STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF REAL ESTATE, )

)

Petitioner, )

)

vs. ) CASE NO. 96-1375

)

LESLIE L. WHITE, )

)

Respondent. )

)

RECOMMENDED ORDER

On July 31, 1996, a formal administrative hearing was held via video conference to Orlando, Florida, before Administrative Law Judge, Daniel M. Kilbride, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Daniel Villazon, Esquire

Department of Business and Professional Regulation

Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

For Respondent: Frederick H. Wilsen, Esquire

Gillis and Wilsen

1415 East Robinson Street, Suite B Orlando, Florida 32801

STATEMENT OF THE ISSUES

Whether Respondent's real estate broker's license should be disciplined based upon the allegations that Respondent is guilty of fraud, misrepresentation, concealment, 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.

Whether Respondent's real estate broker's license should be disciplined based upon the allegation that Respondent is guilty of failure to account and deliver funds, in violation of Section 475.25(1)(d)1., Florida Statutes.

Whether Respondent's real estate broker's license should be disciplined based upon the allegation that Respondent is guilty of failure to maintain trust funds in a real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized, in violation of Section 475.005(1)(k), Florida Statutes.

PRELIMINARY STATEMENT

On August 17, 1995, the Petitioner filed a four-count Administrative Complaint against the Respondent, alleging violations of Chapter 475, Florida Statutes. Respondent filed an Election of Rights, dated September 7, 1995 and requested a formal hearing. This matter was referred to the Division of Administrative Hearings on March 14, 1996. This matter was set for hearing and discovery was pursued.

At the formal administrative hearing, Petitioner presented the testimony of two witnesses, Charles White and John C. Lee, Investigator for the Petitioner.

Petitioner offered a total of nine (9) exhibits which were received in evidence. The Respondent cross-examined each of Petitioner's witnesses, testified on his own behalf and offered one (1) exhibit in evidence. Official Recognition is taken of Section 20.165(2)(i), and Chapters 120, 455 and 475, Florida Statutes.

A transcript of the proceedings was filed on August 22, 1996. Each party filed a proposed recommended order with the Division on September 3, 1996. The parties' proposed findings of fact have been considered and utilized in the preparation of this Recommended Order, except where such proposals were not supported by the evidence or were irrelevant, immaterial, cumulative, or subordinate.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaints pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto.

   
   

2. Respondent Leslie L. White is now and was at all times material hereto a licensed real estate broker in the State of Florida having been issued license number 0095441 in accordance with Chapter 475, Florida Statutes.

   
   

3. The last license issued to the Respondent was as a broker with an address of Les White Realty, 6313 Wynglow Lane, Orlando, Florida, 32818-1311. Respondent's license is currently under suspension for failing to pay a fine and failure to complete certain education courses.

   
   

4. On or about September 28, 1993, Respondent negotiated a contract between himself, doing business as Les White Enterprises, as seller, and Charles and Greta White, as buyers, (no apparent relationship to Respondent) to purchase Lot Number 18, Whisper Ridge subdivision in Orange County, Florida and build a house thereon for the total sum of $79,000.

   
   

5. Respondent prepared the contract, using the standard Contract for Sale and Purchase form approved by the Florida Association of Realtors and The Florida Bar. Les White Enterprises was listed as the "Seller" and Charles White and Greta White, his wife, were listed as "Buyers". The Buyers agreed to purchase Lot 18 and to have a house constructed on the site by the Seller. The Buyers agreed to seek "new financing at prevailing interest rates" in the amount of $75,550; put down a $2,000 deposit and pay an additional $1,450 at closing.

6. The contract called for the deposit to be held in escrow by Les White Realty/Builders. The $2,000 deposit was paid in cash by the Buyers and given to Respondent. The Respondent did not place the $2,000 deposit in an escrow account contrary to the express terms of the contract. Respondent did not acknowledge receipt of the deposit in his capacity as a broker.

   
   

7. At the time the contract was signed, the Buyers knew that the Respondent did not own or have title to Lot 18, and that the purchase price of the lot exceed the amount of the deposit. The Buyers consented to the Respondent using the funds to acquire the property.

   
   

8. Respondent was unable to purchase Lot 18, and sought the Buyers' permission to purchase Lot 2 instead and construct a house on it in accordance with the parties' prior agreement. The Buyers reluctantly agreed.

   
   

9. On February 18, 1994, Buyers gave Respondent a cashier's check for

   $1,200 for the purpose of clearing the land and beginning construction of a home for them on Lot 2. The funds were not placed in escrow.

   
   

10. The Respondent utilized the funds received from the Buyers and acquired title to Lot 2 in his name alone on or about February 25, 1994.

    
    

11. The Respondent cleared Lot 2 in preparation for construction, obtained building plans and applied for building permits in connection with building a house on said lot.

    
    

12. Shortly thereafter, Respondent notified the Buyers that the private investors, who approved their loan application, had discontinued financing of the Respondent's construction loan and he was unable to construct the house.

    
    

13. The transaction failed to close and the Buyers demanded that Respondent return the earnest money deposit.

    
    

14. Respondent was unable to return to return the $3,200 earnest money deposit to the Buyers.

    
    

15. Respondent filed for personal reorganization under Chapter 13 of the United States Bankruptcy Code.

    
    

16. Throughout the course of this transaction, Buyers dealt with Respondent in his capacity as a broker/builder.

    
    

17. In 1994 and 1995, the Florida Real Estate Commission found Respondent guilty of violating the provisions of Section 475.25(1)(b) and (1)(d)1., Florida Statutes on three occasions. Following the third offense, Respondent's license was suspended for six months and it is presently under suspension for failure to pay his administrative fines and complete other requirements of probation.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Subsection 120.57(1), and Section 120.60, Florida Statutes (1995).

    
    

19. Revocation of license proceedings are penal in nature; State ex rel Vining v. Florida Real Estate Commission, 281 So.2d 487 (Fla. 1973) and must be construed strictly in favor of the one against whom the penalty would be

    imposed. Munch v. Department of Professional Regulation, Division of Real Estate, 592 So.2d 1136 (Fla. 1st DCA 1992); Fleischman v. Department of Professional Regulation, 441 So.2d 1121 (Fla. 3d DCA 1983). The standard of proof required in this matter is that relevant and material findings of fact must be supported by clear and convincing evidence of record. Hal Heifetz d/b/a Key Wester Inn v. Department of Business Regulation, Division of Alcoholic Beverages and Tobacco, 475 So.2d 1277 (Fla. 1st DCA 1985). Petitioner has the burden of proving by clear and convincing evidence each of the allegations in the Administrative Complaint. Ferris v. Turlington, 510 So.2d 292 (Fla. 1987).

    
    

20. Subsection 475.25(1), Florida Statutes (1993) as it pertains to the alleged facts in this matter reads, in pertinent parts:

    
    

    1. The commission may ... suspend a license, certification, registration, or permit for a period not exceeding 10 years; may revoke a license, certification, registration, or permit; may impose an administrative fine not to exceed $1,000 for each count or separate offense; and may issue a reprimand, ... if

       it finds that the licensee ....

       (b) Has been guilty of fraud, misrepresent- ation, concealment, false promises false pretenses, dishonest dealing by trick, scheme, or device, culpable negligence, or breach of trust in a business transaction

       in this state . . .

       (d)1. Has failed to account or deliver to any person . . . 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 . . .

       (k) Has failed, if a broker, to immediately place, upon receipt, any money . . .

       entrusted to him by any person dealing with him as a broker in escrow with a . . .

       banking institution . . . or to deposit such funds in a trust or escrow account maintained by him with some bank . . . located and doing business in this state, wherein the funds shall be kept until disbursement thereof is properly authorized; . . .

       (o) Has been found guilty, for a second time, of any misconduct that warrants his suspension or has been found guilty of a course of conduct or practices which show that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation, may not safely be entrusted to him.

       
       

21. Relative to the above statutory prohibitions, the Commission's disciplinary guidelines are codified in Rules 61J2-24.001(2) and (3), Florida

    Administrative Code. These rules provide that the Respondent may be fined up to

    $1,000.00 per count and may have his broker license penalized up to 5 years suspension or revocation.

    
    

22. In order to find a real estate broker has violated this statute, an intentional act must be proven before a violation can be found. Munch v. Department of Professional Regulation, Division of Real Estate,592 So.2d 1136 (Fla. 1st DCA 1992).

    
    

23. As a real estate licensee in Florida, Respondent occupies a status under law with recognized privileges and responsibilities. Zichlin v. Dill, 25 So.2d 4 (Fla. 1946); United Homes, Inc. v. Moss, 54 So.2d 351 (Fla. 2d DCA 1963). Inasmuch as a real estate licensee in Florida belongs to a privileged class, the State has prescribed a high standard of conduct. Zichlin, supra. "The law specifically required 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. 202 So.2d 199 (Fla. 2d DCA 1967), cert. denied 209 So.2d 672 (Fla. 1969).

    
    

24. The evidence establishes by clear and convincing evidence that the Respondent committed fraud, dishonest dealing or was culpably negligent in his business dealings with the Buyers. The clients were first time buyers and clearly would not have been dealing with Respondent if they thought Respondent was merely an "arms length seller" and not a "broker." Section 475.01(1)(c), Florida Statutes (1993). They relied on Respondent to treat them honestly and fairly and in accordance with the code of conduct expected a licensed broker.

    It is a serious breach of trust when Respondent accepted $3,200 from the Buyers, did not abide by the terms of the written contract, and failed to return the deposit when demanded. Respondent misused his position as a licensee in order to defraud the Buyers.

    
    

25. Respondent has also failed to account and deliver the $3,200 deposit after the Buyers made a demand for the return of the deposit money when Respondent advised them that he could not perform under the terms of the contract.

    
    

26. Under the express terms of the written contract that Respondent prepared, Respondent was obligated to place the initial $2,000 deposit money in his escrow account. Respondent failed to do so and failed to keep it there until disbursement was properly authorized. Instead, Respondent used the money to purchase Lot 2 and have the title transferred to his name.

    
    

27. The evidence demonstrates that Respondent has previously been found guilty on more that two occasions of misconduct that warrants suspension.

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED that the Florida Real Estate Commission issue and file a Final Order finding the Respondent guilty of violating Subsections 475.25(1)(b), (d)1., and (k), Florida Statutes; and guilty of having been found guilty for a second time (or more) of misconduct that warrants suspension, in violation of subsection 475.25.(1)(o), Florida Statutes; it is further

RECOMMENDED that Respondent's licensed be revoked.

DONE and ENTERED this 4th day of October, 1996, in Tallahassee, Florida.

DANIEL M. KILBRIDE

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 1996.

COPIES FURNISHED:

Daniel Villazon, Esquire Department of Business and

Professional Regulation Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

Frederick H. Wilsen, Esquire Gillis and Wilsen

1415 East Robinson Street, Suite B Orlando, Florida 32801

Lynda L. Goodgame, Esquire Department of Business

and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792

Henry M. Solares Division Director

Department of Business and Professional Regulation

Division of Real Estate Post Office Box 1900 Orlando, Florida 32802

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 96-001375

Orders for Case No: 96-001375