STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-2244

)

PASQUALE A. VERONA and )

P.A. VERONA AND ASSOCIATES, ) INC., )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on June 20, 1990, in Fort Myers, Florida.

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

P. O. Box 1900

Orlando, Florida 32802-1900

For Respondents: Pasquale A. Verona, pro se

5726 Montilla Drive

Fort Myers, Florida 33907 STATEMENT OF THE ISSUES

Whether respondents' licenses as real estate brokers should be disciplined for the reasons cited in the administrative complaint, and if so, what is the appropriate penalty.

PRELIMINARY STATEMENT

By an administrative complaint filed on October 18, 1989, petitioner, Department of Professional Regulation, Division of Real Estate, charged that respondents, Pasquale A. Verona and P. A. Verona and Associates, Inc., both licensed real estate brokers, had violated Chapter 475, Florida Statutes (1987), and Rule 21V-10.032, Florida Administrative Code (1987), in conjunction with a real estate transaction that occurred in 1988. More specifically, petitioner alleged that after a real estate transaction did not close, respondents failed

(a) to account for and deliver the cash deposit posted by the purchaser as required by Subsection 475.25(1)(d), Florida Statutes (1987), (b) to timely institute one of the statutory procedures as required by Rule 21V-10.032, Florida Administrative Code (1987) thereby violating Subsection 475.25(1)(e),

Florida Statutes (1987), and (c) to maintain trust funds in their real estate brokerage escrow bank account or some other proper depository until disbursement was authorized as required by Subsection 475.25(1)(k), Florida Statutes (1987).

Respondents initially requested an informal hearing pursuant to Subsection 120.57(2), Florida Statutes (1989) to contest the proposed agency action. After disputed factual matters arose, the matter was referred by petitioner to the Division of Administrative Hearings on April 13, 1990, with a request that a hearing officer be assigned to conduct a hearing. By notice of hearing dated May 2, 1990, a final hearing was scheduled on June 20, 1990, in Fort Myers, Florida.

At final hearing, petitioner presented the testimony of Donna Jean Minnich, Barry C. Minnich, and John E. Harris. Also, it offered petitioner's exhibits 1-

1. All exhibits were received in evidence. Respondent Pasquale A. Verona testified on his own behalf. Respondents also presented the testimony of Gary Fluhraty, Mary Jane Kalpin, and John E. Smith and offered respondents' exhibits A-Q. All exhibits were received in evidence.

   
   

   There is no transcript of hearing. At the request of petitioner, the time for filing proposed findings of fact and conclusions of law was extended to July 20, 1990, and the same were timely filed by petitioner. A ruling on each proposed finding is made in the Appendix attached to this Recommended Order.

   
   

   FINDINGS OF FACT

   
   

   Based upon all of the evidence, the following findings of fact are determined:

   
   

   1. Respondent, Pasquale A. Verona (Verona), is a licensed real estate broker having been issued license number 0389728 by petitioner, Department of Professional Regulation, Division of Real Estate (Division). He is the qualifying broker and an officer of respondent, P. A. Verona and Associates, Inc., which holds broker's license number 0251674. The real estate firm is located at 3828 Seago Lane, Fort Myers, Florida.

      
      

   2. In May 1988 Donna Jean and Barry C. Minnich were shopping for a residential lot in Carillon Woods, a subdivision in Fort Myers, Florida. After seeing a lot advertised by Verona s firm, Donna Jean telephoned Verona's office and made an appointment to inspect the lot on May 13, 1988.

      
      

   3. After inspecting the lot, Donna Jean decided to purchase the same and, on the same date, she and Verona orally agreed upon a purchase price of $49,000 with a closing date of May 25, 1988. Verona desired to close on that date since he had a previously planned trip to California with his family beginning on May 26, 1988.

      
      

   4. The oral agreement was reduced to a written contract and executed by the parties on May 13, 1988. At Verona's request, and at the same time the contract was executed, an addendum was prepared by the Minnichs' attorney which provided, in part, that a $54,000 sales price would be used but that at closing Verona would refund $5,000 to the Minnichs. This refund was to be taken out of Verona's real estate commission and rebated to the buyers. Thus, the net sales price was still $49,000 as originally agreed to by the parties. As earnest money, the Minnichs gave Verona $5,000 which was deposited into Verona' s trust account.

   5. The Minnichs immediately made application for a loan with John E. Smith, a vice-president of a local C & S bank. On May 18, 1988 they placed an order for a title commitment with Southwest Title, Inc., a Fort Myers title company designated by the parties to prepare the title insurance and handle the closing. The title company was placed on notice that the contract called for a May 25 closing date.

      
      

   6. According to Mary Jane Kalpin, a Southwest Title, Inc. employee who worked on this transaction, there were unsatisfied water and sewer assessments on the lot owed by Verona to the City of Fort Myers. However, she said this was not unusual and happened quite frequently in subdivisions such as Carillon Woods. As it turned out, however, the city employee who oversaw these assessments was on vacation the week prior to the May 25 closing date, and Kalpin could not obtain payoff figures from any other city employee. In addition, Kalpin needed Verona to furnish her with a certificate of good standing on the property. 1/ He did not do so by May 25. Therefore, she was unable to prepare a closing package by the contract closing date.

      
      

   7. On May 23, 1988, C & S issued a loan commitment to the Minnichs. In the meantime, Kalpin had completed her title search and on May 23 she spoke with Verona who advised her the deal must close by May 25. When she responded she could not get payoff figures from the City by that date, Verona told her it was a "dead deal".

      
      

   8. On or about May 24, Donna Jean spoke with Verona and, after being told of the problems encountered by the title company, reiterated her desire to buy the lot. She requested that Verona extend the time for closing so that the missing items could be obtained. Although Verona denies that he gave such an extension, and nothing was reduced to writing, it is found that Verona orally agreed to an extension of time prior to leaving for California. This is supported by the fact that, after returning from California, Verona's wife delivered a certificate of good standing to the title company on June 9, and the title company representative was under the impression a closing would be held at 1:00 p.m. the same date. However, at Verona's insistence, the closing did not take place.

      
      

   9. On June 15, Verona sent the Minnichs a letter with a check in the amount of $5,000 which represented the deposit on the property. In his letter, Verona stated that he "realize(d) that the delay in the closing on Lot #6, Carillon Woods is not being caused by anything you have done" and that those things occurred whenever "we place a transaction in the hands of another". He added that he had received another offer in the amount of $58,000 from another party and if the Minnichs were willing to pay a "net figure of $56,000", he would give them the opportunity to purchase the lot. The Minnichs chose not to cash the check but instead advised Verona they intended to seek legal advice on their rights under the original contract. Donna Jean deposited the check around June 22 but learned the next day that Verona had stopped payment on the check.

      
      

   10. On June 24, 1988 Verona again wrote the Minnichs and advised them to reconsider their threat to take legal action since he had "never lost a real estate dispute". He also advised them that, pursuant to the contract, he was claiming the $5,000 as liquidated damages due to their failure to close by May

1. Finally, he pointed out that the original contract "was terminated on June

   15 by letter".

   1. On an undisclosed date, but prior to September 1988, Donna Jean spoke with Verona by telephone and requested a refund of her deposit. Her request was denied. The Minnichs then filed a complaint with the Division. On September 2, 1988 Verona advised the Division there was a dispute concerning the deposit and requested the issuance of a disbursement order. On January 11, 1989, the Division, through its counsel, wrote Verona and advised him that, because of disputed facts a disbursement order could not be issued, and he must immediately seek arbitration or file an interpleader action in circuit court.

      
      

   2. Choosing to utilize arbitration, Verona contacted the Miami office of the American Arbitration Association (AAA) on February 15, 1989 and requested a "package" from which an agreement to arbitrate could be prepared. After receiving a package of documents, Verona sent an agreement with a letter to the Minnichs on February 24, 1989. They did not respond to his offer to arbitrate. On March 6 he sent a follow-up letter again requesting the Minnichs to arbitrate. On March 9 Verona learned that AAA would not arbitrate the dispute. As of that date, Verona was aware of the fact that his only remaining alternative was to file an interpleader action in circuit court.

      
      

   3. On March 23, 1989 the Division, through its counsel, sent a second letter to Verona advising him that he had apparently ignored the earlier letter and that he must immediately take action to resolve the dispute.

      
      

   4. On May 5, 1989 Verona sent his attorney, George Knott, a check in the amount of $5,000 with a request that Knott "handle the interplea (sic) action as to the disposition of $5,000 previously held in my real estate firm's escrow account". The suit was eventually filed by Knott in circuit court on September 8, 1989. The suit requested that Verona be awarded the $5,000 deposit plus "damages" and attorney's fees. When asked at hearing why the suit had not been filed earlier, Verona responded that, once the matter was turned over to his attorney, he had no control over the actions of his attorney. He also acknowledged that he has never instructed his attorney to attempt to resolve the matter as quickly as possible. As of the date of hearing (June 20, 1990), the matter was still pending in circuit court.

      
      

   5. There is no evidence that Verona did not maintain the $5,000 deposit in his firm's escrow account until the money was turned over to his attorney on May 5, 1990. There is also no evidence that respondents have ever been disciplined by the Division.

      
      

      CONCLUSIONS OF LAW

      
      

   6. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties hereto pursuant to Subsection 120.57(1), Florida Statutes (1989).

      
      

   7. Because respondents' professional licenses are at risk, petitioner is obligated to prove the allegations in the complaint by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

   8. Respondents are charged with having violated Subsections 475.25(1)(d),

      1. and (k), Florida Statutes (1987), and Rule 21V-10.032, Florida Administrative Code (1987) by their conduct in the Minnich transaction. The cited subsections authorize the Division to initiate disciplinary action against a license if a licensee:

         
         

         1. 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, of 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

            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. He has failed to deposit money in an escrow account when the licensee is the purchaser of real estate under a contract where the contract requires the purchaser to place deposit money in an escrow account to be applied to the purchase price if the sale is consummated.

            * * *

         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, credit union, 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, credit union, 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 the records to be maintained by the broker and the manner which such deposits shall be made.

      * * *

      
      

      As required by the foregoing statute, the Division has adopted Rule 21V-10.032, Florida Administrative Code (1987), which sets forth the time periods in which a broker must take action after receiving conflicting demands for a deposit. The rule reads as follows:

      
      

      21V-10.032 Notice Requirements. A real estate broker upon receiving conflicting demands on an earnest money deposit held in the broker's escrow account must notify the Florida Real Estate Commission, in writing, within five (5) working days of last party's demand and must institute one of the procedures of Section 475.25(1)(d), Florida Statutes, within thirty (30) days after the last demand. A real estate broker who has good faith doubt as to who is entitled to an earnest money deposit in the broker's escrow account must notify the Florida Real Estate Commission, in writing, within fifteen (15) working days from the contractual closing date and institute one of the procedures of section 475.25(1)(d), Florida Statutes, within thirty (30) days after the scheduled date of closing. (Emphasis added)

   9. The complaint alleges that respondents "failed to account and deliver a deposit in violation of Subsection 475.25(1)(d), Florida Statutes," (Counts I and II), "failed to timely institute one of the procedures of Subsection 475.25(1)(d), Florida Statutes, in violation of Rule 21V-10.032, Florida Administrative Code and therefore in violation of Subsection 475.25(1)(e), Florida Statutes" (Counts III and IV), and "failed to maintain trust funds in the 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" (Counts V and VI). Therefore, within the context of this complaint, even though the parties focused much of their attention on the issues of whether a breach of the contract occurred, and if so, who was responsible, those issues need not be reached. Parenthetically, however, it is noted that the Minnichs could hardly be said to have breached the contract because of the seller's failure to produce a certificate of good standing by the closing date, or because the title company, at no fault of either party, could not obtain payoff amounts for certain utility assessments.

      
      

   10. As to Counts I and II, the clear and convincing evidence shows that respondents failed to account and deliver a deposit within the meaning of subsection 475.25(1)(d). This is because they failed to "promptly" employ one of the escape procedures contained therein as more fully discussed in the following paragraph. Therefore, Counts I and II have been sustained.

       
       

   11. As to Counts III and IV, the evidence is clear and convincing that respondents did not conform to the time limitations set forth in rule 21V-

       10.032. More specifically, by waiting from around January 15 until February 24, 1989 to offer the Minnichs an opportunity to arbitrate, and waiting from March 9 until May 5, 1989 to turn the matter over to an attorney, they failed to "substitute one of the procedures of Section 475.25(1)(d), Florida Statutes, within thirty (30) days after the last demand" as required by rule 21V-10.032. This in turn constitutes a violation of subsection 475.25(1)(e), which makes it unlawful to violate any Division rule or statutory requirement. Therefore, the charges in Counts III and IV have been sustained.

       
       

   12. The evidence is less than clear and convincing that respondents failed to maintain the Minnich deposit in their escrow account from May 1988 until May 1989 as required by subsection 475.25(1)(k). Therefore, this charge should be dismissed.

       
       

   13. Rule 21V-24.001, Florida Administrative Code (1989) sets forth suggested disciplinary guidelines to be used whenever licensees are found guilty of violating chapter 475. For a violation of subsection 475.25(1)(d), subsection (3)(e) of the rule suggests a penalty ranging up to 5 years suspension of the license. For a violation of subsection 475.25(1)(e) subsection (3)(f) of the rule suggests a penalty ranging up to 8 years suspension or revocation of the license. Other than a lack of evidence regarding any prior disciplinary action taken by the Division against respondents, and the lengthy time it has taken the buyers to determine if they are entitled to a refund of their deposit, no mitigating or aggravating factors are of record.

       
       

   14. In its proposed order, petitioner's counsel recommends the imposition of a six month suspension of respondents' brokers licenses to be followed by a one year probationary period to be accompanied by respondent Verona successfully completing sixty hours of post education prior to the termination of the

probation period. This penalty is within the guidelines and, except for the recommendation that Verona take sixty hours of unspecified coursework, appears to be appropriate given the circumstances herein.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that respondents be found guilty of violating Subsection

475.25(1)(d) and (e), Florida Statutes (1987) and Rule 21V-10.032, Florida

Administrative Code (1987), and that their brokers' licenses be suspended for six months and thereafter be placed on one year's probation.

DONE and ENTERED this 24th day of July, 1990, in Tallahassee, Florida.

DONALD ALEXANDER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of July, 1990.

ENDNOTES

1/ Since the lot was owned by a corporation, and not Verona individually, it was necessary that Verona obtain a certificate of good standing from the Department of State certifying that the corporation was then in "good standing" under Florida corporate law.

APPENDIX

Petitioner:

1-3. Partially adopted in finding of fact 1.

1. Partially adopted in findings of fact 2 and 4.

2. Partially adopted in findings of fact 4.

3. Partially adopted in finding of fact 5.

4. Partially adopted in finding of fact 6.

5. Partially adopted in findings of fact 7 and 8.

6. Partially adopted in finding of fact 8.

7. Partially adopted in finding of fact 9.

11-12. Partially adopted in finding of fact 11. 13-14. Partially adopted in finding of fact 14.

Note - Where findings have been partially used, the remainder has been rejected as being cumulative, unnecessary, subordinate,

irrelevant or not supported by the more credible and persuasive evidence.

COPIES FURNISHED:

Steven W. Johnson, Esquire

P. O. Box 1900 Orlando, FL 32802-1900

Mr. Pasquale A. Verona 5726 Montilla Drive

Fort Myers, FL 33907

Kenneth E. Easley, Esquire

1940 North Monroe Street, Suite 60

Tallahassee, FL 32399-0792

Darlene Keller, Executive Director Division of Real Estate

P. O. Box 1900 Orlando, FL 32802-1900

Docket for Case No: 90-002244

Orders for Case No: 90-002244