STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL ) REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 90-5320

)

WARREN A. RAYMOND, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Claude B. Arrington, held a formal hearing in the above-styled cases on December 11, 1990 in Miami, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esquire

Senior Attorney

Department of Professional Regulation, Division of Real Estate

Post Office Box 1900 Orlando, Florida 32802-1900

For Respondent: Norman Segall, Esquire

Bentata, Hoet & Associates and Zamora, Segall, Lacasa &

Schere

3191 Coral Way, Third Floor Miami, Florida 33145

STATEMENT OF THE ISSUE

Whether the Respondent committed the violations alleged in the Administrative Complaint and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

Respondent is licensed in the State of Florida by Petitioner as a real estate broker. On May 17, 1990, Petitioner filed a one count administrative complaint against Respondent alleging that Respondent engaged in certain business dealings with Kenny Mohammed and Annie Mohammed and that during the course of those dealings he engaged in conduct that violated the provisions of Section 475.25(1)(b), Florida Statutes. Respondent timely demanded a formal administrative hearing to contest the charges and this proceeding followed.

At the formal hearing, Petitioner presented the testimony of Respondent, Warren A. Raymond and of Kenny Mohammed. In addition, Petitioner presented 8 documentary exhibits, each of which was accepted into evidence. Respondent presented the testimony of Michael Alman, an attorney who represented Mr.

Raymond during the subject transaction, and presented 2 documentary exhibits, both of which were accepted into evidence.

A transcript of the proceedings has been filed. At the request of the parties, the time for filing post-hearing submissions was set for more than ten days following the filing of the transcript. Consequently, the parties waived the requirement that a recommended order be rendered within thirty days after the transcript is filed. Rule 22I-6.031, Florida Administrative Code. Rulings on the parties' proposed findings of fact may be found in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Petitioner is an agency of the State of Florida charged with the responsibility and duty of investigating and prosecuting complaints against real estate professionals in the State of Florida.

   
   

2. Respondent is now and was at all times material hereto a licensed real estate broker in the State of Florida, having been duly issued license numbers 0263586, 0261820, 0260480, and 0300938.

   
   

3. The last license issued to Respondent was as a broker with the following entities: Avatar Realty, Inc., 4550 Poinciana Boulevard, Kissimmee, Florida; Avatar Communities, Inc., 201 Alhambra Circle, Coral Gables, Florida 33134; Golden Gate Realty, Inc., 4736C Golden Gate Parkway, Naples, Florida; and Avatar Condominium Management, Inc., 201 Alhambra Circle, Coral Gables, Florida.

   
   

4. Prior to February 20, 1987, Respondent was the owner of a convenience store known as Hemispheres Food Mart, which was located in the Hemispheres condominium and office complex in Hollywood, Florida.

   
   

5. On or about February 20, 1987, Respondent, as owner, entered into a three month exclusive right of sale listing agreement with South Florida Business Negotiators, Inc., for the sale of the Hemispheres Food Mart, at an asking price of $100,000.

   
   

6. In connection with the foregoing listing agreement, the Respondent represented and warranted as true that the: "Business doing $286,000 yearly net

   $55,000 ambitious owner can improve potential to $350,000 yearly."

   
   

7. On or about April 1, 1987, the Respondent, as seller, entered into a "Contract for Purchase and Sale of Stock of Hemispheres Food Mart, Inc., D/B/A Hemispheres Mini Mart" with Kenny Mohammed and Annie Mohammed, his wife, as purchasers, to sell the corporate stock of Hemispheres Food Mart, Inc. to the Mohammeds. This contract was executed by the Mohammeds on April 2, 1987. The first line of the contract reflects an erroneous date for the contract of May 5, 1987.

8. Paragraph 12 of the "Contract for Purchase and Sale of Stock of Hemispheres Food Mart, Inc., D/B/A Hemispheres Mini Mart", provided as follows:

   
   

   12. PURCHASER'S RIGHT TO INSPECTION OF SELLER'S RECORDS.

   The Purchaser, within 72 hours after the con- tract has been signed and executed by both parties, shall have the right, either by himself or through his accountant, to inspect the financial records and receipts of the Seller to verify the amount of sales of the Seller on a weekly basis. The Purchaser shall verify that the average gross sales on a weekly basis for the Seller, during the time period from January 1 through April 1 (the season) exceed the sum of $8,400.00 per week. If the Purchaser by himself or through his accountant determines that the gross sales for the Seller are less than $8,400.00 per week, the Purchaser shall have the unilateral right to terminate

   its obligations under the terms of this Contract. Seller shall supply Purchaser with copies of

   1985 and 1986 tax returns.

   The Seller agrees to allow the Purchaser to sit in the place of business for a period of one week to observe and verify that the stated daily gross sales of the business exceed

   $1,200.00. If during the one-week observation period the daily gross sales do not meet $1,200.00, the Purchaser reserves the right to cancel this Agreement and the deposit held in escrow shall

   be refunded to them.

   
   

9. On May 7, 1987, Respondent and the Mohammeds executed an addendum to their contract. Paragraph 23 of the addendum provides as follows:

   
   

   23. INSPECTION OF RECORDS

   It is hereby agreed that both parties shall have complied with paragraph 12, PURCHASERS'

   RIGHT TO INSPECTION OF SELLER'S RECORDS, and

   therefore same shall be considered null and void.

   
   

10. The representation contained in the contract relating to the level of sales was for sales made during the "season" between January 1 and April 1. Mr. Mohammed exercised his right to observe the sales during the week that began April 6, 1987. During the week long observation period, the sales for two of the days did not equal $1,200. Mr. Raymond provided various records and cash register tapes for the period January 1 - April 1, 1987, for inspection by Mr. Mohammed and Mr. Mohammed's financial adviser. Following the inspection of these records and the one-week observation period, Mr. Mohammed, against the advice of his attorney, elected to close the transaction. The transaction closed in May 1987. (The closing statement signed by Respondent and the Mohammeds does not reflect the day in May the transaction closed.)

11. Subsequent to the closing, the Mohammeds sued Respondent in a civil action brought in the Circuit Court of the 17th Judicial Circuit, in and for Broward County, Florida. The "Final Judgment for Plaintiffs" entered September 19, 1989, by Circuit Judge J. Cail Lee provides, in pertinent part, as follows:

    
    

    ... [T]he Court having heard the testimony of all witnesses and having examined the proofs offered by the respective parties, the court finds that he testimony of the two witnesses

    was to the effect the defendant, Warren Raymond, falsified sales during the sales verification period to induce the plaintiffs, Kenny Mohammed and Annie Mohammed, to complete the purchase of the Hemispheres Mini Mart, and that constituted fraud, and that constituted a basis not only

    for compensatory damages but punitive damages as well. It is therefore,

    ORDERED AND ADJUDGED that the plaintiffs have a judgment against the defendant for fraud in the sum of $750.00 compensatory damages and

    $15,000.00 punitive damages ...

    
    

12. Respondent appealed the judgment entered against him by Judge Lee. While the case was on appeal, Respondent and the Mohammeds settled the civil suit. Respondent did not admit any wrongdoing in the Settlement Agreement. Thereafter, on March 26, 1990, Judge Lee entered a "Final Judgment of Settlement" in the civil action which vacated the "Final Judgment for Plaintiffs" that he had entered September 19, 1989, and which dismissed with prejudice the civil action the Mohammeds had brought against Respondent.

    
    

13. There was no competent evidence presented at the formal administrative hearing that Respondent had (a) misrepresented the value of the premises or potential of the business, (b) generated false sales during the observation period, (c) falsified cash register receipts, (d) conspired with his friends to falsify sales, or (e) otherwise engaged in fraud during the course of his business dealings with the Mohammeds.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.

    
    

15. Petitioner has charged Respondent with violating the provisions of Section 475.25(1)(b), Florida Statutes, during the course of his dealings with the Mohammeds. Section 475.25(1)(b), Florida Statutes, provides, in pertinent part, as follows:

    
    

    1. The commission ... may suspend a license,

       ... may revoke a license, ... may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, and any or all of the foregoing, if it finds that the licensee ... :

       * * *

       (b) Has been guilty of fraud, misrepresenta- tion, concealment, false promises, false preten- ses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state ...

       
       

16. Petitioner has the burden of proving by clear and convincing evidence the allegations against Respondent. See Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).

    
    

17. Section 120.58(1)(a), Florida Statutes, provides, in pertinent part, as follows:

    
    

    1. In agency proceedings for a rule or order:

       1. Irrelevant, immaterial, or unduly repeti- tious evidence shall be excluded, but all other evidence of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs shall be admissible, whether or not such evidence would be admissible in a trial in the courts of Florida. Any part of the evidence may be received in written form,

          and all testimony of parties and witnesses shall be made under oath. Hearsay evidence may be used for the purpose of supplementing or explaining other evidence, but it shall not be sufficient

          in itself to support a finding unless it would

          be admissible over objection in civil actions... .

          
          

18. The provisions of Section 92.09, Florida Statutes, provide, in pertinent part, as follows:

    
    

    No copy of a judgment or decree shall be admit- ted in evidence as aforesaid when it shall be

    made to appear that such decree has been reversed, annulled, vacated, or set aside ...

    
    

19. The "Final Judgment for Plaintiffs" entered in the civil action by Judge Lee, upon which Petitioner bases its case against Respondent, has been vacated and is not evidence of wrongdoing on the part of the Respondent.

    
    

20. Petitioner has failed to carry its burden of proof in this matter since it has failed to present any competent evidence of wrongdoing on the part of the Respondent.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that a Final Order be entered which dismisses the Administrative Complaint brought against Respondent in this proceeding.

RECOMMENDED in Tallahassee, Leon County, Florida, this 28th day of January, 1991.

CLAUDE B. ARRINGTON

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 28th day of January, 1991.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-5320

The following rulings are made on the proposed findings of fact submitted on behalf of the Petitioner.

1. The proposed findings of fact in paragraphs 1-5, 7 and 11 (the first of the two paragraphs that are numbered 11) are adopted in material part by the Recommended Order.

   
   

2. The proposed findings of fact in paragraph 6 are adopted in part by the Recommended Order. The proposed finding that the contract was dated May 5, 1987, is rejected as being contrary to the finding that the contract was dated April 1, 1987.

   
   

3. The proposed findings of fact in paragraph 8 are adopted in part by the Recommended Order. The use of the term "induced" is rejected as being contrary to the findings made or to the conclusions reached.

   
   

4. The proposed findings of fact in the first sentence of paragraph 9 are rejected as being unsubstantiated by the record. The last sentence is rejected as being unnecessary to the conclusions reached.

   
   

5. The proposed findings of fact in paragraph 10 are rejected as being unnecessary to the conclusions reached.

   
   

6. The proposed findings of fact in paragraph 11 (the second of the two paragraphs that are numbered 11) are rejected as being unnecessary to the conclusions reached.

   
   

7. The proposed findings of fact in paragraph 12 are adopted in part by the Recommended Order, and are rejected in part as being unnecessary to the conclusions reached.

The following rulings are made on the proposed findings of fact submitted on behalf of the Respondent.

1. The proposed findings of fact in paragraphs 1-5, 7-14 are adopted in material part by the Recommended Order.

2. The proposed findings of fact in paragraph 6 are adopted in part by the Recommended Order. The proposed finding that the contract was dated May 5, 1987, is rejected as being contrary to the finding that the contract was dated April 1, 1987.

3. The proposed findings of fact in paragraphs 15 and 16 are rejected as being unnecessary to the conclusions reached.

COPIES FURNISHED:

James Gillis, Esquire Department of Professional

Regulation Senior Attorney

400 West Robinson Street

P. O. Box 1900

Orlando, Florida 32802-1900

Norman Segall, Esquire Bentata Hoet & Associates

& Zamora, Segall, Lacasa & Schere 3191 Coral Way - Third Floor

Miami, Florida 33145

Darlene F. Keller Division Director

Department of Professional Regulation

Division of Real Estate

400 West Robinson Street

P. O. Box 1900

Orlando, Florida 32801

Kenneth Easley General Counsel

Department of Professional Regulation

1940 North Monroe Street Suite 60

Tallahassee, Florida 32399-0792

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 90-005320

Orders for Case No: 90-005320