbitration; or

       3. By interpleader or otherwise, seek adjudication of the matter by a court.

          
          

          If the licensee promptly employs one of the escape procedures contained herein, and if he abides by the order or judgment resulting therefrom, no administrative complaint may be filed against the licensee for failure to account for, deliver, or maintain the escrowed property.

    2. 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, wherein the funds shall be kept until disbursement thereof is properly authorized; or has failed, if a salesman, to immediately place with his registered employer any money, fund, deposit, check, or draft entrusted to him by any person dealing with him as agent of his registered employer. 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.

15. Rule 21V-24.001, Florida Administrative Code, provides, in pertinent part:

    
    

    The minimum penalty for all below listed sections is a reprimand and/or a fine up to $1,000.00 per count. The only exception is for discipline cases with payment from the recovery fund which, according to Section 475.484(7), Florida Statutes, requires the penalty of revocation. The Florida Real Estate Commission upon a specific finding of mitigating or aggravating circumstances shall impose a penalty other than is provided in this rule. The maximum penalties are as listed:

    * * *

    (8) 475.25(1)(b) - Up to 5 years suspension or revocation

    * * *

    (10) 475.25(1)(d) - Up to 5 years suspension,

    (11) 475.25(1)(e) - Up to 8 years suspension or revocation,

    * * *

    (17) 485.25(1)(k) - Up to 2 years suspension.

    
    

16. The correct standard for the revocation of a license, as in the case at issue, is that the evidence must be clear and convincing. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987). The Ferris court agreed with the district court in Reid v. Florida Real Estate Commission, 188 So.2d 846, (Fla. 2d DCA 1955), that:

    
    

    The power to revoke a license should be exercised with no less careful circumspection than the original granting of it. And the penal sanctions should be directed only toward those who by their conduct have forfeited their right to the privilege, and then only upon clear and convincing proof of substantial causes justifying the forfeiture.

    
    

    This elevated standard is necessary to protect the rights and interests of the accused where the proceedings implicate the loss of livelihood. Ferris at 295. This standard has been applied in the case at issue.

    
    

17. The above-noted provisions have been in effect, in substance, at all times material to the allegations in the Administrative Complaint.

    
    

18. Counts I through III of the Administrative Complaint allege violations of Chapter 475 which arose from the Mangold transaction. With regard to Count

I, the Department has proved by clear and convincing evidence that Respondent wrongfully refused to refund the security deposit and misrepresented that she would return the monies. She, therefore, is guilty of breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes. With regard to Count II, the Department has not established that Respondent failed to maintain trust funds in her real estate brokerage escrow bank account or some other proper depository. Clearly Respondent did not return monies which were due the Mangolds. However, no evidence was offered to show that the funds were no longer in an escrow account. The Department did not offer any bank records which would confirm the monies were not maintained. Accordingly, Respondent is not guilty of the violation alleged in Count II. With regard to Count III, the Department has proved by clear and convincing evidence that the Respondent failed to account for and deliver a deposit in violation of Section 475.25(1)(d), Florida Statutes. The Mangolds proved they were entitled to the security deposit, made demand on Respondent for it, sued her and obtained a judgment, and still Respondent has not returned the funds. Based upon their agreement, the Mangolds should have received the return of the deposit in July, 1987.

1. With regard to Count IV, the Department offered hearsay evidence to prove that Respondent did not respond to an investigator's efforts to inspects Respondent's record. Section 120.58, Florida Statutes provides, in part,

   
   

   Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.

   
   

   Accordingly, the uncorroborated testimony of Larry Whitten regarding what he believed another investigator did and the results of that investigator's findings may not be used to prove the violation alleged in Count IV. Therefore, the Respondent is not guilty of violating Section 475.25(1)(e), Florida Statutes.

   
   

2. Counts V through VIII of the Administrative Complaint allege violations which stem from the Zielinski transactions. Counts V and VIII allege the same violation, i.e., failure to maintain trust funds in a real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. While the record in this case established that Respondent paid monies from a personal account and that the monies should have come from an escrow account, there was no evidence that Respondent did not have an escrow or that monies were not held in such an account. Given the standard of proof which must be applied in this case, the Respondent is found not guilty of Counts V and

   VIII. However, with regard to Count VI, the Department has proved, by clear and convincing evidence, the Respondent misrepresented facts to Mr. Zielinski and was indifferent to his interest. Leaving the Zielinski property open to possible vandalism is contrary to the agency role Respondent assumed.

   Respondent is therefore guilty of a breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes. With regard to Count VII, the Department has proved that Respondent failed to account for and deliver the security deposit to Mr. Zielinski's new rental agent in violation of Section 475.25(1)(d), Florida Statutes. The record in this case established that Respondent failed to fulfill her responsibilities to Mr. Zielinski and that only

   through her family's efforts were the monies owed finally paid. Consequently, Respondent is guilty of the violation alleged in Count VII.

   
   

3. Counts IX and X of the Administrative Complaint allege violations relating to the Maloy closing. With regard to Count IX, the Department has proved that Respondent is guilty of concealment, misrepresentation and breach of trust in a business transaction all in violation of Section 475.25(1)(b), Florida Statutes. The Respondent concealed the truth regarding the funds she was to bring to closing, misrepresented she held the funds and would deliver them, and breached the trust owed to the Maloys and jeopardized their closing by failing to deliver the funds. Accordingly, Respondent is guilty of the violation alleged in Count IX. With regard to Count X, the Department has proved Respondent failed to maintain monies in an escrow account. In this instance the Department showed that Respondent tendered escrow checks which were either drawn on an account which had been closed or held insufficient funds. Obviously had Respondent properly maintained the money in escrow the checks would have cleared and allowed the Maloy transaction to close. The Respondent is guilty of the violation alleged in Count X.

   
   

4. Since the Respondent did not appear at the hearing there is no evidence of circumstances which might explain or mitigate Respondent's conduct. The Department did not offer evidence regarding the penalty sought to be imposed in this case. Having found violations of Sections 475.25(1)(b), 475.25(1)(d), and 475.25(1)(k), Florida Statutes the penalties found in Rule 21V-24.001, Florida Administrative Code have been considered.

RECOMMENDATION

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

That the Department of Professional Regulation, Florida Real Estate Commission enter a Final Order suspending the Respondent's real estate broker's license for a period of five years.

DONE and RECOMMENDED this 12th day of July, 1988, in Tallahassee, Florida.

JOYOUS D. PARRISH

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 12th day of July, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-4631

Rulings on Petitioner's proposed findings of fact:

1. Paragraphs 1-3 are accepted.

2. With regard to paragraph 4, with the exception of the date referenced (November, 1986) the paragraph is accepted.

3. Paragraph 5 is rejected a hearsay evidence unsupported by direct evidence of any source.

4. The first sentence of paragraph 6 is accepted. The second sentence calls for speculation based on facts not in the record and is, therefore, rejected.

5. Paragraphs 7-11 are accepted.

6. With regard to paragraph 12, the first four sentences are accepted; with regard to the balance, the Respondent's brother did deliver funds to allow the Maloy transaction to close however the source of the funds is speculation based upon hearsay unsupported by the record.

COPIES FURNISHED:

Steven W. Johnson, Esquire Department of Professional Regulation, Division of Real

Estate

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

Darlene F. Keller, Executive Director Department of Professional

Regulation, Division of Real Estate

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

William O'Neil, Esquire General Counsel

Department of Professional Regulation

130 North Monroe Street Tallahassee, Florida 32301

Naomi N. Radcliff 1420 Seaway Drive

Fort Pierce, Florida 33482

Docket for Case No: 87-004631

Orders for Case No: 87-004631