STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
STATE OF FLORIDA, )
DEPARTMENT OF PROFESSIONAL REGULATION,) DIVISION OF REAL ESTATE, )
)
Petitioner, )
)
vs. ) CASE NO. 89-3850
)
RALPH J. COLLINS, )
)
Respondent. )
)
RECOMMENDED ORDER
Following the provision of notice, a formal hearing was held in this case on August 24, 1989, in the offices of the Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, Florida commencing at 9:00 a.m. The authority for the conduct at this hearing is set forth in Section 120.57(1), Florida Statutes. Charles C. Adams was the Hearing Officer.
APPEARANCES
For Petitioner: James H. Gillis, Esquire
Senior Attorney
Department of Professional Regulation Division of Real Estate, Legal Section
400 West Robinson Street
P.0. Box 1900
Orlando, Florida 32817
For Respondent: William M. Furlow, Esquire
Katz, Kutter, Haigler,
Alderman, Eaton, Davis, Marks, P.A. Attorneys and Counselors at Law
Post Office Box 1877 Tallahassee, Florida 32302-1877
Keith Kinderman, Esquire 906 Thomasville Road
Tallahassee, Florida 32303 STATEMENT OF THE ISSUES
The issues for consideration in this case are those set forth in the administrative complaint, Department of Professional Regulation, Case No. 0161079 brought by Petitioner against Respondent. Respondent disputes the factual allegations in the complaint. Therefore, a formal hearing was held to resolve that dispute. The administrative complaint, through its allegations, accuses the Respondent, as a licensee of the Petitioner and as a builder- developer, with directly or indirectly entering into various agreements to sell
and purchase residential property. Through these arrangements, Respondent is said to have promised and lead sellers/purchasers to believe that the existing mortgage on their property being taken in on trade by the Respondent would be assumed and paid by the Respondent through a partnership known as Tallahassee Properties. By this it is meant that Respondent would apply for, assume and timely make monthly mortgage payments attributable to the property being traded in. It is further stated that these sellers/purchasers relied upon the representations and promises of Respondent to the extent of conveying title to the trade-in residential property over to Tallahassee Properties, in which Respondent was a partner. It is alleged that Respondent received title to that property, in some instances. It is alleged that if it were not for the Respondent's representations that the mortgage would be assumed that the seller would not have conveyed the trade-in property. It is alleged that Respondent failed to apply for the assumptions of the mortgages and the mortgages were not assumed. It is alleged that the Respondent ceased to make payments on the mortgages associated with the trade-in properties resulting in a delinquency and foreclosure. Reference is made to correspondence of February 18, 1986 allegedly drafted by Respondent in which the sellers/purchasers are said to have been alerted that the mortgages had not been assumed and that the lender might foreclose the mortgages leaving the sellers/purchasers with the options of having their trade-in property deeded back or having the lender foreclose. It is alleged that these sellers/purchasers suffered financial losses due to the dishonest acts and false promises of Respondent. In particular, it is alleged that Respondent is 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 Section 475.25(1)(b), Florida Statutes. As to each of the transactions in question, it is also alleged as a general matter that Respondent is guilty of a course of conduct or practice which shows that he is so incompetent, negligent, dishonest, and untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation, may not safely be entrusted to the Respondent, demonstrating violation on his part of Section 475.25(1)(o), Florida Statutes.
PRELIMINARY STATEMENT
This Recommended Order is being entered following the filing of the transcript of the proceeding on August 31, 1989. The transcript has been reviewed. The exhibits offered have been examined. The request for admissions and affirmative responses have been considered. Respondent filed a proposed recommended order on September 11, 1989. Petitioner filed a proposed recommended order on September 13, 1989. These proposals have been considered. An Appendix to this Recommended Order discusses the factual portion of those proposals.
FINDINGS OF FACT GENERAL FACTS
Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute administrative complaints pursuant to the laws of the state of Florida, in particular Section 20.30, Florida Statutes; Chapters 120, 455 and 475, Florida Statutes and the rules promulgated in accordance with those statutes.
Respondent is now and was at all times associated with this administrative complaint a licensed real estate broker in the state of Florida having been issued license number 0251002 under the authority of Chapter 475, Florida Statutes.
Respondent's last license was issued as a real estate broker with the firm of Eastern Marketing, Inc. which is located at 17841 U.S. Highway 441, 3 Mount Dora, Florida 32757.
RESPONDENT'S ROLE
At the time of the hearing, Respondent had been involved in the real estate profession for approximately 18 years. This real estate practice has been exclusively in the state of Florida. In addition to being a real estate broker, Respondent is licensed as a general contractor in Florida and as a mortgage broker in the state. His general contractor's license is a certified license.
At times relevant to this inquiry, Respondent was a real estate broker with Collins and Associates, Inc., a real estate brokerage firm. He also had affiliation with Collins Builders, Inc., a licensed general contracting firm.
He was a one half owner in Tallahassee Properties, a Florida general partnership in which the other ownership was held by W. Ronnie Collins, Respondent's brother. All of these firms did business in Florida and particular as these firms are involved with the issues in dispute, they did business in Tallahassee, Florida.
At times relevant to this inquiry, Respondent was involved in a sales promotion program which has been referred to as a trade-in program. In essence, this program was designed to allow persons who had purchased residences from a firm or through affiliated Collins companies to turn over the initial residence to Tallahassee Properties in exchange for a new home bought from Collins Builders, Inc. with the builder using the real estate services of Collins and Associates, Inc. to sell the new home. The house that was being traded was deeded to Respondent or one of the companies with which he was affiliated. In this case, the company with which Respondent was affiliated with which had property deeded to it was Ralco, Inc.
Those persons who were trading one home for another had been solicited by Collins and Associates, Inc. as a realtor in an advertising program. No realtor was involved in making commissions associated with the closing that took place between the sellers who were trading in a home and Tallahassee Properties, Respondent and Ralco, Inc. with whom he was affiliated. This arrangement was designed to stimulate sales of the new home being purchased.
The traded homes typically had mortgages. Tallahassee Properties not only took possession of the traded or exchanged homes but was responsible for the activities associated with the closing of the transaction, to include assumption and payment of mortgages associated with the exchanged property. As grantee on the deeds in the traded homes Respondent and Ralco, Inc. were also responsible for assumption and payments. As Respondent identified in his testimony, he and his brother W. Ronnie Collins; Collins and Associates, Inc.; Collins Builders, Inc. and Tallahassee Properties were anticipated as being the individuals to apply for the assumption of loans with the lending agencies who held the mortgages on the traded property. W. Ronnie Collins was also one of the names in the overall scheme in which the traded-in property could be placed as grantee.
Approximately 80 homes were traded over a period of 6 or 7 years. The properties in dispute in this case were among them.
Respondent had authorized Tallahassee Properties and in particular his brother W. Ronnie Collins as managing partner of that partnership, to place the properties in Respondent's name, W. Ronnie Collins' name or any of several companies affiliated with Respondent in furtherance of identifying a grantee that the mortgage holder would allow to assume the mortgage. Respondent's expectation was that Tallahassee Properties and the title company involved in the closing of the transaction associated with the traded property would facilitate the assumption arrangement with the mortgage holder. The title company used in the cases that are at issue here was Capital Abstract and Title, Inc.
In the closings for the traded homes, which are at issue in this case, the evidence presented at hearing which may be relied upon for fact finding did not reveal what attempts were made to have the mortgage holders for the traded homes ultimately accept the substitution of Respondent, his brother or one of the companies with which he was affiliated as parties responsible for the existing mortgages on the traded properties.
The reason which Respondent gave for allowing his brother, W. Ronnie Collins to act in his behalf in Tallahassee Properties was that he felt that it was impossible for him to involve himself in that business and its day to day process and at the same time be active in Collins and Associates, Inc. and Collins Builders, Inc. Therefore, he allowed W. Ronnie Collins to act for him in the business of Tallahassee Properties. This explanation has not been disputed and being tenable is credited as true.
In accepting deeds related to the traded property, as will be described in the individual instances that follow, Respondent recognized that he had obligated himself to take the responsibility for assumption of and payment of the mortgage.
Respondent has no direct knowledge of whether any of the trade-in transactions were followed up by gaining permission from the mortgage holder to allow someone other than the original mortgagor to become responsible for the mortgage payments.
The contracts for obtaining the traded-in homes were executed by Tallahassee Properties. Nonetheless, as described, Respondent was given a deed to some of the properties purchased, to include properties in dispute here.
Respondent never orally or in writing advised the sellers of the traded property that the routine mortgage payments associated with the traded property and the overall mortgage obligation would no longer be the responsibility of those sellers.
In one of the cases which is at issue here involving the trade-in property of John M. and Jeanne B. Miller, Respondent stated that he received their traded property as grantee on the deed. In fact Ralco, Inc. was grantee. When asked about whether he had assumed the obligation for the mortgage that existed on that home, Respondent replied that he had assumed the loan. When asked if he explained the fact to that assumption to the Millers, he pointed out that he had never talked to the individuals. When asked if he had directed anyone in any of his companies or his real estate company in particular to
explain the details of the transaction, Respondent pointed out that Collins and Associates, Inc. as realtor, and as a licensed broker had trained each associate to explain all of the rules and procedures associated with Fannie Mae, Freddie Mac, FHA, VA and HUD loans and that Respondent as the broker of those associates would expect that the associates would explain everything to the Millers.
Whether the Millers were informed about such matters by Collins and Associates, Inc. employees was not proven.
The traded in properties were rented, repaired and sold or kept in inventory by Tallahassee Properties.
After purchase of the traded-in properties, Respondent's expectations as a partner in Tallahassee Properties was that the partnership would take possession of the properties and manage them and make payments on existing mortgages associated with any of those properties.
Respondent believes that until the latter part of 1985 when he and some of his operations were involved in a Chapter 11 Federal Bankruptcy declaration, payments on the existing mortgages for traded properties were being made, in that had it not been so that he would have been notified. The record offers no proof that can be relied upon to satisfactorily corroborate or rebut this assumption on his part.
The Chapter 11 bankruptcy proceeding was not caused by problems associated with the traded properties.
Ralco, Inc. was not involved in the bankruptcy. Some of the traded properties in question were owned by Ralco as grantee. Although Ralco was not involved in the bankruptcy, it was unable to make payments because of the bankruptcy in that the houses in question had a negative cash flow and Respondent was unable to take funds from the bankruptcy court and place them with Ralco, Inc. to make the payments on mortgages that existed on the traded properties.
Collins Builders, Inc. and Collins and Associates, Inc. were not involved in the closings of the traded property. Their involvement was with the new house being purchased following the trade. The closing associated with the new house under purchase was a separate closing and Collins and Associates, Inc. received a real estate commission for its participation.
None of the exact details of the solicitation process by Collins and Associates, Inc. in which homeowners were encouraged to trade existing residences on other homes built by Collins Builders, Inc. were made known, so that it might be understood whether Collins and Associates, Inc. promised to make the attempt to have the lender accept a substitute for the original mortgagor on the mortgage indebtedness, to include the possibility of the outright release of the original mortgages from the debt obligation. Therefore, that solicitation process has no part to play in examining the issue of Respondent's conduct associated with the closings of the traded homes.
In the latter part of 1985, following the filing of the petition under Chapter 11, Bankruptcy Laws, Respondent and Duval First Corporation with which he was affiliated were granted an order of relief on December 23, 1985 in Case Nos. 85-07179B and 85-07178C, respectively in the United States District Court, Northern District of Florida, Tallahassee Division. As part of the disposition in front of the bankruptcy court, the bankrupt estates and Real Estate Financing, Inc. agreed that the bankruptcy estates would surrender certain
properties and the automatic stay in all expressed injunctions associated with those properties were lifted. The bankruptcy court held that pursuant to 11
U.S.C. 506, Real Estate Financing, Inc. would not be entitled to an unsecured claim against the bankrupt estates for debts secured by the lien on those properties. Those properties had been encumbered by a first mortgage in favor for Real Estate Financing, Inc. The Court found that the value of those properties was equal to or exceeded the debts secured by the mortgage lien of Real Estate Financing, Inc. as of the date of the Order for Relief. In that Order for Relief, Real Estate Financing, Inc. was allowed a secured claim for the full extent of the debt due as of the date of the Order for Relief plus interest accrued up to the extent of the value of each property and up to the date of November 18, 1986. The bankruptcy court did not hold that Real Estate Financing, Inc. was entitled to any unsecured claim for any pre-petition debt that was secured by the lien on its mortgages. Among the properties affected by this action were those properties of David Walsh, Troy Brewer, Sam Hinson, Harold C. Miller, Peter Hartman, and John Miller, all of whom are listed as individuals whose transactions with Respondent are found in the Administrative Complaint and about which Respondent is said to have violated the aforementioned disciplinary provisions of Chapter 475, Florida Statutes. By this arrangement in bankruptcy court, Respondent hoped to avoid the circumstance by which the mortgage was foreclosed leaving a deficiency against the original mortgagor/homeowner of the traded-in property which would in turn lead to some claim against the bankruptcy estates for the amount of the deficiency. Nonetheless, Real Estate Financing, Inc. proceeded to foreclose on its mortgages as subsequently discussed in commenting on the individual counts to the Administrative Complaint pertaining to individual homeowners. While the bankrupt estates would have preferred to deed back the property in lieu of foreclosure, it accepted the foreclosures given the protections to the bankrupt estates that have been identified in this discussion. It should also be mentioned that two of the accounts in the Administrative Complaint pertaining to Eric Larsen and Robert Aubin, to be discussed, were not part of this arrangement in the bankruptcy court associated with Real Estate Financing, Inc.
At the closings on the traded homes in question some explanations about the mortgage assumptions were made by persons who may have been representing Tallahassee Properties or other Collins affiliates, but these persons are not clearly identified in the record as to their actual position with those organizations and how Respondent was accountable for their remarks. Those remarks will be discussed in the assessment of the individual counts that follow.
Respondent, following the petition for bankruptcy in his own name and that of companies with which he was associated, wrote to advise homeowners who had traded in their homes about his perception of the homeowners' status following that bankruptcy. These letters were written on February 18, 1986 on stationary of the Respondent and were signed by him. In this correspondence, which is the same format in all instances, he would make reference to the date upon which the transaction closed at which time the homeowner deeded over the traded property to Respondent or a company with which he was affiliated. He described the existence of the prior mortgage to Real Estate Financing, Inc. with a loan number and the existence of the paragraph 17, "due on sale" clause and, according to the letter, that the loan was not paid off at the time of the closing and the assertion that the lender would not allow the assumption of that loan by Respondent or one of his companies. Again this record is silent on the subject of what attitude the lender held about this, or even the matter of whether an attempt was made to have the lender accept a new obligor. He described how the lender was not considering Respondent or his company as
purchaser but that the original mortgagor was being considered. This was taken to mean that Respondent was trying to express that the lender was looking to the original mortgagor as a responsible entity on the mortgage. The letter described how Respondent or one of his companies had been renting and making payments since the time of closing until December 23, 1985 when declaration of the Petition in bankruptcy went forward. It described how the Respondent and his companies were unable to continue funding payments related to the mortgages on the traded property which was in the name of the homeowners who had traded the property. The letter went on to describe how the payments would be brought current until February 28, 1986. The letter is interpreted to suggest that beyond that point, the property would either be deeded back to the original owner or the lender would foreclose. The letter expressed a preference by Respondent that because, interpreting the letter again, there was no cash flow that he preferred to see the property deeded back to the original owner. The name Bobbie May was given as a contact person and a telephone number provided for the homeowners to call regarding the return of the property back to the original homeowner. The letter goes on to describe an apology from Respondent to the homeowners.
Movaline Hill who was a property manager for Tallahassee Properties traded in homes, to include the homes in discussion in the Administrative Complaint, offered her testimony at hearing. The principal business of Tallahassee Properties as established in her testimony was to rent homes. Ms. Hill advertised the property for rent, collected the rent, made payments on existing mortgages on the homes, and took care of maintenance matters. Tallahassee Properties took the rent and put the payments in escrow.
One of the homes that Ms. Hill was involved with had belonged to David Walsh. It was a traded home and she had discussed with Walsh getting payment cards or coupons for the mortgage that existed on the traded home. The mortgage company had sent these cards or coupons to Walsh and Hill desired to have them so that the payments on the mortgage could be made. In this connection, Hill wrote Walsh a letter. A copy of that letter may be found as Petitioner's Exhibit 20. It indicates enclosure of a recorded deed on the traded property of Mr. Walsh showing Respondent as having the title in his name. It further states that Mr. Walsh should sign and mail a pre-prepared letter to Real Estate Financing, Inc. telling that lender to change the mailing address and requesting new payment cards. The letter describes that Real Estate Financing, Inc. did not know that the title was no longer in Mr. Walsh's name and that the lender would not transfer the mortgage to anyone and asks Walsh not to send the copy of the deed to the Respondent to the lender. Emphasis is placed in this correspondence on not sending that information to the lender. Ms. Hill was not instructed by anyone to write the letter. The reason why Ms. Hill said that she put an indication in the letter that the transfer of the mortgage could not be done was based upon her assertion that she had been told this by the lender. What connection Respondent had with the letter, if any, was not established.
The cards that she received from Mr. Walsh on coupons for payments would have his name struck over and Respondent's name placed on it and Hill would send the check to the mortgage company for payment of the mortgage.
With Real Estate Financing, Inc., Ms. Hill was sending one or two checks per month that dealt with 15 or 20 mortgages. There would be a lump sum payment with account numbers and backup materials sent with the check. The backup materials would include the payment cards or coupons.
During Ms. Hill's tenure with the Tallahassee Properties, she says that she kept the mortgage payments current. No evidence was presented to the contrary which is competent. From this it is found that mortgage payments were kept current for a period of time which is not specifically shown. She received no contact from the mortgage companies on the topic of any assumption packages for these loans being assumed. She did receive some coupon books with the Respondent's name affixed. Those latter circumstances were not shown to be associated with any of the traded properties that are at issue in this case.
Charles O. Middleton testified at the hearing. He had worked in 1981, 1982 and up to September, 1983, with Capitol Abstract and Title, Inc. which served as a closing agent on traded properties that were picked up by Tallahassee Properties. His recollection of the events is that, as closing agent for the title company, he worked from a contract which identified the terms of the transaction. His recollection is that the transactions associated with a trade property and the new home being purchased after trade was handled together. This is in contrast to the understanding of those homeowners whose traded properties are the subject of this Administrative Complaint and Respondent. The explanation by those homeowners and Respondent that two separate closings were held, one for the traded property and one for the newly purchased property is accepted as factually correct.
Middleton recalls that explanations were given by him as closing agent concerning the nature of the transaction to include the matters of the paragraph
17 "due on sale" clause. He describes this arrangement as involving an affidavit or hold harmless agreement that had to be signed. This included the initialing of the paragraphs within that agreement by the buyer and the seller. Again, none of the homeowners who sold traded property that is described in the Administrative Complaint recalls such explanations and documents and their recollection is deemed more creditable and is accepted in lieu of the comments by Mr. Middleton. Likewise, the document for purposes of explanation which was offered as Respondent's Exhibit 8 containing disclaimers about the paragraph 17, "due on sale" clause, while admitted, offers no insight into the nature of what the homeowners were told in the cases that are at issue here because it isn't the same form that Middleton recalls using in the transactions he participated in as closing agent and hasn't been shown to be a form used in any of the cases here. Middleton explained that in the transactions he was involved in, the homeowners were provided a copy of every document to be utilized in the closing and that the original documents had their pages turned while the copies for the homeowners were being examined at the same time. A brief explanation would be given about each document and the homeowners were asked if they wished to take some time to read the documents and to ask any questions. Middleton as closing agent would offer to answer questions or put them in touch with the lender and let the lender answer questions. In Middleton's estimation, it was the closing agent's responsibility to make sure that necessary documents were presented to the lenders in the assumption of the mortgage for the traded in property. Respondent had not instructed Middleton in any of the closings on the topic of what to do with closing documents that were used at the time of transaction. Middleton said that he was unable to produce any of the documents of explanation concerning the closings which he participated in for Capital Abstract and Title, Inc. because he has no access to those files.
Middleton identified the fact that in a circumstance in which a home had a mortgage and an assumption was called for, an assumption packet would be customarily ordered at the time of the request for assistance in the closing, which he refers to as an order. Middleton identifies the fact that he is only vaguely familiar with the transactions that are at issue in this Administrative
Complaint. He thinks he may have closed some of them but he has no specific recollection about that. As a consequence, he has no worthwhile knowledge of how many of those transactions had assumption packages completed.
COUNT I
Samuel Hinson, Jr. owned property in Arbor Hills which he had bought from Collins Builders, Inc. on June 30, 1982. This house was taken in trade for a house on Starmount. This Starmount home was also purchased from Collins Builders, Inc. and Collins and Associates, Inc. served as the real estate firm for the purchase of the new home as agent for the seller. Andrew Jackson Federal Savings financed the new purchase. The traded in home was sold to Tallahassee Properties with Capital Abstract and Title, Inc., serving as closing agent according to documents presented at hearing. Mr. Middleton did not appear for Capital Abstract at that closing. In the purchaser's closing statement, W. Ronnie Collins is shown as the representative for Tallahassee Properties. Two warranty deeds were made from Hinson in selling his Arbor Hill property. In deeding his Arbor Hill property on May 20, 1983, one of those went to the Respondent and the other to Tallahassee Properties. In both warranty deeds, the grantee promised to assume and pay an existing mortgage in favor of Real Estate Financing, Inc. The existing mortgage on the Arbor Hills property had the paragraph 17 clause which absent certain exceptions allowed Real Estate Financing, Inc. at its option to declare all sums secured by the mortgage to be immediately due and payable, if the property was sold or transferred without prior written consent from the lender. None of the exceptions pertained to this transaction between Hinson and either Respondent or Tallahassee Properties. The paragraph 17 clause also stated that the mortgage holder was considered to have waived its option to accelerate if prior to the sale or transfer, the mortgage holder reached agreement with the purchaser in writing that the credit of the purchaser was satisfactory to the mortgage holder, thus allowing the purchaser to become responsible for the mortgage. In that instance, interest payable on the sum secured by the mortgage would be at the rate requested by the mortgage holder. The mortgagor, Hinson, would be released from all obligations under the mortgage note if the purchaser was substituted on prior written approval.
Hinson went into the transactions involving the sale of his Arbor Hill house and the purchase of the Starmount house with the impression that he had to sell the Arbor Hill house in order to purchase the Starmount house. This was his surmise. Money realized in the sale of the Arbor Hill house was used as a down payment for the Starmount home. Petitioner believed that he had an arrangement to purchase the Starmount home with Ralph Collins. In reality, he was purchasing the home from Collins Builders, Inc. with Collins and Associates, Inc. being the seller's broker. In Mr. Hinson's mind, Respondent and Collins Brothers, Inc. and the then Collins real estate firm through Century 21 were all the same. Going into the transaction, Hinson was not familiar with Tallahassee Properties and its business purpose.
Respondent was at both closings, the closing to sell the Arbor Hill house and the closing to purchase the Starmount home.
No one discussed the matter of the assumption of the mortgage associated with the Arbor Hills house during the course of the closing of that home. Hinson got the impression from events that Respondent had bought his Arbor Hills house and that everything was being paid off. This impression was not based upon anything Respondent said to him.
Hinson, after the closings, requested his insurance company to write to First Alabama concerning the cancellation of his homeowners policy on Arbor Hills. His understanding was that the insurance company sent a letter to do this and that First Alabama sent back a letter saying that they needed certain information. That latter correspondence was then taken to the Respondent. Respondent, under those circumstances, stated to Hinson that it was a mistake and that he would handle it, but that it would take some time to get some of the paper work done. Respondent did not comment to Mr. Hinson on that occasion that he had not assumed the mortgage for the Arbor Hill property nor did he indicate that none of the companies with which he was affiliated had assumed the mortgage. Respondent made no comment whatsoever about assumption of the mortgage in this conversation shown by facts presented at hearing. Hinson then got a new payment book from First Alabama, which he received a couple of days after the insurance letter. This was taken to Respondent and Respondent said that he would take care of it, that it was just a mistake. Again, what was meant by this remark was not developed at hearing.
Hinson got one of the February 18, 1986 letters from Respondent that has been referred to previously.
Having received this correspondence, Hinson complained to the Tallahassee Board of Realtors. Out of the process of his complaint, Hinson met with Keith Kinderman, Respondent's counsel and the Respondent together with Eric Hoffman, counsel to Hinson. Respondent told Hinson he would help get information and that his counsel, Mr. Kinderman would help in getting some form of restitution and help clear Hinson's name and seek relief from the Capital Abstract and Title, Inc. who had closed the Arbor Hill home.
In attempting to obtain a Visa credit card and a Sears credit card, Hinson has been denied that credit. The reason given for the denial is the circumstance associated with the Arbor Hills home and non-payment of the mortgage.
The exact circumstance of the Arbor Hills property, concerning who holds it now was not proven at hearing by evidence that can be relied upon for fact finding.
COUNT II
David P. Walsh and Leila DeJarnette Walsh, his wife bought a home in Huntington Woods from Collins Builders, Inc. on December 23, 1981. This home was financed through Real Estate Financing, Inc. and carried a mortgage from that lender. The mortgage included a paragraph 17 whose language was the same as the Hinson home financed by Real Estate Financing, Inc. The Walshes traded in the Huntington Woods property for a home on Faversham Drive which was financed by Citizens and Southern Mortgage Company. Separate closings were conducted. One was for the sale of the Huntington Woods property with Respondent receiving a warranty deed for that property which property was to be taken over by Tallahassee Properties. The second closing was associated with the sale of the Faversham Drive property from Collins Builders, Inc. to the Walshes. In executing the warranty deed in favor of Respondent as grantee pertaining to the Huntington Woods property, a condition of the warranty deed was an agreement by the grantee to assume the mortgage held by Real Estate Financing, Inc. and pay Capital Abstract and Title, Inc. through some person other than Middleton was the closing agent at the transaction involving the sale
of the Huntington Woods property, according to documents at the hearing. Both that sale and the purchase of the Faversham Drive property took place on March 30, 1983.
The Walshes signed a document reference the escrow account held by Real Estate Financing, Inc. on its Huntington Woods property. There is no indication whether this was or was not signed by Tallahassee Properties or the Respondent and sent to the Real Estate Financing, Inc. pertaining to funds in the escrow account and insurance coverage being transferred from the Walshes to Tallahassee Properties or Respondent as contemplated by the form.
The separate closing associated with the Faversham Drive property was done through Tallahassee Title Company.
Respondent was at the closing associated with the homes.
Mr. Walsh is not in a position to pay for mortgages on two homes.
Mr. Walsh's understanding of the trade in of his Huntington Woods home for the Faversham Drive home was to the effect that he could buy a new home from the transaction and that he would no longer be liable for the traded home, that all paperwork would be taken care of. Some salesman involved in these transactions made these remarks to Mr. Walsh; however, he doesn't know who that person was. Consequently, it is not possible to attribute responsibility for those remarks to Respondent.
Subsequent to the closings, the Walshes received correspondence purportedly from First Alabama having to do with Real Estate Financing, Inc.'s mortgage held on the Huntington Woods' property. This correspondence of April 4, 1983, by its terms, reminds the Walshes that the mortgage holder has received notification of cancellation of the homeowner's policy and that the Walshes were to provide insurance coverage at all times. What the real circumstances of the homeowners policy was is not proven by competent evidence.
In connection with the transactions, Mr. Walsh describes that he felt that he was dealing with a reputable real estate broker and that they had his best interest in mind. He was not represented by counsel at the closings.
Mr. Walsh received one of the February 18, 1986 letters from Respondent as previously described. Mr. Walsh hired a lawyer to try to address the situation of the Huntington Woods property without success in the endeavor. To his knowledge the Huntington Woods property has been foreclosed on. No proof which is competent has been presented in the hearing to describe the exact nature of the developments with the property. Nonetheless, Mr. Walsh has had problems receiving credit twice since that time. Before the situation with the property he had never had credit problems.
Mr. Walsh was proceeding in these transactions on the basis on the belief that Tallahassee Properties and the Respondent were the same entities.
COUNT III
Troy A. Brewer and Tina J. Brewer, his wife purchased a home from Collins Builders, Inc. in Huntington Woods on December 30, 1981. This home was financed by Real Estate Financing, Inc. A mortgage was given by the Brewers in favor of Real Estate Financing, Inc. and it included a paragraph 17 assumption clause as described in the Hinson mortgage financed by that lender.
On March 25, 1983, the Brewers traded their Huntington Woods property for a home on Faringdon Drive. The seller of the Faringdon Drive property was Collins Builders, Inc. In these transactions, the Huntington Woods property was deeded to Respondent with the provisor in the warranty deed that Respondent would assume and agree to pay for the mortgage in favor of Real Estate Financing, Inc.
Mr. Brewer is not in a position to meet mortgage payments associated with two mortgages; one on the Huntington Woods property and one on the Faringdon Drive property. Therefore, he would not knowingly obligate himself to assume mortgages associated with both of those properties.
In the transactions associated with the traded property and new home purchased, Mr. Brewer proceeded on the basis that the first home was being taken over by the Respondent and that the mortgage would be paid off after a month or so as a means for him to purchase the second home. What led him to believe this is not clear. Mr. Brewer's recollection is that he was told that everything would be taken care of and he would not have to worry about anything and there wouldn't be any problems about the house being traded and that he could stay in the home that he was selling until the new home had been built and that once built, all transactions would be taken care of. Both the traded property and the property being purchased were financed by Real Estate Financing, Inc. He was not represented by an attorney in these matters. Some undisclosed realtor had told Mr. Brewer he could have an attorney but that he really didn't need one.
As shown in the testimony of Mr. Brewer given at hearing, he had spoken to Respondent at closing. He also had conversations with Jackie Collins whom he believed to be a representative of Respondent. Jackie Collins was understood by Mr. Brewer to be a realtor. Again, the exact nature of the affiliation of Jackie Collins to the Respondent or his companies was not established in this hearing. Mr. Brewer did state that at the closing he was told by Respondent that there would be no problems. The nature of that remark was not further developed under interrogation of the witness. Nor was the matter of Mr. Brewer's comment to the effect that he had questioned the fact that his first mortgage on the Huntington Woods home was not assumable and had made that question known at the closing, other than to state that in response "they" had assured him everything would be taken care of and he wouldn't have to worry about it. This was associated with some remarks to the effect that Mr. Brewer should not worry that "we" would take it all in and that "they" would transfer everything over and take it out of the Brewers' name, again not pursued as to who "they" and "we" were and whether Respondent was a "they" or "we" or was in attendance when a "they" or "we" made the comments if he was not a "they" or "we." On this subject, Mr. Brewer was of the understanding that the transfer of the mortgage from Mr. Brewer to Respondent had in fact been tentatively approved by Real Estate Financing, Inc. but this was not proven by competent proof either.
Mr. Brewer received one of the February 8, 1986 letters from Respondent as previously described. He in turn composed a letter of complaint concerning the transactions associated with the traded property. The complaint is dated March 31, 1986 and is addressed "To whom it may concern".
As a result of the non-payment of the Huntington Woods property, Mr. Brewer received a letter purportedly from First Alabama for Real Estate Financing, Inc. dated February 13, 1986 that indicated that payment for the
mortgage in the Brewer property had not been paid in January and February, 1986 and under paragraph 18 of the mortgage, Mr. Brewer was being notified of the failure to make payments and the possibility of the pursuit of these delinquent payments through legal means. Whether the assertions in this unauthenticated hearsay document are true was not proven by competent evidence. Beyond that date, in an action in which Respondent and the Brewers were named as defendants, Federal National Mortgage Association by and through its agent Real Estate Financing, Inc. obtained a Summary Final Judgment of foreclosure on the Huntington Woods property on June 1, 1988. This points out that the Brewers were not released from the mortgage obligation as envisioned by paragraph 17.
It does not address what attempts were made by Respondent or his companies to gain their release.
As a result of the foreclosure, Mr. Brewer has had problems with his credit.
Notwithstanding the foreclosure on the Huntington Woods property, there has been no deficiency judgment entered against Mr. Brewer, to his knowledge.
COUNT V
On November 30, 1983, Collins Company of Pensacola, Inc. conveyed property at Eldorado Drive in Pensacola, Florida to Harold C. Miller, Jr., a Collins employee. That property was subject to a mortgage from Real Estate Financing, Inc. which included a paragraph 17 as included in the facts pertaining to the Hinson transaction involving that lender. This house was purchased because of a transfer of Mr. Miller to Pensacola as a condition of his employment with the Collins Company. The Collins Company of Pensacola was responsible for paying the mortgages during that time frame. In conversation with Respondent, it was determined that Miller would buy the house and the Respondent would buy it back and in the interim, Mr. Miller would live rent free. On May 23, 1985, a quit claim deed was executed by Mr. Miller in favor of the Respondent returning possession of the Pensacola home.
Because Respondent had told Mr. Miller that Respondent would make payments on this home, Mr. Miller did not make any payments. Mr. Miller speaks of a contract that was in writing and was involved in the closing on the Pensacola home when it was purchased and that there was a promise to assume the mortgage held by Real Estate Finance, Inc. This comment is made in a deposition of Mr. Miller which was entered as Exhibit 71 by the Petitioner. Whether this refers to an assumption by the Respondent or someone else is not clear. As pointed out by the deposition testimony, more importantly, this contract was not produced then and is not available now for consideration in the deliberation of this case.
Mr. Miller bought another house from Collins Construction in Leon County which is at Foxcroft. At the time of the deposition it was occupied by Susan, Mr. Miller's wife.
Real Estate Financing, Inc. sued the Respondent and Harold C. Miller, Jr. and Susan F. Miller, his wife, in a foreclosure associated with the Pensacola property and received a Final Judgement for foreclosure on May 11, 1988. This points out that the Millers were not released from the mortgage obligation.
By the circumstances, Mr. Miller was persuaded that the Respondent would take care of the mortgage on the Pensacola home until it was paid off. What the payment history was on the mortgage prior to foreclosure has not been established in this record. In terms of any promises from Respondent about further obligations on the mortgage on the Pensacola home, Mr. Miller describes that Respondent never told him that he was relieved of that obligation or that he wasn't. Mr. Miller did not question the Respondent about this because he trusted him.
COUNT VI
On September 25, 1981, Collins Builders, Inc. sold a home to Peter A. Hartmann at Grantham Lane in Tallahassee, Florida. Mr. Hartmann borrowed money from Real Estate Financing, Inc. to purchase that home secured by a mortgage that included paragraph 17 the language of which is the same as in the Hinson transaction with Real Estate Financing, Inc. That property was subsequently deeded to Respondent on March 25, 1983. In the deed Respondent as grantee promises to assume and pay the Real Estate Financing, Inc. mortgage on the property.
The Hartmann property upon which Real Estate Financing, Inc. held a mortgage was foreclosed upon in a suit by Federal National Mortgage Association by and through its agent Real Estate Financing, Inc. against Respondent and in Peter A. Hartmann. Action was taken by order of court on May 3, 1988 and the property sold on May 27, 1988 as evidenced by a Certificate of Sale from the Clerk of the Circuit Court, Second Judicial Court in and for Leon County, Florida. This points out that Mr. Hartmann was not released form the mortgage obligation. There is a potential for a deficiency judgement against Mr. Hartmann following that sale.
The details of the Hartmann transaction were not presented at hearing through his testimony or anyone else.
COUNT VII
On April 22, 1982, Collins Builders, Inc., sold John A. Miller and Jeanne B. Miller, his wife, a home in Lakewood Estates. That home was secured by a mortgage in favor of Real Estate Financing, Inc. It contained a paragraph
17 which had the language set out in the Hinson transaction with Real Estate Financing, Inc. which has been described.
The home at Lakewood Estates was traded for a home in Huntington Woods
II. Those transactions took place on March 2, 1984, and on that date the Millers executed a deed to Ralco, Inc., one of Respondent's companies. The warranty deed contained language to the effect that Ralco, Inc. promised to pay on the mortgage held by Real Estate Financing, Inc. Bobbie G. May signed the contract for sales and purchase as representative of Ralco, Inc. The Huntington Woods II property that was bought by the Millers was bought from Collins Builders, Inc. with Bobbie G. May serving as representative for Collins Builders, Inc. in the contract for sale and purchase.
The payments were not made as promised by Ralco, Inc. and Respondent sent the Millers one of the February 18, 1986 letters as previously described.
Ultimately, Florida National Mortgage Association through Real Estate Financing, Inc. sued Ralco, Inc. and the Millers in foreclosure and obtained a summary Final Judgement of Foreclosure against those defendants. This points
out that the Millers were not released from the mortgage obligation. This as with other foreclosures does not speak to attempts by Ralco, Inc. to be allowed to assume the mortgages in a novation. The property at Lakewood Estates which had been traded in was then sold June 28, 1988, as evidenced by a Certificate of Sale from the Clerk of the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida. That judgment against the Millers is shown on the credit report of John Henry Miller.
Mrs. Miller understood that the mortgage payments on the traded home would be made until the property was sold by Ralco, Inc. Visits to the neighborhood where that traded home was found did not indicate any activities toward the sale by way of for sale signs. No one was living in the traded home at that time.
The Millers were not represented by counsel during the course of the closings associated with the two homes. They were represented in the foreclosures suit.
In reference to the credit circumstance of the Millers, in trying to buy a vehicle they had been denied credit once. They were eventually able to buy the vehicle.
The Millers had been told when purchasing the initial home at Lakewood Estates that the reason for buying it would be the possibility of being able to trade for a larger home at some later date if needed. Again, it is not clear who made those statements to the Millers.
On the day before the closing of the traded home, Mrs. Miller spoke with Sissie Collins whom she understood to be affiliated with Respondent or one of his companies. The record does not show what that affiliation would have been, if anything. In this conversation with Sissie Collins, Mrs. Miller pointed out to Ms. Collins that the loan with Real Estate Financing, Inc. was not assumable without qualifying. Moreover, Mrs. Miller believed that Respondent did not qualify for the loan and that it was not assumable unless he did. Sissie Collins stated that this was not a problem and that Real Estate Financing, Inc. or First Alabama allowed Respondent to assume a mortgage and make the payments until the property was sold and the mortgage was paid off and that Real Estate Financing, Inc. was fully aware of the circumstance. Whether this was true or not was not proven by competent evidence. What Respondent knew about these matters wasn't shown either.
At the time of hearing, the Millers had not been called upon to pay any deficiencies associated with the foreclosure of their Lakewood Estates property.
COUNT VIII
Eric R. Larsen and Young Oak Larsen, his wife, purchased a home from a Collins Company in Huntington Woods Unit II. That house was eventually traded for a home in Cross Creek. The traded home was deeded to Respondent with the promise that Respondent would assume an existing mortgage on the Huntington Woods Unit II property which is owed to Andrew Jackson State Savings and Loan Association and make payments. The closing associated with the traded property took place on December 2, 1982.
The new home was being purchased through the same lending institution as the traded home.
The Larsens were not represented in the closings associated with the traded home and the purchased home. The closing of the traded home took place in offices of the Respondent's business. The second closing for the purchased home took place at the Andrew Jackson Federal Savings.
When Mr. Larsen asked why the deed for his Huntington Woods II property was being made to the Respondent, he was told that it was to facilitate the assumption of the mortgage. By his remarks, Mr. Larsen is not clear on whether the Respondent attended the closing associated with the traded property. He does recall someone whose name is Chip who he thought was the real estate broker who worked with Respondent was at the closing. No further indication of who this man named Chip might be as to association with Respondent or his companies was shown in this record.
The Larsens received a February 18, 1986 letter from Respondent as previously described, when the problems occurred about payments for the traded property, and at that time the mortgage was shown as being held by Colonial Mortgage Company.
Mr. Larsen also received a letter on April 8, 1987, purportedly from Colonial Mortgage Company, which states that Mr. Larsen is not released from liability on the traded property and some comment about assumption packages having been sent on various dates and reminds Mr. Larsen that the loan could not be assumed without the prospective purchaser's credit having been approved. The letter describes other perceptions about the ability of the Respondent to take over responsibility for the mortgage on the traded property. All of the matters set out in this unauthenticated correspondence are hearsay and they cannot form the basis of fact-finding in terms of whether Respondent or his companies were ever allowed to assume the mortgage on the traded property. People who had a direct knowledge of the mortgage circumstance with Colonial Mortgage Company pertaining to this traded property as with other traded property on which a lender held mortgages and sent letters have not been presented to explain that circumstance by competent evidence.
Likewise, the outcome of what has happened with the traded property in the Larsen transaction has not been proven by competent evidence. The explanation of the outcome with that property is hearsay which may not be used as a basis for fact finding.
COUNT IX
Robert R. and Patricia A. Aubin, husband and wife, traded property under the program which Respondent was affiliated with for taking in one residence and selling another. Mr. Aubin thought that this kind of transaction was common and that led to his telling his financing institution that the same builder was taking back the original home in order to build Mr. Aubin another house, thinking that this might simplify the transaction.
In speaking to someone about the obligation to deal with the existing mortgage on the traded property, he identifies the person he was talking to as Ed Hines. Again, it is not clear what Mr. Hines' association was with the Respondent and his companies. The traded home was going to be given to Tallahassee Properties. Mr. Aubin was not certain of the arrangement Respondent had with his individual companies. Ultimately, there was a problem with the payments on the house that had been traded in.
Respondent wrote the Aubins one of the February 18, 1986 letters reference the property at Huntington Woods Unit I. An arrangement was being made whereby Real Estate Financing, Inc. received $3,704.48 from Ralco, Inc. by a check of June 26, 1986. That check was issued after Ralco, Inc. conveyed the traded property back to the Aubins on June 17, 1986 and this resolved the problem for the Aubins.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action in accordance with Sections 120.57(1), Florida Statutes.
The Petitioner is given regulatory authority over Respondent as a licensed real estate broker for purposes of regulating his activities under that license. This regulatory authority is in keeping with Chapters 455 and 475, Florida Statutes.
Count IV of the Administrative Complaint has been dismissed by the Petitioner.
The burden of proving the allegations set out in the remaining counts, Counts I-III and V-X resides with the Petitioner and that proof must be clear and convincing. See Ferris v. Turlington, 510 So.2d 292, (Fla. 1987). Counts
I-III and V-IX allege a violation of Section 475.25(1)(d), Florida Statutes as described in the Statement of Issues. Count X is associated with allegations on all of the events in the previous counts and Respondent is said to have violated Section 475.25(1)(o), Florida Statutes as alluded to in the Statement of Issues.
In trying to characterize the quality of the prosecution of this case, it can only be described as insufficient to understand the circumstances of the questioned transactions. At best, the facts of these events, as understood by an analysis of the record, showed that Respondent had an affiliation with Tallahassee Properties who was taking possession of the traded properties and some of the traded properties were deeded to the Respondent and a company he was affiliated with. The closings in which Tallahassee Properties took possession and Respondent and the company were made grantee, were not real estate transactions in which commissions were received by a real estate firm, such that a fiduciary relationship existed through Respondent's activities as a realtor. These were business transactions in which Respondent was held to a duty to deal fairly with these homeowners. The details of what was said through Collins and Associates, Inc. in order to promote the idea of the trade-ins was not shown. The details of how Respondent or certain persons who might have been operating at Respondent's behest acquitted themselves at the closings of the traded properties was not adequately developed in the proof in terms of what control he had over those persons and the exact nature of what was being stated by Respondent and those other persons concerning the intention to assume the mortgages. This is tied in with the issue of what responsibility Respondent accepted to make sure that the persons who were selling their homes as trade-ins were told that they might be held responsible in the future to pay their mortgages on those traded homes. The way the record is left, it is one in which an arm's length transaction occurring between Tallahassee Properties, Ralco, Inc., and/or Respondent on the one hand and sellers on the other hand who have mortgages which contain the paragraph 17 "due on sale" clause. That paragraph existed before the sales ever occurred and absent some clear and convincing proof that the Respondent caused those persons to be put in jeopardy by some misleading statements about the significance of paragraph 17, his obligation to
discuss the paragraph or to cause that to be done has not been shown. Given that the Respondent was not dealing with the homeowners in the closing transactions associated with the purchase of the traded property as a realtor, he had no affirmative duty to discuss the significance of paragraph 17, in particular as it allows the mortgage to be called for payment if a sale is made, excepting certain conditions that do not pertain to these transactions at issue or that the home owners were not released from the mortgage unless a substitute had been approved in writing prior to the sale. What Respondent was responsible for, was the obligation at the inception to see that assumptions were applied for with the lenders and that the payments were made once the obligation was contracted for. This was his promise made in his individual capacity as grantee and through companies for which he was accountable. To succeed in the proof he would have to be shown to have intended to do otherwise when making the promise or to have made false representations to induce the homeowners to sell. It would appear to have been a fairly straight forward matter for the prosecution to search the records of those lenders and to bring forward appropriate witnesses and exhibits to answer the questions of whether attempts were made to process the assumptions and whether the payments were made on these properties before the petitions in bankruptcy and to develop more completely what was promised at closing by specific facts as to who the people were attending the closings, how they were related to Respondent and his companies, and as comprehensively as possible what they had to say. This was not done and the balance of the evidence which was presented does not address these issues sufficiently to make adequate factual findings on Respondent's culpability. To examine his culpability in a setting which is one not involving a fiduciary relationship, it was necessary to know how he carried how those promises for assumption and payment up until the time of the bankruptcy when he was no longer able to discharge the debt obligation and that proof is sorely lacking. The unfortunate position that the sellers of traded homes found themselves in is regrettable, but the prosecution has failed to identify the part to play, if indeed he had any, in their discomfort.
On the subject of remarks made in the February 18, 1986 letters to the homeowners who traded properties, comments concerning the unwillingness of the lender to allow an assumption at the time of closing suffer the same infirmities in proof as to the true nature of the lender's position. There was no competent proof about this issue. Had there been, Respondent may have been found to have made a material misstatement for which he could have been held accountable as a person obligated to deal fairly in that business transaction.
Finally, assuming that Respondent had some obligation to caution the home owners to seek legal assistance about the significance of paragraph 17 in the "due on sale" clause, i.e., whether is was enforceable or not, the nature of the loans in this case that were being made in terms of the origins of those loans and whether they were subject to enforcement by reference to those origins was not made clear by the proof. This lack of proof becomes significant because of the difference in treatment between certain federal loans and other loans in the matter of enforceability of the "due on sale" clause. See Clark v. Lackenmeier, 237 So.2d 583 (Fla. 2 DCA 1970); First Federal Savings and Loan Association of Englewood v. Lockwood, 385 So.2d 156 (Fla. 2 DCA 1980); Fed. Sav. & Loan Ass.'n. v. de la Cuesta, 458 U.S. 41, 1025 S. Cet. 3014, 73 Led 664 (1982) and Weiman v. McHaffie, 470 So.2d 682 (Fla. 1985).
is,
In consideration of the facts found and the conclusions of law reached, it
RECOMMENDED:
That a Final Order be entered which dismisses the Administrative Complaint. DONE and ENTERED this 20th day of October, 1989, at Tallahassee, Florida.
CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 20th day of October, 1989.
APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 89-3850
The following discussion is given concerning the proposed fact-finding offered by the parties.
PETITIONER'S FACTS
Paragraph 1 is utilized.
Paragraph 2 is not necessary to the resolution of the dispute.
Paragraph 3 is not necessary to the resolution of the dispute.
4-5. Paragraphs 4 and 5 are set out in the findings of fact. 6-10. Paragraphs 6-10 are subordinate to facts found.
Paragraph 11 has not been proven.
Paragraph 12 is correct in terms of Hinson's decision to convey the property; however, what Hinson was allowed to believe concerning the matter of assumption as it might show culpability on the part of the Respondent has not been proven.
This matter set forth in paragraph 13 has not been proven.
Paragraph 14 is not necessary to the resolution of the dispute.
Paragraph 15 is not necessary to the resolution of the dispute.
Paragraph 16 has not been proven as to any financial losses due to dishonest acts or false promises of the Respondent. Hinson was found to have been denied credit cards. The latter sentence in paragraph 16 is speculation and not fact.
Paragraph 17 is subordinate to facts found.
Paragraph 18 in the suggestion that the Respondent through his real estate office and salesmen made representations and promises to the Walshes was not proven in the sense that persons involved with the Walshes and the transaction to trade in the home were not sufficiently identified to understand how those persons were affiliated with the Respondent.
Paragraph 19 is accepted as to the documents and promises by the Respondent. Again, what the association was of the other person identified as the salesman may have been is not clear in this transaction.
Paragraph 20 is subordinate to facts found.
Paragraph 21 is subordinate to facts found.
Paragraph 22 is not proven in the first sentence. The second sentence is subordinate to facts found.
Paragraph 23 was not proven.
Paragraph 24 is subordinate to facts found.
Paragraph 25 is subordinate to facts found except in its suggestion that the Walshes had been deceived in the sense of the idea of the mortgage not having been assumed or attempts made to have it assumed.
Paragraph 26 is contrary to facts found.
Paragraph 27 is subordinate to facts found.
Paragraph 28 is subordinate to facts found except as it identifies the nature of the salesperson and what the affiliation was with Collins and Associates insufficient proof was made to show the true nature of the position of the salesperson in Collins and Associates, Inc., if any, and what Respondent had in mind and any instructions to this person who was reportedly the salesperson.
Paragraph 29 is subordinate to facts found as to promises in the document system responsibilities of Respondent. Otherwise it is not accepted.
Paragraph 30 is subordinate to facts found except as to its suggestion that deceit has been proven relating to the Respondent's attempts to have the mortgage assumed.
Paragraph 31 is subordinate to facts found.
Paragraph 32 is subordinate to facts found.
Paragraph 33 is subordinate to facts found.
Paragraph 34 is subordinate to facts found except as to the suggestion that this problem of the foreclosure dissolved the marriage.
Paragraph 35 in its first sentence is contrary to the Impression of the facts. There was a discussion and a decision reached to buy the house, whether Respondent was acting as a real estate broker individually or as a builder developer is unclear. Whether he made his employee buy the house or directed him to is not accepted as a fact.
Paragraph 36 is subordinate to facts found.
Paragraph 37 is subordinate to facts found.
Paragraph 38 was not proven on the issue of whether Respondent applied for an assumption. The Final Judgment of closure was proven.
Paragraph 39 is subordinate to facts found.
Paragraph 40 is subordinate to facts found.
Paragraph 41 is subordinate to facts found in a suggestion of an agreement to take over the Huntington Woods property. Reference to the allegations and the foreclosure petition are not necessary to the resolution of the dispute and do not constitute an explanation of how Respondent may have carried out his promise to take over responsibilities for the mortgage and the traded property which is the true issue.
Likewise, paragraph 42 where it is acknowledged in that suit the agreement to assume the mortgage does not answer the issue of whether attempts were made to bring about that assumption.
Paragraph 43 is subordinate to facts found.
Paragraph 44 and its suggestion as to any intended action on the part of a mortgage insurer has not been proven by competent evidence.
Paragraph 45 is subordinate to facts found.
Paragraph 46 is subordinate to facts found.
Paragraph 47 in the suggestion of activities by a salesperson of Collins and Associates has not been shown in terms of the affiliation with the Respondent's companies or with the Respondent in terms of the details of that affiliation sufficient to show that Respondent is culpable for any acts of his employees. Respondent through Ralco, Inc. had agreed to assume and pay for the existing mortgage on the traded property.
Paragraph 48 is subordinate to facts found.
Paragraph 49 is subordinate to facts found.
Suggestion by counsel that Respondent's admission of 86 coincide with the fact finding in paragraph 50 is erroneous as is reference to page 11 in the transcript which speaks of the admissions.
Paragraph 51 is subordinate to the facts found.
Paragraph 52 is subordinate to the facts found with the exception that the Respondent was not shown to have been deceitful in saying that the mortgage had not been allowed for assumption in that no competent proof was offered as to the attitude of the lender concerning the assumption.
Paragraph 53 is subordinate to the facts found.
Paragraph 54 is correct in terms of the credit report on foreclosure, otherwise it is rejected as heresay.
Paragraph 55 is inaccurate when it suggests that proof was made that Respondent did not take care of the assumption in the Larsen trade-in property.
Paragraph 56 is subordinate to the facts found.
Paragraph 57 constitutes legal argument.
RESPONDENT'S FACTS
1-7. Paragraphs 1-7 are subordinate to facts found.
The first sentence of Paragraph 8 is contrary to facts found. The remaining sentences within paragraph 8 are subordinate to facts found.
Paragraph 9 is subordinate to facts found.
In paragraph 10, Charles Middleton was not shown to have been the closing agent for Capital Abstract and Title, Inc. in the transactions which are at issue here.
In paragraph 11, Respondent was responsible for applying for the mortgage assumptions but the proof was not made that he did not do so or that he did.
Paragraph 12 is subordinate to the facts found.
Paragraph 13 is subordinate to the facts found.
Paragraph 14 is hearsay and may not form the basis of the fact finding.
Paragraph 15 is hearsay and may not form the basis of the fact finding.
Paragraph 16 is subordinate to the facts found.
Paragraph 17 is subordinate to the facts found.
Paragraph 18 is subordinate to the facts found.
Paragraph 19 is subordinate to the fact found.
Paragraph 20 is not accepted.
Paragraph 21 is not accepted.
Paragraph 22 is subordinate to the facts found.
Paragraph 23 is not relevant.
Paragraph 24 is the reputation of the Respondent is only
relevant if culpability has been shown. It has not been. 25. Paragraph
25 is subordinate to facts found.
Paragraph 26 is not accepted in terms of what position Chip Miller held and what capacity he was acting in when involved in the Hinson transaction as employee of Collins and Associates, or Tallahassee Properties or exactly what capacity.
Paragraph 27 is subordinate to the facts found.
Paragraph 28 is subordinate to the fact found.
Paragraph 29 is heresay and not accepted.
Paragraph 30 is contrary to the impression of the credit circumstance of Mr. Hinson. Whatever the current credit report may say, Mr. Hinson's credit had been hurt.
Paragraph 31 is true.
Paragraph 32 is subordinate to the facts found except for deprivation of credit.
Paragraph 33 is not necessary to the resolution of dispute.
Paragraph 34 is subordinate to facts found.
Paragraph 35 is subordinate to facts found.
Paragraph 36 is contrary to facts found.
Paragraph 37 is contrary to facts found.
Paragraph 38 is subordinate to facts found.
Paragraph 39 is subordinate to facts found.
Paragraph 40 is subordinate to facts found.
Paragraph 41 is subordinate to facts found, except as to credit.
Paragraph 42 is subordinate to facts found.
Paragraph 43 is subordinate to facts found, except in its suggestion of what capacity Sissie Collins really served which is not established.
Paragraph 44 is subordinate to facts found, except not proven that mortgage assumption tentatively approved.
He did make representations as the mortgage grantee.
Paragraph 46 is subordinate to the fact found.
Paragraph 47 is subordinate to the facts found.
Paragraph 48 is contrary to facts found.
There is no paragraph 49.
Paragraph 50 is subordinate to the facts found.
Paragraph 51 is subordinate to the facts found, except as to credit.
Paragraph 52 is subordinate to the facts found.
53.-55. Paragraphs 53-55 are subordinate to the facts found.
Paragraph 56 is contrary to facts found.
Paragraph 57 is subordinate.
Paragraph 58 is not necessary to the resolution of the dispute.
Paragraph 59 is subordinate to the facts found.
60.-62 Paragraphs 60-62 are subordinate to the facts found. 63.-64. Paragraphs 63-64 are subordinate to the facts found.
Paragraph 65 is subordinate to facts found.
Paragraph 66 is subordinate to the facts found.
Paragraph 67 is subordinate to the facts found.
Paragraph 68 is subordinate to the facts found.
Paragraph 69 is subordinate to the facts found.
Paragraph 70 is subordinate to the facts found.
71.-72. Paragraphs 71-72 are subordinate to the facts found.
Paragraph 73 in the first sentence is subordinate to the facts found. The second sentence has to do with whether Andrew Jackson gave preliminary approval for the assumption of the mortgage on the traded property and is heresay not accepted.
Paragraph 74 is not necessary to the resolution of the dispute.
Paragraph 75 is subordinate to the facts found.
76.-77. Paragraphs 76 and 77 are accepted as true but are not needed.
78.-79. Paragraphs 78-79 are subordinate to the facts found.
80. In this instance and all that have discussed before, Respondent did make representations through the February 18, 1986 letters.
81-82. Paragraphs 81-82 are subordinate to facts found.
83. Paragraph 83 is subordinate to facts found.
84.-85. Paragraphs 84-85 are subordinate to facts found.
Suggestion that the paragraph 86 relates back to initial paragraphs is acknowledged and accepted in the manner that has been described in the discussion at the paragraphs set forth in the proposed fact finding.
Paragraph 87 is legal argument.
COPIES FURNISHED:
Darlene F. Keller, Executive Director Division of Real Estate
Department of Professional Regulation
400 West Robinson Street Post Office Box 1900 Orlando, Florida 32801
James H. Gillis, Esquire DPR-Division of Real Estate Legal Section
400 West Robinson Street Post Office Box 1900 Orlando, Florida 32817
William M. Furlow, Esquire
Katz, Kutter, Haigler, Alderman, Eaton, Davis, Marks, P.A.
Post Office Box 1877 Tallahassee, Florida 32302-1877
Keith Kinderman, Esquire 906 Thomasville Road
Tallahassee, Florida 32303
Kenneth E. Easley, General Counsel Department of Professional
Regulation
1940 North Monroe Street Tallahassee, Florida 32399-0792
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF PROFESSIONAL REGULATION
FLORIDA REAL ESTATE COMMISSION
DEPARTMENT OF PROFESSIONAL REGULATION, DIVISION OF REAL ESTATE,
Petitioner,
vs. CASE NO. 0161079
DOAH NO. 89-3850
RALPH J. COLLINS,
Respondent.
/
FINAL ORDER
On December 5, 1989, the Florida Real Estate Commission heard this case to issue a Final Order. Hearing Officer Charles C. Adams of the Division of Administrative Hearings presided over a formal hearing or August 24, 1989. On October 20, 1989, he issued a Recommended Order, a copy of which is attached hereto as Exhibit A and made a part hereof.
After hearing argument of counsel and upon a complete review of the record (including the documentary evidence admitted at the hearing, the transcript of the formal hearing, the Petitioner's and Respondent's Proposed Recommended Orders, the Petitioner's Exceptions to the Hearing Officer's Recommended Order) and having been otherwise fully advised in the premises, the Florida Real Estate Commission finds:
That the Hearing Officer's Findings of Fact numbers 1 through 9 inclusive, first Finding of Fact number 10 (identified by Petitioner as 10-A in its Exceptions), numbers 11 through 16 inclusive, 21, 24 through 38 inclusive, 40-42 inclusive, 44-70 inclusive, and 72 through 91 inclusive are amply supported by competent and substantial evidence in the record and are accepted and adopted by the Commission as its own. (Exceptions numbers 21 and 26 were withdrawn.)
That the Hearing Officer's second Finding of Fact number 10 (identified in Petitioner's Exceptions as 10-B) should be rejected, as the evidence in the record (Transcript Page 38, lines 17 through 19) reflects Respondent's own testimony to the effect that "[I]ndividuals such as myself and my brother or three other companies would apply for the assumption of loans."
That the Hearing Officer's Findings of Fact numbers 17 through 20 should be rejected as irrelevant in regard to the subject matter of the complaint, to wit: failure to apply to assume the mortgages on those properties involved in the trade-in transactions, and failure to disclose to the owners of the traded-in properties that no assumption application had been made, nor that any assumption had been accepted or approved by the mortgage holders.
The Hearing Officer's Findings of Fact numbers 22 and 23 should be rejected also because of lack of relevancy, as they are unrelated to the subject matter of the complaint (as admitted and so found by the Hearing Officer in the last sentence of Finding of Fact number 23).
The Hearing Officer's Finding of Fact number 39 is rejected as not being supported by competent, substantial evidence in the record, and by the Hearing Officer's failure to pursue clarification of the witness's testimony.
Exception 17: Rejected. The evidence (Transcript Page 41, lines 12-
13) supports the Hearing Officer's Finding of Fact number 44, and he correctly used the expression "taken over."
Exception 25: Rejected. The Hearing Officer was correct in finding that the letter from Colonial Mortgage Company to Mr. Larsen, unauthenticated, was hearsay and could not be used by itself to support a finding of whether the Respondent or his companies ever were allowed to assume the mortgage on the traded-in property.
Exception 27: Rejected. Witness Aubin testified (Transcript Page 231, line 22) that he assumed he (Ed Hines) worked for Collins Builders. At this hearing for Final Order, Petitioner corrected his Exception, admitting having misstated the witness's reply.
Exceptions 21 and 26: Withdrawn by the Petitioner during this hearing for Final Order, and no ruling shall be made on these Exceptions.
j . Exceptions 5, 8, 10, 15, 16 and 22: Accepted. Rulings on the Hearing Officer's Findings of Fact affected by these Exceptions appear at Paragraphs 2 through 7, inclusive, of this Order.
CONCLUSIONS OF LAW
The Hearing Officer's Conclusions of Law are accepted and adopted, to the extent that the Commission concludes that because of Ralph J. Collins' status as a real estate broker, Respondent Collins was held to a duty to deal fairly with the owners of the traded-in properties.
The Commission further concludes that although in those transactions involving the aforesaid traded-in properties the Respondent was not acting as a broker, his duty regarding fair dealing still was present and in existence.
Therefore, the Respondent's failure to make known to the owners of the traded-in properties that said owners had a continuing liability to the holders of mortgages encumbering the traded-in properties, until and unless those mortgagees released said owners from liability on those mortgages and notes, clearly denotes that the Respondent was culpably negligent by reason of such non-disclosure, pursuant to s.475.25(1)(b), Florida Statutes.
Whether the homeowners of the traded-in properties suffered damages or not because of Respondent's failure to disclose the possibility of continuing liability of those homeowners is immaterial and has no effect on the finding and conclusion of the Respondent's guilt of culpable negligence, as set forth in the aforesaid statutory provision.
It is therefore ORDERED that the Respondent be reprimanded.
This Order shall be effective 30 days from date of filing with the Clerk of the Department of Professional Regulation. However, any party affected by this Order has the right to seek judicial review, pursuant to s.120.68, Florida Statues, and to Rule 9.110, Florida Rules of Appellate Procedure.
Within 30 days of the filing date of this Order, review proceedings may be instituted by filing a Notice of Appeal with the Clerk of the Department of Professional Regulation at 400 West Robinson Street, Suite 309, Orlando, Florida 32801. At the same time, a copy of the Notice of Appeal, with applicable filing fees, must be filed with the appropriate District Court of Appeal.
DONE AND ORDERED this 5th day of December 1989 in Orlando, Florida.
Darlene F. Keller, Director Division of Real Estate
I HEREBY CERTIFY that a true copy of the foregoing was sent by U.S. Mail to: William Furlow, Esquire, Katz Kutter et al, P. O. Box 1877, Tallahassee, Fl 32301-1877; to Hearing Officer Charles Adams, Division of Administrative Hearings, 1230 Apalachee Parkway, Tallahassee, Fl 32399-1550; and to James Gillis, Esquire, DPR, P O Box 1900, Orlando, Fl 32802, this 15th day of December 1989.
MO :pep Darlene F. Keller, Director
| Issue Date | Proceedings |
|---|---|
| Oct. 20, 1989 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 05, 1989 | Agency Final Order | |
| Oct. 20, 1989 | Recommended Order | Failure of proof to show fraud etc. in business transactions involving assumption of mortgages of property being "taken in on trade." |
