vs. ) Case No. 07-5266PL
Respondent. )
Pursuant to notice, a hearing was conducted in this case pursuant to Sections 120.569 and 120.57(1), Florida Statutes,1 before Stuart M. Lerner, a duly-designated Administrative Law Judge of the Division of Administrative Hearings (DOAH), on January 18, 2008, by video teleconference at sites in Lauderdale Lakes and Tallahassee, Florida.
For Petitioner: P. Brian Coats, Esquire
Whether Respondent committed the violations alleged in the Administrative Complaint issued against him and, if so, what penalty should be imposed.
On or about April 5, 2007, Petitioner issued a two-count Administrative Complaint against Respondent containing the following "[e]ssential [a]llegations of [m]aterial [f]act":
Count I of the Administrative Complaint alleged that, "[b]ased upon the foregoing [essential allegations of material fact], Respondent has failed to communicate an appraisal without good cause in violation of Section 475.624(16), Florida Statutes." Count II of the Administrative Complaint alleged that, "[b]ased upon the foregoing [essential allegations of material fact], Respondent is guilty of having failed to exercise reasonable diligence in developing an appraisal report in violation of Section 475.624(15), Florida Statutes."
On or about June 11, 2007, Respondent, through his attorney, filed a Petition for Formal Administrative Hearing. In his petition, Respondent "specifically dispute[d] the facts alleged in paragraph four (4) of the administrative complaint,"
contending that "the property to be appraised was not a condominium conversion." Respondent further "specifically dispute[d] the facts alleged in paragraph six (6) that [he] failed to respond or communicate the report with his client," asserting that he "communicated to his client there was a delay because of a hurricane in the area and the client canceled the report." On November 19, 2007, the matter was referred to DOAH to conduct the hearing Respondent had requested.
As noted above, the hearing was held on January 18, 2008. Respondent was the lone witness to testify at the hearing. In addition to Respondent's testimony, five exhibits (Petitioner's Exhibits 1 through 5) were offered and received into evidence. Among these exhibits were transcripts of the depositions of Matthew Luth and Jon Mosle, which were offered in lieu of
Mr. Luth's and Mr. Mosle's live testimony.
At the conclusion of the evidentiary portion of the hearing, the undersigned announced, on the record, that the proposed recommended order filing deadline was ten days from the date of the filing with DOAH of the hearing transcript.
The hearing Transcript (consisting of one volume) was filed with DOAH on February 6, 2008. Respondent and Petitioner filed their Proposed Recommended Orders on February 14, 2008, and February 15, 2008, respectively.
Based on the evidence adduced at hearing, and the record as a whole, the following findings of fact are made:
Respondent is now, and has been at all times material to the instant case, a Florida-certified general real estate appraiser, holding license number RZ 2678 and doing business as Easthill Valuation and Consulting (Easthill). He has been doing real estate appraisal work since 1986.
Respondent also holds a Florida real estate broker license.
HBK Investments (HBK) is a hedge fund headquartered in Dallas, Texas.
On June 23, 2006, HBK entered into a written agreement with Easthill in which Easthill agreed, for a $7,500.00 fee, to appraise for HBK the value of the remaining unsold inventory of an uncompleted high-rise, residential condominium project being developed by WCI Communities, Inc., on a barrier island in Pompano Beach, Florida (Ocean Side Project). The agreement did not specify, nor did HBK indicate at any time during the negotiations leading to the agreement, that time was of the essence in completing the appraisal.
The agreement2 read, in pertinent part, as follows:
* * *
The purpose of this appraisal/consultation is to estimate the market value of the fee simple estate reflecting the unsold inventory in the subject property. The report is intended to be used in making internal management decisions related to potential investment by [HBK] related to specific properties, interests, direct investments and/or securities issued by WCI. The assignment is to be a limited appraisal in a summary report format in conformance with, and subject to, the Standards of Professional Practice and Code of Ethics of the Appraisal Institute and the Uniform Standards of Professional Appraisal Practice (USPAP) developed by the Appraisal Standards Board of the Appraisal Foundation.
The scope of [Easthill's] assignment is to evaluate the subject property based upon the estimated remaining inventory as of the date of value for the current development based upon information obtained by the appraiser through market research and analysis. [HBK] hereby acknowledges that the subject property is owned, controlled and in the process of development by WCI.
[HBK] understands and agrees that [Easthill] will receive information for the report from third party sources and that [Easthill] bears no responsibility (and shall not be liable) for the accuracy or completeness (or lack thereof) of such information. [HBK] understands that despite [Easthill's] best efforts to obtain accurate direct data pertinent to the analysis, such as but not limited to the number of sold and/or unsold units, actual transaction prices, actual or proposed development costs, current price schedules, documents pertaining to the declaration and proposed operation of the condominium development, may not be
available. [Easthill] will incorporate market derived information in an effort to estimate these variables in the analysis.
[HBK] acknowledges that market derived estimates may vary considerably from the actual amounts expended by WCI and can therefore reflect diverged value indicators which reflect a higher degree of subjectivity versus an analysis performed had the actual information been made available.
* * * [Easthill's] fee for this assignment will be
$7,500.00 and requires a 50% retainer payment prior to commencement of work with the balance due upon delivery of the report. [Easthill] will provide one bound hard copy and one electronic copy of the report via email in PDF format. The report will be completed and delivered to [HBK} within approximately four (4) to six (6) weeks from receipt of this fully executed engagement letter, the retainer fee and any additional relevant information provided by [HBK].
In the event the assignment is canceled prior to completion, an invoice will be prepared reflecting the percentage of work completed as of that date. Any credits to [HBK] will be promptly returned or any remaining balances to the appraiser will be indicated on the invoice.
* * *
HBK made the "50% retainer payment" by check dated July 6, 2006. The check (in the amount of $3,750.00) was deposited in Respondent's account at BankAtlantic on July 11, 2006. Thereafter, Respondent began work on the appraisal.
Matthew Luth of HBK attempted to contact Respondent by telephone to inquire about the status of the appraisal after four to six weeks had gone by and he had not heard anything from Respondent. Mr. Luth was unsuccessful in his efforts to speak with Respondent, but he did leave "voice mail" messages.
Mr. Luth also sent Respondent three e-mails (on August 8, 2006, August 25, 2006, and September 8, 2006) requesting an update on the appraisal. Respondent received neither Mr. Luth's "voice mail" messages, nor the e-mails Mr. Luth had sent.
Jon Mosle, HBK's General Counsel, subsequently sent the following letter, dated September 26, 2006, to Respondent:
I am the General Counsel for HBK Investments
L.P. On June 23, 2006, HBK engaged your company to perform an appraisal related to the Pompano Beach condominium development to be known as Oceans Side. A copy of our signed engagement letter is attached.
Promptly after signing the engagement letter, HBK paid the initial $3,750 payment for your services (via our check #2611, which cleared our bank on July 11, 2006).
The engagement letter stated that your appraisal would be completed and delivered within approximately four to six weeks, a time frame now long passed. To date, we have seen no evidence of any work on your part. Matt Luth (the business person at HBK, who is responsible for this project) and myself have now tried to contact you numerous times and you have chosen not to return our calls or to provide any update regarding the project.
From this information, I can only conclude that you are attempting to steal our
retainer. Please be assured that we will not simply stand by and let this happen. If you do not call Matt Luth in the next three days to discuss this matter, we will immediately file a complaint with the State of Florida Department of Business and Professional Regulation. We will then investigate the process for reporting this as a criminal matter to the appropriate authorities.
Respondent received Mr. Mosle's letter on October 14, 2006.3
Within a day or two of receiving the letter, Respondent contacted HBK and spoke with Mr. Luth.
Respondent apologetically told Mr. Luth that "the report had been delayed," but he "was finishing the assignment and would have it to [HBK] within about a week." Mr. Luth said "that would be fine."
The next day, however, Respondent received a telephone call from Mr. Luth, who told him that HBK was "canceling the assignment" because it "no longer needed the report."
At the time of HBK's "cancel[lation of] the assignment," Respondent "had completed just about everything there was to complete except for actually writing the narrative report." He had obtained information about the Ocean Side Project, as well 14 other, comparable projects in the area, through public records reviews, on-site visits, and discussions with project staff. The information gathering process had not
proceeded as quickly as Respondent had planned inasmuch as it had turned out that project staff were not always accessible at the times it was convenient for Respondent to meet with them.
Respondent spent a total of approximately 60 hours collecting and analyzing data for the appraisal.
Although the percentage of work that Respondent had completed was greater than the percentage (50%) of the "consultant's fee" he had been paid, Respondent did not ask HBK to pay him any additional monies (notwithstanding that his agreement with HBK authorized the making of such a request).
But for HBK's "cancel[lation of] the assignment," Respondent would have delivered the "limited appraisal in summary report format" that he had agreed to provide to HBK.
CONCLUSIONS OF LAW
DOAH has jurisdiction over the subject matter of this proceeding and of the parties hereto pursuant to Chapter 120, Florida Statutes.
The Florida Real Estate Appraisal Board (Board) is statutorily empowered to take disciplinary action against Florida-certified real estate appraisers based upon any of the grounds enumerated in Section 475.624, Florida Statutes.
Such disciplinary action may include one or more of the following penalties: license revocation; license suspension (for a period not exceeding ten years); imposition of an
administrative fine not to exceed $5,000.00 for each count or separate offense; issuance of a reprimand; and placement of the licensee on probation. § 475.624, Fla. Stat.
The Board may take such action only after the licensee has been given reasonable written notice of the charges and an adequate opportunity to request a proceeding pursuant to Sections 120.569 and 120.57, Florida Statutes. See § 120.60(5), Fla. Stat.
An evidentiary hearing must be held if requested by the licensee when there are disputed issues of material fact. See §§ 120.569(1) and 120.57(1), Fla. Stat.
At the hearing, Petitioner bears the burden of proving that the licensee engaged in the conduct, and thereby committed the violations, alleged in the charging instrument. Clear and convincing evidence of the licensee's guilt must be presented for Petitioner to meet its burden of proof. See Department of Banking and Finance, Division of Securities and Investor Protection v. Osborne Stern and Company, 670 So. 2d 932, 935 (Fla. 1996); Walker v. Florida Department of Business and Professional Regulation, 705 So. 2d 652, 655 (Fla. 5th DCA 1998); and § 120.57(1)(j), Fla. Stat. ("Findings of fact shall be based upon a preponderance of the evidence, except in penal or licensure disciplinary proceedings or except as otherwise provided by statute ").
Clear and convincing evidence is an "intermediate standard," "requir[ing] more proof than a 'preponderance of the evidence' but less than 'beyond and to the exclusion of a reasonable doubt.'" In re Graziano, 696 So. 2d 744, 753 (Fla. 1997). For proof to be considered "'clear and convincing' . . . the evidence must be found to be credible; the facts to which the witnesses testify must be distinctly remembered; the testimony must be precise and explicit and the witnesses must be lacking in confusion as to the facts in issue. The evidence must be of such weight that it produces in the mind of the trier of fact a firm belief or conviction, without hesitancy, as to the truth of the allegations sought to be established." In re Davey, 645 So. 2d 398, 404 (Fla. 1994)(citing with approval, Slomowitz v. Walker, 429 So. 2d 797, 800 (Fla. 4th DCA 1983)); see also In re Adoption of Baby E. A. W., 658 So. 2d 961, 967 (Fla. 1995)("The evidence [in order to be clear and convincing] must be sufficient to convince the trier of fact without hesitancy."). "Although this standard of proof may be met where the evidence is in conflict, . . . it seems to preclude evidence that is ambiguous." Westinghouse Electric Corporation, Inc. v. Shuler Bros., Inc., 590 So. 2d 986, 988 (Fla. 1st DCA 1991).
In determining whether Petitioner has met its burden of proof, it is necessary to evaluate its evidentiary presentation in light of the specific allegations of wrongdoing
made in the charging instrument. Due process prohibits the Board from taking disciplinary action against a licensee based on conduct not specifically alleged in the charging instrument, unless those matters have been tried by consent. See Aldrete v. Department of Health, Board of Medicine, 879 So. 2d 1244, 1246 (Fla. 1st DCA 2004); Shore Village Property Owners' Association,
Inc. v. Department of Environmental Protection, 824 So. 2d 208,
210 (Fla. 4th DCA 2002); and Delk v. Department of Professional Regulation, 595 So. 2d 966, 967 (Fla. 5th DCA 1992).
Furthermore, "the conduct proved must legally fall within the statute or rule claimed [in the charging instrument] to have been violated." Delk, 595 So. 2d at 967. In deciding whether "the statute or rule claimed [in the charging instrument] to have been violated" was in fact violated, as alleged by Petitioner, if there is any reasonable doubt, that doubt must be resolved in favor of the licensee. See Djokic v. Department of Business and Professional Regulation, Division of Real Estate, 875 So. 2d 693, 695 (Fla. 4th DCA 2004); Whitaker
v. Department of Insurance and Treasurer, 680 So. 2d 528, 531 (Fla. 1st DCA 1996); Elmariah v. Department of Professional Regulation, Board of Medicine, 574 So. 2d 164, 165 (Fla. 1st DCA 1990); and Lester v. Department of Professional and Occupational
Regulations, 348 So. 2d 923, 925 (Fla. 1st DCA 1977).
In those cases where the proof is sufficient to establish that the licensee committed the violation(s) alleged in the charging instrument and that therefore disciplinary action is warranted, it is necessary, in determining what disciplinary action should be taken against the licensee, to consult the Board's "disciplinary guidelines," as they existed at the time of the violation(s). See Parrot Heads, Inc. v. Department of Business and Professional Regulation, 741 So. 2d 1231, 1233 (Fla. 5th DCA 1999)("An administrative agency is bound by its own rules . . . creat[ing] guidelines for disciplinary penalties."); and Orasan v. Agency for Health Care Administration, Board of Medicine, 668 So. 2d 1062, 1063 (Fla. 1st DCA 1996)("[T]he case was properly decided under the disciplinary guidelines in effect at the time of the alleged violations."); see also State v. Jenkins, 469 So. 2d 733, 734 (Fla. 1985)("[A]gency rules and regulations, duly promulgated under the authority of law, have the effect of law."); Buffa v. Singletary, 652 So. 2d 885, 886 (Fla. 1st DCA 1995)("An agency must comply with its own rules."); and Williams v. Department of Transportation, 531 So. 2d 994, 996 (Fla. 1st DCA 1988)(agency is required to comply with its disciplinary guidelines in taking disciplinary action against its employees).
At all times material to the instant case, the Board's "disciplinary guidelines" have been set forth in Florida
Administrative Code Rule 61J1-8.002, and have provided, in pertinent part, as follows:
Pursuant to Section 455.2273, F.S., the Florida Real Estate Appraisal Board sets forth below a range of disciplinary guidelines from which disciplinary penalties will be imposed upon licensees guilty of violating Chapter 455 or Part II, Chapter 475, F.S. (For purposes of this rule, the term licensee shall refer to registrants, license holders or certificate holders.)
The purpose of the disciplinary guidelines is to give notice to licensees of the range of penalties which normally will be imposed for each count during a formal or an informal hearing. For purposes of this rule, the order of penalties, ranging from lowest to highest, is: reprimand, fine, probation, suspension, and revocation or denial. Pursuant to Section 475.624, F.S., combinations of these penalties are permissible by law. . . .
* * *
(3) The penalties are as listed unless aggravating or mitigating circumstances apply pursuant to subsection (4):
* * *
Section 475.624(15), F.S. Has failed or refused to exercise reasonable diligence in developing or preparing an appraisal report- The usual action of the Board shall be to impose a penalty from a 5 year suspension to revocation and an administrative fine of $1000.
Section 475.624(16), F.S. Has failed to communicate an appraisal without good cause- The usual action of the Board shall be to impose a penalty from a $1000 fine to a 1 year suspension.
* * *
(4)(a) When either the petitioner or respondent is able to demonstrate aggravating or mitigating circumstances to the Board by clear and convincing evidence, the Board shall be entitled to deviate from the above guidelines in imposing discipline upon a licensee. . . .
(b) Aggravating or mitigating circumstances may include, but are not limited to, the following:
The degree of harm to the consumer or public.
The number of counts in the administrative complaint.
The disciplinary history of the licensee.
The status of the licensee at the time the offense was committed.
The degree of financial hardship incurred by a licensee as a result of the imposition of a fine or suspension of the license.
Violation of the provision of Part II of Chapter 475, F.S., wherein a letter of guidance as provided in Section 455.225(3), F.S., previously has been issued to the licensee.
The Administrative Complaint issued in the instant case alleges that Respondent, in connection with his dealings with HBK, acted in violation of Section 475.624(15), Florida Statutes (Count II), and Section 475.624(16), Florida Statutes (Count I).
At all times material to the instant case, Section 475.624(15), Florida Statutes, has authorized the Board to take disciplinary action against a Florida-certified real estate appraiser who "[h]as failed or refused to exercise reasonable diligence in developing an appraisal or preparing an appraisal report."
"There is no statute, rule, or USPAP standard that defines 'reasonable diligence.'" Department of Business and Professional Regulation, Division of Real Estate v. Guilfoyle, 07-0683PL, 2007 Fla. Div. Adm. Hear. LEXIS 469 *13 (Fla. DOAH August 22, 2007)(Recommended Order). It was therefore incumbent upon Petitioner, in order to meet its burden of proving that Respondent deviated from the required standard of diligence in violation of Section 475.624(15), Florida Statutes, to present "competent evidence . . . from a person with sufficient insight into what constitutes reasonable diligence on the part of a certified real estate appraiser when developing an appraisal or in preparing an appraisal report" under the circumstances that Respondent faced in the instant case. Department of Business and Professional Regulation, Division of Real Estate v. Harrison, No. 06-3387PL, 2007 Fla. Div. Adm. Hear. LEXIS 315
*24-25 (Fla. DOAH May 30, 2007)(Recommended Order); Department
of Business and Professional Regulation, Division of Real Estate v. Catchpole, 06-3389PL, 2007 Fla. Div. Adm. Hear. LEXIS 316
*22-23 (Fla. DOAH May 30, 2007)(Recommended Order); and Department of Business and Professional Regulation, Division of
Real Estate v. Price, 06-3720PL, 2007 Fla. Div. Adm. Hear. LEXIS
249 *26-27 (Fla. DOAH May 3, 2007)(Recommended Order); see also McDonald v. Department of Professional Regulation, 582 So. 2d 660, 670 (Fla. 1st DCA 1991)(Zehmer, J., specially concurring)("[W]here the agency charges negligent violation of general standards of professional conduct, i.e., the negligent failure to exercise the degree of care reasonably expected of a professional, the agency must present expert testimony that proves the required professional conduct as well as the deviation therefrom."); and Purvis v. Department of Professional Regulation, Board of Veterinary Medicine, 461 So. 2d 134, 136 (Fla. 1st DCA 1984)("Section 474.214(1)(q), Florida Statutes, sets forth 'negligence, incompetency or misconduct, in the practice of veterinary medicine' as a ground for disciplinary action. The parties to this appeal have treated 'negligence' and 'incompetency' as meaning a failure to comply with the minimum standard of care or treatment required of a veterinarian under the circumstances. We accept that construction of this penal statute. Unlike a charge of violating a statute or rule under section 474.214(1)(g), which requires no proof of a standard of care, the charge against Dr. Purvis necessarily required evidentiary proof of some standard of professional
conduct as well as deviation therefrom. . . . [T]he Board never introduced any evidence at the administrative hearing to show the appropriate standard of care which it contends Dr. Purvis failed to meet. The Board introduced no expert testimony, no statute, no rule, nor any other type of evidence to establish the appropriate standard of care or that Dr. Purvis fell below that standard."). In its evidentiary presentation in this case, however, Petitioner failed to include such evidence. The lone witness testifying at hearing (either in person or through deposition) with expertise in real estate appraisal was Respondent, and he testified that, in his expert opinion, he "used due diligence in trying to get this appraisal report done" for HBK. No contrary expert opinion was offered, leaving Respondent's exculpatory testimony on the matter unrefuted.4 Instead of offering expert testimony to prove Respondent's lack of "reasonable diligence," Petitioner relied simply on proof of Respondent's failure to have produced the report within the time frame provided for in his agreement with HBK, to wit: "within approximately four (4) to six (6) weeks from receipt of th[e] fully executed engagement letter, the retainer fee and any additional relevant information provided by [HBK]." Such a showing was insufficient to meet Petitioner's burden of proving that Respondent violated Section 475.624(15), Florida Statutes, as alleged in Count II of the Administrative Complaint. See
Fleischman v. Department of Professional Regulation, 441 So. 2d 1121, 1122-1123 (Fla. 3d DCA 1983)("It is well-settled . . . that, absent clear legislative authorization to the contrary, violations of mere contractual rights are concerns only of the courts, and may not be enforced by disciplinary action undertaken by a regulatory agency like the real estate commission."); and Worldwide Research Services Corp. v.
Department of Financial Services, No. 07-4397, 2007 Fla. Div. Adm. Hear. LEXIS 664 *11 (Fla. DOAH December 6, 2007)(Recommended Order)("Be it an oral or written contract, the resolution of contract disputes is the exclusive jurisdiction of Article V courts."). Accordingly, this count of the Administrative Complaint must be dismissed.
At all times material to the instant case, Section 475.624(16), Florida Statutes, has authorized the Board to take disciplinary action against a Florida-certified real estate appraiser who "[h]as failed to communicate an appraisal without good cause."
In the instant case, the record evidence establishes that, but for HBK's cancellation of its agreement with Respondent, Respondent would have provided HBK with the appraisal that was subject of that agreement. Under such circumstances, Respondent's failure to have communicated this appraisal to HBK did not constitute a violation of Section
475.624(16), Florida Statutes. Accordingly, Count I of the Administrative Complaint, which alleges that Respondent committed such a violation, must also be dismissed.
RECOMMENDED that the Board issue a Final Order dismissing the Administrative Complaint issued against Respondent in its entirety.
DONE AND ENTERED this 20th day of February, 2008, in Tallahassee, Leon County, Florida.
STUART M. LERNER
Filed with the Clerk of the Division of Administrative Hearings this 20th day of February, 2008.
1 Unless otherwise noted, all references in this Recommended Order to Florida Statutes are to Florida Statutes (2007).
2 The agreement was the product of negotiations that ensued after Respondent had drafted and sent to HBK a proposed agreement and HBK had "submit[ted] corrections back."
3 Three days previous, Mr. Mosle had completed and sent to Petitioner, a Uniform Complaint Form (UCF) complaining about Respondent. Petitioner received this UCF on October 17, 2006.
4 Respondent's interest in the outcome of the case did not disqualify him from giving this expert testimony. See Falk v. Beard, 614 So. 2d 1086, 1089 (Fla. 1993)("It would be an anomalous situation indeed if the testimony of the one against whom a complaint is lodged could never form the basis for competent substantial evidence."); Florida Publishing Company v. Copeland, 89 So. 2d 18, 20 (Fla. 1956)("There is no doubt that the testimony of the plaintiff, although uncorroborated, '. . . if reasonable on its face, and believed and accepted by the jury as true can carry the burden of proof.'"); Martuccio v. Department of Professional Regulation, Board of Optometry, 622 So. 2d 607, 609-10 (Fla. 1st DCA 1993)(expert testimony of applicant for licensure was not incompetent and could be relied upon "as competent substantial evidence to support hearing officer's conclusions" in proceeding in which applicant was a party); and Raheb v. Di Battisto, 483 So. 2d 475, 476 (Fla. 3d DCA 1986)("We are not persuaded, as urged, that the testimony of the plaintiff Gordon Di Battisto should have been rejected by the trial court as inherently incredible.").
P. Brian Coats, Esquire Assistant General Counsel Department of Business and
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.
