Dean, assigned Hearing Officer of the Division of Administrative Hearings, on September 22, 1994, in Gainesville, Florida.
For Petitioner: Steven W. Johnson, Senior Attorney
For Respondent: Clifford A. Taylor, Esquire
The issue is whether the Respondent is guilty of misrepresentation, fraud, dishonest dealing, culpable negligence, or breach of trust in a business transaction contrary to Section 475.25(1)(b), Florida Statutes; and
Whether, if the above allegations are proven, the Respondent is so incompetent, negligent, dishonest or untruthful that the money, property transactions and rights of investors or others with whom he may sustain a confidential relation may not be entrusted to him by virtue of a second violation of Chapter 475, Florida Statutes, contrary to Section 475.42(1)(o), Florida Statutes.
The Commission filed an Administrative Complaint against the Respondent on April 22, 1993, alleging that he had violated Section 475.25 and Section 475.42, Florida Statutes. The Respondent requested a formal hearing, and the Commission forwarded the case to the Division of Administrative Hearings on April 8, 1994.
The case was noticed for hearing on July 1, 1994 by Notice of Hearing dated May 5, 1994; however, by agreement of the parties the case was reset to September 22, 1994 and heard as noticed.
At hearing, the Commission presented the testimony of Dr. Manuel S. Couto and Stuart Rockett. The Respondent testified in his own behalf. The Hearing Officer recalled Dr. Couto.
Following the hearing, the Commission filed a proposed order contained its proposed findings of fact which were read and considered. The Appendix to this order states which of those findings were adopted, and which were rejected and why.
The Respondent, Robert E. McMillan, III, is and was at all times material to the administrative complaint a licensed real estate broker holding license number 0317361.
The Commission is charged under Chapter 475, Florida Statutes, with regulation of real estate brokers and salesmen.
The Respondent was previously disciplined by the Commission by a Final Order dated September 2, 1992 in which the Commission found the Respondent guilty of violation of Sections 475.25(1)(b),(e),(k), and 475.42(1)(e), Florida Statutes.
Dr. Manuel S. Couto and his wife desired to have a home built on Block 2, Lot 12 Marineland Acres, 1st Addition, Plat Book 5, page 50. They approached Respondent's business, which was a construction and real estate development concern, and spoke with Randy Joyner, a salesman employed by the Respondent and the brother of the Respondent's late wife, who had sold the Coutos the lot.
The Respondent offered to build a particular house for the Coutos for
$50,000. The Coutos counteroffered to purchase the house for $30,000 cash and to convey to the Respondent two lots described in the contract as:
Section 29A, Block 7, Lot 4, Palm Coast, Florida, and Section 29A, Block 7, Lot 5, Palm Coast, Florida.
Dr. Couto bought Lot 4 for $3,900, and Lot 5 for $4,900; however, he paid a total, including interest, of $15,264.80 for the two lots.
Palm Coast is a real estate development located in the western portion of Flagler County in which the Respondent's business was located, and he was not particularly familiar with the area in which the Coutos' lots were located.
The Respondent accepted the counteroffer, above, upon the recommendation of Joyner. The Respondent believed the lots in question to be valued at $10,000 each.
The Coutos paid the Respondent $30,000, and the Respondent began construction. Shortly after commencement of the project, it was determined that the Respondent would have to do considerable site work in order to install a septic tank. The costs of this work, $5,400, was paid by the Respondent, and Dr. Couto wrote the Respondent an additional check in the amount of $1,900. In
addition, Dr. Couto made numerous changes to the plans which raised the costs of the construction for which he was obligated to pay under the contract.
Work progressed on the project until the Respondent became aware that the lots which were to be transferred were not valued at $10,000. A dispute arose between the Respondent and the Coutos regarding the Coutos paying the difference between the value of the lots and $20,000. When the dispute went unresolved, the Respondent ceased work on the project.
Thereafter, the Respondent again began work on the project because of Dr. Couto constant badgering; however, the underlying disagreement about the value of the lots was unresolved. The Respondent finished the house at a cost to him of $55,004.82, and the Coutos paid him $38,425.
When the second lot at Palm Coast was to be transferred, it was arranged to have the Coutos transfer the lot directly to the new purchasers, with the money, $4,690.37, due to the Respondent to be held in escrow pending payment of the subcontractors and materialmen building the Coutos' house.
Dr. Couto prepared an affidavit that all the contractors had been paid for the Respondent to sign. It is this affidavit dated January 16, 1992, which purports to bear the signature of the Respondent notarized by Martha B. Bennett, Notary Public. The Respondent denies that the document bears his signature, and asserts that Dr. Couto signed the affidavit. Dr. Couto states that he saw the Respondent sign it, and the Respondent's secretary notarize it. The authenticity of this document was put in question by Respondent's answer to the administrative complaint, and the notary was not called as a witness.
Dr. Couto and his attorney had attempted unsuccessfully to obtain similar affidavits from the Respondent, who had refused to sign them. At the time the affidavit was prepared, Dr. Couto was aware that materialmen had not be paid. The purported purpose of the affidavit was to release the funds retained by the title company. However, it was Dr. Couto who prepared the affidavit, and it was not presented to the title company to obtain the release of the funds. The affidavit was retained by Dr. Couto, and presented to the title company in June 1992, by Dr. Couto together with letters from Respondent stating that he was not going to pay the subcontractors. Upon the affidavit and letters, the title company paid the $4,690.37 to Dr. Couto. Given the background of the affidavit, the contradictory testimony about its execution, and the absence of additional authentication, the signature of the Respondent is not accepted as genuine.
In spring 1992, various materialmen and subcontractors filed liens on the house being built for the Coutos. In order to clear the title to his home, Dr. Couto had to settle with the lienholders and pay them $14,878.18. As stated above, Dr. Couto received the proceeds from the sale of the second lot,
$4,690.37.
Subsequently, the matter was brought to the attention of the state's attorney. The Respondent paid the Coutos $3,000 in cash, and the state's attorney dropped the case against the Respondent after handwriting analysis was completed on the affidavit.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this case. This Recommended Order is entered pursuant to Section 120.57, Florida Statutes.
The Commission has charged the Respondent with violation of Section 475.25(1)(b), Florida Statute, by engaging in misrepresentation, false promises, false pretenses, dishonest dealing, and breach of trust in a business transaction. The administrative complaint is predicated upon the affidavit allegedly executed by the Respondent, and Respondent's failure to pay the subcontractors and materialmen, i.e., construct the house for the contract price. The Respondent's answer alleged that the affidavit had been signed by Dr. Couto. The Respondent denied the signature on the affidavit was his signature.
Although a document is self-authenticating when notarized, it is only until the signature is questioned. The notary acknowledgment creates a rebuttable presumption that the signature is authentic. In this case, the Respondent denied signing the document. Both men have an interest in the outcome, and both men had access to Ms. Bennett, the notary.
In the absence of added proof that the Respondent signed the affidavit, the document is not proven to be the affidavit of the Respondent. That portion of the administrative complaint alleging violation of Section 475.25(1)(b), Florida Statutes, based upon the affidavit are not proven.
Concerning the allegations that the Respondent did not fulfill the contract, it appears that the parties had a disagreement about the contract and its terms. The contract called for the Respondent to build the house in exchange for $30,000 and the two lots; however, clearly the Respondent had an expectation the lots would be worth $20,000 as indicated by the stated value of the contract, $50,000. The two lots together sold for less than $10,000. The Respondent stopped work on the contract after the first lot was sold because he learned the lots were worth less than $20,000, and commenced work again only because of Dr. Couto badgering. The question is whether Dr. Couto obtained what he bargained for. The answer is yes and no.
The house costs Dr. Couto $30,000, the two lots for which he paid
$15,264.80, plus $14,878.18, to satisfy the liens. However, Dr. Couto received
$3,000 from the Respondent to settle the matter when it was being prosecuted by the state's attorney's office and $4,690.37 from the sale of the second lot.
Dr. Couto total basis in the house, including changes for which he did not pay, is $52,452.61. The Coutos got their house for the contract price, but were denied a windfall gain as a result of the mistake in the valuation of the two lots.
The controversy between the Respondent and Dr. Couto was essentially a contract disagreement. What Respondent did was fail to honor the contract with the Coutos to build the house for $30,000 and the two lots. The putative value of the two lots was $20,000; however, the sale price of the first lot was less than $5,000 dollars. This resulted in a controversy over the value of the lots and the contract. The facts reveal that the Respondent did build the house, and the Coutos paid the contract price for the house with the additions. Whether the Coutos were entitled to the benefit of the mistake in the valuation of the lots is a matter for the courts. The use of the regulatory powers of the Commission to resolve contract disputes, particularly not involving directly a
real estate contract, has been disapproved by the courts. The Respondent did not violate Section 475.25(1)(b), Florida Statutes.
The additional allegation relates to the violation of Section 475.42(1)(o), Florida Statutes, as a result of a second violation of Section 475.25, Florida Statutes. As indicated above, there was no violation of Section 475.25, Florida Statutes; therefore, there is no basis for action under Section 475.42(1)(o), Florida Statutes.
