Stevenson, a duly designated Administrative Law Judge of the Division of Administrative Hearings.
For Petitioner: Geoffrey T. Kirk, Esquire
Whether the Respondent is guilty of the violations alleged in the Administrative Complaint filed by the Petitioner and, if so, whether Respondent's real estate license should be suspended,
revoked, or otherwise disciplined.
In a three-count Administrative Complaint filed on April 18, 1997, Petitioner, the Department of Business and Professional Regulation, Division of Real Estate, charged Respondent with violating several sections of Chapter 475, Florida Statutes.
Specifically, Petitioner alleged that Respondent was guilty of two counts of 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, and was in violation of Section 475.25(1)(o), Florida Statutes, because he was guilty for a second time of misconduct that warrants his suspension.
Respondent disputed the charges and requested a hearing pursuant to Section 120.57(1), Florida Statutes. Petitioner referred the case to the Division of Administrative Hearings, which noticed and conducted the hearing.
At hearing, Petitioner presented the testimony of three witnesses: Christopher M. Fitzpatrick, Ella Kedan, and Irene J. Eastwood. Respondent testified on his own behalf. Petitioner offered twelve exhibits into evidence, all of which were accepted. Two joint exhibits were also admitted into evidence. A transcript of the hearing was filed at the Division of Administrative Hearings on December 22, 1997. Pursuant to
requests for enlargement of time, the parties were required to file proposed findings of fact and conclusions of law no later than February 13, 1998. Petitioner filed its proposed recommended order on February 5, 1998. Respondent’s proposed findings of fact and conclusions of law were late filed without objection on February 17, 1998.
Based on the oral and documentary evidence adduced at the final hearing, and the entire record in this proceeding, the following findings of fact are made:
Petitioner is a state government licensing and regulatory agency 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 adopted pursuant thereto.
At all times pertinent to this proceeding, Respondent Jared A. White T/A Jerry White Realty was a licensed real estate broker, having been issued license number 0187087 pursuant to Chapter 475, Florida Statutes. The last license issued to Respondent was as a broker with an address of 231 Skiff Pt. 7, Clearwater, Florida 34630.
TITLE TO THE PROPERTY
The matters at issue began with Respondent's retention as a real estate broker to bid at a foreclosure auction for a
beachfront house and lot at 235 Howard Drive in Belleair Beach, Pinellas County, Florida. Respondent was hired to submit the bid on behalf of Dr. Moshe Kedan and/or his wife, Ella Kedan.
Prior to the auction on August 17, 1995, Respondent had no contact with the Kedans. Kathy MacKinnon of Viewpoint International Realty in Clearwater was Respondent’s point of contact with the Kedans. It was Ms. MacKinnon who obtained Respondent's services to bid on behalf of the Kedans, and
Ms. MacKinnon who negotiated with Dr. Kedan as to the financial arrangements for both the bid and any ensuing commissions for Respondent. Neither Ms. MacKinnon nor Dr. Kedan was called as a witness in this case.
Respondent attended the foreclosure auction and tendered the winning bid on the property. Respondent bid in his own name. Respondent testified that he had bid at several similar sales in the past, and his practice was to bid in the name of the person who would hold title to the property.
Respondent did not follow his usual practice here because Ms. MacKinnon failed to instruct him as to whether the property would be titled in the name of Dr. Kedan, Mrs. Kedan, or one of their corporations. Ms. MacKinnon told Respondent she would know on August 18 how the property was to be titled.
Respondent's testimony regarding the initial titling of the property is supported by a handwritten note faxed by
Ms. MacKinnon to Dr. Kedan on August 17, shortly after the
auction. Ms. MacKinnon's note provides instructions regarding payment of the purchase price, indicating that the money must be submitted to the Clerk of the Court no later than 10:30 a.m. on the morning of August 18. The note specifically asks, "Also, whose name do you want the house in?"
Respondent testified that on August 18, he went to Atlanta on business, with the understanding that Ms. MacKinnon would handle the payments to the Clerk of the Court and the titling of the property on that date. This testimony is consistent with the handwritten note in which Ms. MacKinnon indicates that she will take the Kedans' checks to the court.
The record evidence shows that the payments were made to the Clerk of the Court and that title insurance on the property was timely issued. However, the title and the title insurance policy listed Respondent as owner of the property.
Respondent was unaware the property had been titled in his name until he received the certificate of title in the mail, approximately two weeks after the auction. Upon receiving the incorrect certificate of title, he went to the title company and signed a quitclaim deed, effective August 17, 1995, in favor of Ella Kedan. Respondent testified that he had learned from Ms. MacKinnon that the property would be titled in Ella Kedan’s name at sometime during the two-week period after the auction.
The quitclaim deed was not notarized until October 9, 1995, and was not recorded until October 10, 1995. However, the
face of the deed states that it was made on August 17, 1995. It is plain that the signature line of the notary statement on the quitclaim deed has been altered from August 17, 1995 to
October 9, 1995.
Respondent had no knowledge of how the quitclaim deed came to be altered. Respondent also had no clear recollection as to why he dated the quitclaim deed August 17, 1995, in light of his testimony that he signed it approximately two weeks after that date. A reasonable inference is that Respondent so dated the quitclaim deed to clarify that Mrs. Kedan's ownership of the property commenced on August 17, the date on which Respondent submitted the winning bid.
Respondent also had no knowledge of why the title company failed to record the quitclaim deed at the time he signed it. He testified that on or about October 9, 1995, he checked the Pinellas County computer tax records and discovered that he was still the owner of record. At that time, he returned to the title company to make sure the quitclaim deed was recorded the next day.
Petitioner offered no testimonial evidence regarding the events surrounding the titling of the property. Respondent's uncontradicted testimony is credible, consistent with the documentary evidence, and thus credited as an accurate and truthful statement of the events in question.
THE CONTRACT FOR REPAIRS
Shortly after the auction, Respondent began discussing with Dr. Kedan the possibility of Respondent’s performing repairs on the just-purchased property. Because Dr. Kedan did not testify in this proceeding, findings as to the substance of the negotiations between Respondent and Dr. Kedan must be based on the testimony of Respondent, to the extent that testimony is credible and consistent with the documentary evidence.
Respondent testified that Ms. MacKinnon approached him after the auction and asked him if he would be interested in fixing up the house for the Kedans. Respondent testified that he was agreeable to contracting for the work because his carpenter
was between jobs and could use the money. Respondent thus met with Dr. Kedan at the doctor’s office to discuss the repairs.
Dr. Kedan explained to Respondent that his ultimate plan was to demolish the existing house on the property and to build a more elaborate residence. Dr. Kedan wanted to rent out the house for five years before tearing it down, and wanted Respondent to affect such repairs as would make the house rentable for that five-year period. Respondent testified that Dr. Kedan expressly told him he did not want to spend a lot of money on the repairs.
Respondent quoted Dr. Kedan a price of $20,000.00, which was the price it would take to pay for the repairs, with no profit built in for Respondent. Respondent testified that he sought no profit on this job. He had made a substantial commission on the purchase of the property, and anticipated doing business with Dr. Kedan in the future, and thus agreed to perform this particular job more or less as a “favor” to Dr. Kedan.
After this meeting with Dr. Kedan, Respondent walked through the house with Irene Eastwood, the Kedans’ property manager. Ms. Eastwood testified that she and Respondent went from room to room, and she made notes on what should be done, with Respondent either concurring or disagreeing. Ms. Eastwood typed the notes into the form of a contract and presented it to Respondent the next day. On September 21, 1995, Respondent signed the contract as drafted by Ms. Eastwood.
There was conflicting testimony as to whether Respondent represented himself as a licensed contractor in the negotiations preceding the contract. Respondent testified that he never told Dr. Kedan that he was a contractor, and that he affirmatively told Ms. Eastwood that he was not a contractor.
Ms. Eastwood testified that she assumed Respondent was a licensed contractor because Dr. Kedan would not have hired a nonlicensed person to perform the contracted work. She denied that Respondent ever told her that he was not a licensed contractor.
The weight of the evidence supports Respondent to the extent it is accepted that Respondent never expressly represented himself as a licensed contractor to either Dr. Kedan or Ms. Eastwood. However, the weight of the evidence does not support Respondent’s claim that he expressly told either Dr. Kedan or Ms. Eastwood that he was not a licensed contractor.
Respondent’s subcontractors commenced work immediately upon the signing of the contract. Ms. Eastwood was in charge of working with Respondent to remodel the house, and she visited the site every day, often two or three times. She only saw Respondent on the site once during the last week of September, and not at all during the month of October. She did observe painters and a maintenance man regularly at work on the property during this period.
Respondent concurred that he was seldom on the property, but testified that this was pursuant to his agreement
with Dr. Kedan that he would generally oversee the work on the property. Respondent testified that he was on the property as often as he felt necessary to perform his oversight duties.
Ms. Eastwood testified as to her general dissatisfaction with the quality of the work that was being performed on the property and the qualifications of those performing the work. She conveyed those concerns to the Kedans.
Respondent testified that he did not initially obtain any permits to perform the work on the house, believing that permits would not be necessary for the job.
On or about October 11, 1995, officials from the City of Belleair Beach shut down Respondent’s job on the Kedans’ property for lack of a construction permit.
Respondent made inquiries with the City as to how to obtain the needed permit. City officials told Respondent that a permit could be granted to either a licensed contractor, or to the owner of the property if such property is not for sale or lease.
Respondent checked the City’s records and discovered that, despite the fact that he had signed a quitclaim deed on August 17, he was still shown as the owner of the property. Respondent then proceeded to sign a permit application as the homeowner, and obtained a construction permit on October 11, 1995.
Respondent testified that because the City’s records showed him as the record owner of the property, he committed no fraud in obtaining a construction permit as the homeowner. This testimony cannot be credited. Whatever the City’s records showed
on October 11, 1995, Respondent well knew he was not the true owner of this property. Respondent cannot be credited both with having taken good faith steps to correct the mistaken titling of the property and with later obtaining in good faith a construction permit as the record owner of the property.
Respondent testified that in obtaining the construction permit under false pretenses, his main concern was to keep the job going and to finish it in a timely fashion. He testified that there was no financial advantage to him in having the property in his name: he was making no profit on the job, and actually lost money because he had to pay for another title policy in the name of the Kedans.
While there may have been no immediate financial advantage to Respondent, he was clearly motivated by the prospect of future profits in projects with Dr. Kedan. The City’s closing down this project jeopardized Respondent’s anticipated continuing relationship with Dr. Kedan, and Respondent took the improper step of obtaining a construction permit as the property owner to maintain that relationship.
The Kedans ultimately dismissed Respondent from the job. A claim of lien was filed against the property by the painter hired by Respondent, and the cabinet maker sent the Kedans a lawyer’s letter threatening to file a claim of lien. Mrs. Kedan testified that she paid off both the painter and the cabinetmaker in full.
Ms. Eastwood estimated that the Kedans ultimately had to pay an additional $20,000 to $50,000 to complete the repairs to the house, some of which included correctional actions for the improper repairs performed by Respondent’s workers.
ALLEGED PRIOR DISCIPLINE
Respondent has been the subject of a prior disciplinary proceeding by the Florida Real Estate Commission. In that prior proceeding, the Division of Real Estate's Administrative Complaint alleged that Respondent was guilty of violating Sections 475.25(1)(b) and (1)(k), Florida Statutes. On September 25, 1995, Respondent and the Division of Real Estate entered into a Stipulation disposing of the Administrative
Complaint. Under the terms of the Stipulation, Respondent agreed to pay a fine of $1,000, and be subject to one year of probation, during which he would complete 30 hours of post-license education for brokers. The Stipulation expressly stated that Respondent neither admitted nor denied the allegations contained in the Administrative Complaint. The Florida Real Estate Commission entered a Final Order approving the Stipulation on November 14, 1995.
Respondent's broker license was suspended by the Florida Real Estate Commission on January 24, 1996. The cause for this suspension was Respondent's failure timely to pay the
$1,000 fine imposed by the Stipulation. Respondent paid the fine on February 19, 1996, and late renewed his license on April 24,
1997.
In the instant proceeding, Respondent testified that by entering into the Stipulation, he had no intention of pleading guilty to any of the allegations, and that he would never have entered into the Stipulation had he known it would be construed in any way as a guilty plea.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1), Florida Statutes.
The Department of Business and Professional Regulation is the licensing and regulatory agency charged with the responsibility to enforce the provisions of Chapters 455 and 475, Florida Statutes, and the rules adopted thereunder.
Section 475.25, Florida Statutes, provides that the agency may suspend a realtor’s license for a period not exceeding ten (10) years; revoke the license; 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 penalties if it is found that a licensee violated Section 475.25(1)(b), Florida Statutes.
In disciplinary proceedings such as this, the agency has the burden of proving the charges in the administrative complaint. Dept. of Business and Professional Regulation v. Osborne Stern and Co., 670 So. 2d 932 (Fla. 1996). Licensure
proceedings involving the potential revocation of the respondent’s license are penal in nature. State ex rel. Vining v. Florida Real Estate Commission, 281 So. 2d 487 (Fla. 1973). The burden of proof in penal cases requires that relevant, material findings of fact be supported by clear and convincing evidence. Ferris v. Turlington, 510 So. 2d 292 (Fla. 1987).
Section 475.25(1)(b), Florida Statutes, provides that the above disciplinary sanctions may be imposed when it is shown that a licensee has been guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme, or devise, culpable negligence or breach of trust in any business transaction in this state or any other state, nation, or territory.
Real estate brokers licensed in Florida may be disciplined under the above statutory provision for dishonest conduct of affairs for their own account, as well as for such conduct and transactions where their interest is that of a broker. Even where the broker charged is not engaged in a real estate transaction, the law in Florida is that a real estate licensee who commits the above-proscribed forms of misconduct in any business transaction may be disciplined by the Florida Real Estate Commission. See Sellars v. Florida Real Estate Commission,
380 So. 2d 1052 (Fla. 1st DCA 1980); LaRosa v. Dept. of Professional Regulation, 474 So. 2d 322 (Fla. 3d DCA 1985).
It has been held that an intentional act must be established before a violation of the above statute proscribing fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or devise, culpable negligence or breach of trust in a business transaction may be established. Munch v. Dept. of Professional Regulation, 592
So. 2d 1136 (Fla. 1st DCA 1992). Therefore, it must be
determined whether Respondent’s actions, established by the clear and convincing evidence supporting the above findings of fact, rises to that level of intentional conduct necessary to prove a violation of this subsection.
Count One of the administrative complaint alleges that Respondent violated Section 475.25(1)(b), Florida Statutes, in that he is alleged to be guilty of dishonest dealing by trick, scheme or device, culpable negligence or breach of trust in a business transaction. The gravamen of Count One is the allegation that Respondent bid on the subject property in his own name, permitted the property to be titled in his own name, and permitted the property to remain in his own name for a period of nearly two months without revealing the true state of affairs to the rightful owner, Ella Kedan.
Petitioner has failed to carry the burden of proving the allegations of Count One by clear and convincing evidence. Petitioner’s case on this point included no testimony by persons with first-hand knowledge of the facts. Petitioner offered the testimony of Ella Kedan, who admitted she had no direct knowledge of how the property came to be titled in the name of Respondent. Petitioner essentially offered the documents concerning the titling of the property, along with a theory that Respondent engaged in a scheme to defraud the Kedans of title to their property. Petitioner’s theory offered no rationale as to what Respondent could possibly have hoped to gain by placing the
property in his own name.
Respondent’s testimony as to the facts surrounding the allegations of Count One is believable and consistent with the documentary evidence. He was given no clear indication how to bid on the property at the auction. At the time, he had no relationship with the Kedans. He relied upon Kathy MacKinnon as his conduit for instructions from the Kedans. He also relied upon her to properly title the property on the day after the auction. For reasons unexplained by the evidence, Ms. MacKinnon failed to do so, and the title was issued in Respondent’s name.
Repondent’s testimony as to his actions subsequent to learning the property was improperly titled in his name is also credited. Petitioner offered no testimonial explanation why the date on the quitclaim deed appears to have been changed from August 17, 1995, to October 10, 1995. The earlier date is consistent with Respondent’s testimony that he executed the quitclaim deed effective August 17, and that for some reason outside the control of Respondent the title company failed to record the deed until the later date, resulting in the property’s remaining in Respondent’s name until October 10, 1995. Petitioner, having failed to meet the burden of establishing by clear and convincing evidence that Respondent intentionally caused the property to be titled in his own name, or intentionally allowed the property to remain titled in his name for two months, Count One of the administrative complaint should
be dismissed.
Count Two of the administrative complaint alleges that Respondent violated Section 475.25(1)(b), Florida Statutes, in that he is alleged to be guilty of fraud, misrepresentation, false promises, or false pretenses in a business transaction. The gravamen of Count Two is that Respondent entered a contract with the Kedans to perform certain repairs on the recently purchased property, and in doing so misrepresented himself to be a licensed contractor. Respondent’s misrepresentations are
alleged to have caused two claims of lien to be filed against the Kedans’ property, liens which the Kedans were forced to pay off in order to clear title to their property. Evidence was also adduced at hearing purporting to show that the Kedans were forced to undertake between $20,000 and $50,000 in additional costs to correct the poor work done by Respondent’s subcontractors.
Petitioner has carried the burden of proving Count Two by clear and convincing evidence. While the testimony conflicted on whether Respondent affirmatively represented to the Kedans and/or Ms. Eastwood that he was a "licensed contractor," it is undisputed that he represented himself as a person capable of performing the repairs described in his contract with the Kedans. Respondent's erroneous belief that he could perform the repairs without obtaining a permit from the City of Belleair Beach does not excuse his essentially false representation to the Kedans.
Respondent's belief that he needed no permit to perform
the contracted repairs was disproved on or about October 11, 1995, when officials from the City of Belleair Beach shut down the job for lack of a construction permit. City officials told Respondent that he could obtain a permit if he were a licensed contractor. They further told Respondent that the owner of the property could obtain the permit if the property was not for sale or lease.
At this point, Respondent could have approached
Dr. Kedan and admitted the City had shut down the job, but this might also have forced him to admit he did not hold the requisite license to perform the work, thereby jeopardizing his business relationship with Dr. Kedan. Respondent thus chose to compound his problem by obtaining a construction permit as the owner of the property. Respondent contended that he committed no fraud in obtaining this permit, because the City's records still showed him as the record owner of the property. However, Respondent was uniquely situated to know that the City's records were in error. Respondent knew that he was not the owner of the property, whatever the official records may have shown on October 11, 1995. Respondent himself had taken aggressive steps to correct this mistaken titling of the property, but now chose to take improper advantage of the continuing error.
Respondent contended that there was no personal advantage to him in obtaining the construction permit, as he was not anticipating a profit from this job. Even if he were not making a profit on this particular job, Respondent clearly was motivated by profit from anticipated future projects with Dr. Kedan. Respondent's own testimony was that he and Dr. Kedan had discussed working together in the future, and that Respondent hoped to impress Dr. Kedan with his performance on this job.
The Kedans ultimately dismissed Respondent from the job, having paid him half of the $20,000 contract price. The
Kedans paid off a claim of lien against their property filed by Respondent's painter. The Kedans also paid off the cabinet-maker hired by Respondent, in lieu of a threatened claim of lien.
While Ms. Eastwood's estimate of the amount is not entirely reliable, it is undisputed that the Kedans spent several thousand additional dollars in renovating the property, and that some of that amount was spent effecting corrections for the poor work done by Respondent's subcontractors.
Respondent was aware that he was not a licensed contractor when he entered into the contract with the Kedans, and was at best culpably negligent in undertaking to perform the repairs without inquiring as to the need for a construction permit in an unfamiliar jurisdiction. Respondent was also aware that he was not the true owner of the property when he obtained a construction permit by swearing that he was the owner. Respondent's conduct clearly amounts to the level of intent necessary to establish misconduct by fraud, misrepresentation, false promises, or false pretenses in a business transaction.
The proof adduced by Petitioner is clear and convincing in establishing the violation alleged in Count Two of the administrative complaint, and is sufficient to justify imposition of penalties within the range of those provided in Section 475.25(1)(b), Florida Statutes, and Rule 61J2-24.001(3)(c), Florida Administrative Code. Had Respondent at the outset disclosed to the Kedans his lack of the requisite contractor’s
license, the contract might never have been entered into. Even after the contract was entered into, Respondent was presented with a clear opportunity to admit his mistake in assuming he could perform the services called for in the contract. However, Respondent chose to maintain his misrepresentation to the Kedans by attempting to defraud the City of Belleair Beach. Respondent plainly has failed to comply with the standards required of licensed real estate professionals by Chapter 475, Florida Statutes.
Count Three of the administrative complaint alleged that Respondent is in violation of Section 475.25(1)(o), Florida Statutes, by virtue of having been found guilty for a second time of any misconduct warranting suspension. Petitioner has not carried the burden of proving this alleged violation by clear and convincing evidence. The very terms of the settlement Stipulation on which Petitioner premises this allegation state that Respondent neither admits nor denies the substance of the allegations. Respondent was not "found guilty" of anything by the Florida Real Estate Commission in the prior proceeding.
