STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF PROFESSIONAL )

REGULATION, DIVISION OF )

REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 91-4449

) ROGER GALDO and REAL ESTATE ) SUPPORT AND DEVELOPMENT, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held in Orlando, Florida, on August 29, 1991, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

The parties were represented at the hearing as follows: For Petitioner: Attorney Janine B. Myrick

Division of Real Estate Legal Section

P.O. Box 1900

Orlando, Florida 32802-1900

For Respondent: Roger Galdo, pro se

208 Madeira Avenue Orlando, Florida 32825

STATEMENT OF THE ISSUES

The issue in this case is whether Respondents are guilty of violating Section 475.25(1)(b) and, if so, what penalty should be imposed.

PRELIMINARY STATEMENT

By Administrative Complaint served May 30, 1991, Petitioner alleges that Respondent Galdo, as trustee, conveyed certain property and instructed the buyer to make mortgage payments to himself rather than the mortgagee. Petitioner alleges that Respondent failed to transmit certain mortgage payments to the mortgagee, which then commenced a foreclosure action.

The Administrative Complaint alleges that Respondent Galdo is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in a business transaction in violation of Section 475.25(1)(b), Florida

Statutes. Alleging that Respondent Galdo was operating as a qualifying broker and officer of Real Estate Support and Development Corporation, the Administrative Complaint alleges that the company also violated Section 475.25(1)(b).

By Election of Rights filed July 10, 1991, Respondents requested a formal hearing.

On August 27, 1991, Respondent Galdo telephoned the undersigned and requested a continuance on the grounds that he would be out of town and had not had a chance to retain counsel. The undersigned denied the request and advised Respondent Galdo to renew the request on the record at the beginning of the hearing. He did so and the request was denied a second time.

At the hearing, Petitioner called three witnesses and offered into evidence eight exhibits. Respondents called two witnesses and offered into evidence no exhibits. All exhibits were admitted into evidence.

Neither party order a transcript. Petitioner filed a proposed recommended order. Treatment of the proposed findings is detailed in the appendix.

FINDINGS OF FACT

1. Respondent Galdo has been a licensed real estate broker for eight years and holds license number 0414542. At all material times, he served as president of Respondent Real Estate Support and Development Corporation, which is registered as a real estate broker and holds license number 0243131. All references below to "Respondent" are to Respondent Galdo only.

   
   

2. By Contract for Sale and Purchase executed by both parties on December 5, 1989, Respondent, as trustee, agreed to sell to Ruben P. Chalarca a parcel located at 12 Sandalwood Court, Oviedo, Florida. The contract calls for a closing on or before December 28, 1989.

   
   

3. The purchase price disclosed on the contract is "approx. 46,300.00 1000.00 cash to Mortgagee." According to the contract, payment was to include the buyer taking subject to and assuming a mortgage held by "Central Fed Mortgage Co." in the approximate principal amount of $45,300.

   
   

4. The contract contains no information as to a brokerage commission. Blanks on the form contract concerning a commission are filled in "N/A."

   
   

5. The only involvement of Respondent Real Estate Support and Development Corporation appears to be that Respondent provided Mr. Chalarca a business card bearing the name of Respondent, the name of Respondent Real Estate Support and Development Corporation, the company's address, and telephone numbers for Respondent and the company.

   
   

6. However, the evidence does not establish that Respondent gave the business card to Mr. Chalarca for any purpose other than giving him the information necessary to contact Respondent. There is no evidence that Respondent held himself out as representing Real Estate Support and Development Corporation in his dealings with Mr. Chalarca.

   
   

7. The $1000 earnest money deposit that Mr. Chalarca "paid" to Respondent was by a check that never cleared. Mr. Chalarca gave another check payable to Respondent individually. The second check was dated December 5, 1989, but was

   only in the amount of $400. There is another check dated December 5 payable to cash and in the amount of $150, but the record does not establish that the Chalarcas gave this sum to Respondent. Except for the $1000 earnest money check, all of the Chalarcas' checks cleared.

   
   

8. The closing took place and Respondent Galdo, as trustee, conveyed the property by deed to Mr. Chalarca and possibly his wife. Mr. and Mrs. Chalarca are from Columbia, South America. Neither has had any significant real estate experience prior to the subject transaction with Respondent. Although Mr. Chalarca speaks and understands English reasonably well, his wife does not. Mr. Chalarca did not complete high school.

   
   

9. Prior to or at the closing, Respondent told Mr. Chalarca to make the mortgage payments to Respondent, who would make arrangements with the mortgagee, evidently to show that the Chalarcas would be making the mortgage payments.

   
   

10. It appear that the mortgage payments may not have been current when the Chalarcas purchased the property. Respondent admitted to Petitioner's investigator that he sent the November and December, 1989, payments to the mortgagee in January, 1990, together with a request that the mortgage be transferred to the Chalarcas. He also admitted that the bank returned the package with a demand for the January, 1990, payment.

    
    

11. Upon receipt of the demand from the bank, Respondent told the Chalarcas that they must make the January, 1990, payment at that time. However, the record establishes that the Chalarcas gave Respondent only two checks after the closing. The first is dated April 17, 1990, and in the amount of $1600. The second check is dated May 21, 1990, and in the amount of $1000.

    
    

12. The record does not clearly establish whether Respondent ultimately made the November and December, 1990, payments. The record clearly establishes that no one made the January, February, and March payments, although there is no evidence that the Chalarcas ever tendered these payments to Respondent.

    
    

13. For reasons not apparent from the record, Mr. Chalarca decided to make the April, 1990, payment directly to the mortgagee. This check is dated April 7, 1990, in the amount of $1220, and payable to Transohio Savings. However, the mortgagee returned the check by letter dated May 29, 1990, because the loan was already in foreclosure. The letter gave Mr. Chalarca an address to contact "in order to stop the action."

    
    

14. Most important, the record establishes that Respondent retained the

    $2600 paid to him by the April and May, 1990, checks, and the record does not establish any justification for the retention of this money by Respondent.

    
    

15. There is no indication in the record that Respondent applied this money on behalf of the Chalarcas. To the contrary, there is some indication that no payments were made on the mortgage after late 1989. By Summary Final Judgment of Foreclosure entered November 6, 1990, Transohio Savings Bank, F.S.B. obtained a foreclosure judgment on the subject mortgage against Mr. Chalarca and his wife for the total sum of $52,613.74.

    
    

16. The foreclosure judgment shows interest on the principal balance of

    $5649.24 through September 23, 1990, with an additional $15.78 per day interest from September 24, 1990, through the date of entry of the judgment. The assumed interest rate was not the statutory interest rate, which is expressly imposed upon the total due, starting from the date of the judgment. If the daily

    interest under the foreclosed mortgage were $15.78 daily, then unpaid interest of $5649.24 represents 358 days' interest, which would suggest that no interest payments were made after September or October, 1989.

    
    

17. The foreclosure judgment ordered the clerk to sell the property on December 20, 1990. The Chalarcas remained in the 12 Sandalwood Court parcel until about the time of the sale.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Section 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes. All references to Rules are to the Florida Administrative Code.)

    
    

19. The Florida Real Estate Commission (FREC) has jurisdiction to discipline the licenses of real estate brokers. Section 475.25.

    
    

20. FREC may impose discipline if it finds that a licensee:

    
    

    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 . . .

    
    

    Section 475.25(1)(b).

    
    

21. Penalties for a violation of Section 475.25(1) include revoking or suspending a license, placing the licensee on probation, imposing an administrative fine of not more than $1000 per count or separate offense, and issuing a reprimand. Section 475.25(1).

    
    

22. Rule 21V-24.001(2)(c) provides a recommended penalty range of up to five years' suspension or revocation for a violation of Section 475.25(1)(b). Aggravating factors include the degree of harm to the consumer or public. Mitigating factors include the disciplinary history of the licensee. Rule 21V- 24.001(4)(b).

    
    

23. Petitioner must prove the material allegations against Respondent by clear and convincing evidence. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

24. Petitioner has proved by clear and convincing evidence that Respondent was guilty of fraud or breach of trust in a business transaction. He accepted checks totalling $2600 from the Chalarcas and failed to account for them under circumstances that, absent an explanation, establish that the checks were not applied to service the mortgage debt.

    
    

25. There is no evidence establishing that Respondent Real Estate Support and Development Corporation committed any prohibited act under the statute. Although it is true that corporations must act through individuals, it is equally true that a corporation is not liable for all actions of persons who happen to be employees and officers of the corporation. In taking the two checks, Respondent was clearly not representing the company.

    
    

26. The penalty requires consideration of the mitigating factor that Respondent has never been disciplined previously. The evidence fails to

    establish the aggravating factor of harm to the consumer or public. Ordinarily, a foreclosure causes harm by its effect upon a person's credit record, if the credit record were good prior to the foreclosure. However, any inference of a good credit rating here is rebutted by the $1000 bad check representing the earnest money deposit. Without evidence of a good credit rating prior to this incident, it would be speculative to assume that the foreclosure harmed the Chalarcas' credit rating. In the absence of the rental value of the mortgaged property, harm is not proved by the Chalarcas' expenditure of about $3000 for the use of the property for nearly a year. Any harm to the mortgagee is likewise speculative in the absence of evidence that the fair market value of the mortgaged property was less than the outstanding indebtedness.

    
    

27. Notwithstanding the mitigating factor of no prior discipline, Respondent remains guilty of retaining and refusing to account for the two checks totalling $2600. However, the five-year suspension proposed by Petitioner is severe in the presence of indications in the record, such as the bad check representing the earnest money deposit, that the Chalarcas may not have performed their obligations timely or even at all.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Florida Real Estate Commission enter a final order dismissing the Administrative Complaint against Real Estate Support and Development Corporation, finding Roger Galdo guilty of violating Section 475.25(1)(b), suspending his license for six months, placing him on probation for 18 months following the end of the suspension, and imposing upon him an administrative fine of $1000.

ENTERED this 9th day of September, 1991, in Tallahassee, Florida.

ROBERT E. MEALE

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 9th day of September, 1991.

APPENDIX TO RECOMMENDED ORDER CASE NO. 91-4449

Treatment of Proposed Findings of Petitioner 1-3: adopted.

4: rejected as irrelevant. 5: adopted.

6: adopted except that the $1000 check was dishonored. 7: adopted.

8: rejected as unsupported by the appropriate weight of the evidence. All of the checks that the Chalarcas gave Respondent have been identified in the recommended order., which also identifies when these checks were delivered to Respondent. The evidence does not establish by the requisite standard that the Chalarcas gave Respondent the mortgage payments each month when they were due, or even that they gave Respondent funds sufficient to make the mortgage payments that fell due following the closing.

9: adopted except as the characterization of Mr. Chalarca as "suspicious." The characterization is rejected as unsupported by the appropriate standard of evidence.

10: adopted.

11: rejected as unsupported by the appropriate weight of the evidence. The record does not establish Mr. Chalarca's motivation for giving Respondent the two checks totalling $2600.

12: adopted, although a substantial amount of time elapsed between the service of the foreclosure summons and the departure of the Chalarcas from the mortgaged property.

13: adopted.

14: rejected as unsupported by the appropriate weight of the evidence. 15-19: rejected as recitation of evidence.

COPIES FURNISHED:

Darlene F. Keller Division Director Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, FL 32801

Attorney Janine B. Myrick Division of Real Estate Legal Section

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

Roger Galdo

208 Madeira Avenue Orlando, FL 32825

Jack McRay, General Counsel Department of Professional Regulation 1940 North Monroe Street

Tallahassee, FL 32399-0792

Docket for Case No: 91-004449

Orders for Case No: 91-004449