STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

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

)

Petitioner, )

)

vs. ) CASES NO. 91-3146

) 91-6272

INGE E. HOOD, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William F. Quattlebaum, held a formal hearing in the above-styled case on April 16, 1992, in LaBelle, Florida.

APPEARANCES

For Petitioner: James H. Gillis, Esq.

Department of Professional Regulation

400 West Robinson Street Orlando, FL 32801-1772

For Respondent: Kinley I. Engvalson, Esq.

DUNCAN & ENGVALSON, P.A.

Post Office Drawer 249 Fort Myers, FL 33902

STATEMENT OF THE ISSUE

The issue in this case is whether the allegations of the Administrative Complaints are correct and, if so, what penalties should be imposed.

PRELIMINARY STATEMENT

On April 18, 1991, the Petitioner filed an Administrative Complaint alleging that the Respondent had converted property management escrow funds for her personal use and had failed to return or account for such funds. The Respondent disputed the allegations and requested a hearing. The request was forwarded to DOAH and was assigned Case No. 91-3146. On August 29, 1991, the Petitioner filed a second Administrative Complaint alleging that the Respondent had converted escrow earnest money deposit funds for her personal use and had failed to account for or return said funds to the appropriate party following a real estate sales transaction that failed to close. The Respondent disputed the allegations and requested a hearing. The request was forwarded to DOAH and was assigned Case No. 91-6272. The cases were consolidated October 16, 1991. The cases were transferred to the undersigned on March 3, 1992.

At the hearing, Petitioner presented the testimony of John E. Harris, Inge

E. Hood, and Harold W. Fenno, and offered exhibits 1-14 which were admitted into evidence.

A hearing transcript was filed on May 22, 1992. On June 1, 1992, the Petitioner requested a 20 day extension of time in which to file a proposed recommended order due to illness. The request was granted. On June 5, 1992, the Petitioner filed a proposed recommended order. On June 8, 1992, the Respondent filed a response to the Petitioner's request for an extension of time, stating that there was no objection, because the Respondent had not yet received a copy of the hearing transcript. On June 29, 1992, the Respondent filed a motion for a further extension of time stating that the Respondent's transcript had only been received on June 23, 1992, and that additional time was required to permit the Respondent to file a proposed recommended order. The Respondent filed a proposed order on July 9, 1992. The proposed recommended orders were considered during the preparation of this Recommended Order. The proposed findings of fact are ruled upon in the Appendix which is attached and hereby made a part of this Recommended Order.

FINDINGS OF FACT

1. At all times material to this case, Respondent Inge E. Hood ("Hood"), was a licensed real estate broker in the State of Florida, license #0318539.

   The most recent license issued to Hood was as a broker c/o William Glass Realty, Inc., 2835 Bridge Street, Post Office Box 755, LaBelle, Florida 33935-9755.

   
   

2. From approximately April 12, 1984 through January 10, 1991, Hood was a manager and qualifying broker for Florida Home Finders, Inc. ("FHF"), and acted as general manager for the FHF Port LaBelle office.

   
   

3. FHF was a subsidiary of General Development Corporation ("GDC"), a developer of residential subdivisions. At the time Hood was the general manager of FHF's Port LaBelle office, FHF managed the rental program available to investment purchasers of GDC homes. The rental program provided such services as leasing, prospective tenant screening, rent collection, and maintenance of investor-owned housing. Such services were funded from escrow accounts to which the home owner would initially deposit funds and which would be supplemented by rental income.

   
   

4. Prior to April 12, 1990, James R. Wells, was president of FHF and was the person to whom Hood reported.

   
   

5. At some time in 1988, Juan and Beryl Soto purchased a GDC home at 4007 Sena Lane, LaBelle. The home was financed through a GDC program, GDC Financing Corporation1 . The Sotos did not occupy the home, and, pursuant to a property management agreement, it was placed in the FHF rental program, administered by Hood. The monthly rental income from the home was approximately half of the monthly mortgage payment amount.

   
   

6. In late 1988, Hood was notified that the Soto home would likely revert to GDC through a foreclosure action, and that the Sotos were entitled to rental income prior to the foreclosure, after which rental income would accrue to GDC, to which the Soto property would revert.

   
   

7. In 1989, the property reverted back to GDC ownership through foreclosure. FHF and Hood continued to manage the rental house for GDC.

8. Approximately $5,394.19 in rental funds were due the Sotos for rental income on the home. A check for the amount was sent to the Sotos, but was returned to GDC.2 Upon return of the funds, the monies were deposited into the FHF property management escrow account.

   
   

9. At some time in 1989, GDC sales went into decline. GDC's fiscal turmoil eventually culminated in the company filing for bankruptcy protection. Hood's compensation, which was based on a salary plus commission "override" agreement, likewise declined during this period.

   
   

10. During late 1989 and early 1990, Hood desired to purchase a house at 4008 South Edgewater Circle, LaBelle, from owner Elizabeth Smith, who resided in Rosedale, New York. Prior to closing on the purchase, Hood rented the Smith house.

    
    

11. While living in the Smith house which Hood was purchasing, Hood purchased replacement carpet, vinyl flooring, and blinds for the house at 4008 South Edgewater from Blocker's Furniture and Appliance Center in LaBelle.

    
    

12. According to receipts, the expenditures at Blocker's totaled

    $3,683.01, including $2725.77 for carpet on 11/6/89, $799.99 for vertical blinds on 11/7/89, and $157.25 for vinyl flooring on 11/28/89.

    
    

13. By checks numbered 017253 and 017254, both dated 3/19/90, payable to Blocker's Furniture and drawn on the "Florida Home Finders, Inc., Rental Receipts Escrow Account", Hood paid Blocker's $3,683.01 from the FHF rental escrow account.

14. By checks numbered 017261 (dated 3/26/90), 017609 (dated 5/5/90) and 017916 (dated 7/4/90), payable to Elizabeth Smith and drawn on the "Florida Home Finders, Inc., Rental Receipts Escrow Account", Hood paid $1,480 to Smith as rent for the house at 4008 South Edgewater.

1. At the hearing, Hood testified that she was owed compensation from FHF which, due to GDC's financial problems, had not been forthcoming. Hood further testified that she was authorized by James Wells to withdraw funds from the FHF escrow account to cover her shortages. Hood suggested that the funds withdrawn from escrow were not actually escrowed funds, but were the funds supposedly rejected by, and therefore not owed to, the Sotos.

   
   

2. The Petitioner's investigator interviewed Wells who admitted that he had expressed to Hood his concern over her financial condition, and that they had discussed her need for funds, but was unable to recall whether he had authorized Hood to remove funds from the escrow account without reference to his files, which he did not have at the time of the interview. The investigator did not further pursue the matter. Wells did not testify at the hearing.

   
   

3. The evidence fails to support Hood's hearsay testimony regarding Wells' supposed authorization to remove funds from the rental escrow account. There is no evidence as to the amount of unpaid compensation to which Hood was allegedly entitled. There is no credible evidence that the Sotos had refused said funds or that the funds were no longer due to them.

   
   

4. In March of 1990, Hood owned a house at 4083 South Edgewater Circle, LaBelle, which she desired to sell to Carolyn J. and Robert M. Ford. Hood arranged to rent the house to the Fords pending completion of the sale.

5. By a rental agreement dated March 17, 1990, the Fords rented the Hood house located at 4083 South Edgewater Circle beginning on said date, with rental payments to begin on April 1, 1990. The rental agreement provided for a monthly payment of $475, of which $115 was to be credited towards the down payment until the sales transaction closed.

   
   

6. By contract for sale and purchase dated March 17, 1990, the Fords agreed to purchase the 4083 South Edgewater Circle house. The Fords gave Hood a

   $500 earnest money deposit check, made payable to "Florida Home Finders" which was deposited into the FHF escrow account.

   
   

7. The contract for sale provides that "[i]f Buyer fails to obtain the loan commitment and promptly notifies Seller in writing, or after diligent effort fails to meet the terms and conditions of the commitment or to waive Buyer's rights under this subparagraph within the time stated for obtaining the commitment, then either party may cancel the Contract and Buyer shall be refunded the deposit(s)."

   
   

8. The Fords were unable to obtain financing for the home purchase by the date set for closing in the contract. However, the Fords continued to reside in Hood's property, and, based on the continuing lease agreement which provided for a portion of the rental payment to go towards the purchase of the house, apparently intended to obtain financing and close on the transaction.

   
   

9. On April 12, 1990, James R. Wells was terminated as president of FHF. Wells was succeeded by Harold W. Fenno.

   
   

10. By check #000337 dated October 8, 1990, drawn on the "Florida Home Finders Sales Escrow Account" and made payable to Hood, she withdrew $1,305.00 from the account. The funds include the $500 initial deposit and seven deposits of $115 as provided in the rental agreement.

    
    

11. A notation on the check indicated that the funds were a "binder deposit due to Seller/Contract Null and Void" and that said monies are "to be applied if & when the contract does become active again" for the Fords purchase of the house at 4083 South Edgewater Circle. The evidence fails to establish that Hood was entitled to retain the Fords deposit funds.

    
    

12. Mr. Fenno subsequently became aware of escrow account discrepancies related to Hood's withdrawals. On January 10, 1991, Hood's employment with FHF was terminated. There is no evidence that FHF has requested the Respondent to return or account for the escrow funds she withdrew.

    
    

13. On February 8, 1991, the Fords, by cashier's check made payable personally to Hood, gave Hood $2,800. The monies were supposedly an additional deposit on the Hood home in which the Fords have lived since March, 1990. The Fords did not testify at the hearing. The sales transaction has never closed.

    
    

14. In March or April of 1991, Hood became aware of the Petitioner's investigation into her withdrawal and retention of the Ford escrow deposit funds. By letter dated April 26, 1991, Hood notified the Fords to vacate the house at 4083 South Edgewater Circle by May 31, 1991. Hood's letter provided that the May rent was due to be paid not later than May 5, 1991.

    
    

15. As of the date of the hearing (April 16, 1992) the Fords continue to live in the Hood house. There is no evidence that the Fords have requested refund or an accounting of any monies provided to Hood. The Fords have paid no

    rent since April, 1991. Hood is pursuing the eviction of the Ford's from the house.

    
    

16. There is no credible evidence as to whether the Fords intend to close on the purchase of the property, to continue residing therein (with or without rental payment) or to vacate the house.

    
    

17. The Respondent asserts that the Ford funds have been applied towards the unpaid rent. There has been no judgement rendered as to Hood's supposed entitlement to retain said funds. The evidence fails to establish that Hood is currently entitled to retain the Ford deposit funds.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

19. Petitioner has responsibility for disciplinary action taken against licensed real estate brokers. The burden of proof is on the Petitioner to establish the truthfulness of the allegations of the Administrative Complaint by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

20. Violation of disciplinary statutes is punishable by denial of a license renewal application, or by a license suspension for a period not to exceed ten years, or by revocation of the license, or through an administrative fine not to exceed $1,000 for each count or separate offense, or through issuance of a reprimand, or through any combination thereof. Section 475.25(1), Florida Statutes. Section 475.25(1), Florida Statutes, in relevant part, provides that the license of a Florida real estate broker may be disciplined by the Petitioner when the Respondent:

    
    

    (b) Has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in any business transaction in this state or any other state, nation, or territory; has violated a duty imposed upon him by law or by the terms of a listing contract, written, oral, express, or implied, in a real estate transaction; has aided, assisted, or conspired with any other person engaged in any such misconduct and in furtherance thereof; or has formed an intent, design, or scheme to engage in any such misconduct and committed an overt act in furtherance of such intent, design, or scheme. It is immaterial to the guilt of the licensee that the victim or intended victim of the misconduct has sustained no damage or loss; that the damage or loss has been settled and paid after discovery of the misconduct; or that such victim or intended victim was a customer or a person in confidential relation with the licensee or was an identified member of the general public.

    * * *

    (d) Has failed to account for 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,...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....

    * * *

    (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...or to deposit such funds in a trust or escrow account maintained by him in some bank, credit union, savings and loan association...wherein the funds shall be kept until disbursement thereof is properly authorized....The commission shall establish rules to provide for records to be maintained by the broker and the manner in which such deposits shall be made.

    
    

21. In this case, the evidence establishes that the Respondent withdrew a total of $5,163.01 from the FHF rental escrow accounts and converted said funds to her own use to cover personal expenditures for Hood's residence at 4008 South Edgewater Circle. The Respondent's assertion that such conversions were authorized by her supervisor is not supported by the weight of credible and persuasive evidence.

    
    

22. Further, the evidence establishes that the Respondent withdrew an additional $1,305.00 attributable to the Fords agreement to purchase Hood's property at 4083 South Edgewater Circle. Said funds were converted to Hood's own use. Respondent asserts that the Fords approved her removal of said funds. There is no evidence to substantiate the assertion. The evidence fails to establish that Hood was entitled to retain the Ford deposit funds.

    
    

23. Based upon the facts established at hearing, by improperly withdrawing escrowed funds and converting said funds to her own use, the Respondent is guilty of a breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida Statutes. By failing to maintain escrowed deposit funds in a bank, credit union, or savings and loan association account until disbursement of said funds was properly authorized, the Respondent has violated Section 475.25(1)(k), Florida Statutes.

    
    

24. Guidelines for the imposition of disciplinary action are as stated in Chapter 21V-24, Florida Administrative Code. Except where otherwise provided, the minimum penalty which may be imposed for each violation is a reprimand, or a fine up to $1,000 per count, or both. The recommended range of penalty imposed for a violation of Section 475.25(1)(b), Florida Statutes, is up to five years suspension or revocation. The minimum penalty imposed for a violation of Section 475.25(1)(k), Florida Statutes, is a 90 day suspension and a $1,000 fine, up to revocation. Rule 21V-24.001, Florida Administrative Code. The penalties recommended in this case are as set forth below.

    
    

25. The Petitioner suggests that the Respondent has violated Section 475.25(1)(d), Florida Statutes, by failing to account for or deliver, 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, the escrow funds which were converted by the Respondent. As to escrowed funds

removed from the FHF account which were utilized for payment of Respondent's expenditures at Blocker Furniture, there is no evidence, and in fact, the president of FHF admitted, that FHF has never sought return of or an accounting of said funds. As to the Ford deposit funds, there is no evidence that the Fords, who have resided in the Respondent's home without payment of rent for approximately one year, have demanded either the return of or accounting for the deposit funds. There is litigation pending related to the Fords continued residence in the Hood property.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Department of Professional Regulation, Division of Real Estate, enter a Final Order determining Inge E. Hood guilty of the violations set forth herein and revoking her license as a real estate broker.

DONE and ENTERED this 17th day of July, 1992, in Tallahassee, Florida.

WILLIAM F. QUATTLEBAUM

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 17th day of July, 1992.

1. The transcript erroneously identifies the company as "GDV Financing Corporation".

   
   

2. The Respondent asserted that the Sotos did not feel entitled to the funds so they returned them. Testimony as to the reason the check was returned by the Sotos is merely speculative, and is insufficient to support a finding of fact.

APPENDIX

CASES NO. 91-3146 and 91-6272

The following constitute rulings on proposed findings of facts submitted by the parties.

Petitioner

The Petitioner's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows:

4. Rejected, contrary to greater weight of the evidence. The testimony of the president of FHF establishes that the Respondent was terminated by the company on January 10, 1991.

11. Second sentence is rejected, immaterial. Mr. Fenno was not president of FHF at the time the Respondent withdrew funds from the FHF escrow account. There has been no request to Respondent by FHF for return of or an accounting of said funds. Mr. Fenno testified that there was no written authorization for Respondent to remove the funds from the escrow account, but admitted he had not examined the files to see if such documentation exists.

13. Accepted as to the fact the Respondent has not refunded escrow funds to FHF. Rejected as to implication that there has been any written request from FHF for return of or an accounting of said funds, (Mr. Fenno admitted that there has been no request) or that Respondent has refused such request.

17. Statement that $1,305 withdrawal on October 10, 1990 from escrow account related to Ford purchase was "all without the prior knowledge and consent of the Fords or the Florida Home Finders, Inc." is rejected, not supported by the greater weight of the evidence, which fails to establish whether or not the withdrawal was approved by the Fords.

19. Rejected. The evidence fails to establish that the additional deposit funds were solicited by the Respondent.

21. Accepted as to the fact the Respondent has not refunded escrow funds to the Fords. Rejected as to implication that there has been any request from them for return of or an accounting of such funds, not supported by the evidence.

Respondent

The Respondent's proposed findings of fact are accepted as modified and incorporated in the Recommended Order except as follows:

4. Rejected, contrary to greater weight of the evidence. The records indicate that the Respondent's application for license as broker for Florida Home Finders, Inc. was filed on April 12, 1984.

6. Last sentence, rejected, irrelevant. The evidence fails to establish that GDC or FHF authorized Respondent to remove funds from escrow and convert said funds to personal use.

9-10. Rejected, not supported by the greater weight of credible and persuasive evidence.

11. Rejected as to statement that Wells authorized Respondent to remove funds from escrow and convert said funds to personal use, not supported by the greater weight of credible and persuasive evidence.

1. Rejected as to statement, "This was done with the full consent of the Fords as rent." The Fords did not testify. If the statement refers to the lease agreement, the agreement is in evidence. If the reference is to the Respondent's removal of said funds from escrow, there is no credible evidence supporting the assertion.

2. Rejected. The evidence fails to establish that the additional deposit funds were solicited by the Respondent

18. Last sentence rejected. There is no evidence that Hood is currently entitled to retain Ford deposit funds as setoff against unpaid rent.

COPIES FURNISHED:

Darlene F. Keller, Director Division of Real Estate

Department of Professional Regulation Hurston North Tower

400 W. Robinson Street

P.O. Box 1900

Orlando, Florida 32802

Jack McRay General Counsel

Department of Professional Regulation 1940 North Monroe Street

Tallahassee, Florida 32399-0792

James H. Gillis, Esq. Division of Legal Services Legal Section, Suite N-308 Hurston Building North Tower

400 West Robinson Street Orlando, FL 32801-1772

Kinley I. Engvalson, Esq. DUNCAN & ENGVALSON, P.A.

Post Office Drawer 249 Fort Myers, FL 33902

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 ten 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: 91-003146

Orders for Case No: 91-003146