STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA DEPARTMENT OF BUSINESS ) AND PROFESSIONAL REGULATION, )

Division of Real Estate, )

)

Petitioner, )

)

vs. ) CASE NO. 94-3732

)

JOSEPH M. MCAULIFFE, JR., )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Daniel M. Kilbride, on October 19, 1994 in Orlando, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Steven W. Johnson, Esquire

Florida Department of Professional Regulation

Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

For Respondent: Joseph C. McAuliffe, Jr. pro se

3846 Southwest Savoy Drive Palm City, Florida 33990

STATEMENT OF THE ISSUES

Whether the Respondent's Florida real estate license should be disciplined because the Respondent was guilty of false promises, false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in a business transaction in violation of Subsection 475.25(1)(b), Florida Statutes.

Whether the Respondent is guilty of operating Bellwether Developments, Inc. as a broker, without holding a valid license as a broker in violation of Subsection 475.25(1)(a), Florida Statutes.

Whether the Respondent is guilty of failure to account or deliver a share of a commission in violation of Subsection 475.25(1)(d)1, Florida Statutes.

PRELIMINARY STATEMENT

By an Administrative Complaint filed March 9, 1994, the Petitioner, Department of Professional Regulation, Division of Real Estate, alleges that the Respondent violated provisions of Section 475.25, Florida Statutes. The Respondent disputed the charge and requested a Section 120.57(1) hearing. The matter was referred to the Division of Administrative Hearings, and, following discovery, a formal hearing was held on October 20, 1994.

At hearing, the Petitioner's Exhibits 1-7 were received into evidence, as were the Respondent's Exhibits 1-4. Jerry Wray, Annkarol Cemer, and Investigator Sarah Kimmig were called as witnesses by the Petitioner. The Respondent testified and called no other witnesses. A transcript was not prepared. Petitioner filed its proposed findings of fact and conclusions of law on November 9, 1994. Respondent has not filed proposals as of the date of this Order. Petitioner's proposals have been given careful consideration and adopted where appropriate. My specific rulings appear in the Appendix attached hereto.

FINDINGS OF FACT

1. Petitioner is a state licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida.

   
   

2. The Respondent, Joseph C. McAuliffe, is now and was at all times material hereto a licensed real estate broker in the State of Florida. He was issued license number 0260690 in accordance with Chapter 475, Florida Statutes. The last license was issued as a broker percentBellwether Realty, 526-A Emmett Street, Kissimmee, Florida 34741.

   
   

3. On January 9, 1990, and August 9, 1990, Respondent in his own capacity and as the chairman and secretary of Bellwether Development, Inc. (not licensed) entered into written contracts to sell four lots to Jerry P. and Kimberly M. Wray.

   
   

4. Pursuant to addendum II of the contracts and the agreement dated January 25, 1990, the Respondent agreed to resell the lots within one year at minimum prices of $16,000; provide the buyers with reimbursement for the total closing cost of $689.08 on three lots; and reimburse the buyers for the monthly payments and any other ordinary and necessary expenses related to the lots. Additionally, if no sale were made by Bellwether, the Respondents agreed to buy back the lots and to provide the buyers a 25 percent return on their investment.

   
   

5. The Respondent breached the contracts and the January 25, 1990 agreement by failing to sell the lots or repurchase the lots in accordance with the written agreement.

   
   

6. Afterward the buyers lost title to the lots as a result of actions in foreclosure.

   
   

7. On February 26, 1992, the buyers filed a civil complaint against the Respondent and Bellwether Development, Inc. based, inter alia, on breach of contract, fraud, constructive fraud, and misrepresentation.

   
   

8. On July 14, 1993, the Circuit Court in St. Lucie County entered a judgment against the Respondent individually and as an officer of Bellwether Development, Inc. for damages of $67,542.70.

9. The Respondent has failed to satisfy the $67,542.70 judgment or to otherwise pay the money claimed by the buyers, and said debt remains outstanding.

   
   

10. Beginning October, 1987 through January, 1989, the Respondent registered Bellwether Realty, Inc., Bellwether Management, Inc. and Bellwether Development, Inc. with the Secretary of State.

    
    

11. On October 14, 1987, and on January 18, 1989, Respondent registered Bellwether Realty, Inc. and Bellwether Management, Inc. with the Petitioner. According to Petitioner's official records Respondent maintained a licensed office located at 526A Emmett Street, Kissimmee, F lorida for Bellwether Realty, Inc. and a licensed office located at 200 Albany Avenue, Stuart, Florida for Bellwether Management, Inc.

    
    

12. On or about October 9, 1992, the Secretary of State involuntarily dissolved Bellwether Realty, Inc. and Bellwether Development, Inc. for failure to file an annual report. The Respondent was an officer of both corporations.

    
    

13. The Respondent operated Bellwether Development, Inc. as a brokerage without a valid license.

    
    

14. In late 1990, Annkarol Cemer was employed through Bellwether Realty, Inc. to solicit and negotiate sales contracts.

    
    

15. On August 31, 1990, the Respondent, in dissolving that relationship, agreed to pay Annkarol Cemer $4,647.50 in real estate sales commission and

    $1,000 vacation pay by December 31, 1990.

    
    

16. After December 31, 1990, Annkarol Cemer demanded the payment of the

    $4,647.50 in commissions owed and $1,000 in vacation pay. Respondent received and kept those commissions and refused to share the commission with Cemer.

    
    

17. On February 25, 1993, Cemer obtained a Final Judgment in the County Court of St. Lucie County, Florida in the amount of $6,422.60 against Respondent individually and Bellwether. Said judgment remains outstanding.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter pursuant to Subsection 120.57(1), Florida Statutes (1991).

    
    

19. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

    
    

20. The Petitioner's authority is derived from Chapter 475, Florida Statutes.

    
    

21. Subsection 475.25, Florida Statutes provides that the Florida Real Estate Commission may suspend a license for a period not exceeding seven (7) years; revoke a real estate license; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may impose a reprimand or, any or all of the foregoing, if it finds that a licensee has violated Subsection 475.25(1)(b), 475.25(d)1, or 474.25(1)(e), Florida Statutes.

22. The burden of proof required in this matter is that relevant and material findings of fact must be supported by clear and convincing evidence. Smith v. HRS, 522 So.2d 956 (Fla. 1st DCA 1988). The burden of proof is on the Petitioner as to each count of the Administrative Complaint. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

    
    

23. As a real estate licensee in Florida, the Respondent occupies a status under law with recognized privileges and responsibilities. Zichlin v. Dill, 25 SO.2d 4 (Fla 2nd DCA 1946); United Homes, Inc. v. Moss, 54 So.2d 351 (Fla. 2nd DCA 1963).

    
    

24. Inasmuch as a real estate licensee in Florida belongs to a privileged class, the State has prescribed a high standard of qualifications. Zichlin, supra. "The law specifically requires that a person, in order to hold a real estate license, must make it appear that he is ... trustworthy, ... and that he bears a good reputation for fair dealing." McKnight v. Florida Real Estate Commission, 209 So.2d 199 (Fla. 2nd DCA 1967).

    
    

25. Respondent McAuliffe admitted he failed to fulfill the requirements of his contract with Mr. and Ms. Wray. He contends that he and Bellwether Development were involved in a joint venture with them and that economic conditions beyond his control prevented him from honoring the contract.

    
    

26. However, the sophisticated Respondent used his superior knowledge to mislead the Wrays. The evidence shows that the Respondents sales presentation to the Wrays went beyond "puffing" and enters the realm of misrepresentation.

    
    

27. It is clear Respondent came in to financial difficulties in 1990-92, but those difficulties were of his own making. The Respondent's scenario does not ring true. Mr. Wray was a credible and believable witness, and it is clear that he put his trust in Respondent, and that trust was breached.

    
    

28. In his dealing with Cemer, the Respondent took advantage of his position as her broker and of his position as the seller of his company, to keep money which, in equity, belonged to her. The evidence established that she took care of her portion of the taxes to be paid relevant to the transaction, and the Respondent admitted he did not bother to contest their business-related lawsuit in court.

    
    

29. Constructive fraud exists where a duty under a confidential or fiduciary relationship has been abused, or where an unconscionable advantage has been taken by one party to a transaction over another. Harrell v. Branson, 344 So.2d 604 (Fla. 1st DCA 1977). This was certainly the case in Respondent's dealings with the Wrays and Cemer.

    
    

30. The Petitioner's proof is clear and convincing, and is sufficient to justify the imposition of a penalty within the range of those provided for in the above-cited statutory authority. Here, the Respondent's behavior, which was based on sheer greed, goes to the central theme of professional licensure in the State of Florida. The Respondent clearly failed to live up the standards expected of and required of licensed real estate professionals as stated above.

    
    

31. The Respondent did not deal honestly with the Wrays and Cemer. The facts indicate disregard for the foregoing principles of fair dealing and professional standards on the part of the Respondent.

32. The Respondent misused his position as a licensee in his dealing with the Complainants, and that is precisely the type of conduct Chapter 475, Florida Statutes, was enacted to thwart.

    
    

33. The evidence establishes that the Respondent committed the actions alleged in the Administrative Complaint.

    
    

34. For all of the above-stated reasons, the Respondent is guilty of having committed violations of Subsection 475.25(1)(b), 475.25(1)(e), and 475.25(1)(d)1, Florida Statutes.

RECOMMENDATION

Having considered the foregoing Findings of Fact and Conclusions of Law, and the evidence of the record, including the contents of the several exhibits received into evidence, it is, therefore:

RECOMMENDED that the Respondent be found guilty of violating the aforementioned statutes, as charged in the Administrative Complaint, and that his real estate license be suspended for two years.

It is further

RECOMMENDED that Respondent McAuliffe be fined $1,000.00, payable within 30 days of the entry of a final order, and such other and further conditions as the Commission deems just and reasonable.

DONE AND ORDERED this 15th day of November, 1994, in Tallahassee, Leon County, Florida.

DANIEL M. KILBRIDE

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 15th day of November, 1994.

APPENDIX

Petitioner's proposed findings of fact Accepted in substance: paragraphs 1-17.

Respondent did not submit proposed findings of fact.

COPIES FURNISHED:

Steven W. Johnson, Esquire Florida Department of

Professional Regulation Division of Real Estate

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802

Joseph C. McAuliffe, Jr. 3846 S.W. Savoy Drive Palm City, Florida 33990

Darlene F. Keller Division Director

400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900

Jack McRay

Acting General Counsel Northwood Centre

1940 North Monroe Street Tallahassee, Florida 32399-0702

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: 94-003732

Orders for Case No: 94-003732